Capital Gold Corporation New York, NY 10005
EXHIBIT
10.12
Capital
Gold Corporation
00
Xxxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
August 2,
2006
Sinergia
Obras Civiles y Mineras, S.A. de C.V.
Xxxxxx
Xxxxxxxxx Xxxxx, CEO
Corretero
Federal #16 Sn
La
Colorada Tramo, Hermosillo-
Tecaripa
Km. 46
Dear
Xx.
Xxxxxxxxx:
As
we
have discussed over the past several days, this letter sets forth the agreement
we have reached concerning amendments to the November 24, 2005 Mining
Contract (the “Mining Contract”) between Sinergia Obras Civiles y Mineras,
S.A. de C.V. (“Sinergia”) and Minera Santa Xxxx S.A. de C.V. (“MSR”). In
consideration of the receipt by Sinergia of the $200,000 USD advance referred
to
below, Sinergia and MSR agree that the Mining Contract is hereby amended as
follows:
| 1. |
Section 5.8
of the Mining Contract is revised to
read:
|
Upon
the
date the Work is to commence under the Notice to Proceed, MSR shall make an
advance payment to Contractor equal to $520,000 minus any payments previously
made to Contractor (the “Advance Payment”).
| 3. |
Section 21.2
of the Mining Contract is hereby revised to read as
follows:
|
| 21.2 |
Change
in Rates
|
Both
MSR
and Contractor acknowledge that MSR’s Mining Plan and Feasibility Study are
based on Contractor’s rates for mining and equipment set forth in
Appendix A, and the standby rates set forth in Appendix E. MSR and
Contractor also acknowledge that the mining rates set forth in Appendix A
may need to be adjusted for inflation, and are subject to change after
February 1, 2007. MSR and Contractor agree that, as long as the Notice to
Proceed is received by Contractor on or before November 1, 2006, with a
specified date of commencement of the Work not later than February 1, 2007,
the mining rates set forth in Appendix A shall apply; provided, however,
that those mining rates shall be adjusted as described in this Section 21.2
for the rate of inflation between September 23, 2005 and the date of
commencement of the Work, calculated using the escalation formula set forth
in
Section 5.5. For
Sinergia
Obras Civiles y Mineras, S.A. de C.V.
Xxxxxx
Xxxxxxxxx Xxxxx, CEO
August 2,
2006
Page
2
purposes
of this Section 21.2, the baseline numbers for tires, lubricants,
replacement parts, interest rates and labor are as set forth in Appendix K
hereto. For purposes of this Section 21.2, if the escalation percentage
between September 23, 2005 and the date of commencement of the Work is four
percent or less, the mining rates set forth in Appendix A shall remain
unchanged. If that escalation percentage is greater than four percent, the
mining rates set forth in Appendix A shall be increased by an amount equal
to one half of the percentage increase in excess of four percent (so that,
for
example, if that escalation percentage turns out to be six percent, the mining
rates for Year 1 and each subsequent year in Appendix A would be
increased by one percent). After any initial adjustments made to the mining
rates pursuant to this Section 21.2, subsequent adjustments will be made
pursuant to Section 5.5. MSR and Contractor further agree that if the
Notice to Proceed (as that term is defined in Section 21.1) has not been
received by Contractor on or before 5:00 p.m. Pacific Time on
November 1, 2006, Contractor shall have the right to terminate this Mining
Contract. Otherwise, Contractor shall have no right to terminate this Contract
prior to November 1, 2006. Alternatively, if Contractor has not received
the Notice to Proceed by November 1, 2006, and if Contractor subsequently
increases any of its mining, equipment or standby rates, MSR shall have no
obligation to proceed with Contractor under this Mining Contract, and may
terminate this Mining Contract at any time after it receives a notice from
Contractor indicating that any of these rates will be increased and prior to
the
date it delivers the Notice to Proceed. Upon termination of this Mining Contract
pursuant to this Section 21.2, MSR shall have no obligation or liability to
Contractor for any payments under Sections 5.7 or 5.8, or any other obligations
or liabilities to Contractor pursuant to this Mining Contract, Contractor shall
have no obligations or liabilities to MSR under this Mining Contract, and MSR
shall be free to enter into negotiations for contract mining at the Mine with
any third party.
In
consideration of the amendments to the Mining Contract, Capital Gold Corporation
(“CGC”) has agreed to wire funds in the amount of $200,000 USD to the below
account belonging to Sinergia:
Sinergia
Obras Civiles y Mineras, S.A. de C.V.
Xxxxxx
Xxxxxxxxx Xxxxx, CEO
August 2,
2006
Page
3
Bank:
XX
Xxxxxx
Bank, New York
ABA: 000000000
Beneficiary
Bank (Mexico): BBVA
Bancomer Mexico
Swift
Code: XXXXXXXXXXX
Mexico
Account #: 012760001456790796
Name
of
Beneficiary: Sinergia
Obras Civiles y Mineras SA DE CV
By
receipt of the above funds, Sinergia agrees to the following additional
conditions set forth below:
|
1.
|
Immediately
following Sinergia’s receipt of the funds transfer above of $200,000 USD,
Sinergia will provide written confirmation on the receipt of these
funds
into account above. In addition, Sinergia will provide written
confirmation on the transfer of the $200,000 USD to Caterpillar’s bank
account to satisfy certain past due balances Sinergia possesses with
Caterpillar.
|
|
2.
|
The
$200,000 USD advance payment will be applied against the Advance
Payment
of $520,000 USD payable under Section 5.8 of the Mining
Contract.
|
If
any of
the conditions described in item 1 above are not met immediately following
the wire transfer of these funds, the full amount of the funds wired above
($200,000 USD) will be returned to CGC within three business days after the
date
of this letter.
We
look
forward to continuing to work with you on this project and its successful
completion, and believe this letter accurately summarizes the significant terms
of our agreement. If you have any questions, please let us know. If you agree
with the terms of this agreement as described in this letter, please sign below.
Mail one executed copy to us and keep one copy for your files.
Very
truly yours,
s/Xxxxxxx
X. Xxxxxxxx
Xxxxxxx
Xxxxxxxx
CEO,
Capital Gold Corporation, and
President,
Minera Santa Xxxx S.A. de C.V.
Sinergia
Obras Civiles y Mineras, S.A. de C.V.
Xxxxxx
Xxxxxxxxx Xxxxx, CEO
August 2,
2006
Page
4
RESPONSE:
This
letter correctly sets forth the understanding and agreement of
Sinergia.
s/
Xxxxxx
Xxxxxxxxx
Xxxxxx
Xxxxxxxxx Xxxxx, CEO
August
2/06
Date
