EXHIBIT 4.118
XXXXXX GOLD CORP.
000 - 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Phone (000) 000-0000
Fax (000) 000-0000
June 28, 2006
XXXXXXXXX X. XXXX (AS TO 50%)
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXX XXXXXXX (AS TO 50%)
000 XxXxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Dear Sirs:
RE: ACQUISITION OF CHEWETT PROPERTIES
Further to our recent discussions, this letter is to confirm our agreement
regarding the acquisition the following claims:
TOWNSHIP CLAIM NUMBER EXPIRY DATE UNITS
---------- ------------ --------------- -------
Xxxxxxx 4208619 May 30, 20008 11
Chewett 4208618 May 30, 2008 16
Chewett 4202081 May 30, 2008 1
Chewett 4208622 April 19, 2008 14
Chewett 4208620 April 19, 2008 6
Chewett 4209548 May 2, 2008 4
(the "Property")
You (the "Finders") have provided to Xxxxxx Gold Corp. (the "Company") certain
technical information regarding the Property that has enabled the Company to
stake in the name of the Company, a 100% interest in the Property in
consideration for the payment of $15,000 to you. Further, the Company agrees
that after commencement of commercial production on the Property you shall be
entitled to receive a royalty equal to 2% of the net smelter returns (the
"Royalty Interest") calculated and payable from the Property in accordance with
the provisions of Schedule "A" attached hereto. The Company may at any time
purchase half of the Royalty Interest from you for $750,000, thereby leaving you
with a 1% royalty interest.
You hereby represent and warrant to the Company that you staked the Property in
accordance with the rules and regulations of Ontario in the name of the Company.
If you are in agreement with the above terms and representations and warranties
please sign and return this letter at your earliest convenience. I thank you for
your attention to this matter.
Yours truly,
BY: /S/ XXXX XXXXXXX
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Xxxx Xxxxxxx
Director
The above terms are agreed and accepted to
as of the 28 day of June, 2006.
Signed, Sealed and Delivered by:
BY: /S/ XXXXXXXX X. XXXX
--------------------------------------
Xxxxxxxx X. Xxxx
The above terms are agreed and accepted to
as of the day of June, 2006.
Signed, Sealed and Delivered by:
BY: /S/ XXXXX XXXXXXX
---------------------------------------
Xxxxx Xxxxxxx
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SCHEDULE "A"
ROYALTY INTEREST
1. For all diamonds, gems and other precious and semi-precious stones
("STONE PRODUCTS") mined or produced from the Property, the Company
shall pay to the Finders a Royalty equal to a percentage of the net
sales returns ("NSAR") realized from the sale or disposition of the
Stone Products.
2. For all metals, bullion, concentrates or ores ("OTHER PRODUCTS") mined
or produced from the Property, the Company shall pay to the Finders a
Royalty equal to a percentage of the net smelter returns ("NSMR")
realized or deemed to be realized as hereinafter provided, from the
sale or disposition of the Other Products.
3. The aforementioned percentage of the NSAR and percentage of the NSMR
shall be that determined in accordance with the provisions of Section
4.1 of the Agreement to which this Schedule B forms a part; and in the
calculation of the Royalty, such percentage is applied to 100% of the
NSAR or NSMR, as the case may be, regardless of dilution of the
Finders' working interest or entitlement with respect to the Agreement,
the Property or the Products.
4. For the purposes of this Schedule B, the term "PRODUCTS" shall be
interpreted as a collective reference to Stone Products and Other
Products and the term "ROYALTY" shall be interpreted as a collective
reference to the NSAR Royalty and the NSMR Royalty.
5. Net Sales Returns Royalty - Stone Products
a. Net sales returns means the gross proceeds from the sale or
disposition of Stone Products to an independent purchaser,
after deducting therefrom the cost of Valuation, Sorting,
Shipping and Insurance in connection with the Stone Products
as well as any sales, excise, production, export and other
duties, levies, assessments and taxes (except income taxes)
payable on the production or sale of Stone Products (but not
income taxes), and for the purposes hereof:
i. "VALUATION" means the establishing of a value for
each lot or group of sorted Stone Products for
purposes of reference when negotiating with a
potential purchaser of the same;
ii. "SORTING" means the final separation of Stone
Products and dividing them into groups according to
quality, size, or other characteristics, and then the
division of such groups into appropriate lots or
groups for valuing and/or sale, it being acknowledged
that in the case of gem quality Stone Products, a
group or lot may be a single stone;
iii. "SHIPPING" means all methods of transportation or
places of storage of Stone Products from the moment
they leave the Property until the passing of title
thereto or risks therefor (whichever is the later) to
an independent purchaser, including, without
limitation, any cost that may be incurred by reason
of such methods or places used or any sorting or
valuation facilities being situated off the Property;
and
iv. "INSURANCE" means all insurance that the Company
considers advisable to protect all or part of the
Stone Products in the possession or control of the
Company (including, without limitation, during
shipping) until the passing of
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title thereto or risks therefor (whichever is the
later) and including, without limitation, the
insurance or bonding of any person who does or may
come into contact with any such Stone Products at any
point during the operations of the Company whether
such person is an employee of the Company or
otherwise.
b. If Stone Products are sold to any entity with which the
Company does not deal at arm's length, the Stone Products
shall for the purposes hereof be deemed to have been sold at
prices determined by an independent valuator chosen by the
Finders.
c. The Company shall not have the right to commingle Stone
Products produced from the Property with similar products
produced from other properties.
6. Net Smelter Returns Royalty - Other Products
a. Net smelter returns means the gross proceeds from the sale or
disposition of Other Products removed from the Property after
deducting the costs of treatment, tolling, smelting, refining
and minting of such products and all costs associated
therewith such as transporting, insuring, handling, weighing,
sampling, assaying and marketing, as well as all penalties,
representation charges, referee's fees and expenses, import
taxes and export taxes; and the term "smelter" shall mean
conventional smelters as well as any other type of production
plant used in lieu of a conventional smelter to reduce ores or
concentrates.
b. If smelting, refining, treatment, assay or sampling of Other
Products is performed by facilities owned or controlled by the
Company or any of its affiliates, all charges, costs and
penalties therefor to be deducted pursuant to the foregoing
paragraph shall be equal to and not exceed actual costs
incurred by the Company in carrying out such processes and
shall not exceed such amounts which the Company would have
incurred if such operations were conducted at facilities
operating at arm's length to the Company, and which were then
offering comparable services for comparable quantities and
quality of Other Products.
c. The Company shall have the right to commingle Other Products
produced from the Property with ores and minerals produced
from other properties. Before commingling, Other Products from
the Property shall be weighed, sampled, assayed, measured or
gauged by the Company in accordance with sound mining and
metallurgical practices for moisture, penalty substances and
payable content. Records shall be kept by the Company for a
reasonable time showing weights, moisture and assays of
payable content. Prior to commingling, the Company shall give
thirty (30) days notice to the Finders specifying its decision
to commingle and outlining the procedures it proposes to
follow.
7. General
a. Royalties shall accrue at the time of sale or deemed sale, as
applicable, and they shall become due and payable in cash on a
calendar quarter basis, on the twentieth (20th) day of the
month next following the calendar quarter in which they
accrue.
b. At the time of making each Royalty payment to the Finders, the
Company shall provide the Finders with a certificate of a
senior officer of the Company certifying as to the accuracy of
the calculations of the Royalty payment and setting out the
method of the calculation thereof to which shall be attached a
true copy of the related smelter or sales receipt or receipts.
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c. Net sales returns and net smelter returns upon the respective
Products shall be calculated exclusively as provided herein,
and the Royalty computed thereon shall be determined without
regard to any "hedging", "forward", "futures" or comparable
sales (collectively referred to as "FUTURE trading") of such
Products by or on behalf of the Company. The Finders shall not
be entitled to any benefit of or be subject to any loss
attributable to such future trading by the Company.
d. The Company shall cause to be kept proper books of account,
records and supporting materials covering all matters relevant
to the calculation of Royalties payable to the Finders, and
the reasonable verification thereof; and the Finders shall
have, from time to time, the unfettered right, during regular
business hours and on reasonable notice, to carry out at its
sole cost and expense an audit by established independent
professionals chosen by the Finders, of the methodology and
manner of calculating all Royalty payments hereunder and the
Company shall provide, during regular business hours and on
reasonable notice, unrestricted access to its books, accounts,
records, vouchers, smelter settlements, sales receipts and
related documentation for this purpose. Should there be any
difference in the amount of the Royalty payment or payments
which are ultimately determined by the process described in
Article 8 of the Agreement to be in the Finders's favour,
which exceed three (3%) percent of the amount of the Royalty
paid to the Finders, then the cost of said audit, to the
extent reasonable, shall be reimbursed to the Finders by the
Company.
e. Any dispute relating to the quantum or methodology of
calculating all Royalties payable hereunder shall be settled
by arbitration pursuant to the provisions of Article 24 of the
Agreement.
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