EXHIBIT 4.5
HEADS OF AGREEMENT
TO THE OPTION TO EARN A 100% INTEREST IN THE
XXXXXXX PROPERTY
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HEADS OF AGREEMENT ("HOA")
BETWEEN
TUMI RESOURCES LIMITED
1305 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Xxxxxx
AND
MINERA SAN JORGE S.A. DE C.V.,
Aguamarina 2457, Bosques de la Victoria,
Xxxxxxxxxxx, Xxxxxxx,
Xxxxxx 00000
RE: OPTION TO EARN A 100% INTEREST OF THE XXXXXXX XX XXXX PRECIOUS METAL
PROPERTY IN ZACATECAS, MEXICO
This HOA sets out the terms and conditions whereby Tumi Resources Limited
("Tumi") will have the option to acquire a 100% interest from Minera San Jorge
S.A. de C.V. ("MSJ") in MSJ's right, title and interests in certain exploration
and mining concessions in Mexico known as the Xxxxxxx xx Xxxx claims (the
"Claims") as listed in the attached Schedule A and accompanying map. The general
terms and conditions of this HOA are as follows:
1. MSJ represents and warrants that it is the legal and beneficial owner
or has the right to 100% interest of the titles to the Claims totaling
110,238.8645 ha and confirms that all titles of such Claims are in
good standing with respect to Mexican Mining laws.
2. MSJ represents and warrants that the Claims are subject to existing
underlying option agreements to which MSJ is a party of. MSJ further
represents and warrants that all of the existing underlying option
agreements are in good standing and properly registered under Mexican
Mining laws and that it has the right to freely grant the option to
Tumi as contemplated by this HOA.
3. Tumi agrees to assume the payment obligations MSJ currently has under
the existing underlying option agreements by making cash payments to
the third parties as described in Schedule B attached (the "Option
Payments"). A copy of each of the existing underlying option
agreements is attached hereto as Schedule C.
4. On signing of this HOA, Tumi will pay to MSJ US$30,000. MSJ
acknowledges that Tumi has already advanced US$50,000 to MSJ for the
following purposes:
(a) US$25,000 to be used for payment of the option payment
obligations MSJ currently has under the existing underlying
option agreements; and
(b) US$25,000 to obtain confirmation of title status of the Claims
and other relevant matters from the appropriate Mexican
authorities.
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Tumi will require from MSJ an accounting of all expenditures made with
the US$50,000.
5. The term of this HOA is 4 years from the date of written acceptance of
this HOA by the TSX Venture Exchange (the "Effective Date").
6. To maintain the option and fully earn its 100% interest, Tumi must
from the Effective Date of this HOA:
(a) fulfill the Option Payments to the third parties as listed in
Schedule B attached; and
(b) from the Effective Date, issue to MSJ 1,000,000 fully paid common
shares of Tumi as follows:
(i) as at the Effective Date, 200,000 shares;
(ii) on the first anniversary of the Effective Date, 200,000
shares;
(iii) on the second anniversary of the Effective Date, 300,000
shares; and
(iv) on the third anniversary of the Effective Date, 300,000
shares.
7. Tumi has been informed by MSJ that there are no significant (over
$5,000) outstanding tax liabilities on any of the Claims other than on
the Juanicipio Claim which has a large outstanding tax liability in
excess of US$300,000. It is agreed that Tumi has no obligation to pay
this overdue tax amount or any portion thereof and that this claim can
be dropped by Tumi without payment of such, if Tumi's exploration
review of the Juanicipio Claim does not return positive results.
8. MSJ will retain the right to a 1% net smelter return royalty
calculated and payable in accordance with Schedule D attached (the
"NSR") on any metal production from the Claims following commencement
of commercial production, which NSR will be increased as follows if
project financing is arranged for commercial production based on a
bankable feasibility study demonstrating a Gold Equivalent (as
hereafter defined) resource in excess of 1 million ounces discovered
within the Claims area:
(a) for open pit production with a recovered Gold Equivalent grade of
2.5 to 3.5 g/t, the NSR will be increased from 1% to 2% and with
a recovered Gold Equivalent grade above 3.5 g/t, the NSR will be
increased from 2% to 3%; and
(b) for underground production with a recovered Gold Equivalent grade
of 10 g/t, the NSR will be increased from 1% to 2% and with a
recovered Gold Equivalent grade above 12 g/t, the NSR will be
increased from 2% to 3%.
For the purposes of this HOA "Gold Equivalent" will be determined as
"Aueq" where:
Aueq = Au + Ag x Ag recovery x Ag price
-------------------------------------------
Au price x Au recovery
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With the price of gold being determined on the basis of the monthly
average price of gold, calculated by dividing the sum of all London
Bullion Market Association P.M. Gold Fix prices reported for the
calendar month in question by the number of days for which such prices
were quoted, and for silver on the basis of the monthly average price
of silver, calculated by dividing the sum of all New York Commodity
Exchange ("COMEX") prices for silver quoted by and at the closing of
COMEX reported for the calendar month in question by the number of
days for which such prices were quoted. Notwithstanding this section
8, Tumi will be under no obligation whatsoever to place the Claims
into commercial production and if the Claims are placed into
commercial production, Tumi will have the right at any time to
curtail, suspend or terminate such commercial production as Tumi in
its sole discretion deems advisable.
9. Bonus Payments:
(a) If a project financing is arranged for commercial production
based on a bankable feasibility study for a Gold Equivalent
resource in excess of 2 million ounces, as a bonus payment, Tumi
will issue to MSJ a further 1,000,000 fully paid shares of Tumi,
and
(b) If a project financing is arranged for commercial production
based on a bankable feasibility study for a Gold Equivalent
resource in excess of 3 million ounces, as a bonus payment, Tumi
will issue to MSJ a further 1,000,000 fully paid shares of Tumi,
for a total of 2,000,000 shares as bonus payments.
10. Tumi has the right to withdraw from its option under this HOA at any
time after the initial exploration program commences with no further
obligation or commitment to MSJ provided that a 30-day advance written
notice is given to MSJ.
11. MSJ will provide to Tumi copies of all records and data respecting the
Claims and all reports prepared by or for MSJ in respect to the Claims
as soon as possible following the execution of this HOA and Tumi will
keep all such information confidential and not disclose it or use it
in any manner contrary to the intent of this HOA without the prior
written consent of MSJ.
12. Each of MSJ and Tumi agrees with the other to negotiate in good faith
to settle and execute a formal agreement on the terms set out in this
letter as expeditiously as possible.
13. There will be an area of mutual interest ("AMI") consisting of an area
of five kilometres from the external perimeter of the Claims. If
either of MSJ or Tumi acquires, directly or indirectly, any interest
in minerals located wholly or in part within the AMI, MSJ and Tumi
agree to offer such interest to each other and set-out the nature of
such mineral interest, including all information known about such
mineral interest and its acquisition costs and either party will have
the right to include such mineral interest in the Claims. If MSJ is
the party acquiring the mineral interest and Tumi elects to include
such interest in the Claims Tumi will reimburse MSJ its acquisition
costs as set out in such notice.
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TERMS AGREED AND ACCEPTED THIS 3rd DAY OF June, 2004
TUMI RESOURCES LIMITED MINERA SAN JORGE S.A. DE C.V.
Per: /s/ Xxxxx Henstidge Per: /s/ Xxxxxx X. Xxxxxxx
------------------------ -----------------------
Authorized Signatory Authorized Signatory
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SCHEDULE A
"THE CLAIMS"
CLAIM/CONCESSION JUANICIPIO
HECTARES 108,443.8281
FILE NUMBER 93/17852
TITLE NUMBER 213797
TYPE OF CONCESSION Exploration
TITLE HOLDER/REPRESENTATIVE Xxxx Xxxxxxx Xxxxxxx Xxxxxx
TYPE OF AGREEMENT Option Agreement
CLAIM/CONCESSION XXXXXX
HECTARES 1,660.0000
FILE NUMBER 93/26863
TITLE NUMBER 221800
TYPE OF CONCESSION Exploration
TITLE HOLDER/REPRESENTATIVE Ma. Xxxxxx Xxxxxxxx Xxxxx
TYPE OF AGREEMENT Option Agreement
CLAIM/CONCESSION SAN FRANCISCO
HECTARES 19.8416
FILE NUMBER 92/9609
TITLE NUMBER 185938
TYPE OF CONCESSION Exploitation
TITLE HOLDER/REPRESENTATIVE Xxxx Xxxxx Xxxxxxxxx Villa
TYPE OF AGREEMENT Option Agreement
CLAIM/CONCESSION EL TRIANGULO
HECTARES 18.0000
FILE NUMBER 92/6416
TITLE NUMBER 152366
TYPE OF CONCESSION Exploitation
TITLE HOLDER/REPRESENTATIVE Xxxx Xxxxx Xxxxxxxxx Villa
TYPE OF AGREEMENT Option Agreement
CLAIM/CONCESSION SANTA XXXXX 3
HECTARES 13.7819
FILE NUMBER 6-1.3/973
TITLE NUMBER 194830
TYPE OF CONCESSION Exploitation
TITLE HOLDER/REPRESENTATIVE Xxxxx Xxxxxxxx Xxxxxxxx
TYPE OF AGREEMENT Option Agreement
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CLAIM/CONCESSION SAN XXXXXX
HECTARES 9.0000
FILE NUMBER 8-60
TITLE NUMBER 176719
TYPE OF CONCESSION Exploitation
TITLE HOLDER/REPRESENTATIVE Xxxxxx Xxxxx Xxxxxx Xxxxxxxxx Xxxxx
TYPE OF AGREEMENT LOI
CLAIM/CONCESSION AMP. SAN XXXXXX
HECTARES 3.0000
FILE NUMBER 8-84
TITLE NUMBER 167779
TYPE OF CONCESSION Exploitation
TITLE HOLDER/REPRESENTATIVE Xxxxxx Xxxxx Xxxxxx Xxxxxxxxx Xxxxx
TYPE OF AGREEMENT LOI
CLAIM/CONCESSION EL ARCA II
HECTARES 68.3076
FILE NUMBER 93/26701
TITLE NUMBER 219736
TYPE OF CONCESSION Exploration
TITLE HOLDER/REPRESENTATIVE Xxxxxxx Xxxxx Xxxxxxx
& Natalia Xxxxxx Xxxx Xxxxx
TYPE OF AGREEMENT Option Agreement
CLAIM/CONCESSION EL ARCA II FRACC. 1
HECTARES 3.1053
FILE NUMBER 93/26701
TITLE NUMBER 219735
TYPE OF CONCESSION Exploration
TITLE HOLDER/REPRESENTATIVE Xxxxxxx Xxxxx Xxxxxxx
& Natalia Xxxxxx Xxxx Xxxxx
TYPE OF AGREEMENT Option Agreement
TOTAL: 110,238.8645 HA
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SCHEDULE B
"OPTION PAYMENTS"
CLAIM/CONCESSION JUANICIPIO
Total Purchase price of US$ 500,000.00
PAYABLE AS FOLLOWS:
Upon signature US$ 8,500.00
Six (6) months after the signature (May 21st, 2004) US$ 8,500.00
Twelve (12) months after the signature US$ 17,000.00
Eighteen (18) months after the signature US$ 16,000.00
Twenty four (24) months after the signature US$ 85,000.00
Thirty (30) months after the signature US$ 85,000.00
Thirty six (36) months after the signature US$ 120,000.00
----------
Total: US$ 340,000.00
----------
Shares or cash (at MSJ's sole discretion) US$ 160,000.00
CLAIMS/CONCESSIONS XXXXXX/
SAN FRANCISCO/
EL TRIANGULO
Total Purchase price of US$1,000,000.00
PAYABLE AS FOLLOWS:
Upon signature US$ 21,500.00
Six (6) months after the signature (May 21st, 2004) US$ 21,500.00
Twelve (12) months after the signature US$ 33,000.00
Eighteen (18) months after the signature US$ 34,000.00
Twenty four (24) months after the signature US$ 160,000.00
Thirty (30) months after the signature US$ 160,000.00
Thirty six (36) months after the signature US$ 230,000.00
----------
Total: US$ 660,000.00
----------
Shares or cash (at MSJ's sole discretion) US$ 340,000.00
CLAIM/CONCESSION SANTA XXXXX 3
Total Purchase price of US $200,000.00
PAYABLE AS FOLLOWS:
Upon signature US$ 5,000.00
Six (6) months after the signature (March 19th, 2004) US$ 10,000.00
Twelve (12) months after the signature US$ 10,000.00
Eighteen (18) months after the signature US$ 15,000.00
Twenty four (24) months after the signature US$ 15,000.00
Thirty (30) months after the signature US$ 20,000.00
Thirty six (36) months after the signature US$ 125,000.00
----------
Total: US$ 200,000.00
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CLAIM/CONCESSION SAN XXXXXX/
AMPL.SAN XXXXXX
Total Purchase price of US $300,000.00
PAYABLE AS FOLLOWS:
Upon signature US$ 12,000.00
Six (6) months after the signature (May 21st, 2004) US$ 12,000.00
Twelve (12) months after the signature US$ 15,000.00
Eighteen (18) months after the signature US$ 20,000.00
Twenty four (24) months after the signature US$ 25,000.00
Thirty (30) months after the signature US$ 30,000.00
Thirty six (36) months after the signature US$ 186,000.00
----------
Total: US$ 300,000.00
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CLAIM/CONCESSION EL ARCA II/
EL ARCA II FRACC.1
Total Purchase price of US$ 250,000.00
PAYABLE AS FOLLOWS:
Upon signature US$ 5,000.00
Six (6) months after the signature (May 21st, 2004) US$ 10,000.00
Twelve (12) months after the signature US$ 15,000.00
Eighteen (18) months after the signature US$ 20,000.00
Twenty four (24) months after the signature US$ 25,000.00
Thirty (30) months after the signature US$ 30,000.00
Thirty six (36) months after the signature US$ 145,000.00
----------
Total: US$ 250,000.00
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SCHEDULE C
NET SMELTER RETURNS ROYALTY
1. INTERPRETATION
Where used herein:
(a) "Agreement" means the agreement to which this schedule is attached,
including any amendments thereto or renewals or extensions thereof.
(b) "The Claims" means those mining claims described in Schedule "A" of
the Agreement.
(c) "Fiscal Period" means each calendar year or other period of 12
consecutive months adopted by Tumi for tax purchases during the term
of the Agreement.
(d) "Royalty Interest" means the minimum 1% and maximum 3% of Net Smelter
Returns which may become payable by Tumi to MSJ under the Agreement.
2. NET SMELTER RETURNS
"Net Smelter Returns" shall mean the gross proceeds payable to MSJ from the
sale or other disposition of ores, metals (metals shall include bullion,
precious metals and other than precious metals) or concentrates produced
from The Claims and sold by Tumi, less the following expenses if actually
incurred by Tumi:
2.1. Taxes specifically based on mining production, but excluding any and all
taxes (a) based upon the net or gross income of Tumi or other operator of
"The Claims" and (b) based upon the value of The Claims, the privilege of
doing business and other similarly based taxes; and
2.2. Charges and costs, if any, for transportation and insurance of ores, metals
(metals shall include bullion, precious metals and other than precious
metals) or concentrates produced from The Claims to any mint, smelter, or
refinery.
2.3. Charges, costs (including assaying and sampling costs) and all penalties,
if any, charged by a smelter or refiner of ores, metals (metals shall
include bullion, precious metals and other than precious metals) or
concentrates produced from The Claims.
3. PAYMENT
(a) The Royalty Interest shall be paid on a quarterly basis within 45 days
after the end of each fiscal quarter in respect of the actual proceeds
received in such fiscal quarter.
(b) Each payment under subsection 3(a) shall be accompanied by a statement
indicating the calculation of Net Smelter Return Royalty hereunder.
MSJ shall be entitled to audit, during normal business hours, such
books and records as are necessary to determine the correctness of the
payment of the Royalty Interest, provided however, that such audit
shall be made only on an annual basis and within 12 months of the end
of the Fiscal Period in respect of which such audit is made.
(c) Payment of the Royalty Interest shall be made to MSJ at such place or
places as it shall advise Tumi from time to time.
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