Exhibit 10.19
EARN-IN AGREEMENT
BETWEEN
RODEO CREEK GOLD INC.
GREAT BASIN GOLD LTD. (AS GUARANTOR)
AND
HECLA VENTURES CORP.
HECLA MINING COMPANY (AS GUARANTOR)
HOLLISTER DEVELOPMENT BLOCK VENTURE
TABLE OF CONTENTS
EARN-IN AGREEMENT
ARTICLE I DEFINITIONS.....................................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS ..............5
ARTICLE III TERM OF EARN-IN AGREEMENT ......................................8
ARTICLE IV RELATIONSHIP OF THE PARTIES.....................................8
ARTICLE V INITIAL CONTRIBUTION...........................................10
ARTICLE VI MAINTENANCE AND ABANDONMENT OF PROPERTIES......................13
ARTICLE VII AREA OF INTEREST ..............................................14
ARTICLE VIII WITHDRAWAL AND TERMINATION.....................................15
ARTICLE IX OPERATIONS AND GOVERNANCE......................................17
ARTICLE X RECLAMATION OBLIGATIONS........................................28
ARTICLE XI REPORTING, INSPECTION AND AUDIT................................29
ARTICLE XII MEMORANDUM.....................................................30
ARTICLE XIII DEFAULTS.......................................................30
ARTICLE XIV CONFIDENTIALITY................................................30
ARTICLE XV TAXES..........................................................32
ARTICLE XVI COOPERATION....................................................32
ARTICLE XVII GENERAL PROVISIONS.............................................32
EXHIBITS
EXHIBIT A: PROPERTIES AND TERMINATION & RELEASE AGREEMENT
EXHIBIT B: ACCOUNTING PROCEDURES
EXHIBIT B1 INSURANCE
EXHIBIT C: FORM OF QUITCLAIM DEED AND ASSIGNMENT
EXHIBIT D: FORM OF MEMORANDUM OF AGREEMENT
EXHIBIT E: EXPENDITURE SCHEDULE AND INITIAL
PROGRAM & BUDGET
EXHIBIT F: OPERATING AGREEMENT
EXHIBIT G: HECLA MINING WARRANT AGREEMENT
EXHIBIT H: GREAT BASIN WARRANT AGREEMENT
EARN-IN AGREEMENT
This Earn-in Agreement is made as of August 2, 2002, ("Effective Date")
between HECLA VENTURES CORP., a Nevada corporation duly qualified to do business
and in good standing in the state of Nevada, whose principal address is 0000
Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000 (hereinafter referred to as
"Hecla Ventures") and its Guarantor, Hecla Mining Company and RODEO CREEK GOLD
INC., a Nevada corporation whose address is C/O Xxxxxxx Xxxxxx, Ste. 260-6121
Xxxxxxxx Xxxxx, Xxxx, XX 00000 (hereinafter referred to as "Rodeo Creek") who is
qualified to do business and is in good standing in the State of Nevada and its
Guarantor, Great Basin Gold Ltd.
RECITALS
A. WHEREAS, Rodeo Creek owns certain mining claims and other real
property interests more specifically described in Exhibit A, attached hereto and
incorporated herein by this reference (hereinafter referred to as the
"Properties");
B. WHEREAS, Hecla Ventures desires to acquire an undivided interest in
the Properties by spending the Earn-in Expenditures on or for the benefit of the
Properties unless terminated pursuant to the terms hereof; and
C. WHEREAS, upon completion of a Earn-in Activities (as that term is
defined below) by Hecla Ventures, Hecla Ventures and Rodeo Creek; enter into the
Operating Agreement attached hereto as Exhibit F;
D. WHEREAS, Hecla Mining Company ("Hecla Mining"), as Guarantor has
agreed to guarantee the due performance of all of the obligations of Hecla
Ventures hereunder.
E. WHEREAS, Great Basin Gold Ltd. ("Great Basin"), as Guarantor has
agreed to guarantee the due performance of all the obligations of Rodeo Creek
hereunder.
NOW, THEREFORE, in consideration of the payments provided for herein
and the mutual promises set forth below, all the Parties hereto agree to the
provisions of this Earn-in Agreement.
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ARTICLE I
DEFINITIONS
1.1 "Accounting Procedures" means the procedures set forth in Exhibit
B.
1.2 "Affiliate" means any person, partner, partnership, joint venture,
limited liability company, corporation or other form of enterprise which
directly or indirectly controls, is controlled by, or is under common control
with a party to this Agreement. For purposes of the preceding sentence,
"control" means possession, directly or indirectly, of the power to direct or
cause direction of management and policies through ownership of voting
securities, contract, voting trust or otherwise.
1.3 "Area of Interest" means an area commonly known as the Hollister
Development Block with the three dimensional coordinates 34,000 E to 40,000
E;35,000 N to 42,000 N; and from surface to 4,000 feet above sea level. (A map
of the Hollister Development Block is attached to this Earn-in Agreement as
Exhibit A).
1.4 "Assets" means all materials, supplies, equipment, and personal
property required to conduct Earn-in Activities.
1.5 "Currency", "$", means US dollars unless otherwise stated.
1.6 "Commercial Production" means greater than or equal to 400 tonnes
mined on average per day over a 21 day calendar period or such longer time as is
consistent with the Feasibility Study.
1.7 "Default" means a Party's failure to perform its obligations
required under this Earn-in Agreement.
1.8 "Earn-in Activities" means all activities on or for the benefit of
the Properties giving rise to Earn-in Expenditures which are duly incurred and
paid as herein provided.
1.9 "Earn-in Agreement" means this Earn-in Agreement together with all
Exhibits and other information appended hereto.
1.10 "Earn-in Expenditures" means the issuance of the Hecla Mining
Warrants (subject to the issuance of the Great Basin Warrants) and other
expenditures including Assets acquired by Hecla Ventures for Earn-in Activities
for the benefit of the Properties.
1.11 "Effective Date" means the date set forth on Page 1 of this
Earn-in Agreement.
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1.12 "Expenditure Commitment" means the minimum sum Hecla Ventures must
spend on Earn-in Expenditures (pursuant to the Expenditure Schedule that is
found in Exhibit E) during each Annual Expenditure Commitment Period.
1.13 "Expenditure Commitment Period" means each year (set out in the
Expenditure Schedule that is found in Exhibit E and/or an approved Program and
Budget under Section 9.3) during which the corresponding Annual Expenditure
Commitment is to be spent.
1.14 "Expenditure Schedule" means Exhibit E.
1.15 "Feasibility Study" means a study of the feasibility of developing
and operating one or more mine(s) on the Properties, including an analysis of
economic, geological, engineering, environmental, regulatory and other
considerations, and containing the level of detail customary in the industry for
a feasibility study presented to financial institutions for the purpose of
seeking and obtaining financing for the development of a mine (with all
estimates developed to an accuracy within +/-10%).
1.16 "Guarantors" means Great Basin Gold Ltd. ("Great Basin") and Hecla
Mining Company ("Hecla Mining").
1.17 "Initial Feasibility Study" or "Prefeasibility Study" means a
study of the feasibility of developing and operating a mine on the Properties,
including an analysis of economic, engineering, geological, environmental,
regulatory and other considerations, and containing the level of detail
customary in the industry to determine whether the veins, ore bodies or other
targets identified in Stage I of Earn-in Activities are of sufficient interest
to the Parties to proceed with Stage II of Earn-in Activities (with all
estimates developed to an accuracy within +/-15%).
1.18 "Operating Agreement" means that agreement, attached to this
Earn-in Agreement as Exhibit F, which is to be effective between Rodeo Creek and
Hecla Ventures upon Hecla Ventures' fulfillment of the requirements set out in
Article V, Section 5.1 of this Earn-in Agreement.
1.19 "Participating Interest" means the percentage interest of a
Participant in the Properties, Products and all other rights and obligations
arising under this Earn-in Agreement. From the Effective Date hereof through
completion of Earn-in Activities, and only for purposes of implementing Earn-in
Activities, Hecla Ventures and Rodeo Creek shall each be deemed to have a fifty
percent (50%) Participating Interest.
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1.20 "Parties" means Rodeo Creek and Hecla Ventures and any other
persons or entities that become subject to this Earn-In Agreement in accordance
with the provisions hereof. Great Basin and Hecla Mining are Parties to this
Earn-In Agreement only with regard to their respective obligations:
(1) as Guarantors under Recitals D and E, and Sections 2.3 and 2.6;
(2) under Sections 2.4 and 2.7 concerning certain representations and
warranties; and
(3) to issue their respective Warrants pursuant to Article V and
Exhibits E, G and H.
1.21 "Participants" means Rodeo Creek and Hecla Ventures.
1.22 "Payments" means those payments identified in Exhibit E.
1.23 "Prime Rate" means a prime rate listed in the Wall Street Journal
(source: Federal Reserve).
1.24 "Products" means all ores, minerals and mineral resources produced
from the Properties under this Earn-In Agreement.
1.25 Programs and Budgets are as defined under Section 9.3.
1.26 "Property or Properties" means those interests in real property
and all mineral estates (and portions thereof) therein described in Exhibit A
and all other interests in real property within the Area of Interest which are
made subject to this Agreement subject to the obligations pertaining thereto
under applicable law or pursuant to Underlying Agreements noted on Exhibit A.
1.27 "Term" means the term of this Earn-in Agreement as defined in
Article III.
1.28 "Underlying Agreements" means those agreements pursuant to which
Rodeo Creek or any Affiliate holds and interest in the Properties with Newmont
Mining Corp. and certain other parties all of which are more particularly
described in Exhibit A.
All words not defined herein shall first be construed as commonly used in the
mining industry. If there is no such usage in the mining industry then such
words shall be given its common understanding.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
2.1 Capacity. Each of the Parties represents as follows:
(a) that it is a corporation duly incorporated and in good
standing in its state or jurisdiction of incorporation and that it is qualified
to do business and is in good standing in those states or jurisdictions where
necessary in order to carry out the purposes of this Earn-in Agreement;
(b) that it has the capacity to enter into and perform this
Earn-in Agreement and all transactions contemplated herein and that all
corporate and other actions required to authorize it to enter into and perform
this Earn-in Agreement have been properly taken;
(c) that it will not breach any other agreement or arrangement
by entering into or performing this Earn-in Agreement; and
(d) that this Earn-in Agreement has been duly executed and
delivered by it and is valid and binding upon it in accordance with its terms.
2.2 Rodeo Creek's Representations and Warranties. Rodeo Creek
represents and warrants that, with respect to the Properties:
(a) Rodeo Creek is in possession of and has the interests in
the Properties as described in Exhibit A and subject to the Underlying
Agreements;
(b) To the best of its information and belief and subject to
the paramount title of the United States, (i) the unpatented mining claims were
properly laid out and monumented; (ii) all required location work was properly
performed; (iii) location notices and certificates were properly recorded and
filed with appropriate governmental agencies; (iv) all assessment work has been
performed, or fee payments in lieu thereof made, as required to hold the
unpatented mining claims through the assessment year ending August 31, 2002; (v)
all affidavits of assessment work and other filings required to maintain the
claims in good standing have been properly and timely recorded or filed with
appropriate governmental agencies; (vi) the claims are free and clear of
defects, liens or encumbrances arising by, through or under Rodeo Creek; (vii)
there are no conflicting claims; and (viii) there are no pending or threatened
actions, suits or proceedings involving the mining claims;
(c) To the best of its information and belief, the Properties
are free and clear of all defects, liens and encumbrances except for those
specifically identified on Exhibit A hereto and except for those which would not
have a material adverse effect on the usage contemplated herein;
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(d) There is no judgment outstanding or litigation, proceeding
or governmental investigation pending or threatened against Rodeo Creek, or the
Properties, which would have an adverse effect on the title or interest of Rodeo
Creek in or to the Properties or Rodeo Creek's power or right to sell, convey,
transfer or assign the mineral estate on the Properties, nor has Rodeo Creek
received any communication asserting or threatening any adverse claim to any
part of the Properties;
(e) Rodeo Creek has made or shall make, pursuant to Article
XVI of this Earn-in Agreement, available to Hecla Ventures all information and
data regarding the existence of minerals within the Properties, and all
information concerning record, possessory, legal or equitable title to the
Properties which is within Rodeo Creek's knowledge, possession or control;
(f) To the best of Rodeo Creek's knowledge information and
belief and except as disclosed to the appropriate environmental regulatory
authorities, there has never been any: 1) release, spill, discharge, leak,
emission, escape, dumping or any material release of any kind of any toxic or
hazardous substances as defined under any local, state or federal regulation,
laws or statutes, from, on, in or under Rodeo Creek's Properties or into any
environment surrounding the Properties, except for those releases permissible
under such regulations, laws or statutes or otherwise allowable under applicable
permits; 2) disposal of toxic or hazardous substances or toxic or hazardous
wastes on the Properties or related to the Properties; and, 3) material storage
or treatment of toxic or hazardous substances or toxic or hazardous wastes on,
at, or related to the Properties;
(g) To the best of its information and belief, Rodeo Creek is
in compliance in all material respects with all federal, state and local laws,
rules and regulations relating to or affecting the Properties, and has obtained,
maintained in full force and effect, and operated in substantial compliance with
all authorizations, licenses, permits, easements, consents, certificates and
orders of any governmental or regulatory body relating to or affecting the
Properties; and operations of Rodeo Creek and its agents or contractors on, at,
or related to the Properties have not resulted in any violations of federal,
state or local laws, rules, regulations, ordinances or orders which would have
an adverse effect on the usage contemplated herein;
(h) There are no existing mineral production or other
royalties of any kind which are payable with respect to the Properties or
mineral substances mined therefrom other than those specifically identified in
Exhibit A;
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(i) Rodeo Creek is not a party to nor has any knowledge of any
existing oral or written agreement of any kind which does or could have any
adverse impact whatsoever on record or possessory title to the mineral estate of
the Properties and/or the access, exploration, development or mining of same;
(j) To the best of Rodeo Creek's knowledge, information and
belief there are no existing restrictions which would have any adverse effect on
the right to explore, develop and mine mineral substances from the Properties,
excluding restrictions contained in applicable laws, statutes, regulations,
permits and other agency directives including Bureau of Land Management ("BLM"),
Nevada Division of Environmental Protection ("NDEP") and Traditional Cultural
Property on the Properties, and other Nevada State and Federal agencies;
(k) To the best of Rodeo Creek's knowledge, information, and
belief, Rodeo Creek is unaware of any material facts or circumstances, which
have not been disclosed or made available to Hecla Ventures or been deliberately
withheld from Hecla Ventures, which Hecla Ventures should be aware of in order
to prevent the representations in this Section 2.2 from being misleading.
(l) Rodeo Creek and its Affiliates shall conduct its other
business activities near, under and adjacent to the Area of Interest in a manner
that does not unreasonably interfere with, hinder or delay Earn-in Activities.
2.3 Great Basin, on behalf of Rodeo Creek, hereby warrants and
covenants with Hecla Ventures that it does hereby unconditionally and
irrevocably guarantee to Hecla Ventures all of Rodeo Creek's representation,
warranties and obligations hereunder.
2.4 For Great Basin only, Great Basin represents and warrants, that its
publicly filed corporate disclosure records with regulatory authorities are up
to date and correct in all material respects.
2.5 Hecla Ventures' represents and warrants that it has or will obtain
the necessary labor and equipment to conduct Earn-in Activities.
2.6 Hecla Mining, on behalf of Hecla Ventures hereby warrants and
covenants with Rodeo Creek that it does hereby unconditionally and irrevocably
guarantee to Rodeo Creek all of Hecla Ventures' representations, warranties and
obligations hereunder.
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2.7 For Hecla Mining only, Hecla Mining represents and warrants that
its publicly filed corporate disclosure record with regulatory authorities is up
to date and correct in all material respects.
2.8 Materiality of Representations. Al representations warranties and
covenants made in this Article II are material to this Earn-in Agreement and the
Parties' intent in entering into it.
ARTICLE III
TERM OF EARN-IN AGREEMENT
The Term of this Earn-in Agreement shall commence as of the Effective
Date and shall automatically terminate after four (4) years thereof or upon
execution of the Operating Agreement in accordance with Sections 5.5 and 8.3,
unless this Earn-in Agreement is terminated earlier pursuant to Article VIII or
extended by amendment upon the Parties' mutual written agreement.
ARTICLE IV
RELATIONSHIP OF THE PARTIES
4.1 No Partnership. Nothing contained in this Earn-in Agreement shall
be deemed to constitute any Party the partner of another, nor, except as
otherwise herein expressly provided, to constitute any Party the agent or legal
representative of another, nor to create any fiduciary relationship between or
among them. It is not the intention of the Parties to create, nor shall this
Earn-in Agreement be construed to create, any mining, commercial or other
partnership. No Party shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other Party, except as otherwise
expressly provided herein. The rights, duties, obligations and liabilities of
the Parties shall be several and not joint or collective. Each Party shall be
responsible only for its obligations as herein set out and shall be liable only
for its share of the costs and expenses as provided herein, it being the express
purpose and intention of the Parties that their ownership of assets and the
rights acquired hereunder shall be as tenants in common. Each Party shall
indemnify, defend and hold harmless the other Party, its directors, officers,
employees, agents and attorneys from and against any and all losses, claims,
damages and liabilities (including litigation costs and attorneys' fees) arising
out of any act or any assumption of liability by the indemnifying Party, or any
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of its directors, officers, employees, agents and attorneys done or undertaken,
or apparently done or undertaken, on behalf of any other Party, except pursuant
to the authority expressly granted herein or as otherwise agreed in writing
between the Parties.
4.2 Federal Tax Elections and Allocations. The Parties agree that their
relationship pursuant to this Earn-in Agreement shall not constitute a tax
partnership within the meaning of Section 761(a) of the United States Internal
Revenue Code of 1986, as amended.
4.3 State & Provincial Income Tax. The Parties also agree that their
relationship shall be treated for Canadian Federal, U.S. State and Canadian
Provincial income tax purposes in the same manner as it is for U.S. Federal
income tax purposes.
4.4 Other Business Opportunities. Except as expressly provided in this
Earn-in Agreement, each Party shall have the right independently to engage in
and receive full benefits from business activities, whether or not competitive
with the operations under this Earn-in Agreement, without consulting any other
Party. The doctrines of "corporate opportunity" or "business opportunity" shall
not be applied to any other activity, venture, or operation of any Party, and,
except as otherwise provided in this Earn-in Agreement, no Party shall have any
obligation to any other with respect to any opportunity to acquire any property
at any time.
4.5 Waiver of Right to Partition. The Parties hereby waive and release
all rights of partition, or of sale in lieu thereof, or other division of
Assets, including any such rights provided by applicable law.
4.6 Transfer or Termination of Rights to Properties. Except as
otherwise provided in this Earn-in Agreement, no Party shall transfer all or any
part of its interest in the Properties or this Earn-in Agreement or otherwise
permit or cause such interests to terminate.
4.7 Implied Covenants. There are no implied covenants contained in this
Earn-in Agreement other than those of good faith and fair dealing.
4.8 Employees. Employees of the respective Parties are not and shall
not be employees of the other Parties or of any venture, which may be comprised
of the Parties.
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ARTICLE V
INITIAL CONTRIBUTION
5.1 Properties and Required Earn-in Expenditures.
(a) Rodeo Creek, hereby makes available to Hecla Ventures the
Properties for the purposes of this Earn-in Agreement and all existing technical
data and other information concerning the Properties. Upon receipt of each
Tranche of Hecla Mining Warrants (as defined below) Rodeo Creek will forthwith
issue to Hecla Ventures two year warrants to purchase common shares in Great
Basin ("Great Basin Warrants") as follows: 1) 1 million Great Basin Warrants
upon receipt of Tranche 1 Hecla Mining Warrants; 2) 500,000 Great Basin Warrants
upon receipt of Tranche 2 Hecla Mining Warrants; and 3) 500,000 Great Basin
Warrants upon receipt of Tranche 3 Hecla Mining Warrants. Great Basin Warrants
will be exercisable at the weighted average daily closing prices for the twenty
(20) trading days on the TSX Venture Exchange immediately prior to issuance and
done substantially in accordance with the form Warrant Agreement attached hereto
in Exhibit H.
(b) Hecla Ventures hereby agrees to fund one-hundred percent
(100%) of Stage I Earn-in Activities and shall exchange with Great Basin 2
million (2,000,000) two year warrants ("Tranche 1") to purchase Hecla Mining
common stock $0.25 par value exercisable at the weighted average daily closing
prices on the New York Stock Exchange for the twenty (20) trading days
immediately prior to the date of the Warrant Agreement ("Exercise Price") which
for Tranche 1 is also the Effective Date. Hecla Ventures agrees to issue the
Warrants within thirty (30) days after the warrant date to Great Basin as
attached hereto as Exhibit G.
(c) Hecla Ventures hereby commits to initiate and fund Stage I
Earn-in Activities on the Effective Date, subject to receipt of Stage I permits,
in an expeditious manner and to complete same on a best efforts diligent basis,
within 24 months of the Effective Date, provided that the Earn-in Activities are
not subjected to a public Environmental Impact Statement (under NEPA) or other
public review and comment process, and to completely fund (100%) of Stage I
(estimated to take approximately twelve (12) months) such Earn-in Activities.
Within sixty (60) days after completion of Stage I Earn-in Activities, Hecla
Ventures must elect to either: (1) proceed with and fund 100% of the estimated
$11.5 million Stage II Program of Earn-In Activities as approved by the
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Management Committee; (2) vest by making the payment to the Joint Venture upon
its actual formation under the Operating Agreement and taking other action as
set forth in section 5.5(b); or (3) elect not to proceed with Stage II and
terminate this Earn-In Agreement. If Hecla Ventures elects to proceed with Stage
II Earn-in Activities or funding in lieu, it will issue one million (1,000,000)
Hecla Mining Warrants ("Tranche 2") dated and priced on the election date,
within ten (10) days thereafter in the form of the Warrant Agreement in Exhibit
G, exercisable at the Exercise Price and in accordance with the terms and
conditions of the Warrant Agreement. If however, Hecla Ventures elects not to
proceed with Stage II of Earn-in Activities or funding in lieu, it shall provide
written notice to Rodeo Creek. Notwithstanding any provision in this Earn-in
Agreement to the contrary, if Hecla Ventures does not notify Rodeo Creek in
writing within the required time of its choice to proceed, or to terminate or
elects not to participate in Stage II Earn-in Activities, it shall have no
further rights or obligations hereunder (except the obligation to reclaim the
Properties for all Earn-in Activities it has conducted) and the Parties shall
execute and record the Termination and Release Agreement in substantially the
same form as Exhibit A, Part IV. To complete the Earn-In Activities, Hecla
Ventures will issue Rodeo Creek an additional one million (1,000,000) two year
warrants (dated and priced on the date that Hecla Ventures gives notice to Rodeo
Creek that Stage II Earn-In Activities are complete or Hecla Ventures elects to
fund Stage II in lieu) to purchase Hecla Mining common stock ("Tranche 3")
exercisable at the Exercise Price and in accordance with the terms and
conditions of the Warrant Agreement. The Tranche 3 Warrants will be issued
within 30 days from the date of the Warrants. After vesting of Hecla Ventures'
Participating Interest, each of the Participants shall be obligated to fund such
activities in accordance with its Participating Interest as defined in Exhibit F
attached hereto and determined thereunder from time to time.
5.2 Reasonable Earn-in Activities. Hecla Ventures' Earn-in Activities
shall be conducted in accordance with Exhibit E at the direction of the
Management Committee and in accordance with all applicable laws, regulations and
good mining industry standards in the United States.
5.3 Credit for Excess Earn-in Expenditures. Earn-in Expenditures made
by Hecla Ventures in excess of that required in a given Annual Expenditure
Commitment Period shall be credited to subsequent Annual Expenditure Commitments
for the following Annual Expenditure Commitment Periods.
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5.4 Completion of Required Earn-in Expenditures. Within thirty (30)
days after completing Earn-in Activities (as provided in Section 5.1 and in
accordance with Exhibit E), Hecla Ventures shall provide notice to Rodeo Creek
that it has completed Earn-in Expenditures. Together with the notice, Hecla
Ventures shall provide sufficient detail and supporting documentation to permit
Rodeo Creek to review, audit and reasonably verify the Earn-in Expenditures.
5.5 Transfer. Hecla Ventures shall have earned a vested and undivided
Participating Interest in the Properties subject to the Operating Agreement by
completing either of the requirements in subparagraphs (a) OR (b) OR (c) of this
section 5.5:
(a) Upon completion of Stage II Earn-in Activities and issuing
Rodeo Creek Tranche 3 Hecla Mining Warrants set forth in Exhibit E and G, Hecla
Ventures shall have a vested right to an undivided fifty percent (50%)
Participating Interest in the Properties effective as of the date Hecla Ventures
provides notice pursuant to Section 5.4 above. Within thirty (30) days after
providing notice verifying that Hecla Ventures has made Earn-in Expenditures
consistent with the requirements of this Article V:
(1) Rodeo Creek shall convey to Hecla Ventures an undivided
fifty percent (50%) of Rodeo Creek's interest in the
Properties, by executing, acknowledging and delivering to
Hecla Ventures a good and sufficient conveyance in the form of
Exhibit C to this Earn-in Agreement; and,
(2) Rodeo Creek and Hecla Ventures shall cause to become
effective an Operating Agreement on the Properties in the form
of the attached Exhibit F, which 1) shall include the
Properties and 2) shall have an effective date as of the date
of the above-described notice from Hecla Ventures to Rodeo
Creek; and,
(3) Rodeo Creek shall issue to Hecla Ventures the Great Basin
Warrants set forth in Exhibit E and H.
(b) By completing Stage I Earn-In Activities and providing
written notice to Rodeo Creek that Hecla Ventures elects to vest by making a
payment to the Joint Venture in an amount of $21.8 million dollars (U.S.) less
actual costs to complete Stage I of Earn-In Activities (excluding overruns
greater than 10%) of a Management Committee approved Program and Budget; and
issue Rodeo Creek the Tranche 2 and Tranche 3 Hecla Mining Warrants set forth in
Exhibit E and G. Within thirty (30) days after receiving the preceding vesting
payment:
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(1) Rodeo Creek shall convey to Hecla Ventures an
undivided fifty percent (50%) of Rodeo Creek's
interest in the Properties, by executing,
acknowledging and delivering to Hecla Ventures a good
and sufficient conveyance in the form of Exhibit C to
this Earn-in Agreement; and,
(2) Rodeo Creek and Hecla Ventures shall cause to become
effective an Operating Agreement on the Properties in
the form of the attached Exhibit F, which 1) shall
include the Properties and 2) shall have an effective
date as of the date of the above-described notice
from Hecla Ventures to Rodeo Creek; and
(3) Rodeo Creek shall issue to Hecla Ventures the Great
Basin Warrants set forth in Exhibit E and H.
(c) By Hecla Ventures completing Stage I and thereupon
completing either Stage II of Earn-in Activities and achieving Commercial
Production; and in either such event issuing Rodeo Creek the Tranche 2 and
Tranche 3 Warrants;
(1) Rodeo Creek shall convey to Hecla Ventures an
undivided fifty percent (50%) of Rodeo Creek's
interest in the Properties by executing,
acknowledging and delivering to Hecla Ventures a good
and sufficient conveyance in the form of Exhibit C to
this Earn-in Agreement; and,
(2) Rodeo Creek and Hecla Ventures shall cause to become
effective an Operating Agreement on the Properties in
the form of the attached Exhibit F, which 1) shall
include the Properties and 2) shall have and
effective date as of the date of the above described
notice from Hecla Ventures to Rodeo Creek; and
(3) Rodeo Creek shall issue to Hecla Ventures the Great
Basin Warrants set forth in Exhibit E and H.
ARTICLE VI
MAINTENANCE AND ABANDONMENT OF PROPERTIES
6.1 Maintenance of Properties. Hecla Ventures as Manager shall take all
steps necessary to maintain at its expense, as part of the Earn-in Activities,
of the Properties (pursuant to the Underlying Agreements and all general legal
requirements relating thereto) all necessary payments on the Properties to
maintain them in good standing during the Term of this Earn-in Agreement.
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6.2 Assessment Work or Fees. During the term of this Earn-in Agreement,
Hecla Ventures as Manager shall also perform any annual assessment work required
to maintain such claims for any assessment year in which this Earn-in Agreement
has not expired or been terminated prior to thirty (30) days before the end of
such assessment year, and will make annual fee payments required to maintain
unpatented (or patented) mining claims included in the Properties for any
assessment year in which this Earn-in Agreement has not expired or been
terminated forty-five (45) days prior to the fee payment due date. Hecla
Ventures shall timely record, file and furnish to Rodeo Creek affidavits of such
performance and evidence of fee payment. Excepting for the August 2002
Properties filings and amounts due shall be paid by and filed by Rodeo Creek.
These 2002 amounts shall be reimbursed by Hecla Ventures to Rodeo Creek as part
of Earn-in Activities, within thirty (30) days of receipt of invoice from Rodeo
Creek. No Party shall be liable on account of holdings by any court or
governmental agency that the effects of any work elected and performed in good
faith by such Party are insufficient to constitute annual assessment work for
purposes of preserving title to such claims, provided that the work so done is
of the kind generally accepted as assessment work in the mining industry in the
United States and provided that such Party expended a total amount sufficient to
meet any minimum requirements during the required period of time with respect to
all such unpatented claims.
6.3 Abandonment of Properties. If either Participant desires to
abandon, release or surrender its rights to a part of the Properties at any
time, it shall notify the other Participant and offer to convey to the other
Participant at no cost the part of those parts of the Properties it intends to
abandon, release or surrender. If the other Participant does not accept the
offer within thirty (30) days of the notice, the notifying Participant may
abandon, release, or surrender that part of those Properties without liability
or obligation to the other Participant for such abandonment, release or
surrender but any liability for reclamation or to any third party arising before
such event shall be unaffected. Properties that are abandoned, released,
surrendered, or conveyed to the other Participant pursuant to this Section 6.3
shall cease to be part of the Properties and the Area of Interest.
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ARTICLE VII
AREA OF INTEREST
7.1 Proposed Acquisition of Properties. If during the Term of this
Earn-in Agreement, a Party or an Affiliate of any Party should acquire any
interest in real property (including any mineral interest or estate therein)
within the boundary of the Area of Interest, it shall notify the other Party
(referred to in this Article VII as "Other Party") within ten (10) days after
the acquisition and shall include in the notice a description of the interest in
real property and a statement of the total acquisition cost and any committed
work expenditures.
7.2 Election to Acquire Properties. The Other Party shall have a period
of thirty (30) days from receipt of such notice under Section 7.1 within which
to elect to subject the interest in real property to this Earn-in Agreement. If
a Participant elects to include the interest to this Earn-in Agreement, it shall
notify the other Participant and the interest in real property shall become a
part of the Properties subject to this Earn-in Agreement.
7.3 Excluded Acquisition. If the Other Party elects not to subject the
real property or interest in real property to this Earn-in Agreement during the
thirty (30) day period referenced in Section 7.1, the acquiring party shall hold
it free and clear of this Earn-in Agreement, and it will not be a part of the
Properties or the Area of Interest.
ARTICLE VIII
WITHDRAWAL AND TERMINATION
8.1 Termination. This Earn-in Agreement shall terminate as expressly
provided herein, unless earlier terminated by written agreement. Withdrawal by
Hecla Ventures in accordance with Section 8.2 shall be deemed to terminate this
Earn-in Agreement.
8.2 Hecla Ventures' Election to Withdraw and Terminate. Hecla Ventures
may withdraw from and terminate this Earn-in Agreement at any time subject to
its reclamation obligations herein provided and subject to Hecla Ventures
commitment to fund the estimated budget and program of the Stage I Earn-in
Activities. To withdraw, Hecla Ventures must provide Rodeo Creek with written
notice of withdrawal. The withdrawal shall be effective thirty (30) days after
the date the notice of withdrawal is sent to Rodeo Creek. Upon such withdrawal
and termination:
(a) This Earn-in Agreement shall terminate; and
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(b) Hecla Ventures shall quitclaim in favour of Rodeo Creek
any rights hereunder and shall ensure there are no liens or encumbrances on
Properties arising out of its Earn-in Activities hereunder. Hecla Ventures shall
thereupon have no further right, title, or interest in or to, the Properties, in
accordance with Article X of this Earn-in Agreement and any Real Property,
subject always to Hecla Ventures' obligations hereunder.
(c) Hecla Ventures shall make available all factual
exploration data, chips, core and rejects not previously provided to Rodeo
Creek. Hecla Ventures shall leave all Assets in reasonable working condition,
normal wear and tear excepted and will promptly remove all materials, supplies
and refuse as required by applicable laws and regulations from the Properties.
Rodeo Creek shall have the election respecting any Assets, the costs of which or
title to which have been included in the Earn-in Activities (such election to
made on 60-days' notice) to either require the conveyance of such Assets to
Rodeo Creek at no cost or to require their removal by Hecla Ventures. Hecla
Ventures shall be under no obligation to supply any interpretive reports or
conclusions of any type pertaining to the Properties.
8.3 Termination Upon Execution and Delivery of Operating Agreement. If
not terminated earlier, this Earn-in Agreement shall terminate upon the
Operating Agreement pursuant to Section 5.5, becoming effective.
8.4 Termination for Hecla Ventures' Failure to Make Annual Expenditure
Commitment. This Earn-in Agreement may be terminated by Rodeo Creek if Hecla
Ventures shall not have completed its Annual Expenditure Commitment on or before
the close of business on the last day of the Annual Expenditure Commitment
Period. Rodeo Creek shall provide notice thereof to Hecla Ventures in accordance
with Section 17.1, and Hecla Ventures shall have a period of ninety (90) days in
which to resolve or dispute any good faith unintended shortfall in the amount of
its Annual Expenditure Commitment. Any such termination shall not relieve Hecla
Ventures of its obligations hereunder and shall have the same effect as a
termination under Section 8.2.
8.5 Removal of Property. Hecla Ventures shall have a period of ninety
(90) days following the effective date of termination or expiration of this
Earn-in Agreement (unless the Operating Agreement has been entered into or Rodeo
Creek exercises its option to acquire at no cost any Assets, the costs of which
or title to which have been included in the Earn-in Activities) to remove at its
sole cost and expense all equipment, machinery, inventory or supplies and it
will so remove them.
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8.6 Termination and Release Agreement. Upon the completion of the
procedures under this Article VIII and the reclamation obligations in Article X
Hecla Ventures and Rodeo Creek shall execute the Termination and Release
Agreement under Exhibit A.
ARTICLE IX
OPERATIONS AND GOVERNANCE
9.1 Management Committee.
(a) Organization and Composition. Rodeo Creek and Hecla Ventures (the
"Participants") hereby establish a Management Committee consisting of four (4)
members to determine overall policies, objectives, procedures, methods and
actions under this Agreement. The Management Committee shall consist of two
member(s) appointed by Rodeo Creek and two member(s) appointed by Hecla
Ventures. Each Participant may appoint one or more alternates to act in the
absence of a regular member. Any alternate so acting shall be deemed a member.
Appointments shall be made or changed by notice to the other Participant prior
to the meeting at which the member is to act.
(b) Decisions. Each Participant, acting through its appointed members,
shall have one vote on the Management Committee. All decisions by the Management
Committee shall be made by majority vote. In the event of a deadlock on a
proposed Program and Budget or on any other management matters relating to this
Earn-in Agreement then the issue along with written reasons by each Participant
shall be given to the respective Presidents of the Participants for a period of
up to twenty-one (21) calendar days for them to discuss, document and resolve;
thereafter, a Management Committee meeting shall be reconvened within fourteen
(14) calendar days and after taking into consideration the Presidents' resolve
or unresolve, as documented, a new vote taken. If the vote is still deadlocked,
Manager shall have the deciding vote (after documenting reasons).
(c) Meetings. The Management Committee shall hold regular meetings at
least quarterly at a place to be designated by the Manager, or at other mutually
agreed places. The Manager shall give 30 days' notice to the Participants of
such regular meetings. Additionally, either Participant may call a special
meeting upon 15 days' notice to the Manager and the other Participant. In case
of an emergency, reasonable notice of a special meeting to consider the
emergency matter only shall suffice. There shall be a quorum if at least one
member representing each Participant is present in person or by conference
telephone; provided, however, that if a quorum is not present, those members in
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attendance may adjourn the meeting to the same time and place seven days later,
and provided further that a quorum shall be deemed present at the adjourned
meeting if at least one Participant is represented. Each notice of a regular
meeting shall include an itemized agenda prepared by the Manager in the case of
a regular meeting, or by the Participant calling the meeting in the case of a
special meeting, but any matters may be considered in any type of meeting with
the consent of all Participants. The Manager shall prepare minutes of all
meetings and shall distribute copies of such minutes to the Participants within
10 days after the meeting. The minutes, when signed by all Participants, shall
be the official record of the decisions made by the Management Committee and
shall be binding on the Manager and the Participants. If the Manager's personnel
are required to physically (rather than by phone) attend a Management Committee
meeting, reasonable costs incurred in connection with such attendance shall be
reimbursed to the Manager in accordance with the Accounting Procedure (Exhibit
B). All other costs of attendance shall be paid by the Participants
individually.
(d) Action Without Meeting. In addition to or in lieu of meetings, the
Management Committee may hold telephone conferences as long as no Participant's
representative objects and so long as all decisions are immediately confirmed in
writing by the Participants.
(e) Matters Requiring Approval. Except as otherwise delegated to the
Manager in Section 9.2, the Management Committee shall have exclusive authority
to determine all management matters related to this Agreement.
9.2 Manager.
(a) Appointment. The Participants hereby appoint Hecla
Ventures as the Manager with management responsibility for Earn-in Activities.
Hecla Ventures hereby agrees to serve until it resigns as provided in Section
9.2(d).
(b) Powers and Duties of Manager. Subject to the terms and
provisions of this Agreement, the Manager shall have the following powers and
duties and obligations which shall be discharged in accordance with adopted
Programs and Budgets:
(1) The Manager shall manage, direct and control
Earn-in Activities and shall prepare and present to the Management Committee
proposed Programs and Budgets as provided in Section 9.3 of this Earn-in
Agreement.
(2) The Manager shall implement the decisions of the
Management Committee, shall make all expenditures necessary to carry out adopted
Programs, and shall promptly advise the Management Committee if Manager lacks
sufficient funds to carry out its responsibilities under this Agreement. If
Hecla Ventures is the Manager, lack of sufficient funds shall be deemed a
default hereunder.
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(3) The Manager shall: (i) purchase or otherwise
acquire all material, supplies, equipment, water, utility and transportation
services required for Earn-in Activities, such purchases and acquisitions to be
made on the best terms available, taking into account all circumstances; and
(ii) obtain such customary warranties and guarantees as are available in
connection with such purchases and acquisitions.
(4) The Manager shall: (i) make or arrange for all
payments required by leases, subleases, surface use agreements, licenses,
permits, contracts and other agreements related to the Assets and Properties;
(ii) pay all taxes, assessments and like charges on Earn-in Activities except
taxes determined or measured by a Participant's sales revenue or net income; and
(iii) do all other acts reasonably necessary to maintain unencumbered title to
and good condition of the Assets and the Properties. The Manager shall have the
right to contest in the courts or otherwise, the validity or amount of any
taxes, assessments or charges if the Manager deems them to be unlawful, unjust,
unequal or excessive, or to undertake such other steps or proceedings as the
Manager may deem reasonably necessary to secure a cancellation, reduction,
readjustment or equalization thereof before the Manager shall be required to pay
them, but in no event shall the Manager permit or allow title to the Assets and
Properties to be lost as the result of the nonpayment of any taxes, assessments
or like charges.
(5) The Manager shall in the name of Rodeo Creek: (i)
apply for all necessary permits, licenses and approvals; (ii) comply with
applicable federal, state and local laws and regulations; (iii) notify promptly
the Management Committee of any allegations of substantial violation thereof;
and (iv) prepare and file all reports or notices required for Earn-in
Activities. The Manager shall not be in breach of this provision if a violation
has occurred in spite of the Manager's good faith efforts to comply, and the
Manager has timely cured or disposed of such violation through performance, or
payment of fines and penalties.
(6) The Manager shall prosecute and defend, but shall
not initiate without consent of the Management Committee, all litigation or
administrative proceedings arising out of Earn-in Activities. The non-managing
Participant shall have the right to participate, at its own expense, in such
litigation or administrative proceedings. The non-managing Participant shall
approve in advance any settlement involving payments, commitments or obligations
in excess of $100,000 in cash or value, unless part of an approved Program and
Budget.
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(7) The Manager shall provide insurance for the
Earn-in Activities as provided in Exhibit B1.
(8) The Manager may dispose of Assets or Properties
only with authorization from the Management Committee but may dispose of
Properties only with the authorization of all of the Participants.
(9) The Manager shall have the right to carry out its
responsibilities hereunder through agents, Affiliates or independent contractors
but shall nevertheless remain responsible for the proper carrying out of such
responsibilities.
(10) The Manager shall perform or cause to be
performed during the term of this Agreement all assessment and other work or pay
fees or rental payments required by law in order to maintain any unpatented
mining claims that are included in the Properties. The Manager shall have the
right to perform any assessment work pursuant to a common plan of Exploration,
Development, Construction, Operating or Reclamation and continued actual
occupancy of such claims and sites shall not be required. The Manager shall not
be liable on account of any determination by any court or governmental agency
that work performed by the Manager does not constitute required annual
assessment work or occupancy for the purposes of preserving or maintaining
ownership of the claims, provided that any work done is in accordance with the
adopted Program and Budget. The Manager shall timely record with the appropriate
county and file with the appropriate United States agency, affidavits in proper
form attesting to the performance of assessment work or notices of intent to
hold in proper form, and allocating therein, to or for the benefit of each
claim, at least any minimum amount, if any, required by law to maintain such
claim or site.
(11) If authorized by the Management Committee, the
Manager may: (i) locate mine facilities, mill site or tunnel site, (ii) apply
for patents or mining leases or other forms of mineral tenure for any such
unpatented claims or sites, (iii) convert any unpatented claims or mill sites
into one or more leases or other forms of mineral tenure pursuant to any federal
law hereafter enacted.
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(12) The Manager shall keep and maintain all required
accounting and financial records pursuant to the Accounting Procedure and in
accordance with customary cost accounting practices in the mining industry.
(13) At all reasonable times the Manager shall
provide the Management Committee or the representative of any Participant, upon
the request of any member of the Management Committee, access to, and the right
to inspect, audit and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical, accounting and
financial records, and other information acquired in Earn-in Activities; such
information will be provided to the Management Committee at the cost set forth
in the Accounting Procedure and if additional copies are required by a
Participant, they will be paid for by that Participant. In addition, the Manager
shall allow the non-managing Participant, at the latter's sole risk and expense,
and subject to reasonable safety regulations, to inspect the Assets and Earn-in
Activities at all reasonable times, so long as the inspecting Participant does
not unreasonably interfere with Earn-in Activities.
(14) The Manager shall prepare or have prepared and
submit to the Management Committee a report containing a description and
analysis of the methods and costs and all other relevant aspects of reclaiming
the Properties pursuant to the requirements of applicable laws, rules and
regulations governing the reclamation of Earn-in Activities on the Properties,
the purpose of which shall be to establish a fund to finance costs and expense
anticipated to be incurred in connection with the reclamation or reclamation
bonding of the Properties. The Management Committee shall determine, based upon
the reclamation report, the total cost, including capital budget, which the
Management Committee reasonably estimates will be required to reclaim the
Properties, including a schedule of the timing of the capital requirements for
such purpose, and shall promptly establish a reclamation fund to meet such
capital requirements and any bonding or financial assurance requirements. The
reclamation fund for Earn-in Activities shall be funded entirely by contribution
of Hecla Ventures. The amounts determined by the Management Committee for
Purposes of funding the reclamation fund shall be included in the applicable
Programs and Budgets for the related periods. Manager may withhold a portion of
proceeds from sale of Products in an amount sufficient to meet expected
reclamation and expenditures as approved by the Management Committee.
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(15) The Manager may conduct environmental audits or
reviews on an annual or as needed basis, and the cost and expense of such audits
or reviews shall be charged to Hecla Ventures.
(16) Manager shall make withholdings from payments to
Participants that are required by applicable law.
(17) The Manager shall undertake all other activities
reasonably necessary to fulfill the foregoing.
(c) Standard of Care. The Manager shall conduct all Earn-in
Activities in a good, workmanlike, safe and efficient manner, in accordance with
sound mining and other applicable industry standards and practices, and in
accordance with the terms and provisions of leases, subleases, licenses,
permits, plans of operation, contracts, Underlying Agreements, and other
agreements pertaining to Assets and Properties. The Manager shall not be liable
to the non-managing Participant for any act or omission resulting in damage or
loss to the other Participants except to the extent caused by or attributable to
the Manager's bad faith conduct, willful misconduct, or gross negligence.
(d) Resignation; Deemed Offer to Resign. If Hecla Ventures
resigns or is deemed to resign as Manager, (voluntary resignation may only be
made upon three months' prior written notice to the other Participant) prior to
completion of its Earn-In Activities without the consent of Rodeo Creek, this
Earn-In Agreement will be deemed to have terminated subject to the provisions of
withdrawal and termination in Article 8. If any of the following shall occur,
the Manager shall be deemed to have offered to resign, which offer shall be
accepted by the other Participant, if at all, at any time within ninety (90)
days following such deemed offer:
(1) Manager terminates this Agreement pursuant to
Article VIII; or
(2) The Manager fails to perform or in good faith,
commence a material obligation imposed upon it under this Agreement and action
to cure said failure is not initiated within thirty (30) days after notice from
the other Participant demanding performance; or
(3) The Manager fails to pay or contest in good faith
its debts within sixty (60) days after they are due; or
(4) A receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for a substantial part of its assets
is appointed and such appointment is neither made ineffective nor discharged
within sixty (60) days after the making thereof, or such appointment is
consented to, requested by, or acquiesced in by the Manager; or
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(5) The Manager fails generally to pay its debts as
such debts become due; or takes corporate or other action in furtherance
thereto; or
(6) Entry is made against the Manager of a judgment,
decree or order for relief affecting a substantial part of its assets by a court
of competent jurisdiction in an involuntary case commenced under any applicable
bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter
in effect.
(e) Payments to Manager. The Manager shall be compensated a
fee for its services and reimbursed for its costs hereunder in accordance with
the Accounting Procedure.
(f) Transactions With Affiliates. If the Manager engages
Affiliates to provide services hereunder, it shall do so on terms in accordance
with the Accounting Procedure.
9.3 Programs and Budgets.
(a) Operations Pursuant to Programs and Budgets. Except as set
forth in Sections 9.2(b)(6), 9.3(g) and 9.3(h), Earn-in Activities shall be
conducted, expenses shall be incurred, and Assets shall be acquired only
pursuant to adopted Programs and Budgets.
(b) Types of Programs. Five general types of Programs may be
proposed: Exploration, Development, Construction, Operating and Reclamation
Programs.
(1) An "Exploration Program" shall be a Program
conducted within the Area of Interest, and it shall include but not be limited
to geological mapping, geochemical sampling, geophysical surveys, drilling, bulk
sampling and other such work expended to ascertain the existence, location,
quantity and quality of deposits of Products within the Area of Interest.
(2) A "Development Program" shall be a Program
conducted within the Area of Interest that shall include but not be limited to
drilling, test mining, preparing any Feasibility Study, other than the
Prefeasibility Study, and other such work in preparation for the removal and
recovery of Products within the Area of Interest, but does not encompass, by
itself, construction, operation, maintenance and attendant activities designed
to bring a Mine into production in reasonable commercial quantities.
(3) A "Construction Program" shall be a Program
conducted within the Area of Interest that is designed to bring a Mine into
production in reasonable commercial quantities, and that provides for its
subsequent operation. It shall include but not be limited to engineering and
design work, and work expended toward development of deposits of Products, as
well as construction, operation, maintenance, mine expansions, ore definition,
mill/processing scenarios, including a proposed alternative, time schedule for
Construction Program and attendant activities.
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(4) An "Operating Program" shall be a Program
conducted with the Area of Interest that is designed to operate a Mine in
reasonable commercial quantities as defined by Commercial Production and at the
onset in conformance with the Feasibility Study, mine operating permit(s) or
other objective document(s). It shall include mining, transportation,
engineering, geology, milling (on-site or off-site) of deposits and related
Products.
(5) A "Reclamation Program" shall be a Program
conducted with the Area of Interest that shall include but not be limited to
reclaiming disturbed lands, water quality monitoring and treatment, if required,
disposal of Assets and other attendant activities in accordance with applicable
laws, regulations and permit requirements to reclaim and close a mine.
(c) Preparation, Presentation and Content of Programs and
Budgets.
(1) Content of Programs. Proposed Programs and
Budgets shall be prepared by the Manager. Each Program shall be accompanied by
and include a corresponding Budget and shall designate precisely the area on
which Earn-in Activities are to be performed, describe work to be performed, and
state the estimated period of time required to perform the work. Each Program
shall state whether it is an Exploration, Development, Construction, Operating,
or Reclamation Program.
(2) Content of Budgets. Each Budget shall be prepared
in reasonable detail and shall set forth each expenditure of $50,000 or more for
a budgeted item which, under generally accepted accounting treatment, would be
capitalized. Each Budget Program, as near as is practicable, shall show the
estimated expenditures for each month covered by the Budget period.
(3) Initial Program and Budget. The Management
Committee approved Initial Program and Budget is attached hereto in Exhibit E.
(4) Duration. An Exploration, Operating and
Reclamation Programs and Budget is anticipated to be for a period of one
calendar year from date of commencement. A Development or Construction Program
and Budget is anticipated to extend for a period of at least one year, but may
extend for such longer period as is reasonably necessary to complete the
Program, but in no event (save force majeure) longer than two years.
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(5) Review. Each adopted Program and Budget,
regardless of length, shall be reviewed at least quarterly (supported by
detailed reports of costs and technical progress) at a regular meeting of the
Management Committee. During the period encompassed by any Program and Budget,
and at least two months prior to its expiration, a proposed Program and Budget
for the succeeding period shall be prepared by the Manager and submitted to the
Participants.
(d) Submittal and Approval of Proposed Programs and Budgets.
(1) Submittal of Manager's Program and Budget. Within
30 days after the Manager submits a proposed Program and Budget to the
Management Committee, the non-managing Participant shall submit to the
Management Committee:
(i) Notice that the non-managing Participant
approves of the Program and Budget; or
(ii) Proposed modifications of the proposed
Program and Budget, which shall include detailed specific objections
regarding the proposed Program and Budget.
If a non-managing Participant fails to give either of the foregoing responses
within the allotted time, the failure shall be deemed an approval by the
non-managing Participant of the Manager's proposed Program and Budget. If a
non-managing Participant makes a timely submission to the Management Committee
pursuant to Section 9.3(d)(ii), then the Management Committee shall within the
following 30 days meet to consider the proposed Program and Budget and proposed
modifications. At that meeting, the Management Committee shall seek to develop a
Program and Budget acceptable to both the Participants. Failing approval by a
majority vote, the Participants shall follow the decision making process set
forth in Section 9.1(b).
(2) Feasibility Study. Any Participant may propose to
the Management Committee at any time that a Feasibility Study, evaluating the
feasibility of opening or expanding a mine on a particular area of the
Properties be conducted on behalf of Hecla Ventures. If the Management Committee
does not approve of the preparation of such Feasibility Study, then the
Participant proposing it may cause such Feasibility Study to be prepared at its
sole expense. Promptly upon completion of the Feasibility Study, the Participant
preparing it shall present it to the Management Committee for evaluation.
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(e) Subsequent Programs. A subsequent Program relating to an
area for which a prior Program has been adopted under the provisions of this
Article IX may be proposed and conducted pursuant to this Agreement.
(f) Budget Overruns; Program Changes. The Manager shall
immediately notify the Management Committee of any material departure including
documented reasons, from an adopted Program and Budget. If the Manager exceeds
an adopted Budget by more than ten per cent (10%), then the excess over ten per
cent (10%), unless directly caused by an emergency expenditure made pursuant to
Section 9.3(h), due to unforeseen events beyond the reasonable control or
anticipation of the Manager, or unless otherwise authorized by the Management
Committee, shall be for the sole account of the Manager and such excess shall
not be included in the calculations of the Participating Interests. Budget
overruns of ten per cent (10%) or less shall be acceptable to form part of the
Earn-In Expenditures.
(g) Emergency Expenditures. In case of emergency, the Manager
may take any reasonable action it deems necessary to protect life, limb or
property, to protect the Assets or to comply with law or government regulation.
The Manager shall promptly notify the Participants of the emergency expenditure,
and the Manager shall be reimbursed by Hecla Ventures for all resulting costs
(if the Manager is other than Hecla Ventures).
(h) Interim Program and Budget. If the Management Committee
for any reason has failed to adopt a Program and Budget to succeed an expiring
or completed prior Program and Budget, the Manager shall continue operations at
levels necessary to maintain the Assets and to comply with any and all legal
obligations.
9.4 Accounts and Settlements.
(a) Monthly Statements. The Manager shall promptly submit to
the Management Committee monthly statements of accounts (costs and activities)
reflecting in reasonable detail the Earn-in Activities during the preceding
month, including a written report of activities, progress and results.
(b) Cash Calls. On the basis of the adopted Program and
Budget, the Manager, if other than Hecla Ventures, shall submit to Hecla
Ventures prior to the 15th day of each calendar month, a billing for the
Manager's Fee due to Manager pursuant to section 9.2(e) for the preceding month.
Within ten (10) days after receipt of each billing, Hecla Ventures shall advance
to the Manager payment for the Manager's Fee.
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(c) Failure to Meet Cash Calls. If Hecla Ventures fails to
meet cash calls in the amount and at the times specified in Section 9.4(b) shall
be in default, and the amounts of the defaulted cash call shall bear interest
from the date due at an annual rate equal to the Prime Rate plus 5%, but in no
event shall said rate of interest exceed the maximum permitted by law, nor be
included as part of Earn-in Activities.
(d) Audits. Upon request made by any Participant within 12
months following the end of any calendar year (or, if the Management Committee
has adopted an accounting period other than the calendar year, within 12 months
after the end of such period), the Manager shall order an audit of the
accounting and financial records for such calendar year (or other accounting
period). All written exceptions to and claims upon the Manager for discrepancies
disclosed by such audit shall be made not more than three months after receipt
of the audit report. Failure to make any such exception or claim within the
three-month period shall mean the audit is correct and binding upon the
Participants. The audits shall be conducted by a firm of certified public or
chartered accountants selected by the Manager, unless otherwise agreed by the
Management Committee.
9.5 Parameters for Hecla Ventures' Earn-in Activities. During the Term
of this Earn-in Agreement, Hecla Ventures shall act in accordance with direction
from the Management Committee but Hecla Ventures shall be solely responsible for
conducting at its expense the specific manner and method of the Earn-in
Activities described in Exhibit E, including, without limitation, mineral
exploration, development, test mining and processing activities, drilling,
blasting, assaying, modeling, engineering, geophysics, geochemistry, hydrology,
metallurgy, metallurgical and environmental test work or other test work,
process testing, permitting, regulatory compliance, evaluation, performance and
preparation of a Feasibility Study, and all other activities incidental to or
arising therefrom, on or for the benefit of the Properties, regardless of where
such activities may be conducted. Hecla Ventures may recover and process a
reasonable amount of ore and other material from the Properties for testing
purposes during Earn-In-Activities and may conduct such testing on or off the
Properties. Proceeds from all Products produced from the Area of Interest during
the term of this Earn-In Agreement (estimated to approximate 40,000 tons at a
grade of 1.29 oz Au and 7 oz Ag diluted by 50% for a total tonnage of 60,000
tons; equivalent gold ounces produced expected to approximate 53,000 ozs) shall
be distributed one hundred percent (100%) to Hecla Ventures up to Hecla
Ventures' actual costs of Stage I and Stage II Earn-in Activities plus fifteen
percent (15%). Any excess amounts shall be distributed based on the deemed
Participating Interests of the Parties.
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9.6 Surface and Surface Facilities. Subject to approval of the
Management Committee and compliance with Underlying Agreements and applicable
law, including Newmont Mining Company reclamation agreement on the Reclaim Area
as described in Exhibit A, Hecla Ventures shall have the right without further
consideration, to use as much of the surface and any surface facilities owned or
controlled by Rodeo Creek, or on lands within the Area of Interest that are both
owned or controlled by Rodeo Creek and made subject to this Earn-in Agreement.
Hecla Ventures shall have the right to make other surface use arrangements only
upon authorization from the Management Committee and subject to compliance with
Newmont Mining Company reclamation activities on the Properties.
9.7 Compliance With Laws and Agreements. Hecla Ventures' Earn-in
Activities on the Properties shall be conducted in compliance with all
applicable laws, statutes, regulations, Underlying Agreements (specified on
Schedule A as they may be augmented from time to time pursuant to the terms
hereof) and this Earn-in Agreement.
ARTICLE X
RECLAMATION OBLIGATIONS
Hecla Ventures shall comply with all laws and regulations of the State
of Nevada and the United States of America as they pertain to reclamation
obligations and Hecla Ventures shall fund and at Hecla Ventures' election,
either contract out or carry out these reclamation obligations relating to or
arising out of Earn-in Activities on the surface and subsurface of the Area of
Interest. If Rodeo Creek elects to continue activities on the Area of Interest
for greater than one year from the date of Termination by Hecla Ventures and
elects not to have reclamation activities undertaken at that time, then an
independent third party's determination of the reclamation liability for
Earn-In-Activities will be obtained. Based on the determination of the
reclamation liability ("DRL") for Earn-In-Activities then the following shall
occur:
(1) if the reclamation fund ("RF") equals the DRL than no monies
shall be removed from the RF and Hecla Ventures shall be
released of all further reclamation obligations under this
Earn-In-Agreement and the Parties shall execute the
Termination and Release Agreement in Part III of Exhibit A; or
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(2) if the RF is less than the DRL than Hecla Ventures shall
contribute 100% of the deficiency; or
(3) if the RF is greater than the DRL than any unused portion of a
reclamation fund (funded during or on termination of the
Earn-in Activities) remaining after reclamation of the area(s)
or upon payment to Rodeo Creek of the DRL to which the
reclamation fund relates shall be distributed to Hecla
Ventures to the extent Hecla Ventures has not recouped 115% of
the actual costs of Stage I and Stage II Earn-in Activities,
otherwise distributed to the Participants based on their
respective Participating Interest at time of disbursement.
In the event of (1), (2) or (3) above, then Rodeo Creek shall be fully
responsible for the DRL and Hecla Ventures shall be released of all further
reclamation obligations. Hecla Ventures acknowledges that certain areas of the
Properties are undergoing reclamation. Hecla Ventures agrees to coordinate its
Earn-in Activities with Rodeo Creek's reclamation and permitting activities and
Rodeo Creek's reclamation activities with Newmont Mining Company, and dealings
with BLM, NDEP and Traditional Cultural Properties and Resources and other
government agencies.
Nothing in this Earn-in Agreement shall require or be interpreted as
requiring Hecla Ventures to perform any reclamation or pay any part of
reclamation costs associated with conditions resulting from any activities on
the Properties conducted by any other person or entity other than Hecla
Ventures.
ARTICLE XI
REPORTING, INSPECTION AND AUDIT
Hecla Ventures shall keep Rodeo Creek advised of all Earn-in Activities
during the term of this Earn-in Agreement by making available to Rodeo Creek all
Area of Interest data and information within a reasonable time but no more than
thirty (30) days after such data and information is available to Hecla Ventures;
if such information is material to Rodeo Creek then Hecla Ventures will provide
it promptly to Rodeo Creek. In addition, Rodeo Creek's employees, agents and
representatives (at Rodeo Creek's sole risk and expense and subject to
reasonable safety regulations) shall have the right to inspect and to audit
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Hecla Ventures' activities on and with respect to the Properties and all
documents, records, accounts and other data at all reasonable times, so long as,
Rodeo Creek's employees, agents and representatives do not unreasonably
interfere with Earn-in Activities. Hecla Ventures shall provide Rodeo Creek
detailed reports within fifteen (15) days following the end of each calendar
month that summarize Hecla Ventures' Earn-in Activities for each month and a
schedule of plans for the forthcoming month.
ARTICLE XII
MEMORANDUM
Hecla Ventures and Rodeo Creek shall execute and record a memorandum of
this Earn-in Agreement in substantially the form of Exhibit D, which shall not
disclose financial or other proprietary information contained herein, in a form
sufficient to constitute record public notice of the rights granted by this
Earn-in Agreement in the county or counties in which the Properties are
situated. This Earn-in Agreement shall not be recorded.
ARTICLE XIII
DEFAULTS
In the event of any Default by either Hecla Ventures or Rodeo Creek in
the performance of its obligations under this Earn-in Agreement ("Defaulting
Party"), the Non-Defaulting Party shall give to the Defaulting Party written
notice specifying the default. If the Default is not completely cured within
thirty (30) days, or such other, longer time as may be specified in this
Agreement, after the Defaulting Party has received the notice, the
Non-Defaulting Party may declare this Earn-in Agreement terminated and/or pursue
legal action against the Defaulting Party. Nothing herein shall be construed as
a limitation of remedies to the Non-Defaulting Party.
ARTICLE XIV
CONFIDENTIALITY
14.1 General. The financial terms of this Earn-in Agreement and all
geologic, metallurgical and other information obtained in connection with the
performance of it shall be the exclusive property of the Parties, except that on
termination of this Earn-in Agreement, other than on execution and delivery of
Operating Agreement, ownership of all information shall revert solely to Rodeo
Creek. Information, except as provided in Section 14.2, shall not be disclosed
by a Party to any third party or the public without the prior written consent of
the other Party.
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14.2 Exceptions. The consent required by Section 14.1 shall not apply
to a disclosure:
(a) To an Affiliate or a consultant, contractor or
subcontractor that has a bona fide need to be informed;
(b) To any third party to whom the disclosing Party
contemplates a transfer of all of its interest in or to this Earn-in Agreement;
or
(c) To a governmental agency or to the public which the
disclosing Party believes in good faith is required by pertinent law or
regulation or the rules of any stock exchange on which the disclosing Party is
listed.
In any case to which this Section 14.2 is applicable, the disclosing Party shall
give notice to the other Party concurrently with the making of such disclosure.
As to any disclosure pursuant to Section 14.2(a) or (b), only such confidential
information as such third party shall have a legitimate business need to know
shall be disclosed and such third party shall first agree in writing to protect
the confidential information from further disclosure for a period of one (1)
year after its receipt to the same extent as the Parties are obligated under
this Article XIV.
14.3 Press Releases. Hecla Ventures and Rodeo Creek shall consult with
and provide a written copy to each other at least twenty-four (24) hours before
issuing any press release or public statement on the results of Earn-in
Activities on or for the benefit of the Properties. Neither Hecla Ventures nor
Rodeo Creek or their Guarantors shall issue any press release or public
statement mentioning the name of the other or of any entity related to the other
without the other Party's prior written approval, which approval shall not be
unreasonably withheld.
14.4 Duration of Confidentiality. The provisions of this Article XIV
shall apply during the Term of this Earn-in Agreement and shall continue to
apply to any Party who withdraws, who is deemed to have withdrawn, or who
transfers its interest in this Earn-in Agreement, for one year following the
date of such occurrence. If the Parties enter into the Operating Agreement, its
provisions concerning confidentiality shall then apply to the financial terms of
this Earn-in Agreement and to all information obtained in connection with the
performance of Earn-in Activities.
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ARTICLE XV
TAXES
15.1 Payment of Properties and Improvement Taxes. All taxes levied on
real estate associated with the Properties or any improvements on the Properties
during the term of this Earn-in Agreement shall be paid by Hecla Ventures as
part of Earn-In Expenditures.
15.2 Provisions Concerning Taxation. While this Earn-in Agreement is in
effect, all matters relating to taxation other than Section 15.1 shall be
governed by Article IV of this Earn-in Agreement.
ARTICLE XVI
COOPERATION
Within ten (10) days after a request from a Party, each Party shall
provide the other Party with access to all data and information in its
possession or to which it has access relating to or affecting the Properties
including, but not limited to, title documents, legal opinions, pertinent
agreements, assays, samples of minerals, drill hole logs, test results,
historical materials relating to exploration, development, mining, environmental
matters and title, filings with governmental bodies, maps and surveys. Both
Parties shall have the right to make copies thereof, each at its own expense.
ARTICLE XVII
GENERAL PROVISIONS
17.1 Notices. All notices and other required communications made
pursuant to this Earn-in Agreement (referred to in this Section 17.1 as
"Notices") to the Parties shall be in writing, and shall be addressed
respectively as follows:
To: Hecla Ventures Corp. w/a copy to: Hecla Mining Company
0000 Xxxxxxx Xxxxx 0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000-0000 Xxxxx x'Xxxxx, Xxxxx 00000-0000
XXX XXX
Attn: President Attn: President and COO
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To: Rodeo Creek Gold Inc. w/a copy to: Lang Xxxxxxxx
C/O Xxxxxxx Xxxxxx 0000-0000 Xxxx Xxxxxxx Xxxxxx
000-0000 Xxxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Reno, NV 89511 X0X 0X0, XXXXXX
Attn: B. Zinkhofer
w/a copy to: Great Basin Gold Ltd.
0000-000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0, XXXXXX
Attn: President & CEO
All Notices shall be given: (i) by personal delivery to the Party or (ii) by
electronic communication, with a confirmation sent by registered or certified
mail return receipt requested, or (iii) by registered or certified mail return
receipt requested. All Notices shall be effective and shall be deemed delivered
(i) if by personal delivery, on the date of delivery if delivered during normal
business hours, and if not delivered during normal business hours, on the next
business day following delivery, (ii) if by electronic communication, on the
next business day following receipt of the electronic communication, and (iii)
if solely by mail, on the next business day after actual receipt. A Party may
change its address by Notice to the other Party.
17.2 Waiver. The failure of a Party to insist on the strict performance
of any provision of this Earn-in Agreement or to exercise any right, power or
remedy upon a breach hereof shall not constitute a waiver of any provision of
this Earn-in Agreement or limit the Party's right thereafter to enforce any
provision or exercise any right.
17.3 Modification. No modification of this Earn-in Agreement shall be
valid unless made in writing and duly executed by the Parties.
17.4 Force Majeure. Except for any obligation to make payments when due
hereunder and except for matters arising out of a Party's lack of funds, the
obligations of a Party shall be suspended to the extent and for the period that
performance is prevented by any cause, beyond its reasonable control, including,
without limitation, labor disputes (however arising and whether or not employee
demands are reasonable or within the power of the Party to grant); acts of God;
laws, regulations, orders, proclamations, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain on reasonably acceptable terms any public or private license, permit
or other authorization, including access and occupancy rights from surface
-33-
owners; acts of war or conditions arising out of or attributable to war, whether
declared or undeclared; riot, civil strife, insurrection or rebellion; fire,
explosion, earthquake, storm, flood, sink holes, drought or other adverse
weather conditions; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors' or subcontractors'
shortage of, or inability to obtain, labor, transportation, materials,
machinery, equipment, supplies, utilities or services; accidents; breakdown of
equipment, machinery or facilities; or any other cause similar to the foregoing
The affected Party shall promptly give notice to the other Party of the
suspension of performance, stating therein the nature of the suspension, the
reasons therefore, and the expected duration thereof. The affected Party shall
resume performance as soon as reasonably possible. Commercial frustration,
commercial impracticability or the occurrence of unforeseen events rendering
performance hereunder uneconomical shall not constitute an excuse of performance
of any obligation imposed hereunder.
17.5 Governing Law. This Earn-in Agreement shall be governed by and
interpreted in accordance with the laws of the State of Nevada, except for its
rules pertaining to conflicts of laws.
17.6 Rule Against Perpetuities. Any right or option to acquire any
interest in real or personal property under this Earn-in Agreement must be
exercised, if at all, so as to vest such interest within twenty-one (21) years
after the Effective Date.
17.7 Further Assurances. Each of the Parties agrees to take from time
to time such actions and execute such additional instruments (without demand for
further consideration) as may be reasonably necessary or convenient to implement
and carry out the terms of this Earn-in Agreement.
17.8 Entire Agreement; Amendments; Successors and Assigns. This Earn-in
Agreement contains the entire understanding of the Parties and supersedes all
prior agreements and understandings between the Parties relating to the subject
matter hereof, and may be amended only by a written agreement executed by the
Parties hereto. This Earn-in Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the Parties. No
Party shall assign any interest or obligation in this Earn-in Agreement to any
party without the written consent of the other Parties, which consent shall not
be unreasonably withheld, provided, however, that no consent shall be required
to transfer a Participant's interest to an Affiliate.
17.9 Severability. In the event that a court of competent jurisdiction
determines that any term, part or provision of this Earn-in Agreement is
unenforceable, illegal, or in conflict with any federal, state, or local laws,
-34-
the Parties intend that the court reform that term, part or provision within the
limits permissible under law in a way as to approximate most closely the intent
of the Parties to this Earn-in Agreement; provided that, if the court cannot
make a reformation, then that term, part or provision shall be considered
severed from this Earn-in Agreement. The remaining portions of this Earn-in
Agreement shall not be affected and it shall be construed and enforced as if it
did not contain that term, part or provision.
17.10 Paragraph Headings. The paragraph and other headings of this
Earn-in Agreement are inserted only for convenience and in no way define, limit
or describe the scope or intent of this Earn-in Agreement or effect its terms
and provisions.
17.11 Attorneys' Fees. The prevailing party in any dispute arising
under this Earn-in Agreement shall be entitled to an award of its reasonable
attorneys' fees and costs.
17.12 Counterparts. This Earn-In Agreement may be signed by the Parties
and Guarantors hereto in as many counterparts as may be necessary, and via
facsimile if necessary, each of which so signed being deemed to be an original
and such counterparts together constituting one and the same instrument and,
notwithstanding the date of execution, being deemed to bear the execution date
as set forth in this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Earn-in Agreement as
of the date first above written.
HECLA VENTURES CORP. RODEO CREEK GOLD INC.
By: By:
------------------------------- -------------------------------
Authorized Signatory Authorized Signatory
---------------------------------- ----------------------------------
Print Name Print Name
---------------------------------- ----------------------------------
Title Title
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IN WITNESS WHEREOF, the Guarantors hereto have executed this Earn-in Agreement
as of the date first above written.
Agreed as to Recital D and Sections Agreed as to Recital E and Sections
2.6, 2.7, 5, Exhibit E and Article X 2.3, 2.4 and 5 and Exhibit E
HECLA MINING COMPANY GREAT BASIN GOLD LTD.
Per: Per:
------------------------------ --------------------------------
Authorized Signatory Authorized Signatory
---------------------------------- ----------------------------------
Print Name Print Name
---------------------------------- ----------------------------------
Title Title
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ACKNOWLEDGEMENTS
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ________ day
of _____________ 2002, by Xxxxxx X. Xxxxx, President of Hecla Ventures Corp., a
Nevada corporation, on behalf of said corporation.
-------------------------------------------
Notary Public in and for the State of Idaho
Residing at: ______________________________
My Commission Expires: ____________________
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ________ day
of _____________ 2002, by __________________, _________________ of Hecla Mining
Company, a Delaware corporation, on behalf of said corporation.
-------------------------------------------
Notary Public in and for the State of Idaho
Residing at: ______________________________
My Commission Expires: ____________________
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CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 2002, by ___________________________________ the
_______________________ of Rodeo Creek Gold Inc., a Nevada corporation, on
behalf of said corporation
-------------------------------------------
Notary Public in and for the
Province of British Columbia
Residing at: ______________________________
My Commission Expires: ____________________
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 2002, by __________________________________ the
_______________________ of Xxxxx Xxxxx Xxxx Xxx., x Xxxxxxx Xxxxxxxx, Xxxxxx
corporation, on behalf of said corporation.
-------------------------------------------
Notary Public in and for the
Province of British Columbia
Residing at: ______________________________
My Commission Expires: ____________________
-38-
EXHIBIT A
PROPERTIES
(INCLUDES EXHIBIT A, PART I, II AND III)
I. The 73 unpatented lode claims located in Elko County, Nevada listed
below lie completely or partially within the Area of Interest commonly
known as the Hollister Development Block which is defined by the
following three dimensional Mine Grid Coordinates:
34,000E to 40,000E
35,000N to 42,000N
Surface to 4,000ft Above sea level
These claims are subject to Underlying Agreements (Part II and III of
Exhibit A) and obligations or royalties of general application to any local,
state or federal governments.
--------------------------------- ------------------------------- --------------------------------
CLAIM NAME NCM NUMBERS NUMBER OF CLAIMS
--------------------------------- ------------------------------- --------------------------------
--------------------------------- ------------------------------- --------------------------------
XXXXX NUMBER 6-7 103763-103764 2
--------------------------------- ------------------------------- --------------------------------
CAR 1-5 103752-103756 5
--------------------------------- ------------------------------- --------------------------------
PICKUP 2 103765 1
--------------------------------- ------------------------------- --------------------------------
GAPFILLER 103767 1
--------------------------------- ------------------------------- --------------------------------
GAPFILLER 1 103768 1
--------------------------------- ------------------------------- --------------------------------
XXXXX 1,2,4,5, 103769,103770,103772, 14
13-15, 103775,103780-103782,
23-25, 103790-103792,
28-31 103793-103796
--------------------------------- ------------------------------- --------------------------------
WDF 1 395835 1
--------------------------------- ------------------------------- --------------------------------
MWB 1 515540 1
--------------------------------- ------------------------------- --------------------------------
PICKUP 1 617440
--------------------------------- ------------------------------- --------------------------------
CLYN 151-175, 679609-679633, 41
204-212, 679662-679670,
219,220, 679677, 679678,
222,224,226, 679680, 679682, 679684,
228, 230 679686, 679688
--------------------------------- ------------------------------- --------------------------------
HAROLDS CLUB 1A-5A 681147-681151 5
--------------------------------- ------------------------------- --------------------------------
HAROLDS CLUB 8A 681152 1
--------------------------------- ------------------------------- --------------------------------
--------------------------------- ------------------------------- --------------------------------
TOTAL 73 CLAIMS
--------------------------------- ------------------------------- --------------------------------
Exhibit A to Earn-in Agreement
Part I - Properties
Page 1 of 2
HOLLISTER DEVELOPMENT BLOCK
AREA OF INTEREST
[GRAPHIC]
Exhibit A to Earn-in Agreement
Part I - Properties
Page 2 of 2
II. LEASES AND ROYALTIES AND UNDERLYING AGREEMENTS
A. Hillcrest Claims. The Xxxxx 6-7; Car 1-5; Pickup 2; Gapfiller;
Gapfiller 1; Xxxxx 1-2, 4-5, 13-15, 23-25, and 28-31; Pickup 1; and Harold's
Club 1A-5A and 0X xxxxxx (xxx "Xxxxxxxxx Xxxxxx") are owned by Hillcrest Mining
Company, a Nevada corporation.
The Hillcrest Claims are subject to a Mineral Lease dated October 23,
1981 between Hillcrest Mining Company as Lessor and Auric Metals Corporation as
Lessee (the "Hillcrest Mining Lease"). A Sublease dated December 10, 1981 was
granted by Auric Metals Corporation to United States Steel Corporation. Through
various conveyances, the Sublease is now held by Rodeo Creek Gold Inc., a Nevada
corporation.
There are three royalties associated with the Hillcrest Claims: a 2%
royalty on net proceeds reserved to Hillcrest/Auric; a 3% net returns royalty in
favor of USX (successor to United States Steel Corporation). A 5% net profits
interest reserved by Touchstone Resources Company will be paid entirely by Rodeo
Creek out of Rodeo Creek's Participating Interest or Rodeo Creek's interest in
the Net Profits Interest and will in no event affect the Participating Interest
or Net Profits Interest of Hecla Ventures. The USX royalty was subsequently
conveyed to Franco-Nevada Mining Corporation and Euro-Nevada Mining Corporation,
Inc., which have been acquired by Newmont Mining Corporation (or a related
company); the 3% net returns royalty is now owned and controlled by Newmont.
B. Ivanhoe Claims. The WDF 1, MDW 1, and CLYN 151-175, 204-212,
219-220, 222, 224, 226, 228, and 230 claims (the "Ivanhoe Claims") are owned by
Rodeo Creek Gold Inc., a Nevada corporation.
The Ivanhoe Claims are subject to two royalties: a 5% net returns
royalty, originally reserved by USX and now held by Newmont Mining Corporation
or an affiliate company. A 5% net profits interest reserved by Touchstone
Resources Company will be paid entirely by Rodeo Creek out of Rodeo Creek's
Participating Interest or Rodeo Creek's interest in the Net Profits Interest and
will in no event affect the Participating Interest or Net Profits Interest of
Hecla Ventures.
Exhibit A to Earn-in Agreement
Part II - Properties -Leases and Royalties and Underlying Agreements
Page 1 of 2
C. Underlying Agreements and Other Information. See Hollister
Development Block Land and Agreement 3 ring binder dated July 22, 2002 for legal
opinion, Property map and Underlying Agreements. A copy of the table of contents
follows in Part III.
Exhibit A to Earn-in Agreement
Part II - Properties -Leases and Royalties and Underlying Agreements
Page 2 of 2
PART III - UNDERLYING AGREEMENTS AND OTHER INFORMATION
1.0 SUMMARY INFORMATION
* Claim List - claims in Hollister Development Block with ownership and
royalties identified.
* Claim Map - Hollister Development Block with corresponding royalties
identified.
2.0 LEGAL CORRESPONDENCE
* Title Report on Hollister Development Block, Elko County, Nevada, dated
July 19, 2002 by Xxxxxx & Xxxxxxxx.
* Hillcrest-Auric Production Royalty, dated June 26, 1998 by Xxxxxx,
Trimmer & Xxxxxxxx.
3.0 FEBRUARY 18, 2002 - NEWS RELEASE
* Newmont announces that it has completed its acquisition of
Franco-Nevada Mining.
4.0 MARCH 15, 2002 - ACKNOWLEDGEMENT
* RODEO CREEK GOLD INC. AND TOUCHSTONE RESOURCES INC.: Touchstone's
participating interest in the joint venture is reduced to below 10%,
they relinquish their interest to Rodeo Creek and reserve a 5% Net
Profits Royalty.
5.0 OCTOBER 27, 2000 - ASSIGNMENT OF INTEREST
* AURIC METALS CORPORATION AND XXXXXX RIVER COMPANY: Auric assigns and
transfers all of its rights, titles and interests in the Hillcrest
Mining Lease and Sublease to Xxxxxx River.
6.0 MARCH 02, 1999 - PURCHASE AGREEMENT
* GREAT BASIN GOLD LTD. AND TOUCHSTONE RESOURCES COMPANY & CORNUCOPIA
RESOURCES LTD.: Great Basin purchases all of the shares of Touchstone
Resources from Cornucopia Resources.
7.0 JULY 31, 1998 - PURCHASE AGREEMENT ASSIGNMENT
* GREAT BASIN GOLD INC. AND RODEO CREEK GOLD INC.: Great Basin assigns
all of its right, title and interest in the August 13, 1997 purchase
agreement to Rodeo Creek.
* GREAT BASIN GOLD INC. AND RODEO CREEK GOLD INC.: Quitclaim deed and
assignment of the "Ivanhoe Properties" from Great Basin to Rodeo Creek.
8.0 JULY 31, 1998 - VENTURE AGREEMENT ASSIGNMENT
* GREAT BASIN GOLD INC. AND RODEO CREEK GOLD INC.: Great Basin assigns
all of its right, title and interest in the August 13, 1997 venture
agreement to Rodeo Creek.
Exhibit A to Earn-in Agreement
Part III - Properties -Underlying Agreements and Other Information
Page 1 of 3
9.0 AUGUST 13, 1997 - SUBLEASE AMENDMENT
* AURIC METALS CORPORATION, AND HILLCREST MINING COMPANY AND GREAT BASIN
GOLD INC..: Auric and Hillcrest acknowledge the assignment of the
Sublease to Great Basin effective August 13, 1997.
10.0 AUGUST 13, 1997 - QUITCLAIM DEED AND ASSIGNMENT
* NEWMONT EXPLORATION LIMITED AND GREAT BASIN GOLD INC..: Newmont
quitclaims all rights titles and interest in the Ivanhoe properties to
Great Basin Gold and assigns all of its rights , title and interests in
the mineral lease and sub-lease to Great Basin.
11.0 AUGUST 13, 1997 - PURCHASE AGREEMENT
* NEWMONT EXPLORATION LIMITED, TOUCHSTONE RESOURCES COMPANY AND GREAT
BASIN GOLD INC..: Newmont and Touchstone terminate the Venture
Agreement and Great Basin acquires Newmont's interest in the Ivanhoe
Properties.
12.0 AUGUST 13, 1997 - VENTURE AGREEMENT
* TOUCHSTONE RESOURCES COMPANY AND GREAT BASIN GOLD INC..: Great Basin
and Touchstone participate jointly in the exploration, evaluation and
development of mineral resources within the Ivanhoe Properties and any
other acquired properties under the terms of this agreement.
13.0 MARCH 19, 1992 - QUITCLAIM DEED AND ASSIGNMENT
* USX CORPORATION AND EURO-NEVADA MINING CORPORATION: USX conveys all of
its remaining interest right and title in the "Deed" dated December 20,
1988 to Euro-Nevada.
14.0 DECEMBER 20, 1988 - QUITCLAIM DEED AND ASSIGNMENT
* USX CORPORATION AND TOUCHSTONE RESOURCES COMPANY: USX conveys all of
its interest right and title in the USX Claims and the base leases and
Hillcrest claims to Touchstone while reserving certain interests.
*
15.0 MARCH 26, 1987 - LESSOR'S CERTIFICATION
* AURIC METALS CORPORATION AND TOUCHSTONE RESOURCES COMPANY: Auric
certifies the good standing of the leases.
16.0 MARCH 19, 1987 - CERTIFICATION AND AGREEMENT
* HILLCREST MINING RESOURCES COMPANY AND TOUCHSTONE RESOURCES COMPANY AND
USX CORPORATION: Renewal and amendment of the lease.
Exhibit A to Earn-in Agreement
Part III - Properties -Underlying Agreements and Other Information
Page 2 of 3
17.0 MARCH 19, 1987 - AMENDMENT TO MINERAL LEASE
* AURIC METALS CORPORATION AND HILLCREST MINING RESOURCES: Amendment to
the lease and assignment of interest.
18.0 DECEMBER 10, 1981 - SUBLEASE
* AURIC METALS CORPORATION AND USX: USX subleases the Hillcrest Claims
from Auric.
19.0 OCTOBER 23, 1981 - MINERAL LEASE
* AURIC METALS CORPORATION AND HILLCREST MINING RESOURCES: Auric Leases
the "Hillcrest" claims from Hillcrest.
Exhibit A to Earn-in Agreement
Part III - Properties -Underlying Agreements and Other Information
Page 3 of 3
IV: TERMINATION AND RELEASE AGREEMENT
THIS AGREEMENT is entered into and made effective this ___ day of
________, 20___, by and between Hecla Ventures Corp., a Nevada corporation
("Hecla Ventures") and its Guarantor, Hecla Mining Company, with their principal
place of business at 0000 Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000 and
Rodeo Creek Gold Inc., C/O Xxxxxxx Xxxxxx, 260 - 0000 Xxxxxxxx Xxxxx, Xxxx,
Xxxxxx 00000, a Nevada corporation ("Rodeo Creek"), and its Guarantor, Great
Basin Gold Ltd. with their principal place of business at 1020 - 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0XX.
RECITALS
WHEREAS, Hecla Ventures and Rodeo Creek entered into an Earn-in
Agreement dated August 2, 2002 ("Earn-in Agreement"); and,
WHEREAS, Hecla Ventures and Rodeo Creek desire to terminate the Earn-in
Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Hecla Ventures" means Hecla Ventures Corp. and its subsidiaries,
affiliates, successors and assigns;
1.2 "Great Basin" means Great Basin Gold Ltd. and its subsidiaries,
affiliates, successors and assigns;
1.3 "Earn-in Agreement" means the Earn-in Agreement by and between
Hecla Ventures and Rodeo Creek, dated August 2, 2002, including all amendments
and modifications thereof, and all schedules and exhibits, thereto.
1.4 "Agreement" shall mean collectively all covenants, terms and
conditions of this Termination and Release of Agreement, and any specifications
and exhibits thereto.
1.5 All other defined terms used in this Agreement and in its exhibits
shall have the definitions previously agreed to in the Earn-in Agreement, unless
specifically defined herein.
Exhibit A to Earn-in Agreement
Part IV - Termination and Release Agreement
Page 1 of 6
ARTICLE II
TERMINATION OF EARN-IN AGREEMENT
2.1 As evidenced by their signatures below, Hecla Ventures and Rodeo Creek
hereby agree to terminate the Earn-in Agreement, subject to the terms and
conditions of this Agreement.
ARTICLE III
MUTUAL RELEASE
3.1 Except as set out in this Agreement, Hecla Ventures and Rodeo Creek hereby
release each other from all duties, obligations and liabilities, past, present
and future, including contingent liabilities arising in whole or in part from
joint operations on and near the Properties for activities undertaken pursuant
to the Earn-in Agreement, excluding Hecla Mining Warrants and Great Basin
Warrants which have been exchanged.
ARTICLE IV
INDEMNITY
4.1 Rodeo Creek's Indemnity
Notwithstanding any provision of this Agreement to the contrary, Rodeo
Creek shall be solely responsible for, and shall indemnify, defend, and hold
harmless Hecla Ventures and its directors, officers, employees, agents,
attorneys and Affiliates from and against, any and all liabilities, losses,
claims, demands, damages, costs, expenses (including without limitation any
environmental, reclamation and remediation expenses, fines, penalties,
judgments, litigation costs and attorneys' fees) enforcement actions and causes
of action ("Claims") arising in whole or in part from the activities conducted
at any time prior to the Effective Date of the Earn-In Agreement on the
Properties or on lands owned or controlled as of the Effective Date by Rodeo
Creek within the Area of Interest, or on nearby lands involved in Rodeo Creek's
operations, regardless of whether such Claims arise or accrue before or after
the Effective Date of this Agreement, or after termination or expiration of the
Term of this Agreement for any reason.
Exhibit A to Earn-in Agreement
Part IV - Termination and Release Agreement
Page 2 of 6
4.2 Hecla Ventures' Indemnity
Notwithstanding any provision of this Agreement to the contrary, Hecla
Ventures shall be solely responsible for, and shall indemnify, defend, and hold
harmless Rodeo Creek and its directors, officers, employees, agents, attorneys
and Affiliates from and against, any and all liabilities, losses, claims,
demands, damages, costs, expenses (including without limitation any
environmental, reclamation and remediation expenses, fines, penalties,
judgments, litigation costs and attorneys' fees) enforcement actions and causes
of action ("Claims") arising in whole or in part from the Earn-in Activities
conducted at any time after the Earn-In Agreement Effective Date on the
Properties or on lands owned or controlled as of the Effective Date by Hecla
Ventures within the Area of Interest, or on nearby lands involved in Hecla
Ventures' operations, regardless of whether such Claims arise or accrue after
the Effective Date of this Agreement, or after termination or expiration of the
Term of this Agreement for any reason.
ARTICLE V
ATTORNEYS' FEES
5.1 The prevailing party in any dispute arising under this Agreement shall be
entitled to an award of its reasonable attorneys' fees and costs.
ARTICLE VI
PARENT GUARANTEE
6.1 Hecla Mining hereby guarantees to Rodeo Creek the due performance of all the
obligations of Hecla Ventures owed to Rodeo Creek hereunder.
6.2 Great Basin hereby guarantees to Hecla Ventures the due performance of all
the obligations of Rodeo Creek owed to Hecla Ventures hereunder.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
Exhibit A to Earn-in Agreement
Part IV - Termination and Release Agreement
Page 3 of 6
HECLA VENTURES CORP. RODEO CREEK GOLD INC.
By NOT FOR SIGNATURE - FORM ONLY By NOT FOR SIGNATURE - FORM ONLY
------------------------------ ------------------------------
----------------------------------- --------------------------------
Print Name Print Name
------------------------------------ ------------------------------------
Title Title
IN WITNESS WHEREOF, the Guarantors hereto have executed this Agreement
as of the date first above written.
HECLA MINING COMPANY GREAT BASIN GOLD LTD.
By NOT FOR SIGNATURE - FORM ONLY By NOT FOR SIGNATURE - FORM ONLY
------------------------------ ------------------------------
----------------------------------- --------------------------------
Print Name Print Name
------------------------------------ ------------------------------------
Title Title
Exhibit A to Earn-in Agreement
Part IV - Termination and Release Agreement
Page 4 of 6
ACKNOWLEDGEMENTS
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by ______________________ the ____________________ of
Hecla Ventures Corp., a Nevada corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: __________________________
My commission expires:_________________
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by ______________________ the ____________________ of
Hecla Mining Company, a Delaware corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: __________________________
My commission expires:_________________
Exhibit A to Earn-in Agreement
Part IV - Termination and Release Agreement
Page 5 of 6
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by ______________________ the ____________________ of
Rodeo Creek Gold Inc., a Nevada corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: __________________________
My commission expires:_________________
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by _______________________ the ___________________ of
Great Basin Gold Ltd., a British Columbia corporation, on behalf of said
corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: __________________________
My commission expires:_________________
Exhibit A to Earn-in Agreement
Part IV - Termination and Release Agreement
Page 6 of 6
EXHIBIT B
ACCOUNTING PROCEDURES
I. GENERAL PROVISIONS
It is the intent of the Manager and the Participants that the Manager, except as
permitted by this Agreement, shall not lose or profit by reason of its duties
and responsibilities as Manager. The Accounting Procedures shall be reviewed by
the Management Committee upon the request of the Manager or any Participant to
assure that the Manager (directly or through its Affiliates) does not , except
as permitted by this Agreement, make a profit or suffer a loss from serving as
Manager. The Participants shall, in good faith, endeavor to agree on
modifications to these Accounting Procedures that will remedy any alleged
unfairness or inequity.
1. Definitions
All words indicated with initial capital letters shall have the meaning
set forth in Article I of this Joint Operating Agreement.
2. Conflict with Agreement
In the event of a conflict between the provisions of this Accounting
Procedure and the provisions of the agreement to which this Accounting
Procedure is attached ("Operating Agreement"), the provisions of the
Operating Agreement shall control.
3. Collective Action by Non-Manager
Where there are more than one non-Manager, where an agreement or other
action by non-Manager is expressly required under this Accounting
Procedure, and if the Operating Agreement contains no contrary
provisions in regard thereto, the agreement or action of a majority in
interest of the non-Manager shall be controlling on all non-Managers.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 1 of 15
4. Statements and Xxxxxxxx
A. Prior to the first day of each month covered by an approved
budget, or some other quantum of months as may be agreed by
the Participants and such time being hereinafter referred to
as the "Period," each Participant shall advance to the Joint
Accounts its proportionate share (i.e., according to its
Participating Interest in the Joint Operation) of the total
amount of the funds required for such Period, as reflected by
the budget. Manager shall pay and discharge all costs and
expenses of the Joint Account as the same become due and
payable. Notwithstanding the failure of the Participants to
approve any budget, each Participant shall advance to the
Joint Account its proportionate share of such funds as the
Manager shall by written notice advise the Participants are
required for protecting and maintaining the Joint Properties
and meeting the obligations properly incurred for the Joint
Account. No Participant shall be considered deficient as to
any advance due from it unless it shall have been allowed at
least ten (10) days (after receipt of copies of the approved
budget on which determination of the amount to be advanced is
based, or, in the case of an advance to be made pursuant to
the next preceding sentence, after receipt of notice from the
Manager in such regard) in which to make such advance.
B. Manager shall provide non-Manager on or before the last day of
the month following each Period a statement of costs and
expenses for the Period. Such statement will reflect all
charges and credits to the Joint Account, summarized by
appropriate classifications indicative of the nature thereof.
Proper adjustments shall be made between advances and direct
and indirect costs, to the end that each Participant shall
bear and pay its proportionate share of direct and indirect
costs incurred and no more or less.
5. Payment and Advances by Non-Manager
In the case where advances have been insufficient to cover actual
costs, the Manager, by written notice, shall advise non-Manager of such
deficiency and request that funds to cover such deficiency be paid in
accordance with this paragraph 5 of Section I. If advances exceed
actual costs, the Manager shall advise non-Manager of such excess and
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 2 of 15
advise non-Manager of either a reduced amount required to be advanced
for the next Period or return to the Participants their proportionate
share of such excess. Each non-Manager shall pay pro rata share of any
advance due for a Period or for a deficiency request for funds within
ten (10) days after receipt of notice from Manager. If payment is not
made within such time, the unpaid balance shall bear interest at the
annual rate of five (5) percent above the Prime Rate.
6. Adjustments
Payments of any such advance or deficiency requests shall not prejudice
the right of the non-Manager to protest or question the correctness
thereof, provided, however, all accounts and statements rendered to
non-Manager during any calendar year shall conclusively be presumed to
be true and correct after twelve (12) months following the end of such
calendar year, unless within the said twelve (12) month period a
non-Manager takes written exception thereto and makes claim on Manager
for adjustment. No adjustment favorable to Manager shall be made unless
it is made within the same prescribed period. The provisions of this
paragraph shall not prevent adjustments resulting from a physical
inventory of the Joint Property.
7. Audits
The Manager shall, upon the request of any Participant with a
Participating Interest under this Agreement, have an annual audit
performed on the Manager's accounts by a firm of auditors acceptable to
the Participants which own the majority Participating Interest. The
cost of such annual audit shall be charged to the Joint Account. In
addition to the annual audit, any other work performed by these
auditors (including the preparation of schedules for submission to any
taxing authorities), if approved by the Management Committee, shall be
charged to the Joint Account.
Notwithstanding the above, any audit, accounting, taxation or similar
work performed at the request of any Participant to this Agreement for
the exclusive benefit of that Participant shall be a charge to that
Participant and not be a charge to the Joint Account.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 3 of 15
A non-Manager, upon notice in writing to Manager, shall have the right
to audit Manager's accounts and records relating to the accounting
hereunder for any calendar year within the twelve (12) month period
following the end of each calendar year, provided, however, the making
of an audit shall not extend the time for the taking of written
exception to and the adjustment of accounts as provided above. Where
there are two or more non-Managers, the non-Manager shall make every
reasonable effort to conduct joint or simultaneous audits in a manner
which will result in a minimum of inconvenience to the Manager.
II. DIRECT CHARGES
Subject to limitations hereinafter prescribed, and unless otherwise provided in
the Operating Agreement, Manager shall charge the Joint Account with the
following items:
1. Rentals, Royalties, Fees and Reclamation
A. Rentals and royalties when such rentals, lease payments and
royalties are paid by Manager for the Joint Account of the
Participants.
B. Any annual fee payment or assessment work expenditure on or
for the Properties.
C. A cash reclamation account that is funded on a per ounce basis
to meet expected reclamation costs identified in the
Feasibility Study as may be updated from time to time by an
independent consultant and approved by the Management
Committee.
2. Labor
A. Salaries and wages of Manager's employees or Affiliates
directly engaged in the conduct of the Joint Operations
(except those entities' executives and officers), and salaries
or wages of technical employees who are temporarily assigned
to and directly employed in the conduct of Joint Operations
and whose salaries are not compensated for under Section III.
B. Manager's cost of holiday, vacation, sickness, and disability
benefits and other customary allowances paid to the employees
whose salaries and wages are chargeable to the Joint Account
under Paragraph 2A of this Section II and Paragraph 1 of
Section III; except that in the case of those employees only a
pro rata portion of whose salaries and wages are chargeable to
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 4 of 15
the Joint Account under Paragraph 1 of Section III, not more
than the same pro rata portion of the benefits and allowances
herein provided for shall be charged to the Joint Account.
Cost under this Paragraph 2B may be charged on a "when and as
paid basis" or by "percentage assessment" on the amount of
salaries and wages chargeable to the Joint Account under
Paragraph 2A of this Section II and Paragraph 1 of Section
III. If percentage assessment is used, the rate shall be based
on the Manager's cost experience.
C. Expenditures or contributions made pursuant to assessments
imposed by governmental authority which are applicable to
Manager's labor cost of salaries and wages chargeable to the
Joint Account under Paragraphs 2A and 2B of this Section II
and Paragraph 1 of Section III.
D. Reasonable personal expenses of those employees whose salaries
and wages are chargeable to the Joint Account under Paragraph
2A of this Section II and for which expenses the employees are
reimbursed under Manager's usual practice.
3. Employee Benefits
Manager's cost of established plans for employees' group life
insurance, hospitalization, pension, retirement, stock purchase,
thrift, severance payments and other benefit plans of a like nature,
applicable to Manager's labor cost chargeable to the Joint Account
under Paragraphs 2A and 2B of this Section II and Paragraph 1 of
Section III.
4. Material
Material and supplies ("Material") purchased or furnished by Manager
for use on the Joint Property. So far as it is reasonably practical and
consistent with efficient economical operation, only such Material
shall be purchased for or transferred to the Joint Property as may be
required for immediate use; and the accumulation of surplus stocks
shall be avoided. The charges for any Material or services provided by
Manager or an Affiliate of Manager shall not exceed the prevailing
charges or rates for such Material or services in the vicinity of the
Joint Property and those services performed by Manager or Affiliate of
Manager shall be under the same terms and conditions as are customary
and usual in the vicinity of the Joint Property in contracts of
independent contractors who are doing work of a similar nature.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 5 of 15
5. Transportation
Transportation of employees and Material necessary for the Joint
Operations but subject to the following limitations:
A. If Material is moved to the Joint Property from the Manager's
warehouse or other properties, no charge shall be made to the
Joint Account for a distance greater than the distance from
the nearest reliable supply store or railway receiving point
where like material is available, except by agreement with
non-Manager.
B. If surplus Material is moved to Manager's warehouse or other
storage point, no charge shall be made to the Joint Account
for a distance greater than the distance to the nearest
reliable supply store or railway receiving point, except by
agreement with non-Manager. No charge shall be made to Joint
Account for moving Material to other properties belonging to
Manager, except by agreement with non-Manager.
C. In the application of subparagraphs A and B above, there shall
be no equalization of actual gross trucking costs of $100.00
or less.
6. Off-Site Transportation of Ore
Transportation of Products from the Properties to any off-site
processing facility.
7. Processing Cost
It is understood at the time of the signing of this agreement that no
final disposition of Products from the Properties has been arranged.
However, the intent of the parties can be summarized as follows:
A. If the arrangement shall be toll milling then the Participants
shall take in kind and the costs required to beneficiate the
Products to the point where delivery may be taken in kind are
charged to the Joint Account as Processing Cost.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 6 of 15
B. If the arrangement shall be custom milling the Processing Cost
shall be the difference between the gross value of metal in
the Products and the payment received for the Products.
8. Services
A. The cost of contract services and utilities procured from
outside sources other than services covered by Paragraph 10 of
this Section II of this Accounting Procedure.
B. Use and services of equipment and facilities furnished by
Manager as provided in Paragraph 2 of Section IV of this
Accounting Procedure.
9. Damages and Losses to Joint Property
All costs or expenses necessary for the repair or replacement of Joint
Property made necessary because of damages or losses incurred by fire,
flood, storm, theft, accident, or any other cause. Manager shall
furnish non-Manager written notice of damages or losses incurred as
soon as practical after a report thereof has been received by Manager.
10. Legal Expenses
All costs and expenses of handling, investigating and settling
litigation or claims arising by reason of the Joint Operations or
necessary to protect or recover the Joint Property, including, but not
limited to, attorneys' fees, court costs, cost of investigation or
procuring evidence and amounts paid in settlement or satisfaction of
any such litigation or claims; provided (a) except as otherwise
permitted herein, no charge shall be made for the services of Manager's
legal staff or other regularly employed legal personnel for legal
services rendered solely on behalf of and for the benefit of Manager
(such services being considered to be Administrative Overhead under
Section III), except by agreement with non-Manager, (b) no charge shall
be made for the fees and expenses of outside attorneys unless the
employment of such attorneys is approved by the Management Committee,
and (c) no settlement of litigation or claims for more than $100,000 in
cash or value shall be made by the Manager without prior approval of
the non-Manager.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 7 of 15
11. Taxes
All taxes of every kind and nature assessed or levied upon or in
connection with the Joint Property, the operation thereof, of the
production therefrom, and which taxes have been paid by the Manager for
the benefit of all the Participants. For greater certainty, any tax
levied on income or profit of the Joint Venture is payable by each
individual Participant to this Agreement and, to the extent paid by the
Joint Account, is to be refunded to the Joint Account by each such
Participant on whom such tax is assessed and/or levied.
12. Insurance Premiums
Premiums paid for insurance required to be carried on the Joint
Property for the protection of the Participants.
13. Other Expenditures
Any other expenditures not covered or dealt with in the foregoing
provisions of this Section II or in Section III, and which are incurred
by the Manager for the necessary and proper conduct of the Joint
Operations and pursuant to any applicable provisions of the Operating
Agreement.
III. INDIRECT CHARGES
Subject to limitations hereinafter prescribed, and unless otherwise
provided in the Operating Agreement, Manager shall charge the Joint
Account with the following items:
1. Administrative Overhead
In addition to the charges made pursuant to Paragraph 1 above, Manager
shall charge the Joint Account with an overhead charge calculated as
follows:
A. One percent (1%) of any expenditure for an item which would,
under generally accepted accounting treatment for financial
purposes, be capitalized and is not included as a direct
charge included in Section II of the Account Procedure; plus
B. Seven percent (7%) of all Direct Charges as defined in this
Exhibit B, except the Direct Charges identified in Section II,
paragraphs 1A, 1B and 1C of this Exhibit B but for any
individual contract in excess of $50,000 the fee shall be
reduced to 3%.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 8 of 15
Such overhead rates may be amended from time to time by mutual
agreement of the Participants hereto if, in practice, the rates are
found to be insufficient or excessive.
2. Depreciation and Amortization
The value of additional capital equipment and facilities acquired after
Stage II will be amortized on a per ounce produced basis over the
remaining mine life, or the expected useful life of the newly acquired
capital asset, whichever is shorter.
IV. BASIS OF CHARGES TO JOINT ACCOUNT
1. Purchases
Material and equipment purchased and service procured shall be charged
at the price paid by Manager after deduction of all discounts actually
received.
2. Material Furnished by Manager
Material required for operations shall be purchased for direct charge
to the Joint Account whenever practicable, except that Manager may
furnish such material from Manager's stocks under the following
conditions:
A. New Material (Condition "A")
(1) New material transferred from Manager's warehouse or
other properties shall be priced F.O.B. the nearest
reputable supply store or railway receiving point,
where such material is available, at current
replacement cost of the same kind of material.
(2) Cash discount shall be allowed.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 9 of 15
B. Used Material (Conditions "B" and "C")
(1) Material which cannot be classified as Condition "A"
but which are classified as Condition "B" or "C" as
defined below shall be priced at 50% of new price.
(a) "Condition B": after reconditioning will be
further serviceable for original function as
good secondhand material, or
(b) "Condition C": is serviceable for original
function but substantially not suitable for
reconditioning.
(2) Material which cannot be classified as Condition "B"
or Condition "C" shall be priced at a value
commensurate with its use.
C. Material Furnished by Manager When Not Readily Available
When material and/or supplies are not readily available from
reputable supply sources due to scarcity, national emergency
or governmental regulations, Manager may furnish such from its
stock or properties at its nearest available supply and charge
Manager's full cost or replacement cost, as circumstances may
require, of same to the Joint Account, including, without
limitation, purchase price, procurement, warehousing,
handling, transportation and all other costs incurred in
connection therewith up to the time of delivery to the Joint
Property.
3. Premium Prices
Whenever materials and equipment are not readily obtainable at the
customary supply point and at prices specified in Paragraphs 1 and 2 of
this Section IV because of national emergencies, strike or other
unusual causes over which the Manager has no control, the Manager may
charge the Joint Account for the required materials on the basis of the
Manager's direct cost and expense incurred in procuring, such
materials, in making it suitable for use, and in moving it to the
location; provided, however, that notice in writing is furnished to
non-Manager of the proposed charge prior to billing the non-Manager for
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 10 of 15
the material or equipment acquired pursuant to this provision,
whereupon non-Manager shall have the right, by so electing and
notifying Manager, within ten (10) days after receiving notice from the
Manager, to furnish in kind, or in tonnage as the Participants may
agree, at the location nearest railway receiving point, or Manager's
storage point within a comparable distance, all or part of its share of
material or equipment suitable for use and acceptable to the Manager.
Transportation costs on any such material furnished by the non-Manager,
at any point other than at location, shall be borne by the non-Manager.
If, pursuant to the provisions of this paragraph, the non-Manager
furnishes material or equipment in kind, the Manager shall make
appropriate credits therefore to the Joint Account.
4. Warranty of Material Furnished by Manager
Manager does not warrant the material furnished beyond the backing of
the dealer's or manufacturer's guaranty; and in case of defective
material, credit shall not be passed until adjustment has been received
by Manager from the manufacturers or their agents.
5. Manager's Exclusively Owned Facilities
The following rates shall apply to service rendered to the Joint
Account by facilities and equipment owned by Manager:
A. Water, fuel, power, compressor and other auxiliary services at
rates commensurate with cost of providing and furnishing such
service to the Joint Account but not exceeding rates currently
prevailing in the vicinity of the Joint Property.
B. Automotive equipment at rates commensurate with cost of
ownership and operation. Automotive rates shall include cost
of oil, gas, repairs, insurance and other operating expenses
and depreciation; and charges shall be based on use in actual
service on, or in connection with, the Joint Account
operations. Truck and tractor rates may include wages and
expenses of driver.
C. A fair rate shall be charged for the use of Manager's fully
owned machinery or equipment which shall be ample to cover
maintenance, repairs, depreciation, and the service furnished
the Joint Property; provided that such charges shall not
exceed those currently prevailing in the vicinity of the Joint
Property.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 11 of 15
D. A fair rate shall be charged for laboratory services performed
by Manager for the benefit of the Joint Account; provided such
charges shall not exceed those currently prevailing if
performed by outside service laboratories.
E. Whenever requested, Manager shall inform non-Manager in
advance of the rates it proposes to charge.
F. Rates shall be revised and adjusted from time to time by the
Management Committee when found to be either excessive or
insufficient.
V. DISPOSAL OF EQUIPMENT AND MATERIAL
1. Manager Not Obligated to Purchase
The Manager shall be under no obligation to purchase interests of non
Manager in surplus new or secondhand material. The disposition of major
items of surplus material shall be subject to mutual determination by
the Participants hereto; provided, Manager shall have the right to
dispose of normal accumulations of junk and scrap material either by
transfer or sale from the Joint Property.
2. Material Purchased by the Manager or Non-Manager
Material purchased by either the Manager or non-Manager shall be
credited by the Manager to the Joint Account for the month in which the
material is removed by the purchaser.
3. Division in Kind
Division of material in kind, if made between Manager and non-Manager,
shall be in proportion to their respective interests in such material.
Each Participant will thereupon be charged individually with the value
of the material received or receivable by each Participant, and
corresponding credits will be made by the Manager to the Joint Account.
Such credits shall appear in the monthly statement of operations.
4. Sales to Third Parties
Sales to third parties of material from the Joint Property shall be
credited by Manager to the Joint Account at the net amount collected by
Manager from any such third party. Any claims by any such third party
for defective material or otherwise shall be charged back to the Joint
Account if and when paid by Manager.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 12 of 15
VI. BASIS OF PRICING MATERIAL TRANSFERRED FROM
JOINT ACCOUNT TO ACCOUNT OF EITHER PARTY
1. New Price Defined
New price as used in the following paragraphs shall have the same
meaning and application as that used in Section IV above, "Basis of
Charges to Joint Account."
2. New Material
New Material (Condition "A"), being new material procured for the Joint
Property but never used thereon, at one hundred percent (100%) of
current new price (plus sales tax, if any).
3. Good Used Material
Good used material (Condition "B"), being used material in sound and
serviceable condition, suitable for reuse without reconditioning.
A. At seventy-five percent (75%) of current new price (plus sales
tax, if any) if material was charged to the Joint Account as
new, or
B. At sixty-five percent (65%) of current new price (plus sales
tax, if any) if material was originally charged to the Joint
Account as Condition "B" material.
4. Other Used Material
Used material (Condition "C"), at fifty percent (50%) of current new
price (plus sales tax, if any), being used material which:
A. After reconditioning will be further serviceable for original
function as good secondhand material (Condition "B"), or
B. Is serviceable for original function but substantially not
suitable for reconditioning.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 13 of 15
5. Bad-Order Material
Material and equipment (Condition "D") which is no longer useable for
its original purpose without excessive repair cost but is further
useable for some other purpose shall be priced on a basis comparable
with that of items nominally used for that purpose.
6. Junk
Junk (Condition "E"), being obsolete and scrap material at prevailing
prices.
7. Temporarily Used Material
When the use of material is temporary and its service to the Joint
Property does not justify the reduction in price, such material shall
be priced on a basis that will leave a net charge to the Joint Account
consistent with the value to the Venture.
VII. INVENTORIES
1. Periodic Inventories, Notice and Representations
At reasonable intervals, but no less than annually, inventories shall
be taken by Manager of the Joint Account material, which shall include
all such material as is ordinarily considered controllable by operators
of mining properties. Written notice of intention to take inventory
shall be given by Manager at least thirty (30) days before any
inventory is to begin so that non-Manager may be represented at an
inventory. Failure of non-Manager to be represented at an inventory
shall bind the non-Manager to accept the inventory taken by Manager,
who shall in that event furnish non-Manager with a copy thereof. The
provisions of this paragraph do not apply if inventory is maintained on
a perpetual basis.
2. Reconciliation and Adjustment of Inventories
Reconciliation of inventory with charges to the Joint Account shall be
made by each Participant in interest, and a list of overages and
shortages shall be jointly determined by Manager and non-Manager.
Inventory adjustments shall be made by Manager to the Joint Account for
overages and shortages, but Manager shall be held accountable to
non-Manager only for shortages due to lack of reasonable care.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 14 of 15
3. Special Inventories
Special inventories may be taken at the expense of a purchaser of a
Party's Periodic Inventory whenever there is any sale or change of
interest in the Joint Property; and it shall be the duty of the
Participant selling to notify all other Participants hereto as quickly
as possible after the transfer of interest takes place. In such cases,
both the seller and the purchaser shall be represented and shall be
governed by the inventory so taken.
Exhibit B to Earn-in Agreement
Accounting Procedures
Page 15 of 15
EXHIBIT B1
INSURANCE
1. Manager as determined by the Management Committee shall maintain in the
names of the Participants the following types of insurance with limits
of liability as stated below and shall maintain insurance as required,
as a cost charged to the Earn-in Activities, at all times while
performing the operations for the benefit of the Participants. Upon
written request by any Participant, Manager shall provide certificates
of insurance executed by the insurance companies evidencing the
insurance placed by Manager and shall promptly deliver said
certificates to said Participant. The certificates procured by Manager
shall provide that any major negative change in or the cancellation of
any coverages for which certificates are issued shall not be valid as
respects the certificate holder's interests therein until the
certificate holder has had at least thirty days' notice in writing
prior to such change or cancellation. Insurance provided by Manager
under subsection (a)(i), (a)(ii) and (a)(iii), below, shall contain a
waiver of subrogation in favor of the Participants, if such waiver is
available under such policies of insurance. Contractors and
subcontractors shall include the Participants as additional insureds,
which inclusion shall be shown on appropriate certificates.
-------------------------------------------------------------- ---------------------------------------------
COVERAGE MINIMUM LIMITS
-------------------------------------------------------------- ---------------------------------------------
(i) Workers' Compensation ("WC") and WC - Statutory
Employers' Liability ("EL") Insurance, including
Occupational disease. EL - $500,000
-------------------------------------------------------------- ---------------------------------------------
(ii) Business automobile liability insurance, $1,000,000 combined single limit per
including all owned, and hired vehicles; provided, occurrence for bodily injury and
if Rodeo Creek uses non-owned vehicles, it shall first property damage.
obtain coverage for such non-owned vehicles as part of the
automobile liability insurance policy or under a rider
thereto.
-------------------------------------------------------------- ---------------------------------------------
(iii) Commercial general liability insurance $5,000,000 combined single limit per
including blanket contractual liability, personal occurrence and in the annual aggregate
injury, independent contractors. for bodily injury, personal injury and
property damage.
-------------------------------------------------------------- ---------------------------------------------
2. Manager shall cause all of Manager's Affiliates, contractors and
subcontractors to maintain Worker's Compensation Insurance as
prescribed by law, and to maintain Employer's Liability Insurance,
Exhibit B1 to Earn-in Agreement
Insurance
Page 1 of 2
Business Automobile Liability Insurance in amounts equal to at least
10% of the amounts set forth above, and Commercial general liability
insurance with a combined single limit of $1,000,000 and in the annual
aggregate, at all times during the performance of Operations by such
Affiliates, contractors or subcontractors.
Exhibit B1 to Earn-in Agreement
Insurance
Page 2 of 2
EXHIBIT C
FORM OF QUITCLAIM DEED AND ASSIGNMENT
RECORDING REQUESTED BY & RETURN TO:
Hecla Ventures Corp.
Land Records Department
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, XX 00000-0000
FORM OF QUITCLAIM DEED AND ASSIGNMENT
Rodeo Creek Gold Inc. (hereinafter referred to as "Transferor"), a
Nevada corporation, whose address is C/O Xxxxxxx Xxxxxx, 260 - 0000 Xxxxxxxx
Xxxxx, Xxxx, Xxxxxx 00000, duly qualified to do business and in good standing in
the state of Nevada, in consideration of the sum of ten dollars ($10.00) and
other valuable consideration paid to Transferor by Hecla Ventures Corp.,
(hereinafter referred to as "Transferee"), a Nevada corporation duly qualified
to do business and in good standing in the state of Nevada, whose address is
0000 Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000, the receipt of which is
hereby acknowledged by Transferor, hereby assigns and quitclaims to Transferee
an undivided fifty percent (50%) interest in all of the Transferor's interest in
the Properties described in Exhibit A to that Earn-in Agreement between
Transferor and Transferee dated __________, 2002 ("Property").
TO HAVE AND TO HOLD, all and singular the Property, together with the
tenements, hereditaments and appurtenances belonging thereto, or in anywise
appertaining, and the rents, issues and profits of such property all to
Transferee and Transferee's successors and permitted assigns forever.
IN WITNESS WHEREOF, Transferor has caused this Quitclaim Deed and
Assignment to be executed this _______ day of _________________, 2002.
TRANSFEROR:
RODEO CREEK GOLD INC.
By: NOT FOR SIGNATURE - FORM ONLY
-----------------------------
Name:
----------------------------
Title:
---------------------------
Exhibit C to Earn-in Agreement
Form of Form of Quitclaim Deed and Assignment
Page 1 of 2
ACKNOWLEDGEMENT
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 2002, by ___________________________________ the
_______________________ of Rodeo Creek Gold Inc., a Nevada corporation, on
behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
-----------------------------
Notary Public in and for the
Province of British Columbia
Residing at: ___________________________
My Commission Expires: _________________
Exhibit C to Earn-in Agreement
Form of Form of Quitclaim Deed and Assignment
Page 2 of 2
EXHIBIT D
FORM OF MEMORANDUM OF AGREEMENT
RECORDING REQUESTED BY & RETURN TO:
Hecla Ventures Corp.
Land Records Department
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, XX 00000-0000
FORM OF MEMORANDUM OF EARN-IN AGREEMENT
This Memorandum of Earn-in Agreement, effective the ___ day of
_____________, 2002, is filed of record in accordance with the provisions
contained in that certain agreement of even date herewith known as the Ivanhoe
Project - Hollister Development Block Earn-in Agreement ("Earn-in Agreement"),
wherein Hecla Ventures Corp., a Nevada corporation, whose address is 0000
Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000 ("Hecla Ventures") entered into a
mineral exploration, development and mining arrangement with Rodeo Creek Gold
Inc., a Nevada corporation, whose address is C/O Xxxxxxx Xxxxxx, 260-6121
Xxxxxxxx Xxxxx, Xxxx, XX 00000 ("Rodeo Creek"), for good and valuable
consideration as set forth in the provisions of the Earn-in Agreement, a copy of
which is available at the offices of the parties set forth above.
Under the terms of the Earn-in Agreement, Hecla Ventures is granted the
right to conduct activities including, without limitation, mineral exploration,
development, test mining and processing, and all other activities incident to or
arising therefrom, on or for the benefit of the properties held by Rodeo Creek
more specifically described in Exhibit A, attached hereto and incorporated
herein by this reference (referred to as the "Properties").
Upon completion of certain terms specified in the Earn-in Agreement and
payment of valuable consideration to Rodeo Creek, Hecla Ventures shall acquire
an immediate right to receive an undivided fifty percent (50%) interest in Rodeo
Creek's Properties, and both parties shall immediately contribute their
undivided interests in such properties to the purposes of a Joint Operating
Agreement, the form of which is attached as Exhibit F to the Earn-in Agreement.
This Memorandum has been executed and filed of record solely to give
the public notice of the existence of the Earn-in Agreement. It does not in any
way amend, modify, revise, or replace the Earn-in Agreement.
Exhibit D to Earn-in Agreement
Form of Memorandum of Agreement
Page 1 of 4
IN WITNESS WHEREOF, the parties have executed this Memorandum effective
as of the date and year first above written.
HECLA VENTURES CORP. RODEO CREEK GOLD INC.
By: NOT FOR SIGNATURE - FORM ONLY By: NOT FOR SIGNATURE - FORM ONLY
------------------------------ ------------------------------
--------------------------------- ---------------------------------
Print Name Print Name
Its: Its:
----------------------------- -----------------------------
Title Title
Exhibit D to Earn-in Agreement
Form of Memorandum of Agreement
Page 2 of 4
ACKNOWLEDGEMENTS
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ________ day
of _____________ 2002, by Xxxxxx X. Xxxxx, President of Hecla Ventures Corp., a
Nevada corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
-----------------------------
Notary Public in and for the State of Idaho
Residing at: ______________________________
My Commission Expires: ____________________
Exhibit D to Earn-in Agreement
Form of Memorandum of Agreement
Page 3 of 4
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 2002, by ___________________________________ the
_______________________ of Rodeo Creek Gold Inc., a Nevada corporation, on
behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
-----------------------------
Notary Public in and for the
Province of British Columbia
Residing at: ______________________________
My Commission Expires: ____________________
Exhibit D to Earn-in Agreement
Form of Memorandum of Agreement
Page 4 of 4
EXHIBIT E
EXPENDITURE SCHEDULE AND INITIAL PROGRAM AND BUDGET
A. Warrant Commitments.
Subject to the right to terminate and to withdraw under Article VIII of
the Earn-in Agreement, Hecla Ventures issues Great Basin the following
warrants to purchase Hecla Common Stock:
Date of Hecla Mining Warrants Amount of Warrant Issuance
----------------------------- --------------------------
1. At signing ("Effective Date") of the Earn-in 2,000,000 two year warrants to purchase Hecla
Agreement Mining common stock ("Tranche 1")
2. On date Hecla Ventures elects to An additional 1,000,000 two year warrants to
proceed with Stage II Activities or fund in purchase Hecla Mining common stock
lieu ("Tranche 2")
3. On date Hecla Ventures gives notice to An additional 1,000,000 two year warrants to
Rodeo Creek that Stage II Earn-In Activities purchase Hecla Mining common stock
are complete or Hecla Ventures elects to fund ("Tranche 3")
Stage II in lieu.
Hecla Ventures shall issue to Great Basin the warrant certificate(s)
dated as per above within thirty (30) days of the date of the Warrant
Agreement, substantially in the form of Exhibit G hereto.
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 1 of 14
Upon receipt of each Tranche of Hecla Mining Warrants (as defined
above) Great Basin will issue to Hecla Ventures warrants to purchase
shares in Great Basin ("Great Basin Warrants") as follows: 1) 1 million
Great Basin two year Warrants upon receipt of Tranche 1 Hecla Mining
Warrants; 2) 500,000 Great Basin two year Warrants upon receipt of
Tranche 2 Hecla Mining Warrants; and 3) 500,000 Great Basin two year
Warrants upon receipt of Tranche 3 Hecla Mining Warrants. Great Basin
Warrants will be exercisable at the weighted average closing price for
the twenty (20) trading days on the Toronto Stock Exchange immediately
prior to issuance and done substantially in accordance with the form
Warrant Agreement attached hereto in Exhibit H, subject to Article V.
B. Earn-in Activities.
For purposes of this Exhibit E and the Earn-in Agreement, "Earn-in
Activities" shall mean the following activities conducted in accordance
with generally accepted mining practices in the United States of
America.
Stage I
* Plan, engineer and permit (in an expeditious manner) scope of
work
* Develop underground access to Gwenivere and Clementine veins
including some equipment purchases
* Delineate ore shoots within veins
* Convert resource to "measured and indicated" based on diamond
core drilling program
* Complete Feasibility Study to determine the scope of work to be
accomplished in Stage II and the overall feasibility of a mine
project.
See attached Scope of Work for Details of Stage I Work. The estimated
costs to complete Stage I is $10,300,000 and the estimated time to
complete is 12 months after date of issuance of permit(s) (pursued in
an expeditious manner on a best efforts and diligent basis by Hecla
Ventures), however, some permitting and Stage I work Program Activities
will run concurrently. Earn-In Activities to commence on the Effective
Date of this Agreement. If the actual costs of Stage I exceed the
Initial Budget, but are done in accordance with a revised and approved
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 2 of 14
Program and Budget, then such additional costs shall apply towards
Earn-In Expenditures as provided under Section 9.3, Programs and
Budgets.
Stage II
* Possible future development loop of underground to surface
* Underground production development
* Production equipment
* Surface Facilities and Infrastructure
* Engineering, procurement and management construction
The estimated costs to complete Stage II are $11,500,000 and
are estimated to take approximately 12 months to complete. The total
costs of Stage I and II are estimated at $21,800,000.
After completion of Stage II, the subject Properties are
essentially developed to the point of Commercial Production or where a
decision can be made whether they are capable of Commercial Production.
Each Party must notify the other within thirty (30) days after
completion of Stage II whether it elects to proceed.
C. Initial Program and Budget for Stage I.
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 3 of 14
HOLLISTER DEVELOPMENT BLOCK VENTURE - AUGUST 2, 2002
STAGE 1 EXPLORATION PROGRAM AND BUDGET
US $
Permitting $ 200,000
Project Planning and Engineering incl. in Management Services
Equipment and Facilities
Procurement and Prep 653,165
Mobilization 34,630
Drifting and Development
Ramping, Crosscutting and Diamond Drill
Stations - 5,780 ft 1,992,752
Drift on Vein - 2,200 ft 591,600
Raising on Veins 750 ft 366,200
Indirect Costs 2,580,040
Metallurgy 73,171
-----------------
Subtotal - Setup and Construction 6,491,558
Diamond Drilling - 40,000 ft. 1,080,000
Management Services @ 7% 530,009
-----------------
Subtotal - Project 8,101,567
Contingencies
Ground support 350,000
Water handling 200,000
Environmental 25% of Forecast Permitting Cost 50,000
Equipment and Facilities 498,433
-----------------
Subtotal Project with Contingencies 9,200,000
Other
Bonding 1,000,000
Other Contingencies 100,000
-----------------
Total Estimated Stage I Costs $10,300,000
=================
Notes:
1. Assumes an E.I.S. is not needed, that an E.A. is sufficient
2. Does not include Reclamation
3. Phase 2 (USD) = $21.8 m less $10.3 m = $11.5 m
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 4 of 14
PHASE I: DEFINITION AND CHARACTERIZATION
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
1. PROJECT PLANNING / PERMITTING QUANTITY U/M UNIT COST TOTAL
---------------------------------------------------------------------------------------------------------------------------------
1.1. Manage project planning and engineering incl. -
---------------------------------------------------------------------------------------------------------------------------------
1.2. Review existing Plan of Operations (POO) to identify changes to 1 LS 200,000 200,000
facilitate Phase I
---------------------------------------------------------------------------------------------------------------------------------
1.3. Conduct a data review for the project with an initial focus on incl. -
hydrogeology, impacts to surface waters, waste rock characterization,
cultural impacts, and the existing EA.
---------------------------------------------------------------------------------------------------------------------------------
1.3. Develop an ARD sampling plan based on the data review and review incl. -
the plan with GBG
---------------------------------------------------------------------------------------------------------------------------------
1.4. Prepare a conceptual Phase I plan and schedule for review by incl. -
GBG, Newmont, and regulatory agencies
---------------------------------------------------------------------------------------------------------------------------------
1.5. Review the conceptual Phase I exploration POO and environmental incl. -
monitoring plans with BLM and NDEP prior to actual sample collection and
analysis.
---------------------------------------------------------------------------------------------------------------------------------
1.6. Determine what existing permits can be transferred to the incl. -
project, identify and correct deficiencies.
---------------------------------------------------------------------------------------------------------------------------------
1.7. Pursue in an expeditious manner all necessary environmental incl. -
permits to conduct an underground exploration program to define and
characterize mineral resources within the Hollister Development Block.
---------------------------------------------------------------------------------------------------------------------------------
1.8. Pursue in an expeditious manner all necessary local, state and incl. -
federal permits such as but not limited to MSHA, and State of Nevada mine
ID numbers required to conduct the Phase One Scope of Work.
---------------------------------------------------------------------------------------------------------------------------------
1.9. Pursue in an expeditious manner all necessary permits for incl. -
erection of surface facilities, communication facilities and all other
permits required by local, state or federal authorities to accomplish the
Phase One Scope of Work.
---------------------------------------------------------------------------------------------------------------------------------
1.10. Once a significant geologic resource is identified, begin incl. -
permitting for Phase 2 Development.
---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 200,000
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
2. SITE ACCESS QUANTITY U/M UNIT COST TOTAL
---------------------------------------------------------------------------------------------------------------------------------
2.1. Maintain access that portion of the Midas - Tuscarora Road 52 Weeks 1,200 61,920
eastward from the Xxx Xxxxxx turnoff to and including the project access
road, consisting of grading, snow removal and dust suppression suitable
for the season, traffic and vehicles using the road.
---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 61,920
---------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 5 of 14
----------------------------------------------------------------------------------------------------------------------------------
3. SITE UTILITIES QUANTITY U/M UNIT COST TOTAL
----------------------------------------------------------------------------------------------------------------------------------
3.1. Procure and establish telephone services to the project site 1 LS 25,000 25,000
adequate for voice communication, fax and data transmission.
----------------------------------------------------------------------------------------------------------------------------------
3.2.1 Design, supply, and install services for electric power 1 LS 15,000 15,000
sufficient to conduct Phase One Scope of Work.
----------------------------------------------------------------------------------------------------------------------------------
3.2.2 Operate and maintain functioning services for electric power 13 Month 58,462 975,000
sufficient to conduct Phase One Scope of Work.
----------------------------------------------------------------------------------------------------------------------------------
3.3. Design, supply, install and maintain functioning services for 12 Month 833 10,000
compressed air sufficient to conduct Phase One Scope of Work
----------------------------------------------------------------------------------------------------------------------------------
3.4. Design, supply, install and maintain functioning services for 1 LS 91,950 91,950
service water for the underground work and surface facilities sufficient
to conduct Phase One Scope of Work. Water will be available from a well
owned by Great Basin Gold and trucked to the project site for storage in a
tank or tanks on site.
----------------------------------------------------------------------------------------------------------------------------------
3.5. Design, supply, install and maintain functioning services for 1 LS 53,000 53,000
water drainage from the underground workings sufficient to conduct Phase
One Scope of Work including required water treatment and disposal systems.
----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 1,169,950
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
4. SITE INFRASTRUCTURE QUANTITY U/M UNIT COST TOTAL
----------------------------------------------------------------------------------------------------------------------------------
4.1. Provide staffing including Project Manager, Office Manager, Mine 13 Month 67,269 874,500
Supervisors, Engineer, Geologist, to carry out the Phase One Scope of Work
in Safe and Environmentally Compliant Manner.
----------------------------------------------------------------------------------------------------------------------------------
4.2. Provide, erect and maintain office facilities for Project 13 Month 1,000 29,450
Management, Safety, Environmental, Geologic, and Engineering functions during
the Phase One Scope of Work.
----------------------------------------------------------------------------------------------------------------------------------
4.3. Using the material generated from the underground access incl. -
development, prepare a pad suitable for ore stockpiling.
----------------------------------------------------------------------------------------------------------------------------------
4.4. Provide and install maintenance area for equipment used in the 1 LS 50,000 50,000
underground development which minimizes contamination from oils, greases
and waters from equipment.
----------------------------------------------------------------------------------------------------------------------------------
4.5. Establish secure and orderly lay down areas and warehousing 1 LS 25,000 25,000
facilities for parts and consumables necessary to accomplish the Phase One
Scope of Work.
----------------------------------------------------------------------------------------------------------------------------------
4.6. Provide an explosives storage area which meets all state and incl. -
federal requirements.
----------------------------------------------------------------------------------------------------------------------------------
4.7. Erect fuel, oil and grease storage areas including containment 1 LS 15,000 15,000
areas and fire protection.
----------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 6 of 14
-----------------------------------------------------------------------------------------------------------------------------------
4. SITE INFRASTRUCTURE - CONTINUED QUANTITY U/M UNIT COST TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
4.8. Supply fire protection equipment suitable for each area of the incl. -
site.
-----------------------------------------------------------------------------------------------------------------------------------
4.9. Site Grading and preparation within the East pit, portal area, 1 LS 38,000 38,000
and explosive storage area.
-----------------------------------------------------------------------------------------------------------------------------------
4.10. Provide sanitary facilities for site employees and visitors. 1 LS 9,000 9,000
-----------------------------------------------------------------------------------------------------------------------------------
4.11. Provide and erect dry facilities for project crews including 1 LS 22,100 22,100
miners, drillers, supervisors, engineers, geologists and other staff as
needed.
-----------------------------------------------------------------------------------------------------------------------------------
4.12. Provide a system for waste oil and solid waste collection and 12 Month 1,500 18,000
offsite disposal.
-----------------------------------------------------------------------------------------------------------------------------------
4.13. Provide transportation for employees to site. 13 Month 7,486 97,320
-----------------------------------------------------------------------------------------------------------------------------------
4.14. Establish and operate an accounting system capable of tracking incl. -
costs for each of the major activities for the Phase One Exploration and
Characterization work as well as Phase Two Preproduction Development.
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 1,178,370
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
5. UNDERGROUND ACCESS DEVELOPMENT QUANTITY U/M UNIT COST TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
5.1. Establish a secure portal with locking gate on the 5560 bench in 1 LS 50,000 50,000
the South East side of the Hollister USX East Pit at approximate
Coordinates 36,990E, 35,780N
-----------------------------------------------------------------------------------------------------------------------------------
5.2. Excavate a 13 feet wide by 14 feet high decline at approximately 2,700 Ft 336 907,200
minus 15% 2,700 feet to approximate coordinates of 37170E, 38170N Elev
5178 ft. Crossing 38000N at 37370E Elevation 5212.
-----------------------------------------------------------------------------------------------------------------------------------
5.3. Excavate one rehandling and passing area at about 1,200 feet 52 Ft 336 17,472
from portal. 32 feet long, 13 feet wide by 14 feet high and widen
decline to 18 feet wide for 50 feet. 20 equivalent feet = 52 feet.
-----------------------------------------------------------------------------------------------------------------------------------
5.5. From approximate coordinates 37170E, 38170N Elev 5178 ft 2,050 Ft 336 688,800
excavate a 13 feet wide by 14 feet high decline approximately N 75 W 1,275 feet
at about -9.1% parallel to the general strike of the Clementine and Gwenivere
structures to approximate coordinates 35,250 EE, 38520 N, 5,000 feet Elevation.
-----------------------------------------------------------------------------------------------------------------------------------
5.6. From approximate coordinates37170E, 38170N Elev 5178 ft 560 Ft 336 188,160
Elevation and 36500 E, 38350 N Elevation 5113 ft excavate 13 feet wide by 14
feet high cross cuts approximately220 ft each to cross the East, South and
Central Clementines respectively. From about 36,650 E, 38,300 N Elevation 5,130
ft crosscut `120 feet south to cross the Gwenivere structure and establish a
diamond drill station. at about 36,600, E, 38200 N 5,140 Elev.
-----------------------------------------------------------------------------------------------------------------------------------
5.8. Carry all utilities necessary to perform the excavation incl. -
including compressed air, fresh and discharge water, ventilation, power
and communication.
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 5,362 1,851,632
-----------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 7 of 14
-----------------------------------------------------------------------------------------------------------------------------------
6. DIAMOND DRILL STATION EXCAVATION QUANTITY U/M UNIT COST TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
6.1. Excavate approximately 20 diamond drill stations along the 420 Ft 336 141,120
access decline beginning at 2,400 ft from the portal, then stations at
2,700 feet, 2,900 feet then one every 100 feet along the decline. And
one Diamond drill station at or near the crosscut intersection with the
Gwenivere Structure. Dimensions of the drill stations will be 20 feet
deep as measured from the rib of the decline, 13 feet wide and 16 feet
high to accommodate 10 foot core barrels and maximum drill angles of plus
or minus 60 degrees while maintaining all drilling equipment inside the
drill station.
-----------------------------------------------------------------------------------------------------------------------------------
6.3. Supply compressed air, mine water, drainage line and electrical incl. -
power connections at the entrance to each drill station.
-----------------------------------------------------------------------------------------------------------------------------------
6.4. Provide alignment markings and survey control for the drilling incl. -
contractor to use for alignment of drill holes.
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAl 420 141,120
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
7. DRIFTING AND RAISING ON VEIN QUANTITY U/M UNIT COST TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
7.1. From approximately 37,200E, 38,400N Elev 5,200, Drift 400 feet 900 Ft 258 232,200
west and 500 feet east on the East Clementine at a minimum 7 feet wide
or vein width if vein is wider than 7 feet and 10.5 feet high.
-----------------------------------------------------------------------------------------------------------------------------------
7.2. From coordinates 36,500 E, 38450N Elevation 5,150 feet ,Drift 600 Ft 258 154,800
300 feet east and 300 feet west on the South Clementine Structure at a
minimum 7 feet wide or vein width if the vein is wider than 7 feet wide.
-----------------------------------------------------------------------------------------------------------------------------------
7.3. From Coordinates 36,500 E, 38,550 N Elevation 5,150 drift 300 600 Ft 258 154,800
feet east and 300 feet west on the Central Clementine Structure at a
minimum 7 feet wide or vein width if the vein is wider than 7 feet.
-----------------------------------------------------------------------------------------------------------------------------------
7.4. From Coordinates 36,100 E, 38,200 N Elevation 5,160 Drift 50 100 Ft 258 25,800
feet east and 50 feet west on the Gwenivere Structure at a minimum 7 feet
wide or vein width if the vein is wider than 7 feet.
-----------------------------------------------------------------------------------------------------------------------------------
7.5. Drive Alimak raises on East Clementine, South Clementine and 750 ft See detail 366,200
Central Xxxxxxxxx from the drifts on vein to the unconformity. Each
raise will be about 250 feet high. Unit cost includes mobilization and
set up.
-----------------------------------------------------------------------------------------------------------------------------------
7.5. Collect and assay face samples in drifts as required. 1,200 assays 20 24,000
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 2,950 Ft 957,800
-----------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 8 of 14
--------------------------------------------------------------------------
RAISING COST DETAIL:
--------------------------------------------------------------------------
1 LS 50000 50000
---------------------------------- ---------- ----- --------- ------------
Set up and Hideaway 50 ft 258 12900
---------------------------------- ---------- ----- --------- ------------
Raising 250 ft 350 87500
---------------------------------- ---------- ----- --------- ------------
Set up and Hideaway 50 ft 258 12900
---------------------------------- ---------- ----- --------- ------------
Raising 250 ft 350 87500
---------------------------------- ---------- ----- --------- ------------
Set up and Hideaway 50 ft 258 12900
---------------------------------- ---------- ----- --------- ------------
Raising 250 ft 350 87500
---------------------------------- ---------- ----- --------- ------------
1 LS 15000 15000
---------------------------------- ---------- ----- --------- ------------
Total Raising 366200
---------------------------------- -------------------------- ------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
8. DIAMOND DRILLING QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
8.1. Drill approximately 32,000 ft of NQ size core into the 40,000 Ft 25 1,000,000
Clementine structures and 8,000 ft into the Gwenivere Structure as
determined by geologic guidance.
--------------------------------------------------------------------------------------------------------------------------------
8.1.1 Photograph core before splitting. incl.
--------------------------------------------------------------------------------------------------------------------------------
8.1.2 Split core with hydraulic splitter. Send one half for assay incl.
with other half saved.
--------------------------------------------------------------------------------------------------------------------------------
8.1.3 Sample on geologic breaks with a minimum of 20 cm and a maximum incl.
of 1 m in vein.
--------------------------------------------------------------------------------------------------------------------------------
8.1.4 Send all samples to an accredited laboratory, mutually agreed incl.
upon.
--------------------------------------------------------------------------------------------------------------------------------
8.1.5 The lab will have a blind control sample list with instructions incl. to
include 2 pulps in the list with each fired lot. Control samples will include
standard pulps and pulp re-runs.
--------------------------------------------------------------------------------------------------------------------------------
8.1.6 Submit blind rejects in the amount of 5% of the samples in vein incl.
at regular intervals.
--------------------------------------------------------------------------------------------------------------------------------
8.1.7 Compile a quality control report once per month. incl.
--------------------------------------------------------------------------------------------------------------------------------
8.2. Survey drill holes to collect angles of inclination and bearing incl. -
at appropriate intervals.
--------------------------------------------------------------------------------------------------------------------------------
8.3. Log drill holes to include the following as a minimum: rock 4,000 Assays 20 80,000
type, structure, RQD, assays for gold and silver and other metals as
requested by geologic staff.
--------------------------------------------------------------------------------------------------------------------------------
8.4. Collect samples of each different rock type for analysis of ARD incl. -
potential
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 1,080,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
9. GEOLOGIC CONTROL QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
9.1. Map declines and drifts on an appropriate scale for geologic incl. -
interpretation and mine planning. Mapping will record as a minimum rock
type, structures, joint orientation, bedding, assay results and other
data as deemed necessary by the geologic staff.
--------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 9 of 14
--------------------------------------------------------------------------------------------------------------------------------
9. GEOLOGIC CONTROL-CONTINUED QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
9.2. Collect samples of all rock types encountered in development incl. -
for analysis of ARD potential.
--------------------------------------------------------------------------------------------------------------------------------
9.3. Geologic mapping will be transferred to posting sheets and incl.
digitized.
--------------------------------------------------------------------------------------------------------------------------------
9.4. Longitudinal sections of each vein showing sampling results and incl.
approximate geologic features and limits will be constructed.
--------------------------------------------------------------------------------------------------------------------------------
9.5. Transverse cross-sections will be maintained and posted as in incl.
9.4, above.
--------------------------------------------------------------------------------------------------------------------------------
9.6. Underground samples will be collected to obtain approximately 6 kg / m (5
lbs/ foot), cut horizontally with a hammer, moil, and other appropriate sampling
equipment. A duplicate vein sample will be collected from each face.
--------------------------------------------------------------------------------------------------------------------------------
9.7. Assays will be maintained in an ACCESS database and will be incl.
posted to plan and section.
--------------------------------------------------------------------------------------------------------------------------------
9.8 A compilation scale will be determined and updated periodically incl.
to show relevant geologic and assay results.
--------------------------------------------------------------------------------------------------------------------------------
9.9 Will provide daily guidance on drift placement and size for all incl.
on-vein development.
--------------------------------------------------------------------------------------------------------------------------------
9.10 Provide guidance and support for metallurgical testing. incl.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL -
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
10. SURVEYING QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
10.1 Survey and detail all underground work and compile onto incl. -
underground as built drawings in both digital and hard copy formats at a
scale adequate for mine planning and geologic functions.
--------------------------------------------------------------------------------------------------------------------------------
10.2. Survey and detail all surface work and compile onto underground 1 LS 1,800 1,800
as built drawings in both digital and hard copy formats at a scale
adequate for mine planning and geologic functions.
--------------------------------------------------------------------------------------------------------------------------------
10.3. Survey all diamond drill hole collar locations and bearing and incl. -
inclination at the collar of each diamond drill hole.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 1,800
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
11. UNDERGROUND INFRASTRUCTURE
--------------------------------------------------------------------------------------------------------------------------------
11.1. Install and maintain the following as necessary and as required incl. -
by State and Federal regulations: mine ventilation, mine fresh water,
mine discharge water, compressed air, communication, refuge area.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL -
--------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 10 of 14
--------------------------------------------------------------------------------------------------------------------------------
12. MINE EQUIPMENT QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
12.1. Provide mobile mining equipment, service equipment, and fixed 1 LS 290,791 290,791
facilities necessary to accomplish the Scope of Work, to include but not limited
to the following: Diesel-hydraulic drill jumbo, 3.5yd LHD, 6 yd LHD 16 ton
underground haul truck, Underground service truck, Scissor-Lift truck, Personnel
tractors, Crew-vans for surface transportation, Emergency First-Aid vehicle,
Underground mine fans, power-centers, switchgear.
--------------------------------------------------------------------------------------------------------------------------------
12.2. Necessary Reconditioning of Equipment 1 LS 212,374 212,374
--------------------------------------------------------------------------------------------------------------------------------
12.3. Mobilize Equipment to Project, place equipment in service 1 LS 34,630 34,630
--------------------------------------------------------------------------------------------------------------------------------
12.4. Additional Equipment not available from Rosebud to include 1 LS 150,000 150,000
handheld drills, smaller LHDs and one additional large LHD for Decline
development. All Equipment reconditioned.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 687,795
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
13. GEOTECHNICAL EVALUATION
--------------------------------------------------------------------------------------------------------------------------------
13.1. Coordinate/perform the geotechnical evaluations necessary to 1 LS 15,000 15,000
carry out ground support design in all underground openings, and to
carry out potential stope design/layouts.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 15,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
14. BULK SAMPLE COLLECTION
--------------------------------------------------------------------------------------------------------------------------------
14.1. From drifts on Clementine and Gwenivere Veins, collect material incl. -
representative of future mine production for pilot testing and/or test
milling.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL -
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
15. ENVIRONMENTAL CHARACTERIZATION
--------------------------------------------------------------------------------------------------------------------------------
15.1. Environmental monitoring and reporting as required by permit or 13 Month 5,400 70,200
regulation.
--------------------------------------------------------------------------------------------------------------------------------
15.2. Acid base accounting on representative samples of development incl. -
material.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 70,200
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
16. METALLURGICAL TESTING QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
16.1. Preliminary Assessment Of Appropriate Processing Methods
--------------------------------------------------------------------------------------------------------------------------------
16.1.1. Perform cyanide soluble assays on selected pulps. Identify 1 LS 20,000 20,000
general precious metal extraction, refractory gold or silver occurrence,
potential preg robbing, soluble base metals.
--------------------------------------------------------------------------------------------------------------------------------
16.1.2. Compile a database of sample locations, total and cyanide incl.
soluble assays and pertinent geology log data to delineate different
metallurgical ore types.
--------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 11 of 14
--------------------------------------------------------------------------------------------------------------------------------
16. METALLURGICAL TESTING-CONTINUED QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
16.1.3. Identify potential material handling problems (i.e. high incl.
moisture or high clay content).
--------------------------------------------------------------------------------------------------------------------------------
16.1.4. Review mineralogy and ore types of nearby mines (i.e. Ramarco incl.
and Midas).
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 20,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
16.2. SELECTION AND COMPOSITE OF METALLURGICAL SAMPLES FOR FURTHER
STUDY
--------------------------------------------------------------------------------------------------------------------------------
16.2.1. Categorize core into separate ore types. 1 LS 5,000 5,000
--------------------------------------------------------------------------------------------------------------------------------
16.2.2. Select core intervals within ore types that represent several incl. -
grade ranges.
--------------------------------------------------------------------------------------------------------------------------------
16.2.3. Composite intervals to obtain a representative metallurgical incl. -
sample of a particular ore type for a particular grade range.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 5,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
16.3. METALLURGICAL TESTING PROGRAM
--------------------------------------------------------------------------------------------------------------------------------
16.3.1. Feed Preparation & Head Analysis. Determine head feed by fire 1 LS 2,662 2,662
assay, trace elements by ICP, and Bond ball mill work index.
--------------------------------------------------------------------------------------------------------------------------------
16.3.2. Grind & Xxxxx Kinetics Tests. Determine the mesh of grind 1 LS 4,345 4,345
versus recovery relationship, optimum xxxxx time
--------------------------------------------------------------------------------------------------------------------------------
16.3.3. Cyanide Optimization Tests. Determine optimum cyanide 1 LS 3,575 3,575
concentration in the xxxxx slurry, cyanide consumption at the optimum
concentration.
--------------------------------------------------------------------------------------------------------------------------------
16.3.4. Comparison Carbon In Xxxxx versus Counter Current Decantation 1 LS 3,960 3,960
Processes. Perform duplicate standard cyanidation and carbon in xxxxx
bottle roll tests. Determine metal extractions and reagent consumption,
carbon loading for gold and silver.
--------------------------------------------------------------------------------------------------------------------------------
16.3.5. Process Confirmation Tests. Perform agitated cyanidation tests 1 LS 9,405 9,405
using optimized parameters. Analyze all residues including carbon for
gold and silver. Determine metal extractions and reagent consumption.
Perform agitated cyanidation tests using optimized parameters.
--------------------------------------------------------------------------------------------------------------------------------
16.3.6. Thickening & Filtration Tests. Perform flocculent screening, 1 LS 3,520 3,520
Kynch and filter leaf tests on the ground feed and xxxxx residue to
determine thickening and filtration area requirements.
--------------------------------------------------------------------------------------------------------------------------------
16.3.7. Environmental Tests. TCLP test on xxxxx residue. Acid 1 LS 493 493
generating / acid neutralization potential tests on ground feed and
xxxxx residue.
--------------------------------------------------------------------------------------------------------------------------------
16.3.8 Lab project management and reporting 1 LS 2,712 2,712
--------------------------------------------------------------------------------------------------------------------------------
16.3.9 Hecla project management and review. 1 LS 9,500 9,500
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 40,171
--------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 12 of 14
--------------------------------------------------------------------------------------------------------------------------------
17. RESOURCE MODELING QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
17.1. Model the resource delineated by drifting and drilling using a 1 LS 30,000 30,000
software package or packages to be agreed upon by Great Basin and Hecla.
--------------------------------------------------------------------------------------------------------------------------------
17.2. Construct a drill hole and chip sample database appropriate for incl.
resource estimate.
--------------------------------------------------------------------------------------------------------------------------------
17.3. Supply geologic model and data as required and appropriate to incl.
conduct resource estimate.
--------------------------------------------------------------------------------------------------------------------------------
17.4. Conduct in-house resource estimate using its software and incl.
personnel and/or outside consultants as directed by Management Committee.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 30,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
18. MARKETING QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
18.1. Tour surrounding area process facilities of the Hollister 1 LS 8,000 8,000
Development Block.
--------------------------------------------------------------------------------------------------------------------------------
18.2. Determine process efficiencies with Hollister Development Block incl.
ore for each facility
--------------------------------------------------------------------------------------------------------------------------------
18.3. Determine distance from the mine (haulage costs). incl.
--------------------------------------------------------------------------------------------------------------------------------
18.4. Determine tonnage capacity (mill throughput and tails storage incl.
availability).
--------------------------------------------------------------------------------------------------------------------------------
18.5. Determine if stand alone milling or co-mingling of owners incl.
(others) ore.
--------------------------------------------------------------------------------------------------------------------------------
18.6. Determine refining capabilities. incl.
--------------------------------------------------------------------------------------------------------------------------------
18.7. Negotiate preliminary contract agreement. incl.
--------------------------------------------------------------------------------------------------------------------------------
18.8. Propose custom and toll milling agreements. incl.
--------------------------------------------------------------------------------------------------------------------------------
18.9. Select process facility and finalize contract agreement. incl.
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 8,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
19. PRE FEASIBILITY STUDY QUANTITY U/M UNIT COST TOTAL
--------------------------------------------------------------------------------------------------------------------------------
19.1. Prepare conceptual mine plans compatible with data gathered 6 Month 8,800 52,800
from drilling, drifting on vein, geotechnical evaluation and test mining.
--------------------------------------------------------------------------------------------------------------------------------
19.2. Develop economic model of Conceptual Mine Plan and custom incl. -
milling operation.
--------------------------------------------------------------------------------------------------------------------------------
19.3. With a combination of Hecla in house costing data base and zero incl. -
based costing, evaluate production rates in the Conceptual Mine Plan(s).
--------------------------------------------------------------------------------------------------------------------------------
19.4. Develop capital cost estimates, scope of work and schedule for incl. -
pre production program and budget (Phase 2).
--------------------------------------------------------------------------------------------------------------------------------
19.5. Evaluate Return on Investment and Net Present Value, price, incl. -
capital, grade and operating cost sensitivities
--------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 52,800
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL 7,571,558
--------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-in Agreement
Expenditure Schedule and Initial Program & Budget
Page 13 of 14
CONTINGENCY CALCULATIONS
------------------------------------------------------------------------------------------------------------------------------------
COST ITEM AFFECTED COST ITEM BASE UNIT UNITS TOTAL UNITS % OF QUANTITY POSSIBLE CONTINGENCY PER CENT
------------------ --------- --------- ----- ----- ----- ---- -------- -------- ----------- --------
AMOUNT COST AFFECTED QUANTITY TOTAL AFFECTED PERCENTAGE AMOUNT REDUCTION IN
------ ------------- -------- ----- -------- ---------- ------ ------------
INCREASE ADVANCE RATE
------------------------------------------------------------------------------------------------------------------------------------
GROUND SUPPORT
--------------
------------------------------------------------------------------------------------------------------------------------------------
5. UNDERGROUND ACCESS $1,851,632 $15 $/ft Ground 5,362 ft 30% 1608.6 100% $ 24,129 50%
DEVELOPMENT Support
------------------------------------------------------------------------------------------------------------------------------------
132 $/ft Labor 5,362 ft 30% 1608.6 100% $212,335
------------------------------------------------------------------------------------------------------------------------------------
6. DIAMOND DRILL 141,120 $15 $/ft Ground 420 ft 30% 126 100% $ 1,890 50%
STATION EXCAVATION Support
------------------------------------------------------------------------------------------------------------------------------------
132 $/ft Labor 420 ft 30% 126 100% $ 16,632
------------------------------------------------------------------------------------------------------------------------------------
7. DRIFTING ON VEIN 957,800 $15 $/ft Ground 2,200 ft 30% 660 100% $ 9,900 50%
Support
------------------------------------------------------------------------------------------------------------------------------------
132 $/ft Labor 2,200 ft 30% 660 100% $ 87,120
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL GROUND SUPPORT CONTINGENCY $352,006
--------------------------------
------------------------------------------------------------------------------------------------------------------------------------
WATER HANDLING
--------------
------------------------------------------------------------------------------------------------------------------------------------
5. UNDERGROUND ACCESS $1,851,632 132 $/ft Labor 5,362 ft 50% 2,681 15% $ 53,084 15%
DEVELOPMENT
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
6. DIAMOND DRILL 141,120 132 $/ft Labor 420 ft 50% 210 15% $ 4,158 15%
STATION EXCAVATION
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
7. DRIFTING ON VEIN 957,800 132 $/ft Labor 2200 ft 50% 1,100 15% $ 21,780 15%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
4. SITE INFRASTRUCTURE 53,000 53,000 Construction 1 L.S. 100% 50% $ 26,500 0
of Settling
pond and water
disposal/recycling
system
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL WATER HANDLING CONTINGENCY AMOUNT $105,522
---------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Exhibit E to Earn-In Agreement
Expenditure Schedule and Initial Program & Budget
Page 14 of 14
EXHIBIT F
JOINT OPERATING AGREEMENT
Exhibit F to Earn-In Agreement
Joint Operating Agreement
Page 1 of 48
EXHIBIT G
WARRANT AGREEMENT
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY SUCH APPLICABLE STATE LAWS.
HECLA MINING COMPANY
WARRANT CERTIFICATE TO PURCHASE
SHARES OF COMMON STOCK
Date of Issuance: ___________________, 200_ Certificate W-1
FOR VALUE RECEIVED, Hecla Mining Company, a Delaware corporation (the
"Company"), hereby grants to Great Basin Gold Ltd. and/or its registered assigns
pursuant to Section 5 hereof (each, a "Registered Holder") the right to purchase
from the Company an aggregate of ________ of the Company's shares of common
stock, $0.25 par value per share ("Common Stock"), at a price per share of
$____, (the "Exercise Price") which price shall be the weighted average daily
closing price per share for the common stock of the Company for the twenty (20)
trading days immediately prior to the date of this Warrant Agreement, as
adjusted pursuant to Section 2 hereof.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Two Year Exercise Period. The Registered Holder may exercise, in
whole or in part, the purchase rights represented by this Warrant at any time
and from time to time during the two year period commencing on ____________,
200_ and ending on ______________, 200_ (the "Exercise Period").
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 1 of 11
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph
1C below, executed by the Registered Holder;
(b) this Warrant;
(c) an Assignment or Assignments in the form set forth in
Exhibit I if the Warrant is exercised by any Registered Holder other
than Great Basin Gold Ltd.; and
(d) a cashier's check or wire transfer to the Company in an
amount equal to the product of the Exercise Price multiplied by the
number of shares of Common Stock being purchased upon such exercise
(the "Aggregate Exercise Price").
(ii) Certificates for Common Stock, if any, purchased upon exercise of
this Warrant shall be delivered by the Company to the Registered Holder within
three business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such three-day period, deliver such
new Warrant to the person designated for delivery in the Exercise Agreement.
(iii) The shares of Common Stock issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Registered Holder at the
Exercise Time, and the Registered Holder shall be deemed for all purposes to
have become the record holder of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for the Common Stock, if any, upon
exercise of this Warrant shall be made without charge to the Registered Holder
for any issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of Common Stock. Each
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 2 of 11
share of Common Stock issuable upon exercise of this Warrant shall, when issued,
be duly and validly issued and free from all taxes, liens and charges. The
company shall prepare and file at its expense a registration statement with the
United States Securities and Exchange Commission ("SEC") forthwith after
issuance hereof and use its reasonable best efforts to obtain SEC approval
thereof so that any Common Stock acquired by exercise hereof is freely tradeable
in the United States within four (4) months from the date of issuance of this
warrant. Until registration of such Common Stock, each certificate shall bear
the following legend:
The shares of common stock of Hecla Mining Company represented
by this certificate have been issued pursuant to an exemption
from registration under the Securities Act of 1933 and may not
be resold without registration thereunder or an exemption
therefrom. The issuer may require an opinion of counsel
reasonably satisfactory to it to the effect that such an
exemption is available before permitting transfer of such
shares.
(v) The Company shall assist and cooperate with any Registered Holder
required to make any governmental filings or obtain any governmental approvals
prior to or in connection with any exercise of this Warrant, without limitation,
making any filings required to be made by the Company.
(vi) The Company shall take all such actions as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which securities of the Company or their
equivalents may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon such issuance).
(vii) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a registered public
offering of the Company, the sale of the Company or pursuant to Section 3
hereof, the exercise of any portion of this Warrant may, at the election of the
Registered Holder hereof, be conditioned upon the consummation of the public
offering, the sale or the event referred to in the notice described in Section
3, in which case such exercise shall not be deemed to be effective until the
consummation of such transaction.
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 3 of 11
1C. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit II hereto. If
the number of shares of Common Stock to be issued does not include all the
Common Stock purchasable hereunder, it shall also state the Registered Holder to
whom a new Warrant for the unexercised portion of the rights hereunder is to be
delivered. Such Exercise Agreement shall be dated the actual date of execution
thereof.
Section 2. Adjustment of Exercise Price and Number of Shares of Common
Stock. In order to prevent dilution of the rights granted under this Warrant,
the Exercise Price shall be subject to adjustment from time to time as provided
in this Section 2, and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be subject to adjustment from time to time as
provided in this Section 2.
2A. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any split, dividend, recapitalization or otherwise) its
outstanding Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be proportionately increased. If the Company at any time combines
(by reverse split or otherwise) its Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be proportionately decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for the Common Stock is
referred to herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders of the Warrants representing a
majority of the Common Stock obtainable upon exercise of all Warrants then
outstanding) to insure the Registered Holder of the Warrant shall thereafter be
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 4 of 11
entitled to receive, upon exercise of this Warrant, the numbers or amount of
shares of stock, securities or assets resulting from such Organic Change that a
holder of the Common Stock deliverable upon exercise of this Warrant would have
been entitled to receive as a result of such Organic Change If the Warrant had
been exercised immediately before the effective date of such Organic Change. In
any such case, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders of the Warrants representing a
majority of the shares of Common Stock obtainable upon exercise of all Warrants
then outstanding) with respect to such holders' rights and interests to insure
that the provisions of this Section 2 and Sections 3 and 4 hereof shall
thereafter be applicable to the Warrant (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of the Exercise Price to the
value for the Common Stock reflected by the terms of such consolidation, merger
or sale, and a corresponding immediate adjustment in the number of shares of
Common Stock acquirable and receivable upon exercise of the Warrant, if the
value so reflected is less than the Exercise Price in effect immediately prior
to such consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the Registered Holders of Warrants
representing a majority of the shares of Common Stock obtainable upon exercise
of all of the Warrants then outstanding), the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2C. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions,
then the Company shall make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock obtainable upon exercise of this Warrant so
as to protect the rights of the Registered Holders.
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 5 of 11
2D. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 10 days prior to the date on which the Company intends to (A)
make any pro rata subscription offer to holders of Common Stock or (B)
consummate any Organic Change, dissolution or liquidation.
Section 3. Intention to Exercise. If the Company gives a notice
described in paragraph (ii) of Section 2D and the Registered Holder informs the
Company in writing within 10 days of receipt of such notice that it intends to
exercise the Warrant in whole or in part, the Company shall not make or
consummate the event described in such notice before the earlier of (i) the
completion of the exercise of the Warrant in whole or in part or (ii) 30 days
after the date the Registered Holder informs the Company of its intention to
exercise. If the event described in such notice is the liquidation of the
Company, whether or not the Registered Holder responds to such notice, the
Company shall pay to the Registered Holder the payment or payments (net of the
Exercise Price), if any, that would have been made to such Registered Holder on
the Common Stock had this Warrant been exercised in full immediately prior to
the liquidation.
Section 4. No Voting Rights; Limitations of Liability. This Warrant
shall not entitle the Registered Holder to any voting rights or other rights as
a holder of Common Stock in the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such holder for the Exercise Price of Common Stock
acquirable by exercise hereof or as a holder of a Common Stock in the Company.
Section 5. Warrant Transferable. This Warrant and all rights hereunder
are not transferable, in whole or in part, without the consent of the Company.
Upon receipt of such consent, the Warrant will be transferred without charge to
the Registered Holder, upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit I hereto) at the principal office of the
Company. As soon as practicable after the transfer, the Company will prepare new
Warrants for the assigning and new Registered Holders, substantially identical
hereto, but reflecting the number of shares of Common Stock the assigning and
new Registered Holders are entitled to receive upon exercise of the applicable
Warrant.
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 6 of 11
Section 6. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrant."
Section 7. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is a financial institution or other institutional
investor its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
Section 8. Notices. Except as otherwise expressly provided herein, all
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered or deposited in the
U.S. Mail (i) to the Company, at its principal executive offices and (ii) to the
Registered Holder of this Warrant, at such holder's address as it appears in the
records of the Company (unless otherwise indicated by any such holder).
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 7 of 11
Section 9. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holders of Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
shares obtainable upon exercise of each Warrant without the written consent of
all of the Registered Holders of Warrants.
Section 10. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its members and interpretation of this Agreement.
Section 11. Voting of Shares. So long as any Registered Holders and/or
its affiliates ("Registered Holder Group") hold, along or in the aggregate at
least ten percent (10%) of the shares of Common Stock issued to the Registered
Holder Group upon exercise of this Warrant, the Registered Holder Group agrees
to vote all of the shares of Common Stock held by the Registered Holder Group at
any annual or special meeting of the shareholders of the Company in accordance
with the recommendations of the Company's chief executive officer.
Section 12. Trading Limitation. Except as otherwise permitted herein,
the Registered Holder Group shall not, individually or in the aggregate, dispose
of more than fifty thousand (50,000) share of Common Stock during any one
trading day. In addition, so long as the Registered Holder Group continues to
hold at least twenty percent (20%) of the shares of Common Stock issued upon
exercise of this Warrant, the Registered Holder Group shall provide the Company
with reasonable advance notice of any such sale of the shares of Common Stock.
The Registered Holder Group shall not be obligated to complete any sale of
shares of Common Stock even if it has provided the Company with advance written
notice of such sale, but the Registered Holder Group shall notify Company of its
withdrawal of any shares of Common Stock from the market with respect to which
the Registered Holder Group has provided prior notice of sale. Company shall
notify the Registered Holder Group of the pendency of a sale under any
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 8 of 11
underwritten public offering by Company of Common Stock or any other Company
equity security, in which event the Registered Holder Group shall not effect any
sales of any shares of Common Stock within five (5) days prior to the
commencement of or during such underwritten public offering. The Registered
Holder Group shall have the right to sell any amount of shares of Common Stock
in a private transaction, provided that (i) any such sale shall not be reported
or reportable on any exchange or other public market where shares of Common
Stock are or may in future be traded, and (ii) the purchaser in such private
transaction agrees in writing that, for a period of six (6) months from and
after the date of such purchase and sale of shares of Common Stock, such
purchaser shall not sell any such shares of Common Stock. In addition, the
Registered Holder Group shall be permitted to pledge any number of shares of
Common Stock to an arm's-length lender to secure payment of a bona fide loan or
other indebtedness, subject to the terms hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers and to be dated the Date of
Issuance hereof.
HECLA MINING COMPANY
By: NOT FOR SIGNATURE - FORM ONLY
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 9 of 11
EXHIBIT I TO WARRANT AGREEMENT
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_____________) with respect to the number of shares
of Common Stock covered thereby set forth below, unto:
Names of Assignee Address Number of Shares
----------------- ------- ----------------
Dated: Signature NOT FOR SIGNATURE - FORM ONLY
-----------------------------
Witness
-------------------------------
Exhibit G to Earn-in Agreement
Hecla Warrant Agreement
Page 10 of 11
EXHIBIT II TO WARRANT AGREEMENT
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-___________), hereby agrees to subscribe for the
purchase of __________ shares of Common Stock covered by such Warrant and makes
payment herewith in full therefore at the price per share provided by such
Warrant. If any new Warrant will be prepared under Section 1B(ii) of the
Warrant, please deliver it to _________, a Registered Holder.
Signature NOT FOR SIGNATURE - FORM ONLY
-----------------------------
Address
-------------------------------
Exhibit G to Earn-In Agreement
Hecla Warrant Agreement
Page 11 of 11
EXHIBIT H
WARRANT AGREEMENT
WITHOUT THE PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE
WITH ALL APPLICABLE SECURITIES LEGISLATION, THE COMMON SHARES, WHICH MAY BE
ACQUIRED ON EXERCISE OF THESE WARRANTS, MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE
EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT
UNTIL *, 2002. [FOUR MONTHS]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF THE ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT IF APPLICABLE, (C)
INSIDE THE UNITED STATES (1) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (2) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR
ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF
SECURITIES, AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE ISSUER AN
OPINION OF COUNSEL.
Date of Issuance: _____________________, 2002
Warrant Certificate Number: W-*
GREAT BASIN GOLD LTD.
SUITE 1020 - 000 XXXX XXXXXX XXXXXX
XXXXXXXXX, X.X. X0X 0X0
TELEPHONE: (000) 000-0000 FAX: (000) 000-0000
WARRANT CERTIFICATE TO PURCHASE ___________
SHARES OF COMMON STOCK
THE RIGHT TO PURCHASE COMMON SHARES UNDER THIS WARRANT EXPIRES AT 5:00 P.M.
(VANCOUVER TIME) ON *, 2004 (THE "EXPIRY DATE").
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 1 of 11
ANY SHARES ACQUIRED BY EXERCISE PRIOR TO *, 2002 WILL BE SUBJECT TO RESALE
RESTRICTIONS IN CANADA UNTIL THAT DATE AND WILL BEAR A LEGEND TO THIS EFFECT.
FOR VALUE RECEIVED, GREAT BASIN GOLD LTD., a British Columbia corporation (the
"Company"), hereby grants to HECLA VENTURES CORP. (the "Registered Holder") the
right to purchase from the Company * of the Company's shares of common stock
("Common Stock"), at a price per share of $____, which price is the weighted
average daily closing price per share for the common stock of the Company for
the twenty (20) trading days immediately prior to the Date of this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Two Year Exercise Period. The Registered Holder may exercise, in
whole or in part, the purchase rights represented by this Warrant at any time
and from time to time during the two year time period commencing on
____________, 200_ and ending on _________________, 200_ (the "Exercise
Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised at the
time when the Company has received all of the following items (the "Exercise
Time"):
(a) a completed Exercise Agreement, as described in
paragraph 1C below, executed by the Registered Holder;
(b) this Warrant; and
(c) a cashier's or certified check or wire transfer
to the Company in an amount equal to the product of the Exercise Price
multiplied by the number of shares of Common Stock being purchased upon such
exercise (the "Aggregate Exercise Price").
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 2 of 11
(ii) Certificates for Common Stock, if any, purchased upon
exercise of this Warrant shall be delivered by the Company to the Registered
Holder within three business days after the date of the Exercise Time. Unless
this Warrant has expired or all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall, within such three-day period, deliver
such new Warrant to the person designated for delivery in the Exercise
Agreement.
(iii) The shares of Common Stock issuable upon the exercise of
this Warrant shall be deemed to have been issued to the Registered Holder at the
Exercise Time, and the Registered Holder shall be deemed for all purposes to
have become the record holder of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for the Common Stock, if
any, upon exercise of this Warrant shall be made without charge to the
Registered Holder or the Purchaser for any issuance tax in respect thereof or
other cost incurred by the Company in connection with such exercise and the
related issuance of Common Stock. Each share of Common Stock issuable upon
exercise of this Warrant shall, when issued, be duly and validly issued and free
from all taxes, liens and charges.
(v) The Company shall assist and cooperate with any Registered
Holder required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this Warrant
(including, without limitation, making any filings required to be made by the
Company) including prompt notice and application to list any Common Shares
issuable on exercise hereof on the TSX Venture Exchange. . Any Common Stock
acquired by exercise hereof is freely tradeable in Canada after four (4) months
from the date of issuance of this warrant. Until the expiry of such four (4)
month period, all certificates of Common Stock issued to Registered Holder by
Exercise of its rights hereunder shall bear the following legend:
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 3 of 11
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE *, 2002.
WITHOUT THE PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE
AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH
THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN
CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL
*, 2002.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE U.S. SECURITIES ACT IF APPLICABLE, (C) INSIDE THE
UNITED STATES (1) PURSUANT TO THE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (2) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S.
SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS
GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS
PRIOR TO SUCH SALE FURNISHED TO THE ISSUER AN OPINION OF
COUNSEL.
(vi) The Company shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which securities of the
Company or their equivalents may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon such
issuance). The Company shall file a qualifying issuer certificate with the TSX
Venture Exchange within ten (10) days after the Date of Issuance for each
Warrant Certificate issued hereunder and take other actions as required by
applicable law to make such shares of Common Stock freely tradeable through the
TSX Venture after the four (4) month holding period set forth in paragraph 1B(v)
herein above.
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 4 of 11
1C. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
except that if the Common Stock is not to be issued in the name of the person in
whose name this Warrant is registered, the Exercise Agreement shall also state
the name of the person to whom the Common Stock is to be issued. Such Exercise
Agreement shall be dated the actual date of execution thereof.
Section 2. Adjustment of Exercise Price and Number of Shares of Common
Stock. In order to prevent dilution of the rights granted under this Warrant,
the Exercise Price shall be subject to adjustment from time to time as provided
in this Section 2, and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be subject to adjustment from time to time as
provided in this Section 2.
2A. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any split, dividend, recapitalization or otherwise) its
outstanding Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be proportionately increased. If the Company at any time combines
(by reverse split or otherwise) its Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be proportionately decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for the Common Stock is
referred to herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders of the Warrants representing a
majority of the Common Stock obtainable upon exercise of all Warrants then
outstanding) to insure that each of the Registered Holders of the Warrants shall
thereafter have the right to acquire and receive, in lieu of or addition to (as
the case may be) the number of shares Common Stock immediately theretofore
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 5 of 11
acquirable and receivable upon the exercise of such holder's Warrant, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of such holder's Warrant had
such Organic Change not taken place. In any such case, the Company shall make
appropriate provision (in form and substance satisfactory to the Registered
Holders of the Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of all Warrants then outstanding) with respect to such
holders' rights and interests to insure that the provisions of this Section 2
and Sections 3 and 4 hereof shall thereafter be applicable to the Warrants
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon exercise of the Warrants, if the value so reflected is less than the
Exercise Price in effect immediately prior to such consolidation, merger or
sale). The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance satisfactory to
the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of all of the Warrants then outstanding),
the obligation to deliver to each such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
2C. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions,
then the Company's management shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants.
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 6 of 11
2D. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 10 days prior to the date on which the Company intends to (A)
make any pro rata subscription offer to holders of Common Stock or (B)
consummate any Organic Change, dissolution or liquidation.
Section 3. Intention to Exercise. If the Company gives a notice
described in paragraph (ii) of Section 2D and the Registered Holder informs the
Company in writing within 10 days of receipt of such notice that it intends to
exercise the Warrant in whole or in part, the Company shall not make or
consummate the event described in such notice before the earlier of (i) the
completion of the exercise of the Warrant in whole or in part or (ii) 30 days
after the date the Registered Holder informs the Company of its intention to
exercise. If the event described in such notice is the liquidation of the
Company, whether or not the Registered Holder responds to such notice, the
Company shall pay to the Registered Holder the payment or payments (net of the
Exercise Price), if any, that would have been made to such Registered Holder on
the Common Stock had this Warrant been exercised in full immediately prior to
the liquidation.
Section 4. No Voting Rights; Limitations of Liability. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
holder of Common Stock in the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such holder for the Exercise Price of Common Stock
acquirable by exercise hereof or as a holder of a Common Stock in the Company.
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 7 of 11
Section 5. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable by the Registered Holder, upon the surrender hereof by
the Registered Holder at the principal office of the Company, for new Warrants
of like tenor representing in the aggregate the purchase rights hereunder, and
each of such new Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender. The date the
Company initially issues this Warrant shall be deemed to be the "Date of
Issuance" hereof regardless of the number of times new certificates representing
the unexpired and unexercised rights formerly represented by this Warrant shall
be issued. These Warrants are non-transferable, except with the consent of the
TSX Venture. All Warrants representing portions of the rights hereunder are
referred to herein as the "Warrants."
Section 6. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is a financial institution or other institutional
investor its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
Section 7. Notices. Except as otherwise expressly provided herein, all
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered or deposited in the
mail (i) to the Company, at its principal executive offices and (ii) to the
Registered Holder of this Warrant, at such holder's address as it appears in the
records of the Company (unless otherwise indicated by any such holder).
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 8 of 11
Section 8. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
shares obtainable upon exercise of each Warrant without the written consent of
all of the Registered Holders of Warrants.
Section 9. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The laws of the
Province of British Columbia shall govern all issues concerning the relative
rights of the Company and its members and interpretation of this Agreement. This
warrant and all rights pertaining hereto may not be transferred by the
registered holder without the consent of the TSX Venture Exchange.
Section 10. Voting of Shares. So long as Registered Holder holds at
least ten percent (10%) of the Shares issued to Registered Holder under this
Agreement, Registered Holder Agrees to vote all of the Shares held by Registered
Holder at any annual or special meeting of shareholder in accordance with the
recommendations of the Company's chief executive officer.
Section 11. Trading Limitation. Except as otherwise permitted herein,
the Registered Holder shall not, in the aggregate, dispose of more than
twenty-five thousand (25,000) of the Great Basin Shares during any one trading
day. In addition, so long as the Registered Holder continues to hold at least
twenty percent (20%) of the Great Basin Shares held by it upon consummation of
the transactions contemplated by this Agreement, the Registered Holder shall
provide the Company with reasonable advance notice of any such sale of the Great
Basin Shares. The Registered Holder shall not be obligated to complete any sale
of Great Basin shares even if it has provided the Company with advance written
notice of such sale, but Registered Holder shall notify Company of its
withdrawal of any Great Basin Shares from the market with respect to which
Registered Holder of the pendency of a sale under any underwritten public
offering by Company of company's common stock or any other Company equity
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 9 of 11
security, in which event the Registered Holder shall not effect any sales of any
Great Basin Shares within Five (5) days prior to the commencement of or during
such underwritten public offering. The Registered Holder shall have the right to
sell any amount of Great Basin Shares in a private transaction, provided that
(i) any such sale shall not be reported or reportable on any exchange or other
public market where shares of Company are or may in future be traded, and (ii)
the Buyer in such private transaction agrees in writing that, for a period of
six (6) months from and after the date of such purchase and sale of Great Basin
Shares, such Buyer shall not sell any such Great Basin Shares. In addition, the
Registered Holder shall be permitted to pledge any number of Great Basin Shares
to an arm's length lender to secure payment of a bona fide loan or other
indebtedness, subject to the terms hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the Date of Issuance
hereof.
GREAT BASIN GOLD LTD.
By:
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 10 of 11
EXHIBIT I TO WARRANT AGREEMENT
EXERCISE AGREEMENT
To: GREAT BASIN GOLD LTD.
Suite 1020 - 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Telephone: (000) 000-0000 - Fax: (000) 000-0000
Dated:
-----------------------------------
The undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W-___________), hereby agrees to subscribe for the purchase of
__________ shares of Common Stock covered by such Warrant and makes payment
herewith in full therefore at the price per share provided by such Warrant. The
shares shall be issued in the name of and delivered as described beneath the
signature of the authorized signatory of the warrant holder below. The shares
shall bear the legends referred to in the Warrant.
Signature
-----------------------------------
Name
----------------------------------------
Address
-------------------------------------
Exhibit H to the Earn-in Agreement
Great Basin Warrant
Page 11 of 11
