LEASE-PURCHASE OPTION AGREEMENT
This agreement, made and entered into this 14th day of February, 2009,
by and between Western Sierra Mining Corp. (hereinafter "WSRM"), having
an address of 0000 Xxxxx Xxxxx Xxxxx, Xxxx Xxxxxx Xxxx, Xxxxxxx 00000
and Merge II, Inc., having an address of 0000 Xxxxx Xxxx 0, Xxxxxxxxxx,
Xxxxxxx 00000. hereinafter collectively referred to as "the parties".
RECITALS:
WHEREAS: WSRM is a company involved in mining in the United States and
Mexico;
And
WHEREAS: WSRM is developing various placer and hard rock mines in
Arizona, USA,
And
WHEREAS: MERGE II desirers to acquire a specific mine lease with an
option to purchase said mine: and
THEREFORE: In consideration of the following terms and conditions, The
Parties hereby agree as follows:
I. WSRM shall:
X. Xxxxx to MERGE II a lease to the Treasure Gulch Group mines located
in the Hassayampa Mining District of Arizona approximately 10 miles
south of Prescott. Located 10 miles south of Prescott, Arizona within
the Hassayampa District in T12.5N, Range 2W, Sections 30 & 31. (please
also see attached Exhibit A-Summary of Treasure Gulch Property
Document)
X. Xxxxx to MERGE II and option to purchase the mining rights to the
Treasure Gulch Group mines.
C. At the request of MERGE II will act as the mine developer to
produce hard rock gold from the Treasure gulch mines including but not
limited to engineering, permitting, road improvements, testing and
final development and execution of a mining plan under separate
contract.
II. MERGE II shall:
A. Pay to Western $25,000 for an initial lease period of 24 months;
$12,500 at the time of execution of this agreement and an additional
$12,500 within 90 days thereafter.
Purchase Option: At anytime during the first year of the lease period,
MERGE II may purchase the Treasure Gulch mine group from WSRM for a
total price of $1,000,000 paid in three installments of $500,000 the
first payment due the time of execution of the purchase agreement and
then each additional payment of $250,000 due 30 days and 60 days
thereafter.
Payments: All payments made to SWRM under this agreement shall be made
by direct wire transfer to an account as directed by WSRM
Threatened or pending proceedings: "The Parties" warrant that no
proceedings shall have been initiated or threatened by any governmental
department, commission, bureau, board, agency of instrumentality or any
other bona fide third party seeking to enjoin or otherwise restrain or
to obtain an award for damages in connection with condition of the
transaction contemplated hereby.
Authorization: All corporate action necessary to authorize the
execution, delivery and performance by the parities of the Agreement
and any other agreements or instruments contemplated by this
transaction shall be furnished each to the other with copies of all
applicable resolutions certified by the Secretary of the respective
companies.
Consents: The Parties shall have received the approvals, consents and
authorizations of all third parties necessary to affect the validity of
this agreement.
Brokerage: Neither WSRM nor MERGE II has dealt with any broker or
finder in connection with the transaction contemplated herein and each
of them agrees to indemnify and hold the other party harmless in
connection with any claims for commissions or other compensation made
by any broker of finder claiming to have been employed by it on its
behalf in connection with the transactions contemplated herein.
Expenses: Except as otherwise provided herein, the Parties shall pay
the fees and expenses of their respective accountants and legal counsel
incurred in connection with the transactions contemplated by this
Agreement.
Notices: Any demand, notice or other communication required or
permitted under or in connection with the transactions contemplated by
this Agreement, shall be in writing and shall be deemed to be effective
when delivered by facsimile or in person or deposited in the United
States mail and sent by certified or registered mail, return receipt
requested, addressed as follows:
If to WSRM:
Western Sierra Mining Corp.
0000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Fax:000-000-0000
If to MERGE II:
000 Xxxxxxxxx Xxxxxx, Xxxx X
Xxxxx Xxxx Xxxxx, Xxxxxxx 00000
Fax:000-000-0000
Termination: Either party may terminate this Agreement, upon written
notice to the other party, for any of the following reasons:
A. A breach by either "Party" of any covenant, term, or condition of
the Agreement and the failure to cure such breach within thirty (30)
business days after receipt of written notice of such breach from the
non-breaching party; or
B. Either party misrepresents the terms or conditions of this
Agreement, or engages in any fraudulent activity relating thereto; or
C. Either party institute any proceeding for relief under the
Bankruptcy Code, or becomes insolvent, or if a receiver is appointed by
a court of competent authority, or if either party makes a general
assignment for the benefit of its creditors; or
D. State or Federal law forbids, places restriction on, limits or
otherwise impairs WSRM's ability to perform as contemplated by this
agreement
Arbitration: In the event a dispute should arise between the parties
to this Agreement, both parties agree to submit said dispute to a board
of arbitration under the laws of Arizona prior to any effort to seek a
remedy in the courts as set forth above.
Confidential Information Each of the parties hereby acknowledges and
agrees that all information disclosed to each other necessary for the
execution of the terms and conditions of this Agreement, whether
written or oral, including the terms and conditions of this Agreement,
is Confidential Information and shall not be disclosed to any third
party without the written consent of the other or such information
becomes public knowledge or as required by the Securities and Exchange
Commission.
Waiver The failure of any party hereto at any time or times hereafter
to exercise any right, power, privilege or remedy hereunder or to
require strict performance by the other or another party of any of the
provisions, terms or conditions contained in this Agreement or in any
other document, instrument or agreement contemplated hereby or
delivered in connection herewith shall not waive, affect, or diminish
any right, power, privilege or remedy of such party at any time or
times thereafter to demand strict performance thereof; and, no rights
of any party hereto shall be deemed to have been waived by any act of
knowledge of such party hereto on its rights on any one occasion shall
operate as a waiver of any other of its rights or any of its rights on
any future occasion.
Section Headings The section headings in this agreement are for the
convenience of reference only and shall not be deemed to be a part of
this Agreement or to alter or affect any provisions, terms or
conditions contained herein.
Exhibits and Schedules Any exhibits, appendices and/or schedules
referenced herein, shall be deemed to be attached hereto and made a
part hereof. All references herein to the Agreement shall include all
schedules, exhibits, appendices and financial statements and/or other
documents delivered hereunder.
Severability Wherever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under
applicable law. If ay portion of this Agreement is declared invalid
for ay reason in any jurisdiction, such declaration shall have no
effect upon the remaining portions of the Agreement which shall
continue in full force and effect upon the remaining portions of the
Agreement which shall continue in full force and effect as if this
Agreement had been executed with the invalid portion thereof deleted.
Furthermore, the entirety of this Agreement shall continue in full
force and effect in all other jurisdiction.
Entire understanding. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions
contemplated hereby and such understandings shall not be modified
except in writing signed by or on behalf of all the parties hereto.
Binding Effect. This Agreement shall be binding upon and shall inure
to the exclusive benefit of the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and
assigns. This Agreement is not intended to, nor shall it create any
rights in any other party.
Governing Law This Agreement is and shall be deemed to be a contract
entered into and made pursuant to the laws of the State of Arizona and
shall in all respects be governed, construed, applied and enforced and
in accordance with the laws of said state, without reference to
conflict of principals.
References Each reference herein to a party hereto shall be deemed to
include such party's legal representatives, successors and assigns, all
of whom shall be bound by the provisions hereof. Each reference to a
party hereto and any pronouns referring thereto as used herein shall be
construed in the masculine, feminine, neuter, singular or plural, as
the context may require.
Assignment. Each party hereto shall be able to sell, pledge, assign or
otherwise transfers rights under this Agreement, in whole or in part
only upon receiving written consent from the other, a consent that
shall not be unreasonably withheld. For purposes hereof the transfer
of the party's rights under this Agreement shall be deemed to include a
transfer of a majority of the voting rights with respect to such party.
Counter parts This Agreement may be signed in any number of
counterparts each of which shall be deemed to be an original and all of
which together shall constitute by one and the same instrument.
Time is of the Essence Time is of the essence in the undertaking of
all obligations under this Agreement, including but not limited to any
and all payment obligations.
Facsimile Signatures. A facsimile signature on this Agreement is as
valid as an original signature.
Executed on this 15th day of February, 2009.
By: Western Sierra Mining Corp.
/s/X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
President, CEP
By: Merge II, Inc.
/s/Xxxxxx Xxxxxxxxxxxx
------------------------------
Xxxxxx Xxxxxxxxxxxx
President, CEO
EXHIBIT A
SUMMARY TREASURE GULCH PROPERTY
Western Sierra Mining
- Located 10 miles south of Prescott, Arizona within the Hassayampa
District in T12.5N, Range 2W, Sections 30 & 31.
- An old mine that produced exceedingly rich gold ore from a narrow
portion of the vein and from underground open stopes.
- Vein is 6' to 12' in width and the adjacent Zero extension, also a
part of this property, is from 2' to 5" in width.
- Three claims comprise the property
- Approximately 5000 tons of ore are available from surface at
Treasure Gulch, averaging between .7 and .9 oz/ton Au. Underground
exposures suggest ore grading in excess of 1.0 oz/ton Au
- At the Zero extension ore at an adit face is grading .35 oz/ton Au,
and a large 3000 to 5000 ton dump is averaging .12 oz/ton Au
- Recent road work has improved access to the mine area.
- Recent road work has improved access to the mine area.
- A proven and probable ore reserve block has been calculated to
contain 33,330 tons of ore yielding a tenor of 24,664 ounces of gold
At the Zero extension a block of probable ore containing 41, 660 tons,
hosting 24,163 ounces of gold is known.
SUMMARY OF ORE RESERVES FOR THE FOLLOWING MINES:
1. The SunGold Mine
2. The Big Chief Group
3. The Oro Cache Mine
4. The Eagle Mine
5. The Treasure Gulch Mine
General Statement
Previous ore reserve calculations for the above mines have been made
over a period of many years by various professionals. Exploration
activity in 2006 and 2007 has provided a basis for evaluating previous
calculations and updating the overall ore reserve potential. It is
important to note that the following ore reserves are regarded as in-
ground ore reserves and have not been converted to loose tons after
expansion from drilling and blasting, and that no mine dilution or
recovery factor has been applied. This analysis is summarized below:
SUNGOLD MINE:
- Proven Ore Reserves (from all blocks) 141,525 tons @ 0.41
oz/ton AU
- Probable (Indicated) 318,750 tons @ 0.41 oz/ton AU
- Possible (Geologic Inferred) 500,000 tons @ 0.10 oz/ton AU
BIG CHIEF GROUP:
- Proven Ore Reserves (from 3 mines) 29,135 tons @ 0.52 oz/ton
Au
- Probable (indicated) 20,840 tons @ 0.58 oz/ton Au
- Probable (Indicated) 71,600 tons @ 0.31 oz/ton Au
- Possible (Geologic Inferred) 3 million tons @ 0.05 oz/ton Au
ORO CACHE MINE:
- Proven Ore Serves 13, 17 tons @ 0.32 oz/ton Au
- Probable 9,500 tons @ 0.32 oz/ton Au
- Possible (Geologic Inferred to 300' depth) 75,000 tons @ 0.32
oz/ton Au
EAGLE MINE:
- Proven Ore Reserve (Eagle Vein) 3,000 tons @ 0.30 oz/ton Au,
55.0 oz/ton Au
- Probable Ore Reserve (Eagle Vein) 3,665 tons @ 0.30 oz/ton Au,
55.0 oz/ton Ag
- Proven Ore Reserve (Buzzard Vein) 5,000 tons @ 0.20 oz/ton Au,
17.0 oz/ton Ag
- Probable Ore Reserve (Buzzard Vein) 16,000 tons @ 0.20 oz/ton
Au, 17.0 oz/ton Ag
- Proven Ore Reserve (Stockwork/Breccia) 20,000 tons @ 0.12
oz/ton Au, 78 oz/ton Ag
TREASURE GULCH MINE:
- Proven Ore Reserve (T. Gulch#1) 10,500 tons @ 0.65 oz/ton Au
- Probable Ore Reserve (T. Gulch #1) 22,830 tons @ 0.65 oz/ton
Au
- Proven Ore Reserve (T.Gulch#1) 20,000 tons @ 0.58 oz/ton Au
- Probable Ore Reserve (T.Gulch#2) 21,660 tons @ 0.58 oz/ton
Au
/s/Xxx X. Xxxxxxx
--------------------------------
Xxx X. Xxxxxxx
CPG #3341
ME#1594874
May 7, 2008
