Exhibit 10.5
AGREEMENT TO ASSIGN INTEREST - BUFFALO GULCH CLAIMS
This Agreement is dated as of the 11th day of December, 1995 and is made
between:
IDAHO GOLD CORPORATION
OF THE FIRST PART
AND:
IDAHO CONSOLIODATED METALS CORP.
OF THE SECOND PART
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This is an accurate certified copy.
Date 10/4/96
Signed: /s/ Xxxxxxxx X. Xxxxxxxx
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Xxxxxxxx X. Xxxxxxxx, Corporate Secretary
Idaho Consolidated Metals Corporation
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WHEREAS:
A. Idaho Gold Corporation ("Idaho Gold") has the right to acquire certain
mining interests known as the Buffalo Gulch Claims as more particularly
described in Schedule "A" hereto (the "Mining Properties");
B. Idaho Consolidated Metals Corp. ("ICMC") wishes to acquire Idaho Gold's
interest in the Mining Properties together with all geological information
(including core or drill cuttings), metallurgical lab and field test
results, mine design and reserve calculations and pre-feasibility and
feasibility studies relating to the Mining Interests and in the possession
or under the control of Idaho Gold (the "Data");
NOW THEREFORE this Agreement witnesses that in consideration of the mutual
covenants and agreements herein contained and subject to the terms and
conditions hereafter set out, the parties hereto agree as follows:
1. "Closing Date" and "Closing" - The term "Closing Date" as used throughout
this Agreement shall mean July 19, 1996 or such other date as is agreed to
by the parties. The term "Closing" as used throughout this Agreement shall
mean the completion of the transactions herein contemplated which shall
occur at 10:00 a.m. Vancouver time on the Closing Date or such other time
on the Closing Date as agreed to by the parties.
2. Purchase and Sale of Assigned Interests - Upon and subject to the terms and
conditions set forth in this Agreement, Idaho Gold agrees to sell, assign
and transfer to ICMC, and ICMC agrees to purchase from Idaho Gold, on the
Closing Date all interest of
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Idaho Gold in and to the Mining Properties and the Data (collectively, the
"Assigned Interests"), subject to the reservation by Idaho Gold of a net
smelter return royalty (the "Royalty") on the Mining Properties on the
terms specified in Schedule "B" hereto.
3. Consideration for Assigned Interests - As consideration for the transfer of
the Assigned Interests, ICMC:
a) will issue to Idaho Gold 120,000 common shares in the capital of ICMC,
60,000 of which shares will be issued to Idaho Gold on the Closing
Date and the balance of which will be issued to Idaho Gold one year
after the Closing Date;
b) will incur expenditures (as defined in clause 3(f)(ii) below) of not
less than US$310,000 in the aggregate on or before the fifth
anniversary of the Closing Date on the exploration and development of
the Mining Properties, with the following amounts being incurred by
the dates indicated below:
i) USS30,000 on or before the first anniversary of the Closing Date;
ii) an aggregate of US$70,000 on or before the second anniversary of
the Closing Date;
iii) an aggregate of US$150,000 on or before the third anniversary of
the Closing Date; and
iv) an aggregate of US$230,000 on or before the fourth anniversary of
the Closing Date;
c) will replace all bonds relating to the Mining Properties currently
lodged by or on behalf of Idaho Gold with any regulatory authorities;
d) will be solely responsible for all costs of environmental compliance
associated with its exploration and mining operations on the Mining
Properties or with the termination thereof, and all costs incurred in
connection with environmental compliance, reclamation and long-term
care and monitoring of the Mining Properties arising out of activities
at any time by any person and its predecessors in ownership of the
Mining Properties;
e) will consent to the reservation by Idaho Gold of the Royalty, and
f) subject to paragraph 4, will grant to Idaho Gold an option (the
"Option") to acquire a 49% working interest in the Mining Properties
upon the following terms:
i) the term of the Option will be five years from the Closing Date;
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ii) Idaho Gold may exercise the Option by delivering a notice (the
"Option Notice") to ICMC to that effect and, within 30 days after
delivery of the Option Notice, a payment to ICMC equal to 115% of
ICMC's expenditures on the Mining Properties from January 1, 1996
to the date of delivery of such payment. "Expenditures" shall
mean all cash, expenses, obligations and liabilities, other than
for personal injury or property damage, of whatever kind or
nature spent or incurred directly or indirectly in connection
with the exploration, development or equipping of the Mining
Properties for commercial production including an overhead fee
not to exceed 8% of all expenditures (other than the overhead
fee),
iii) if Idaho Gold exercises the Option, ICMC and Idaho Gold will
enter into a joint venture agreement which will provide that (A)
each party will fund its proportionate share of ongoing
expenditures on the Mining Properties or have its interest
diluted; (B) a management committee will approve all operations
and activities of the joint venture and will consist of two
members from each of ICMC and Idaho Gold, with ICMC to hold the
casting vote so long as it retains not less than a 51% interest
in the joint venture; (C ) ICMC will have the right to be
operator of the joint venture so long as it retains not less than
a 51% interest in the joint venture;
iv) during the term of the Option, ICMC shall keep the Mining
Properties free and clear of all liens and encumbrances arising
from its operations and in good standing by the doing and filing,
or payment in lieu thereof, of all necessary assessment work and
payment of all taxes and other charges required to be paid and by
the doing of all other acts and things and the making of all
other payments required to be made;
v) ICMC will, as of January 1, 1996 and during the term of the
Option, assume, observe and perform each and every covenant and
agreement made or given by Idaho Gold or its predecessor in title
to be observed and performed under those contracts and agreements
listed in Schedule "C" hereto, including the making of all cash
and share payments and the performance of all work commitments on
the Mining Properties. ICMC may re-negotiate any of the contracts
and agreements listed in Schedule "C" to decrease or eliminate
the payment obligations thereunder,
vi) if, during the term of the Option, ICMC elects to relinquish one
or more of the Mining Properties, it will so notify Idaho Gold
and, if within 60 days of receipt of such notice, Idaho Gold
provides a notice to ICMC to the effect that Idaho Gold wants the
particular Mining Property re-transferred to it, ICMC will assign
that Mining Property, in good standing, to Idaho Gold upon
receipt from Idaho Gold of US$1.00. Notwithstanding the
foregoing, ICMC may not elect to relinquish any part of the
Mining Properties during
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the first year of the term of the Option;
vii) if ICMC should fail to make any of the payments or carry out any
of the obligations referred to in clauses (iv) or (v) above, it
shall be deemed to have made an election to relinquish the Mining
Property(ies) involved;
viii)an election or deemed election to relinquish one or more of the
Mining Properties will not relieve ICMC of its obligations
pursuant to paragraph 3(d); and
ix) if Idaho Gold exercises the Option, the Royalty will be
terminated.
4. Right to Acquire Option - ICMC will have the right to acquire Idaho Gold's
right to the Option by payment to Idaho Gold of Cdn.$300,000 at any time up
to 21 days after receipt by ICMC of the Option Notice from Idaho Gold.
5. Assignments by ICMC - ICMC agrees that it will not transfer or assign any
part of its interest in the Assigned Interests without the prior written
consent of Idaho Gold. It shall be a condition precedent to any assignment
that the assignee of the interest being transferred agrees in writing to be
bound by the terms of this Agreement, the Option and the Royalty.
6. Closing - On the Closing Date, the parties will table the following
documents and instruments and take the following steps:
a) ICMC will table for delivery to Idaho Gold a share certificate for
60,000 common shares in the capital of ICMC registered in the name of
Idaho Gold;
b) ICMC will table for delivery to Idaho Gold evidence satisfactory to
Idaho Gold that the bonds referred to in paragraph 3(c) have been
replaced by ICMC;
c) Idaho Gold will table for delivery to ICMC duly executed transfers, as
prepared by ICMC's solicitors, sufficient to convey to ICMC the
Assigned Interests to ICMC;
d) each party will execute and table for delivery to the other the Option
agreement;
e) ICMC will execute and table for delivery to Idaho Gold an agreement
reserving the Royalty to Idaho Gold; and
f) each party will execute and table for delivery to the other party all
such other documents and instruments reasonably required to
effectively consummate the transactions contemplated herein.
"Closing" will occur upon all documents set out above being tabled as
required
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and the closing conditions being satisfied or waived by the parties.
7. Joint Condition Precedent to Closing - The respective obligations of each
of the parties hereto to complete the Closing shall be subject to receipt
of all governmental and third party approvals and consents required for the
completion of the purchase and sale transaction. This condition may be
waived by ICMC and Idaho Gold acting together. ICMC hereby acknowledges
that Arctic Fox Ltd. and Xxxx Estates Company have not consented to the
transfer contemplated herein and that such consent may not be received by
Closing, if at all. Idaho Gold and ICMC hereby waive the receipt of the
consent by Arctic Fox Ltd. and Xxxx Estates Company as a condition
precedent to the completion of the purchase and sale transaction
contemplated herein.
8. Time of Essence - Time is and will be of the essence of each and every
provision of this Agreement.
9. Entire Agreement - This Agreement contains the whole agreement between
Idaho Gold and ICMC in respect of the subject matter hereof and supersedes
and replaces the letter of understanding dated December 11, 1995 and all
prior negotiations, communications and correspondence. There are no
warranties, representations, terms, conditions or collateral agreements,
express or implied, statutory or otherwise, other than as expressly set out
in this Agreement.
10. Enurement - This Agreement will enure to the benefit of and be binding upon
Idaho Gold and ICMC and their respective successors, liquidators and
permitted assigns.
11. Governing Law - This Agreement shall be construed and interpreted in
accordance with the laws of Idaho.
12. Notices - AU notices, payments and other required communications
("Notices") to the parties shall be in writing and shall be addressed
respectively as follows:
If to Idaho Gold:
x/x Xxxx Xxxx Xxxxxxxxxxx
0000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0XX
Fax No.: 000-000-0000
Attention: Xx. Xxxxx Xxxxxx
If to ICMC:
ICMC
X.X. Xxx 0000
Xxxxxxxx, Xxxxx 00000
Fax No.:000-000-0000
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Attention: Mr. [Illegible]
All Notices shall be given:
i) by personal delivery to the party by leaving a copy at the place
specified for notice with a receptionist or an apparently
responsible individual, or
ii) by electronic facsimile communication.
All Notices shall be effective and shall be deemed delivered:
iii) 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, and
iv) if by electronic communication, on the next business day
following receipt of the electronic communication, provided that
a positive transmission report is generated by the sender's
facsimile machine.
13. Regulatory Approval - The obligations of the parties hereto is subject to
the acceptance for filing of this Agreement by the Vancouver Stock
Exchange.
14. Counterparts - This Agreement shall be executed in counterparts with the
same effect as if both parties had signed the same [document], and both
such counterparts will be construed together and will constitute one and
the same instrument. The execution of this Agreement will not become
effective until counterparts hereof have been executed by both parties
hereto and an executed copy delivered to each party hereto. Such delivery
may be made by facsimile transmission [of the] execution page or pages
hereof to the other party by the party signing the particular counterpart,
provided that forthwith after such facsimile transmission, an originally
[executed execution] page or pages is forwarded by prepaid express courier
to the other [party by the] party signing the particular counterpart.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of
the day and year first above written.
IDAHO GOLD CORPORATION
Per: /s/ [Illegible]
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IDAHO CONSOLIDATED METALS CORP.
Per: /s/ [Illegible] Vice President
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SCHEDULE "A"
BUFFALO GULCH CLAIMS
Xxxxx XXX # XXX #
Xxxx
X 00 00000
A 48 95058
A 49 95059
A 50 95060
A 53 95063
A 54 95064
A 55 95065
A 56 95066
A 58 95068
A 65 95075
A 66 95076
A 67 95077
A 68 95078
A 69 95079
A 70 95080
A 71 95081
A 72 95082
A 73 95083
A 74 95084
A 75 95085
A 80 95090
A 81 95091
A 82 95092
A 83 95093
A 84 95094
A 85 95095
A 86 95096
A 87 95097
A 88 95098
A 89 95099
A 90 95100
A 91 95101
A 92 95102
A 93 95103
A 94 95104
A 95 95105
A 96 95106
A 97 95107
A 98 95108
A 99 95109
Black Bear 1 72588 297158
Black Bear 2 72589 297159
Black Bear 3 72590 297160
Black Bear 4 72591 297161
Black Bear 5 72592 297162
Black Bear 6 72593 297163
EC 1 85868
EC 2 85869
EC 3 85870
EC 4 85871
EC 5 85872
EC 6 85873
EC 7 85874
EC 8 85875
EC 9 85876
EC 10 85877
EC 12 85879
EC 14 85881
EC 16 85883
EC 18 85885
EC 20 85887
EC 22 85889
EC 24 85891
EC 57 85892
EC 58 85893
EC 120 85894
EC 121 85895
EC 125 85897
EC 126 85898
Whiskey Xxxx 1 121621
Whiskey Xxxx 2 121622
Whiskey Xxxx 3 121623
Whiskey Xxxx 4 121624
SCHEDULE "B" - BUFFALO GULCH CLAIMS
NET SMELTER RETURNS
1. The royalty which may be payable to Idaho Gold Corporation (hereinafter
called the "Payee") pursuant to paragraph 3(d) of the Assignment of
Interests Agreement by Idaho Consolidated Metals Corp. (hereinafter called
the "Payor") will be 3% of 100% of the Net Smelter Revenue ( as hereinafter
defined) and will be calculated and paid to the Payee in accordance with
the terms of this Schedule "B". Terms having defined meanings in the
Agreement and used herein will have the same meanings in this Schedule as
assigned to them in the Assignment of Interests Agreement unless otherwise
specified or the context otherwise requires.
2. The Net Smelter Revenue will be calculated on a calendar quarterly basis
and will, subject to paragraph 7 of this Schedule "B", be equal to Gross
Revenue less Permissible Deductions for such quarter.
3. The following words will have the following meanings:
(a) "Gross Revenue" means the aggregate of the following amounts received
in each quarterly period following the commencement of commercial
production from the Mining Properties:
(i) the revenue received by the Payor from arm's length purchasers of
all Product;
(ii) the fair market value of all Product sold by the Payor in such
period to persons not dealing at arm's length with the Payor; and
(iii) any proceeds of insurance on Product;
(b) "Ore" means all materials from the Mining Properties, the nature and
composition of which justifies either:
(i) mining or removing from place and shipping and selling such
material, or delivering such material to a processing plant for
physical or chemical treatment; or
(ii) leaching such material in place;
(c) "Permissible Deductions" means the aggregate of the following charges
(to the extent that they are not deducted by any purchaser in
computing
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payment) that are paid in each quarterly period:
(i) sales charges levied by any sales agent on the sale of Product,
(ii) transportation costs for Product from the Mining Properties to
the place of beneficiation, processing or treatment and thence to
the place of delivery of Product to a purchaser thereof,
including shipping, freight, handling and forwarding expenses;
(iii)all costs, expenses and charges of any nature whatsoever which
are either paid or incurred by the Payor in connection with
refinement or beneficiation of Product after leaving the
Property, including all weighing, sampling, assaying and
representation costs, metal losses, any umpire charges and any
penalties charged by the processor, refinery or smelter, and
(iv) all insurance costs on Product, and any government royalties,
production taxes, severance taxes and sales and other taxes
levied on Ore, Product or on the production or value thereof
(other than any Federal or Provincial taxes levied on the income
or profit of the Payor);
(d) "Product" means:
(i) all Ore shipped and sold prior to treatment, and
(ii) all concentrates, precipitates and products produced from Ore.
4. The payment on account of the royalty for each calendar quarter will be
calculated and paid within 60 days after the end of each calendar quarter.
Smelter settlement sheets, if any, and a statement setting forth
calculations in sufficient detail to show the payment's derivation (the
"Statement") must be submitted with the payment.
5. In the event that final amounts required for the calculation of the payment
on account of the royalty are not available within the time period referred
to in section 4 of the Schedule "B", then provisional amounts will be
estimated and such payment will be paid on the basis of this provisional
calculation. Positive or negative adjustments will be made to the payment
on account of the royalty for the succeeding quarter.
6. All payments on account of the royalty will be considered final and in full
satisfaction of all obligations of the Payor with respect thereto, unless
the Payee delivers to the Payor a written notice (the "Objection Notice")
describing and setting forth a specific objection to the calculation
thereof within 60 days after
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receipt by the Payee of the Statement. If the Payee objects to a particular
Statement as herein provided, the Payee will, for a period of 60 days after
the Payor's receipt of such Objection Notice, have the right, upon
reasonable notice and at reasonable times, to have the Payor's accounts and
records relating to the calculation of the payment in question audited by
the auditors of the Payee. If such audit determines that there has been a
deficiency or an excess in the payment made to the Payee, such deficiency
or excess will be resolved by adjusting the next quarterly payment due
hereunder. The payee will pay all the costs and expenses of such audit
unless a deficiency of 5% or more of the amount due is determined to exist.
The Payor will pay the costs and expenses of such audit if a deficiency of
5% or more of the amount due is determined to exist. Failure on the part of
the Payee to made a claim against the Payor for adjustment in such 60 day
period by delivery of an Objection Notice will conclusively establish the
correctness and sufficiency of the Statement and payment on account of the
royalty for such quarter.
7. All profits and losses resulting from the Payor engaging in any commodity
futures trading, option trading, metals trading, gold loans or any
combination thereof, and any other hedging transactions with respect to
Product which is a precious metal (collectively, "Hedging Transactions")
are specifically excluded from calculations of the payments on account of
the royalty pursuant to this Schedule "B" (it being the intent of the
parties that the Payor will have the unrestricted right to market and sell
Product to third parties in any manner it chooses and that the Payee will
not have any right to participate in such marketing activities or to share
in any profits or losses therefrom. All Hedging Transactions by the Payor
and all profits or losses associated therewith, if any, will be solely for
the Payor's account. The amount of Net Smelter Revenue derived from all
Product subject to Hedging Transactions by the Payor will be determined
pursuant to the provisions of this paragraph 7 and not paragraph 2. As to
precious metals subject to Hedging Transactions by the Payor, Net Smelter
Revenue will be determined without reference to Hedging Transactions and
will be determined by using, for gold, the quarterly average price of gold,
which will be calculated by dividing the sum of all London Bullion Market
Association P.M. Gold Fix prices reported for the calendar quarter in
question by the number of days for which such prices were quoted. Any
Product subject to Hedging Transactions will be deemed to be sold, and
revenues received therefrom, only on the date of the final settlement of
the amount of refined Product allocated to the account of the Payor by a
third party refinery in respect of such transactions. Furthermore, the
Payor will have no obligation to fulfill any futures contracts, forward
sales, gold loans or other Hedging Transactions which the Payor may hold
with Product.
8. If the royalty becomes payable to two or more parties, those parties will
appoint, and will deliver to the Payor a document executed by all of those
parties appointing, a single agent or trustee of all such parties to whom
the
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Payor will make all payments on account of the royalty. The Payor will have
no responsibility as to the division of the royalty payments amount such
parties, and if the Payor makes a payment or payments on account of the
royalty in accordance with the provisions of this paragraph 8, it will be
conclusively deemed that such payment or payments have been received by the
Payee. All charges of the agent or trustee will be borne solely by the
parties receiving payments on account of the royalty.
9. Notwithstanding the foregoing, the royalty payable shall be limited to
US$3,000,000.
