Mining Lease and Option to Purchase Agreement
This Mining Lease and Option to Purchase Agreement ("Agreement") is
made and entered into by and between ▇▇▇▇ ▇▇▇▇▇▇, doing business as ▇▇▇▇▇▇
Exploration, and ▇▇▇▇▇ ▇▇▇▇▇▇ (collectively "Owner"), and Tornado Gold
International Corp., a Nevada corporation ("TOGI").
Recitals
A. Owner owns the unpatented mining claims situated in Lander County,
Nevada, more particularly described in Exhibit A attached to and by this
reference incorporated in this Agreement (collectively the "Property").
B. Owner desires to lease the Property to TOGI and to grant to TOGI the
option to acquire ownership of the Property.
Now, therefore, in consideration of their mutual promises, the parties
agree as follows:
1. DEFINITIONS. The following defined terms, wherever used in this Agreement,
shall have the meanings described below:
1.1 "Area of Interest" means the geographic area within two (2) miles from
the exterior boundaries of the Property on the Effective Date.
1.2 "Closing Date" means the date on which TOGI's purchase of the Property
is closed in accordance with Section 5.
1.3 "Effective Date" means February 5, 2004.
1.4 "Governmental Regulations" means all directives, laws, orders,
ordinances, regulations and statutes of any federal, state or local agency,
court or office.
1.5 "Interest Rate" means the prime interest rate established by the
Department of Business and Industry of the State of Nevada plus two percent (2%)
per annum.
1.6 "Lease Year" means each one (1) year period following the Effective
Date and each anniversary of the Effective Date.
1.7 "Minerals" means all minerals and mineral materials, including gold,
silver, platinum and platinum group metals, base metals (including antimony,
chromium, cobalt, copper, lead, manganese, mercury, nickel, molybdenum,
titanium, tungsten, zinc), and other metals and mineral materials which are on,
in or under the Property.
1.8 "Minimum Payments" means the minimum payments payable by TOGI in
accordance with Section 4.1.
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1.9 "Net Smelter Returns" means the net smelter returns from the production
of Minerals from the Property as calculated and determined in accordance with
Exhibit 1 attached to and part of Exhibit B attached to and part of the
conveyance to be executed and delivered in accordance with Section 5.5.
1.10 "Option" means the option granted by Owner to TOGI to acquire
ownership of the Property.
1.11 "Owner" means collectively ▇▇▇▇ ▇▇▇▇▇▇, doing business as ▇▇▇▇▇▇
Exploration, and ▇▇▇▇▇ ▇▇▇▇▇▇, and Owner's heirs, successors and assigns.
1.12 "Property" means the unpatented mining claims described in Exhibit A,
plus any additional unpatented mining claims which are made subject to this
Agreement in accordance with its terms.
1.13 "Purchase Price" means the purchase price for the Property described
in Section 5.
1.14 "Royalty" means the production royalty payable by TOGI to Owner in
accordance with Section 4.2.
1.15 "TOGI" means and Tornado Gold International Corp., a Nevada
corporation, and its successors and assigns.
2. LEASE AND GRANT OF RIGHTS. Owner leases the Property to TOGI and grants TOGI
the rights and privileges described in this Section.
2.1 LEASE. Owner leases the Property to TOGI for the purposes of
exploration for Minerals, provided, however, that TOGI shall have no right to
construct, develop or operate a mine on the Property without first having
exercised and closed the Option.
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2.2 WATER RIGHTS. Subject to the regulations of the State of Nevada
concerning the appropriation and taking of water, TOGI shall have the right to
appropriate and use water, to drill ▇▇▇▇▇ for the water on the Property and to
lay and maintain all necessary water lines as may be required by TOGI in its
operations on the Property. On termination of this Agreement, except on TOGI's
exercise and closing of the Option, TOGI shall assign and convey to Owner all
permits and water rights appurtenant to the Property which are acquired by TOGI
during the term of this Agreement. If TOGI exercises and closes the Option,
Owner shall assign and convey to TOGI all permits and water rights appurtenant
to the Property.
3. TERM. The initial term of this Agreement shall commence on the Effective Date
and shall expire twenty (20) years after the Effective Date, unless this
Agreement is sooner terminated, canceled or extended. Owner grants to TOGI and
TOGI shall have the option and right to extend the term of this Agreement for
additional extension terms of one (1) year each on the express condition that
TOGI is conducting exploration, development or mining activities on the Property
at the expiration of the term immediately preceding the proposed extension term
and TOGI is current in its performance of all of its obligations under this
Agreement, including, expressly, TOGI's payment obligations.
4. PAYMENTS. TOGI shall make the following payments to Owner:
4.1 MINIMUM PAYMENTS. On the dates described below, TOGI shall pay to Owner
the sums ("Minimum Payments") described below:
Date Payment Amount
April 15, 2005 $22,500.00
Second anniversary of the Effective Date 30,000.00
Third anniversary of the Effective Date 37,500.00
Fourth anniversary of the Effective Date 50,000.00
Fifth anniversary of the Effective Date 62,500.00
Sixth anniversary of the Effective Date and on 100,000.00
each subsequent anniversary of the Effective Date
The Minimum Payments which are paid after the fourth anniversary of the
Effective Date and completion of a bankable positive feasibility study for the
development of a mine on the Property shall constitute advance payments of the
Royalty and shall be credited in TOGI's favor against its Royalty payment
obligations.
4.2 PRODUCTION ROYALTY. TOGI shall pay to Owner a production royalty based
on the Net Smelter Returns from the production or sale of Minerals from the
Property. The Royalty percentage rate for the Property shall be four percent
(4%) of the Net Smelter Returns. The Royalty percentage rate for the production
of Minerals from any unpatented mining claims located by TOGI or Owner outside
the exterior boundaries of the Property and within the Area of Interest shall be
four percent (4%) of the Net Smelter Returns and the Royalty percentage rate for
the production of Minerals from any mineral rights, mining claims outside the
exterior boundaries of the Property and within the Area of Interest which TOGI
acquires from any third party shall be one percent (1%) of the Net Smelter
Returns (the "Area of Interest Royalty").
TOGI shall have the option to acquire the royalty (the "Royalty
Option") in accordance with Section. TOGI shall have the option to purchase
one-half (1/2) of the Royalty applicable to the Property representing two
percent (2%) of the Net Smelter Returns. TOGI shall have the right to elect to
purchase such part of the Royalty in increments representing one percent (1%) of
the Net Smelter Returns and the purchase price for each such increment shall be
One Million Five Hundred Thousand Dollars ($1,500,000). TOGI shall have the
option to purchase one-half (1/2) of the Area of Interest Royalty applicable to
mineral rights, mining claims and properties which TOGI acquires from third
parties representing one-half percent (.5%) of the Net Smelter Returns. The
purchase price for such part of the Area of Interest Royalty shall be Five
Hundred Thousand Dollars ($500,000) for the one-half percent (.5%) of the Area
of Interest Royalty applicable to mineral rights, mining claims and properties
which TOGI acquires from any third party.
4.3 METHOD OF PAYMENT. Except as otherwise provided in this Agreement, all
payments by TOGI to Owner shall be paid by check delivered to Owner at its
address for notice purposes or by wire transfer to an account designated by
Owner. TOGI shall be obligated to deliver a single check or payment and shall
have no liability or responsibility for allocation of the payment among the
members of Owner.
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4.4 INTEREST. If any Minimum Payment or other amount payable by TOGI
remains delinquent for a period in excess of thirty (30) days, TOGI shall pay to
Owner interest from and after the due date at the Interest Rate.
4.5 CURRENCY. All sums referred to in this Agreement are in United States
currency.
5. OPTION. Owner grants to TOGI the exclusive right to acquire ownership of the
Property, subject to the Royalty reserved by Owner and subject to TOGI's
obligations under the conveyance executed and delivered by Owner on the closing
of the Option. TOGI may exercise the Option at any time after: (a) TOGI has paid
to Owner Minimum Payments in the sum of One Hundred Five Thousand Dollars
($105,000); and (b) TOGI has completed a bankable positive feasibility study for
the development of a mine on the Property and TOGI has provided to Owner a copy
of the positive bankable feasibility study. TOGI may exercise the Royalty Option
at any time before TOGI completes a bankable positive feasibility study for the
development of a mine on the Property and has provided to Owner a copy of the
bankable positive feasibility study, provided, however, that if TOGI does not
exercise the Royalty Option, the Royalty Option shall be terminated and of no
effect.
5.1 NOTICE OF ELECTION. If TOGI elects to exercise the Option, TOGI shall
deliver written notice to Owner. On Owner's receipt of TOGI's notice of exercise
of the Option, the parties shall make diligent efforts to close the conveyance
of the Property, as applicable, within thirty (30) days after Owner's delivery
of the notice.
5.2 REAL PROPERTY TRANSFER TAXES. TOGI shall pay the real property transfer
taxes, if any, the costs of escrow and all recording costs incurred in closing
of the Option. The parties acknowledge that there are presently no real property
transfer taxes assessed on the transfer of title to unpatented mining claims,
including the unpatented mining claims which constitute the Property.
5.3 PRORATION OF TAXES. Payment of any and all state and local real
property and personal property taxes levied on the Property and not otherwise
provided for in this Agreement shall be prorated between the parties as of the
closing of any transaction on the basis of a thirty (30) day month. The parties
acknowledge that there are presently no real property taxes assessed against
unpatented mining claims, including the unpatented mining claims which
constitute the
Property.
5.4 PAYMENT ON CLOSING. On closing of the Option, TOGI shall pay the
Purchase Price to Owner, in cash or by wire transfer to an account designated by
Owner.
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5.5 CONVEYANCE ON CLOSING. If TOGI exercises and closes the Option, Owner
shall execute and deliver to TOGI a conveyance of the Property in the form of
Exhibit B attached to and by this reference incorporated in this Agreement. On
the closing of the Option, the parties shall complete the conveyance by (a)
inserting the description of all of the unpatented mining claims which comprise
the Property on closing of the Option; (b) inserting the Royalty percentage
rates which shall be taken from Section 4.2 of this Agreement, unless on
exercise of the Option TOGI exercises and closes the Royalty Option, in which
case the Royalty percentage rates as reduced shall be inserted in the
conveyance; and (c) inserting the schedule of Minimum Payments applicable after
the closing of the Option. The execution, delivery and recording of the
conveyance shall not constitute a merger of TOGI's obligations under this
Agreement which shall survive the closing of the Option, specifically, the
obligations expressly stated in the conveyance and TOGI's obligations which
accrue, but are not fully performed, before the closing of the Option, including
the obligations under Sections 4.1, 6, 7.3, 9, 10, 11, 12, 13 and 22 of this
Agreement. Owner and TOGI shall execute and deliver such other written
assurances and instruments as are reasonably necessary for the purpose of
closing the purchase of the Property.
5.6 EFFECT OF CLOSING. On closing of the Option, TOGI shall own the
Property, subject to the Royalty reserved by Owner and TOGI's obligations stated
in the conveyance of the Property and this Agreement shall terminate.
6. COMPLIANCE WITH THE LAW. TOGI shall, at TOGI's sole cost, promptly comply
with all Governmental Regulations relating to the condition, use or occupancy of
the Property by TOGI, including but not limited to all exploration and
development work performed by TOGI during the term of this Agreement. TOGI
shall, at its sole cost, promptly comply with all applicable Governmental
Regulations regarding reclamation of the Property and TOGI shall defend,
indemnify and hold harmless Owner from any and all actions, assessments, claims,
costs, fines, liability and penalties arising from or relating to TOGI's failure
to comply with any applicable Governmental Regulations. Owner agrees to
cooperate with TOGI in TOGI's application for governmental licenses, permits and
approvals, the costs of which shall be borne by TOGI.
7. TOGI's WORK PRACTICES AND REPORTING.
7.1 WORK PRACTICES. TOGI shall work the Property in a miner-like fashion.
7.2 Inspection of Data. During the term of this Agreement, Owner shall have
the right to examine and make copies of all data, including interpretative data,
regarding the Property in TOGI's possession during reasonable business hours and
upon prior notice, provided, however, that the rights of Owner to examine such
data shall be exercised in a manner that does not interfere with the operations
of TOGI.
7.3 REPORTS. On or before March 1 following each Lease Year during which
this Agreement is effective, TOGI shall deliver to Owner a report of all of
TOGI's activities conducted on the Property for the previous calendar year.
8. ScOPE OF AGREEMENT. This Agreement shall extend to and include the unpatented
mining claims described in Exhibit A attached to this Agreement and in the
exhibits which are part of this Agreement, and all other interests, mining
claims and property rights made part of and subject to this Agreement in
accordance with this Section. All unpatented mining claims located by Owner or
TOGI which are partially or wholly in the Area of Interest shall be located for
Owner's benefit and shall be part of and subject to this Agreement. If a party
locates any unpatented mining claims in the Area of Interest, the locator shall
promptly notify the other party. The parties shall execute and deliver an
amendment of this Agreement, in recordable form, which provides that the newly
located unpatented mining claims are part of the Property and are subject to
this Agreement. The amendment may be recorded by either party.
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9. LIENS AND NOTICES OF NON-RESPONSIBILITY. TOGI agrees to keep the Property at
all times free and clear of all liens, charges and encumbrances of any and every
nature and description done made or caused by TOGI, and to pay, and defend,
indemnify and hold harmless Owner from and against, all indebtedness and
liabilities incurred by or for TOGI which may or might become a lien, charge or
encumbrance; except that TOGI need not discharge or release any such lien,
charge or encumbrance so long as TOGI disputes or contests the lien, charge or
encumbrance or posts a bond sufficient to discharge lien acceptable to Owner.
Subject to TOGI's right to dispute or contest the lien, charge or encumbrance or
to post a bond in accordance with the foregoing, if TOGI does not within thirty
(30) days following the imposition of any such lien, charge or encumbrance,
cause the same to be released of record, Owner shall have, in addition to
Owner's contractual and legal remedies, the right, but not the obligation, to
cause the lien to be released by such manner as Owner deems proper, including
payment of the claim giving rise to such lien, charge or encumbrance. All sums
paid by Owner for and all expenses incurred by it in connection with such
purpose, including court costs and attorney's fees, shall be payable by TOGI to
Owner on demand with interest at the Interest Rate. Nothing in this Section
shall prohibit TOGI's grant of a lien or security interest in this Agreement to
secure financing for its operations on or relating to the Property.
10. TAXES.
10.1 REAL PROPERTY TAXES. Owner shall pay any and all taxes assessed and
due against the Property before execution of this Agreement. TOGI shall pay
promptly before delinquency all taxes and assessments, general, special,
ordinary and extraordinary, that may be levied or assessed during the term of
this Agreement upon the Property. All such taxes for the year in which this
Agreement is executed and for the year in which this Agreement terminates shall
be prorated between Owner and TOGI, except that neither Owner nor TOGI shall be
responsible for the payment of any taxes which are based upon income, net
proceeds, production or revenues from the Property assessed solely to the other
party. The parties acknowledge that there are presently no real property taxes
assessed against unpatented mining claims, including the unpatented mining
claims which constitute the Property.
10.2 PERSONAL PROPERTY TAXES. Each party shall promptly when due pay all
taxes assessed against such party's personal property, improvements or
structures placed or used on the Property.
10.3 INCOME TAXES. Owner shall not be liable for any taxes levied on or
measured by income or net proceeds, or other taxes applicable to TOGI, based
upon payments under this Agreement or under the conveyance executed and
delivered by Owner on the Closing of the Option.
10.4 DELIVERY OF TAX NOTICES. If Owner receives tax bills or claims which
are TOGI's responsibility, Owner shall promptly forward them to TOGI for
payment.
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11. INSURANCE AND INDEMNITY.
11.1 TOGI's LIABILITY INSURANCE. TOGI shall, at TOGI's sole cost, keep in
force during this Agreement term a policy of commercial general liability
insurance covering property damage and liability for personal injury occurring
on or about the Property, with limits in the amount of at least One Million
Dollars ($1,000,000) per occurrence for injuries to or death of any person.
11.2 WAIVER OF SUBROGATION. TOGI and Owner each waives any and all rights
of recovery against the other, and against the partners, members, officers,
employees, agents and representatives of the other, for loss of or damage to the
Property or injury to person to the extent such damage or injury is covered by
proceeds received under any insurance policy carried by Owner or TOGI and in
force at the time of such loss or damage.
11.3 WAIVER AND INDEMNIFICATION. Owner shall not be liable to TOGI and TOGI
waives all claims against Owner for any injury to or death of any person or
damage to or destruction of any personal property or equipment or theft of
property occurring on or about the Property or arising from or relating to
TOGI's business conducted on the Property. TOGI shall defend, indemnify and hold
harmless Owner and its members, officers, directors, agents and employees from
and against any and all claims, judgments, damage, demands, losses, expenses,
costs or liability arising in connection with injury to person or property from
any activity, work, or things done, permitted or suffered by TOGI or TOGI's
agents, partners, servants, employees, invitees or contractors on or about the
Property.
12. ENVIRONMENTAL.
12.1 DEFINITIONS. Hazardous Materials means any material, waste, chemical,
mixture or byproduct which: (a) is or is subsequently defined, listed, or
designated under Applicable Environmental Laws (defined below) as a pollutant,
or as a contaminant, or as toxic or hazardous; or (b) is harmful to or threatens
to harm public health, safety, ecology, or the environment and which is or
hereafter becomes subject to regulation by any federal, state or local
governmental authority or agency. Applicable Environmental Laws means any
applicable federal, state, or local government law (including common law),
statute, rule, regulation, ordinance, permit, license, requirement, agreement or
approval, or any applicable determination, judgment, injunction, directive,
prohibition or order of any governmental authority with jurisdiction at any
level of federal, state, or local government, relating to pollution or
protection of the environment, ecology, natural resources, or public health or
safety.
12.2 TOGI HAZARDOUS MATERIAL ACTIVITIES. TOGI shall limit any use,
generation, storage, treatment, transportation, and handling of Hazardous
Materials in connection with TOGI's use of the Property (collectively "TOGI
Hazardous Materials Activities") to those Hazardous Materials, and to quantities
of them, that are necessary to perform activities permitted under this
Agreement. TOGI Hazardous Materials Activities include, without limitation, all
such activities on or about the Property by TOGI's employees, partners, agents,
invitees, contractors and their subcontractors. TOGI shall not cause or permit
any Hazardous Materials to be disposed or abandoned at the Property, except as
allowed under Applicable Environmental Laws. TOGI shall cause all TOGI Hazardous
Materials Activities to be performed in strict conformance to Applicable
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Environmental Laws. TOGI shall promptly notify Owner of any actual or claimed
violation of Applicable Environmental Laws in connection with TOGI Hazardous
Materials Activities, and TOGI shall promptly and thoroughly cure any violation
of Applicable Environmental Laws in connection with TOGI Hazardous Materials
Activities. If any governmental approval, consent, license or permit is required
under Applicable Environmental Laws for TOGI to perform any portion of its work
at the Property, including without limitation any air emission permits, before
commencing any such work, TOGI shall be solely responsible, at TOGI's expense,
for obtaining and maintaining, and providing copies of, each approval, consent,
license or permit. All TOGI Hazardous Materials Activities shall be performed by
qualified personnel who have received proper training with respect to Hazardous
Materials, including compliance with applicable OSHA laws and regulations. TOGI
shall cause all Hazardous Materials present at the Property in connection with
TOGI Hazardous Materials Activities to be safely and securely stored, using
double containment. TOGI agrees that neither its use of the Property nor TOGI
Hazardous Materials Activities shall result in contamination of the environment.
12.3 REMOVAL OF STORED HAZARDOUS MATERIALS. Before the expiration or
termination of this Agreement, and notwithstanding any other provision of this
Agreement, and in full conformance to Applicable Environmental Laws, TOGI shall:
(a) cause to be properly removed from the Property all Hazardous Materials
stored at the Property in connection with TOGI's use of the Property or in
connection with TOGI Hazardous Materials Activities; and (b) cause to be
properly dismantled, closed and removed from the Property all devices, drums,
equipment and containments used for handling, storing or treating Hazardous
Materials Activities.
12.4 ENVIRONMENTAL INDEMNITY. TOGI shall promptly reimburse, defend,
indemnify and hold harmless Owner, its employees, assigns,
successors-in-interest, agents and representatives from any and all claims,
liabilities, obligations, losses, causes of action, demands, governmental
proceedings or directives, fines, penalties, expenses, costs (including but not
limited to reasonable attorney's fees, consultant's fees and other expert's fees
and costs), and damages, which arise from or relate to: (a) TOGI Hazardous
Materials Activities; (b) any non-compliance with Applicable Environmental Laws
in connection with TOGI's use of the Property; or (c) a breach of any obligation
of TOGI under this Section.
12.5 SURVIVAL. The provisions of this Section shall survive expiration or
termination of this Agreement.
13. PROPERTY MAINTENANCE.
13.1 PROPERTY MAINTENANCE; Work Commitment.
13.1.1 ANNUAL ASSESSMENT WORK. To the extent required by law,
beginning with the annual assessment work period of September 1, 2005, to
September 1, 2006, and for each succeeding annual assessment work year
commencing during the term of this Agreement. TOGI shall perform for the benefit
of the Property work of a type customarily deemed applicable as assessment work
and of sufficient value to satisfy the annual assessment work requirements of
all applicable federal, state and local laws, regulations and ordinances, if
any, and shall prepare evidence of the same in form proper for recordation and
filing, and shall timely record and/or file such evidence in the appropriate
federal, state and local office as required by applicable federal, state and
local laws, regulations and ordinances. TOGI shall deliver to Owner proof of
TOGI's compliance with this Section not less than fifteen (15) days before the
applicable deadline. If TOGI elects to terminate this Agreement more than four
(4) months before the deadline for performance of annual assessment work for the
succeeding annual assessment year, TOGI shall have no obligation to perform
annual assessment work nor to prepare, record and/or file evidence of the same
for the following annual assessment year.
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13.1.2 FEDERAL MINING CLAIM MAINTENANCE FEES. If under applicable
federal laws and regulations federal annual mining claim maintenance fees are
required to be paid for the unpatented mining claims which constitute all or
part of the Property, beginning with the annual assessment work period of
September 1, 2005, to September 1, 2006, TOGI shall timely and properly pay the
federal annual mining claim maintenance fees, and shall execute and record or
file, as applicable, proof of payment of the federal annual mining claim
maintenance fees and of Owner's intention to hold the unpatented mining claims
which constitute the Property. TOGI shall deliver to Owner proof of TOGI's
compliance with this Section not less than fifteen (15) days before the
applicable deadline. If TOGI elects to terminate this Agreement more than four
(4) months before the deadline for payment of the federal annual mining claim
maintenance fees for the succeeding annual assessment year, TOGI shall have no
obligation to pay the federal annual mining claim maintenance fees for the
Property for the succeeding assessment year.
13.2 AMENDMENT OF MINING LAWS. The parties acknowledge that legislation for
the amendment or repeal of the mining laws of the United States applicable to
the Property has been, and in the future may be, considered by the United States
Congress. The parties desire to insure that any and all interests of the parties
in the lands subject to the unpatented mining claims which comprise all or part
of the Property, including any rights or interests acquired in such lands under
the mining laws as amended, repealed or superseded, shall be part of the
Property and shall be subject to the Agreement. If the mining laws applicable to
the unpatented mining claims subject to this Agreement are amended, repealed or
superseded, the conversion or termination of Owner's interest in the Property
pursuant to such amendment, repeal or supersession of the mining laws shall not
be considered a deficiency or defect in Owner's title in the Property, and TOGI
shall have no right or claim against Owner resulting from the conversion,
diminution, or loss of Owner's interest in and to the Property, except as
expressly provided in this Agreement.
If pursuant to any amendment or supersession of the mining laws Owner
is granted the right to convert its interest in the unpatented mining claims
comprising the Property to a permit, license, lease, or other right or interest,
all converted interests or rights shall be deemed to be part of the Property
subject to this Agreement. Upon the grant or issuance of such converted
interests or rights, the parties shall execute and deliver an addendum to this
Agreement, in recordable form, by which such converted interests or rights are
made subject to this Agreement.
13.3 WORK COMMITMENT. As a work commitment, on or before September 1, 2006,
and on or before September 1 of each subsequent Lease Year until TOGI completes
a bankable positive feasibility study, TOGI shall drill not less than 5,000
linear feet of exploration drilling on the Property or in the Area of Interest.
TOGI's work commitment for the initial 5,000 feet of exploration drilling is a
firm and unconditional commitment and obligation under this Agreement. If TOGI
does not complete drilling of 5,000 linear feet on or before September 1, 2006,
or drilling of 5,000 linear feet on or before September 1 during each subsequent
Lease Year, TOGI shall have the right to pay to Owner in lieu of performance of
the drilling work commitment the sum of Ten Dollars ($10.00) multiplied by the
difference between 5,000 linear feet and the actual number of linear feet which
TOGI drills on or before the applicable deadline. In such case, TOGI shall pay
the sum to Owner within thirty (30) days following the applicable deadline. Any
exploration drilling in excess of the minimum requirement shall be carried
forward and credited in TOGI's favor against its exploration drilling commitment
for any succeeding period. If TOGI's performance of its drilling work commitment
in any period is deferred as a result of the occurrence and continuation of a
force majeure event, TOGI shall be obligated to perform the deferred drilling
work commitment on or before September 1 of the second year following
termination of the force majeure event, provided, however, that TOGI shall
retain the right to pay to Owner in lieu of performance the sum of Ten Dollars
($10.00) multiplied by the difference between the linear feet of the deferred
drilling work commitment and the actual number of linear feet of such deferred
drilling work commitment which TOGI drills during the applicable period. TOGI's
work commitment shall terminate on TOGI's completion of a bankable positive
feasibility study.
14. RELATIONSHIP OF THE PARTIES.
14.1 NO PARTNERSHIP. This Agreement shall not be deemed to constitute any
party, in its capacity as such, the partner, agent or legal representative of
any other party, or to create any joint venture, partnership, mining partnership
or other partnership relationship between the parties.
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14.2 COMPETITION. Except as expressly provided in this Agreement, each
party shall have the free and unrestricted right independently to engage in and
receive the full benefits of any and all business endeavors of any sort outside
the Property or outside the scope of this Agreement, whether or not competitive
with the endeavors contemplated under this Agreement, without consultation with
or participation of the other party. In particular, without limiting the
foregoing, neither party to this Agreement shall have any obligation to the
other as to any opportunity to acquire any interest, property or right offered
to it outside the scope of this Agreement.
15. INSPECTION. Owner or Owner's duly authorized representatives shall be
permitted to enter on the Property and TOGI's workings at all reasonable times
for the purpose of inspection, but they shall enter on the Property at their own
risk and in such a manner which does not unreasonably hinder, delay or interfere
with TOGI's operations.
16. TITLE. OWNER REPRESENTS THAT: (a) the claims were properly located in
accordance with applicable federal and state laws and regulations; (b) all
assessment work requirements for the claims have been performed and all filings
and recordings of proof of performance have been made properly and the federal
annual mining claim maintenance and rental fees have been paid properly; (c) the
claims are in good standing; (d) subject to the paramount title of the United
States, Owner has good right and full power to lease and to convey the interests
described in this Agreement; and (e) the claims are free and clear of all liens,
claims and encumbrances created by, through or under Owner. Owner disclaims any
representation or warranty concerning the existence or proof of a discovery of
locatable minerals on or under the Property.
17. COVENANTS, WARRANTIES AND REPRESENTATIONS. Each of the parties
covenants, warrants and represents for itself as follows:
17.1 COMPLIANCE WITH LAWS. That it has complied with all applicable laws
and regulations of any governmental body, federal, state or local, regarding the
terms of and performance of its obligations under this Agreement.
17.2 NO PENDING PROCEEDINGS. That there are no lawsuits or proceedings
pending or threatened which affect its ability to perform the terms of this
Agreement.
17.3 COSTS. That it shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
17.4 BROKERS. That it has had no dealings with any agent, broker or finder
in connection with this Agreement, and shall indemnify, defend and hold the
other party harmless from and against any claims that may be asserted through
such party that any agent's broker's or finder's fee is due in connection with
this Agreement.
17.5 PATRIOT ACT. That it is not on the Specially Designated National &
Blocked Persons List of the Office of Foreign Assets Control of the United
States Treasury Department and is not otherwise blocked or banned by any foreign
assets office rule or any other law or regulation, including the USA Patriot Act
or Executive Order 13224.
10
18. TERMINATION BY OWNER. Any failure by TOGI to perform any of its
covenants, liabilities, obligations or responsibilities under this Agreement
shall be a default. Owner may give TOGI written notice of a default. If the
default is not remedied within thirty (30) days after receipt of the notice,
provided the default can reasonably be cured within that time, or, if not, if
TOGI has not within that time commenced action to cure the same or does not
after such commencement diligently prosecute such action to completion, Owner
may terminate this Agreement by delivering notice to TOGI of Owner's termination
of this Agreement. In the case of TOGI's failure to pay the Minimum Payments,
Owner shall be entitled to give TOGI written notice of the default, and if such
default is not remedied within fifteen (15) days after the receipt of the
notice, then Owner may terminate this Agreement by delivering notice to TOGI of
Owner's termination of this Agreement. On termination of this Agreement based on
TOGI's default, within ten (10) days after termination TOGI shall execute and
deliver to Owner a release and termination of this Agreement in form acceptable
for recording.
19. TERMINATION BY TOGI. TOGI may at any time terminate this Agreement by
giving written thirty (30) days advance notice to Owner. If TOGI terminates this
Agreement, TOGI shall perform all obligations and pay all payments which accrue
or become due before the termination date. On TOGI's termination of this
Agreement, within ten (10) days after termination TOGI shall execute and deliver
to Owner a release and termination of this Agreement in form acceptable for
recording. During the term of this Agreement, TOGI may at any time surrender any
unpatented mining claim which constitutes part of the Property. If during the
term of this Agreement, TOGI intends to surrender any unpatented mining claim,
it shall give written notice to Owner. Owner shall have ten (10) business days
following Owner's receipt of TOGI's notice during which to notify TOGI that
Owner requests a reconveyance to Owner of the mining claim(s) proposed to be
surrendered by TOGI. If Owner does not request a reconveyance of the mining
claim(s) within the foregoing described ten (10) day period, Owner shall be
deemed to have irrevocably waived its right to request a reconveyance of the
surrendered mining claim(s) and TOGI shall be relieved of its obligation to
maintains any such mining claim(s). If Owner requests that TOGI reconvey the
mining claim(s) within the foregoing described ten (10) day period, TOGI shall
promptly execute and deliver to Owner a quitclaim deed of TOGI's right, title
and interest in and to the mining claim(s) to be surrendered. At such time Owner
shall assume and perform the obligations to maintain the mining claim(s) which
accrue or arise after the date of TOGI's delivery of its notice of intent to
surrender such mining claim(s).
20. SURRENDER OF PROPERTY. On expiration or termination of this Agreement,
except on TOGI's exercise of the Option, TOGI shall surrender the Property
promptly to Owner and at TOGI's sole cost shall remove from the Property all of
TOGI's buildings, equipment and structures. TOGI shall reclaim the Property in
accordance with all applicable Governmental Regulations. TOGI shall diligently
perform reclamation and restoration of the Property such that TOGI's reclamation
and restoration shall be completed before expiration of this Agreement and not
later than the date required under any Governmental Regulations.
21. DATA. Within thirty (30) days following termination of this Agreement,
except on TOGI's exercise of the Option, TOGI shall deliver to Owner copies of
all data regarding the Property in TOGI's possession at the time of termination
which before termination have not been furnished to Owner and, at Owner's
request, TOGI shall deliver to Owner all drilling core, samples and sample
splits taken from the Property.
22. CONFIDENTIALITY. The data and information, including the terms of this
Agreement, coming into TOGI's possession by virtue of this Agreement shall be
deemed confidential and shall not be disclosed to outside third parties except
as may be required to publicly record or protect title to the Property or to
publicly announce and disclose information under Governmental Regulations or
under the rules and regulations of any stock exchange on which the stock of any
party, or the parent or affiliates of any party, is listed. TOGI agrees to
inform Owner of the content of the announcement or disclosure in sufficient time
to permit Owner to jointly or simultaneously make a similar public announcement
or disclosure. If a party negotiates for a transfer of all or any portion of its
interest in the Property or under this Agreement or negotiates to procure
financing or loans relating to the Property, in order to facilitate any such
negotiations such party shall have the right to furnish information to third
parties, provided that each third party to whom the information is disclosed
agrees to maintain its confidentiality in the manner provided in this Section.
23. ASSIGNMENT.
23.1 TOGI'S ASSIGNMENt. TOGI shall not assign, convey, encumber,
sublease, grant any concession, or license or otherwise transfer (each a
"Transfer") all or any part of its interest in this Agreement or the Property,
without, in each case, Owner's prior written consent, which shall not be
withheld unreasonably. Owner shall respond to TOGI's request for consent within
ten (10) days following Owner's receipt of TOGI' request, and if Owner does not
timely inform TOGI that Owner does not consent to the proposed Transfer, Owner
shall be deemed to have approved the Transfer. If Owner denies TOGI's request
for consent to the proposed Transfer, Owner shall deliver to TOGI a written
statement of Owner's reasons for denial of TOGI's request for consent and, if
TOGI contests Owner's denial of TOGI's request for consent, Owner shall be
barred and estopped from asserting as the basis for Owner's denial of consent
any reason which is not expressly described in Owner's statement. TOGI shall
have the right to assign, convey, sublease, license or otherwise transfer all or
any part of its interest in this Agreement or the Property, to any affiliated or
subsidiary company of TOGI or any joint venture, limited liability company or
partnership of which TOGI is a member without Owner's prior written consent.
11
23.2 OWNER'S ASSIGNMENT. Subject to the provisions of this Section, Owner
shall have the right to assign, convey, encumber, sublease, grant any
concession, or license or otherwise transfer all or any part of its interest in
this Agreement or the Property. No change in ownership of Owner's interest in
the Property shall affect TOGI's obligations under this Agreement unless and
until Owner delivers and TOGI receives copies of the documents which demonstrate
the change in ownership of Owner's interest. Until TOGI receives Owner's notice
and the documents required to be delivered under this Section, TOGI may continue
to make all payments under this Agreement as if the transfer of Owner's
ownership interest had not occurred. No division of Owner's ownership as to all
or any part of the Property shall enlarge TOGI's obligations or diminish TOGI's
rights under this Agreement.
24. FORCE MAJEURE. The respective obligations of the parties, except TOGI's
obligations to pay the Minimum Payments, maintain insurance coverage and to
perform or pay Property maintenance obligations, including the federal annual
mining claim maintenance fees, shall be suspended during the time and to the
extent that the parties are prevented from compliance, in whole or in part, by
accident, act or restraint of any lawful authority, earthquake, equipment
unavailability, fire, flood, labor shortage, stoppage or strike, application or
imposition of Governmental Regulations which prohibit or unreasonably hinder or
interfere with TOGI's operations on the Property, including delay or refusal in
the issuance of license or permit approvals and other causes of the same or
other character beyond the reasonable control of the parties.
25. MEMORANDUM AGREEMENT. The parties shall execute and deliver a
memorandum of this Agreement. The execution of the memorandum shall not limit,
increase or in any manner affect any of the terms of this Agreement or any
rights, interests or obligations of the parties.
26. NOTICES. Any notices required or authorized to be given by this
Agreement shall be in writing and shall be sent either by commercial courier,
facsimile, or by certified U.S. mail, postage prepaid and return receipt
requested, addressed to the proper party at the address stated below or such
address as the party shall have designated to the other parties in accordance
with this Section. Such notice shall be effective on the date of receipt by the
addressee party, except that any facsimiles received after 5:00 p.m. of the
addressee's local time shall be deemed delivered the next day.
If to Owner: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Exploration
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
If to TOGI : Tornado Gold International Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
27. BINDING EFFECT OF OBLIGATIONS. This Agreement shall be binding upon and
inure to the benefit of the respective parties and their successors or assigns.
28. ENTIRE AGREEMENT. The parties agree that the entire agreement between
them is written in this Agreement and in a memorandum of agreement of even date.
There are no terms or conditions, express or implied, other than expressly
stated in this Agreement. This Agreement may be amended or modified only by a
written instrument signed by the parties with the same formality as this
Agreement.
29. GOVERNING LAW AND FORUM SELECTION. This Agreement shall be construed
and enforced in accordance with the laws of the State of Nevada. Any action or
proceeding concerning the construction, or interpretation of the terms of this
Agreement or any claim or dispute between the parties shall be commenced and
heard in the Second Judicial District Court of the State of Nevada, in and for
the County of Washoe, Reno, Nevada.
30. MULTIPLE COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute the same Agreement.
31. SEVERABILITY. If any part, term or provision of this Agreement is held
by a court of competent jurisdiction to be illegal or in conflict with any
Governmental Regulations, the validity of the remaining portions or provisions
shall not be affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the particular part,
term or provision held to be invalid.
32. TIME OF ESSENCE. Time is of the essence in the performance of the
parties' obligations under this Agreement.
12
The parties have executed this Agreement effective as of the Effective
Date.
Owner
-----------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Tornado Gold International Corp.
By
---------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
13
STATE OF NEVADA,
COUNTY OF ELKO.
This Mining Lease and Option to Purchase Agreement was acknowledged
before me on April , 2005, by ▇▇▇▇ ▇▇▇▇▇▇.
----------------------------------------
Notary Public
STATE OF NEVADA,
COUNTY OF ELKO.
This Mining Lease and Option to Purchase Agreement was acknowledged
before me on April , 2005, by ▇▇▇▇▇ ▇▇▇▇▇▇.
----------------------------------------
Notary Public
STATE OF NEVADA,
COUNTY OF WASHOE.
This Mining Lease and Option to Purchase Agreement was acknowledged
before me on April ____, 2005, by ▇▇▇▇ ▇. ▇▇▇▇▇▇ as President of Tornado Gold
International Corp.
----------------------------------------
Notary Public
14
================================================================================
Mining Lease and Option to Purchase Agreement
Exhibit A
Description of Property
See attached description
EXHIBIT B
No APN - unpatented mining claims
Recorded at the request of
and when recorded return to:
Tornado Gold International Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Quitclaim Deed With Reservation of Royalty
This Quitclaim Deed With Reservation of Royalty ("Deed") is made by and
between ▇▇▇▇ ▇▇▇▇▇▇, doing business as ▇▇▇▇▇▇ Exploration, and ▇▇▇▇▇ ▇▇▇▇▇▇
(collectively "Owner"), to Tornado Gold International Corp., a Nevada
corporation ("TOGI").
Recitals
A. Owner and TOGI are parties to the Mining Lease and Option to Purchase
Agreement dated effective February 5, 2004 (the "Agreement"), concerning the
unpatented mining claims situated in Lander County, Nevada, more particularly
described in Exhibit A attached to and by this reference incorporated in this
Deed (collectively the "Royalty Property"), in accordance with which Owner
agreed to sell to TOGI all of Owner's right, title and interest in and to the
Royalty Property, subject to Owner's reservation to Owner of the production
royalty (the "Royalty") and other obligations described in this Deed.
B. Owner and TOGI have closed the purchase and sale of the Royalty Property in
accordance with the Agreement.
In consideration of the parties' rights and obligations under the
Agreement, the parties agree as follows:
1. Quitclaim. Owner quitclaims to TOGI, and its assigns and successors forever,
all of Owner's right, title and interest in the Royalty Property, except and
subject to Owner's reserved Royalty and the parties' rights and obligations
under this Deed.
2. Royalty. Owner grants, reserves and retains to itself, and Owner's assigns
and successors forever, and TOGI agrees and covenants to pay to Owner, and
Owner's assigns and successors, a production royalty based on the Net Smelter
Returns from the production or sale of Minerals from the Property. The
production royalty percentage rate shall be ____ percent ( %) of the Net Smelter
Returns for the production of Minerals from any mineral rights, mining claims or
other properties in the Area of Interest which TOGI acquired from any third
parties, all as described in Exhibit A.
2.1 Burden on Royalty Property. The Royalty shall burden and run with the
Royalty Property, including any amendments, conversions to a lease or other form
of tenure, relocations or patent of all or any of the unpatented mining claims
which comprise all or part of the Royalty Property. On amendment, conversion to
a lease or other form of tenure, relocation or patenting of any of the
unpatented mining claims which comprise all or part of the Royalty Property,
TOGI agrees and covenants to execute, deliver and record in the office of the
recorder in which all or any part of the Royalty Property is situated an
instrument by which TOGI grants to Owner the Royalty and subjects the amended,
converted or relocated unpatented mining claims and the patented claims, as
applicable, to all of the burdens, conditions, obligations and terms of this
Deed.
15
2.2 Minimum Payments. On the dates described below, TOGI shall pay to Owner
the sums ("Minimum Payments") described below:
Date Payment Amount
[insert applicable payment schedule]
The Minimum Payments paid after April 15, 2008, under the
Agreement or this Deed shall constitute advance payments of the Royalty and
shall be credited in TOGI's favor against its Royalty payment obligations. The
Minimum Payments paid under the Agreement which constituted advance payments of
the Royalty shall also be credited in TOGI's favor against its Royalty payment
obligations. TOGI's Minimum Payment obligations shall terminate on the cessation
of the mining of or exploration for Minerals from the Property and the Area of
Interest and TOGI's delivery of formal notice to regulatory agencies having
jurisdiction of TOGI's operations on the Property and in the Area of Interest
that TOGI has ceased mining operations and commenced reclamation of the mine on
the Property or in the Area of Interest.
2.3 PAYMENT OF ROYALTY. TOGI shall calculate and pay the Royalty monthly in
accordance with the provisions of Exhibit 1. If TOGI does not timely pay the
Royalty, Owner may give written notice to TOGI that TOGI is in default of its
obligations under this Deed, and unless within five (5) business days following
receipt by TOGI of such notice Owner receives the delinquent Royalty payment,
then TOGI shall pay interest on the delinquent payment at the rate of ten
percent (10%) per annum which shall accrue from the day the delinquent Royalty
payment was due to the date of payment of the Royalty and accrued interest. TOGI
shall pay all of Owner's attorney's fees and all other costs incurred by Owner
to collect the delinquent Royalty payment.
2.4 PRODUCTION RECORDS. TOGI shall keep true and accurate accounts, books
and records of all of its activities, operations and production of minerals on
the Royalty Property.
2.5 DELIVERY OF PAYMENTS. TOGI shall deliver the payments under this Deed
to Owner by check delivered to Owner's address as stated in this Deed or by wire
transfers to an account designated by Owner.
3. COMMINGLING. TOGI shall have the right to commingle minerals from the Royalty
Property with minerals mined from other properties. Not less than sixty (60)
days before commencement of commingling, TOGI shall notify Owner and shall
deliver to Owner TOGI's proposed commingling plan for Owner's review. Before
TOGI commingles any minerals produced from the Royalty Property with minerals
from other properties, the minerals produced from the Royalty Property and other
properties shall be measured and sampled in accordance with sound mining and
metallurgical practices for metal, commercial minerals and other appropriate
content. TOGI shall keep detailed accounts and records which show measures,
assays of metal, commercial minerals, and other appropriate content and penalty
substances, and gross metal content of the minerals. From this information, TOGI
shall determine the amount of the Royalty due and payable to Owner for minerals
produced from the Royalty Property commingled with minerals from other
properties.
16
4. REPORTS. Not later than March 1 of each calendar year, TOGI shall deliver to
Owner a comprehensive report of all exploration, development and mining
activities and operations conducted by TOGI on or relating to the Property
during the preceding calendar year. Such annual report shall include estimates
of proposed expenditures upon, anticipated production from, and estimated
remaining ore reserves on the Royalty Property for the succeeding year. TOGI
shall provide Owner reasonable access to all data and information generated
regarding the Royalty Property.
5. INSPECTIONS. Owner, or its authorized agents or representatives, may enter
upon all surface and subsurface portions of the Royalty Property for the purpose
of inspecting the Royalty Property and all improvements and operations on the
Royalty Property, as well as inspecting and copying all accounts and records,
including without limitation such accounts and records which are maintained
electronically, pertaining to all activities and operations on or relating to
the Royalty Property, the improvements or operations.
6. Compliance with Laws, Reclamation, Environmental Obligations and Indemnities.
6.1 COMPLIANCE WITH LAWS. TOGI shall at all times comply with all
applicable federal, state and local laws, regulations and ordinances relating to
TOGI's activities and operations on or relating to the Royalty Property.
6.2 RECLAMATION, ENVIRONMENTAL OBLIGATIONS AND INDEMNITIES. TOGI shall
perform all reclamation required under federal, state and local laws,
regulations and ordinances relating to TOGI's activities or operations on or
relating to the Royalty Property. TOGI shall defend, indemnify and hold harmless
Owner from and against any and all actions, claims, costs, damages, expenses
(including attorney's fees and legal costs), liabilities and responsibilities
arising from or relating to TOGI's activities or operations on or relating to
the Royalty Property, including those under laws, regulations and ordinances
intended to protect or preserve the environment or to reclaim the Royalty
Property. TOGI's obligations under this Section shall survive the abandonment,
surrender or transfer of the Royalty Property.
7. TAILINGS AND RESIDUES. All tailings, residues, waste rock, spoiled ▇▇▇▇▇
materials and other materials (collectively "Materials") resulting from TOGI's
operations and activities on the Royalty Property shall be TOGI's sole property,
but shall remain subject to the Royalty if they are processed or reprocessed and
TOGI receives revenues from such processing or reprocessing. If Materials are
processed or reprocessed, the Royalty payable shall be determined by using the
best engineering, metallurgical and technical practices and standards then
available.
8. TITLE MAINTENANCE.
8.1 TITLE MAINTENANCE AND TAXES. TOGI shall maintain title to the Royalty
Property, including without limitation, paying when due all taxes on or with
respect to the Royalty Property and doing all things and making all payments
necessary or appropriate to maintain the right, title and interest of TOGI and
Owner, respectively, in the Royalty Property and under this Deed. TOGI shall
deliver to Owner proof of TOGI's compliance with this Section not less than
fifteen (15) days before the applicable deadline.
17
8.2 CLAIM MAINTENANCE. TOGI shall perform all required assessment work on,
pay all mining claim maintenance fees and make such filings and recordings as
are necessary to maintain title to the Royalty Property in accordance with
applicable federal and state laws and regulations. TOGI shall deliver to Owner
proof of TOGI's compliance with this Section not less than fifteen (15) days
before the applicable deadline. If TOGI elects to abandon any of the unpatented
mining claims effective within four (4) months of the deadline for performance
of annual assessment work or payment of mining claim maintenance fees, TOGI
shall perform such assessment work and pay the federal annual mining claim
maintenance fees for such claims for the succeeding assessment year.
8.3 ABANDONMENT. If TOGI intends to abandon or surrender any of the Royalty
Property (the "Abandonment Property"), TOGI shall first give notice of such
intention to Owner at least thirty (30) days in advance of the proposed date of
abandonment or surrender. At any time before the date of TOGI's proposed
abandonment or surrender of the Royalty Property Owner may deliver notice to
TOGI that Owner desires TOGI to convey the Abandonment Property to Owner. In
such case, TOGI shall convey the Abandonment Property to Owner free and clear of
any claims, encumbrances or liens created by, through or under TOGI. If Owner
does not timely request reconveyance of the Abandonment Property, Owner's right
to do so shall be irrevocably terminated.
9. GENERAL PROVISIONS.
9.1 CONFLICT. If a conflict arises between the provisions of this Deed and
the provisions of the Agreement, the provisions of the Agreement shall prevail.
9.2 ENTIRE AGREEMENT. This Deed and the Agreement constitute the entire
agreement between the parties.
9.3 ADDITIONAL DOCUMENTS. The parties shall from time to time execute all
such further instruments and documents and do all such further actions as may be
necessary to effectuate the purposes of this Deed.
9.4 BINDING EFFECT. All of the covenants, conditions, and terms of this
Deed shall bind and inure to the benefit of the parties and their successors and
assigns.
9.5 NO PARTNERSHIP. Nothing in this Deed shall be construed to create,
expressly or by implication, a joint venture, mining partnership or other
partnership relationship between the parties.
9.6 GOVERNING LAW. This Deed is to be governed by and construed under the
laws of the State of Nevada.
9.7 NOTICES. Any notices required or authorized to be given by this Deed
shall be in writing and shall be sent either by commercial courier, facsimile,
or by certified U.S. mail, postage prepaid and return receipt requested,
addressed to the proper party at the address stated below or such address as the
party shall have designated to the other parties in accordance with this
Section. Such notice shall be effective on the date of receipt by the addressee
party, except that any facsimiles received after 5:00 p.m. of the addressee's
local time shall be deemed delivered the next day.
If to Owner: ▇▇▇▇ ▇▇▇▇▇▇
If to TOGI : Tornado Gold International Corp.
This Deed is effective , regardless of the date on which the parties
execute this Deed.
18
Owner
-----------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Tornado Gold International Corp.
By
---------------------------------------------------
Title:
-----------------------------------------------
19
STATE OF
COUNTY OF
This Quitclaim Deed With Reservation of Royalty was acknowledged before
me on , by ▇▇▇▇ ▇▇▇▇▇▇.
-------------------------------------
Notary Public
STATE OF
COUNTY OF
This Quitclaim Deed With Reservation of Royalty was acknowledged before
me on , by ▇▇▇▇▇ ▇▇▇▇▇▇.
--------------------------------------
Notary Public
STATE OF
COUNTY OF
This Quitclaim Deed With Reservation of Royalty was acknowledged
before me on
---------------------------------------------
, by as
------------------------------------------------ ----------------------
of Tornado Gold International Corp.
------------------------------------
Notary Public
20
AMENDMENT NO. 1
TO
MINING LEASE AND OPTION TO PURCHASE DATED APRIL 5, 2005
Reference is hereby made to that certain Mining Lease and
Option to Purchase in regard to NT Green Gold Property, dated April 5, 2005 (the
"Company") by and among Tornado Gold International Corp., a Nevada corporation,
and ▇▇▇▇▇▇ Exploration ("Owner"). All capitalized terms used herein, but not
otherwise defined herein, shall have the meanings ascribed to them in the
Agreement.
WHEREAS, the parties to the Agreement desire to amend certain
terms of the Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
The Agreement is hereby amended to extend the due date of the
first payment from April 15, 2005 to May 15, 2005.
Except for the specific changes provided for in this section,
all terms and conditions of the Agreement shall remain and are in full force and
effect.
This Amendment shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, each of the following parties have
caused this Amendment to be duly executed as of the 15th day of April, 2005.
OWNER COMPANY
▇▇▇▇▇▇ Exploration Tornado Gold International Corp.
By: By:
------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Owner Its: President
21
AMENDMENT NO. 2
TO
MINING LEASE AND OPTION TO PURCHASE DATED APRIL 5, 2005
Reference is hereby made to that certain Mining Lease and
Option to Purchase in regard to NT Green Gold Property, dated April 5, 2005 (the
"Company") by and among Tornado Gold International Corp., a Nevada corporation,
and ▇▇▇▇▇▇ Exploration ("Owner"). All capitalized terms used herein, but not
otherwise defined herein, shall have the meanings ascribed to them in the
Agreement.
WHEREAS, the parties to the Agreement desire to amend certain
terms of the Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
The Agreement is hereby amended to extend the due date of the
first payment from May 15, 2005 to June 15, 2005.
Except for the specific changes provided for in this section,
all terms and conditions of the Agreement shall remain and are in full force and
effect.
This Amendment shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, each of the following parties have
caused this Amendment to be duly executed as of the ___ day of May, 2005.
OWNER COMPANY
▇▇▇▇▇▇ Exploration Tornado Gold International Corp.
By: By:
-------------------------- --------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Owner Its: President
===============================================================================
Exhibit 1
Net Smelter Returns
Payor: Tornado Gold International Corp.
Recipient: ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇
1. Definitions. The terms defined in the instrument to which this Exhibit is
attached and made part of shall have the same meanings in this Exhibit. The
following definitions shall apply to this Exhibit.
1.1 "Gold Production" means the quantity of refined gold outturned to
Payor's account by an independent third party refinery for gold produced from
the Property during the month on either a provisional or final settlement basis.
1.2 "Gross Value" shall be determined on a month basis and have the
following meanings with respect to the following Minerals:
1.2.1 Gold
(a) If Payor sells gold concentrates, dore or ore, then Gross
Value shall be the value of the gold contained in the gold concentrates, dore
and ore determined by utilizing: (1) the mine weights and assays for such gold
concentrates, dore and ore; (2) a reasonable recovery rate for the refined gold
recoverable from such gold concentrates, dore and ore (which shall be adjusted
annually to reflect the actual recovery rate of refined metal from such gold
concentrates, dore and ore); and (3) the Monthly Average Gold Price for the
month in which the gold concentrates, dore and ore were sold.
(b) If Payor produces refined gold (meeting the specifications of
the London Bullion Market Association, and if the London Bullion Market
Association no longer prescribes specifications, the specifications of such
other association generally accepted and recognized in the mining industry) from
Minerals, and if Section 1.2.1(a) above is not applicable, then for purposes of
determining Gross Value, the refined gold shall be deemed to have been sold at
the Monthly Average Gold Price for the month in which it was refined. The Gross
Value shall be determined by multiplying Gold Production during the month by the
Monthly Average Gold Price.
1.2.2 Silver.
(a) If Payor sells silver concentrates, dore or ore, then Gross
Value shall be the value of the silver contained in the silver concentrates,
dore and ore determined by utilizing: (1) the mine weights and assays for such
silver concentrates, dore and ore; (2) a reasonable recovery rate for the
refined silver recoverable from such silver concentrates, dore and ore (which
shall be adjusted annually to reflect the actual recovery rate of refined metal
from such silver concentrates, dore and ore); and (3) the Monthly Average Silver
Price for the month in which the silver concentrates, dore and ore were sold.
(b) If Payor produces refined silver (meeting the specifications
for refined silver subject to the New York Silver Price published by Handy &
▇▇▇▇▇▇, and if Handy & ▇▇▇▇▇▇ no longer publishes such specifications, the
specifications of such other association or entity generally accepted and
recognized in the mining industry) from Minerals, and if Section 1.2.2(a) above
is not applicable, the refined silver shall be deemed to have been sold at the
Monthly Average Silver Price for the month in which it was refined. The Gross
Value shall be determined by multiplying Silver Production during the month by
the Monthly Average Silver Price.
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1.2.3 All Other Minerals.
(a) If Payor sells any concentrates, dore or ore of Minerals other
than gold or silver, then Gross Value shall be the value of such Minerals
determined by utilizing: (1) the mine weights and assays for such Minerals; (2)
a reasonable recovery rate for the Minerals (which shall be adjusted annually to
reflect the actual recovery rate of recovered or refined metal or product from
such Minerals); and (3) the monthly average price for the Minerals or product of
the Minerals for the month in which the concentrates, dore or ore was sold. The
monthly average price shall be determined by reference to the market for such
Minerals or product which is recognized in the mining industry as authoritative
and reflective of the market for such Minerals or product.
(b) If Payor produces refined or processed metals from Minerals
other than refined gold or refined silver, and if Section 1.2.3(a) above is not
applicable, then Gross Value shall be equal to the amount of the proceeds
received by Payor during the month from the sale of such refined or processed
metals. Payor shall have the right to sell such refined or processed metals to
an affiliated party, provided that such sales shall be considered, solely for
purposes of determining Gross Value, to have been sold at prices and on terms no
less favorable than those that would be obtained from an unaffiliated third
party in similar quantities and under similar circumstances.
1.3 "Minerals" means gold, silver, platinum, antimony, mercury, copper,
lead, zinc, and all other mineral elements and mineral compounds, and geothermal
resources, which are contemplated to exist on the Property or which are after
the Effective Date discovered on the Property and which can be extracted, mined
or processed by any method presently known or developed or invented after the
Effective Date.
1.4 "Monthly Average Gold Price" means the average London Bullion Market
Association Afternoon Gold Fix, calculated by dividing the sum of all such
prices reported for the month by the number of days for which such prices were
reported during that month. If the London Bullion Market Association Afternoon
Gold Fix ceases to be published, all such references shall be replaced with
references to prices of gold for immediate sale in another established marked
selected by Payor, as such prices are published in Metals Week magazine, and if
Metals Week magazine no longer publishes such prices, the prices of such other
association or entity generally accepted and recognized in the mining industry.
1.5 "Monthly Average Silver Price" means the average New York Silver Price
as published daily by Handy & ▇▇▇▇▇▇, calculated by dividing the sum of all such
prices reported for the month by the number of days in such month for which such
prices were reported. If the Handy & ▇▇▇▇▇▇ quotations cease to be published,
all such references shall be replaced with references to prices of silver for
immediate sale in another established market selected by Payor as published in
Metals Week magazine, and if Metals Week magazine no longer publishes such
prices, the prices of such other association or entity generally accepted and
recognized in the mining industry.
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1.6 "Net Smelter Returns" means the Gross Value of all Minerals, less the
following costs, charges and expenses paid or incurred by Payor with respect to
the refining and smelting of such Minerals:
1.6.1 Charges for smelting and refining (including sampling, assaying
and penalty charges), but not any charges or costs of agglomeration,
beneficiation, crushing, extraction, milling, mining or other processing; and
1.6.2 Actual costs of transportation (including freight, insurance,
security, transaction taxes, handling, port, demurrage, delay and forwarding
expenses incurred by reason of or in the course of such transportation) of
concentrates or dore metal from the Property to the smelter or refinery, but not
any charges or costs of transportation of Minerals or ores from any mine on the
Property to an autoclave, concentrator, crusher, heap or other ▇▇▇▇▇ process,
mill or plant which is not a smelter or refinery.
1.7 "Property" means the real property described in the instrument to which
these Net Smelter Returns provisions are attached and made a part.
1.8 "Silver Production" means the quantity of refined silver outturned to
Payor's account by an independent third-party refinery for silver produced from
the Property during the month on either a provisional or final settlement basis.
2. Payment Procedures.
2.1 Accrual of Obligation. Payor's obligation to pay the royalty shall
accrue and become due and payable upon the sale or shipment from the Property of
unrefined metals, dore metal, concentrates, ores or other Minerals or Minerals
products or, if refined metals are produced, upon the outturn of refined metals
meeting the requirements of the specified published price to Payor's account.
2.2 Futures or Forward Sales, Etc.. Except as provided in Sections
1.2.1(a), 1.2.2(a) and 1.2.3 (a) (regarding sales of unprocessed gold and silver
and sales of Minerals other than gold and silver), Gross Value shall be
determined irrespective of any actual arrangements for the sale or other
disposition of Minerals by Payor, specifically including but not limited to
forward sales, futures trading or commodities options trading, and any other
price hedging, price protection, and speculative arrangements that may involve
the possible delivery of gold, silver or other metals produced from Minerals.
2.3 Monthly Calculations and Payments. Net Smelter Returns royalties shall
be determined on a monthly basis. Payor shall pay Payor each monthly royalty
payment on or before the last business day of the month immediately following
the month in which the royalty payment obligation accrued. Payor acknowledges
that late payment by Payor to Recipient of royalty payments will cause Recipient
to incur costs, the exact amount of which will be difficult to ascertain.
Accordingly, if any amount due and payable by Payor is not received by Recipient
within ten (10) days after such amount is due, then Payor shall pay to Recipient
a late charge equal to ten percent (10%) of such overdue amount. Recipient's
acceptance of such late charge shall not constitute a waiver of Payor' default
with respect to such overdue amount, nor prevent Recipient from exercising any
of Recipient's other rights and remedies. If any amount payable by Payor remains
delinquent for a period in excess of thirty (30) days, Payor shall pay to
Recipient, in addition to the late payment, interest from and after the due date
at the statutory interest rate.
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2.4 Statements. At the time of payment of the royalty, Payor shall
accompany such payment with a statement which shows in detail the quantities and
grades of refined gold, silver or other metals or dore, concentrates or ores
produced and sold or deemed sold by Payor in the preceding month; the Monthly
Average Gold Price and Monthly Average Silver Price, as applicable; costs and
other deductions, and other pertinent information in detail to explain the
calculation of the payment with respect to such month. Payment shall be made to
the address provided in the agreement or instrument to which this Exhibit is
attached for purposes of notices or by wire transfer to an account which
Recipient designates.
2.5 Inventories and Stockpiles. Payor shall include in all monthly
statements a description of the quantity and quality of any gold or silver dore
that has been retained as inventory for more than ninety (90) days. Recipient
shall have thirty (30) days after receipt of the statement to either: (a) elect
that the dore be deemed sold, with Gross Value to be determined as provided in
Sections 1.2.1 (b), with respect to gold, and 1.2.2(b), with respect to silver,
as of such thirtieth (30th) day utilizing the mine weights and assays for such
dore and utilizing a reasonable recovery rate for refined metal and reasonable
deemed charges for all deductions which Payor is authorized to take, or (b)
elect to wait until such time as the royalty payment otherwise would become
payable pursuant to Sections 1.2.1(b) and 1.2.2(b). The Payor's failure to
respond within such time shall be deemed to be an election to use the methods
described in Sections 1.2.1(b) and 1.2.2(b).
2.6 Audit. Upon reasonable notice and at a reasonable time, the Recipient
shall have the right to audit and examine the Payor's accounts and records
relating to the calculation of the Net Smelter Returns royalty payments. If such
audit determines that there has been a deficiency or an excess in the payment
made to Recipient, such deficiency or excess shall be resolved by adjusting the
next monthly royalty payment due Recipient. Recipient shall pay all costs of
such audit unless a deficiency of three percent (3%) or more of the royalty
payment due for the calendar month in question is determined to exist. All books
and records used by Payor to calculate the royalty payments shall be kept in
accordance with generally accepted accounting principles applicable to the
mining industry.
3. Sampling and Commingling. Payor shall have the right to
commingle Minerals and ores from the Property and materials from other
properties, provided, that Payor first informs Recipient, in writing, of Payor's
intention to commingle and delivers to Recipient a detailed written description
of Payor's commingling plan. Recipient shall have ninety (90) days during which
to review and comment on Payor's proposed commingling plan. In any and all
events, all Minerals and ores shall be measured and sampled by Payor in
accordance with sound mining and metallurgical practices for metal and mineral
content before commingling of any such Minerals or ores with materials from any
other property. Representative samples of materials from the Property intended
to be commingled shall be retained by Payor, and assays of these samples shall
be made before commingling to determine the metal content of each ore. Accurate
records shall be kept by Recipient showing measurements, assays of metal content
and gross metal content of the materials from the Property are commingled.
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