LETTER OF INTENT BETWEEN THE COMPANY AND GEOLOGIX EXPLORATIONS INC. DATED FEBRUARY 1, 2008
EXHIBIT 4.13
LETTER OF INTENT BETWEEN THE COMPANY AND
GEOLOGIX EXPLORATIONS INC.
DATED FEBRUARY 1, 2008
___________________
A XXXXXX
GROUP MEMBER COMPANY
February
1, 2008
Geologix
Exploration Inc.
0000-000
Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx,
XX X0X 0X0
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Re:
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Letter
Agreement, Sura, San Xxxxxx and Toro Xxxxxx
Properties
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Huancavelica Department,
Peru
Further
to our conversations on the above subject, this letter agreement (“Letter Agreement”) sets out
the understanding between Amera
Resources Corporation and its subsidiary Recursos de los Andes S.A.C.
(collectively, “AMERA”)
and Geologix Exploration
Inc. and its subsidiary Geologix (Peru) S.A. (collectively, “GIX”) as owner of the
following properties:
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·
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Sura
(three (3) exploration concessions covering 5,700 hectares, hereinafter
the “Sura
Property”),
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·
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San
Xxxxxx (one (1) exploration concession covering 400 hectares, hereinafter
the “San Xxxxxx
Property”), and
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·
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Toro
Xxxxxx (one (1) concession covering 900 hectares, hereinafter the “Toro Xxxxxx
Property”),
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(collectively
the “Properties”)
all
located in Xxxxxxxxxxxx Xxxxxxxxxx, Xxxx, whereby AMERA will have an option to
acquire an initial fifty-one percent (51%) interest in any or all of the
Properties. The Properties, including the concession names, title numbers and
area of land covered by the concessions, are as described in Schedule
“A”.
This
Letter Agreement, binding and effective as of the date of acceptance by GIX
(“Effective Date”),
shall serve as the basis for the preparation of a definitive agreement in
accordance with British Columbia and applicable Peruvian laws (the “Definitive Agreement”). The
Definitive Agreement will be prepared and signed within ninety (90) days of the
Effective Date.
In
consideration of the premises and mutual covenants hereinafter set out and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, AMERA and GIX agree as follows:
1) AMERA Representations and
Warranties: AMERA represents and warrants that as of the
Execution Date of this Letter Agreement:
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a)
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it
is a company, duly incorporated under the laws of British Columbia,
Canada, and it is duly organized and validly subsisting under such
laws;
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b)
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it
has full power and authority to carry on its business and to enter into
this Letter Agreement and any agreement or instrument referred to or
contemplated by this Letter Agreement and to carry out and perform all of
its obligations and duties hereunder;
and
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c)
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it
has duly obtained all corporate authorizations for the execution, delivery
and performance of this Letter Agreement and such execution, delivery and
performance and the consummation of the transactions herein contemplated
will not contravene any existing laws and will not conflict with or result
in any breach of any covenants or agreements contained in, or constitute a
default under, or result in the creation of any encumbrance, lien or
charge under the provisions of its constating documents or any
shareholders' or directors' resolution or any indenture, agreement or
other instrument whatsoever to which it is a party or by which it is
bound.
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2) GIX Representations and
Warranties: GIX represents and warrants to AMERA
that:
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a)
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it
is a company, duly incorporated under the laws of British Columbia,
Canada, and it is duly organized and validly subsisting under such
laws;
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b)
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it
has full power and authority to carry on its business and to enter into
this Letter Agreement and any agreement or instrument referred to or
contemplated by this Letter Agreement and to carry out and perform all of
its obligations and duties
hereunder;
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c)
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it
has duly obtained all corporate authorizations for the execution, delivery
and performance of this Letter Agreement and such execution, delivery and
performance and the consummation of the transactions herein contemplated
will not contravene any existing laws and will not conflict with or result
in any breach of any covenants or agreements contained in, or constitute a
default under, or result in the creation of any encumbrance, lien or
charge under the provisions of its constating documents or any
shareholders' or directors' resolution or any indenture, agreement or
other instrument whatsoever to which it is a party or by which it is
bound;
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d)
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the
Properties and the concessions are properly and accurately described in
Schedule “A”;
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e)
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it
is directly or indirectly the 100% owner of the Properties and respective
concessions;
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f)
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to
the best of its knowledge, the concessions covering the Properties were
duly issued by the Peruvian Registry of Mines and correspondent
authorities and are in good standing under applicable Peruvian
law;
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g)
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except
to the extent of such reversionary, royalty and other rights, if any, held
by the government of Peru in respect of mineral and mining interests
pursuant to applicable Peruvian law, the concessions covering the
Properties are held free and clear of all liens, security interests,
encumbrances and other interests and, there are no agreements, adverse
interests or options to acquire or purchase the concessions, or any
portion thereof, and no other person has any proprietary or possessory
interest in the concessions, nor is entitled to any royalty, in respect to
any mineral products removed from the Properties;
and
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h)
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there
are no outstanding work orders or actions required to be taken relating to
environmental matters, including rehabilitation or reclamation, in respect
to the Properties or any operations thereon and it has no knowledge of any
environmental issues affecting the
Properties.
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3) Option. GIX hereby grants
to AMERA the irrevocable right and option to acquire an initial fifty-one
percent (51%) interest in each of the Properties (the “Option”) by incurring
Expenditures (as defined below) of US $3,800,000 on each of the Properties (for
a total of US $11,400,000 should it exercise the Option on each of the
Properties) in accordance with the following schedule:
a) US
$100,000 on or before the first anniversary of the Effective Date, such
Expenditures being a firm commitment. AMERA shall incur Expenditures of at least
US $20,000 on each of the Sura, San Xxxxxx and Toro Xxxxxx Properties. AMERA has
discretion to decide on which property it will incur the remaining US $40,000
commitment for the first year. Should AMERA fail to incur the full amount of
Expenditures prior to the first anniversary of the Effective Date, it shall pay
the shortfall to GIX within fifteen (15) days of the first anniversary in
satisfaction of its obligation to incur such Expenditures.
b) AMERA
will have the discretion to exercise the Option on any of the Properties, on an
individual basis, by making further Expenditures of US$3,700,000 on each
Property in which it elects to acquire a fifty-one percent (51%) interest (upon
making such election, AMERA shall be deemed to have spent at least US$100,000 on
each of such Properties) as follows:
(i) US
$200,000 on or before the second anniversary of the Effective Date;
(ii) US
$500,000 on or before the third anniversary of the Effective Date;
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(iii)
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US
$1,000,000 on or before the fourth anniversary of the Effective Date;
and
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(iv) US
$2,000,000 on or before the fifth anniversary of the Effective
Date.
Each of
the payments in (i) through (iv) are optional, and not firm commitments. Any
excess expenditures shall be carried forward to the expenditures required to be
incurred in the following year. Should AMERA fail to incur the full amount of
Expenditures on any one or more of the Properties prior to the respective
anniversary of the Effective Date, it may pay the shortfall to GIX within
fifteen (15) days of that anniversary in satisfaction of its election to incur
such Expenditures. If AMERA fails to incur the expenditures and pay the
shortfall to GIX, then the Option on the relevant Property shall terminate. Once
it has exercised the Option on a Property and provided an up-to-date and
comprehensive technical report to GIX pursuant to section 6 below, AMERA shall
give GIX written notice thereof (the date on which such notice is given being
the “Exercise
Date”).
The term
“Expenditures” means all
costs, expenses, charges and outlays, direct and indirect, incurred by AMERA
during the term of the Option on or in respect of the exploration of the
Properties other than overhead and administrative costs but including, without
limiting generality, all on-site costs, costs for prospecting, claim staking,
property payments (including validity fees and penalties for minimum production
requirements), any payments to holders of surface rights, taxes, mapping,
surveying, permitting, geochemical surveys, geophysical surveys, sampling,
assaying, trenching, drilling, geochemical analyses, road building, drill site
preparation, drafting, report writing, metallurgical testing, metallurgical and
socio economic studies, feasibility studies, reclamation, and all other similar
expenditures.
4) Additional Options. After
exercising the Option on a Property, AMERA may earn an additional ten percent
(10%) interest in that Property by the preparation of a positive, feasibility
study by the third anniversary of the Exercise Date at its sole expense, and
after it has prepared a positive, feasibility study, it may earn an additional
nine percent (9%) interest, by placing (including arranging all necessary
financing) the Property into commercial production by the sixth anniversary of
the Exercise Date. for an aggregate seventy percent (70%) interest in that
Property. If AMERA does not complete a positive, feasibility study by the third
anniversary date of the Exercise Date for a Property, GIX may elect to become
operator and if it completes a positive feasibility study within two years GIX
will earn an additional eleven percent (11%) interest and if it places (and
arranges necessary financing) the Property into commercial production an
additional ten percent (10%) for an aggregate seventy percent (70%) interest in
the Property.
5) Formation of a Joint Venture.
Prior to exercise of the Option or, if applicable, the Additional Options
described in paragraph 4, AMERA and GIX will incorporate, for each Property in
which it acquires an interest, a holding company in the British Virgin Islands
(hereinafter called “Holdco”) owned by AMERA and
GIX in proportion to their respective interests in the Properties, and cause
Holdco to incorporate a subsidiary in Peru (a “Peruco”).
Upon
AMERA earning its fifty-one (51%) (or, if applicable, its sixty-one or seventy
percent (61% or 70%) interest in a Property, GIX will transfer the Property to a
Peruco and AMERA and GIX will associate themselves as a single purpose joint
venture through Holdco (a “Joint
Venture”) for the purposes of
continuing exploration and development on the Property with a view to placing
the Property or a portion thereof into commercial production.
In order
to maintain its interest in Holdco, each party shall contribute to work programs
in proportion to its interest in Holdco. If a party elects not to contribute to
a budget, its shareholdings in Holdco shall be reduced, such that a party’s
interests at any time, shall be calculated by dividing the subject party’s
deemed and actual contributions by the deemed and actual contributions of the
other party and multiplying the resulting number by 100. If at any time a
party’s interest in Holdco is reduced below ten percent (10%), it shall be
deemed to have conveyed its interest in Holdco to the other party in
consideration of the right to receive a royalty equal to ten percent (10%) of
Net Profits (NPI) or two percent (2%) of Net Smelter Returns (NSR), and it shall
cease to hold any interest in Holdco. The other party will always have the right
to purchase one-half of the royalty for US $1,000,000. The party receiving the
royalty shall elect at its sole discretion between the NPI or NSR as soon as its
interest in Holdco ceases to be at least ten percent (10%).
AMERA and
GIX will negotiate in good faith and agree upon the form of agreement (the
“Joint Venture Agreement” or “JVA”) governing each Joint
Venture. Each Joint Venture Agreement shall be substantially in the form of
Joint Venture Agreement published by the Continuing Legal Education Society of
British Columbia in 1999 as part of its mining law materials and contain, among
other things:
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(i)
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standard
representations and warranties on the part of each of the parties, that
are commercially reasonable in the
circumstances;
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(ii)
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provisions
as to restrictions on the transfer of the joint venture interest to
non-affiliated companies and a right of first refusal in the event of a
contemplated transfer to a non-affiliated
company;
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(iii)
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provisions
as to venture governance, including the formation and authority of a
management committee and the designation,
duties;
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(iv)
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provisions
as to valuation of contributions and dilution of
interests;
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(v)
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provisions
as to force majeure; (vi) provisions as to
confidentiality;
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(vii)
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provisions
as to governing law (British Columbia);
and
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(viii)
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provisions
for arbitration of joint venture disputes under the Rules of Arbitration
of the British Columbia International Arbitration Centre by one or more
arbitrators appointed in accordance with such
Rules.
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6) Operator of the Properties.
AMERA shall be the Operator during the term of the Option and after the
formation of a Joint Venture so long as its interest in the Joint Venture equals
or exceeds fifty percent (50%). The Operator shall comply with the following
requirements and obligations:
(i) concession
maintenance;
(ii) compliance
with applicable laws;
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(iii)
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exploration
and development of the Property (in accordance with accepted industry
standards and practices and in accordance with the terms and provisions of
leases, licenses, permits, contracts and other agreements pertaining to
the Properties); and
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(iv)
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permits
and consents (AMERA shall obtain all licenses, permits, consents,
approvals and/or authorizations required for the performance of its
activities undertaken pursuant to this Letter
Agreement).
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In order
for AMERA to fulfill the obligations of Operator, a Definitive Agreement must be
prepared and, if applicable, recorded in accordance with Peruvian
law.
Additionally
AMERA shall prepare and deliver to GIX not later than thirty (30) days after
each anniversary of the Exercise Date during the continuance of the Option a
written report (prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators) detailing the
Expenditures made, the fees, taxes and rents paid to the Peruvian mining
authorities in respect of the Properties, the cumulative drilling completed and
any other activities carried out on the Properties, and a technical report
jointly addressed to AMERA and GIX and which provides a full database and
reasonable interpretation of all exploration results and a detailed financial
accounting thereof of the data and interpretations derived from such
Expenditures and drilling, including all assays and geochemical, geophysical and
geological analyses made, together with copies of all technical reports prepared
by or for AMERA during such year. Notwithstanding the foregoing, AMERA shall
promptly provide GIX with notice and particulars of any material exploration
results from or events occurring on the Properties in order that GIX may satisfy
its timely disclosure obligations.
7) After the first anniversary
of the Effective Date, AMERA may terminate this Letter Agreement at any time
upon thirty (30) days written notice, without any further obligation to GIX,
including any further Expenditures under section 3 other than the firm
commitment of section 3(a) and AMERA shall have no further rights to the
Properties.
8) Each of the Parties to this
Letter Agreement shall take all such further steps and execute all such further
and other documentation as may be necessary or desirable in order to more fully
give effect to the provisions of this Letter Agreement.
9) In the event of any dispute
or difference arising between the Parties in respect of the subject matter, the
interpretation, or the effect of this Letter Agreement, the Parties shall use
their best endeavours to settle successfully such dispute, question or
difference. To this effect, they shall consult and negotiate with each other, in
good faith and understanding of their mutual interests, to reach an equitable
solution satisfactory to all Parties. If the Parties do not reach a solution
within a
period of thirty (30) days, then upon thirty (30) days written notice by either
Party to the other, the dispute, claim, question or difference shall be finally
settled by arbitration in Vancouver, B.C. in accordance with the Rules of
Arbitration of the British Columbia International Arbitration Centre by one or
more arbitrators appointed in accordance with such Rules.
10) Any notice, direction or
other instrument required or permitted to be given under this Letter Agreement
will be validly given if delivered, mailed or faxed, addressed as
follows:
If
to GIX, at:
0000-000
Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx,
XX X0X 0X0
Attention: Xxxxxx
X. Xxxxx, President
Tel: 604-694-1742 Fax: 000-000-0000
If
to AMERA, at:
Amera
Resources Corporation
Xxxxx
000, 000 X. Xxxxxxxx Xxxxxx,
Xxxxxxxxx,
XX X0X 0X0
Attention: Xxxxxxxx
Xxxxx, President
Tel: 000-000-0000,
Fax: 000-000-0000
11) Unless otherwise expressly
stated, all references to dollars are in United States currency.
[Balance
of page intentionally blank.]
12) This Letter Agreement
shall be governed by and construed in accordance with the laws of British
Columbia.
IN
WITNESS WHEREOF the parties have caused this Letter Agreement to be executed by
their duly authorized signatories.
Yours
truly,
AMERA
RESOURCES CORPORATION
/s/ Xxxxxxxx
Xxxxx
Per:
Xxxxxxxx Xxxxx, President & CEO
___________________________________
Per:
AGREED
this 1st day of
February, 2008
GEOLOGIX
EXPLORATION INC.
/s/ Xxxxxx
Xxxxx
Per: Xxxxxx Xxxxx, President and CEO
Per: Xxxxxx Xxxxx, President and CEO
___________________________________
Per:
