Goldspring, Inc. Virginia City, NV 89440
Goldspring,
Inc.
X.X
Xxx
0000
Xxxxxxxx
Xxxx, XX 00000
775-847-5272
August
13, 2008
Mr.
Xxxx
Xxxxxxxx
President
DWC
Resources, Inc.
Xxxxxx
Xxxx, XX 00000
Re:
Letter of Intent (DWC Property, Storey County, Nevada)
Dear
Xx.
Xxxxxxxx:
This
Letter of Intent will confirm our mutual intention to enter into a Purchase
(the
“Agreement”) between DWC Resources, Inc., a Nevada Corporation (DWC), and
Goldspring, Inc., a Florida Corporation (“Goldspring”), affecting the DWC
property situated in Storey County, Nevada (the “Property”), as more
particularly defined in Paragraph 1 below). This letter of intent is intended
to
be binding upon the parties.
1. Property
Description.
The
Property consists of the patented and unpatented lode mining claims, together
with all structures and improvements thereon, which are more particularly
described on Exhibit A attached hereto.
|
a.
|
During
the purchase period Goldspring shall have the sole, exclusive, and
immediate right to enter upon and evaluate the Property and to have
quiet
and exclusive possession of the
Property.
|
|
x.
|
Xxxxxxxxxx
will spend a minimum of $250,000.00 in exploration expenditures on
the
subject Property during each of the following five years: (1) from
execution of this Letter of Intent until July 31st, 2013. The failure
to
spend such amount shall constitute an Event of Default, as such term
is
defined in the Note.
|
Goldspring,
Inc.
August
12, 2008
Page
2
2.
Sale
of Property.
Goldspring shall purchase the Property. The Agreement shall contain the
following provisions, among others, regarding the Purchase:
a.
The
purchase price for the Property shall be $7,500,000.00.
b.
The
convertible Promissory Note described in Paragraph 2(a) above shall bear
interest at the rate of 9% per year, interest is payable in quarterly
installments on the first day of each quarter. The Note shall have a five year
term. The Promissory Note and any stock obtained through conversion shall be
subject to the terms and conditions set forth in Exhibit B attached hereto
which
shall reflect similar executed notes with Winfield. The Note shall be secured
by
the Property.
c.
The
Purchase Price and terms set forth in Paragraphs 2.a and 2.b are subject to
adjustment on a dollar for dollar basis due to the results of a fairness opinion
and/or appraisal (the “Goldspring Fairness Opinion”) to be obtained by
Goldspring by a third party engineering firm and or investment banking firm
selected by Goldspring within 30 days from the date hereof. The parties
specifically agree to this provision as this is a “related party transaction” as
such terms are defined under the federal securities laws. In the event the
Goldspring Fairness Opinion results in a reduction of the Purchase Price of
15%
or more, DWC shall be entitled to obtain at its own cost, a second fairness
opinion, which opinion at DWC’s option, shall be binding on
Goldspring.
d.
At the
option of DWC, any payment on the Note can be paid in common
stock of Goldspring and the conversion rate for the shares shall be calculated
as follows: (i)
the
average
of the
five
lowest
closing bid
prices for the thirty trading days immediately prior to the execution of this
Letter of Intent, multiplied by 85%; or (ii) the average of the three lowest
closing bid prices for the twenty (20) trading days immediately prior to the
date of exercise of such option, multiplied by 85%, whichever is
lower
and
restricted under rule 144.)
4.
Reserved
Royalty. Upon
receipt of the purchase price, as specified in Paragraph 2 above, DWC shall
convey the Property to Goldspring by way of a Quitclaim Deed,
free and clear of liens and encumbrances. The Deed shall reserve to DWC a
quarterly royalty on production which shall vary in accordance with the average
price of gold for the proceeding calendar quarter, as follows:
Goldspring,
Inc.
August
12, 2008
Page
3
Table
of
Royalty Payments
|
Gold
Price / Ounce
|
Pre-Production
Royalty
|
Royalty Paid on
Production (“Net
Smelter Return”)
|
Total NSR Royalty
|
|||||||
|
$250.00
or less
|
1
|
%
|
1
|
%
|
2
|
%
|
||||
|
$251.00
to $500.00
|
1.5
|
%
|
1.5
|
%
|
3
|
%
|
||||
|
$501.00
to $750.00
|
2
|
%
|
3
|
%
|
5
|
%
|
||||
|
$751.00
or over
|
3
|
%
|
3
|
%
|
6
|
%
|
||||
Pre-production
royalties shall be paid upon verification of a mineable resource by an
accredited third party engineer. The term “net smelter returns” shall be defined
in accordance with Nevada standards. Goldspring expressly acknowledges the
above
royalties shall be exclusive of the 1% NSR royalty retained by Xxx Xxxxxx to
be
paid by GoldSpring from production.
5.
Additional Commitments. During the term of the Note, Goldspring shall comply
with the following conditions:
a. Goldspring
shall pay all property taxes on a timely basis with respect to the
Property;
x. Xxxxxxxxxx
shall obtain all necessary local, state and federal permits required for its
exploration activities, and Goldspring shall obtain all reclamation bonds
required by state and federal agencies;
x. Xxxxxxxxxx
shall keep the Property free of all liens and encumbrances; and shall defend,
indemnify, and hold DWC harmless from all claims, demands, and liabilities
arising from Goldspring’s activities on the Property.
6.
Miscellaneous
Provisions. The
following provisions shall apply to this Letter of Intent and the Agreement:
binding effect, choice of law (Nevada), and other standard
provisions.
Please
indicate your consent to these terms by signing the Acceptance below and
returning
a copy to our office. Thank you for your attention.
|
DWC
Resources Inc., a Nevada Corporation
|
|
|
By:
|
|
|
Xxxx
Xxxxxxxx, President
|
|
ACCEPTANCE
OF LETTER OF INTENT
The
undersigned hereby accepts and agrees to the terms set forth in this Letter
of
Intent.
Dated
this _____________ day of August, 2008.
Goldspring,
Inc., a Florida Corporation
Exhibit
“A”
DWC
Properties
Exhibit
“B”
Note
Goldspring,
Inc.
X.X
Xxx
0000
Xxxxxxxx
Xxxx, XX 00000
775-847-5272
August
13, 2008
Mr.
Xxxx
Xxxxxxxx
Or
Nominee
Xxxxxx
Xxxx, XX 00000
Re:
Letter of Intent (Sutro Tunnel Co. Lease dated January 1, 2008, Storey County,
Nevada)
Dear
Xx.
Xxxxxxxx:
This
Letter of Intent will confirm our mutual intention to sign a sublease\Purchase
(the “Agreement”) between Xxxx Xxxxxxxx or Nominee, herein after “Winfield” and
Goldspring, Inc., a Florida Corporation (“Goldspring”), affecting the Sutro
Tunnel Co. Lease property situated in Storey County, Nevada (the “Property”), as
more particularly defined in Paragraph 1 below). This letter of intent is
intended to be binding upon the parties. Goldspring can Purchase the Property
over a five year period pursuant to the terms and conditions set forth
below.
|
1.
|
Property
Description.
The Property consists of the patented lode mining claims, together
with
all structures and improvements thereon, which are more particularly
described on Exhibit A attached hereto, “THE
LEASE”.
|
|
a.
|
During
the Purchase period Goldspring shall have the sole, exclusive,
and
immediate right to enter upon and evaluate the Property and to
have quiet
and exclusive possession of the
Property.
|
|
b.
|
During
the Purchase period Winfield shall not deal or attempt to deal
with its
right, title, and interest in the Property in any way that would
preclude
negotiation and execution of the
Agreement.
|
|
x.
|
Xxxxxxxxxx
will spend a minimum in exploration expenditures on the subject
Property
as per Section C of the Lease. The failure to spend such amount
shall
constitute an Event of Default, as such term is defined in the
Note.
|
|
x.
|
Xxxxxxxxxx
shall pay for all property taxes with respect to the Property during
the
Purchase years.
|
Goldspring,
Inc.
August
12, 2008
Page
2
|
x.
|
Xxxxxxxxxx
shall obtain all necessary local, state, and federal permits required
for
its exploration activities, and Goldspring shall obtain all reclamation
bonds required by state and federal agencies.
|
|
f.
|
In
conducting its examination of the Property, Goldspring shall keep
the
Property free of all liens and encumbrances; and shall defend,
indemnify,
and hold Winfield harmless from all claims, demands, and liabilities
arising from Goldsprings’ activities on the
Property.
|
|
g.
|
In
addition to its physical examination of the Property, Goldspring
may
conduct an examination of the title of the Property, which may
include
preparation of a title opinion (at Golspring’s expense) satisfactory to
Goldspring.
|
|
2.
|
Sale
of Lease.
Goldspring will purchase the Lease of the Property. The Agreement
shall
contain the following provisions, among others, regarding the
Purchase:
|
a.
The
purchase price for the Property shall be $2,000,000.00.
b.
The
convertible Promissory Note for the purchase in Paragraph 2(a) shall bear
interest at the rate of 9% per year, interest is payable in quarterly
installments on the first day of each quarter. The term of the Note shall
be
five years. The Promissory Note and any stock obtained through conversion
shall
be subject to the terms and conditions set forth in Exhibit B attached hereto
which shall reflect similar executed notes with Winfield. The Note shall
be
secured by the Property.
c.
The
Purchase Price and terms set forth in Paragraphs 2.a and 2.b are subject
to
adjustment on a dollar for dollar basis due to the results of a fairness
opinion
and/or appraisal (the “Goldspring Fairness Opinion”) to be obtained by
Goldspring by a third party engineering firm and or investment banking firm
selected by Goldspring within 30 days from the date hereof. The parties
specifically agree to this provision as this is a “related party transaction” as
such terms are defined under the federal securities laws. In the event the
Goldspring Fairness Opinion results in a reduction of the Purchase Price
of 15%
or more, Winfield shall be entitled to obtain at his own cost, a second fairness
opinion, which opinion at Winfield’s option, shall be binding on
Goldspring.
Goldspring,
Inc.
August12,
2008
Page
3
d.
At
the
option of Winfield, any payment on the Note can
be
paid in
the
common stock of GoldSpring, the conversion rate for the shares shall
be
calculated as follows: (i)
the
average
of the
five
lowest
closing bid
prices
for the thirty (30) trading days immediately prior to the execution
of this Letter of Intent, multiplied by 85%; or (ii) the average of
the
five lowest closing bid prices for the twenty trading days immediately
prior to the date of exercise of such option, multiplied by 85%,
whichever is lower
and
restricted under rule 144.
| 3. |
Reserved
Royalty GoldSpring
shall pay to Winfield et al a net smelter return royalty
as listed in the following table.
|
Table
of
Royalty Payments
|
Gold
Price / Ounce
|
Pre-Production
Royalty
|
Royalty Paid on
Production (“Net
Smelter
Returns”)
|
Underlying
Royalty
|
Total NSR
Royalty
|
|||||||||
|
$250.00
or less
|
0.5
|
%
|
0.5
|
%
|
5
|
%
|
6
|
%
|
|||||
|
$251.00
to $500.00
|
1.0
|
%
|
1.0
|
%
|
5
|
%
|
7
|
%
|
|||||
|
$501.00
or over
|
1.5
|
%
|
0.5
|
%
|
5
|
%
|
7
|
%
|
|||||
Pre-production
royalties shall be paid upon verification of a mineable resource by an
accredited third party engineer. The term “net smelter returns” shall be defined
in accordance with Nevada standards. If Winfield provides an acceptable buy-out
of the Sutro lands, then Winfield shall retain an additional 1% NSR. Goldspring
expressly acknowledges the above royalties shall be exclusive of any other
royalties payable by Goldspring relating hereto.
| 4. |
Miscellaneous
Provisions. The
following provisions shall apply to this Letter of Intent and
the
Agreement: binding effect, choice of law (Nevada), and other
standard
provisions.
|
Goldspring,
Inc.
August
12, 2008
Page
4
Please
indicate your consent to these terms by signing the Acceptance below and
returning
a copy to our office. Thank you for your attention.
|
By:
|
||
|
Xxxx
Xxxxxxxx
|
ACCEPTANCE
OF LETTER OF INTENT
The
undersigned hereby accepts and agrees to the terms set forth in this Letter
of
Intent.
DATED
this _____________ day of August, 2008.
Goldspring,
Inc., a Florida corporation
|
By:
|
||
|
Xxxxxx
Xxxxx, President
|
Schedule
“A”
Attachment
of Sutro Tunnel Co. Mineral Exploration and Mining Lease with
Xxxx
Xxxxxxxx or Nominee dated January 8, 2008
Schedule
“B”
Exhibit
of Notes
