EARN - IN AGREEMENT
between
RODEO CREEK GOLD INC.
GREAT BASIN GOLD LTD. (as Guarantor)
and
HECLA VENTURES CORP.
HECLA MINING COMPANY (as Guarantor)
HOLLISTER DEVELOPMENT BLOCK VENTURE
TABLE OF CONTENTS
EARN - IN AGREEMENT
ARTICLE I DEFINITIONS....................................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS .............5
ARTICLE III TERM OF EARN IN AGREEMENT ....................................8
ARTICLE IV RELATIONSHIP OF THE PARTIES....................................8
ARTICLE V INITIAL CONTRIBUTION..........................................10
ARTICLE VI MAINTENANCE AND ABANDONMENT OF PROPERTIES.....................13
ARTICLE VII AREA OF INTEREST .............................................15
ARTICLE VIII WITHDRAWAL AND TERMINATION....................................15
ARTICLE IX OPERATIONS AND GOVERNANCE.....................................17
ARTICLE X RECLAMATION OBLIGATIONS.......................................28
ARTICLE XI REPORTING, INSPECTION AND AUDIT...............................29
ARTICLE XII MEMORANDUM....................................................30
ARTICLE XIII DEFAULTS......................................................30
ARTICLE XIV CONFIDENTIALITY...............................................30
ARTICLE XV TAXES.........................................................32
ARTICLE XVI COOPERATION...................................................32
ARTICLE XVII GENERAL PROVISIONS............................................32
EXHIBITS
EXHIBIT A: PROPERTIES AND TERMINATION & RELEASE AGREEMENT
EXHIBIT B: ACCOUNTING PROCEDURES
EXHIBIT B1 INSURANCE
EXHIBIT C: FORM OF QUITCLAIM DEED AND ASSIGNMENT
EXHIBIT D: FORM OF MEMORANDUM OF AGREEMENT
EXHIBIT E: EXPENDITURE SCHEDULE AND INITIAL
PROGRAM & BUDGET
EXHIBIT F: OPERATING AGREEMENT
EXHIBIT G: HECLA MINING WARRANT AGREEMENT
EXHIBIT H: GREAT BASIN WARRANT AGREEMENT
- 1 -
EARN - IN AGREEMENT
This Earn - in Agreement is made as of August 2, 2002, ("Effective Date")
between HECLA VENTURES CORP., a Nevada corporation duly qualified to do business
and in good standing in the state of Nevada, whose principal address is 0000
Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000 - 8788 (hereinafter referred to as
"Hecla Ventures") and its Guarantor, Hecla Mining Company and RODEO CREEK GOLD
INC., a Nevada corporation whose address is X/X Xxxxxxx Xxxxxx, Xxx. 000 - 0000
Xxxxxxxx Xxxxx, Xxxx, XX 00000 (hereinafter referred to as "Rodeo Creek") who is
qualified to do business and is in good standing in the State of Nevada and its
Guarantor, Great Basin Gold Ltd.
RECITALS
A. WHEREAS, Rodeo Creek owns certain mining claims and other real property
interests more specifically described in Exhibit A, attached hereto and
incorporated herein by this reference (hereinafter referred to as the
"Properties");
B. WHEREAS, Hecla Ventures desires to acquire an undivided interest in the
Properties by spending the Earn - in Expenditures on or for the benefit of the
Properties unless terminated pursuant to the terms hereof; and
C. WHEREAS, upon completion of a Earn - in Activities (as that term is defined
below) by Hecla Ventures, Hecla Ventures and Rodeo Creek; enter into the
Operating Agreement attached hereto as Exhibit F;
D. WHEREAS, Hecla Mining Company ("Hecla Mining"), as Guarantor has agreed to
guarantee the due performance of all of the obligations of Hecla Ventures
hereunder. E. WHEREAS, Great Basin Gold Ltd. ("Great Basin"), as Guarantor has
agreed to guarantee the due performance of all the obligations of Rodeo Creek
hereunder.
NOW, THEREFORE, in consideration of the payments provided for herein and the
mutual promises set forth below, all the Parties hereto agree to the provisions
of this Earn - in Agreement.
ARTICLE I
DEFINITIONS
1.1 "Accounting Procedures" means the procedures set forth in Exhibit B.
1.2 "Affiliate" means any person, partner, partnership, joint venture, limited
liability company, corporation or other form of enterprise which directly or
indirectly controls, is controlled by, or is under common control with a party
to this Agreement. For purposes of the preceding sentence, "control" means
possession, directly or indirectly, of the power to direct or cause direction of
management and policies through ownership of voting securities, contract, voting
trust or otherwise.
1.3 "Area of Interest" means an area commonly known as the Hollister Development
Block with the three dimensional coordinates 34,000 E to 40,000 E;35,000 N to
42,000 N; and from surface to 4,000 feet above sea level. (A map of the
Hollister Development Block is attached to this Earn - in Agreement as Exhibit
A).
1.4 "Assets" means all materials, supplies, equipment, and personal property
required to conduct Earn - in Activities.
1.5 "Currency", "$", means US dollars unless otherwise stated.
1.6 "Commercial Production" means greater than or equal to 400 tonnes mined on
average per day over a 21 day calendar period or such longer time as is
consistent with the Feasibility Study.
1.7 "Default" means a Party's failure to perform its obligations required under
this Earn - in Agreement.
1.8 "Earn - in Activities" means all activities on or for the benefit of the
Properties giving rise to Earn - in Expenditures which are duly incurred and
paid as herein provided.
1.9 "Earn - in Agreement" means this Earn - in Agreement together with all
Exhibits and other information appended hereto.
1.10 "Earn - in Expenditures" means the issuance of the Hecla Mining Warrants
(subject to the issuance of the Great Basin Warrants) and other expenditures
including Assets acquired by Hecla Ventures for Earn - - in Activities for the
benefit of the Properties.
1.11 "Effective Date" means the date set forth on Page 1 of this Earn - in
Agreement.
1.12 "Expenditure Commitment" means the minimum sum Hecla Ventures must spend on
Earn - in Expenditures (pursuant to the Expenditure Schedule that is found in
Exhibit E) during each Annual Expenditure Commitment Period.
1.13 "Expenditure Commitment Period" means each year (set out in the Expenditure
Schedule that is found in Exhibit E and/or an approved Program and Budget under
Section 9.3) during which the corresponding Annual Expenditure Commitment is to
be spent.
1.14 "Expenditure Schedule" means Exhibit E.
1.15 "Feasibility Study" means a study of the feasibility of developing and
operating one or more mine(s) on the Properties, including an analysis of
economic, geological, engineering, environmental, regulatory and other
considerations, and containing the level of detail customary in the industry for
a feasibility study presented to financial institutions for the purpose of
seeking and obtaining financing for the development of a mine (with all
estimates developed to an accuracy within +/-10%).
1.16 "Guarantors" means Great Basin Gold Ltd. ("Great Basin") and Hecla Mining
Company ("Hecla Mining").
1.17 "Initial Feasibility Study" or "Prefeasibility Study" means a study of the
feasibility of developing and operating a mine on the Properties, including an
analysis of economic, engineering, geological, environmental, regulatory and
other considerations, and containing the level of detail customary in the
industry to determine whether the veins, ore bodies or other targets identified
in Stage I of Earn - in Activities are of sufficient interest to the Parties to
proceed with Stage II of Earn - in Activities (with all estimates developed to
an accuracy within +/- 15%).
1.18 "Operating Agreement" means that agreement, attached to this Earn - in
Agreement as Exhibit F, which is to be effective between Rodeo Creek and Hecla
Ventures upon Hecla Ventures' fulfillment of the requirements set out in Article
V, Section 5.1 of this Earn - in Agreement.
1.19 "Participating Interest" means the percentage interest of a Participant in
the Properties, Products and all other rights and obligations arising under this
Earn - in Agreement. From the Effective Date hereof through completion of Earn -
in Activities, and only for purposes of implementing Earn - in Activities, Hecla
Ventures and Rodeo Creek shall each be deemed to have a fifty percent (50%)
Participating Interest.
1.20 "Parties" means Rodeo Creek and Hecla Ventures and any other persons or
entities that become subject to this Earn - In Agreement in accordance with the
provisions hereof. Great Basin and Hecla Mining are Parties to this Earn - In
Agreement only with regard to their respective obligations:
(1) as Guarantors under Recitals D and E, and Sections 2.3 and 2.6;
(2) under Sections 2.4 and 2.7 concerning certain representations and
warranties; and
(3) to issue their respective Warrants pursuant to Article V and Exhibits E, G
and H.
1.21 "Participants" means Rodeo Creek and Hecla Ventures.
1.22 "Payments" means those payments identified in Exhibit E.
1.23 "Prime Rate" means a prime rate listed in the Wall Street Journal (source:
Federal Reserve).
1.24 "Products" means all ores, minerals and mineral resources produced from the
Properties under this Earn - In Agreement.
1.25 Programs and Budgets are as defined under Section 9.3.
1.26 "Property or Properties" means those interests in real property and all
mineral estates (and portions thereof) therein described in Exhibit A and all
other interests in real property within the Area of Interest which are made
subject to this Agreement subject to the obligations pertaining thereto under
applicable law or pursuant to Underlying Agreements noted on Exhibit A.
1.27 "Term" means the term of this Earn - in Agreement as defined in Article
III.
1.28 "Underlying Agreements" means those agreements pursuant to which Rodeo
Creek or any Affiliate holds and interest in the Properties with Newmont Mining
Corp. and certain other parties all of which are more particularly described in
Exhibit A.
All words not defined herein shall first be construed as commonly used in the
mining industry. If there is no such usage in the mining industry then such
words shall be given its common understanding.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
2.1 Capacity. Each of the Parties represents as follows:
(a) that it is a corporation duly incorporated and in good standing in its state
or jurisdiction of incorporation and that it is qualified to do business and is
in good standing in those states or jurisdictions where necessary in order to
carry out the purposes of this Earn - in Agreement;
(b) that it has the capacity to enter into and perform this Earn - in Agreement
and all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this Earn - in
Agreement have been properly taken;
(c) that it will not breach any other agreement or arrangement by entering into
or performing this Earn - in Agreement; and
(d) that this Earn - in Agreement has been duly executed and delivered by it and
is valid and binding upon it in accordance with its terms.
2.2 Rodeo Creek's Representations and Warranties. Rodeo Creek represents and
warrants that, with respect to the Properties:
(a) Rodeo Creek is in possession of and has the interests in the Properties as
described in Exhibit A and subject to the Underlying Agreements;
(b) To the best of its information and belief and subject to the paramount title
of the United States,
(i) the unpatented mining claims were properly laid out and monumented; (ii) all
required location work was properly performed; (iii) location notices and
certificates were properly recorded and filed with appropriate governmental
agencies; (iv) all assessment work has been performed, or fee payments in lieu
thereof made, as required to hold the unpatented mining claims through the
assessment year ending August 31, 2002; (v) all affidavits of assessment work
and other filings required to maintain the claims in good standing have been
properly and timely recorded or filed with appropriate governmental agencies;
(vi) the claims are free and clear of defects, liens or encumbrances arising by,
through or under Rodeo Creek; (vii) there are no conflicting claims; and (viii)
there are no pending or threatened actions, suits or proceedings involving the
mining claims;
(c) To the best of its information and belief, the Properties are free and clear
of all defects, liens and encumbrances except for those specifically identified
on Exhibit A hereto and except for those which would not have a material adverse
effect on the usage contemplated herein;
(d) There is no judgment outstanding or litigation, proceeding or governmental
investigation pending or threatened against Rodeo Creek, or the Properties,
which would have an adverse effect on the title or interest of Rodeo Creek in or
to the Properties or Rodeo Creek's power or right to sell, convey, transfer or
assign the mineral estate on the Properties, nor has Rodeo Creek received any
communication asserting or threatening any adverse claim to any part of the
Properties;
(e) Rodeo Creek has made or shall make, pursuant to Article XVI of this Earn -
in Agreement, available to Hecla Ventures all information and data regarding the
existence of minerals within the Properties, and all information concerning
record, possessory, legal or equitable title to the Properties which is within
Rodeo Creek's knowledge, possession or control;
(f) To the best of Rodeo Creek's knowledge information and belief and except as
disclosed to the appropriate environmental regulatory authorities, there has
never been any: 1) release, spill, discharge, leak, emission, escape, dumping or
any material release of any kind of any toxic or hazardous substances as defined
under any local, state or federal regulation, laws or statutes, from, on, in or
under Rodeo Creek's Properties or into any environment surrounding the
Properties, except for those releases permissible under such regulations, laws
or statutes or otherwise allowable under applicable permits; 2) disposal of
toxic or hazardous substances or toxic or hazardous wastes on the Properties or
related to the Properties; and, 3) material storage or treatment of toxic or
hazardous substances or toxic or hazardous wastes on, at, or related to the
Properties;
(g) To the best of its information and belief, Rodeo Creek is in compliance in
all material respects with all federal, state and local laws, rules and
regulations relating to or affecting the Properties, and has obtained,
maintained in full force and effect, and operated in substantial compliance with
all authorizations, licenses, permits, easements, consents, certificates and
orders of any governmental or regulatory body relating to or affecting the
Properties; and operations of Rodeo Creek and its agents or contractors on, at,
or related to the Properties have not resulted in any violations of federal,
state or local laws, rules, regulations, ordinances or orders which would have
an adverse effect on the usage contemplated herein;
(h) There are no existing mineral production or other royalties of any kind
which are payable with respect to the Properties or mineral substances mined
therefrom other than those specifically identified in Exhibit A;
(i) Rodeo Creek is not a party to nor has any knowledge of any existing oral or
written agreement of any kind which does or could have any adverse impact
whatsoever on record or possessory title to the mineral estate of the Properties
and/or the access, exploration, development or mining of same;
(j) To the best of Rodeo Creek's knowledge, information and belief there are no
existing restrictions which would have any adverse effect on the right to
explore, develop and mine mineral substances from the Properties, excluding
restrictions contained in applicable laws, statutes, regulations, permits and
other agency directives including Bureau of Land Management ("BLM"), Nevada
Division of Environmental Protection ("NDEP") and Traditional Cultural Property
on the Properties, and other Nevada State and Federal agencies;
(k) To the best of Rodeo Creek's knowledge, information, and belief, Rodeo Creek
is unaware of any material facts or circumstances, which have not been disclosed
or made available to Hecla Ventures or been deliberately withheld from Hecla
Ventures, which Hecla Ventures should be aware of in order to prevent the
representations in this Section 2.2 from being misleading.
(l) Rodeo Creek and its Affiliates shall conduct its other business activities
near, under and adjacent to the Area of Interest in a manner that does not
unreasonably interfere with, hinder or delay Earn - in Activities.
2.3 Great Basin, on behalf of Rodeo Creek, hereby warrants and covenants with
Hecla Ventures that it does hereby unconditionally and irrevocably guarantee to
Hecla Ventures all of Rodeo Creek's representation, warranties and obligations
hereunder.
2.4 For Great Basin only, Great Basin represents and warrants, that its publicly
filed corporate disclosure records with regulatory authorities are up to date
and correct in all material respects.
2.5 Hecla Ventures' represents and warrants that it has or will obtain the
necessary labor and equipment to conduct Earn - in Activities.
2.6 Hecla Mining, on behalf of Hecla Ventures hereby warrants and covenants with
Rodeo Creek that it does hereby unconditionally and irrevocably guarantee to
Rodeo Creek all of Hecla Ventures' representations, warranties and obligations
hereunder.
2.7 For Hecla Mining only, Hecla Mining represents and warrants that its
publicly filed corporate disclosure record with regulatory authorities is up to
date and correct in all material respects.
2.8 Materiality of Representations. Al representations warranties and covenants
made in this Article II are material to this Earn - in Agreement and the
Parties' intent in entering into it.
ARTICLE III
TERM OF EARN - IN AGREEMENT
The Term of this Earn - in Agreement shall commence as of the Effective Date and
shall automatically terminate after four (4) years thereof or upon execution of
the Operating Agreement in accordance with Sections 5.5 and 8.3, unless this
Earn - in Agreement is terminated earlier pursuant to Article VIII or extended
by amendment upon the Parties' mutual written agreement.
ARTICLE IV
RELATIONSHIP OF THE PARTIES
4.1 No Partnership.
Nothing contained in this Earn - in Agreement shall be deemed to constitute any
Party the partner of another, nor, except as otherwise herein expressly
provided, to constitute any Party the agent or legal representative of another,
nor to create any fiduciary relationship between or among them. It is not the
intention of the Parties to create, nor shall this Earn - in Agreement be
construed to create, any mining, commercial or other partnership. No Party shall
have any authority to act for or to assume any obligation or responsibility on
behalf of the other Party, except as otherwise expressly provided herein. The
rights, duties, obligations and liabilities of the Parties shall be several and
not joint or collective. Each Party shall be responsible only for its
obligations as herein set out and shall be liable only for its share of the
costs and expenses as provided herein, it being the express purpose and
intention of the Parties that their ownership of assets and the rights acquired
hereunder shall be as tenants in common. Each Party shall indemnify, defend and
hold harmless the other Party, its directors, officers, employees, agents and
attorneys from and against any and all losses, claims, damages and liabilities
(including litigation costs and attorneys' fees) arising out of any act or any
assumption of liability by the indemnifying Party, or any of its directors,
officers, employees, agents and attorneys done or undertaken, or apparently done
or undertaken, on behalf of any other Party, except pursuant to the authority
expressly granted herein or as otherwise agreed in writing between the Parties.
4.2 Federal Tax Elections and Allocations.
The Parties agree that their relationship pursuant to this Earn - in Agreement
shall not constitute a tax partnership within the meaning of Section 761(a) of
the United States Internal Revenue Code of 1986, as amended.
4.3 State & Provincial Income Tax.
The Parties also agree that their relationship shall be treated for Canadian
Federal, U.S. State and Canadian Provincial income tax purposes in the same
manner as it is for U.S. Federal income tax purposes.
4.4 Other Business Opportunities.
Except as expressly provided in this Earn - in Agreement, each Party shall have
the right independently to engage in and receive full benefits from business
activities, whether or not competitive with the operations under this Earn - in
Agreement, without consulting any other Party. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of any Party, and, except as otherwise provided
in this Earn - in Agreement, no Party shall have any obligation to any other
with respect to any opportunity to acquire any property at any time.
4.5 Waiver of Right to Partition.
The Parties hereby waive and release all rights of partition, or of sale in lieu
thereof, or other division of Assets, including any such rights provided by
applicable law.
4.6 Transfer or Termination of Rights to Properties.
Except as otherwise provided in this Earn - in Agreement, no Party shall
transfer all or any part of its interest in the Properties or this Earn - in
Agreement or otherwise permit or cause such interests to terminate.
4.7 Implied Covenants.
There are no implied covenants contained in this Earn - in Agreement other than
those of good faith and fair dealing.
4.8 Employees.
Employees of the respective Parties are not and shall not be employees of the
other Parties or of any venture, which may be comprised of the Parties.
ARTICLE V
INITIAL CONTRIBUTION
5.1 Properties and Required Earn - in Expenditures.
(a) Rodeo Creek, hereby makes available to Hecla Ventures the Properties for the
purposes of this Earn - in Agreement and all existing technical data and other
information concerning the Properties. Upon receipt of each Tranche of Hecla
Mining Warrants (as defined below) Rodeo Creek will forthwith issue to Hecla
Ventures two year warrants to purchase common shares in Great Basin ("Great
Basin Warrants") as follows: 1) 1 million Great Basin Warrants upon receipt of
Tranche 1 Hecla Mining Warrants; 2) 500,000 Great Basin Warrants upon receipt of
Tranche 2 Hecla Mining Warrants; and 3) 500,000 Great Basin Warrants upon
receipt of Tranche 3 Hecla Mining Warrants. Great Basin Warrants will be
exercisable at the weighted average daily closing prices for the twenty (20)
trading days on the TSX Venture Exchange immediately prior to issuance and done
substantially in accordance with the form Warrant Agreement attached hereto in
Exhibit H.
(b) Hecla Ventures hereby agrees to fund one - hundred percent (100%) of Stage I
Earn - in Activities and shall exchange with Great Basin 2 million (2,000,000)
two year warrants ("Tranche 1") to purchase Hecla Mining common stock $0.25 par
value exercisable at the weighted average daily closing prices on the New York
Stock Exchange for the twenty (20) trading days immediately prior to the date of
the Warrant Agreement ("Exercise Price") which for Tranche 1 is also the
Effective Date. Hecla Ventures agrees to issue the Warrants within thirty (30)
days after the warrant date to Great Basin as attached hereto as Exhibit G.
(c) Hecla Ventures hereby commits to initiate and fund Stage I Earn - in
Activities on the Effective Date, subject to receipt of Stage I permits, in an
expeditious manner and to complete same on a best efforts diligent basis, within
24 months of the Effective Date, provided that the Earn - in Activities are not
subjected to a public Environmental Impact Statement (under NEPA) or other
public review and comment process, and to completely fund (100%) of Stage I
(estimated to take approximately twelve (12) months) such Earn - in Activities.
Within sixty (60) days after completion of Stage I Earn - in Activities, Hecla
Ventures must elect to either: (1) proceed with and fund 100% of the estimated
$11.5 million Stage II Program of Earn - In Activities as approved by the
Management Committee; (2) vest by making the payment to the Joint Venture upon
its actual formation under the Operating Agreement and taking other action as
set forth in section 5.5(b); or (3) elect not to proceed with Stage II and
terminate this Earn - In Agreement. If Hecla Ventures elects to proceed with
Stage II Earn - in Activities or funding in lieu, it will issue one million
(1,000,000) Hecla Mining Warrants ("Tranche 2") dated and priced on the election
date, within ten (10) days thereafter in the form of the Warrant Agreement in
Exhibit G, exercisable at the Exercise Price and in accordance with the terms
and conditions of the Warrant Agreement. If however, Hecla Ventures elects not
to proceed with Stage II of Earn - in Activities or funding in lieu, it shall
provide written notice to Rodeo Creek. Notwithstanding any provision in this
Earn - in Agreement to the contrary, if Hecla Ventures does not notify Rodeo
Creek in writing within the required time of its choice to proceed, or to
terminate or elects not to participate in Stage II Earn - in Activities, it
shall have no further rights or obligations hereunder (except the obligation to
reclaim the Properties for all Earn - in Activities it has conducted) and the
Parties shall execute and record the Termination and Release Agreement in
substantially the same form as Exhibit A, Part IV. To complete the Earn - In
Activities, Hecla Ventures will issue Rodeo Creek an additional one million
(1,000,000) two year warrants (dated and priced on the date that Hecla Ventures
gives notice to Rodeo Creek that Stage II Earn - In Activities are complete or
Hecla Ventures elects to fund Stage II in lieu) to purchase Hecla Mining common
stock ("Tranche 3") exercisable at the Exercise Price and in accordance with the
terms and conditions of the Warrant Agreement. The Tranche 3 Warrants will be
issued within 30 days from the date of the Warrants. After vesting of Hecla
Ventures' Participating Interest, each of the Participants shall be obligated to
fund such activities in accordance with its Participating Interest as defined in
Exhibit F attached hereto and determined thereunder from time to time.
5.2 Reasonable Earn - in Activities.
Hecla Ventures' Earn - in Activities shall be conducted in accordance with
Exhibit E at the direction of the Management Committee and in accordance with
all applicable laws, regulations and good mining industry standards in the
United States.
5.3 Credit for Excess Earn - in Expenditures.
Earn - in Expenditures made by Hecla Ventures in excess of that required in a
given Annual Expenditure Commitment Period shall be credited to subsequent
Annual Expenditure Commitments for the following Annual Expenditure Commitment
Periods.
5.4 Completion of Required Earn - in Expenditures.
Within thirty (30) days after completing Earn - in Activities (as provided in
Section 5.1 and in accordance with Exhibit E), Hecla Ventures shall provide
notice to Rodeo Creek that it has completed Earn - in Expenditures. Together
with the notice, Hecla Ventures shall provide sufficient detail and supporting
documentation to permit Rodeo Creek to review, audit and reasonably verify the
Earn - in Expenditures 5.5 Transfer. Hecla Ventures shall have earned a vested
and undivided Participating Interest in the Properties subject to the Operating
Agreement by completing either of the requirements in subparagraphs (a) OR (b)
OR (c) of this section 5.5:
(a) Upon completion of Stage II Earn - in Activities and issuing Rodeo Creek
Tranche 3 Hecla Mining Warrants set forth in Exhibit E and G, Hecla Ventures
shall have a vested right to an undivided fifty percent (50%) Participating
Interest in the Properties effective as of the date Hecla Ventures provides
notice pursuant to Section 5.4 above. Within thirty (30) days after providing
notice verifying that Hecla Ventures has made Earn - in Expenditures consistent
with the requirements of this Article V:
(1) Rodeo Creek shall convey to Hecla Ventures an undivided fifty percent (50%)
of Rodeo Creek's interest in the Properties, by executing, acknowledging and
delivering to Hecla Ventures a good and sufficient conveyance in the form of
Exhibit C to this Earn - in Agreement; and,
(2) Rodeo Creek and Hecla Ventures shall cause to become effective an Operating
Agreement on the Properties in the form of the attached Exhibit F, which 1)
shall include the Properties and 2) shall have an effective date as of the date
of the above - described notice from Hecla Ventures to Rodeo Creek; and,
(3) Rodeo Creek shall issue to Hecla Ventures the Great Basin Warrants set forth
in Exhibit E and H.
(b) By completing Stage I Earn - In Activities and providing written notice to
Rodeo Creek that Hecla Ventures elects to vest by making a payment to the Joint
Venture in an amount of $21.8 million dollars (U.S.) less actual costs to
complete Stage I of Earn - In Activities (excluding overruns greater than 10%)
of a Management Committee approved Program and Budget; and issue Rodeo Creek the
Tranche 2 and Tranche 3 Hecla Mining Warrants set forth in Exhibit E and G.
Within thirty (30) days after receiving the preceding vesting payment:
(1) Rodeo Creek shall convey to Hecla Ventures an undivided fifty percent (50%)
of Rodeo Creek's interest in the Properties, by executing, acknowledging and
delivering to Hecla Ventures a good and sufficient conveyance in the form of
Exhibit C to this Earn - in Agreement; and,
(2) Rodeo Creek and Hecla Ventures shall cause to become effective an Operating
Agreement on the Properties in the form of the attached Exhibit F, which 1)
shall include the Properties and 2) shall have an effective date as of the date
of the above - described notice from Hecla Ventures to Rodeo Creek; and
(3) Rodeo Creek shall issue to Hecla Ventures the Great Basin Warrants set forth
in Exhibit E and H.
(c) By Hecla Ventures completing Stage I and thereupon completing either Stage
II of Earn - in Activities and achieving Commercial Production; and in either
such event issuing Rodeo Creek the Tranche 2 and Tranche 3 Warrants;
(1) Rodeo Creek shall convey to Hecla Ventures an undivided fifty percent (50%)
of Rodeo Creek's interest in the Properties by executing, acknowledging and
delivering to Hecla Ventures a good and sufficient conveyance in the form of
Exhibit C to this Earn - in Agreement; and,
(2) Rodeo Creek and Hecla Ventures shall cause to become effective an Operating
Agreement on the Properties in the form of the attached Exhibit F, which 1)
shall include the Properties and 2) shall have and effective date as of the date
of the above described notice from Hecla Ventures to Rodeo Creek; and
(3) Rodeo Creek shall issue to Hecla Ventures the Great Basin Warrants set forth
in Exhibit E and H.
ARTICLE VI
MAINTENANCE AND ABANDONMENT OF PROPERTIES
6.1 Maintenance of Properties.
Hecla Ventures as Manager shall take all steps necessary to maintain at its
expense, as part of the Earn - in Activities, of the Properties (pursuant to the
Underlying Agreements and all general legal requirements relating thereto) all
necessary payments on the Properties to maintain them in good standing during
the Term of this Earn - in Agreement.
6.2 Assessment Work or Fees.
During the term of this Earn - in Agreement, Hecla Ventures as Manager shall
also perform any annual assessment work required to maintain such claims for any
assessment year in which this Earn - in Agreement has not expired or been
terminated prior to thirty (30) days before the end of such assessment year, and
will make annual fee payments required to maintain unpatented (or patented)
mining claims included in the Properties for any assessment year in which this
Earn - in Agreement has not expired or been terminated forty - five (45) days
prior to the fee payment due date. Hecla Ventures shall timely record, file and
furnish to Rodeo Creek affidavits of such performance and evidence of fee
payment. Excepting for the August 2002 Properties filings and amounts due shall
be paid by and filed by Rodeo Creek. These 2002 amounts shall be reimbursed by
Hecla Ventures to Rodeo Creek as part of Earn - in Activities, within thirty
(30) days of receipt of invoice from Rodeo Creek. No Party shall be liable on
account of holdings by any court or governmental agency that the effects of any
work elected and performed in good faith by such Party are insufficient to
constitute annual assessment work for purposes of preserving title to such
claims, provided that the work so done is of the kind generally accepted as
assessment work in the mining industry in the United States and provided that
such Party expended a total amount sufficient to meet any minimum requirements
during the required period of time with respect to all such unpatented claims.
6.3 Abandonment of Properties.
If either Participant desires to abandon, release or surrender its rights to a
part of the Properties at any time, it shall notify the other Participant and
offer to convey to the other Participant at no cost the part of those parts of
the Properties it intends to abandon, release or surrender. If the other
Participant does not accept the offer within thirty (30) days of the notice, the
notifying Participant may abandon, release, or surrender that part of those
Properties without liability or obligation to the other Participant for such
abandonment, release or surrender but any liability for reclamation or to any
third party arising before such event shall be unaffected. Properties that are
abandoned, released, surrendered, or conveyed to the other Participant pursuant
to this Section 6.3 shall cease to be part of the Properties and the Area of
Interest.
ARTICLE VII
AREA OF INTEREST
7.1 Proposed Acquisition of Properties.
If during the Term of this Earn - in Agreement, a Party or an Affiliate of any
Party should acquire any interest in real property (including any mineral
interest or estate therein) within the boundary of the Area of Interest, it
shall notify the other Party (referred to in this Article VII as "Other Party")
within ten (10) days after the acquisition and shall include in the notice a
description of the interest in real property and a statement of the total
acquisition cost and any committed work expenditures.
7.2 Election to Acquire Properties.
The Other Party shall have a period of thirty (30) days from receipt of such
notice under Section 7.1 within which to elect to subject the interest in real
property to this Earn - in Agreement. If a Participant elects to include the
interest to this Earn - in Agreement, it shall notify the other Participant and
the interest in real property shall become a part of the Properties subject to
this Earn - in Agreement.
7.3 Excluded Acquisition.
If the Other Party elects not to subject the real property or interest in real
property to this Earn - in Agreement during the thirty (30) day period
referenced in Section 7.1, the acquiring party shall hold it free and clear of
this Earn - in Agreement, and it will not be a part of the Properties or the
Area of Interest.
ARTICLE VIII
WITHDRAWAL AND TERMINATION
8.1 Termination.
This Earn - in Agreement shall terminate as expressly provided herein, unless
earlier terminated by written agreement. Withdrawal by Hecla Ventures in
accordance with Section 8.2 shall be deemed to terminate this Earn - in
Agreement.
8.2 Hecla Ventures' Election to Withdraw and Terminate.
Hecla Ventures may withdraw from and terminate this Earn - in Agreement at any
time subject to its reclamation obligations herein provided and subject to Hecla
Ventures commitment to fund the estimated budget and program of the Stage I Earn
- in Activities. To withdraw, Hecla Ventures must provide Rodeo Creek with
written notice of withdrawal. The withdrawal shall be effective thirty (30) days
after the date the notice of withdrawal is sent to Rodeo Creek. Upon such
withdrawal and termination:
(a) This Earn - in Agreement shall terminate; and
(b) Hecla Ventures shall quitclaim in favour of Rodeo Creek any rights hereunder
and shall ensure there are no liens or encumbrances on Properties arising out of
its Earn - in Activities hereunder. Hecla Ventures shall thereupon have no
further right, title, or interest in or to, the Properties, in accordance with
Article X of this Earn - in Agreement and any Real Property, subject always to
Hecla Ventures' obligations hereunder.
(c) Hecla Ventures shall make available all factual exploration data, chips,
core and rejects not previously provided to Rodeo Creek. Hecla Ventures shall
leave all Assets in reasonable working condition, normal wear and tear excepted
and will promptly remove all materials, supplies and refuse as required by
applicable laws and regulations from the Properties. Rodeo Creek shall have the
election respecting any Assets, the costs of which or title to which have been
included in the Earn - in Activities (such election to made on 60 - days'
notice) to either require the conveyance of such Assets to Rodeo Creek at no
cost or to require their removal by Hecla Ventures. Hecla Ventures shall be
under no obligation to supply any interpretive reports or conclusions of any
type pertaining to the Properties.
8.3 Termination Upon Execution and Delivery of Operating Agreement.
If not terminated earlier, this Earn - in Agreement shall terminate upon the
Operating Agreement pursuant to Section 5.5, becoming effective.
8.4 Termination for Hecla Ventures' Failure to Make Annual Expenditure
Commitment.
This Earn - in Agreement may be terminated by Rodeo Creek if Hecla Ventures
shall not have completed its Annual Expenditure Commitment on or before the
close of business on the last day of the Annual Expenditure Commitment Period.
Rodeo Creek shall provide notice thereof to Hecla Ventures in accordance with
Section 17.1, and Hecla Ventures shall have a period of ninety (90) days in
which to resolve or dispute any good faith unintended shortfall in the amount of
its Annual Expenditure Commitment. Any such termination shall not relieve Hecla
Ventures of its obligations hereunder and shall have the same effect as a
termination under Section 8.2.
8.5 Removal of Property.
Hecla Ventures shall have a period of ninety (90) days following the effective
date of termination or expiration of this Earn - in Agreement (unless the
Operating Agreement has been entered into or Rodeo Creek exercises its option to
acquire at no cost any Assets, the costs of which or title to which have been
included in the Earn - in Activities) to remove at its sole cost and expense all
equipment, machinery, inventory or supplies and it will so remove them.
8.6 Termination and Release Agreement.
Upon the completion of the procedures under this Article VIII and the
reclamation obligations in Article X Hecla Ventures and Rodeo Creek shall
execute the Termination and Release Agreement under Exhibit A.
ARTICLE IX
OPERATIONS AND GOVERNANCE
9.1 Management Committee.
(a) Organization and Composition. Rodeo Creek and Hecla Ventures (the
"Participants") hereby establish a Management Committee consisting of four (4)
members to determine overall policies, objectives, procedures, methods and
actions under this Agreement. The Management Committee shall consist of two
member(s) appointed by Rodeo Creek and two member(s) appointed by Hecla
Ventures. Each Participant may appoint one or more alternates to act in the
absence of a regular member. Any alternate so acting shall be deemed a member.
Appointments shall be made or changed by notice to the other Participant prior
to the meeting at which the member is to act.
(b) Decisions. Each Participant, acting through its appointed members, shall
have one vote on the Management Committee. All decisions by the Management
Committee shall be made by majority vote. In the event of a deadlock on a
proposed Program and Budget or on any other management matters relating to this
Earn - in Agreement then the issue along with written reasons by each
Participant shall be given to the respective Presidents of the Participants for
a period of up to twenty - one (21) calendar days for them to discuss, document
and resolve; thereafter, a Management Committee meeting shall be reconvened
within fourteen (14) calendar days and after taking into consideration the
Presidents' resolve or unresolve, as documented, a new vote taken. If the vote
is still deadlocked, Manager shall have the deciding vote (after documenting
reasons).
(c) Meetings. The Management Committee shall hold regular meetings at least
quarterly at a place to be designated by the Manager, or at other mutually
agreed places. The Manager shall give 30 days' notice to the Participants of
such regular meetings. Additionally, either Participant may call a special
meeting upon 15 days' notice to the Manager and the other Participant. In case
of an emergency, reasonable notice of a special meeting to consider the
emergency matter only shall suffice. There shall be a quorum if at least one
member representing each Participant is present in person or by conference
telephone; provided, however, that if a quorum is not present, those members in
attendance may adjourn the meeting to the same time and place seven days later,
and provided further that a quorum shall be deemed present at the adjourned
meeting if at least one Participant is represented. Each notice of a regular
meeting shall include an itemized agenda prepared by the Manager in the case of
a regular meeting, or by the Participant calling the meeting in the case of a
special meeting, but any matters may be considered in any type of meeting with
the consent of all Participants. The Manager shall prepare minutes of all
meetings and shall distribute copies of such minutes to the Participants within
10 days after the meeting. The minutes, when signed by all Participants, shall
be the official record of the decisions made by the Management Committee and
shall be binding on the Manager and the Participants. If the Manager's personnel
are required to physically (rather than by phone) attend a Management Committee
meeting, reasonable costs incurred in connection with such attendance shall be
reimbursed to the Manager in accordance with the Accounting Procedure (Exhibit
B). All other costs of attendance shall be paid by the Participants
individually.
(d) Action Without Meeting. In addition to or in lieu of meetings, the
Management Committee may hold telephone conferences as long as no Participant's
representative objects and so long as all decisions are immediately confirmed in
writing by the Participants.
(e) Matters Requiring Approval. Except as otherwise delegated to the Manager in
Section 9.2, the Management Committee shall have exclusive authority to
determine all management matters related to this Agreement.
9.2 Manager.
(a) Appointment. The Participants hereby appoint Hecla Ventures as the Manager
with management responsibility for Earn - in Activities. Hecla Ventures hereby
agrees to serve until it resigns as provided in Section 9.2(d).
(b) Powers and Duties of Manager. Subject to the terms and provisions of this
Agreement, the Manager shall have the following powers and duties and
obligations which shall be discharged in accordance with adopted Programs and
Budgets:
(1) The Manager shall manage, direct and control Earn - in Activities and shall
prepare and present to the Management Committee proposed Programs and Budgets as
provided in Section 9.3 of this Earn - in Agreement.
(2) The Manager shall implement the decisions of the Management Committee, shall
make all expenditures necessary to carry out adopted Programs, and shall
promptly advise the Management Committee if Manager lacks sufficient funds to
carry out its responsibilities under this Agreement. If Hecla Ventures is the
Manager, lack of sufficient funds shall be deemed a default hereunder.
(3) The Manager shall: (i) purchase or otherwise acquire all material, supplies,
equipment, water, utility and transportation services required for Earn - in
Activities, such purchases and acquisitions to be made on the best terms
available, taking into account all circumstances; and (ii) obtain such customary
warranties and guarantees as are available in connection with such purchases and
acquisitions.
(4) The Manager shall: (i) make or arrange for all payments required by leases,
subleases, surface use agreements, licenses, permits, contracts and other
agreements related to the Assets and Properties; (ii) pay all taxes, assessments
and like charges on Earn - in Activities except taxes determined or measured by
a Participant's sales revenue or net income; and (iii) do all other acts
reasonably necessary to maintain unencumbered title to and good condition of the
Assets and the Properties. The Manager shall have the right to contest in the
courts or otherwise, the validity or amount of any taxes, assessments or charges
if the Manager deems them to be unlawful, unjust, unequal or excessive, or to
undertake such other steps or proceedings as the Manager may deem reasonably
necessary to secure a cancellation, reduction, readjustment or equalization
thereof before the Manager shall be required to pay them, but in no event shall
the Manager permit or allow title to the Assets and Properties to be lost as the
result of the nonpayment of any taxes, assessments or like charges.
(5) The Manager shall in the name of Rodeo Creek: (i) apply for all necessary
permits, licenses and approvals; (ii) comply with applicable federal, state and
local laws and regulations; (iii) notify promptly the Management Committee of
any allegations of substantial violation thereof; and (iv) prepare and file all
reports or notices required for Earn - in Activities. The Manager shall not be
in breach of this provision if a violation has occurred in spite of the
Manager's good faith efforts to comply, and the Manager has timely cured or
disposed of such violation through performance, or payment of fines and
penalties.
(6) The Manager shall prosecute and defend, but shall not initiate without
consent of the Management Committee, all litigation or administrative
proceedings arising out of Earn - in Activities. The non - managing Participant
shall have the right to participate, at its own expense, in such litigation or
administrative proceedings. The non - managing Participant shall approve in
advance any settlement involving payments, commitments or obligations in excess
of $100,000 in cash or value, unless part of an approved Program and Budget.
(7) The Manager shall provide insurance for the Earn - in Activities as provided
in Exhibit B1.
(8) The Manager may dispose of Assets or Properties only with authorization from
the Management Committee but may dispose of Properties only with the
authorization of all of the Participants.
(9) The Manager shall have the right to carry out its responsibilities hereunder
through agents, Affiliates or independent contractors but shall nevertheless
remain responsible for the proper carrying out of such responsibilities.
(10) The Manager shall perform or cause to be performed during the term of this
Agreement all assessment and other work or pay fees or rental payments required
by law in order to maintain any unpatented mining claims that are included in
the Properties. The Manager shall have the right to perform any assessment work
pursuant to a common plan of Exploration, Development, Construction, Operating
or Reclamation and continued actual occupancy of such claims and sites shall not
be required. The Manager shall not be liable on account of any determination by
any court or governmental agency that work performed by the Manager does not
constitute required annual assessment work or occupancy for the purposes of
preserving or maintaining ownership of the claims, provided that any work done
is in accordance with the adopted Program and Budget. The Manager shall timely
record with the appropriate county and file with the appropriate United States
agency, affidavits in proper form attesting to the performance of assessment
work or notices of intent to hold in proper form, and allocating therein, to or
for the benefit of each claim, at least any minimum amount, if any, required by
law to maintain such claim or site.
(11) If authorized by the Management Committee, the Manager may: (i) locate mine
facilities, mill site or tunnel site, (ii) apply for patents or mining leases or
other forms of mineral tenure for any such unpatented claims or sites, (iii)
convert any unpatented claims or mill sites into one or more leases or other
forms of mineral tenure pursuant to any federal law hereafter enacted.
(12) The Manager shall keep and maintain all required accounting and financial
records pursuant to the Accounting Procedure and in accordance with customary
cost accounting practices in the mining industry.
(13) At all reasonable times the Manager shall provide the Management Committee
or the representative of any Participant, upon the request of any member of the
Management Committee, access to, and the right to inspect, audit and copy all
maps, drill logs, core tests, reports, surveys, assays, analyses, production
reports, operations, technical, accounting and financial records, and other
information acquired in Earn - in Activities; such information will be provided
to the Management Committee at the cost set forth in the Accounting Procedure
and if additional copies are required by a Participant, they will be paid for by
that Participant. In addition, the Manager shall allow the non - managing
Participant, at the latter's sole risk and expense, and subject to reasonable
safety regulations, to inspect the Assets and Earn - in Activities at all
reasonable times, so long as the inspecting Participant does not unreasonably
interfere with Earn - in Activities.
(14) The Manager shall prepare or have prepared and submit to the Management
Committee a report containing a description and analysis of the methods and
costs and all other relevant aspects of reclaiming the Properties pursuant to
the requirements of applicable laws, rules and regulations governing the
reclamation of Earn - in Activities on the Properties, the purpose of which
shall be to establish a fund to finance costs and expense anticipated to be
incurred in connection with the reclamation or reclamation bonding of the
Properties. The Management Committee shall determine, based upon the reclamation
report, the total cost, including capital budget, which the Management Committee
reasonably estimates will be required to reclaim the Properties, including a
schedule of the timing of the capital requirements for such purpose, and shall
promptly establish a reclamation fund to meet such capital requirements and any
bonding or financial assurance requirements. The reclamation fund for Earn - in
Activities shall be funded entirely by contribution of Hecla Ventures. The
amounts determined by the Management Committee for Purposes of funding the
reclamation fund shall be included in the applicable Programs and Budgets for
the related periods. Manager may withhold a portion of proceeds from sale of
Products in an amount sufficient to meet expected reclamation and expenditures
as approved by the Management Committee.
(15) The Manager may conduct environmental audits or reviews on an annual or as
needed basis, and the cost and expense of such audits or reviews shall be
charged to Hecla Ventures.
(16) Manager shall make withholdings from payments to Participants that are
required by applicable law.
(17) The Manager shall undertake all other activities reasonably necessary to
fulfill the foregoing.
(c) Standard of Care. The Manager shall conduct all Earn - in Activities in a
good, workmanlike, safe and efficient manner, in accordance with sound mining
and other applicable industry standards and practices, and in accordance with
the terms and provisions of leases, subleases, licenses, permits, plans of
operation, contracts, Underlying Agreements, and other agreements pertaining to
Assets and Properties. The Manager shall not be liable to the non - managing
Participant for any act or omission resulting in damage or loss to the other
Participants except to the extent caused by or attributable to the Manager's bad
faith conduct, willful misconduct, or gross negligence.
(d) Resignation; Deemed Offer to Resign. If Hecla Ventures resigns or is deemed
to resign as Manager, (voluntary resignation may only be made upon three months'
prior written notice to the other Participant) prior to completion of its Earn -
In Activities without the consent of Rodeo Creek, this Earn - In Agreement will
be deemed to have terminated subject to the provisions of withdrawal and
termination in Article 8. If any of the following shall occur, the Manager shall
be deemed to have offered to resign, which offer shall be accepted by the other
Participant, if at all, at any time within ninety (90) days following such
deemed offer:
(1) Manager terminates this Agreement pursuant to Article VIII; or
(2) The Manager fails to perform or in good faith, commence a material
obligation imposed upon it under this Agreement and action to cure said failure
is not initiated within thirty (30) days after notice from the other Participant
demanding performance; or
(3) The Manager fails to pay or contest in good faith its debts within sixty
(60) days after they are due; or
(4) A receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for a substantial part of its assets is appointed and such
appointment is neither made ineffective nor discharged within sixty (60) days
after the making thereof, or such appointment is consented to, requested by, or
acquiesced in by the Manager; or
(5) The Manager fails generally to pay its debts as such debts become due; or
takes corporate or other action in furtherance thereto; or
(6) Entry is made against the Manager of a judgment, decree or order for relief
affecting a substantial part of its assets by a court of competent jurisdiction
in an involuntary case commenced under any applicable bankruptcy, insolvency or
other similar law of any jurisdiction now or hereafter in effect.
(e) Payments to Manager. The Manager shall be compensated a fee for its services
and reimbursed for its costs hereunder in accordance with the Accounting
Procedure.
(f) Transactions With Affiliates. If the Manager engages Affiliates to provide
services hereunder, it shall do so on terms in accordance with the Accounting
Procedure.
9.3 Programs and Budgets.
(a) Operations Pursuant to Programs and Budgets. Except as set forth in Sections
9.2(b)(6), 9.3(g) and 9.3(h), Earn - in Activities shall be conducted, expenses
shall be incurred, and Assets shall be acquired only pursuant to adopted
Programs and Budgets.
(b) Types of Programs. Five general types of Programs may be proposed:
Exploration, Development, Construction, Operating and Reclamation Programs.
(1) An "Exploration Program" shall be a Program conducted within the Area of
Interest, and it shall include but not be limited to geological mapping,
geochemical sampling, geophysical surveys, drilling, bulk sampling and other
such work expended to ascertain the existence, location, quantity and quality of
deposits of Products within the Area of Interest.
(2) A "Development Program" shall be a Program conducted within the Area of
Interest that shall include but not be limited to drilling, test mining,
preparing any Feasibility Study, other than the Prefeasibility Study, and other
such work in preparation for the removal and recovery of Products within the
Area of Interest, but does not encompass, by itself, construction, operation,
maintenance and attendant activities designed to bring a Mine into production in
reasonable commercial quantities.
(3) A "Construction Program" shall be a Program conducted within the Area of
Interest that is designed to bring a Mine into production in reasonable
commercial quantities, and that provides for its subsequent operation. It shall
include but not be limited to engineering and design work, and work expended
toward development of deposits of Products, as well as construction, operation,
maintenance, mine expansions, ore definition, mill/processing scenarios,
including a proposed alternative, time schedule for Construction Program and
attendant activities.
(4) An "Operating Program" shall be a Program conducted with the Area of
Interest that is designed to operate a Mine in reasonable commercial quantities
as defined by Commercial Production and at the onset in conformance with the
Feasibility Study, mine operating permit(s) or other objective document(s). It
shall include mining, transportation, engineering, geology, milling (on - site
or off - site) of deposits and related Products.
(5) A "Reclamation Program" shall be a Program conducted with the Area of
Interest that shall include but not be limited to reclaiming disturbed lands,
water quality monitoring and treatment, if required, disposal of Assets and
other attendant activities in accordance with applicable laws, regulations and
permit requirements to reclaim and close a mine.
(c) Preparation, Presentation and Content of Programs and Budgets.
(1) Content of Programs. Proposed Programs and Budgets shall be prepared by the
Manager. Each Program shall be accompanied by and include a corresponding Budget
and shall designate precisely the area on which Earn - in Activities are to be
performed, describe work to be performed, and state the estimated period of time
required to perform the work. Each Program shall state whether it is an
Exploration, Development, Construction, Operating, or Reclamation Program.
(2) Content of Budgets. Each Budget shall be prepared in reasonable detail and
shall set forth each expenditure of $50,000 or more for a budgeted item which,
under generally accepted accounting treatment, would be capitalized. Each Budget
Program, as near as is practicable, shall show the estimated expenditures for
each month covered by the Budget period.
(3) Initial Program and Budget. The Management Committee approved Initial
Program and Budget is attached hereto in Exhibit E.
(4) Duration. An Exploration, Operating and Reclamation Programs and Budget is
anticipated to be for a period of one calendar year from date of commencement. A
Development or Construction Program and Budget is anticipated to extend for a
period of at least one year, but may extend for such longer period as is
reasonably necessary to complete the Program, but in no event (save force
majeure) longer than two years.
(5) Review. Each adopted Program and Budget, regardless of length, shall be
reviewed at least quarterly (supported by detailed reports of costs and
technical progress) at a regular meeting of the Management Committee. During the
period encompassed by any Program and Budget, and at least two months prior to
its expiration, a proposed Program and Budget for the succeeding period shall be
prepared by the Manager and submitted to the Participants.
(d) Submittal and Approval of Proposed Programs and Budgets.
(1) Submittal of Manager's Program and Budget. Within 30 days after the Manager
submits a proposed Program and Budget to the Management Committee, the
non - managing Participant shall submit to the Management Committee:
(i) Notice that the non - managing Participant approves of the Program and
Budget; or
(ii) Proposed modifications of the proposed Program and Budget, which shall
include detailed specific objections regarding the proposed Program and Budget.
If a non - managing Participant fails to give either of the foregoing responses
within the allotted time, the failure shall be deemed an approval by the non -
managing Participant of the Manager's proposed Program and Budget. If a non -
managing Participant makes a timely submission to the Management Committee
pursuant to Section 9.3(d)(ii), then the Management Committee shall within the
following 30 days meet to consider the proposed Program and Budget and proposed
modifications. At that meeting, the Management Committee shall seek to develop a
Program and Budget acceptable to both the Participants. Failing approval by a
majority vote, the Participants shall follow the decision making process set
forth in Section 9.1(b).
(2) Feasibility Study. Any Participant may propose to the Management Committee
at any time that a Feasibility Study, evaluating the feasibility of opening or
expanding a mine on a particular area of the Properties be conducted on behalf
of Hecla Ventures. If the Management Committee does not approve of the
preparation of such Feasibility Study, then the Participant proposing it may
cause such Feasibility Study to be prepared at its sole expense. Promptly upon
completion of the Feasibility Study, the Participant preparing it shall present
it to the Management Committee for evaluation.
(e) Subsequent Programs. A subsequent Program relating to an area for which a
prior Program has been adopted under the provisions of this Article IX may be
proposed and conducted pursuant to this Agreement.
(f) Budget Overruns; Program Changes. The Manager shall immediately notify the
Management Committee of any material departure including documented reasons,
from an adopted Program and Budget. If the Manager exceeds an adopted Budget by
more than ten per cent (10%), then the excess over ten per cent (10%), unless
directly caused by an emergency expenditure made pursuant to Section 9.3(h), due
to unforeseen events beyond the reasonable control or anticipation of the
Manager, or unless otherwise authorized by the Management Committee, shall be
for the sole account of the Manager and such excess shall not be included in the
calculations of the Participating Interests. Budget overruns of ten per cent
(10%) or less shall be acceptable to form part of the Earn - In Expenditures.
(g) Emergency Expenditures. In case of emergency, the Manager may take any
reasonable action it deems necessary to protect life, limb or property, to
protect the Assets or to comply with law or government regulation. The Manager
shall promptly notify the Participants of the emergency expenditure, and the
Manager shall be reimbursed by Hecla Ventures for all resulting costs (if the
Manager is other than Hecla Ventures). (h) Interim Program and Budget. If the
Management Committee for any reason has failed to adopt a Program and Budget to
succeed an expiring or completed prior Program and Budget, the Manager shall
continue operations at levels necessary to maintain the Assets and to comply
with any and all legal obligations.
9.4 Accounts and Settlements.
(a) Monthly Statements. The Manager shall promptly submit to the Management
Committee monthly statements of accounts (costs and activities) reflecting in
reasonable detail the Earn - in Activities during the preceding month, including
a written report of activities, progress and results.
(b) Cash Calls. On the basis of the adopted Program and Budget, the Manager, if
other than Hecla Ventures, shall submit to Hecla Ventures prior to the 15th day
of each calendar month, a billing for the Manager's Fee due to Manager pursuant
to section 9.2(e) for the preceding month. Within ten (10) days after receipt of
each billing, Hecla Ventures shall advance to the Manager payment for the
Manager's Fee.
(c) Failure to Meet Cash Calls. If Hecla Ventures fails to meet cash calls in
the amount and at the times specified in Section 9.4(b) shall be in default, and
the amounts of the defaulted cash call shall bear interest from the date due at
an annual rate equal to the Prime Rate plus 5%, but in no event shall said rate
of interest exceed the maximum permitted by law, nor be included as part of
Earn - in Activities.
(d) Audits. Upon request made by any Participant within 12 months following the
end of any calendar year (or, if the Management Committee has adopted an
accounting period other than the calendar year, within 12 months after the end
of such period), the Manager shall order an audit of the accounting and
financial records for such calendar year (or other accounting period). All
written exceptions to and claims upon the Manager for discrepancies disclosed by
such audit shall be made not more than three months after receipt of the audit
report. Failure to make any such exception or claim within the three - month
period shall mean the audit is correct and binding upon the Participants. The
audits shall be conducted by a firm of certified public or chartered accountants
selected by the Manager, unless otherwise agreed by the Management Committee.
9.5 Parameters for Hecla Ventures' Earn - in Activities.
During the Term of this Earn - in Agreement, Hecla Ventures shall act in
accordance with direction from the Management Committee but Hecla Ventures shall
be solely responsible for conducting at its expense the specific manner and
method of the Earn - in Activities described in Exhibit E, including, without
limitation, mineral exploration, development, test mining and processing
activities, drilling, blasting, assaying, modeling, engineering, geophysics,
geochemistry, hydrology, metallurgy, metallurgical and environmental test work
or other test work, process testing, permitting, regulatory compliance,
evaluation, performance and preparation of a Feasibility Study, and all other
activities incidental to or arising therefrom, on or for the benefit of the
Properties, regardless of where such activities may be conducted. Hecla Ventures
may recover and process a reasonable amount of ore and other material from the
Properties for testing purposes during Earn - In - Activities and may conduct
such testing on or off the Properties. Proceeds from all Products produced from
the Area of Interest during the term of this Earn - In Agreement (estimated to
approximate 40,000 tons at a grade of 1.29 oz Au and 7 oz Ag diluted by 50% for
a total tonnage of 60,000 tons; equivalent gold ounces produced expected to
approximate 53,000 ozs) shall be distributed one hundred percent (100%) to Hecla
Ventures up to Hecla Ventures' actual costs of Stage I and Stage II Earn - in
Activities plus fifteen percent (15%). Any excess amounts shall be distributed
based on the deemed Participating Interests of the Parties.
9.6 Surface and Surface Facilities.
Subject to approval of the Management Committee and compliance with Underlying
Agreements and applicable law, including Newmont Mining Company reclamation
agreement on the Reclaim Area as described in Exhibit A, Hecla Ventures shall
have the right without further consideration, to use as much of the surface and
any surface facilities owned or controlled by Rodeo Creek, or on lands within
the Area of Interest that are both owned or controlled by Rodeo Creek and made
subject to this Earn - in Agreement. Hecla Ventures shall have the right to make
other surface use arrangements only upon authorization from the Management
Committee and subject to compliance with Newmont Mining Company reclamation
activities on the Properties.
9.7 Compliance With Laws and Agreements.
Hecla Ventures' Earn - in Activities on the Properties shall be conducted in
compliance with all applicable laws, statutes, regulations, Underlying
Agreements (specified on Schedule A as they may be augmented from time to time
pursuant to the terms hereof ) and this Earn - in Agreement.
ARTICLE X
RECLAMATION OBLIGATIONS
Hecla Ventures shall comply with all laws and regulations of the State of Nevada
and the United States of America as they pertain to reclamation obligations and
Hecla Ventures shall fund and at Hecla Ventures' election, either contract out
or carry out these reclamation obligations relating to or arising out of Earn -
in Activities on the surface and subsurface of the Area of Interest. If Rodeo
Creek elects to continue activities on the Area of Interest for greater than one
year from the date of Termination by Hecla Ventures and elects not to have
reclamation activities undertaken at that time, then an independent third
party's determination of the reclamation liability for Earn - In - Activities
will be obtained. Based on the determination of the reclamation liability
("DRL") for Earn - In - Activities then the following shall occur:
(1) if the reclamation fund ("RF") equals the DRL than no monies shall be
removed from the RF and Hecla Ventures shall be released of all further
reclamation obligations under this Earn - In - Agreement and the Parties shall
execute the Termination and Release Agreement in Part III of Exhibit A; or
(2) if the RF is less than the DRL than Hecla Ventures shall contribute 100% of
the deficiency; or
(3) if the RF is greater than the DRL than any unused portion of a reclamation
fund (funded during or on termination of the Earn - in Activities) remaining
after reclamation of the area(s) or upon payment to Rodeo Creek of the DRL to
which the reclamation fund relates shall be distributed to Hecla Ventures to the
extent Hecla Ventures has not recouped 115% of the actual costs of Stage I and
Stage II Earn - in Activities, otherwise distributed to the Participants based
on their respective Participating Interest at time of disbursement.
In the event of (1), (2) or (3) above, then Rodeo Creek shall be fully
responsible for the DRL and Hecla Ventures shall be released of all further
reclamation obligations. Hecla Ventures acknowledges that certain areas of the
Properties are undergoing reclamation. Hecla Ventures agrees to coordinate its
Earn - in Activities with Rodeo Creek's reclamation and permitting activities
and Rodeo Creek's reclamation activities with Newmont Mining Company, and
dealings with BLM, NDEP and Traditional Cultural Properties and Resources and
other government agencies.
Nothing in this Earn - in Agreement shall require or be interpreted as requiring
Hecla Ventures to perform any reclamation or pay any part of reclamation costs
associated with conditions resulting from any activities on the Properties
conducted by any other person or entity other than Hecla Ventures.
ARTICLE XI
REPORTING, INSPECTION AND AUDIT
Hecla Ventures shall keep Rodeo Creek advised of all Earn - in Activities during
the term of this Earn - in Agreement by making available to Rodeo Creek all Area
of Interest data and information within a reasonable time but no more than
thirty (30) days after such data and information is available to Hecla Ventures;
if such information is material to Rodeo Creek then Hecla Ventures will provide
it promptly to Rodeo Creek. In addition, Rodeo Creek's employees, agents and
representatives (at Rodeo Creek's sole risk and expense and subject to
reasonable safety regulations) shall have the right to inspect and to audit
Hecla Ventures' activities on and with respect to the Properties and all
documents, records, accounts and other data at all reasonable times, so long as,
Rodeo Creek's employees, agents and representatives do not unreasonably
interfere with Earn - in Activities. Hecla Ventures shall provide Rodeo Creek
detailed reports within fifteen (15) days following the end of each calendar
month that summarize Hecla Ventures' Earn - in Activities for each month and a
schedule of plans for the forthcoming month.
ARTICLE XII
MEMORANDUM
Hecla Ventures and Rodeo Creek shall execute and record a memorandum of this
Earn - in Agreement in substantially the form of Exhibit D, which shall not
disclose financial or other proprietary information contained herein, in a form
sufficient to constitute record public notice of the rights granted by this Earn
- in Agreement in the county or counties in which the Properties are situated.
This Earn - in Agreement shall not be recorded.
ARTICLE XIII
DEFAULTS
In the event of any Default by either Hecla Ventures or Rodeo Creek in the
performance of its obligations under this Earn - in Agreement ("Defaulting
Party"), the Non - Defaulting Party shall give to the Defaulting Party written
notice specifying the default. If the Default is not completely cured within
thirty (30) days, or such other, longer time as may be specified in this
Agreement, after the Defaulting Party has received the notice, the Non -
Defaulting Party may declare this Earn - in Agreement terminated and/or pursue
legal action against the Defaulting Party. Nothing herein shall be construed as
a limitation of remedies to the Non - Defaulting Party.
ARTICLE XIV
CONFIDENTIALITY
14.1 General.
The financial terms of this Earn - in Agreement and all geologic, metallurgical
and other information obtained in connection with the performance of it shall be
the exclusive property of the Parties, except that on termination of this Earn -
in Agreement, other than on execution and delivery of Operating Agreement,
ownership of all information shall revert solely to Rodeo Creek. Information,
except as provided in Section 14.2, shall not be disclosed by a Party to any
third party or the public without the prior written consent of the other Party.
14.2 Exceptions.
The consent required by Section 14.1 shall not apply to a disclosure:
(a) To an Affiliate or a consultant, contractor or subcontractor that has a bona
fide need to be informed;
(b) To any third party to whom the disclosing Party contemplates a transfer of
all of its interest in or to this Earn - in Agreement; or
(c) To a governmental agency or to the public which the disclosing Party
believes in good faith is required by pertinent law or regulation or the rules
of any stock exchange on which the disclosing Party is listed. In any case to
which this Section 14.2 is applicable, the disclosing Party shall give notice to
the other Party concurrently with the making of such disclosure. As to any
disclosure pursuant to Section 14.2(a) or
(b), only such confidential information as such third party shall have a
legitimate business need to know shall be disclosed and such third party shall
first agree in writing to protect the confidential information from further
disclosure for a period of one (1) year after its receipt to the same extent as
the Parties are obligated under this Article XIV.
14.3 Press Releases.
Hecla Ventures and Rodeo Creek shall consult with and provide a written copy to
each other at least twenty - four (24) hours before issuing any press release or
public statement on the results of Earn - in Activities on or for the benefit of
the Properties. Neither Hecla Ventures nor Rodeo Creek or their Guarantors shall
issue any press release or public statement mentioning the name of the other or
of any entity related to the other without the other Party's prior written
approval, which approval shall not be unreasonably withheld.
14.4 Duration of Confidentiality.
The provisions of this Article XIV shall apply during the Term of this Earn - in
Agreement and shall continue to apply to any Party who withdraws, who is deemed
to have withdrawn, or who transfers its interest in this Earn - in Agreement,
for one year following the date of such occurrence. If the Parties enter into
the Operating Agreement, its provisions concerning confidentiality shall then
apply to the financial terms of this Earn - in Agreement and to all information
obtained in connection with the performance of Earn - in Activities.
ARTICLE XV
TAXES
15.1 Payment of Properties and Improvement Taxes.
All taxes levied on real estate associated with the Properties or any
improvements on the Properties during the term of this Earn - in Agreement shall
be paid by Hecla Ventures as part of Earn - In Expenditures. 15.2 Provisions
Concerning Taxation. While this Earn - in Agreement is in effect, all matters
relating to taxation other than Section 15.1 shall be governed by Article IV of
this Earn - in Agreement.
ARTICLE XVI
COOPERATION
Within ten (10) days after a request from a Party, each Party shall provide the
other Party with access to all data and information in its possession or to
which it has access relating to or affecting the Properties including, but not
limited to, title documents, legal opinions, pertinent agreements, assays,
samples of minerals, drill hole logs, test results, historical materials
relating to exploration, development, mining, environmental matters and title,
filings with governmental bodies, maps and surveys. Both Parties shall have the
right to make copies thereof, each at its own expense.
ARTICLE XVII GENERAL
PROVISIONS
17.1 Notices.
All notices and other required communications made pursuant to this Earn - in
Agreement (referred to in this Section 17.1 as "Notices") to the Parties shall
be in writing, and shall be addressed respectively as follows: To: Hecla
Ventures Corp. w/a copy to: Hecla Mining Company 0000 Xxxxxxx Xxxxx 0000 Xxxxxxx
Xxxxx Xxxxx x'Xxxxx, Xxxxx 00000 - 8788 Xxxxx x'Xxxxx, Xxxxx 00000 - 8788 USA
USA Attn: President Attn: President and COO
To: Rodeo Creek Gold Inc. w/a copy to: Lang Xxxxxxxx
X/X Xxxxxxx Xxxxxx 0000 - 0000 Xxxx Xxxxxxx Xx.
260 - 0000 Xxxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Reno, NV 89511 X0X 0X0, XXXXXX
Attn: B. Zinkhofer
w/a copy to: Great Basin Gold Ltd.
1020 - 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0, XXXXXX
Attn: President & CEO
All Notices shall be given: (i) by personal delivery to the Party or (ii) by
electronic communication, with a confirmation sent by registered or certified
mail return receipt requested, or (iii) by registered or certified mail return
receipt requested. All Notices shall be effective and shall be deemed delivered
(i) if by personal delivery, on the date of delivery if delivered during normal
business hours, and if not delivered during normal business hours, on the next
business day following delivery, (ii) if by electronic communication, on the
next business day following receipt of the electronic communication, and (iii)
if solely by mail, on the next business day after actual receipt. A Party may
change its address by Notice to the other Party.
17.2 Waiver.
The failure of a Party to insist on the strict performance of any provision of
this Earn - in Agreement or to exercise any right, power or remedy upon a breach
hereof shall not constitute a waiver of any provision of this Earn - in
Agreement or limit the Party's right thereafter to enforce any provision or
exercise any right.
17.3 Modification.
No modification of this Earn - in Agreement shall be valid unless made in
writing and duly executed by the Parties.
17.4 Force Majeure.
Except for any obligation to make payments when due hereunder and except for
matters arising out of a Party's lack of funds, the obligations of a Party shall
be suspended to the extent and for the period that performance is prevented by
any cause, beyond its reasonable control, including, without limitation, labor
disputes (however arising and whether or not employee demands are reasonable or
within the power of the Party to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other authorization,
including access and occupancy rights from surface owners; acts of war or
conditions arising out of or attributable to war, whether declared or
undeclared; riot, civil strife, insurrection or rebellion; fire, explosion,
earthquake, storm, flood, sink holes, drought or other adverse weather
conditions; delay or failure by suppliers or transporters of materials, parts,
supplies, services or equipment or by contractors' or subcontractors' shortage
of, or inability to obtain, labor, transportation, materials, machinery,
equipment, supplies, utilities or services; accidents; breakdown of equipment,
machinery or facilities; or any other cause similar to the foregoing The
affected Party shall promptly give notice to the other Party of the suspension
of performance, stating therein the nature of the suspension, the reasons
therefore, and the expected duration thereof. The affected Party shall resume
performance as soon as reasonably possible. Commercial frustration, commercial
impracticability or the occurrence of unforeseen events rendering performance
hereunder uneconomical shall not constitute an excuse of performance of any
obligation imposed hereunder.
17.5 Governing Law.
This Earn - in Agreement shall be governed by and interpreted in accordance with
the laws of the State of Nevada, except for its rules pertaining to conflicts of
laws.
17.6 Rule Against Perpetuities.
Any right or option to acquire any interest in real or personal property under
this Earn - in Agreement must be exercised, if at all, so as to vest such
interest within twenty - one (21) years after the Effective Date.
17.7 Further Assurances.
Each of the Parties agrees to take from time to time such actions and execute
such additional instruments (without demand for further consideration) as may be
reasonably necessary or convenient to implement and carry out the terms of this
Earn - in Agreement.
17.8 Entire Agreement; Amendments; Successors and Assigns.
This Earn - in Agreement contains the entire understanding of the Parties and
supersedes all prior agreements and understandings between the Parties relating
to the subject matter hereof, and may be amended only by a written agreement
executed by the Parties hereto. This Earn - in Agreement shall be binding upon
and inure to the benefit of the respective successors and permitted assigns of
the Parties. No Party shall assign any interest or obligation in this Earn - in
Agreement to any party without the written consent of the other Parties, which
consent shall not be unreasonably withheld, provided, however, that no consent
shall be required to transfer a Participant's interest to an Affiliate.
17.9 Severability.
In the event that a court of competent jurisdiction determines that any term,
part or provision of this Earn - in Agreement is unenforceable, illegal, or in
conflict with any federal, state, or local laws, the Parties intend that the
court reform that term, part or provision within the limits permissible under
law in a way as to approximate most closely the intent of the Parties to this
Earn - in Agreement; provided that, if the court cannot make a reformation, then
that term, part or provision shall be considered severed from this Earn - in
Agreement. The remaining portions of this Earn - in Agreement shall not be
affected and it shall be construed and enforced as if it did not contain that
term, part or provision.
17.10 Paragraph Headings.
The paragraph and other headings of this Earn - in Agreement are inserted only
for convenience and in no way define, limit or describe the scope or intent of
this Earn - in Agreement or effect its terms and provisions.
17.11 Attorneys' Fees.
The prevailing party in any dispute arising under this Earn - in Agreement shall
be entitled to an award of its reasonable attorneys' fees and costs.
17.12 Counterparts.
This Earn - In Agreement may be signed by the Parties and Guarantors hereto in
as many counterparts as may be necessary, and via facsimile if necessary, each
of which so signed being deemed to be an original and such counterparts together
constituting one and the same instrument and, notwithstanding the date of
execution, being deemed to bear the execution date as set forth in this
Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Earn - in Agreement as
of the date first above written.
HECLA VENTURES CORP. RODEO CREEK GOLD INC.
By: s/s Xxxxxx X. Xxxxx Xx. By: /s/ Xxxxxxx X. Xxxxx
Authorized Signatory Authorized Signatory
Xxxxxx X. Xxxxx Xx. Xxxxxxx X. Xxxxx
Print Name Print Name
President CFO/Director
Title Title
IN WITNESS WHEREOF, the Guarantors hereto have executed this Earn - in Agreement
as of the date first above written.
Agreed as to Recital D and Sections 2.6, Agreed as to Recital E and Sections
2.7, 5, Exhibit E and Article X 2,3, 2,4 and 5 and Exhibit E
HECLA MINING COMPANY GREAT BASIN GOLD LTD.
By: s/s Xxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
Authorized Signatory Authorized Signatory
Xxxxxx Xxxxx Xxxxxx X. Xxxxxxxx
Print Name Print Name
Chairman/CEO CEO/President/Director
Title Title
ACKNOWLEDGEMENTS
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this 2nd day of August 2002,
by Xxxxxx X. Xxxxx, President of Hecla Ventures Corp., a Nevada corporation, on
behalf of said corporation.
Xxxxxx X. Xxxxxx
___________________________________________
Notary Public in and for the State of Idaho
Residing at: Hayden, Idaho
My Commission Expires: 10/12/07
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this 2nd day of August 2002,
by Xxxxxx Xxxxx , Chairman/CEO of Hecla Mining Company, a Delaware corporation,
on behalf of said corporation.
Xxxxxx X. Xxxxxx
___________________________________________
Notary Public in and for the State of Idaho
Residing at: Hayden, Idaho
My Commission Expires: 10/12/07
CANADA )
)
Province of British Columbia)
The foregoing instrument was acknowledged before me this 2nd day of August,
2002, by Xxxxxxx X. Xxxxx the CFO/Director of Rodeo Creek Gold Inc., a Nevada
corporation, on behalf of said corporation
Xxxxxx X. Xxxxxxxx
___________________________________________
Notary Public in and for the
Province of British Columbia
Residing at: West Vancouver
My Commission Expires: N/A
CANADA )
)
Province of British Columbia)
The foregoing instrument was acknowledged before me this 2nd day of August,
2002, by Xxxxxx X. Xxxxxxxx the President/Director of Great Basin Gold Ltd., a
British Columbia, Canada corporation, on behalf of said corporation.
Xxxxxx X. Xxxxxxxx
___________________________________________
Notary Public in and for the
Province of British Columbia
Residing at: West Vancouver, BC
My Commission Expires: N/A
Exhibit A to Earn - in Agreement
Part I - Properties
Page 2 of 2
EXHIBIT A
PROPERTIES
(Includes Exhibit A, Part I, II and III)
I. The 75 unpatented lode claims located in Elko County, Nevada listed below
lie completely or partially within the Area of Interest commonly known as
the Hollister Development Block which is defined by the following three
dimensional Mine Grid Coordinates:
34,000E to 40,000E
35,000N to 42,000
Surface to 4,000ft Above sea level
These claims are subject to Underlying Agreements (Part II and III of
Exhibit A) and obligations or royalties of general application to any
local, state or federal governments.
--------------------------------------------------------------------------------
CLAIM NAME NCM NUMBERS NUMBER OF CLAIMS
--------------------------------------------------------------------------------
XXXXX NUMBER 6 - 7 103763 - 103764 2
--------------------------------------------------------------------------------
CAR 1 - 5 103752 - 103756 5
--------------------------------------------------------------------------------
PICKUP 2 103765 1
--------------------------------------------------------------------------------
GAPFILLER 103767 1
--------------------------------------------------------------------------------
GAPFILLER 1 103768 1
--------------------------------------------------------------------------------
XXXXX 1,2,4,5, 103769,103770,103772,103775,103779-103782, 5
12 - 15, 103790 - 103792,
23 - 25, 103793 - 103796
28 - 31
--------------------------------------------------------------------------------
WDF 1 395835 1
--------------------------------------------------------------------------------
MWB 1 515540 1
--------------------------------------------------------------------------------
PICKUP 1 617440 1
--------------------------------------------------------------------------------
CLYN 151 - 175, 679609 - 679633, 41
204 - 212, 679662 - 679670,
219,220, 679677, 679678,
222,224,226, 679680, 679682, 679684,
228, 230 679686, 679688
--------------------------------------------------------------------------------
XXXXXXX XXXX 0X - 0X 000000 - 000000 5
--------------------------------------------------------------------------------
HAROLDS CLUB 8A 681152 1
================================================================================
TOTAL 75 CLAIMS
================================================================================
HOLLISTER DEVELOPMENT BLOCK
AREA OF INTEREST
[GRAPHIC OMITTED]
Exhibit A to Earn - in Agreement
Part II - Properties - Leases and Royalties and Underlying Agreements
Page 2 of 2
II. LEASES AND ROYALTIES AND UNDERLYING AGREEMENTS
A. Hillcrest Claims. The Xxxxx 6 - 7; Car 1 - 5; Pickup 2; Gapfiller; Gapfiller
1; Xxxxx 0 - 0, 0 - 0, 00 - 00, 00 - 00, xxx 00 - 00; Pickup 1; and Harold's
Club 0X - 0X xxx 0X xxxxxx (xxx "Xxxxxxxxx Xxxxxx") are owned by Hillcrest
Mining Company, a Nevada corporation.
The Hillcrest Claims are subject to a Mineral Lease dated October 23, 1981
between Hillcrest Mining Company as Lessor and Auric Metals Corporation as
Lessee (the "Hillcrest Mining Lease"). A Sublease dated December 10, 1981 was
granted by Auric Metals Corporation to United States Steel Corporation. Through
various conveyances, the Sublease is now held by Rodeo Creek Gold Inc., a Nevada
corporation.
There are three royalties associated with the Hillcrest Claims: a 2% royalty on
net proceeds reserved to Hillcrest/Auric; a 3% net returns royalty in favor of
USX (successor to United States Steel Corporation). A 5% net profits interest
reserved by Touchstone Resources Company will be paid entirely by Rodeo Creek
out of Rodeo Creek's Participating Interest or Rodeo Creek's interest in the Net
Profits Interest and will in no event affect the Participating Interest or Net
Profits Interest of Hecla Ventures. The USX royalty was subsequently conveyed to
Franco - Nevada Mining Corporation and Euro - Nevada Mining Corporation, Inc.,
which have been acquired by Newmont Mining Corporation (or a related company);
the 3% net returns royalty is now owned and controlled by Newmont.
B. Ivanhoe Claims. The WDF 1, MDW 1, and CLYN 151 - 175, 204 - 212, 219 - 220,
222, 224, 226, 228, and 230 claims (the "Ivanhoe Claims") are owned by Rodeo
Creek Gold Inc., a Nevada corporation.
The Ivanhoe Claims are subject to two royalties: a 5% net returns royalty,
originally reserved by USX and now held by Newmont Mining Corporation or an
affiliate company. A 5% net profits interest reserved by Touchstone Resources
Company will be paid entirely by Rodeo Creek out of Rodeo Creek's Participating
Interest or Rodeo Creek's interest in the Net Profits Interest and will in no
event affect the Participating Interest or Net Profits Interest of Hecla
Ventures. C. Underlying Agreements and Other Information. See Hollister
Development Block Land and Agreement 3 ring binder dated July 22, 2002 for legal
opinion, Property map and Underlying Agreements. A copy of the table of contents
follows in Part III.
Exhibit A to Earn - in Agreement
Part III - Properties - Underlying Agreements and Other Information
Page 3 of 3
PART III - UNDERLYING AGREEMENTS AND OTHER INFORMATION
1.0 SUMMARY INFORMATION
- Claim List - claims in Hollister Development Block with ownership and
royalties identified.
- Claim Map - Hollister Development Block with corresponding royalties
identified.
2.0 LEGAL CORRESPONDENCE
- Title Report on Hollister Development Block, Elko County, Nevada, dated July
19, 2002 by Xxxxxx & Xxxxxxxx.
- Hillcrest - Auric Production Royalty, dated June 26, 1998 by Xxxxxx, Trimmer &
Xxxxxxxx.
3.0 FEBRUARY 18, 2002 - NEWS RELEASE
- Newmont announces that it has completed its acquisition of Franco - Nevada
Mining.
4.0 MARCH 15, 2002 - ACKNOWLEDGEMENT
- Rodeo Creek Gold Inc. and Touchstone Resources Inc.: Touchstone's
participating interest in the joint venture is reduced to below 10%, they
relinquish their interest to Rodeo Creek and reserve a 5% Net Profits Royalty.
5.0 OCTOBER 27, 2000 - ASSIGNMENT OF INTEREST
- Auric Metals Corporation and Xxxxxx River Company: Auric assigns and transfers
all of its rights, titles and interests in the Hillcrest Mining Lease and
Sublease to Xxxxxx River.
6.0 MARCH 02, 1999 - PURCHASE AGREEMENT
- Great Basin Gold Ltd. And Touchstone Resources Company & Cornucopia Resources
Ltd.: Great Basin purchases all of the shares of Touchstone Resources from
Cornucopia Resources.
7.0 JULY 31, 1998 - PURCHASE AGREEMENT ASSIGNMENT
- Great Basin Gold Inc. and Rodeo Creek Gold Inc.: Great Basin assigns all of
its right, title and interest in the August 13, 1997 purchase agreement to Rodeo
Creek.
- Great Basin Gold Inc. and Rodeo Creek Gold Inc.: Quitclaim deed and assignment
of the "Ivanhoe Properties" from Great Basin to Rodeo Creek.
8.0 JULY 31, 1998 - VENTURE AGREEMENT ASSIGNMENT
- Great Basin Gold Inc. and Rodeo Creek Gold Inc.: Great Basin assigns all of
its right, title and interest in the August 13, 1997 venture agreement to Rodeo
Creek.
9.0 AUGUST 13, 1997 - SUBLEASE AMENDMENT
- Auric Metals Corporation, and Hillcrest Mining Company and Great Basin Gold
Inc..: Auric and Hillcrest acknowledge the assignment of the Sublease to Great
Basin effective August 13, 1997.
10.0 AUGUST 13, 1997 - QUITCLAIM DEED AND ASSIGNMENT
- Newmont Exploration Limited and Great Basin Gold Inc..: Newmont quitclaims all
rights titles and interest in the Ivanhoe properties to Great Basin Gold and
assigns all of its rights , title and interests in the mineral lease and sub -
lease to Great Basin.
11.0 AUGUST 13, 1997 - PURCHASE AGREEMENT
- Newmont Exploration Limited, Touchstone Resources Company and Great Basin Gold
Inc..: Newmont and Touchstone terminate the Venture Agreement and Great Basin
acquires Newmont's interest in the Ivanhoe Properties.
12.0 AUGUST 13, 1997 - VENTURE AGREEMENT
- Touchstone Resources Company and Great Basin Gold Inc..: Great Basin and
Touchstone participate jointly in the exploration, evaluation and development of
mineral resources within the Ivanhoe Properties and any other acquired
properties under the terms of this agreement.
13.0 MARCH 19, 1992 - QUITCLAIM DEED AND ASSIGNMENT
- USX Corporation and Euro - Nevada Mining Corporation: USX conveys all of its
remaining interest right and title in the "Deed" dated December 20, 1988 to Euro
- Nevada.
14.0 DECEMBER 20, 1988 - QUITCLAIM DEED AND ASSIGNMENT
- USX Corporation and Touchstone Resources Company: USX conveys all of its
interest right and title in the USX Claims and the base leases and Hillcrest
claims to Touchstone while reserving certain interests. - 15.0 MARCH 26, 1987 -
LESSOR'S CERTIFICATION
- Auric Metals Corporation and Touchstone Resources Company: Auric certifies the
good standing of the leases.
16.0 MARCH 19, 1987 - CERTIFICATION AND AGREEMENT
- Hillcrest Mining Resources Company and Touchstone Resources Company and USX
Corporation: Renewal and amendment of the lease.
17.0 MARCH 19, 1987 - AMENDMENT TO MINERAL LEASE
- Auric Metals Corporation and Hillcrest Mining Resources: Amendment to the
lease and assignment of interest.
18.0 DECEMBER 10, 1981 - SUBLEASE
- Auric Metals Corporation and USX: USX subleases the Hillcrest Claims from
Auric.
19.0 OCTOBER 23, 1981 - MINERAL LEASE
- Auric Metals Corporation and Hillcrest Mining Resources: Auric Leases the
"Hillcrest" claims from Hillcrest.
Exhibit A to Earn - in Agreement
Part IV - Termination and Release Agreement
Page 6 of 6
IV: TERMINATION AND RELEASE AGREEMENT
THIS AGREEMENT is entered into and made effective this ___ day of ________,
20___, by and between Hecla Ventures Corp., a Nevada corporation ("Hecla
Ventures") and its Guarantor, Hecla Mining Company, with their principal place
of business at 0000 Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000 - 8788 and Rodeo
Creek Gold Inc., C/O Xxxxxxx Xxxxxx, 260 - 0000 Xxxxxxxx Xxxxx, Xxxx, Xxxxxx
00000, a Nevada corporation ("Rodeo Creek"), and its Guarantor, Great Basin Gold
Ltd. with their principal place of business at 1020 - 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0XX.
RECITALS
WHEREAS, Hecla Ventures and Rodeo Creek entered into an Earn - in Agreement
dated August 2, 2002 ("Earn - in Agreement"); and,
WHEREAS, Hecla Ventures and Rodeo Creek desire to terminate the Earn - in
Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Hecla Ventures" means Hecla Ventures Corp. and its subsidiaries,
affiliates, successors and assigns;
1.2 "Great Basin" means Great Basin Gold Ltd. and its subsidiaries, affiliates,
successors and assigns;
1.3 "Earn - in Agreement" means the Earn - in Agreement by and between Hecla
Ventures and Rodeo Creek, dated August 2, 2002, including all amendments and
modifications thereof, and all schedules and exhibits, thereto.
1.4 "Agreement" shall mean collectively all covenants, terms and conditions of
this Termination and Release of Agreement, and any specifications and exhibits
thereto.
1.5 All other defined terms used in this Agreement and in its exhibits shall
have the definitions previously agreed to in the Earn - in Agreement, unless
specifically defined herein.
ARTICLE II
TERMINATION OF EARN - IN AGREEMENT
2.1 As evidenced by their signatures below, Hecla Ventures and Rodeo Creek
hereby agree to terminate the Earn - in Agreement, subject to the terms and
conditions of this Agreement.
ARTICLE III
MUTUAL RELEASE
3.1 Except as set out in this Agreement, Hecla Ventures and Rodeo Creek hereby
release each other from all duties, obligations and liabilities, past, present
and future, including contingent liabilities arising in whole or in part from
joint operations on and near the Properties for activities undertaken pursuant
to the Earn - in Agreement, excluding Hecla Mining Warrants and Great Basin
Warrants which have been exchanged.
ARTICLE IV
INDEMNITY
4.1 Rodeo Creek's Indemnity
Notwithstanding any provision of this Agreement to the contrary, Rodeo Creek
shall be solely responsible for, and shall indemnify, defend, and hold harmless
Hecla Ventures and its directors, officers, employees, agents, attorneys and
Affiliates from and against, any and all liabilities, losses, claims, demands,
damages, costs, expenses (including without limitation any environmental,
reclamation and remediation expenses, fines, penalties, judgments, litigation
costs and attorneys' fees) enforcement actions and causes of action ("Claims")
arising in whole or in part from the activities conducted at any time prior to
the Effective Date of the Earn - In Agreement on the Properties or on lands
owned or controlled as of the Effective Date by Rodeo Creek within the Area of
Interest, or on nearby lands involved in Rodeo Creek's operations, regardless of
whether such Claims arise or accrue before or after the Effective Date of this
Agreement, or after termination or expiration of the Term of this Agreement for
any reason.
4.2 Hecla Ventures' Indemnity
Notwithstanding any provision of this Agreement to the contrary, Hecla Ventures
shall be solely responsible for, and shall indemnify, defend, and hold harmless
Rodeo Creek and its directors, officers, employees, agents, attorneys and
Affiliates from and against, any and all liabilities, losses, claims, demands,
damages, costs, expenses (including without limitation any environmental,
reclamation and remediation expenses, fines, penalties, judgments, litigation
costs and attorneys' fees) enforcement actions and causes of action ("Claims")
arising in whole or in part from the Earn - in Activities conducted at any time
after the Earn - In Agreement Effective Date on the Properties or on lands owned
or controlled as of the Effective Date by Hecla Ventures within the Area of
Interest, or on nearby lands involved in Hecla Ventures' operations, regardless
of whether such Claims arise or accrue after the Effective Date of this
Agreement, or after termination or expiration of the Term of this Agreement for
any reason.
ARTICLE V
ATTORNEYS' FEES
5.1 The prevailing party in any dispute arising under this Agreement shall be
entitled to an award of its reasonable attorneys' fees and costs.
ARTICLE VI
PARENT GUARANTEE
6.1 Hecla Mining hereby guarantees to Rodeo Creek the due performance of all the
obligations of Hecla Ventures owed to Rodeo Creek hereunder. 6.2 Great Basin
hereby guarantees to Hecla Ventures the due performance of all the obligations
of Rodeo Creek owed to Hecla Ventures hereunder.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
HECLA VENTURES CORP. RODEO CREEK GOLD INC.
By NOT FOR SIGNATURE - FORM ONLY By NOT FOR SIGNATURE - FORM ONLY
___________________________________ ___________________________________
Print Name Print Name
____________________________________ ____________________________________
Title Title
IN WITNESS WHEREOF, the Guarantors hereto have executed this Agreement as of the
date first above written. HECLA MINING COMPANY GREAT BASIN GOLD LTD.
By NOT FOR SIGNATURE - FORM ONLY By NOT FOR SIGNATURE - FORM ONLY
___________________________________ ___________________________________
Print Name Print Name
____________________________________ ____________________________________
Title Title
ACKNOWLEDGEMENTS
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by ______________________ the ____________________ of
Hecla Ventures Corp., a Nevada corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: ______________________
My commission expires: ____________
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by ______________________ the ____________________ of
Hecla Mining Company, a Delaware corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: ______________________
My commission expires: ____________
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by _________________________ the
_______________________ of Rodeo Creek Gold Inc., a Nevada corporation, on
behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: ______________________
My commission expires: ____________
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ___ day of
_________________, 2002, by _________________________ the
_______________________ of Great Basin Gold Ltd., a British Columbia
corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public
Residing at: _____________________
My commission expires: ___________
Exhibit B to Earn - in Agreement
Accounting Procedures
Page 15 of 15
EXHIBIT B
ACCOUNTING PROCEDURES
I. GENERAL PROVISIONS
It is the intent of the Manager and the Participants that the Manager, except as
permitted by this Agreement, shall not lose or profit by reason of its duties
and responsibilities as Manager. The Accounting Procedures shall be reviewed by
the Management Committee upon the request of the Manager or any Participant to
assure that the Manager (directly or through its Affiliates) does not , except
as permitted by this Agreement, make a profit or suffer a loss from serving as
Manager. The Participants shall, in good faith, endeavor to agree on
modifications to these Accounting Procedures that will remedy any alleged
unfairness or inequity.
1. Definitions
All words indicated with initial capital letters shall have the meaning set
forth in Article I of this Joint Operating Agreement.
2. Conflict with Agreement
In the event of a conflict between the provisions of this Accounting Procedure
and the provisions of the agreement to which this Accounting Procedure is
attached ("Operating Agreement"), the provisions of the Operating Agreement
shall control.
3. Collective Action by Non - Manager
Where there are more than one non - Manager, where an agreement or other action
by non - Manager is expressly required under this Accounting Procedure, and if
the Operating Agreement contains no contrary provisions in regard thereto, the
agreement or action of a majority in interest of the non - Manager shall be
controlling on all non - Managers.
4. Statements and Xxxxxxxx
A. Prior to the first day of each month covered by an approved budget, or some
other quantum of months as may be agreed by the Participants and such time being
hereinafter referred to as the "Period," each Participant shall advance to the
Joint Accounts its proportionate share (i.e., according to its Participating
Interest in the Joint Operation) of the total amount of the funds required for
such Period, as reflected by the budget. Manager shall pay and discharge all
costs and expenses of the Joint Account as the same become due and payable.
Notwithstanding the failure of the Participants to approve any budget, each
Participant shall advance to the Joint Account its proportionate share of such
funds as the Manager shall by written notice advise the Participants are
required for protecting and maintaining the Joint Properties and meeting the
obligations properly incurred for the Joint Account. No Participant shall be
considered deficient as to any advance due from it unless it shall have been
allowed at least ten (10) days (after receipt of copies of the approved budget
on which determination of the amount to be advanced is based, or, in the case of
an advance to be made pursuant to the next preceding sentence, after receipt of
notice from the Manager in such regard) in which to make such advance.
B. Manager shall provide non - Manager on or before the last day of the month
following each Period a statement of costs and expenses for the Period. Such
statement will reflect all charges and credits to the Joint Account, summarized
by appropriate classifications indicative of the nature thereof. Proper
adjustments shall be made between advances and direct and indirect costs, to the
end that each Participant shall bear and pay its proportionate share of direct
and indirect costs incurred and no more or less.
5. Payment and Advances by Non - Manager
In the case where advances have been insufficient to cover actual costs, the
Manager, by written notice, shall advise non - Manager of such deficiency and
request that funds to cover such deficiency be paid in accordance with this
paragraph 5 of Section I. If advances exceed actual costs, the Manager shall
advise non - Manager of such excess and advise non - Manager of either a reduced
amount required to be advanced for the next Period or return to the Participants
their proportionate share of such excess. Each non - Manager shall pay pro rata
share of any advance due for a Period or for a deficiency request for funds
within ten (10) days after receipt of notice from Manager. If payment is not
made within such time, the unpaid balance shall bear interest at the annual rate
of five (5) percent above the Prime Rate.
6. Adjustments
Payments of any such advance or deficiency requests shall not prejudice the
right of the non - Manager to protest or question the correctness thereof,
provided, however, all accounts and statements rendered to non - Manager during
any calendar year shall conclusively be presumed to be true and correct after
twelve (12) months following the end of such calendar year, unless within the
said twelve (12) month period a non - Manager takes written exception thereto
and makes claim on Manager for adjustment. No adjustment favorable to Manager
shall be made unless it is made within the same prescribed period. The
provisions of this paragraph shall not prevent adjustments resulting from a
physical inventory of the Joint Property.
7. Audits
The Manager shall, upon the request of any Participant with a Participating
Interest under this Agreement, have an annual audit performed on the Manager's
accounts by a firm of auditors acceptable to the Participants which own the
majority Participating Interest. The cost of such annual audit shall be charged
to the Joint Account. In addition to the annual audit, any other work performed
by these auditors (including the preparation of schedules for submission to any
taxing authorities), if approved by the Management Committee, shall be charged
to the Joint Account.
Notwithstanding the above, any audit, accounting, taxation or similar work
performed at the request of any Participant to this Agreement for the exclusive
benefit of that Participant shall be a charge to that Participant and not be a
charge to the Joint Account.
A non - Manager, upon notice in writing to Manager, shall have the right to
audit Manager's accounts and records relating to the accounting hereunder for
any calendar year within the twelve (12) month period following the end of each
calendar year, provided, however, the making of an audit shall not extend the
time for the taking of written exception to and the adjustment of accounts as
provided above. Where there are two or more non - Managers, the non - Manager
shall make every reasonable effort to conduct joint or simultaneous audits in a
manner which will result in a minimum of inconvenience to the Manager.
II. DIRECT CHARGES
Subject to limitations hereinafter prescribed, and unless otherwise provided in
the Operating Agreement, Manager shall charge the Joint Account with the
following items:
1. Rentals, Royalties, Fees and Reclamation
A. Rentals and royalties when such rentals, lease payments and royalties are
paid by Manager for the Joint Account of the Participants.
B. Any annual fee payment or assessment work expenditure on or for the
Properties.
C. A cash reclamation account that is funded on a per ounce basis to meet
expected reclamation costs identified in the Feasibility Study as may be updated
from time to time by an independent consultant and approved by the Management
Committee.
2. Labor
A. Salaries and wages of Manager's employees or Affiliates directly engaged in
the conduct of the Joint Operations (except those entities' executives and
officers), and salaries or wages of technical employees who are temporarily
assigned to and directly employed in the conduct of Joint Operations and whose
salaries are not compensated for under Section III.
B. Manager's cost of holiday, vacation, sickness, and disability benefits and
other customary allowances paid to the employees whose salaries and wages are
chargeable to the Joint Account under Paragraph 2A of this Section II and
Paragraph 1 of Section III; except that in the case of those employees only a
pro rata portion of whose salaries and wages are chargeable to the Joint Account
under Paragraph 1 of Section III, not more than the same pro rata portion of the
benefits and allowances herein provided for shall be charged to the Joint
Account. Cost under this Paragraph 2B may be charged on a "when and as paid
basis" or by "percentage assessment" on the amount of salaries and wages
chargeable to the Joint Account under Paragraph 2A of this Section II and
Paragraph 1 of Section III. If percentage assessment is used, the rate shall be
based on the Manager's cost experience.
C. Expenditures or contributions made pursuant to assessments imposed by
governmental authority which are applicable to Manager's labor cost of salaries
and wages chargeable to the Joint Account under Paragraphs 2A and 2B of this
Section II and Paragraph 1 of Section III.
D. Reasonable personal expenses of those employees whose salaries and wages are
chargeable to the Joint Account under Paragraph 2A of this Section II and for
which expenses the employees are reimbursed under Manager's usual practice.
3. Employee Benefits
Manager's cost of established plans for employees' group life insurance,
hospitalization, pension, retirement, stock purchase, thrift, severance payments
and other benefit plans of a like nature, applicable to Manager's labor cost
chargeable to the Joint Account under Paragraphs 2A and 2B of this Section II
and Paragraph 1 of Section III.
4. Material
Material and supplies ("Material") purchased or furnished by Manager for use on
the Joint Property. So far as it is reasonably practical and consistent with
efficient economical operation, only such Material shall be purchased for or
transferred to the Joint Property as may be required for immediate use; and the
accumulation of surplus stocks shall be avoided. The charges for any Material or
services provided by Manager or an Affiliate of Manager shall not exceed the
prevailing charges or rates for such Material or services in the vicinity of the
Joint Property and those services performed by Manager or Affiliate of Manager
shall be under the same terms and conditions as are customary and usual in the
vicinity of the
Joint Property in contracts of independent contractors who are doing work of a
similar nature.
5. Transportation
Transportation of employees and Material necessary for the Joint Operations but
subject to the following limitations:
A. If Material is moved to the Joint Property from the Manager's warehouse or
other properties, no charge shall be made to the Joint Account for a distance
greater than the distance from the nearest reliable supply store or railway
receiving point where like material is available, except by agreement with
non - Manager.
B. If surplus Material is moved to Manager's warehouse or other storage point,
no charge shall be made to the Joint Account for a distance greater than the
distance to the nearest reliable supply store or railway receiving point, except
by agreement with non - Manager. No charge shall be made to Joint Account for
moving Material to other properties belonging to Manager, except by agreement
with non - Manager. C. In the application of subparagraphs A and B above, there
shall be no equalization of actual gross trucking costs of $100.00 or less.
6. Off - Site Transportation of Ore
Transportation of Products from the Properties to any off - site processing
facility.
7. Processing Cost
It is understood at the time of the signing of this agreement that no final
disposition of Products from the Properties has been arranged. However, the
intent of the parties can be summarized as follows: A. If the arrangement shall
be toll milling then the Participants shall take in kind and the costs required
to beneficiate the Products to the point where delivery may be taken in kind are
charged to the Joint Account as Processing Cost.
B. If the arrangement shall be custom milling the Processing Cost shall be the
difference between the gross value of metal in the Products and the payment
received for the Products.
8. Services
A. The cost of contract services and utilities procured from outside sources
other than services covered by Paragraph 10 of this Section II of this
Accounting Procedure.
B. Use and services of equipment and facilities furnished by Manager as provided
in Paragraph 2 of Section IV of this Accounting Procedure.
9. Damages and Losses to Joint Property
All costs or expenses necessary for the repair or replacement of Joint Property
made necessary because of damages or losses incurred by fire, flood, storm,
theft, accident, or any other cause. Manager shall furnish non - Manager written
notice of damages or losses incurred as soon as practical after a report thereof
has been received by Manager.
10. Legal Expenses
All costs and expenses of handling, investigating and settling litigation or
claims arising by reason of the Joint Operations or necessary to protect or
recover the Joint Property, including, but not limited to, attorneys' fees,
court costs, cost of investigation or procuring evidence and amounts paid in
settlement or satisfaction of any such litigation or claims; provided (a) except
as otherwise permitted herein, no charge shall be made for the services of
Manager's legal staff or other regularly employed legal personnel for legal
services rendered solely on behalf of and for the benefit of Manager (such
services being considered to be Administrative Overhead under Section III),
except by agreement with non - Manager, (b) no charge shall be made for the fees
and expenses of outside attorneys unless the employment of such attorneys is
approved by the Management Committee, and (c) no settlement of litigation or
claims for more than $100,000 in cash or value shall be made by the Manager
without prior approval of the non - Manager.
11. Taxes
All taxes of every kind and nature assessed or levied upon or in connection with
the Joint Property, the operation thereof, of the production therefrom, and
which taxes have been paid by the Manager for the benefit of all the
Participants. For greater certainty, any tax levied on income or profit of the
Joint Venture is payable by each individual Participant to this Agreement and,
to the extent paid by the Joint Account, is to be refunded to the Joint Account
by each such Participant on whom such tax is assessed and/or levied.
12. Insurance Premiums
Premiums paid for insurance required to be carried on the Joint Property for the
protection of the Participants.
13. Other Expenditures
Any other expenditures not covered or dealt with in the foregoing provisions of
this Section II or in Section III, and which are incurred by the Manager for the
necessary and proper conduct of the Joint Operations and pursuant to any
applicable provisions of the Operating Agreement.
III. INDIRECT CHARGES
Subject to limitations hereinafter prescribed, and unless otherwise provided in
the Operating Agreement, Manager shall charge the Joint Account with the
following items:
1. Administrative Overhead
In addition to the charges made pursuant to Paragraph 1 above, Manager shall
charge the Joint Account with an overhead charge calculated as follows:
A. One percent (1%) of any expenditure for an item which would, under generally
accepted accounting treatment for financial purposes, be capitalized and is not
included as a direct charge included in Section II of the Account Procedure;
plus
B. Seven percent (7%) of all Direct Charges as defined in this Exhibit B, except
the Direct Charges identified in Section II, paragraphs 1A, 1B and 1C of this
Exhibit B but for any individual contract in excess of $50,000 the fee shall be
reduced to 3%.
Such overhead rates may be amended from time to time by mutual agreement of the
Participants hereto if, in practice, the rates are found to be insufficient or
excessive.
2. Depreciation and Amortization
The value of additional capital equipment and facilities acquired after Stage II
will be amortized on a per ounce produced basis over the remaining mine life, or
the expected useful life of the newly acquired capital asset, whichever is
shorter.
IV. BASIS OF CHARGES TO JOINT ACCOUNT
1. Purchases
Material and equipment purchased and service procured shall be charged at the
price paid by Manager after deduction of all discounts actually received.
2. Material Furnished by Manager
Material required for operations shall be purchased for direct charge to the
Joint Account whenever practicable, except that Manager may furnish such
material from Manager's stocks under the following conditions:
A. New Material (Condition "A")
(1) New material transferred from Manager's warehouse or other properties shall
be priced F.O.B. the nearest reputable supply store or railway receiving point,
where such material is available, at current replacement cost of the same kind
of material.
(2) Cash discount shall be allowed.
B. Used Material (Conditions "B" and "C")
(1) Material which cannot be classified as Condition "A" but which are
classified as Condition "B" or "C" as defined below shall be priced at 50% of
new price.
(a) "Condition B": after reconditioning will be further serviceable for original
function as good secondhand material, or
(b) "Condition C": is serviceable for original function but substantially not
suitable for reconditioning.
(2) Material which cannot be classified as Condition "B" or Condition "C" shall
be priced at a value commensurate with its use.
C. Material Furnished by Manager When Not Readily Available When material and/or
supplies are not readily available from reputable supply sources due to
scarcity, national emergency or governmental regulations, Manager may furnish
such from its stock or properties at its nearest available supply and charge
Manager's full cost or replacement cost, as circumstances may require, of same
to the Joint Account, including, without limitation, purchase price,
procurement, warehousing, handling, transportation and all other costs incurred
in connection therewith up to the time of delivery to the Joint Property.
3. Premium Prices
Whenever materials and equipment are not readily obtainable at the customary
supply point and at prices specified in Paragraphs 1 and 2 of this Section IV
because of national emergencies, strike or other unusual causes over which the
Manager has no control, the Manager may charge the Joint Account for the
required materials on the basis of the Manager's direct cost and expense
incurred in procuring, such materials, in making it suitable for use, and in
moving it to the location; provided, however, that notice in writing is
furnished to non - Manager of the proposed charge prior to billing the non -
Manager for the material or equipment acquired pursuant to this provision,
whereupon non - Manager shall have the right, by so electing and notifying
Manager, within ten (10) days after receiving notice from the Manager, to
furnish in kind, or in tonnage as the Participants may agree, at the location
nearest railway receiving point, or Manager's storage point within a comparable
distance, all or part of its share of material or equipment suitable for use and
acceptable to the Manager. Transportation costs on any such material furnished
by the non - Manager, at any point other than at location, shall be borne by the
non - Manager. If, pursuant to the provisions of this paragraph, the non -
Manager furnishes material or equipment in kind, the Manager shall make
appropriate credits therefore to the Joint Account.
4. Warranty of Material Furnished by Manager
Manager does not warrant the material furnished beyond the backing of the
dealer's or manufacturer's guaranty; and in case of defective material, credit
shall not be passed until adjustment has been received by Manager from the
manufacturers or their agents.
5. Manager's Exclusively Owned Facilities
The following rates shall apply to service rendered to the Joint Account by
facilities and equipment owned by Manager:
A. Water, fuel, power, compressor and other auxiliary services at rates
commensurate with cost of providing and furnishing such service to the Joint
Account but not exceeding rates currently prevailing in the vicinity of the
Joint Property.
B. Automotive equipment at rates commensurate with cost of ownership and
operation. Automotive rates shall include cost of oil, gas, repairs, insurance
and other operating expenses and depreciation; and charges shall be based on use
in actual service on, or in connection with, the Joint Account operations. Truck
and tractor rates may include wages and expenses of driver.
C. A fair rate shall be charged for the use of Manager's fully owned machinery
or equipment which shall be ample to cover maintenance, repairs, depreciation,
and the service furnished the Joint Property; provided that such charges shall
not exceed those currently prevailing in the vicinity of the Joint Property.
D. A fair rate shall be charged for laboratory services performed by Manager for
the benefit of the Joint Account; provided such charges shall not exceed those
currently prevailing if performed by outside service laboratories. E. Whenever
requested, Manager shall inform non - Manager in advance of the rates it
proposes to charge. F. Rates shall be revised and adjusted from time to time by
the Management Committee when found to be either excessive or insufficient.
V. DISPOSAL OF EQUIPMENT AND MATERIAL
1. Manager Not Obligated to Purchase
The Manager shall be under no obligation to purchase interests of non Manager in
surplus new or secondhand material. The disposition of major items of surplus
material shall be subject to mutual determination by the Participants hereto;
provided, Manager shall have the right to dispose of normal accumulations of
junk and scrap material either by transfer or sale from the Joint Property.
2. Material Purchased by the Manager or Non - Manager
Material purchased by either the Manager or non - Manager shall be credited by
the Manager to the Joint Account for the month in which the material is removed
by the purchaser.
3. Division in Kind
Division of material in kind, if made between Manager and non - Manager, shall
be in proportion to their respective interests in such material. Each
Participant will thereupon be charged individually with the value of the
material received or receivable by each Participant, and corresponding credits
will be made by the Manager to the Joint Account. Such credits shall appear in
the monthly statement of operations.
4. Sales to Third Parties
Sales to third parties of material from the Joint Property shall be credited by
Manager to the Joint Account at the net amount collected by Manager from any
such third party. Any claims by any such third party for defective material or
otherwise shall be charged back to the Joint Account if and when paid by
Manager.
VI. BASIS OF PRICING MATERIAL TRANSFERRED FROM
JOINT ACCOUNT TO ACCOUNT OF EITHER PARTY
1. New Price Defined
New price as used in the following paragraphs shall have the same meaning and
application as that used in Section IV above, "Basis of Charges to Joint
Account."
2. New Material
New Material (Condition "A"), being new material procured for the Joint Property
but never used thereon, at one hundred percent (100%) of current new price (plus
sales tax, if any).
3. Good Used Material
Good used material (Condition "B"), being used material in sound and serviceable
condition, suitable for reuse without reconditioning.
A. At seventy - five percent (75%) of current new price (plus sales tax, if any)
if material was charged to the Joint Account as new, or
B. At sixty - five percent (65%) of current new price (plus sales tax, if any)
if material was originally charged to the Joint Account as Condition "B"
material.
4. Other Used Material
Used material (Condition "C"), at fifty percent (50%) of current new price (plus
sales tax, if any), being used material which:
A. After reconditioning will be further serviceable for original function as
good secondhand material (Condition "B"), or
B. Is serviceable for original function but substantially not suitable for
reconditioning.
5. Bad - Order Material
Material and equipment (Condition "D") which is no longer useable for its
original purpose without excessive repair cost but is further useable for some
other purpose shall be priced on a basis comparable with that of items nominally
used for that purpose.
6. Junk
Junk (Condition "E"), being obsolete and scrap material at prevailing prices.
7. Temporarily Used Material
When the use of material is temporary and its service to the Joint Property does
not justify the reduction in price, such material shall be priced on a basis
that will leave a net charge to the Joint Account consistent with the value to
the Venture.
VII. INVENTORIES
1. Periodic Inventories, Notice and Representations
At reasonable intervals, but no less than annually, inventories shall be taken
by Manager of the Joint Account material, which shall include all such material
as is ordinarily considered controllable by operators of mining properties.
Written notice of intention to take inventory shall be given by Manager at least
thirty (30) days before any inventory is to begin so that non - Manager may be
represented at an inventory. Failure of non - Manager to be represented at an
inventory shall bind the non - Manager to accept the inventory taken by Manager,
who shall in that event furnish non - Manager with a copy thereof. The
provisions of this paragraph do not apply if inventory is maintained on a
perpetual basis.
2. Reconciliation and Adjustment of Inventories
Reconciliation of inventory with charges to the Joint Account shall be made by
each Participant in interest, and a list of overages and shortages shall be
jointly determined by Manager and non - Manager. Inventory adjustments shall be
made by Manager to the Joint Account for overages and shortages, but Manager
shall be held accountable to non - Manager only for shortages due to lack of
reasonable care.
3. Special Inventories
Special inventories may be taken at the expense of a purchaser of a Party's
Periodic Inventory whenever there is any sale or change of interest in the Joint
Property; and it shall be the duty of the Participant selling to notify all
other Participants hereto as quickly as possible after the transfer of interest
takes place. In such cases, both the seller and the purchaser shall be
represented and shall be governed by the inventory so taken.
Exhibit B1 to Earn - in Agreement
Insurance
Page 2 of 2
EXHIBIT B1
INSURANCE
1. Manager as determined by the Management Committee shall maintain in the
names of the Participants the following types of insurance with limits of
liability as stated below and shall maintain insurance as required, as a
cost charged to the Earn - in Activities, at all times while performing the
operations for the benefit of the Participants. Upon written request by any
Participant, Manager shall provide certificates of insurance executed by
the insurance companies evidencing the insurance placed by Manager and
shall promptly deliver said certificates to said Participant. The
certificates procured by Manager shall provide that any major negative
change in or the cancellation of any coverages for which certificates are
issued shall not be valid as respects the certificate holder's interests
therein until the certificate holder has had at least thirty days' notice
in writing prior to such change or cancellation. Insurance provided by
Manager under subsection (a)(i), (a)(ii) and (a)(iii), below, shall contain
a waiver of subrogation in favor of the Participants, if such waiver is
available under such policies of insurance. Contractors and subcontractors
shall include the Participants as additional insureds, which inclusion
shall be shown on appropriate certificates.
--------------------------------------------------------------------------------------------------------------------------
COVERAGE MINIMUM LIMITS
--------------------------------------------------------------------------------------------------------------------------
(i) Workers' Compensation ("WC") and Employers' Liability WC - Statutory
("EL") Insurance, including Occupational disease. EL - $500,000
--------------------------------------------------------------------------------------------------------------------------
(ii) Business automobile liability insurance, including all $1,000,000 combined single limit per
owned, and hired vehicles; provided, if Rodeo Creek uses occurrence for bodily injury and property
non - owned vehicles, it shall first obtain coverage for such damage.
non - owned vehicles as part of the automobile liability
insurance policy or under a rider thereto.
--------------------------------------------------------------------------------------------------------------------------
(iii) Commercial general liability insurance including $5,000,000 combined single limit per
blanket contractual liability, personal injury, independent occurrence and in the annual aggregate for
contractors. bodily injury, personal injury and property
damage.
--------------------------------------------------------------------------------------------------------------------------
2. Manager shall cause all of Manager's Affiliates, contractors and
subcontractors to maintain Worker's Compensation Insurance as prescribed by
law, and to maintain Employer's Liability Insurance, Business Automobile
Liability Insurance in amounts equal to at least 10% of the amounts set
forth above, and Commercial general liability insurance with a combined
single limit of $1,000,000 and in the annual aggregate, at all times during
the performance of Operations by such Affiliates, contractors or
subcontractors.
Exhibit C to Earn - in Agreement
Form of Form of Quitclaim Deed and Assignment
Page 2 of 2
EXHIBIT C
FORM OF QUITCLAIM DEED AND ASSIGNMENT
RECORDING REQUESTED BY & RETURN TO:
Hecla Ventures Corp.
Land Records Department
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, XX 00000 - 8788
FORM OF QUITCLAIM DEED AND ASSIGNMENT
RodeoCreek Gold Inc. (hereinafter referred to as "Transferor"), a Nevada
corporation, whose address is C/O Xxxxxxx Xxxxxx, 260 - 0000 Xxxxxxxx Xxxxx,
Xxxx, Xxxxxx 00000, duly qualified to do business and in good standing in the
state of Nevada, in consideration of the sum of ten dollars ($10.00) and other
valuable consideration paid to Transferor by Hecla Ventures Corp., (hereinafter
referred to as "Transferee"), a Nevada corporation duly qualified to do business
and in good standing in the state of Nevada, whose address is 0000 Xxxxxxx
Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000 - 8788, the receipt of which is hereby
acknowledged by Transferor, hereby assigns and quitclaims to Transferee an
undivided fifty percent (50%) interest in all of the Transferor's interest in
the Properties described in Exhibit A to that Earn - in Agreement between
Transferor and Transferee dated __________, 2002 ("Property").
TO HAVE AND TO HOLD, all and singular the Property, together with the tenements,
hereditaments and appurtenances belonging thereto, or in anywise appertaining,
and the rents, issues and profits of such property all to Transferee and
Transferee's successors and permitted assigns forever.
IN WITNESS WHEREOF, Transferor has caused this Quitclaim Deed and Assignment to
be executed this _______ day of _________________, 2002.
TRANSFEROR:
RODEO CREEK GOLD INC.
By: NOT FOR SIGNATURE - FORM ONLY
Name:______________________________
Title:_____________________________
ACKNOWLEDGEMENT
CANADA )
)
Province of British Columbia )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 2002, by ___________________________________ the
_______________________ of Rodeo Creek Gold Inc., a Nevada corporation, on
behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public in and for the
Province of British Columbia
Residing at: ______________________
My Commission Expires: ____________
Exhibit D to Earn - in Agreement
Form of Memorandum of Agreement
Page 4 of 4
EXHIBIT D
FORM OF MEMORANDUM OF AGREEMENT
RECORDING REQUESTED BY & RETURN TO:
Hecla Ventures Corp.
Land Records Department
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, XX 00000 - 8788
FORM OF MEMORANDUM OF EARN - IN AGREEMENT
This Memorandum of Earn - in Agreement, effective the ___ day of _____________,
2002, is filed of record in accordance with the provisions contained in that
certain agreement of even date herewith known as the Ivanhoe Project - Hollister
Development Block Earn - in Agreement ("Earn - in Agreement"), wherein Hecla
Ventures Corp., a Nevada corporation, whose address is 0000 Xxxxxxx Xxxxx, Xxxxx
x'Xxxxx, Xxxxx 00000 - 8788 ("Hecla Ventures") entered into a mineral
exploration, development and mining arrangement with Rodeo Creek Gold Inc., a
Nevada corporation, whose address is C/O Xxxxxxx Xxxxxx, 260 - 0000 Xxxxxxxx
Xxxxx, Xxxx, XX 00000 ("Rodeo Creek"), for good and valuable consideration as
set forth in the provisions of the Earn - in Agreement, a copy of which is
available at the offices of the parties set forth above.
Under the terms of the Earn - in Agreement, Hecla Ventures is granted the right
to conduct activities including, without limitation, mineral exploration,
development, test mining and processing, and all other activities incident to or
arising therefrom, on or for the benefit of the properties held by Rodeo Creek
more specifically described in Exhibit A, attached hereto and incorporated
herein by this reference (referred to as the "Properties").
Upon completion of certain terms specified in the Earn - in Agreement and
payment of valuable consideration to Rodeo Creek, Hecla Ventures shall acquire
an immediate right to receive an undivided fifty percent (50%) interest in Rodeo
Creek's Properties, and both parties shall immediately contribute their
undivided interests in such properties to the purposes of a Joint Operating
Agreement, the form of which is attached as Exhibit F to the Earn - in
Agreement.
This Memorandum has been executed and filed of record solely to give the public
notice of the existence of the Earn - in Agreement. It does not in any way
amend, modify, revise, or replace the Earn - in Agreement.
IN WITNESS WHEREOF, the parties have executed this Memorandum effective as of
the date and year first above written.
HECLA VENTURES CORP. RODEO CREEK GOLD INC.
By: NOT FOR SIGNATURE - FORM ONLY By: NOT FOR SIGNATURE - FORM ONLY
______________________________ ______________________________
Print Name Print Name
Its:___________________________ Its:___________________________
Title Title
ACKNOWLEDGEMENTS
STATE OF IDAHO )
) ss.
County of Kootenai )
The foregoing instrument was acknowledged before me this ________ day of
_____________ 2002, by Xxxxxx X. Xxxxx, President of Hecla Ventures Corp., a
Nevada corporation, on behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public in and for the State of Idaho
Residing at: __________________________
My Commission Expires: _______________
CANADA )
)
Province of British Columbia)
The foregoing instrument was acknowledged before me this ______ day of
_______________, 2002, by ___________________________________ the
_______________________ of Rodeo Creek Gold Inc., a Nevada corporation, on
behalf of said corporation.
NOT FOR SIGNATURE - FORM ONLY
Notary Public in and for the
Province of British Columbia
Residing at: ______________________________
My Commission Expires: ___________________
Exhibit E to Earn - in Agreement
Expenditure Schedule and Initial Program & Budget
Page 13 of 14
EXHIBIT E
EXPENDITURE SCHEDULE AND INITIAL PROGRAM AND BUDGET
A. Warrant Commitments.
Subject to the right to terminate and to withdraw under Article VIII of the Earn
- in Agreement, Hecla Ventures issues Great Basin the following warrants to
purchase Hecla Common Stock:
Date of Hecla Mining Warrants Amount of Warrant Issuance
---------------------------------------------------------- -------------------------------------------------------
1. At signing ("Effective Date") of the Earn - in 2,000,000 two year warrants to purchase Hecla Mining
Agreement common stock ("Tranche 1")
2. On date Hecla Ventures elects to An additional 1,000,000 two year warrants to purchase
proceed with Stage II Activities or fund in lieu Hecla Mining common stock ("Tranche 2")
3. On date Hecla Ventures gives notice to Rodeo Creek An additional 1,000,000 two year warrants to purchase
that Stage II Earn - In Activities are complete or Hecla Mining common stock ("Tranche 3")
Hecla Ventures elects to fund Stage II in lieu.
Hecla Ventures shall issue to Great Basin the warrant certificate(s) dated as
per above within thirty (30) days of the date of the Warrant Agreement,
substantially in the form of Exhibit G hereto.
Upon receipt of each Tranche of Hecla Mining Warrants (as defined above) Great
Basin will issue to Hecla Ventures warrants to purchase shares in Great Basin
("Great Basin Warrants") as follows: 1) 1 million Great Basin two year Warrants
upon receipt of Tranche 1 Hecla Mining Warrants; 2) 500,000 Great Basin two year
Warrants upon receipt of Tranche 2 Hecla Mining Warrants; and 3) 500,000 Great
Basin two year Warrants upon receipt of Tranche 3 Hecla Mining Warrants. Great
Basin Warrants will be exercisable at the weighted average closing price for the
twenty (20) trading days on the Toronto Stock Exchange immediately prior to
issuance and done substantially in accordance with the form Warrant Agreement
attached hereto in Exhibit H, subject to Article V. B. Earn - in Activities. For
purposes of this Exhibit E and the Earn - in Agreement, "Earn - in Activities"
shall mean the following activities conducted in accordance with generally
accepted mining practices in the United States of America. Stage I o Plan,
engineer and permit (in an expeditious manner) scope of work
o Develop underground access to Gwenivere and Clementine veins including some
equipment purchases
o Delineate ore shoots within veins
o Convert resource to "measured and indicated" based on diamond core drilling
program
o Complete Feasibility Study to determine the scope of work to be
accomplished in Stage II and the overall feasibility of a mine project.
See attached Scope of Work for Details of Stage I Work. The estimated costs to
complete Stage I is $10,300,000 and the estimated time to complete is 12 months
after date of issuance of permit(s) (pursued in an expeditious manner on a best
efforts and diligent basis by Hecla Ventures), however, some permitting and
Stage I work Program Activities will run concurrently. Earn - In Activities to
commence on the Effective Date of this Agreement. If the actual costs of Stage I
exceed the Initial Budget, but are done in accordance with a revised and
approved Program and Budget, then such additional costs shall apply towards Earn
- In Expenditures as provided under Section 9.3, Programs and Budgets.
Stage II
o Possible future development loop of underground to surface
o Underground production development
o Production equipment
o Surface Facilities and Infrastructure
o Engineering, procurement and management construction
The estimated costs to complete Stage II are $11,500,000 and are estimated to
take approximately 12 months to complete. The total costs of Stage I and II are
estimated at $21,800,000. After completion of Stage II, the subject Properties
are essentially developed to the point of Commercial Production or where a
decision can be made whether they are capable of Commercial Production. Each
Party must notify the other within thirty (30) days after completion of Stage II
whether it elects to proceed.
C. Initial Program and Budget for Stage X.
XXXXXXXXX DEVELOPMENT BLOCK VENTURE - August 2, 2002
Stage 1 Exploration Program and Budget
US $
Permitting $ 200,000
Project Planning and Engineering
incl. in Management Services
Equipment and Facilities
Procurement and Prep 653,165
Mobilization 34,630
Drifting and Development
Ramping, Crosscutting and Diamond Drill
Stations - 5,780 ft 1,992,752
Drift on Vein - 2,200 ft 591,600
Raising on Veins 750 ft 366,200
Indirect Costs 2,580,040
Metallurgy 73,171
------------
Subtotal - Setup and Construction 6,491,558
Diamond Drilling - 40,000 ft 1,080,000
Management Services @ 7% 530,009
------------
Subtotal - Project 8,101,567
Contingencies
Ground support 350,000
Water handling 200,000
Environmental 25% of Forecast Permitting Cost 50,000
Equipment and Facilities 498,433
------------
Subtotal Project with Contingencies 9,200,000
Other
Bonding 1,000,000
Other Contingencies 100,000
------------
Total Estimated Stage I Costs $ 10,300,000
============
Notes:
1. Assumes an E.I.S. is not needed, that an E.A. is sufficient
2. Does not include Reclamation
3. Phase 2 (USD) = $21.8 m less $10.3 m = $11.5 m
Exhibit F to Earn - In Agreement
Joint Operating Agreement
Page 1 of 48
EXHIBIT F
JOINT OPERATING AGREEMENT
Exhibit G to Earn - In Agreement
Hecla Warrant Agreement
Page 9 of 11
EXHIBIT G
WARRANT AGREEMENT
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY SUCH APPLICABLE STATE LAWS.
HECLA MINING COMPANY
WARRANT CERTIFICATE TO PURCHASE
SHARES OF COMMON STOCK
Date of Issuance: _____________________, 200_ Certificate W - 1
FOR VALUE RECEIVED, Hecla Mining Company, a Delaware corporation (the
"Company"), hereby grants to Great Basin Gold Ltd. and/or its registered assigns
pursuant to Section 5 hereof (each, a "Registered Holder") the right to purchase
from the Company an aggregate of ________ of the Company's shares of common
stock, $0.25 par value per share ("Common Stock"), at a price per share of
$____, (the "Exercise Price") which price shall be the weighted average daily
closing price per share for the common stock of the Company for the twenty (20)
trading days immediately prior to the date of this Warrant Agreement, as
adjusted pursuant to Section 2 hereof.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Two Year Exercise Period. The Registered Holder may exercise, in whole or in
part, the purchase rights represented by this Warrant at any time and from time
to time during the two year period commencing on ____________, 200_ and ending
on ______________, 200_ (the "Exercise Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the Company has
received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below, executed
by the Registered Holder;
(b) this Warrant;
(c) an Assignment or Assignments in the form set forth in Exhibit I if the
Warrant is exercised by any Registered Holder other than Great Basin Gold Ltd.;
and
(d) a cashier's check or wire transfer to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price").
(ii) Certificates for Common Stock, if any, purchased upon exercise of this
Warrant shall be delivered by the Company to the Registered Holder within three
business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such three - day period, deliver
such new Warrant to the person designated for delivery in the Exercise
Agreement.
(iii) The shares of Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Registered Holder at the Exercise
Time, and the Registered Holder shall be deemed for all purposes to have become
the record holder of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for the Common Stock, if any, upon exercise of
this Warrant shall be made without charge to the Registered Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of Common Stock. Each
share of Common Stock issuable upon exercise of this Warrant shall, when issued,
be duly and validly issued and free from all taxes, liens and charges. The
company shall prepare and file at its expense a registration statement with the
United States Securities and Exchange Commission ("SEC") forthwith after
issuance hereof and use its reasonable best efforts to obtain SEC approval
thereof so that any Common Stock acquired by exercise hereof is freely tradeable
in the United States within four (4) months from the date of issuance of this
warrant. Until registration of such Common Stock, each certificate shall bear
the following legend:
The shares of common stock of Hecla Mining Company represented by this
certificate have been issued pursuant to an exemption from registration under
the Securities Act of 1933 and may not be resold without registration thereunder
or an exemption therefrom. The issuer may require an opinion of counsel
reasonably satisfactory to it to the effect that such an exemption is available
before permitting transfer of such shares.
(v) The Company shall assist and cooperate with any Registered Holder required
to make any governmental filings or obtain any governmental approvals prior to
or in connection with any exercise of this Warrant, without limitation, making
any filings required to be made by the Company.
(vi) The Company shall take all such actions as may be necessary to assure that
all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which securities of the Company or their equivalents
may be listed (except for official notice of issuance which shall be immediately
delivered by the Company upon such issuance).
(vii) Notwithstanding any other provision hereof, if an exercise of any portion
of this Warrant is to be made in connection with a registered public offering of
the Company, the sale of the Company or pursuant to Section 3 hereof, the
exercise of any portion of this Warrant may, at the election of the Registered
Holder hereof, be conditioned upon the consummation of the public offering, the
sale or the event referred to in the notice described in Section 3, in which
case such exercise shall not be deemed to be effective until the consummation of
such transaction.
1C. Exercise Agreement.
Upon any exercise of this Warrant, the Exercise Agreement shall be substantially
in the form set forth in Exhibit II hereto. If the number of shares of Common
Stock to be issued does not include all the Common Stock purchasable hereunder,
it shall also state the Registered Holder to whom a new Warrant for the
unexercised portion of the rights hereunder is to be delivered. Such Exercise
Agreement shall be dated the actual date of execution thereof.
Section 2. Adjustment of Exercise Price and Number of Shares of Common Stock.
In order to prevent dilution of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2, and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be subject to adjustment from time to time as
provided in this Section 2.
2A. Subdivision or Combination of Common Stock.
If the Company at any time subdivides (by any split, dividend, recapitalization
or otherwise) its outstanding Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be proportionately increased. If the Company at
any time combines (by reverse split or otherwise) its Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for the Common Stock is
referred to herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders of the Warrants representing a
majority of the Common Stock obtainable upon exercise of all Warrants then
outstanding) to insure the Registered Holder of the Warrant shall thereafter be
entitled to receive, upon exercise of this Warrant, the numbers or amount of
shares of stock, securities or assets resulting from such Organic Change that a
holder of the Common Stock deliverable upon exercise of this Warrant would have
been entitled to receive as a result of such Organic Change If the Warrant had
been exercised immediately before the effective date of such Organic Change. In
any such case, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders of the Warrants representing a
majority of the shares of Common Stock obtainable upon exercise of all Warrants
then outstanding) with respect to such holders' rights and interests to insure
that the provisions of this Section 2 and Sections 3 and 4 hereof shall
thereafter be applicable to the Warrant (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of the Exercise Price to the
value for the Common Stock reflected by the terms of such consolidation, merger
or sale, and a corresponding immediate adjustment in the number of shares of
Common Stock acquirable and receivable upon exercise of the Warrant, if the
value so reflected is less than the Exercise Price in effect immediately prior
to such consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the Registered Holders of Warrants
representing a majority of the shares of Common Stock obtainable upon exercise
of all of the Warrants then outstanding), the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2C. Certain Events.
If any event occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions, then the Company shall make
an appropriate adjustment in the Exercise Price and the number of shares of
Common Stock obtainable upon exercise of this Warrant so as to protect the
rights of the Registered Holders.
2D. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the Company shall
give written notice thereof to the Registered Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder at least 10
days prior to the date on which the Company intends to (A) make any pro rata
subscription offer to holders of Common Stock or (B) consummate any Organic
Change, dissolution or liquidation.
Section 3. Intention to Exercise.
If the Company gives a notice described in paragraph (ii) of Section 2D and the
Registered Holder informs the Company in writing within 10 days of receipt of
such notice that it intends to exercise the Warrant in whole or in part, the
Company shall not make or consummate the event described in such notice before
the earlier of (i) the completion of the exercise of the Warrant in whole or in
part or (ii) 30 days after the date the Registered Holder informs the Company of
its intention to exercise. If the event described in such notice is the
liquidation of the Company, whether or not the Registered Holder responds to
such notice, the Company shall pay to the Registered Holder the payment or
payments (net of the Exercise Price), if any, that would have been made to such
Registered Holder on the Common Stock had this Warrant been exercised in full
immediately prior to the liquidation.
Section 4. No Voting Rights; Limitations of Liability.
This Warrant shall not entitle the Registered Holder to any voting rights or
other rights as a holder of Common Stock in the Company. No provision hereof, in
the absence of affirmative action by the Registered Holder to purchase Common
Stock, and no enumeration herein of the rights or privileges of the Registered
Holder shall give rise to any liability of such holder for the Exercise Price of
Common Stock acquirable by exercise hereof or as a holder of a Common Stock in
the Company.
Section 5. Warrant Transferable.
This Warrant and all rights hereunder are not transferable, in whole or in part,
without the consent of the Company. Upon receipt of such consent, the Warrant
will be transferred without charge to the Registered Holder, upon surrender of
this Warrant with a properly executed Assignment (in the form of Exhibit I
hereto) at the principal office of the Company. As soon as practicable after the
transfer, the Company will prepare new Warrants for the assigning and new
Registered Holders, substantially identical hereto, but reflecting the number of
shares of Common Stock the assigning and new Registered Holders are entitled to
receive upon exercise of the applicable Warrant.
Section 6. Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the Registered Holder
at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants shall represent such portion of such rights as is designated by the
Registered Holder at the time of such surrender. The date the Company initially
issues this Warrant shall be deemed to be the "Date of Issuance" hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued. All
Warrants representing portions of the rights hereunder are referred to herein as
the "Warrant."
Section 7. Replacement.
Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of
the Registered Holder shall be satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any certificate evidencing this Warrant, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company (provided that if the holder is a
financial institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section 8. Notices.
Except as otherwise expressly provided herein, all notices referred to in this
Warrant shall be in writing and shall be delivered personally, sent by reputable
overnight courier service (charges prepaid) or sent by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so delivered or deposited in the U.S. Mail (i) to the Company, at its
principal executive offices and (ii) to the Registered Holder of this Warrant,
at such holder's address as it appears in the records of the Company (unless
otherwise indicated by any such holder).
Section 9. Amendment and Waiver.
Except as otherwise provided herein, the provisions of the Warrant may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Registered Holders of Warrants representing
a majority of the shares of Common Stock obtainable upon exercise of the
Warrants; provided that no such action may change the Exercise Price of the
Warrants or the number of shares or class of shares obtainable upon exercise of
each Warrant without the written consent of all of the Registered Holders of
Warrants.
Section 10. Descriptive Headings; Governing Law.
The descriptive headings of the several Sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The laws of the State of Delaware shall govern all issues concerning the
relative rights of the Company and its members and interpretation of this
Agreement.
Section 11. Voting of Shares.
So long as any Registered Holders and/or its affiliates ("Registered Holder
Group") hold, along or in the aggregate at least ten percent (10%) of the shares
of Common Stock issued to the Registered Holder Group upon exercise of this
Warrant, the Registered Holder Group agrees to vote all of the shares of Common
Stock held by the Registered Holder Group at any annual or special meeting of
the shareholders of the Company in accordance with the recommendations of the
Company's chief executive officer.
Section 12. Trading Limitation.
Except as otherwise permitted herein, the Registered Holder Group shall not,
individually or in the aggregate, dispose of more than fifty thousand (50,000)
share of Common Stock during any one trading day. In addition, so long as the
Registered Holder Group continues to hold at least twenty percent (20%) of the
shares of Common Stock issued upon exercise of this Warrant, the Registered
Holder Group shall provide the Company with reasonable advance notice of any
such sale of the shares of Common Stock. The Registered Holder Group shall not
be obligated to complete any sale of shares of Common Stock even if it has
provided the Company with advance written notice of such sale, but the
Registered Holder Group shall notify Company of its withdrawal of any shares of
Common Stock from the market with respect to which the Registered Holder Group
has provided prior notice of sale. Company shall notify the Registered Holder
Group of the pendency of a sale under any underwritten public offering by
Company of Common Stock or any other Company equity security, in which event the
Registered Holder Group shall not effect any sales of any shares of Common Stock
within five (5) days prior to the commencement of or during such underwritten
public offering. The Registered Holder Group shall have the right to sell any
amount of shares of Common Stock in a private transaction, provided that (i) any
such sale shall not be reported or reportable on any exchange or other public
market where shares of Common Stock are or may in future be traded, and (ii) the
purchaser in such private transaction agrees in writing that, for a period of
six (6) months from and after the date of such purchase and sale of shares of
Common Stock, such purchaser shall not sell any such shares of Common Stock. In
addition, the Registered Holder Group shall be permitted to pledge any number of
shares of Common Stock to an arm's - length lender to secure payment of a bona
fide loan or other indebtedness, subject to the terms hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the Date of Issuance
hereof.
HECLA MINING COMPANY
By: NOT FOR SIGNATURE - FORM ONLY
Name:
Title:
Exhibit G to Earn - in Agreement
Hecla Warrant Agreement
Page 10 of 11
EXHIBIT I TO WARRANT AGREEMENT
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W - _____________) with respect to the number of shares of
Common Stock covered thereby set forth below, unto:
Names of Assignee Address Number of Shares
Dated: Signature NOT FOR SIGNATURE - FORM ONLY
Witness ________________________________
Exhibit G to Earn - In Agreement
Hecla Warrant Agreement
Page 11 of 11
EXHIBIT II TO WARRANT AGREEMENT
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W - ___________), hereby agrees to subscribe for the purchase
of __________ shares of Common Stock covered by such Warrant and makes payment
herewith in full therefore at the price per share provided by such Warrant. If
any new Warrant will be prepared under Section 1B(ii) of the Warrant, please
deliver it to _________, a Registered Holder.
Signature NOT FOR SIGNATURE - FORM ONLY
Address _______________________________
Exhibit H to the Earn - in Agreement
Great Basin Warrant
Page 7 of 11
Exhibit H to the Earn - in Agreement
Great Basin Warrant
Page 1 of 11
EXHIBIT H
WARRANT AGREEMENT
WITHOUT THE PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE
WITH ALL APPLICABLE SECURITIES LEGISLATION, THE COMMON SHARES, WHICH MAY BE
ACQUIRED ON EXERCISE OF THESE WARRANTS, MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE
EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT
UNTIL __, 2002. [FOUR MONTHS]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF THE ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT IF APPLICABLE, (C)
INSIDE THE UNITED STATES (1) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (2) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR
ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF
SECURITIES, AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE ISSUER AN
OPINION OF COUNSEL.
Date of Issuance: _____________________, 2002
Warrant Certificate Number: W - __
GREAT BASIN GOLD LTD.
Suite 1020 - 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Telephone: (604) 684 - 6365 Fax: (604) 684 - 8092
WARRANT CERTIFICATE TO PURCHASE ___________
SHARES OF COMMON STOCK
THE RIGHT TO PURCHASE COMMON SHARES UNDER THIS WARRANT EXPIRES AT 5:00 P.M.
(VANCOUVER TIME) ON __, 2004 (THE "EXPIRY DATE").
ANY SHARES ACQUIRED BY EXERCISE PRIOR TO __, 2002 WILL BE SUBJECT TO RESALE
RESTRICTIONS IN CANADA UNTIL THAT DATE AND WILL BEAR A LEGEND TO THIS EFFECT.
FOR VALUE RECEIVED, Great Basin Gold Ltd., a British Columbia corporation (the
"Company"), hereby grants to Hecla Ventures Corp. (the "Registered Holder") the
right to purchase from the Company ___ of the Company's shares of common stock
("Common Stock"), at a price per share of $____, which price is the weighted
average daily closing price per share for the common stock of the Company for
the twenty (20) trading days immediately prior to the Date of this Warrant. This
Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Two Year Exercise Period. The Registered Holder may exercise, in whole or in
part, the purchase rights represented by this Warrant at any time and from time
to time during the two year time period commencing on ____________, 200_ and
ending on _________________, 200_ (the "Exercise Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised at the time when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below, executed
by the Registered Holder;
(b) this Warrant; and
(c) a cashier's or certified check or wire transfer to the Company in an amount
equal to the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise (the "Aggregate Exercise
Price").
(ii) Certificates for Common Stock, if any, purchased upon exercise of this
Warrant shall be delivered by the Company to the Registered Holder within three
business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such three - day period, deliver
such new Warrant to the person designated for delivery in the Exercise
Agreement.
(iii) The shares of Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Registered Holder at the Exercise
Time, and the Registered Holder shall be deemed for all purposes to have become
the record holder of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for the Common Stock, if any, upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Common
Stock. Each share of Common Stock issuable upon exercise of this Warrant shall,
when issued, be duly and validly issued and free from all taxes, liens and
charges.
(v) The Company shall assist and cooperate with any Registered Holder required
to make any governmental filings or obtain any governmental approvals prior to
or in connection with any exercise of this Warrant (including, without
limitation, making any filings required to be made by the Company) including
prompt notice and application to list any Common Shares issuable on exercise
hereof on the TSX Venture Exchange. . Any Common Stock acquired by exercise
hereof is freely tradeable in Canada after four (4) months from the date of
issuance of this warrant. Until the expiry of such four (4) month period, all
certificates of Common Stock issued to Registered Holder by Exercise of its
rights hereunder shall bear the following legend:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE ___, 2002.
WITHOUT THE PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE
WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL ___, 2002.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF THE ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT IF APPLICABLE, (C)
INSIDE THE UNITED STATES (1) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (2) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR
ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF
SECURITIES, AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE ISSUER AN
OPINION OF COUNSEL.
(vi) The Company shall take all such actions as may be necessary to assure that
all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which securities of the Company or their equivalents
may be listed (except for official notice of issuance which shall be immediately
delivered by the Company upon such issuance). The Company shall file a
qualifying issuer certificate with the TSX Venture Exchange within ten (10) days
after the Date of Issuance for each Warrant Certificate issued hereunder and
take other actions as required by applicable law to make such shares of Common
Stock freely tradeable through the TSX Venture after the four (4) month holding
period set forth in paragraph 1B(v) herein above.
1C. Exercise Agreement.
Upon any exercise of this Warrant, the Exercise Agreement shall be substantially
in the form set forth in Exhibit I hereto, except that if the Common Stock is
not to be issued in the name of the person in whose name this Warrant is
registered, the Exercise Agreement shall also state the name of the person to
whom the Common Stock is to be issued. Such Exercise Agreement shall be dated
the actual date of execution thereof.
Section 2. Adjustment of Exercise Price and Number of Shares of Common Stock.
In order to prevent dilution of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2, and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be subject to adjustment from time to time as
provided in this Section 2.
2A. Subdivision or Combination of Common Stock.
If the Company at any time subdivides (by any split, dividend, recapitalization
or otherwise) its outstanding Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be proportionately increased. If the Company at
any time combines (by reverse split or otherwise) its Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for the Common Stock is
referred to herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the Registered Holders of the Warrants representing a
majority of the Common Stock obtainable upon exercise of all Warrants then
outstanding) to insure that each of the Registered Holders of the Warrants shall
thereafter have the right to acquire and receive, in lieu of or addition to (as
the case may be) the number of shares Common Stock immediately theretofore
acquirable and receivable upon the exercise of such holder's Warrant, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of such holder's Warrant had
such Organic Change not taken place. In any such case, the Company shall make
appropriate provision (in form and substance satisfactory to the Registered
Holders of the Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of all Warrants then outstanding) with respect to such
holders' rights and interests to insure that the provisions of this Section 2
and Sections 3 and 4 hereof shall thereafter be applicable to the Warrants
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon exercise of the Warrants, if the value so reflected is less than the
Exercise Price in effect immediately prior to such consolidation, merger or
sale). The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance satisfactory to
the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of all of the Warrants then outstanding),
the obligation to deliver to each such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
2C. Certain Events.
If any event occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions, then the Company's management
shall make an appropriate adjustment in the Exercise Price and the number of
shares of Common Stock obtainable upon exercise of this Warrant so as to protect
the rights of the holders of the Warrants.
2D. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the Company shall
give written notice thereof to the Registered Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder at least 10
days prior to the date on which the Company intends to (A) make any pro rata
subscription offer to holders of Common Stock or (B) consummate any Organic
Change, dissolution or liquidation.
Section 3. Intention to Exercise.
If the Company gives a notice described in paragraph (ii) of Section 2D and the
Registered Holder informs the Company in writing within 10 days of receipt of
such notice that it intends to exercise the Warrant in whole or in part, the
Company shall not make or consummate the event described in such notice before
the earlier of (i) the completion of the exercise of the Warrant in whole or in
part or (ii) 30 days after the date the Registered Holder informs the Company of
its intention to exercise. If the event described in such notice is the
liquidation of the Company, whether or not the Registered Holder responds to
such notice, the Company shall pay to the Registered Holder the payment or
payments (net of the Exercise Price), if any, that would have been made to such
Registered Holder on the Common Stock had this Warrant been exercised in full
immediately prior to the liquidation.
Section 4. No Voting Rights; Limitations of Liability.
This Warrant shall not entitle the holder hereof to any voting rights or other
rights as a holder of Common Stock in the Company. No provision hereof, in the
absence of affirmative action by the Registered Holder to purchase Common Stock,
and no enumeration herein of the rights or privileges of the Registered Holder
shall give rise to any liability of such holder for the Exercise Price of Common
Stock acquirable by exercise hereof or as a holder of a Common Stock in the
Company.
Section 5. Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable by the Registered Holder, upon the surrender hereof
by the Registered Holder at the principal office of the Company, for new
Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion of such
rights as is designated by the Registered Holder at the time of such surrender.
The date the Company initially issues this Warrant shall be deemed to be the
"Date of Issuance" hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued. These Warrants are non - transferable, except with the
consent of the TSX Venture. All Warrants representing portions of the rights
hereunder are referred to herein as the "Warrants."
Section 6. Replacement.
Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of
the Registered Holder shall be satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any certificate evidencing this Warrant, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company (provided that if the holder is a
financial institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section 7. Notices.
Except as otherwise expressly provided herein, all notices referred to in this
Warrant shall be in writing and shall be delivered personally, sent by reputable
overnight courier service (charges prepaid) or sent by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so delivered or deposited in the mail (i) to the Company, at its
principal executive offices and (ii) to the Registered Holder of this Warrant,
at such holder's address as it appears in the records of the Company (unless
otherwise indicated by any such holder).
Section 8. Amendment and Waiver.
Except as otherwise provided herein, the provisions of the Warrants may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Registered Holders of Warrants representing
a majority of the shares of Common Stock obtainable upon exercise of the
Warrants; provided that no such action may change the Exercise Price of the
Warrants or the number of shares or class of shares obtainable upon exercise of
each Warrant without the written consent of all of the Registered Holders of
Warrants.
Section 9. Descriptive Headings; Governing Law.
The descriptive headings of the several Sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The laws of the Province of British Columbia shall govern all issues concerning
the relative rights of the Company and its members and interpretation of this
Agreement. This warrant and all rights pertaining hereto may not be transferred
by the registered holder without the consent of the TSX Venture Exchange.
Section 10. Voting of Shares.
So long as Registered Holder holds at least ten percent (10%) of the Shares
issued to Registered Holder under this Agreement, Registered Holder Agrees to
vote all of the Shares held by Registered Holder at any annual or special
meeting of shareholder in accordance with the recommendations of the Company's
chief executive officer.
Section 11. Trading Limitation.
Except as otherwise permitted herein, the Registered Holder shall not, in the
aggregate, dispose of more than twenty - five thousand (25,000) of the Great
Basin Shares during any one trading day. In addition, so long as the Registered
Holder continues to hold at least twenty percent (20%) of the Great Basin Shares
held by it upon consummation of the transactions contemplated by this Agreement,
the Registered Holder shall provide the Company with reasonable advance notice
of any such sale of the Great Basin Shares. The Registered Holder shall not be
obligated to complete any sale of Great Basin shares even if it has provided the
Company with advance written notice of such sale, but Registered Holder shall
notify Company of its withdrawal of any Great Basin Shares from the market with
respect to which Registered Holder of the pendency of a sale under any
underwritten public offering by Company of company's common stock or any other
Company equity security, in which event the Registered Holder shall not effect
any sales of any Great Basin Shares within Five (5) days prior to the
commencement of or during such underwritten public offering. The Registered
Holder shall have the right to sell any amount of Great Basin Shares in a
private transaction, provided that (i) any such sale shall not be reported or
reportable on any exchange or other public market where shares of Company are or
may in future be traded, and (ii) the Buyer in such private transaction agrees
in writing that, for a period of six (6) months from and after the date of such
purchase and sale of Great Basin Shares, such Buyer shall not sell any such
Great Basin Shares. In addition, the Registered Holder shall be permitted to
pledge any number of Great Basin Shares to an arm's length lender to secure
payment of a bona fide loan or other indebtedness, subject to the terms hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the Date of Issuance
hereof.
GREAT BASIN GOLD LTD.
By:
Name:
Title:
EXHIBIT I TO WARRANT AGREEMENT
EXERCISE AGREEMENT
To: GREAT BASIN GOLD LTD.
Suite 1020 - 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Telephone: (604) 684 - 6365 - Fax: (604) 684 - 8092
Dated:
The undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W - ___________), hereby agrees to subscribe for the purchase
of __________ shares of Common Stock covered by such Warrant and makes payment
herewith in full therefore at the price per share provided by such Warrant. The
shares shall be issued in the name of and delivered as described beneath the
signature of the authorized signatory of the warrant holder below. The shares
shall bear the legends referred to in the Warrant. Signature Name Address
