Exhibit
10.1
THIS
AGREEMENT made as of October 27, 2009.
BETWEEN:
WILPENA
RESOURCES LTD. PTY.
(hereafter
referred to as "Wilpena
Resources")
AND:
XXXXX
EXPLORATION INC.
(hereafter
referred to as "Xxxxx
Exploration")
WHEREAS:
A.
Wilpena Resources owns a 100% Interest (defined below) in certain mining
properties known as the Wilpena Property (the "Property") located in the
State of Queensland, Australia as more particularly described in Schedule "A"
hereto;
B.
Wilpena Resources has agreed to grant to Xxxxx Exploration the exclusive right
and option to acquire all of Wilpena Resources's Interest in and to the Property
on the terms and conditions hereinafter set forth.
X. Xxxxx
Exploration will have the exclusive option to acquire, subject to the
reservation of a royalty by Wilpena Resources and the covenant by Xxxxx
Exploration to pay a production bonus, all of Wilpena Resources's Interest in
the Property on the terms and conditions hereinafter set forth.
NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants
and agreements herein contained the parties hereto mutually agree as
follows:
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For
the purposes of this Agreement:
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"Affiliate" means a
corporation which is (i) a subsidiary of a party hereto, (ii) a subsidiary
of a corporation of which a party hereto is a subsidiary or (iii)
controlled by the same corporation or person as a party hereto (where
"controlled" means that more than 50% of the votes that may be cast to
elect directors of the corporation are held, other than by way of security
only, by or for the benefit of that corporation or person, and the votes
attached to those securities are sufficient, if exercised, to elect a
majority of the directors of the
corporation);
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"Business Day" means, for
any obligation to be performed in Canada, any day (other than a Saturday
or Sunday) on which banks in Sydney,
Australia;
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"Commencement of Commercial
Production" means
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if
a Mill is located on the Property, the last day of a period of 40
consecutive days in which, for not less than 30 days, such concentrator
processed ore from the Property at 70% of its nameplate concentrating
capacity,
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if
no Mill is located on the Property, the first day on which direct shipping
ore has been shipped from the Property for the purpose of earning
revenues, or
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if
the commencement of commercial production or the completion date of the
mine, as described in any project financing arrangements, is fulfilled
under such project financing arrangements before the dates described in
(i) and (ii) above, the day on which such fulfillment
occurs,
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but
no period of time during which ore or concentrate is shipped from the
Property for testing purposes, shall be taken into account in determining
the date of Commencement of Commercial
Production;
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"Effective Date" means
October 27, 2009;
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"Expenditures" means all
items of outlay and expense whatsoever, direct or indirect, with respect
to Mining Operations, recorded by Xxxxx Exploration in accordance with
this Agreement, and includes, without duplication, Xxxxx Exploration's
Fee. Without limiting generality, the following categories of Expenditures
shall have the following meanings:
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"Construction
Expenditures" means those Expenditures recorded after a production
decision and before the completion date of the
mine;
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"Exploration
Expenditures" means those Expenditures recorded during the
exploration period prior to a decision having been made to put the
Property into production by building a mine;
and
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"Operating Expenditures"
means those Expenditures recorded after the completion date of the
mine;
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"Interest" means the
undivided beneficial interest of Wilpena Resources in the Property, which
beneficial interest is subject to the charges contemplated in Section
6.2(d);
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"Mill" means any crusher,
concentrator and other processing facilities to be constructed on or in
proximity to the Property and used for the processing of production from
the Property, whether or not in conjunction with or after production from
any other mineral property;
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"Mining Operations" means
every kind of work done by Xxxxx Exploration on or in respect of the
Property including, without limiting generality, investigating,
prospecting, exploring, developing, property maintenance, preparing
reports, estimates and studies, designing, equipping, improving,
surveying, construction and mining, milling, concentrating,
rehabilitation, reclamation, and environmental
protection;
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"NSR Royalty" means the
royalty to be paid by Xxxxx Exploration to Wilpena Resources in accordance
with the terms of this Agreement;
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"Option" means the sole
and exclusive right and option granted by Wilpena Resources to Xxxxx
Exploration to acquire, subject to Wilpena Resources's NSR Royalty which
is hereby reserved, an undivided 100% right, title and Interest in and to
the Property pursuant to this
Agreement;
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"Shares" means the voting
common shares in the capital of Xxxxx Exploration as presently
constituted; and
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1.
Wilpena Resources hereby gives and grants to Xxxxx Exploration the Option
in accordance with the terms of this
Agreement.
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2. In
order for Xxxxx Exploration to acquire, subject to Wilpena Resources's NSR
Royalty, an undivided 100% Interest in the Property, it
must:
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a.
within 30 days of the Effective Date issue to Wilpena Resources 45,000
Shares ; and
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b.
incur the Expenditures (or make cash payments to Wilpena Resources for any
shortfall), in the following amounts and on or before the following
dates:
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i.
US$25,000 on or before April 27, 2010;
and
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ii.
An additional US$50,000 on or before October 27,
2010.
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3.
Xxxxx Exploration must have fulfilled all of the conditions in Section 2.2
and have exercised the Option by October 1, 2008, after which date the
Option will expire.
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4.
Provided Xxxxx Exploration has complied with Section 2.2 hereof, the
Option will have been exercised without any further action on the part of
Xxxxx Exploration and Xxxxx Exploration shall have acquired, subject to
Wilpena Resources's NSR Royalty, Wilpena Resources's Interest in the
Property, and Wilpena Resources will promptly execute and deliver all such
documents and to do all such things as may be required to transfer its
Interest in the Property to Xxxxx Exploration or its designated nominee.
Xxxxx Exploration consents to Wilpena Resources registering the NSR
Royalty against title to the Property in the Mining Registry of Queensland
upon such transfer.
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For
the purposes of Sections 2.2(a), and
3.1:
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a.
Wilpena Resources must give notice to Xxxxx Exploration of its election,
where applicable, to take payment in cash or in Shares, as the case may
be, and, if applicable, the name of the nominee in which the Shares should
be registered, on or before the fifth Business Day after the date on which
the payment required under such paragraph becomes due, and if Wilpena
Resources does not give Xxxxx Exploration such notice within such time
period then Wilpena Resources will have been deemed to have elected to
receive the payment in cash;
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b.
the value of each Share (if any) to be issued shall be equal to the
weighted average trading price of the Shares on the Over-the Counter
Bulletin Board ( the "OTCBB")or the
Australian Stock Exchange (the "ASX"), as the case may
be, for the five trading days prior to the date on which the payment
required under such paragraph becomes due, such weighted average trading
price to be determined by dividing the aggregate number of Shares traded
on the OTCBB or the ASX, as the case may be, for the five days prior to
the date on which the determination is being made by the aggregate value
of Shares traded on the ASX or the OTCBB during such five day
period;
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x.
Xxxxx Exploration shall issue certificates representing the Shares (if
any) as soon as practicable after receiving notice from Wilpena Resources
of its election to receive Shares, and in any event within five Business
Days of receipt of such election.
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Notwithstanding
anything to the contrary in this Agreement, the obligations described in
Sections 2.2(a) and 3.1 shall remain obligations of Xxxxx Exploration
throughout the term of this
Agreement.
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1.
In addition to the payment obligations described in Article 2 above that
Xxxxx Exploration must make in order to exercise the Option, on the six
month anniversary of the Commencement of Commercial Production on the
Property, Xxxxx Exploration will be obligated to pay to Wilpena Resources
US$20,000 in cash or in Shares, at the election of Wilpena Resources in
its sole discretion.
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1.
Wilpena Resources and Xxxxx Exploration shall form a technical committee
with respect to the Property, such technical committee to consist of one
member from Xxxxx Exploration and one member from Wilpena
Resources.
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2.
The technical committee shall meet at least once per year, with the first
meeting of the technical committee to be held no later than April 27,
2009. At each meeting of the technical committee, Xxxxx Exploration will
provide to Wilpena Resources evidence of and the results from the
Expenditures made by Xxxxx Exploration as of the date of the
Meeting.
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1.
Upon the Commencement of Commercial Production on the Property, Xxxxx
Exploration will be obligated to pay to Wilpena Resources the NSR Royalty
in accordance with Schedule "B"
hereto.
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6.
REPRESENTATIONS AND WARRANTIES
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1.
Each of Wilpena Resources and Xxxxx Exploration hereby represent and
warrant to the other that as at the date
hereof:
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a.
it has full power, capacity and authority to carry on its business and to
enter into and perform its obligations under this Agreement and any
agreement or instrument referred to or contemplated by this Agreement and
this Agreement is legally binding upon it and is enforceable in accordance
with its terms;
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b.
neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation
of the transactions hereby contemplated conflict with, result in the
breach of or accelerate the performance required by, any agreement to
which it is a party; and
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c.
the execution and delivery of this Agreement has been duly authorized by
all necessary corporate action on its part and will not violate or result
in the breach of the laws of any jurisdiction applicable or pertaining
thereto or of its constating
documents.
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2.
Wilpena Resources hereby represents and warrants to Xxxxx Exploration that
as at the date hereof:
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a.
it holds a 100% Interest in the Property, which is
registered in the name of its principal and is in good
standing;
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b.
Wilpena Resources has the exclusive right to enter into this Agreement and
all necessary authority to dispose of an interest in and to the Property in accordance
with the terms of this Agreement;
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c.
The Property is comprised
of the mining concessions which are properly and accurately
described in Schedule "A" hereto;
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d.
to the best of its knowledge, no person, firm or corporation has any
proprietary or possessory interest in the Property or any right capable of
becoming an interest in the Property and, no person is entitled to any
royalty or other payment in the nature of rent or royalty on any minerals,
ores, metals or concentrates or any other such products removed from the
Property;
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e.
there are no actual, pending or threatened actions, suits, claims or
proceedings regarding the Property or any basis therefor of which it is
aware;
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f.
there are no liens, charges or encumbrances (recorded or unrecorded), and
Wilpena Resources has not been served with any notice and is not aware of
any defects or objections, materially affecting Wilpena Resources's rights
in respect of the Property;
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g.
to Wilpena Resources's knowledge, conditions on and relating to the Property and operations
conducted thereon are in compliance with all applicable laws, regulations
or orders including, without limitation, laws relating to environmental
matters, waste disposal and storage and
reclamation;
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h.
Wilpena Resources has not been served with any outstanding orders or
directions relating to environmental matters requiring any work, repairs,
construction or capital expenditures with respect to the Property and the conduct
of the operations related thereto;
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i.
Wilpena Resources has not received notice of any act or omission of any
party which could result by notice or lapse of time in the breach,
termination, abandonment, forfeiture, relinquishment or other premature
termination of the Property;
and
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j.
any consents or approvals required by Wilpena Resources with respect to
the grant of the Option hereunder
will be obtained prior to such
grant.
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3.
The representations and warranties hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and shall
survive the acquisition of any interest in the Property by Xxxxx
Exploration, for a period of two years with respect to the representations
and warranties in Sections 6.2(e) to (j) and indefinitely with respect to
the representations and warranties in Sections. to (c) and 6.2(a) to
(d), and each of the parties will indemnify and save the other harmless
from all loss, damage, costs, actions and suits arising out of or in
connection with any breach of any representation, warranty, covenant,
agreement or condition made by them and contained in this
Agreement.
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1.
During the term of the Option and before Wilpena Resources's Interest in
the Property has been transferred by Wilpena Resources to Xxxxx
Exploration or its designated nominee pursuant to Section 2.4, Wilpena
Resources hereby covenants and agrees with Xxxxx Exploration
to:
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a.
not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of Xxxxx Exploration
hereunder and, without limitation, will not transfer, convey, assign,
mortgage or grant an option in respect of or grant a right to purchase or
in any manner transfer or alienate any or all of the title to or its
Interest in the Property, except as
expressly provided under this
Agreement;
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b.
make available to Xxxxx Exploration and its representatives all records
and files in its possession relating to the Property and permit
Xxxxx Exploration and its representatives at their own expense to take
abstracts therefrom and make copies
thereof;
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c.
promptly provide Xxxxx Exploration with any and all notices and
correspondence received by Wilpena Resources from government agencies in
respect of the Property;
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d.
do all things necessary to maintain its Interest in the Property;
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e.
immediately notify Xxxxx Exploration of any claims, actions, demands or
similar acts of a civil, labour or juridical nature, filed against it
respecting the Property; and
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f.
obtain the written consent of Xxxxx Exploration prior to entering into any
lease of the surface of the Property as to the terms
of such proposed lease.
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2.
During the term of the Option and before Wilpena Resources's Interest in
the Property has been transferred by Wilpena Resources to Xxxxx
Exploration or its designated nominee pursuant to Section 2.4, Xxxxx
Exploration hereby covenants and agrees with Wilpena Resources
to:
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a.
perform its obligations and conduct all operations in a workmanlike and
commercially reasonable manner, in accordance with sound mining,
engineering and processing methods and
practices;
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b.
provide automobile liability insurance, having a limit consistent with
local practices as agreeable between the parties, and insuring against
claims for bodily injury, including death, and for property damage arising
out of the use of owned, leased and non-owned vehicles for the performance
of any activities under this
Agreement;
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c.
provide health, accident, and unemployment insurance and worker's
compensation coverage for itself and its employees, agents and contractors
hired to perform the services in connection with the
Property;
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d.
keep the Property free and clear from any liens or encumbrances relating
to its work on the Property;
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e.
provide Wilpena Resources with regular progress reports during periods of
active exploration and with an annual summary of the work performed and
the results obtained. The annual summary shall include copies of any drill
records, assays, maps, plans and all other relevant factual information
and materials not previously
delivered;
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f.
do and file such assessment work or other reports required to maintain
tenure to the Property in good
standing;
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g.
maintain accounts of its Expenditures on the Property in accordance with
international accounting standards generally accepted in the mining
industry;
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h.
indemnify Wilpena Resources for any claims arising against Wilpena
Resources, its Affiliates and the directors, officers, employees and
agents thereof which may arise as a result of Xxxxx Exploration's work and
Expenditures on the Property, such indemnification to expire two years
from the date of the transfer of Wilpena Resources's Interest to Xxxxx
Exploration or its designated
nominee;
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i.
use its commercial best efforts to incorporate the Subsidiary, and
immediately upon the incorporation of the Subsidiary provide notice to
Wilpena Resources of such incorporation, at which time all references
herein to "Xxxxx Exploration" will be deemed to be references to the
Subsidiary, with the exception of the requirements to issue shares of
Xxxxx Exploration, which shall continue to be the responsibility of Xxxxx
Exploration. In addition, the requirement to make the payment contemplated
by Section 3.1 shall be a joint liability of both Xxxxx Exploration and
the Subsidiary.
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8.
RIGHTS AND DUTIES DURING OPTION
PERIOD
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1.
During the term of this Agreement, Xxxxx Exploration or its designated
nominee pursuant to Section 2.4:
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x.
Xxxxx Exploration and its employees, agents and independent contractors
shall have the right to enter upon the Property and to do such
prospecting, exploration, development or other mining work thereon and
thereunder as is permitted by this agreement, including the removal of
mineral samples for the purpose of, and in the amounts appropriate for,
testing such mineral samples, and Xxxxx Exploration shall have the right
to bring upon and erect upon the Property such buildings, plant machinery
and equipment as Xxxxx Exploration may deem necessary or desirable to
carry out such activities;
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x.
Xxxxx Exploration in its sole discretion will make any decision concerning
the Expenditures; and
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x.
Xxxxx Exploration shall have exclusive and quiet possession of the
Property.
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9. TERMINATION OR FORFEITURE OF
OPTION
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1.
Xxxxx Exploration shall at any time have the right to elect by notice in
writing to Wilpena Resources not to make the payments provided for under
Section 2.2, thereby forfeiting its Option to acquire the
Interest.
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2.
If Xxxxx Exploration fails to make a payment on or before the dates
specified in Section 2.2 and the default continues for 14 days after
receipt by Xxxxx Exploration of notice from Wilpena Resources of the
default, the Option to acquire the Interest will terminate on the 30th day
after receipt of such notice by Xxxxx Exploration. If Xxxxx Exploration
cures any default in respect of a payment in accordance with this section,
Xxxxx Exploration will be deemed to have duly made the payment in respect
of such default.
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3.
If either party terminates this Agreement in accordance with this Article
9, Xxxxx Exploration will:
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a.
leave the Property free and clear of all liens, charges and encumbrances
arising from its operations hereunder and in a safe and orderly condition
and in good standing;
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b.
deliver to Wilpena Resources within 60 days of its written request, all
drill cores, assay samples, pulps, rejects and copies of all maps, drill
logs, assay results and other factual technical data compiled by Xxxxx
Exploration with respect to the
Property;
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c.
have the right and, if so requested by Wilpena Resources, the obligation,
to remove from the Property within six months of the effective date of
termination all facilities erected, installed or brought upon the Property
by or at the instance of Xxxxx
Exploration;
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d.
comply with all laws, rules, orders and regulations in effect on the date
of termination with respect to reclamation and environmental
rehabilitation in relation to the work performed on the Property by Xxxxx
Exploration under this Agreement;
and
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e.
leave the property in good standing with respect to any annual minimum
assessment work required and payment of any applicable taxes then due on
the Property,
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whereupon
this Agreement will terminate and be of no further force or
effect.
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10. SHARING OF AND CONFIDENTIAL
NATURE OF INFORMATION
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1.
Each party agrees that all information obtained hereunder shall be the
exclusive property of the parties and not publicly disclosed or used other
than for the activities contemplated hereunder except as required by law
or by the rules and regulations of any regulatory authority or stock
exchange having jurisdiction, or with the written consent of the other
party, such consent not to be unreasonably withheld. Where a party
releases information based on a requirement at law or under the rules and
regulations of any regulatory authority or stock exchange having
jurisdiction it will deliver a copy concurrently to the other
party.
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2.
Consent to disclosure of information pursuant to Section 10.1 shall not be
unreasonably withheld where a party wishes to disclose any such
information to a third party for the purpose of arranging financing for
its contributions hereunder or for the purpose of selling its Interest,
provided that such third party gives its undertaking to the parties that
any such information not theretofore publicly disclosed shall be kept
confidential and not disclosed to
others.
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3.
Except as provided for in Section 10.1, neither party will issue any press
release concerning the Property or this Agreement without first delivering
a copy of the proposed release to the other for comment and if such
comment is not forthcoming within two business days of such delivery, such
press release may be issued without the comment or consent of the other
but a copy will be delivered to such other party concurrently with its
release by such party.
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4.
No party shall be liable to any other for the fraudulent or negligent
disclosure of information by any of its employees, servants or agents,
provided that such party has taken reasonable steps to ensure the
preservation of the confidential nature of such
information.
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11.
RESTRICTIONS ON
TRANSFER
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1.
The restrictions on transfer described in Sections 11.2 to 11.4
shall apply during the term of the Option only, and, subject to
Section 11.6,
subsequent to the term of the Option either party may sell, transfer,
assign or otherwise dispose of its right, title and interest in and to
this Agreement and any of its rights hereunder in its sole
discretion.
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2.
Subject to Section 11.4, any party may sell, transfer, assign or otherwise
dispose of ("Assign", or an "Assignment") all or any
portion of its right, title and interest in and to this agreement to a
third party ("New
Party") only with
the consent of the other parties hereto, which consent may be withheld for
any reason.
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3.
Notwithstanding the foregoing, either party may, without the consent of
the other, Assign any or all of its Interest or its rights under this
Agreement to an Affiliate, provided that such Affiliate first complies
with the provisions of Section 11.4 and
agrees with the other parties in writing to re-transfer such Interest to
the originally assigning party before ceasing to be an Affiliate of such
party.
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4.
Before the completion of any Assignment by a party of its Interest or
rights under this Agreement, to an Affiliate or otherwise, the New Party
shall, at the election of the parties not selling, enter into an agreement
with the party not selling on the same terms and conditions as set out in
this Agreement.
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5.
Each party agrees that its failure to comply with the restrictions set out
in this Article would constitute an injury and damage to the other party
impossible to measure monetarily and, in the event of any such failure the
other party shall, in addition and without prejudice to any other rights
and remedies at law or in equity, be entitled to injunctive relief
restraining or enjoining any sale of any Interest or assignment of any
rights under this Agreement save in accordance with the provisions of this
section, and any party intending to make a sale or making a sale contrary
to the provisions of this section hereby waives any defence it might have
in law to such injunctive relief.
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6.
Subsequent to the term of the Option and upon exercise of the Option by
Xxxxx Exploration and the transfer by Wilpena Resources of its Interest to
Xxxxx Exploration, Xxxxx Exploration shall not transfer, assign or
otherwise dispose of all or any portion of its right, title and interest
in and to this Agreement, its rights hereunder or the Property to any
third party without first causing the assignee to deliver to Wilpena
Resources an agreement between the assignee and Wilpena Resources, in a
form satisfactory to Wilpena Resources, acting reasonably, under which
such assignee acknowledges the NSR Royalty and covenants to pay the NSR
Royalty to Wilpena Resources on the same terms and conditions as under
this Agreement.
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12. AMALGAMATION OR
REORGANIZATION
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1.
The provisions of Article 11 shall not prevent a party from entering into
an amalgamation or corporate reorganization which will have the effect in
law of the amalgamated or surviving company possessing substantially all
the property, rights and interests and being subject to all the debts,
liabilities and obligations of each amalgamating or predecessor
company.
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1.
Any notice, direction or other instrument required or permitted to be
given under this Agreement shall be in writing and may be given by the
delivery of the same or by sending the same by telecommunication,
facsimile or other similar form of communication, in each case addressed
as follows:
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if
to Wilpena Resources at:
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Xxxxxxx
Xxxxxxxxx Xxxxxxxx 0, Xxxxxx Xxxx Office Park, 2404 Xxxxx Xx, Eight Mile
Plains QLD. 4113 Attention:
President
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if
to Xxxxx Exploration at:
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Xxxxx
Exploration Inc.. #6 Xxxxxxx Avenue, Mosman, Sydney Australia
2088
Attention: Xxxx Xxxxxx
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2.
Any notice, direction or other instrument will, if delivered, be deemed to
have been given and received on the day after it was delivered, and if
sent by telecommunication, facsimile or other similar form of
communication, be deemed to have been given or received on the day it was
so sent, if sent during the normal business hours of the recipient and
otherwise on the first business day following the day it was so
sent.
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3.
Any party may at any time give to the others notice in writing of any
change of address of the party giving such notice and from and after the
giving of such notice the address or addresses therein specified will be
deemed to be the address of such party for the purposes of giving notice
hereunder.
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1.
The parties will execute such further and other documents and do such
further and other things as may be necessary or convenient to carry out
and give effect to the intent of this
Agreement.
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1.
All references to monies hereunder shall be in lawful currency of the
United States of America. All payments to be made to any party hereunder
may be made by cheque or draft mailed or delivered to such party at its
address for notice purposes as provided herein, or deposited for the
account of such party at such bank or banks as such party may designate
from time to time by written notice. Said bank or banks shall be deemed
the agent of the designating party for the purpose of receiving,
collecting and receipting such
payment.
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1.
Time shall be of the essence in the performance of this
Agreement.
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1.
The headings of the sections of this Agreement are for convenience only
and do not form a part of this Agreement nor are they intended to affect
the construction or meaning of anything herein contained or govern the
rights and liabilities of the
parties.
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1.
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted
assigns.
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1.
Neither party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its control
including, but not limited to adverse weather conditions, environmental
protests or blockages, acts of God, fire, flood, explosion, strikes,
lockouts or other industrial disturbances, laws, rules and regulations or
orders of any duly constituted governmental authority or non-availability
of materials or transportation (each an "Intervening
Event").
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2.
A party relying on the provisions of Section 19.1 will promptly give
written notice to the other of the particulars of the Intervening Event
and all time limits imposed by this Agreement will be extended from the
date of delivery of such notice by a period equivalent to the period of
delay resulting from an Intervening Event described in Section 20.1. If an
Intervening Event continues for a period of more than one year,
the parties hereto will enter into negotiations to amend or terminate this
Agreement, as appropriate.
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3.
A party relying on the provisions of Section 19.1 will take all reasonable
steps to eliminate any Intervening Event and, if possible, will perform
its obligations under this Agreement as far as practical, but nothing
herein will require such party to settle or adjust any labour dispute or
to question or to test the validity of any law, rule, regulation or order
of any duly constituted governmental authority or to complete its
obligations under this Agreement if an Intervening Event renders
completion impossible. A party relying on the provisions of Section 19.1
will give written notice to the other as soon as such Intervening Event
ceases to exist.
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4.
During an Intervening Event Wilpena Resources will use its commercially
reasonable efforts to maintain its Interest in the Property, and Xxxxx
Exploration shall provide to Wilpena Resources any funds required to make
any payments to any governmental agencies or bodies with respect to the
Property necessary in order for Wilpena Resources to maintain its
Interest.
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1.
Notwithstanding anything in this Agreement to the contrary, if any party
(a "Defaulting Party") is in default of any requirement herein set forth
the party affected by such default shall give written notice to the
Defaulting Party specifying the default and the Defaulting party shall not
lose any rights under this Agreement, unless within 30 days after the
giving of notice of default by the affected party the Defaulting party has
failed to take reasonable steps to cure the default by the appropriate
performance and if the Defaulting Party fails within such period to take
reasonable steps to cure any such default, the affected party shall be
entitled to seek any remedy it may have on account of such
default.
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1.
This Agreement constitutes the entire agreement between the parties and,
except as hereafter set out, replaces and supersedes all prior agreements,
memoranda, correspondence, communications, negotiations and
representations, whether oral or written, express or implied, statutory or
otherwise between the parties with respect to the subject matter
herein.
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22.
GOVERNING LAW AND ARBITRATION
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1.
This Agreement shall be governed by and construed according to the laws of
the State of Nevada.
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2.
Any dispute arising under this Agreement will be determined by a panel of
three arbitrators, one of which will be appointed by Xxxxx Exploration,
one of which will be appointed by Wilpena Resources and one of which will
be appointed by Xxxxx Exploration and Wilpena Resources jointly, as
follows:
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a.
either party may refer any such matter to arbitration by written notice to
the other and, within ten Business Days after receipt of such notice, the
parties will agree on the appointment of an
arbitrator;
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b.
no person will be appointed as an arbitrator hereunder unless such person
agrees in writing to act;
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c.
upon appointment in accordance with section (a), the arbitrator will
immediately proceed to hear and determine the matter in question and
unless otherwise agreed, such hearing shall take place in Vancouver,
British Columbia;
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d.
the determination by the arbitrator will be made within 45 days after his
appointment subject to any reasonable delay due to unforeseen
circumstances and the decision of the arbitrator will be in writing and
signed by the arbitrator and will be final and binding upon the parties
who will abide by such decision;
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e.
if the parties cannot agree on a single arbitrator as provided in section
(b), or if the person appointed is unwilling or unable to act, either
party will have the right to request the Court to mediate in the
appointment of a mutually acceptable arbitrator;
and
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f.
the arbitrators' fees shall be paid by both parties in equal parts during
the course of the arbitration, but upon final decision of the dispute, the
panel of arbitrators shall determine the responsibility for the payment of
all arbitration costs, and if the arbitrators do not make such a
determination then the unsuccessful party shall pay all arbitration costs,
including the amounts paid by the prevailing
party.
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1.
This Agreement may be executed by each of Xxxxx Exploration and Wilpena
Resources in counterparts and by facsimile, each of which when so executed
and delivered shall be an original, but both such counterparts, whether
executed and delivered in the original or by facsimile, shall together
constitute one and the same
instrument.
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IN
WITNESS WHEREOF the parties hereto have executed these presents as of the day
and year first above written.
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WILPENA
RESOURCES LTD. PTY.
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By:
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Authorized
Signatory
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XXXXX
EXPLORATION INC.
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By:
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Authorized
Signatory
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SCHEDULE
"A"
WILPENA
PROPERTY
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Licence
Area
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Tenure No.
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Area
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Mt.
Xxxxxx
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EPM
15313
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5
acres
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SCHEDULE
"B"
DEFINITION,
CALCULATION AND PAYMENT OF NSR ROYALTY
The NSR
Royalty is the percentage royalty provided in the body of the Agreement to which
this Schedule "B" is attached and calculated and paid by Xxxxx Exploration to
Wilpena Resources in accordance with the following provisions:
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Unless
otherwise set forth below, all capitalized terms used in this Schedule
shall have the meaning ascribed to them in the
Agreement.
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"Calendar Quarter" means
each three-month period ending March 31st, June 30th, September 30th and
December 31st of each calendar
year.
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"Mineral Price Quotation"
means the final sale price of gold as quoted on the London Metals
Exchange, as published in Metals Week or a
similar publication.
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"Net Smelter Returns" or
"NSR"
means:
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where
all or a portion of the ores or concentrates derived from the Property are
sold as ores or concentrates, the gross amount received from the purchaser
following sale thereof after deduction (i) if applicable under the sale
contract, of all smelter or refinery charges, penalties and other
deductions; (ii) of all costs of transporting and insuring the ores or
concentrates from the mine to the smelter, refinery or other place of
final delivery; and (iii) of sales, use, severance, excise, net proceeds
of mine, and ad valorem taxes and any tax on or measured by mineral
production, but excluding income taxes of Xxxxx Exploration;
and
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where
all or a portion of the said ores or concentrates derived from the
Property are treated in a smelter or refinery and a portion of the metals
recovered therefrom are delivered to, and sold by Xxxxx Exploration, the
gross amount received from the purchaser following sale of the metals so
delivered, after deduction of (i) all smelter or refinery charges,
penalties and other deductions; (ii) all costs of transporting and
insuring the ores or concentrates from the mine to the smelter or
refinery; (iii) if applicable under the smelter or refining contract, all
costs of transporting and insuring the metals from the smelter or refinery
to the place of final delivery by the purchaser; and (iv) sales, use,
severance, excise, net proceeds of mine, and ad valorem taxes and any tax
on or measured by mineral production, but excluding income taxes of Xxxxx
Exploration,
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and
where any ores or concentrates are sold to, or treated in, a smelter or
refinery owned or controlled by Xxxxx Exploration, the pricing for that
sale or treatment will be established by Xxxxx Exploration on an arm's
length basis so as to be fairly competitive with pricing, net of
transportation, insurance, treatment charges and other related costs, then
available on world markets for product of like quantity and quality.
Page
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Upon
the Commencement of Commercial Production, each Calendar Quarter Xxxxx
Exploration shall be obligated to pay and Wilpena Resources shall be
entitled to receive the NSR Royalty as
follows:
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for
gold produced from the Property:
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(i)
1.5% of Net Smelter Returns if the average Mineral Price Quotation for
gold over the Calendar Quarter for which the NSR Royalty is being paid is
less than US$600 per ounce; or
(ii) 2% of Net Smelter Returns if the
average Mineral Price Quotation for gold over the Calendar Quarter for
which the NSR Royalty is being paid is equal to or greater than US$600 per
ounce; and
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for
all other minerals produced from the Property, 1.75% of Net Smelter
Returns.
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Xxxxx
Exploration shall, within 60 days of the end of each Calendar Quarter, as
and when any Net Smelter Returns are available for
distribution:
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pay
or cause to be paid to Wilpena Resources that percentage of the Net
Smelter Returns to which Wilpena Resources is entitled under the
Agreement;
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deliver
to Wilpena Resources a statement
indicating:
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(i)
the gross amounts received from the purchaser contemplated in the
definition of "Net Smelter Returns" in subsection 1.01 of this
Schedule "B";
(ii)
the deductions therefrom in accordance with the definition of "Net Smelter
Returns" in subsection 1.01 of this Schedule "B";
(iii) the amount of Net
Smelter Returns remaining; and
(iv) the amount of those Net Smelter
Returns to which Wilpena Resources is entitled;
supported by such
reasonable information as to the tonnage and grade of ores or concentrates
shipped as will enable Wilpena Resources to verify the gross amount
payable by the smelter or other
purchaser.
Page
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Adjustments
and Verification
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Payment
of any Net Smelter Returns by Xxxxx Exploration shall not prejudice the
right of Xxxxx Exploration to adjust any statement supporting the payment;
provided, however, that all statements presented to Wilpena Resources by
Xxxxx Exploration for any quarter shall conclusively be presumed to be
true and correct upon the expiration of 12 months following the end of the
quarter to which the statement relates, unless within that 12-month period
Xxxxx Exploration gives notice to Wilpena Resources claiming an adjustment
to the statement which will be reflected in subsequent payment of Net
Smelter Returns.
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Xxxxx
Exploration shall not adjust any statement in favour of itself more than
12 months following the end of the quarter to which the statement
relates.
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Wilpena
Resources shall, upon 30 days' notice in advance to Xxxxx Exploration,
have the right to request that Xxxxx Exploration have its independent
external auditors provide their audit certificate for the statement or
adjusted statement, as it may relate to the Agreement and the calculation
of Net Smelter Returns.
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The
cost of the audit certificate shall be solely for Wilpena Resources's
account unless the audit certificate discloses material error in the
calculation of Net Smelter Returns, in which case Xxxxx Exploration shall
reimburse Wilpena Resources the cost of the audit certificate. Without
limiting the generality of the foregoing, a discrepancy of one percent in
the calculation of Net Smelter Returns shall be deemed to be
material.
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Xxxxx
Exploration to Determine Operations
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Xxxxx
Exploration will have complete discretion concerning the nature, timing
and extent of all exploration, development mining and other operations
conducted on or for the benefit of the Property and may suspend operations
and production on the Property at any time it considers prudent or
appropriate to do so. Xxxxx Exploration will owe Wilpena Resources no duty
to explore, develop or mine the Property, or to do so at any rate or in
any manner other than that which Xxxxx Exploration may determine in its
sole and unfettered discretion. Xxxxx Exploration may, but will not be
obligated to treat, mill, heap xxxxx, sort, concentrate, refine, smelt or
otherwise process, beneficiate or upgrade the ores, concentrates, and
other products at sites located on or off the Property, prior to sale,
transfer, or conveyance to a purchaser, user, or consumer. Xxxxx
Exploration will not be liable for mineral values lost in processing under
sound practices and procedures, and no royalty will be due on any such
lost mineral values.
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Ores,
concentrates and derivatives mined or retrieved from the Property may be
commingled with ores, concentrates or derivatives mined or retrieved from
other properties. All determinations required for calculation of Net
Smelter Returns, including without limitation the amount of the metals
contained in or recovered from ores, solutions, concentrates or
derivatives mined or retrieved from the Property, the amount of the metals
contained in or recovered from commingled ores, solutions, concentrates or
derivatives shall be made in accordance with prudent engineering,
metallurgical and cost accounting
practices.
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Xxxxx
Exploration may, but need not, engage in forward sales, futures trading or
commodity options trading, and other price hedging, price protection, and
speculative arrangements ("Trading Activities")
which may involve the possible delivery of base or precious metals
produced from the Property. The parties acknowledge and agree that Wilpena
Resources shall not be entitled to participate in the proceeds or be
obligated to share in any losses generated by the Trading
Activities.
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