EXHIBIT 10.16
APPLIED GEOLOGIC STUDIES, INC.
0000 Xxxx Xxxxxx
Xxxxx #0
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
May 20, 1994
Xx. Xxxx Xxxx, VP, Minerals Exploration
St. Xxxx Minerals, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Dear Xxxx:
As per our recent phone call, I am herein describing terms of an Agreement,
which if affirmed by your signature, will result in our passing onto you and
your company information on an interesting "copper-oxide" prospect
(prospect), located on claimed land in New Mexico.
The prospect was encountered during a comprehensive review of leachable
copper reserves in the Southwestern U.S. The prospect was explored (luring
the porphyry copper era by a couple of majors, however, was not in itself big
enough for their further interest. We estimate that there may be upward to
20-25 million tons of low-grade exotic copper with a possible core area of
0.5% or better. According to a call made to the owner last year, the prospect
was open for option negotiations.
Agreement to the following terms would make this prospect and our in-house
data available to you.
1. St. Xxxx Minerals, Inc. (St. Xxxx) would have 60 days from date of
disclosure of prospect data to accept or reject the prospect. If rejected,
St. Xxxx shall submit in writing this rejection and agrees that it and any of
its officers, employees, agents, representatives or consultants for a period
of three (3) years from the date of rejection letter, shall not acquire or
attempt to acquire any interest in the prospect or any property within a mile
limit outside the boundaries of the prospect (Area to be defined on map with
data). Furthermore, St. Xxxx shall keep all data on the prospect strictly
confidential for the 3-year period.
2. If the prospect is accepted, St. Xxxx agrees to pay Applied Geologic
Studies, Inc (AGS) a discovery bonus amounting to $100,000. The bonus shall
be paid as follows:
a. $5,000 at time of land acquisition in prospect area, or in any area
within a mile limit outside the prospect's boundaries.
b. Five percent (5%) of total direct exploration expenditures made for
benefit of the prospect, exclusive of land costs. Expenditures would include
geologic work, geochemistry, geophysics, assay, drilling and costs related to
mine feasibility studies or mine development. These payments would be made
annually.
c. Any balance (not to exceed $100,000), shall be paid at time of
decision to put the prospect into mine production.
3. In the event that St. Xxxx conveys its interest in the prospect to
another party, it will require such party to expressly assume in writing St.
Mary's obligation to make the above payments; whereupon, St. Mary's further
obligations under this Agreement shall cease. If St. Xxxx surrenders its
interest in the prospect, or if St. Mary's rights in the property expire or
terminates in any other way, it's obligations to make further payments under
this Agreement shall immediately cease.
If you are in agreement with the terms set forth above,
please indicate by executing both copies of the Agreement and
returning one signed copy to me.
Sincerely,
/s/ Xxxxxxx X. Xxxxxx
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Xx. Xxxxxxx X. Xxxxxx
Pres. AGS Inc.
Accepted by me this the 23rd day of May, 1994
/s/ [ILLEGIBLE]
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Signature of Company Representative
