EXHIBIT 99.5
[SEAL]
ROYALTY ASSIGNMENT, CONFIRMATION, AMENDMENT,
AND RESTATEMENT OF ROYALTY,
AND AGREEMENT
THIS INSTRUMENT, referred to as "this Assignment," dated as of November
30, 1995, (the "Effective Date"), is among BARRICK BULLFROG INC., a Delaware
corporation ("Bullfrog"), ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, BARRICK
GOLDSTRIKE MINES INC., a Colorado corporation ("Goldstrike"), ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, and ROYAL HAL CO., a Delaware corporation ("RHC"), ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
RECITALS
A. As successor by mesne conveyances, mergers and name changes (described
in more detail in recitals B through L below) to Long Lac Mineral Exploration
Limited, an Ontario, Canada corporation ("Long Lac"), Bullfrog owns a royalty
interest (the "Lac Royalty") that constitutes a burden upon and interest in the
▇.▇. #l through #14 patented mining claims situated in Eureka County, Nevada,
which are more particularly described in Exhibit A hereto (the "SJ Claims"), and
other properties.
B. The Lac Royalty was reserved by Long Lac, the beneficial owner of 100%
interest in possessory title to the ▇.▇. Nos. 1 through 16 unpatented mining
claims (the "SJ unpatented claims") in that certain Assignment and Agreement
dated February 24, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Minerals Corporation
("WSMC"), a copy of which is attached as Exhibit B, covering the ▇.▇. unpatented
claims and other properties.
C. The Assignment and Agreement was amended by First Amendment to
Assignment and Agreement dated as of October 16, 1981 between Long Lac and WSMC
(the "First Amendment"), a copy of which is attached as Exhibit C, which made
the ▇.▇. unpatented claims subject to the Lac Royalty in the amount of 5% of net
smelter returns, and contained a ratification and confirmation of the Lac
Royalty by WSMC, the record owner of possessory title to the ▇.▇. unpatented
claims.
D. By Assignment dated as of December 1, 1982, a copy of which is attached
as Exhibit D, the Lac Royalty was assigned by Long Lac to Long Lac Mineral
Exploration (Texas) Inc., a Texas corporation.
E. On December 31, 1983, Long Lac Mineral Exploration (Texas), Inc. merged
into Willroy Mines (Texas), Inc., a Texas corporation, as evidenced by
Certificate of Merger of Domestic Corporations issued by the Secretary of State
of Texas and Articles of Merger of Long Lac Mineral Exploration (Texas), Inc.
into Willroy Mines (Texas), Inc., copies of which are attached as Exhibit ▇.
▇. ▇▇▇▇▇▇▇ Mines (Texas), Inc. changed its name to Long Lac Mineral
Exploration (Texas), Inc., as evidenced by Articles of Amendment by the Sole
Shareholder to the Articles of Incorporation of Willroy Mines (Texas), Inc.
dated March 26, 1984 and Certificate of Amendment issued by the Secretary of
State of Texas dated April 6, 1984, copies of which are attached as Exhibit ▇.
▇. ▇▇▇▇ Lac Mineral Exploration (Texas), Inc. changed its name to Lac
Minerals (USA), Inc., as evidenced by Articles of Amendment to Articles of
Incorporation dated April 15, 1987, and Certificate of Amendment issued by the
Secretary of State of Texas dated April 27, 1987, copies of which are attached
as Exhibit G.
H. Lac Minerals Ltd., an Ontario, Canada corporation (formerly Long Lac),
and Lac Minerals (USA), Inc. entered into an Amending Agreement dated as of
November 24, 1987, a copy of which is attached as Exhibit H, which amended the
Assignment referred to in Recital D above.
I. The Assignment and Agreement was further amended, and ratified and
confirmed as amended, in a Second Amendment to Assignment and Agreement dated as
of December 18, 1989 between Lac Minerals (USA), Inc. and Barrick Goldstrike
Mines Inc., a copy of which is attached as Exhibit I.
J. Effective December 31, 1991, Lac Minerals (USA), Inc., a Texas
corporation, merged with and into Bond Gold Holding, Inc., a Delaware
corporation, and the name of the surviving corporation was changed to LAC
Minerals (USA) Inc., a Delaware corporation, as evidenced by Articles of Merger
of LAC Minerals (USA) Inc. with and into Bond Gold Holdings, Inc., a Certificate
of Merger issued by the Secretary of State of Delaware based on documents filed
in that office on December 24, 1991, and a Certificate of Merger issued by the
Secretary of State of State of Texas dated December 27, 1991, copies of which
are attached as Exhibit J.
K. By Assignment of Royalty Interest dated as of December 31, 1993, a copy
of which is attached as Exhibit K, Lac Minerals (USA) Inc., a Delaware
corporation, assigned the LAC Royalty to Lac Bullfrog Inc., a Delaware
corporation.
L. Lac Bullfrog Inc. changed its name to Barrick Bullfrog Inc., as
evidenced by Certificate of Amendment of Certificate of Incorporation of Lac
Bullfrog Inc. dated March 29, 1995 and filed with the Delaware Secretary of
State on April 5, 1995, a copy of which is attached as Exhibit ▇.
▇. Bullfrog desires to assign a portion of the Lac Royalty as it applies
to the SJ Claims (referred to as the "SJ Claims Royalty") to RHC hereunder
pursuant to that certain Royalty Purchase and Sale Agreement of even date
herewith among RHC, Bullfrog, and Goldstrike (the "Royalty Purchase and Sale
Agreement").
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N. Goldstrike, a subsidiary of ▇▇▇▇▇▇▇ Gold Corporation, an Ontario Canada
corporation ("BGC"), is an affiliate of Bullfrog, which is also a subsidiary of
BGC. Goldstrike owns the SJ Claims.
O. Bullfrog and Goldstrike desire to confirm the SJ Claims Royalty insofar
as it relates to the SJ Claims, which were patented on May 16, 1994.
P. Bullfrog, Goldstrike, and RHC desire to amend and restate the SJ Claims
Royalty.
AGREEMENT
For and in consideration of the mutual covenants set forth in the Royalty
Purchase and Sale Agreement, the mutual covenants set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree and take action as follows:
1. Confirmation and Grant of Royalty.
Goldstrike and Bullfrog hereby warrant that Bullfrog owns the SJ
Claims Royalty free and clear of material defects, liens, encumbrances and
liabilities that might adversely affect the SJ Claims Royalty. For purposes of
establishing record title thereto, Goldstrike hereby confirms the grant of and
grants and conveys to Bullfrog a royalty of five percent (5%) of Net Smelter
Returns (as herein defined) from the production of minerals mined and sold from
the SJ Claims, which grant is, as specifically acknowledged and agreed by
Bullfrog, in confirmation of the royalty previously reserved by Long Lac, the
predecessor in title to Bullfrog, and is not in addition to such reserved
royalty. For purposes of this instrument, the royalty herein confirmed and
granted shall continue to be referred to as the SJ Claims Royalty.
2. Assignment.
Bullfrog hereby grants, conveys, and assigns to RHC twenty percent
of the SJ Claims Royalty which shall be subject to the provisions hereof. The
royalty so assigned is referred to herein as the "RHC SJ Claims Royalty." It is
the intent of the parties that as a result of such assignment RHC will hold a
royalty of 1% of Net Smelter Returns from the production of minerals mined and
sold from the SJ Claims and Bullfrog will hold a royalty of 4% of Net Smelter
Returns from the production of minerals mined and sold from the SJ Claims (the
"Bullfrog SJ Claims Royalty").
3. Modification and Restatement of Royalty.
Goldstrike, Bullfrog, and RHC hereby agree that the SJ Claims
Royalty (and by extension the Bullfrog SJ Claims Royalty and the RHC SJ Claims
Royalty) is amended and restated in its entirety as follows and that all
previous agreements constituting the SJ Royalty are superseded and replaced by
the following. For convenience of reference, the term "Producer"
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means Goldstrike and its successors and assigns, and the term "Royalty Owner" is
used to mean Bullfrog or RHC and their respective successors and assigns.
(a) Net Smelter Returns. "Net Smelter Returns" shall be equal to the
Net Value (as hereinafter defined) of all minerals mined and removed from the SJ
Claims.
(b) Net Value Defined. As used herein, "Net Value" means, (i) with
respect to gold and silver (referred to as "Precious Metals"), the Gross Value
of such Precious Metals, less Allowable Deductions, and (ii) with respect to all
other minerals, the actual proceeds received from the sale of such minerals,
less Allowable Deductions.
(c) Allowable Deductions Defined. As used herein, "Allowable
Deductions" means, with respect to Precious Metals, only the following costs,
charges, and expenses paid or incurred by or for Producer after production of
dore, whether at the SJ Claims or elsewhere:
(i) charges for treatment by an independent, third party,
commercial refinery in the refining process (including handling, processing,
interest and provisional settlement fees, sampling, assaying and representation
costs, penalties and other processor deductions) or equivalent charges, if
Precious Metals are refined at a refinery that is not an independent third
party;
(ii) 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 dore from the SJ Claims or other facility producing dore to
the place of additional treatment and to the place of sale; and
(iii) sales, use, severance, net proceeds of mine, ad valorem
taxes and other taxes applicable under state, federal, or local law, relating to
production or sale of Precious Metals from the SJ Claims (but excluding income
taxes).
No costs for the mining, treatment or beneficiation at or near the
SJ Claims or for the transportation of ores or mineral products from the SJ
Claims to any facility located in Elko or Eureka Counties, Nevada for treatment,
processing, upgrading, beneficiation, or refining to produce dore or any less
refined product shall be deducted from the proceeds received or deemed to be
received by Producer to calculate the royalty due hereunder.
"Allowable Deduction" means, with respect to minerals other than
Precious Metals, only the following costs, charges, and expenses paid or
incurred by Producer:
(i) charges for treatment by an independent, third party,
commercial smelter or refinery in the smelting and refining processes (including
handling, processing, interest and provisional settlement fees, sampling,
assaying and representation costs, penalties and other processor deductions);
(ii) actual costs of transportation (including freight,
insurance, security, transaction taxes, handling, port, demurrage, delay, and
forwarding expenses incurred by reason
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of or in the course of such transportation), (A) in the case of ores, from the
SJ Claims to the place of sale, or if the ores are further treated by an
unrelated third party prior to sale, from the SJ Claims to such place of
treatment and then to the place of sale, or (B) in the case of concentrates or
other beneficiated products derived after the treatment of ores from the SJ
Claims at facilities owned by Producer or its Affiliates, from such place of
treatment to the place of sale, or if further treated prior to sale, from such
place of treatment by Producer to the place of additional treatment and then to
the place of sale.
(iii) sales, use, severance, net proceeds of mine, ad valorem
taxes and other taxes applicable under state, federal or local law, relating to
production or sale of such minerals from the SJ Claims (but excluding income
taxes).
(d) Gross Value Defined. "Gross Value" shall have the following
meaning:
(i) If Producer or an Affiliate of Producer (as defined below)
causes refined gold meeting or exceeding generally accepted commercial standards
for the sale of refined gold ("Refined Gold") to be produced from ores mined
from the SJ Claims and, for purposes of determining Net Smelter Returns, the
Refined Gold shall be deemed to have been sold at the Monthly Average Gold Price
for the month in which it was refined, and the Gross Value shall be determined
by multiplying Gold Production during the calendar month by the Monthly Average
Gold Price. As used in this Agreement, "Gold Production" means for each calendar
month the quantity of Refined Gold outturned to Producer's pool account (or to
a third-party account for the benefit of Producer) by a refinery from ore mined
from the SJ Claims on either a provisional or final settlement basis. As used
herein, "Monthly Average Gold Price" means the average London Bullion Market
Association P.M. 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.
If the London Bullion Market Association P.M. Gold Fix ceases to
be made or published, all such references shall be replaced with references to
prices of gold for immediate delivery in the most nearly comparable established
market reasonably selected by Producer as such prices are published in "Metals
Week" or a similar publication.
(ii) If Producer or an Affiliate of Producer causes refined
silver meeting or exceeding generally accepted commercial standards for the sale
of refined silver ("Refined Silver") to be produced from ore mined from the SJ
Claims and, for purposes of determining the Net Smelter Returns the Refined
Silver shall be deemed to have been sold at the Monthly Average Silver Price for
the month in which it was refined, and the Gross Value shall be determined by
multiplying Silver Production during the calendar month by the Monthly Average
Silver Price. As used herein, "Silver Production" means for each calendar month
the quantity of silver outturned to Producer's pool account (or to a third-party
account for the benefit of Producer) by a refinery from ore mined from the SJ
Claims on either a provisional or final settlement basis. As used herein,
"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 calendar month by the number of days for which such
prices were reported.
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If the Handy & ▇▇▇▇▇▇ quotation ceases to be made or published,
all such references shall be replaced with references to prices of silver for
immediate delivery in the most nearly comparable established market selected by
Producer as published in "Metals Week" or a similar publication.
(iii) If Producer sells raw ores of Precious Metals or
concentrates or dore produced from such ores mined from the SJ Claims, then the
Gross Value shall be calculated as set forth in Section 3(d)(i) and (ii), except
that the Gold Production or Silver Production shall, in each case, be equal to
the gold or silver contained in such raw ores, concentrates or dore sold in the
specified month multiplied by (A) the recovery rate contractually determined
between Producer and a third party processor or (B) if there is not a
specifically contracted recovery rate, then by an assumed recovery rate equal to
the average actual recovery rate for such metal during beneficiation by Producer
for the latest calendar quarter ended prior to such month in which ores of such
metal from the SJ Claims were beneficiated by or for Producer. If such ores have
not been so beneficiated by or for Producer during any such calendar quarter,
the recovery rate shall be the actual recovery rate experienced by the purchaser
of such ores, concentrates or dore determined in good faith by Producer:
Gross Value for Precious Metals shall be determined as provided in this
Section 3(d) regardless of any actual selling or price protection arrangements
entered into by Producer with respect to production of Precious Metals from the
SJ Claims including, but not limited to, forward sales, futures trading or
commodity options trading, and any other price hedging, price protection, and
speculative arrangements which may involve the possible delivery of Precious
Metals produced from ores mined from the SJ Claims.
(e) Payment In Kind.
(i) At any time and from time to time, either Bullfrog or RHC
may elect, for any calendar quarter, to receive its Royalty "in kind" by
delivery of Refined Gold as hereinafter provided, by notifying Producer of such
election on or before thirty (30) days prior to the commencement of the quarter.
An election by Bullfrog or RHC to receive its royalty in kind shall be
irrevocable for the calendar quarter for which it is made.
(ii) The quantity of Refined Gold to be delivered to Bullfrog or
RHC as the Bullfrog SJ Royalty or the RHC SJ Claims Royalty shall be determined
as follows: (A) the amount of the Net Smelter Returns payable in cash shall be
determined by multiplying the Net Value determined as provided in Sections 3(c)
and (d) above by 1% in the case of the RHC SJ Claims Royalty and by 4% in the
case of the Bullfrog SJ Claims Royalty, and (B) the quantity of Refined Gold to
be paid as Royalty for the calendar quarter shall be determined by dividing the
cash amount of the Net Smelter Returns payable for each month in the quarter by
the Monthly Average Gold Price for the corresponding month. Producer shall
instruct the refiner to credit to the account of Bullfrog and/or RHC the
quantity of Refined Gold determined as above provided, or shall otherwise
arrange for the delivery of Refined Gold to Bullfrog and/or RHC, with such
credit or delivery to be governed by the procedures set forth in Section 3(f).
Royalty Owner shall be solely responsible for all costs of maintaining its
account at the refinery and for all costs and expenses incurred in connection
with Refined Gold credited to its
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account, and, with respect to Refined Gold delivered to Bullfrog or RHC, for
costs incurred for delivering Refined Gold to Bullfrog or RHC from the refiner
as Royalty hereunder after the making of such credit by the refiner.
(f) Payment of Proceeds Payment. The obligation to pay the SJ Claims
Royalty shall accrue upon the outturn of refined Precious Metals meeting the
requirements of the specified published price to Producer's account (or to a
third-party account for the benefit of Producer) as provided in Sections 3(d)(i)
and (ii) or the sooner sale of unrefined metals, dore, concentrates or ores, as
provided in Section 3(d)(iii). Timing of royalty payments and payment procedures
shall be as follows:
(i) Net Value shall be determined on a calendar month basis. The
RHC SJ Claims Royalty and the Bullfrog SJ Claims Royalty shall be paid on the
fifteenth business day following the last day of the calendar quarter in which
the same accrued. At the time of payment of the Royalty, Producer shall deliver
to RHC and Bullfrog a statement showing in reasonable detail the quantities and
grades of the refined Precious Metals, dore concentrates or ores produced and
sold or deemed sold by Producer in the preceding quarter; the Average Monthly
Price determined as herein provided for refined Precious Metals on which Royalty
is due; Allowable Deductions; the computation of the quantity of Refined Gold
delivered in kind pursuant to Section 3(e); and other pertinent information in
reasonable detail to explain the calculation of the RHC SJ Claims Royalty and
the Bullfrog SJ Claims Royalty with respect to each month in such quarter.
Payment to RHC or Bullfrog shall be made in cash or by check, or upon 48 hours
prior written notice from RHC or Bullfrog, by wire transfer to the account
specified by RHC or Bullfrog in such notice, unless either RHC or Bullfrog has
elected to receive payment in kind pursuant to Section 3(e). If Royalty Owner
comprises more than one person (except for the distinction between RHC and
Bullfrog); (A) such persons shall designate a bank or other agent to receive
payment of all sums payable hereunder from Producer; (B) Producer shall have no
responsibility as to the division of payments among the persons constituting
Royalty Owner; (C) Producer shall not be in default with respect to any payment
until 30 days after it had received delivery of an instrument signed by each
person or entity constituting Royalty Owner that designates the name and address
of a single agent or trustee to whom Producer shall make all payments; and (D)
until Producer receives such designation, Producer may deposit such payments
into a separate interest bearing account pending receipt of the designation.
(ii) Such quarterly statement shall also list the quantity and
quality of any Precious Metals dore in inventory for more than ninety (90) days.
Bullfrog and RHC shall each have ten (10) business days after receipt of the
statement to either: (A) elect that the dore be deemed sold as provided in
Sections 3(d)(i) and (ii) above as of such tenth 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 Allowable Deductions, or (B) elect
to wait until the time that royalties would otherwise become payable pursuant to
subsection (f)(i) hereof The failure of Royalty Owner to respond within such
time shall be deemed to be an election to use the method set forth in (B)
above. No Royalty payment shall be due with respect to stockpiles of ores or
concentrate unless and until such ores or concentrates are actually sold.
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(iii) All Royalty payments shall be considered final and in full
satisfaction of all obligations of Producer with respect thereto, unless
Bullfrog or RHC gives Producer written notice describing and setting forth a
specific objection to the calculation thereof within ninety (90) days after
receipt by Bullfrog or RHC of the quarterly statement herein provided for in
subsection (f)(i). If Bullfrog or RHC notifies Producer with respect to a
particular quarterly statement, Bullfrog or RHC, for a period of thirty (30)
days after Producer's receipt of such notice, shall have the right, upon
reasonable notice and at reasonable times, to have Producer's accounts and
records relating to the calculation of the royalty with respect to the quarter
in question audited by an independent certified public accountant reasonably
acceptable to Producer. If such audit determines that there has been a
deficiency or an excess in the payment made to Bullfrog or RHC such deficiency
or excess shall be resolved by adjusting the next quarterly royalty payment due
hereunder. Bullfrog or RHC shall pay all costs of such audit unless a deficiency
in the payment made to Bullfrog or RHC of 2% (of their respective royalties) is
determined to exist, in which event Producer shall pay such costs. Where Royalty
Owner comprises more than one person (except for the distinction between RHC and
Bullfrog), each person shall conduct joint or simultaneous audits in a manner
which will result in a minimum of inconvenience to Producer.
(g) Quarterly Reconciliation.
(i) If outturn of Precious Metals is made by an independent
third-party refinery on a provisional basis, the Gross Value shall be based upon
the amount of such provisional settlement, but shall be adjusted in subsequent
statements to account for the amount of refined Precious Metals established by
final settlement by such refinery. Within six months after any royalty payment
made pursuant to Section 3(f)(i), Producer may reconcile any estimated Allowable
Deductions reflected in such royalty payment with actual Allowable Deductions as
finally determined and make adjustments therefore in subsequent statements. Any
statements showing such adjustments shall be subject to Royalty Owner's rights
under Section 3(f)(iii).
(ii) In the event either Bullfrog or RHC has been underpaid,
Producer shall increase subsequent royalty payments or deliveries in kind as
necessary to bring Bullfrog's or RHC's royalty into balance. If Bullfrog or RHC
has been overpaid, Producer shall reduce subsequent royalty payments or
deliveries in kind as necessary to bring Bullfrog's or RHC's royalty into
balance. In neither case will either party be required to make direct payments
or repayments to the other party and neither party shall otherwise be liable to
the other for any such overpayments or underpayments, except as set forth in
this section, or unless sufficient additional production is not available to
make the adjustments.
(h) Transfer or Pledge of SJ Royalty. Any person constituting Royalty
Owner may transfer, pledge, mortgage, charge, or otherwise encumber all or any
part of its right, title, and interest in and to the RHC SJ Claims Royalty or
the Bullfrog SJ Claims Royalty, provided that such transfer, pledge, mortgage,
charge, or encumbrance is specifically made subject to the terms of this
Assignment and the Commingling Agreement of even date among the parties to this
Assignment (the "Commingling Agreement." No assignment, pledge, mortgage,
transfer, or other conveyance or encumbrance of the Bullfrog SJ Claims Royalty,
the RHC SJ Claims
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Royalty, or any portion thereof, shall be binding upon Producer, regardless of
whether Producer has actual or constructive knowledge of the change of
ownership, until 30 days after Producer has received from Royalty Owner a
certified copy of the recorded instrument or instruments satisfactory, in the
opinion of Producer, to evidence the change of ownership and to establish the
right, title, or interest of the claiming party and the extent thereof.
(i) Taxes. Royalty Owner shall bear and pay a percentage based upon
Royalty Owner's royalty of any and all taxes assessed upon any minerals with
respect to which the royalty is paid, together with a share based upon the
amount of Royalty Owner's royalty of all severance, production and license
taxes, or other taxes or assessments levied or assessed on account of the
production of such minerals (except income taxes) whether the same are assessed
to Producer or Royalty Owner or otherwise, and Producer is hereby authorized to
pay all such taxes and assessments on behalf of Royalty Owner and to deduct the
amount so paid from any royalties due to Royalty Owner hereunder as provided in
Section 3(c)(iii), or from the royalties due if such payments for Royalty Owner
are made directly by Producer to the taxing authority. Such deductions shall not
duplicate deductions for taxes made in the computation of Allowable Deductions
in accordance with subsection 3(c) above.
(j) Inspections. Any person constituting Royalty Owner, at such Royalty
Owner's expense, may have a representative present at any stage when ores or
mineral products derived after the treatment thereof are weighed, sampled,
assayed, and the contained moisture determined, and shall upon request be
furnished with a part of any sample taken. If more than one person or entity
constitutes Royalty Owner, except for the distinction between RHC and Bullfrog,
such inspections and sample share rights shall be exercised in a collective
manner so as to minimize any inconvenience to Producer.
(k) Records. Producer shall keep accurate records of data necessary for
the computation of royalty hereunder. Producer's records, books, and accounts,
that are related to the computation and payment of the royalty due hereunder
shall be open to the inspection of and copying by Royalty Owner or its
designated representatives at times selected by Royalty Owner upon not less than
three days notice to Producer during normal business hours. Royalty Owner will
honor and comply with any reasonable confidentiality restrictions placed upon
such information by Producer. If more than one person or entity constitutes
Royalty Owner, except for the distinction between RHC and Bullfrog, any such
inspection shall be deemed to be carried out on behalf of all of such
individuals and entities, and such inspections shall be limited to one each
calendar quarter.
(1) Control of Operations. Subject to Section 5.b of the Royalty
Purchase and Sale Agreement, Producer shall have the sole and exclusive right to
determine the timing and the manner of any mining or production from the SJ
Claims and all related exploration, development and mining activities. The
mining of ores from any properties not subject to the SJ Claims Royalty to the
exclusion of ores and minerals that are subject to the SJ Claims Royalty shall
not violate any provision hereof.
(m) Default. Should any default in any of the terms or provisions hereof
occur, Royalty Owner shall give notice to Producer in writing, as hereinafter
provided,
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designating such asserted default. If Royalty Owner comprises more than one
person, except for the distinction between RHC and Bullfrog, such notice shall
not be valid unless it is given by, or by an authorized agent or agents on
behalf of, all such persons and/or entities; provided, however, that such
concurrence shall not be required as between RHC, its successors and assigns,
and Bullfrog, its successors and assigns. Producer shall thereafter have a
period of 60 days from the date of receipt of such notice in which to correct or
commence action to correct the defaults of which it has received notice, except
for the payment of funds, with respect to which the period shall be 10 days.
Should Producer fail to correct said defaults or to commence action to correct
said defaults within the said 10 or 60 day period, Royalty Owner may, at its
election, upon written notice to Producer pursue its remedies with respect to
such default.
(n) Arbitration. All disputes, controversies or claims arising out of or
relating to this Assignment, or the breach thereof, shall be submitted to
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and such arbitration shall be governed by the
provisions of the Federal Arbitration Act and the Nevada Uniform Arbitration
Act (Nev. Rev. Stat. Sec. 38.015 et seq.) or any successor Nevada law. This
arbitration agreement shall be specifically enforceable, and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
(o) Commingling. Commingling of ores produced from the SJ Claims and
products produced after the treatment thereof with ores and products from other
areas may be made by Goldstrike in accordance with the separate Commingling
Agreement among the parties.
(p) Confidentiality. Bullfrog and RHC shall not, without the prior
written consent of Producer, knowingly disclose to any third party any
information or data obtained pursuant to Bullfrog's and RHC's exercise of its
rights under this Assignment which is not generally available to the public;
provided, however, Bullfrog or RHC may disclose information or data pertinent to
this royalty: (i) if required for compliance with applicable laws rules,
regulations or orders of a governmental agency or stock exchange having
jurisdiction, in which event Bullfrog or RHC shall use their best efforts to
provide Goldstrike with a copy of any disclosure in advance; (ii) to any third
party to whom Bullfrog or RHC in good faith, anticipates selling or assigning
its interest in the SJ Royalty, or (iii) to a prospective lender to whom an
interest in payments of production royalties to be made to Bullfrog or RHC would
be granted as security; provided that Goldstrike shall have been provided with a
confidentiality agreement executed by such third party (excluding government
agencies) or lender, which agreement shall include the confidentiality
provisions of this Section.
(q) Production Projections. No later than December 1, each year,
Producer shall provide Bullfrog and RHC with production forecasts or other
information relating to its operations on the SJ Claims sufficient to allow
Bullfrog and RHC to estimate the royalty which shall be payable for the ensuing
year. Such information shall be subject to Section 3(q). Goldstrike makes no
representations as to the accuracy of such projections and shall have no
liability if actual production deviates from the projections.
-10-
4. Applicability of Royalty Purchase and Sale Agreement.
This Assignment is subject to the provisions of the Royalty
Purchase and Sale Agreement, including without limitation, the representations
and warranties of the parties, which shall survive independently of this
Assignment.
5. Miscellaneous.
(a) Successors and Assigns. This Assignment creates an interest
in real property that runs with the land, and it shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
(b) Choice of Law. This Assignment shall be governed in all
respects by the laws of the State of Nevada, except it choice of law rules.
(c) Amendment. This Assignment may not be amended or
supplemented except by an instrument in writing signed by all parties.
(d) Severability. Whenever possible, each provision of this
Assignment shall be interpreted in such manner as to be valid under applicable
law; but, if any provision of this Assignment shall be invalid or prohibited
under applicable law, such provision shall be ineffective to the extent of such
invalidity or prohibition without invalidating the remainder of such provision
or the remaining provisions of this Assignment.
(e) Notices. Any notice or communication required or permitted
to be given hereunder shall be in writing and shall be hand delivered or sent by
certified mail or telephone facsimile to the party to whom such notice is given
hereunder at the address below or at such other address as such party may have
notified the other party in the same manner.
To RHC: Royal Hal Co.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and P. ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
To Bullfrog: Barrick Bullfrog Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
P.O. Box 119
Toronto, Ontario
Canada M5J 2J3
Attn: General Counsel
Fax: (▇▇▇)▇▇▇-▇▇▇▇
-11-
To Goldstrike: Barrick Goldstrike Mines Inc.
▇.▇. ▇▇▇ ▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mine Manager
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Hand delivery and mail delivery shall be effective upon receipt. Delivery by
telephone facsimile shall be effective the first business day after successful
transmission.
(f) Definition of Affiliate. The term "Affiliate" used herein
means any person or entity related to a party that directly or indirectly
controls, is controlled by, or is under common control with that party.
6. Further Assurances.
The parties shall also from time to time and at all times do
such further acts and things and execute all such further documents and
instruments as may reasonably be required in order to carry out and implement
the true intent and meaning of this Assignment.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first set forth above, and shall be deemed effective as of said
date.
BARRICK BULLFROG INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name Printed: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Secretary
-------------------------------------
BARRICK GOLDSTRIKE MINES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name Printed: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Secretary
-------------------------------------
ROYAL HAL CO.
By: /s/ P. ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name Printed: P. ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Title: President
-------------------------------------
-12-
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
On this 30th day of November, 1995, personally appeared before me, a
notary public, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Secretary of BARRICK BULLFROG INC., a
Delaware corporation, personally known (or proved) to me to be the person whose
name is subscribed to the foregoing instrument, who acknowledged that he
executed the foregoing instrument on behalf of the corporation.
Notary Public
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇. #▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
[SEAL] ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ -----------------------------------
My Commission Expires NOTARY PUBLIC
November 21, 1997
State of Utah
My commission expires:
11/27/97
[SEAL]
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
On this 30th day of November, 1995, personally appeared before me, a
notary public, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Secretary of BARRICK GOLDSTRIKE MINES INC.,
a Colorado, corporation, personally known (or proved) to me to be the person
whose name is subscribed to the foregoing instrument, who acknowledged that he
executed the foregoing instrument on behalf of the corporation.
Notary Public
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇. #▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
[SEAL] ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ -----------------------------------
My Commission Expires NOTARY PUBLIC
November 21, 1997
State of Utah
My commission expires:
11/27/97
[SEAL]
-13-
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
On this 30th day of November, 1995, personally appeared before me, a
notary public, P. ▇▇▇ ▇▇▇▇▇▇▇▇, the President of ROYAL HAL CO., a Delaware
corporation, personally known (or proved) to me to be the person whose name is
subscribed to the foregoing instrument, who acknowledged that he executed the
foregoing instrument on behalf of the corporation.
Notary Public
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇. #▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
[SEAL] ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ -----------------------------------
My Commission Expires NOTARY PUBLIC
November 21, 1997
State of Utah
My commission expires:
11/21/97
[SEAL]
-14-
EXHIBIT B
ASSIGNMENT AND AGREEMENT
THIS ASSIGNMENT AND AGREEMENT, made and entered into this 24th day of
February, 1979, by and between LONG LAC MINERAL EXPLORATION LIMITED, a company
duly incorporated under the laws of the Province of Ontario, Canada (hereinafter
called "Long Lac"), and WESTERN STATES MINERALS CORPORATION, a Utah corporation
(hereinafter called "WSMC").
RECITALS
A. Long Lac holds the working interests in sixteen (16) unpatented lode
mining claims, known as the SJ 1-16 claims (hereinafter called "the SJ Claims"),
located by ▇. ▇. ▇▇▇▇▇▇▇▇▇▇ in the County of Eureka, State of Nevada, as more
particularly described in Exhibit A attached hereto.
B. Long Lac holds the leasehold working interest rights in certain lands
as lessee under a Mining Lease with Southern Pacific Land Company, dated
February 15, 1976, No. SPL-634 (hereinafter called "the SP Lease"), as more
particularly described in Exhibit B hereto. All lands covered by the SP Lease
and the SJ Claims and all rights of Long Lac thereunder are sometimes
hereinafter referred to collectively as the "Subject Properties".
C. The Subject Properties, in whole or in part, are subject to a one
percent (1%) net carried interest owned by ▇. ▇▇▇▇▇▇▇ under that certain letter
agreement dated July 7, 1975, as executed in counterparts by and between ▇▇▇▇▇
▇▇▇▇▇▇▇, Long Lac Minerals Exploration Limited, Belmoral Mines Limited, Great
Bear Mining Limited, and Min-Ex Services Limited, and to a five percent (5%) net
carried interest owned by ▇.▇. ▇▇▇▇▇▇▇▇▇▇ under that certain Memorandum of
Agreement dated April 28, 1975, by and between Long Lac Exploration Limited,
Great Bear Mining Limited, Belmoral Mines Limited and Min-Ex Services Limited
(hereinafter collectively called the "Net Carried Interests").
D. Long Lac desires to assign to WSMC all of its right, title and
interest in and to the Subject Properties and convey, or cause to have conveyed,
to WSMC any and all right, title and interest of Long Lac and of ▇. ▇.
▇▇▇▇▇▇▇▇▇▇ in the SJ Claims, subject only to the SP Lease and the Net Carried
Interests, pursuant to the following terms and conditions
NOW, THEREFORE, in consideration of the following mutual promises and
covenants, to be kept and performed by the parties, it is agreed as follows:
1. Grant. Long Lac hereby bargains, sells, transfers, assigns and
conveys to WSMC all of its right, title and interest in and to the Subject
Properties, subject to: (i) a reservation to Long Lac of certain royalties as
provided herein; (ii) the SP Lease and the Net Carried Interests; and (iii) the
other terms and conditions contained herein including, but not limited to, the
right of WSMC to release and reconvey to Long Lac all or part of the Subject
Properties pursuant to Paragraphs 2 and 6 below.
2. Consent to Assignment of the S.P. Lease; Renegotiation of S.P. Lease.
On or before April 2, 1979 (the "Due Date"), Long Lac shall obtain from the
Southern Pacific Land Company written consent to the assignment of the SP Lease
to WSMC (the "Consent") and shall deliver the Consent to the Agent provided for
in the Escrow Agreement attached hereto as Exhibit C and by this reference
incorporated herein (the "Escrow Agreement"). WSMC may elect, at any time, in
its sole discretion, to extend the Due Date by written notice thereof to Long
Lac and to the Agent. In the event Long Lac fails to obtain the Consent on or
before any Due Date then in effect, the initial advance royalty payment of Ten
Thousand Dollars ($10,000) provided for below shall be returned to WSMC,
pursuant to the terms of the Escrow Agreement, and the parties shall have no
further rights or obligations hereunder, subject only to WSMC's obligation to
deliver to Long Lac an executed quitclaim deed, in recordable form, conveying
the Subject Properties to Long Lac.
-▇-
▇▇▇▇ may elect, in its sole discretion, to renegotiate any or all terms
of the SP Lease. In the event that WSMC so elects and upon the execution by WSMC
of any new or amended lease, WSMC shall promptly notify the Agent in writing
thereof, directing the Agent to pay such initial advance royalty payment to Long
Lac, pursuant to the terms of the Escrow Agreement. If at the time of the
execution of any such new or amended lease, such initial advance royalty payment
has been previously returned to WSMC, pursuant to the Escrow Agreement, WSMC
shall promptly make such payment directly to Long Lac.
3. Payments to Long Lac.
(a) Advance Royalty Payments. Upon execution of this agreement, WSMC
shall pay Ten Thousand United States Dollars (U.S. $10,000) to Long Lac as
an advance royalty payment. Such payment shall be made by WSMC to the Agent
for disbursement in accordance with the Escrow Agreement and with Paragraph
2 above.
Commencing not later than the second anniversary date of the execution
hereof and continuing through the fifth anniversary date while this
Agreement remains in effect, WSMC shall pay to Long Lac an annual advance
royalty payment of Twenty Thousand United States Dollars (U.S. $20,000),
except that such payments shall be reduced to the extent of any Earned
Royalties actually paid to Long Lac prior to such due date which have not
been applied to reduce any previous advance royalty payment. All advance
royalties shall be deductible and recovered by WSMC as a credit against any
Earned Royalties which accrue to Long Lac hereunder. It is expressly
understood and agreed that such advance royalty payments are in lieu of any
covenant by WSMC implied or otherwise, to develop the Subject Properties and
that following the payment of a total of Ninety Thousand United States
Dollars (U.S. $90,000) in advance and Earned Royalties,
-3-
WSMC shall have no duty to pay further advance royalties to Long Lac or to
develop the Subject Properties.
(b) Earned Royalties. WSMC shall pay to Long Lac royalties based on
production from the Subject Properties, if any, ("the Earned Royalties") in
amounts calculated as follows:
The Earned Royalty shall be One United States Dollar (U.S. $1.00) per
cubic yard of ore mined by WSMC, for so long as the average market price for
gold during any given payment period is less than or equal to Two Hundred
Fifty United States Dollars per ounce (U.S. $250/ounce), and shall increase
by One United States Dollar (U.S. $1.00) per cubic yard of ore mined for
each full Fifty United States Dollars (U.S. $50) increase in such average
market price during any given payment period. For example:
Market Price per Ounce of
Amount of Royalty per Gold (industrial grade
Cubic Yard of Ore Mined bullion)
----------------------- -------------------------
U.S. $1/cu. yd U.S. $250/ounce or less
U.S. $2/cu. yd U.S. S250.01-300/ounce
U.S. $3/cu. yd U.S. $300.01-350/ounce
All volumes of ore referred to herein shall be the volume of such ore in
its in situ state and shall be measured by WSMC on a calendar quarter basis.
For purposes hereof, "ore" is defined as that material mined from the
Subject Properties by WSMC to be processed for its gold value. It is
expressly understood that WSMC will be removing overburden and waste
material for which no Earned Royalty will be payable and will be removing
other materials of low gold value for which no Earned Royalty will be
payable, except in the event that such" other material is actually
subjected to processing, as WSMC may elect in its sole discretion.
The average market price of gold for the purposes of calculating the
Earned Royalties due Long Lac hereunder shall be the average price of
industrial grade bullion
-4-
gold in the United States quoted in Metals Week over the calendar quarter
for ore mined during such quarter or, if that is not available, the average
price of industrial grade bullion gold in the United States determined on
the basis of a mutually agreeable price quotation system. Earned Royalties
shall be payable no later than the last day of the calendar quarter
following the quarter during which such ore is mined. Earned Royalty
payments shall be accompanied by a settlement sheet and a copy of the
records of volume measurements and gold valuations used as the basis for
computing Earned Royalty or having a bearing on Earned Royalties. All
records relating to the calculation of Earned Royalties shall be available
for inspection by Long Lac during the normal hours of WSMC's operations.
4. Annual Assessment Work. WSMC agrees that it will, for the assessment
year which ends September 1, 1979, and for each subsequent assessment year for
which this Agreement remains in effect on March 1, subject to Paragraph 11
below, make all filings required by law to maintain the SJ Claims, and perform
on or for the benefit of the SJ Claims assessment work of a character and value
reasonably expected to satisfy the requirements of the mining laws of the United
States. In the event that WSMC reasonably determines that any of the SJ claims
are invalid for any reason, it shall have no obligations with regard to such
claims, expressly including any obligations under this Paragraph and under
Paragraph 6 below. If WSMC so determines it shall give Long Lac 30 days prior
written notice before its obligations with regard to said claims shall be
regarded as terminated pursuant to this paragraph. In no event however, may WSMC
terminate its obligations regarding any of the SJ claims pursuant to this
paragraph by giving notice less than 60 days prior to the expiry of the then
current assessment year.
In the event that the performance of work intended by WSMC in good faith
to satisfy the requirements under the mining laws with respect to assessment
work shall be deficient in one respect or another and in the event that such
failure shall, through
-5-
relocation of a third party or otherwise, result in the forfeiture or loss of
such claim or claims as to which there is a deficiency in the work, WSMC shall
not be liable to Long Lac or others in damages or otherwise on account of such
failure to meet the requirements of the mining laws. If WSMC acquires any notice
through legal proceedings, notice of relocation or attempted relocation, or in
any other manner that a third person or any agency of the government of the
State of
Nevada or the United Sates is challenging the validity of the SJ
claims, it shall immediately notify Long Lac thereof. If WSMC choses not to
defend such action or not to challenge such relocation it shall immediately
notify Long Lac thereof.
-▇▇-
▇▇▇▇ agrees to prepare and timely file all instruments, documents, maps
and perform other work which may be required for compliance with the filing
requirements of the Federal Land Policy and Management Act of 1976 (43 U.S.C.
ss. 1744) to the extent applicable to any of the SJ claims which WSMC reasonably
determines to be valid. Long Lac shall reimburse WSMC for all costs so incurred
not to exceed Two Hundred United States Dollars (U.S. $200) per claim. WSMC
shall be reimbursed by offsetting such costs against royalties due Long Lac by
WSMC pursuant to the provisions of Paragraph 16 below. Long Lac, at WSMC's
request, shall execute or cause to be executed any and all documents necessary
or desirable for this purpose and shall cooperate fully with WSMC in the
preparation and filing of necessary instruments, documents and maps.
5. Payments under the SP Lease and the Net Carried Interests; Authority
to Amend. WSMC agrees to perform all duties and obligations and make all
payments under, and in accordance with terms and conditions of, the SP Lease and
to make all payments attributable to the Net Carried Interests. WSMC shall have
the authority and the right, as it may elect in its sole discretion, to
negotiate and execute any amendments, modifications and other changes to the SP
Lease, the Net Carried Interests and such other agreements as may affect the
Subject Properties or WSMC rights hereunder. Any such amendments, modifications
or other changes shall be binding on Long Lac in the event the Subject
Properties are reconveyed to it.
6. Release and Reconveyance of Subject Properties. Subject to the
provisions of this Paragraph, WSMC shall have the right, but not the obligation,
at any time, to reconvey to Long Lac all or any one or more of the SJ Claims,
and all or any portion of the SP Lease and thereby to terminate this
-6-
agreement as to such reconveyed property. Such reconveyance shall be effected by
written notice to Long Lac thereof and by delivery to Long Lac of a quitclaim
deed in recordable form conveying such property to Long Lac. With respect to any
reconveyance of the properties covered by the SP Lease, WSMC also shall comply
with the provisions of the SP Lease.
Except with regard to a reconveyance of the Subject Properties under
Paragraph 2, with respect to any portion of the Subject Properties reconveyed
hereunder, WSMC shall, at the time of such reconveyance, have paid all advance
royalty payments to third parties and otherwise performed all necessary
obligations so that the property so released shall be in good standing for a
period of six (6) months following the date of reconveyance of such property to
Long Lac. In the event of such reconveyance, all payments theretofore made by
WSMC shall be retained by Long Lac and, except as provided in this Paragraph,
WSMC shall have no further obligations with respect to the portion of the
Subject Properties to which such reconveyance applies.
7. Further Documents; Cooperation: Long Lac agrees to provide to WSMC
copies of documents in recordable form which establish Long Lac's right, title
and interest in and to the Subject Properties and of documents in recordable
form evidencing the nature and extent of the Net Carried Interests. Long Lac
expressly agrees to obtain from ▇. ▇. ▇▇▇▇▇▇▇▇▇▇ and provide to WSMC a
conveyance in recordable form satisfactory to WSMC granting all his right, title
and interest in the SJ Claims to WSMC and warranting that: (i) the SJ Claims are
free and clear of all liens and encumbrances, except for the Net Carried
Interest; (ii) to the best of his information and belief the SJ Claims were
validly located and have been duly maintained in accordance with law; and (iii)
he has no knowledge of any conflicting mining claims, except those certain
claims known as the "Bazza" claims controlled by Pancana Industries, Inc.
-7-
Long Lac further agrees to provide WSMC copies of documents in
recordable form satisfactory to WSMC evidencing that: (i) Long Lac is the sole
survivor of that certain association known as the "
Nevada Syndicate"; (ii) Long
Lac has succeeded to all rights belonging thereto; (iii) no other member or
party to the
Nevada Syndicate has any right, title or interest to the Subject
Properties, except the Net Carried Interests; and (iv) Long Lac has the right to
convey the Subject Properties to WSMC, free and clear of all liens and
encumbrances, except for the Net Carried Interests and the SP Lease
requirements.
At WSMC's request, Long Lac shall make available to WSMC for copying any
other reports, evaluations, maps and documents in Long Lac's possession or to
which it has access relating to the Subject Properties. Long Lac agrees to
cooperate with WSMC in any reasonable way to assist WSMC in effectuating the
purposes of this agreement and, at WSMC's request, to execute any further
documents deemed by WSMC to be necessary or convenient for such purposes.
8. Long Lac's Warranties. Long Lac represents that: (i) to the best of
its knowledge and belief the SJ claims were properly located in accordance with
applicable laws and regulations of the State of
Nevada and of the United States;
(ii) to the best of its knowledge and belief, assessment work as required by the
laws and regulations of the State of Nevada and the United States has been
performed as required by law and appropriate proofs of labour filed; (iii) it
has no knowledge of any conflicting mining claims except those certain claims
known as the "Bazza" claims; and (iv) it is not in default of any payment or
obligation under the SP lease and that the SP lease is currently valid and in
full effect.
Long Lac covenants and warrants that: (i) it has not conveyed or
otherwise encumbered the Subject Properties;
-8-
(ii) it is the sole survivor of the Nevada Syndicate; (iii) it has succeeded to
all rights of the Nevada Syndicate; (iv) no other member of or party to the
Nevada Syndicate holds any right, title or interest in or to the Subject
Properties, except the Net Carried Interests; (v) that Long Lac has the right to
convey the Subject Properties to WSMC; and (vi) the royalties and payments due
under (a) the SP Lease and (b) the Net Carried Interests are the only royalties
and payments to which the Subject Properties are subject.
Long Lac further covenants and warrants that this agreement shall cover
and extend to any further or additional right, title, interest or estate
hereafter acquired by Long Lac in or to the Subject Properties.
Long Lac agrees to indemnify, defend and hold WSMC, its successors and
assigns, harmless from and against any and all liabilities, costs, damages, and
expenses, including reasonable attorney's fees, which may result to WSMC as a
result of any activities, events or conditions existing with respect to the Sub
Properties directly attributable to Long Lac or its employees, agents, servants
or authorized representatives prior to the date of execution hereof.
9. Mining Operations; Insurance and Inspections
WSMC agrees to conduct all mining operations on the Subject Properties
in accordance with good mining practices and to save harmless and fully
indemnify Long Lac from any liability arising out of injuries to the person or
property of third persons (other than Long Lac, its employees, agents or
representatives) by reason of the operations of WSMC, its employees, and
subcontractors and their employees upon the Subject Properties.
WSMC agrees to carry such insurance, covering all persons working in or
on the Subject Properties for WSMC, as will fully comply with the requirements
of the statutes of the State of Nevada pertaining to workmen's compensation and
occupational disease and disabilities as are now in force or as may be hereafter
amended or enacted. In addition, WSMC
-9-
agrees to carry liability insurance in reasonable amounts. Further, WSMC agrees
to comply with all the terms and provisions of all applicable laws of the State
of Nevada, and of the United States of America now existing or as hereinafter
amended or enacted, pertaining to social security, unemployment compensation,
wages, hours and conditions of labor, and to indemnify and hold Long Lac
harmless from payment of any damages occasioned by WSMC's failure to comply
with said laws.
Long Lac shall have the right, at reasonable times and at the sole risk
of Long Lac, to enter upon the Subject Properties for the purpose of inspecting
the same and any work being conducted by WSMC thereon.
WSMC agrees to make available to Long Lac upon termination of this
agreement for examination any survey maps, drill hole logs, title abstracts
and title opinions, and other information on the Subject Properties, if any,
which it develops during the term of this agreement. Long Lac agrees to treat
any information it receives from WSMC as proprietary to WSMC and confidential
and not disclose it to third persons without the prior written approval of WSMC
until this agreement is terminated.
10. Covenants of the Parties.
10.1 Covenants of WSMC. In addition to obligations otherwise imposed
upon it by this agreement, WSMC covenants and agrees as follows:
10.1.1 Corporate Status. WSMC is a corporation duly organized and
existing, and in good standing, under the laws of the State of Utah, and
is duly authorized to carry on its business in Nevada.
10.1.2 Corporation Authorization; Impediments. WSMC is duly
authorized to execute and deliver this agreement and to perform all its
obligations hereunder, and has obtained, or will use its best efforts to
obtain, all governmental and other approvals with respect thereto.
-10-
10.1.3 Broker's or Finder's Fees. WSMC has not engaged or employed
any broker or finder in connection with the negotiation, execution and
delivery of this agreement, and no broker's or finder's fee or
commission is due with respect thereto.
10.1.4 Binding Obligation. This agreement; when duly executed by the
parties hereto, will constitute a valid and binding obligation of WSMC
enforceable against WSMC in accordance with its terms.
10.2 Covenants of Long Lac. In addition to obligations otherwise
imposed upon it by this agreement, Long Lac covenants and agrees as follows:
10.2.1 Corporate status. Long Lac is a corporation duly organized
and existing, and in good standing, under the laws of the Province of
Ontario, Canada, and is duly authorized to carry on its business as
presently conducted in Nevada.
10.2.2 Corporation Authorization; Impediments. Long Lac is duly
authorized to execute and deliver this agreement and to perform all its
obligations hereunder.
10.2.3 Broker's or Finder's Fees. Long Lac has not engaged or
employed any broker or finder in connection with the negotiation,
execution and delivery of this agreement, and no broker's or finder's
fee or commission is due with respect thereto.
10.2.4. Binding Obligation. This agreement, when duly executed by
the parties hereto, will constitute a valid and binding obligation of
Long Lac, enforceable against Long Lac in accordance with its terms.
11. Force Majeure. In the event either party is rendered unable, wholly or
in part, by force majeure applying to it, to carry on its obligations under this
agreement (other than the obligation to make payment of monetary amounts due
hereunder or Long Lac's obligation under Paragraph 2, above), it is agreed that
the obligations of such party, so
-11-
far as they are affected by such force majeure, shall be suspended during the
continuance of any inability so caused, but for no longer period; that the
various periods and terms provided for herein shall be extended for a period
equivalent to such period of force majeure; and, such cause shall, so far as
possible, be remedied with all reasonable dispatch. Said party will promptly
notify the other party of the commencement and termination of any event to
force majeure.
The term "force majeure," as employed herein shall mean acts of God,
strikes, lockouts or other industrial disturbances, unavoidable accidents,
uncontrollable delays in transportation, inability to obtain necessary materials
in the open market, any State or Federal laws, regulations or requirements
(expressly including inability to obtain necessary governmental approvals on
terms reasonably acceptable to the applying party), or other matters beyond the
reasonable control of the party, whether similar to matters herein specifically
enumerated or not; provided, however, that performance shall be resumed within a
reasonable period of time after such cause has been removed; and, provided,
further that the party subject to the event of force majeure shall not be
required against its will to adjust any labor dispute or to question the
validity of or to refrain from judicially testing the validity of any State or
Federal order, regulation or law.
12. Notices. Any notice or delivery of information herein contemplated
to be given to WSMC shall be sufficient if given in writing by registered mail
and addressed to:
Western States Minerals Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
or to such other address or addresses as Western States may from time to time
designate. Any notice or delivery of information herein contemplated to be
given to Long Lac,
-12-
shall be sufficient if given in writing by registered mail and addressed to:
Long Lac Mineral Exploration Limited
Suite 1900
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or to such other address or addresses as Long Lac may from time to time
designate.
Except as otherwise provided herein, service of notice of delivery of
information shall be effective and complete five days after deposit thereof in
the United States or Canadian (as appropriate) mail with postage prepaid and
addressed as aforesaid.
13. Arbitration. All disputes, controversies or claims arising out of or
relating to this agreement, or the breach thereof, shall be submitted to binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and such arbitration shall be governed by the
provisions of the Nevada Uniform Arbitration Act (Nev. Rev. Stat. Section 38.015
et seq.) or any successor Nevada law. This arbitration agreement shall be
specifically enforceable, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.
14. Assignment; Inurement. Long Lac may not assign all or any portion of
its interest hereunder without the prior written consent of WSMC, except that
Long Lac may assign to any parent, subsidiary or affiliate of Long Lac without
such consent. No assignment of any interest hereunder shall be effective until
receipt by the nonassigning party of written notice of such assignment. This
agreement shall be binding upon and inure to the benefit of the parties hereto,
their successors and assigns.
15. Title to Equipment and Structures. All tools, equipment, pipelines,
apparatus, buildings, structures and
-13-
property of every nature and description, whether or not affixed to the soil,
purchased for use on the Subject Properties by WSMC, shall be deemed to be and
shall remain the personal property of WSMC and title thereto shall at all times
remain and be in WSMC. WSMC shall have the right at all times during the term of
this agreement and for a period of six months after the reconveyance of any
portion of the Subject Properties to remove such property from such portion of
the Subject Properties. Any property not so removed within such six months shall
become the sole property of Long Lac.
16. Set-Off Rights. In the event that WSMC should become compelled by
court order to make any payments based on production from the Subject Properties
or otherwise, in excess of the royalties and payments under the SP Lease and the
Net Carried Interests or the royalty payments which become due and payable to
Long Lac pursuant hereto, or should incur costs for which it is entitled to
reimbursement pursuant to Paragraph 4 above, WSMC shall have the right to retain
all royalty payments which thereafter become due and payable to Long Lac
hereunder until such time as WSMC has recovered the total amounts so paid by
WSMC or such costs incurred by WSMC. Retention by WSMC of royalty payments
pursuant to this Paragraph shall not, under any circumstances, be deemed to
constitute a default by WSMC hereunder, and the amount so retained by WSMC
shall, for all purposes of determining compliance by WSMC with the provisions of
this agreement, be deemed to have been paid to Long Lac. The provisions of this
Paragraph shall not be deemed to limit or restrict in any manner any other legal
or equitable rights of WSMC.
17. Default. Should any default in any of the terms or provisions hereof
occur, Long Lac shall give notice to WSMC in writing as hereinafter provided,
designating such asserted default. WSMC shall thereafter have a period of sixty
(60) days from the date of receipt of such notice within which to correct or
commence action to correct the
-14-
defaults of which it has received notice. Should WSMC fail to correct said
defaults or to commence action to correct said defaults within said sixty-day
period, Long Lac may, at its election, upon written notice to WSMC cancel and
terminate this Agreement. It is specifically understood and agreed that, subject
to the obligation of WSMC to pay royalties based upon production from the
Subject Properties incurred prior to the date of such termination, the sole
liability of WSMC for any default under the terms hereof, shall be such
termination and WSMC shall under no circumstances have any liability to Long Lac
by way of damages of any kind or otherwise.
18. Rights-Of-Way. Long Lac hereby authorizes WSMC to utilize all rights
or entitlements which Long Lac may hold for purposes of access to the Subject
Properties and which may be assigned by Long Lac to or otherwise be used by
WSMC, and Long Lac agrees to maintain such rights and entitlements in effect so
long as this Agreement shall be in effect.
19. Memorandum for Recording. WSMC may cause to be prepared a memorandum
form of agreement which it determines to be suitable for recording with the
Clerk and County Recorder of Eureka County, Nevada. Long Lac agrees to execute
promptly any such memorandum agreement upon request by WSMC.
20. Entire Agreement. This instrument represents the full understanding
of the parties, there being no oral agreements, promises or representation
which are or may be incidental with or supplementary to the provisions hereof.
21. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada, except insofar as it may become
necessary to comply with Federal statutes, rules or regulations.
-15-
IN WITNESS WHEREOF, the parties have executed this agreement this 24th
day of February, 1979.
WESTERN STATES MINERALS
CORPORATION
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title: President
--------------------------------------
LONG LAC MINERAL EXPLORATION
LIMITED
By: /s/ [ILLEGIBLE]
-----------------------------------------
And: /s/ [ILLEGIBLE]
----------------------------------------
(SEAL)
STATE OF COLORADO )
) ss.
COUNTY OF JEFFERSON )
On February 24, 1979, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ personally appeared before me,
a notary public, and who acknowledged that he executed the above instrument.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Notary Public
My commission expires: Nov. 16, 1980.
[Acknowledgement of Long Lac to be
completed by U.S. Consulate on
separate page and attached hereto.]
Province of Ontario )
Judicial District of York )
On Thursday the 12th day of April, 1979, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.▇.
Wage personally appeared before me, a notary public, and who acknowledged that
they were the President and Vice-President of Long Lac Mineral Exploration
Limited and that they each had executed the above instrument.
/s/ [ILLEGIBLE]
--------------------------------------------
A Notary Public in and for
the Province of Ontario
(SEAL)
My commission is unlimited as to time.
-16-
EXHIBIT A
To Assignment and Agreement of
February 24, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Minerals Corporation
and Long Lac Mineral Exploration Limited
SJ Claims (County of Eureka, State of Nevada)
Certificate of Location of
Date of Recording Recording Data
Name of Claim Location Date Book Page
------------- -------- --------- -------------- -----------
SJ Claim ▇▇. ▇ ▇▇▇. ▇▇, ▇▇▇▇ ▇▇▇▇. 22, 1975 52 327
" No. 2 " " " " " " " 328
" No. 3 " " " " " " " 329
" No. 4 " " " " " " " 330
" No. 5 " " " " " " " 331
" No. 6 " " " " " " " 332
" No. 7 " " " " " " " 333
" No. 8 " " " " " " " 334
" No. 9 " " " " " " " 335
" No. 10 " " " " " " " 336
" No. 11 " " " " " " " 337
" No. 12 " " " " " " " 338
" No. 13 " " " " " " " 339
" No. 14 " " " " " " " 340
" No. 15 " " " " " " " 341
" No. 16 " " " " " " " 342
EXHIBIT B
To Assignment and Agreement of
February 24, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Minerals Corporation
and Long Lac Mineral Exploration Limited
Property Covered by SP Lease
(County of Eureka, State of Nevada)
MDM
Description Sec. Twp Rge Acres
----------- ---- --- --- -----
E1/2 25 T36N R49E 320.00
EXHIBIT C
To Assignment and Agreement of
February 24, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Minerals Corporation and
Long Lac Mineral Exploration Limited
ESCROW AGREEMENT
A. This Escrow Agreement relates to an Assignment of certain mining
properties by and between Western States Minerals Corporation ("WSMC") and Long
Lac Mineral Exploration Limited ("Long Lac") February ___, 1979 (the "Assignment
and Agreement").
B. The payment by WSMC to Long Lac of the sum of $10,000 as provided
for in Paragraph 3 of the Assignment and Agreement shall be held in escrow with
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Agent") pursuant to the following instructions and
provisions.
INSTRUCTIONS
1. WSMC shall deposit in escrow with the Agent simultaneously with its
execution of five (5) copies of the agreement to which this Exhibit C is
appended a Certified check in the amount of $8,500 payable to Long Lac, together
with a statement concerning the withholding by Western States of $1,500, for
payment over to the Internal Revenue Service pursuant to applicable Treasury
Regulations and the U.S.-Canada Tax Treaty (the "Check"). Said executed copies
of the Assignment and Agreement shall be promptly forwarded to Long Lac by the
Agent.
2. Long Lac shall deposit in escrow with Agent the five (5) copies of
the agreement to which this Exhibit C is appended, executed by Long Lac, with
said Exhibit C also executed by Long Lac and with a proper acknowledgment of
Long Lac's execution of the agreement by a consular officer of the United States
attached to each such copy. In the event that such copies of the Assignment and
Agreement, executed by Long
Lac, have not been delivered to the Agent by Long Lac on or before April 2,
1979, this Escrow Agreement shall be deemed void and terminated, the Agent shall
return the Check to WSMC, and the Agent shall have no further responsibility
hereunder.
3. Subject to Paragraph 2 above and Paragraph 4 below, the Check is to
be held by the Agent until Long Lac shall deliver to the Agent a written
agreement (the "Consent") executed and acknowledged by an authorized officer of
the Southern Pacific Land Company ("SP") consenting to the assignment of the
Mining Lease No. SPL-634 dated February 15, 1976, by and between Southern
Pacific Land Company and Long Lac (The "SP Lease") by Long Lac to WSMC in the
form of the Assignment and Agreement.
The Consent shall be in form suitable for recording and shall be
accompanied by an opinion of counsel (the "Opinion of Counsel") that (i) the
Consent permits assignment by Long Lac to WSMC of the SP Lease in the form of
the Assignment and Agreement; (ii) the Consent has been executed and
acknowledged by an authorized officer of SP and is binding upon SP; and (iii)
the Consent is in form suitable for recording.
4. Upon delivery to the Agent of the Consent and Opinion of Counsel,
the Agent: (i) shall deliver the Check to Long Lac, (ii) shall deliver the
Consent and Opinion of Counsel to WSMC, (iii) shall deliver two (2) executed
copies of the Assignment and Agreement to Long Lac, and two (2) executed copies
of the Assignment and Agreement to WSMC, and (iv) shall notify Long Lac and WSMC
that all terms and instructions of this Escrow Agreement have been performed.
Upon the performance of the above duties by the Agent, this Escrow Agreement
shall be terminated.
5. In the event that both the Consent and Opinion of Counsel have not
been delivered to the Agent on or before April 2, 1979 (the "Due Date"), or on
or before such other Due Date as WSMC may hereafter designate by written notice
to
-2-
the Agent on or before April 2, 1979, the Agent shall deliver the Check to WSMC
and this Escrow Agreement shall be terminated.
6. Notwithstanding any other provisions contained herein, upon receipt
by the Agent of written notice from WSMC that WSMC has elected to renegotiate
the SP Lease and has executed a new or amended lease, the Agent shall deliver
the Check to Long Lac and this Escrow Agreement shall be terminated.
7. Any notices or deliveries provided for herein shall be in writing
and shall be deemed given to a party when a copy thereof, addressed as provided
below, is delivered, either by hand, or by registered or certified mail, return
receipt requested, to the address for such party set forth below or such other
address as the party to be notified may indicate in writing to the other
parties:
Notices and deliveries for WSMC shall be addressed:
Western States Minerals Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Notices and deliveries for Long Lac shall be addressed:
Long Lac Mineral Exploration Limited
Suite 1900
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Notices and deliveries for Agent shall be addressed:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
2600 Colorado National Building
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
GENERAL PROVISIONS
1. The Agent shall have no duty to know or determine the performance or
non-performance of any provision of any agreement between the other parties
hereto, and the original, or a copy, of any such agreement deposited with the
Agent shall not bind the Agent in any manner. The Agent assumes no
responsibility for the validity or sufficiency of
-3-
any documents or papers or payments deposited or called for hereunder.
2. This Escrow Agreement may be supplemented, altered, amended,
modified or revoked by writing only, signed by all of the parties hereto, and
approved by the Agent, upon payment of all fees, costs and expenses incident
thereto.
3. No assignment, transfer, conveyance or hypothecation of any right,
title or interest in and to the subject matter of this Escrow Agreement shall be
binding upon the Agent unless written notice thereof shall be served upon the
Agent and all fees, costs and expenses incident thereto shall have been paid and
then only upon the Agent's assent thereto in writing.
4. The Escrow Agent shall not be personally liable for any act it may
do or omit to do hereunder as such agent, while acting in good faith and in the
exercise of its own best judgment, and any act done or omitted by it pursuant to
the advice of counsel shall be conclusive evidence of such good faith. The Agent
shall have the right at any time to consult with counsel upon any question
arising hereunder and shall incur no liability for any delay reasonably required
to obtain such advice.
5. The Agent is hereby expressly authorized to disregard any and all
notices or warnings given by any of the parties hereto, or by any other person,
firm or corporation, excepting only orders or process of court, and is hereby
expressly authorized to comply with and obey any and all process, orders,
judgments or decrees of any court, and in the case the Agent obeys or complies
with any such process, order, judgment or decree of any court it shall not be
liable to any of the parties hereto or to any other person, firm or corporation
by reason of such compliance, notwithstanding any such process, order, judgment
or decree be subsequently reversed, modified, annulled, set aside or vacated, or
found to have been issued or entered without jurisdiction.
-4-
6. In consideration of the acceptance of this Escrow Agreement by the
Agent, the undersigned agree, jointly and severally, for themselves, their
successors and assigns, to indemnify and hold the Agent harmless as to any
liability by it incurred to any other person, firm or corporation by reason of
its having accepted the same, or in connection herewith, and under such
circumstances, or in the event of a dispute, whether or not resulting in
litigation, between the parties hereto, or between the parties hereto and the
Agent, to reimburse the Agent for all its expenses, including, among other
things, court costs and reasonable attorneys' fees incurred in connection
therewith; and that the Agent shall have a first and prior lien upon all
deposits made hereunder to secure the performance of said agreement of indemnity
and the payment of all of its fees, charges and expenses, hereby expressly
authorizing the Agent in the event payment is not received promptly from the
undersigned, to deduct such fees, charges and expenses without previous notice
from any funds deposited hereunder.
7. The Agent shall be under no duty or obligation to ascertain the
identity, authority or rights of the parties (or their agents) executing or
delivering or purporting to execute or deliver this Escrow Agreement or any
documents or papers or payments deposited or called for hereunder.
8. The Agent shall not be liable for the outlawing of any rights under
any Statute of Limitations or by reason of laches in respect to the Escrow
Agreement or any documents or papers deposited.
9. In the event of any dispute between the parties hereto as to the
facts of default, the validity or meaning of this Escrow Agreement or any other
fact or matter relating to the transaction between the parties, the Agent is
instructed as follows:
(a) That it shall be under no obligation to act, except under process
or order of court, or until it has
-5-
been adequately indemnified to its full satisfaction, and shall sustain no
liability for its failure to act pending such process or court order or
indemnification;
(b) That it may in its sole and absolute discretion, deposit the
property described herein or so much thereof as remains in its hands with
the then Clerk, or acting Clerk, of the District Court of the City and
County of Denver, State of Colorado, and interplead the parties hereto, and
upon so depositing such property and filing its complaint in interpleader
it shall be relieved of all liability under the terms hereof as to the
property so deposited and shall be entitled to recover in such interpleader
action, from the other parties hereto, its reasonable attorney fees and
related costs and expenses incurred in commencing such action and
furthermore, the parties hereto for themselves, their heirs, legal
representatives, successors and assigns do hereby submit themselves to the
jurisdiction of said court and do hereby appoint the then Clerk, or acting
Clerk, of said court as their agent for the service of all process in
connection with such proceedings. The institution of any such interpleader
action shall not impair the rights of the Agent under paragraph 6, above.
10. The validity and effect of this Escrow Agreement shall be
determined in accordance with the laws of the State of Colorado.
11. This Escrow Agreement shall bind and inure to the benefit of the
parties hereto and their successors and assigns.
-6-
IN WITNESS WHEREOF the undersigned have hereunto affixed their
signatures as of the date first above written.
LONG LAC MINERAL EXPLORATION WESTERN STATES MINERALS
LIMITED CORPORATION
By: /s/ (ILLEGIBLE) By: /s/ (ILLEGIBLE)
--------------------------- --------------------------------
PRESIDENT
And: /s/ (ILLEGIBLE) Title: President
-------------------------- -----------------------------
VICE-PRESIDENT
Acceptance of the foregoing Escrow
Agreement and receipt of Check is
hereby acknowledged this 24th day
of February, 1979.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Agent
-7-
EXHIBIT C
FIRST AMENDMENT
TO
ASSIGNMENT AND AGREEMENT
THIS FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT is made and entered
into as of this 16th day of October, 1981, by and between LONG LAC MINERAL
EXPLORATION LIMITED, a company duly incorporated under the laws of the Province
of Ontario, Canada (hereinafter called "Long Lac"), and WESTERN STATES MINERALS
CORPORATION, a Utah corporation (hereinafter called "WSMC").
RECITALS
A. Long Lac holds the working interests in sixteen (16) unpatented lode
mining claims, known as the SJ 1-16 claims (hereinafter called the "SJ Claims"),
located by ▇. ▇. ▇▇▇▇▇▇▇▇▇▇ in the County of Eureka, State of Nevada, as more
particularly described in Exhibit A attached hereto;
B. Long Lac holds the leasehold working interest rights in certain
lands as lessee under a Mining Lease with Southern Pacific Land Company, dated
February 15, 1976, No. SPL-634 (hereinafter called the "SP Lease"), as more
particularly described in Exhibit B hereto. All lands covered by the SP Lease
and the SJ Claims and all rights of Long Lac thereunder are sometimes referred
to collectively as the Subject Properties";
C. Long Lac and WSMC entered into a certain Assignment and Agreement
dated February 24, 1979 (the "1979 Assignment and Agreement") under which Long
Lac assigned its interest in the Subject Properties to WSMC, subject to the
terms therein;
D. WSMC has discovered a deposit of mineralization on the Subject
Properties; and
E. Long Lac and WSMC now desire to revise Long Lac's production royalty
reserved in the 1979 Assignment and Agreement toward the purposes of reducing
the royalty burden on the Subject Properties, facilitating the further
development and, if warranted, the production therefrom.
AGREEMENT
NOW, THEREFORE, FOR A GOOD AND VALUABLE CONSIDERATION, the sufficiency
of which is hereby confessed and acknowledged, Long Lac and WSMC agree as
follows:
1. Section 3 (b) of the 1979 Assignment and Agreement is deleted in its
entirety and in place thereof is substituted the following:
(b) Earned Royalties. Long Lac reserves and WSMC shall pay to
Long Lac as production royalty, 5% of the NET SMELTER RETURNS from the
production of minerals mined and sold from the SJ Claims. Long Lac further
reserves, and WSMC further agrees to pay to Long Lac as production royalty,
2-1/2% of the NET SMELTER RETURNS from the production of minerals mined and
sold from the SP Lease. For purposes of this section 3(b) "NET SMELTER
RETURNS" shall mean the actual proceeds of sale less (i) custom smelting
costs, treatment charges and penalties, including,
but without being limited to, metal losses, penalties for impurities and
charges for refining and selling; (ii) costs of transportation from the
concentrator to a mint, smelter, or other place of treatment; (iii) in the
event crude products or concentrates are shipped to a concentrator or
smelter owned and operated by WSMC, the net smelter returns for which
royalties are calculated shall be no less favourable to Long Lac than if
such crude products or concentrates had been shipped to the nearest
concentrator or smelter which would accept such products, except that
charges for transportation, on crude products or concentrates shipped to
WSMC's smelter shall be the actual cost to WSMC.
2. Except to the extent amended in this FIRST AMENDMENT TO ASSIGNMENT
AND AGREEMENT, the 1979 Assignment and Agreement is hereby ratified,
republished, and confirmed, and as amended remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this FIRST AMENDMENT TO
ASSIGNMENT AND AGREEMENT effective as of the day and, year first above written.
WESTERN STATES MINERALS CORPORATION
Attest: By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
(ILLEGIBLE) Title: President
Secretary --------------------------------------
LONG LAC MINERAL EXPLORATION LIMITED
By /s/ (ILLEGIBLE) PRESIDENT
-----------------------------------------
And: /s/ (ILLEGIBLE) VICE PRESIDENT
----------------------------------------
STATE OF COLORADO )
) ss.
COUNTY OF JEFFERSON )
On February 8, 1982, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ personally appeared before me, a
notary public, and acknowledge that he executed the above instrument.
/s/ ▇▇▇▇ ▇. ▇▇▇
--------------------------------------------
NOTARY PUBLIC
Residing at: /s/ Colarado
--------------------------------
My commission expires: 11-5-84.
PROVINCE OF ONTARIO )
JUDICIAL DISTRICT OF YORK )
On Wednesday, the 6th day of January, 1982, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇
▇. Shauhass personally appeared before me, a notary public, and acknowledged
that they were the President and Vice-President of Long Lac Mineral Explore,
Limited and that they each had executed the above instrument.
/s/ (ILLEGIBLE)
--------------------------------------------
A NOTARY PUBLIC in and for the
Province of Ontario
My commission is unlimited as to time.
-2-
[Certificate of Authentication to be
completed by U.S. Consulate on
separate page and attached hereto.]
Canada )
Province of Ontario )
City of Toronto ) ss: CERTIFICATE OF AUTHENTICATION
Consulate General of the ) (Notary Public)
United States of America )
I, the undersigned, _________________. Consul of the United States of
America at ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, duly commissioned and qualified, do hereby
certify that ________________________________________________, whose name is
subscribed to the annexed document, was at the time of subscribing the same a
Notary Public of the Province of Ontario, Canada.
For the contents of the annexed document, I assume no responsibility.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of
the Consulate General of the United States of America at Toronto, Canada,
this ____ day of ________________, 1981.
--------------------------------------
Consul of the United States of America
EXHIBIT A
To First Amendment to Assignment and
Agreement of October 16, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Minerals Corporation and
Long Lac Mineral Exploration Limited
SJ Claims (County of Eureka, State of Nevada)
Certificate of Location of
Date of Recording Recording Data
Name of Claim Location Date Book Page
------------- -------- --------- -------------- -----------
SJ Claim ▇▇. ▇ ▇▇▇. ▇▇, ▇▇▇▇ ▇▇▇▇. 22, 1975 52 327
" No. 2 " " " " " " " 328
" No. 3 " " " " " " " 329
" No. 4 " " " " " " " 330
" No. 5 " " " " " " " 331
" No. 6 " " " " " " " 332
" No. 7 " " " " " " " 333
" No. 8 " " " " " " " 334
" No. 9 " " " " " " " 335
" No. 10 " " " " " " " 336
" No. 11 " " " " " " " 337
" No. 12 " " " " " " " 338
" No. 13 " " " " " " " 339
" No. 14 " " " " " " " 340
" No. 15 " " " " " " " 341
" No. 16 " " " " " " " 342
A-1
EXHIBIT B
To First Amendment to Assignment and
Agreement of October 16, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Minerals Corporation and
Long Lac Mineral Exploration Limited
Property Covered by SP Lease
(County of Eureka, State of Nevada)
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MDM
Description Sec. Twp Rge Acres
----------- ---- ---- ---- -----
E1/2 25 T36N R49E 320.00
B-1
EXHIBIT D
ASSIGNMENT
THIS INDENTURE made in duplicate as of the 1st day of December, 1982.
BETWEEN:
LONG LAC MINERAL EXPLORATION LIMITED, a
corporation incorporated under the laws of
the Province of Ontario;
(hereinafter referred to as the "Assignor")
OF THE FIRST PART
-and-
LONG LAC MINERAL EXPLORATION (TEXAS) INC., a
company incorporated under the laws of the
State of Texas, U.S.A.,
(hereinafter referred to as the "Assignee")
OF THE SECOND PART
WHEREAS by an Assignment and Agreement (the "Agreement") made as
of the 24th day of February, 1979 between the Assignor and Western States
Minerals Corporation ("Western"), the Assignor assigned its interest in the
sixteen (16) unpatented lode mining claims, (the "Claims") to Western, subject
to the terms of the Agreement;
AND WHEREAS by an Amended Assignment and Agreement (the
"Amendment") made as of the 16th day of October, 1981 between the Assignor and
Western, Western agreed to pay the Assignor certain royalties under the terms of
the Amendment;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of
the sum of One ($1.00) Dollar and other good and valuable consideration paid by
the Assignee to the Assignor (the receipt whereof is hereby acknowledged), the
Assignor doth hereby grant and assign unto the Assignee the Assignor's entire
estate, right, title and interest in the Agreement and the Amendment and all
benefits and advantages to be derived therefrom.
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TO HAVE AND TO HOLD the same unto the Assignee subject to the
performance and observance of the covenants, conditions and stipulations in the
Agreement and Amendment reserved and contained, and henceforth on the Assignor's
part to be performed and observed.
THE ASSIGNOR HEREBY COVENANTS AND AGREES WITH THE ASSIGNEE as
follows:
1. That notwithstanding anything herein contained or any act of the
Assignor he now has in himself good right, full power and absolute authority to
assign the Agreement and Amendment for the purposes and in the manner
aforesaid, according to the true intent and meaning of these presents.
2. That subject to the terms of the Agreement and Amendment the
Assignee may exercise the Assignors rights under the Agreement and Amendment for
its own use and benefit without any interruption of or by the Assignor or any
other person whomsoever claiming or to claim by, through or under him.
3. That the Assignor shall and will pay over to the Assignee any
rents, royalties, or other monies that are paid or received by the Assignor
pursuant to the covenants, conditions or agreements in the Agreement and
Amendment contained from January 1, 1982.
4. That the Assignor shall and will from time to time and at all
times hereafter, at the request and cost of the Assignee, do and perform all
such acts and things and execute all such deeds, documents and writings, and
give all such further assurances with respect to the assignment of the Agreement
and Amendment as the Assignee shall reasonably require.
-3-
AND THE ASSIGNEE COVENANTS AND AGREES WITH THE ASSIGNOR that the
Assignee shall and will indemnify and save harmless the Assignor of, from and
against the observance and performance of the Assignor's covenants, conditions
and agreements contained in the Agreement.
AND IT IS HEREBY DECLARED AND AGREED THAT these presents shall
enure to the benefit of and be binding upon the Parties hereto, their respective
successors and assigns.
IN WITNESS WHEREOF the Assignor and the Assignee have executed
and delivered these presents, the day and year first above written.
LONG LAC MINERAL EXPLORATION LIMITED
/s/ [ILLEGIBLE] c/s
---------------------------------------
/s/ [ILLEGIBLE]
---------------------------------------
LONG LAC MINEAL EXPLORATION (TEXAS) INC.
/s/ [ILLEGIBLE] c/s
---------------------------------------
/s/ [ILLEGIBLE]
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PROVINCE OF ONTARIO )
JUDICIAL DISTRICT OF YORK)
On Tuesday, the 4th day of January, 1983, ▇. ▇. ▇▇▇▇ and ▇. ▇.
[Illegible] personally appeared before me, a notary public, and acknowledged
that they were the Senior Vice President and Vice President of Long Lac Mineral
Exploration Limited and that they each had executed the attached instrument.
/s/ [ILLEGIBLE]
-----------------------------
A NOTARY PUBLIC in and
for the Province of Ontario
My commission is unlimited as to time.
PROVINCE OF ONTARIO )
JUDICIAL DISTRICT OF YORK)
On Tuesday, the 4th day of January, 1983, ▇. ▇. ▇▇▇▇ and ▇. ▇▇▇▇▇▇▇▇▇
personally appeared before me, a notary public, and acknowledged that they were
the President and Secretary of Long Lac Mineral Exploration (Texas) Inc. and
that they each had executed the attached instrument.
/s/ [ILLEGIBLE]
-----------------------------
A NOTARY PUBLIC in and
for the Province of Ontario
My commission is unlimited as to tine.
EXHIBIT H
AMENDING AGREEMENT
THIS AGREEMENT made as of the 24th day of November, 1987.
BETWEEN:
LAC MINERALS LTD., a corporation
incorporated under the laws of the Province
of Ontario, formerly LONG LAC MINERAL
EXPLORATION LIMITED.
(hereinafter referred to as the "Assignor")
-and-
LAC MINERALS (USA), INC., a company
incorporated under the laws of the State of
Texas, U.S.A., formerly LONG LAC MINERAL
EXPLORATION (TEXAS) INC.
(hereinafter referred to as the "Assignee")
WHEREAS by an Assignment and Agreement (the "Agreement") made as of the 24th day
of February, 1979 between the Assignor and Western States Minerals Corporation
("Western"), the Assignor assigned its interest in the sixteen (16) unpatented
lode mining claims (the "Claims) to Western, subject to the terms of the
Agreement;
AND WHEREAS by an Amended Assignment and Agreement (the "Amendment") made as of
the 16th day of October, 1981 between the Assignor and Western, Western agreed
to pay the Assignor certain royalties under the terms of the Amendment.
AND WHEREAS the Assignor and the Assignee entered into an Assignment Agreement
on December 1, 1982 (the "Assignment")
AND WHEREAS the Assignment was meant to include with the Claims, Mining Lease
No. SPL-634 dated February 15, 1976 between Southern Pacific Land Company and
the Assignor (the "SPL Lease") annexed hereto as Schedule "A".
THE ASSIGNOR HEREBY COVENANTS AND AGREES WITH THE ASSIGNEE as follows:
1. The Parties hereto agree that the Claims referred to in the Assignment
should include the SPL Lease.
2. For greater certainty, the Assignment be and its hereby amended to
include the SPL Lease.
3. All other terms and conditions of the Assignment shall remain in
effect, unamended and unrevoked, except as provided hereby mutatis mutandis.
4. It is hereby declared and agreed that the presents shall enure to the
benefit of and be binding upon the Parties hereto, their respective successors
and assigns.
IN WITNESS WHEREOF the Assignor and the Assignee have executed and delivered
these presents, the day and year first above written.
LAC MINERALS LTD.
/s/ [ILLEGIBLE]
----------------------------
/s/ [ILLEGIBLE]
----------------------------
LAC MINERALS (USA), INC.
/s/ [ILLEGIBLE]
----------------------------
/s/ [ILLEGIBLE]
----------------------------
SCHEDULE "A"
MINING LEASE NO. SPL-634
THIS LEASE, made this 15th day of February, 1976, by and between
SOUTHERN PACIFIC LAND COMPANY, hereinafter called "Lessor", and LONG LAC
MINERAL EXPLORATION LIMITED, hereinafter called "Lessee":
WITNESSETH;
1. For and in consideration of the sum of One Thousand Six Hundred &
00/100 dollars, paid to Lessor, the receipt of which is hereby acknowledged,
and the payments to be made hereunder by Lessee, Lessor hereby leases to Lessee,
for the purposes hereinafter provided and subject to the provisions hereof, that
certain property, hereinafter sometimes referred to as "leased premises",
situated in the County of Eureka in the State of Nevada, more particularly
described in Exhibit "A", attached hereto and made a part hereof.
During the life of this lease, Lessee shall have the exclusive right to
examine, prospect and explore the leased premises for minerals and
mineral-bearing materials, and to open, develop and operate mines on the leased
premises, to crush, mill, blend, commingle, concentrate, beneficiate, refine,
reduce, or otherwise process any minerals which may be mined from the leased
premises, to remove and ship all such ores, concentrates, and minerals or
mineral products recovered in any manner from the leased premises, and to sell
or dispose thereof, excepting and reserving to Lessor, its successors and
assigns, the exclusive right to all hot water, brine, thermal energy,
extractable minerals in solution, and oil, petroleum, and other hydrocarbons and
natural gas, including steam, in and underlying the leased premises.
Lessee shall have the right to use the leased premises for purposes
necessary in the exercise of Lessee's rights and conduct of Lessee's operations
hereunder.
Reserving to Lessor, its successors and assigns, an easement for
railroad, transportation, communication and pipeline purposes, and the right to
use said property for any and all other purposes consistent with the rights
leased to Lessee hereunder.
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This lease is made subject to all rights of way; easements, limitations
and restrictions, and to existing leases, licenses, and options, and renewals
thereof, on or affecting said leased premises.
2. The term of this lease shall be five years from and after the date
first herein written and so long thereafter as Lessee carries on mining or
exploration on the leased premises, as provided in Section 5, however, this
lease shall terminate fifty years from the date hereof, subject to such
extensions as may arise under Section 6 hereof.
3. Lessee agrees, during the first: two years following the date first
herein written, to perform substantial geophysical, geochemical, geological,
stripping, drilling, or other work of a similar nature on the leased premises
directed toward the evaluation of the mineral potential of the leased premises.
4. Subject to the right of Lessee to terminate this lease in whole or
in part as set forth in Section 20 herein, Lessee agrees to pay to Lessor,
annually in advance, on or before the first day of the second year of this lease
and on or before the first day of each successive year thereafter that this
lease remains in effect, a minimum royalty in the amount of $500.00 or the
applicable following amount, whichever is the greater:
$5.00 per acre per year for the second through the ninth years of this
lease; and
$10.00 per acre per year for the tenth year of this lease and each
succeeding year this lease is in effect;
provided that for a maximum of two consecutive years during the first ten years
of the term hereof no advance minimum royalty payments shall be due and payable
while Lessee may be actively constructing a plant to treat ores mined from, or
in the immediate vicinity of, the -leased premises, or both, which plant shall
have a capacity estimated to be capable of producing mineral products in an
amount sufficient to yield to Lessor annual production, royalty payments equal
to or exceeding the annual minimum royalty provided for herein at the time the
plant is being constructed.
-2-
Commencing with the year immediately following the first lease year in
which mineral products are produced from the leased premises and sold for three
calendar months or more, and for each succeeding year thereafter this lease
remains in effect, said advance minimum royalty payments shall be increased or
decreased each year in proportion to the amount of the increase or decrease in
the "escalation percentage" for the lease year immediately preceding the year
for which said advance minimum royalty payment is to be made.
The term "escalation percentage" as used herein shall mean the
percentage variation, if any, of the "weighted average sales price" received or
receivable by Lessee for mineral products produced and sold by Lessee from the
leased premises during a particular lease year, from the "weighted average sales
price" received or receivable by Lessee for similar products during the first
calendar, or base, year in which Lessee produces and sells mineral products
hereunder.
The term "sales price" for non-ferrous metals shall be defined as the
Net Smelter Return as defined in Paragraph 8(c) herein, and the "sales price"
for iron ore, rock products or industrial minerals shall be defined as the
f.o.b. sailing price at the mine or nearest railhead.
The term "weighted average sales price" as used herein shall be
calculated as follows :
(a) Non-ferrous metals. The "weighted average sales price" for
any particular lease year shall be the sum of the total re- ceipts
(NSR) from sales received by the Lessee for the combined metals
contained lit products produced by the Lessee from the o leased
premises and sold during that year by the Lessee, divided by the total
number of sales units.
(b) Iron ore. The "weighted average sales price" for any
particular lease year shall be the total receipts from sales received
by the Lessee f.o.b. mine or nearest railhead for iron-bearing
materials produced by the Lessee from the leased
-3-
premises and sold during that year by the Lessee, divided by the total
number of sales units.
(c) Rock products and industrial minerals. The "weighted average
sales price" for any particular lease year shall be the total receipts
from sales received by the Lessee, f.o.b. mine or nearest railhead, for
the products produced by the Lessee from the leased premises and sold
during that year by the Lessee, divided by the total number of sales
units.
For purposes of calculating the "escalation percentage" to be applied
to the minimum advance royalties, the sum of the "weighted average sales prices"
as defined above in sub-sections 4 (a), (b) and (c), shall be divided by the
number of such commodities produced and sold during the lease year, and the
resulting quotient shall be the "weighted average sales price" used to calculate
the percentage variation from the first calendar, or base, year. This percentage
variation shall be the "escalation percentage".
The advance minimum royalty payments made hereunder shall be credited
only against royalties becoming payable to Lessor under the terms of Section 8
herein during the year for which such minimum royalty payments were made. In
addition, if the above mentioned plant is constructed during the initial
ten-year period of this lease, that part of the advance minimum royalty payments
made during such ten-year period covering the portions of the leased premises in
which Lessee's mining rights hereunder are in effect, not previously credited
against actual royalties, shall be credited against actual royalties accruing to
Lessor under Section 8 during the remaining period this lease is in effect.
5. Beginning five years from the date hereof, and annually thereafter
during the term hereof, Lessee shall expend at least Ten Thousand Dollars per
year for exploration or mining upon the leased premises and Lessee shall
diligently perform in good faith, in an active and substantial way, exploration
or mining work upon said
-4-
leased premises directed toward the discovery and production of minerals.
Exploration work shall consist of drilling, pitting, shaft sinking, winzing,
tunneling, cross-cutting, drifting, raising, excavating, or stripping directed
toward the physical exposure of mineral-bearing ores. Work such as road
building, camp or surface plant construction shall not be considered as
exploration or mining work as hereinabove defined.
6. The obligations of the Lessee hereunder shall be suspended only
while the Lessee's performance and compliance is prevented by the elements,
accidents, strikes, lockouts, riots, delays in transportation, inability to
secure materials in the open market, or interference by governmental action, or
any other causes beyond the reasonable control of the Lessee, whether similar or
dissimilar to the causes specifically mentioned. The duration of this lease
shall be extended for a period equal to the period for which performance under
the provisions of this Section 6 is suspended. In the event that in any annual
period after production has started on which actual royalties have become due or
have been paid, in the judgment of Lessee, metal prices are such as to make
further mining uneconomic, Lessee shall be excused from making the expenditures
called for in Section 5 until such time as metal or mineral prices again become
such as to make mining economic. It is agreed that the settlement of any strike
or lockout shall be at the discretion of Lessee, and the continuance of any such
strike or lockout shall be deemed a cause beyond Lessee's reasonable control.
7. Prior to commencement of actual mining and not later than the
twenty-fifth day of the first month, following any lease year in which any
exploration, development or mining work is required or in which any work is
completed, and including the first calendar month next following the month in
which this lease may be terminated, Lessee shall furnish to Lessor a report in
writing detailing such work. Such report shall include geologic, geophysical,
geochemical, engineering and assay maps and cross sections of workings on the
leased
-5-
premises and the location, direction, altitude, geologic log and assay logs of
all exploratory drill holes completed by Lessee.
8. In the event that Lessee conducts mining operations on the leased
premises and ships or sells crude ores, minerals or mineral products mined
therefrom, Lessee agrees to pay to Lessor on or before the last day of each and
every calendar month, royalty due and payable for the crude ore, minerals or
mineral products sold or shipped to a smelter for treatment during the preceding
calendar month, or within thirty days after Lessee has received a settlement
sheet for the last of the crude ores, minerals, or mineral products sold or
shipped to a smelter or treatment plant in said calendar month, but in no event
later than thirty days after said last day of each and every calendar month.
With each payment, Lessee shall furnish Lessor a statement setting forth in
detail the basis for computation and determination of the royalties due and
payable, which shall be calculated as follows:
(a) On industrial rocks and minerals mined or produced from the
leased premises, 5% of the sale price thereof received by Lessee;
(b) On iron ore or concentrate products of iron-bearing
materials, valuable principally for their iron-bearing content, mined
or produced from the leased premises, two-thirds of a cent ($0.00666)
per long ton unit of iron contained in the product sold, plus 10% of
that part of the sale price therefor, to be calculated at the normal
rail shipping point in Nevada , which exceeds 9 cents per long
ton unit of contained in the product sold.
(c) on non-ferrous metallic ores shipped directly from the mine
to a smelter without beneficiation other than crushing, screening,
sorting or cobbing (hereafter referred to as crude products), or on
concentrated products of non-ferrous metallic minerals or oxidized
equivalents thereof (hereafter referred to as concentrates), which are
produced from crude ores mined from the leased premises,
-6-
the royalty rate shall be a percentage, as hereinafter provided, of
the net smelter return received by Lessee for such crude products or
concentrates.
For the purpose of this Agreement, "net smelter returns" shall be the
amount received by Lessee from any smelter, reduction works or purchaser, other
than a smelter owned or operated by Lessee, in payment for such crude products
or concentrates, less costs and charges of transportation (including haulage,
railroad freight, truckage and handling) from the crude ore treatment plant of
Lessee to such smelter or facilities from which payment is received, and less
treatment charges, special sampling charges, and all other charges incident to
determination of net smelter returns made by such smelter or facility. In the
event crude products or concentrates are shipped to a smelter owned and/or
operated by Lessee, the net smelter returns on which royalties are calculated
shall be no less favorable to Lessor than if such crude products or concentrates
had been shipped to the nearest competitive smelter which would accept such
products, except that charges of transportation, as herein defined, on crude
products or concentrates shipped to Lessee's smelter shall be the actual cost to
Lessee.
The royalties shall be based on the dollar value of the crude ore as
mined and shall vary in accordance with the monthly average net smelter return
per ton of crude ore, which shall be computed as the total of all net smelter
returns received by Lessee during a calendar month for all non-ferrous crude
products or concentrates produced by Lessee from the leased premises and sold,
divided by the total number of tons of crude ore mined by Lessee from the
leased premises and used or required to produce the products sold. In the event
of commingling of crude ores from the leased premises with those of other land
controlled by Lessee, the net smelter returns attributable to the leased
premises and the number of tons of crude ore attributable to the other land
shall be determined in the manner set forth in Section 9 hereof.
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If the average net smelter return per ton of crude ore for the month in
question is $3.00 or less per short ton, the royalty payable to Lessor for such
month shall be l 1/2% of the total net smelter returns received by Lessee
during such month as a result of the sale of non-ferrous crude products or
concentrates produced by Lessee from the leased premises; but if such average
net smelter return per ton of crude ore for the month is higher than $3.00 per
short ton; the royalty rate shall increase proportionately from 1 1/2% of such
net smelter returns to a maximum of 7 1/2% of such net smelter returns at the
rate of 1/2 of 1% for each $1.50 increase in the monthly average net smelter
return per ton of crude ore.
The actual royalty formula subject to a maximum rate of 7 1/2% shall be
as follows when the average value of crude ore exceeds $3.00 per short ton:
[1.50% + (0.50% x (average value - 3.00)] x average value
[ -------------------- ]
[ $1.50 ]
(d) On gold and silver bullion mined from the leased premises and
produced in Lessee's plant (other than a smelter) for Lessee's
account,five per cent of the sales price received by Lessee therefor.
9. It is understood that any minerals contained in the leased premises
may constitute a portion or portions of a deposit or deposits of minerals which
extend onto land other than leased from Lessor pursuant to this lease. It is
contemplated that any exploration, development, mining, and processing to be
performed by Lessee on the leased premises may be performed pursuant to mining
plans which embrace exploration, development, mining and processing on other
land owned or controlled by Lessee.
Lessee may mine, remove, and hoist minerals, mineral-bearing materials
and waste materials from the leased premises or adjacent land over or across
other land or through a shaft or shafts and inclines or other openings in or
upon the leased premises or other land, by any means whatsoever and may mine,
remove, and hoist materials, mineral-bearing materials, and waste materials from
other land in which Lessee may be conducting mining operations, over and across
the leased premises
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or through a shaft or shafts or inclines or other openings in or upon the leased
premises by any means whatsoever, and may enjoy such other cross-mining rights
involving ore, mineral-bearing materials, waste materials, slope rights, dump
rights, water drainage, ventilation, mining machinery, mining equipment, plants,
▇▇▇▇▇ or buildings, and all mining supplies as may be necessary or convenient
from time to time in the conduct of Lessee's mining operations, on either or
both the herein leased premises or other land being mined by Lessee. It is
specifically agreed that Lessee may excavate any portions of the leased premises
which Lessee deems necessary to create pit slopes to permit the mining of other
land controlled by Lessee.
Lessee shall have the right at Lessee's discretion to mix, prior to
shipment or prior to beneficiation or at any stage in the process of
beneficiation, and at any plant or plants, minerals, mineral bearing materials,
and partially processed materials and concentrates mined from the leased
premises with minerals, mineral-bearing materials, and partially processed
materials and concentrates mined from any other land in which Lessee may have an
interest. In such event, Lessee shall keep and make available to Lessor accurate
accounts and records of the quantities of minerals, mineral-bearing materials,
and partially processed materials and concentrates originating from the leased
premises, and minerals, mineral-bearing materials, and partially processed
materials, originating from such other land, either by weighing the same or by
use of uniform size cars, trucks, or other containers or measure uniformly
filled. Lessee shall make such sampling prior to mixing, make such analyses, and
keep and make available to Lessor such records and data as shall be reasonably
necessary to accurately determine the quality and character of the materials
which Lessee desires to mix, as hereinabove provided. That portion of any
mixture of minerals or concentrated product resulting from the beneficiation of
any mineral-bearing material or partially processed materials or concentrates
shall be deemed to have been derived from the leased premises which the quantity
of the minerals, mineral-bearing materials, or concentrates from the leased
premises contributed to the mixture and determined as herein provided bears to
the total quantity of all
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of the minerals, mineral-bearing materials or concentrates contributed to such
mixtures, and similarly determined, adjusted as may be necessary according to
the quality and character of the materials which have been mixed. The actual
shipping weights and value of each shipment of any mixture shall be
apportioned between the respective leased premises and other land contributing
thereto, in accordance with the provisions hereof.
It being the intent of this paragraph to provide an equitable and
reasonably accurate method of determining the quantities and qualities of
material originating on the leased premises which may be mixed with material
originating elsewhere, the parties agree that Lessee may propose a different
method of making such determination, and if such proposed method is acceptable
to Lessor, it will be substituted for the method herein prescribed.
10. Lessor, its officers, employees and agents so authorized on its
behalf, at Lessor's sole risk and expense, shall have the right at all
reasonable times to enter the leased premises and the mines or works thereon in
order to inspect, examine, survey or measure the same and the production
therefrom, and may inspect the books kept by Lessee in relation to the
production from said leased premises, provided that said right shall be
exercised so as not unnecessarily to interfere or conflict with the operations
of Lessee. On written request of Lessor, Lessee shall furnish to Lessor's
accredited representative a copy of all logs, assays, location and direction
maps of any exploration, opening, drift, crosscut, shaft, winze, raise, diamond
drill, or other holes made in order to discover, develop, outline, and mine ore
or mineral-bearing materials on said leased premises. As long as this lease is
in force, any and all information acquired by examination or obtained from
Lessee shall be held in strict confidence by Lessor and shall not be divulged to
third parties without consent of Lessee.
11. Any mineral-bearing materials mined and recovered from said leased
premises but not shipped as a part of, or processed into, products for current
shipment for sale by Lessee and which contain at least 50% of the assay grade of
crude ores currently being mined or processed into
-10-
products for current shipment for sale from the leased premises or land in the
near vicinity, shall be placed in stockpiles, on the leased premises, separate
from waste material, according to good mining practice in the industry at the
time such stockpiling took place. Lessee shall have the right to deposit waste
removed from the leased premises or from other land in the near vicinity
controlled by Lessee, including non-mineral-bearing waste and tailings, either
on the leased premises or upon other nearby land, the use of the surface of
which for such purposes shall have been obtained by the Lessee. Lessee shall
have the right to stockpile or deposit on the leased premises ore,
mineral-bearing materials, concentrates or waste material from other premises
being mined by the Lessee; provided that, unless otherwise mutually agreed, any
area or areas within said leased premises upon which stockpiling or deposition
of materials may be planned, shall first be adequately explored and
determination made so far as practicable that no economically mineable
quantities of usable or mineral-bearing materials lie beneath said area or
areas, the mining of which would be adversely affected by such dumping or
stockpiling and in the event of dispute such determination shall be made by
Board of Arbitration, as provided for in Section 13. Such exploration work shall
be done prior to the stockpiling or dumping of ore, mineral-bearing materials,
concentrates, or waste material of any kind that may come either from said
leased premises or from other land in the near vicinity then being worked by
Lessee.
12. Lessee may, during Lessee's operations hereunder, and at Lessee's
discretion, extract ore, mineral-bearing materials or concentrated products from
waste or tailings resulting from Lessee's operations hereunder. No royalty shall
be payable on waste or tailings when shipped from the leased premises to
stockpile on other premises, or to be used as fill on or beneath the surface. In
the event Lessee should elect to extract ore, mineral-bearing materials or
concentrated products from waste or tailings originating from the leased
premises and resulting from Lessee's operations hereunder, or, shall sell said
waste and tailings for other than their metallic
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mineral content, royalty shall be paid by Lessee to Lessor at the rates
specified herein, and in the manner herein provided, on the products so sold.
Upon termination of this lease, any waste or tailings stockpiled or deposited on
land owned by others than Lessor shall become the property of Lessee, and Lessee
may make such disposition of such waste and tailings as Lessee deems proper
without any obligation to Lessor whatsoever and any waste or tailings stockpiled
or deposited on the leased premises or other land belonging to Lessor shall
become the property of Lessor and Lessor may make such disposition of such waste
and tailings as he deems proper without any obligation to Lessee whatsoever.
13. It is agreed that in the event Lessor is of the opinion that
Lessee's determination of royalties is erroneous and Lessor is unwilling to
accept such determination, Lessor shall have the right at any time within sixty
days after receiving such determination to contest the same. If Lessor desires
to contest such determination, it shall do so by written notice to Lessee, and
should Lessor and Lessee thereafter be unable to settle their differences and
agree upon a determination within sixty days after the notice contesting the
determination, the matter shall be submitted to a Board of Arbitration.
The Board shall be composed of qualified mining engineers, one
appointed by Lessee, and one appointed by Lessor, and a third appointed by the
first two. In the event that the first two appointed arbitrators are unable to
agree as to the third, he will be appointed by any person then holding the
office of Judge of the United States District Court for the District of Nevada,
upon application made by either party upon thirty days' written notice to the
other party. All data forming a basis for the determination of royalties shall
be made available to the Board of Arbitration, together with such other evidence
as either party may wish to submit. A decision by majority vote of the Board of
Arbitration shall be binding and conclusive on Lessor and Lessee.
Notwithstanding the above provision for submission to three arbitrators, the
matter may be submitted to arbitration hereunder to one arbitrator if the
parties can agree upon one arbitrator.
-12-
The cost of the services of said Board of Arbitration shall be borne equally by
the parties hereto.
Nothing in this section shall be construed to require a cessation of
mining operations hereunder in the event of a contested determination
hereinabove referred to.
14. In case Lessee shall, except by Lessor, be lawfully deprived of the
possession of the rights hereby leased, or any part thereof, Lessee shall notify
Lessor in writing setting forth in full the circumstances in relation thereto,
whereupon Lessor may, at its option, either reinstall Lessee in possession of
said rights or terminate this lease and refund to Lessee the pro rata amount of
any rental theretofore paid in advance for the unexpired term of this lease from
and after the receipt of such notice, whereupon no claims for damages of
whatsoever kind or character incurred by Lessee by reason of such dispossession
shall be chargeable against Lessor.
15. Lessee agrees to pay, prior to delinquency, during the effective
term of this lease, all taxes and assessments levied and assessed on the mineral
and mining rights hereby leased and on the minerals and ores produced hereunder,
including any and all production or severance taxes computed or based upon
production of minerals hereunder, and on all property and improvements owned by
Lessee or placed or installed on the leased premises by or under Lessee,
together with any and all penalties and interest thereon. In the event Lessee
fails to so pay such taxes and assessments, Lessor, at Lessor's option, may pay
the taxes and assessments, together with any and all penalties and interest
thereon, and Lessee agrees to reimburse Lessor promptly on demand in the full
amount of the payments so made by Lessor. Lessee further agrees to reimburse
Lessor promptly upon demand, for an equivalent amount of any and all taxes and
assessments levied and assessed on said leased premises which shall have been
paid by Lessor, for each tax fiscal year or portion thereof, during the
effective term of this lease. In the event that this lease is terminated in
whole or in part prior to the date when taxes and assessments on the leased
premises for the current fiscal tax year become due and payable, Lessee
agrees, on such termination, to pay to
-13-
Lessor, in lieu of reimbursement of the payment to be made by Lessor therefore,
a sum equivalent to the taxes levied upon that part of the leased premises so
terminated for the fiscal tax year immediately preceding the current fiscal tax
year, prorated to the date of such termination. Notwithstanding the above
provisions, Lessee shall not be liable for any and all taxes and assessments
levied upon the minerals and rights reserved hereunder by Lessor.
16. Lessor may post and maintain upon the leased premises notices of
nonresponsibility as provided by law. Lessee agrees to pay in full all persons
who perform labor or services on, furnish material joined or affixed to, or
provide equipment for, said property, or the construction, reconstruction,
repair or replacement of any structure or improvement on said property, at
Lessee's instance or request. Lessee shall not permit or suffer liens of any
kind or nature to be enforced against said property for such labor, services,
materials or equipment. Lessor may pay such amount as may be required to release
any such lien or liens, to defend any action brought thereon or to satisfy a
judgment entered therein. Lessee agrees to reimburse Lessor for all costs,
damages, reasonable attorney fees and amounts paid by Lessor in defending such
actions, payment of said liens or satisfying judgment obtained therefor.
17. Lessee shall abide by, comply with, and shall pay all fees imposed
under, applicable, valid laws, ordinances, governmental regulations and orders
pertaining to the exercise by Lessee of the rights leased hereunder and Lessee
agrees to furnish forthwith to Lessor such evidence thereof as Lessor may
demand. Lessee agrees to indemnify and save harmless Lessor from and against any
and all liability, damages, penalties cost or expense incurred by, or imposed
upon, Lessor due to Lessee's failure to do so.
18. Lessee shall release and agrees to indemnify Lessor from and
against all liability, claims, causes of action, cost or expense for injuries to
or deaths of persons, or loss of or damage to property, upon or in the vicinity
of the leased premises, arising out of the occupancy and use made of the leased
premises hereunder by Lessee and those claiming under Lessee.
-14-
19. Upon breach by the Lessee of any of the terms, covenants or
conditions of this lease and Lessee's failure to remedy the default within
ninety days after written notice from Lessor so to do, then at the option of the
Lessor, notice of the exercise of which shall be given to the Lessee in writing,
this lease shall forthwith cease and determine as to that portion of the leased
premises to which default applies, and all rights of the Lessee in and to such
property shall be at an end, whereupon Lessee shall vacate such premises and
surrender possession thereof to Lessor. The waiver by Lessor of any breach of
any covenant or condition thereof shall not be deemed a waiver of any other or
subsequent breach hereof nor of any other covenant or condition hereof. The
acceptance of payments hereunder by Lessor shall not be deemed to be a waiver of
any preceding breach by Lessee of any covenant or condition hereof, other than
the failure of Lessee to pay such particular payment so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
payment.
20. Notwithstanding anything to the contrary herein, Lessee may
surrender and quitclaim this lease, either in its entirety or as to the
leasehold mineral estate created hereby, at any time upon thirty days' written
notice to Lessor, as to that part included in any one or more forty-acre legal
subdivisions, according to the United States survey. Such termination of this
lease shall not release any party hereto from any liability or obligation
whatsoever under this lease resulting from acts, omissions or events happening
prior to such termination or thereafter, to the extent this lease provides. In
the event of termination of any one or more subdivisions in its entirety after
the payment of any minimum annual royalty payment, as provided herein, and prior
to the end of any period for which such payment is made, Lessor shall not be
required to refund any of such payment. In the event, however, that Lessee
wishes to quitclaim the mineral rights only in any one or more subdivisions and
to retain use of such land for or in connection with mining operations on nearby
premises as provided for in this section 20, Lessee shall be released only from
performing exploration and mining work required hereunder on the lands
-15-
on which the mineral interest is so terminated. Lessee shall be required to
perform all exploration and mining work required hereunder on the lands on which
the mineral interest is so retained.
In the event this Lease of Mining Rights is terminated as to any one or
more forty-acre legal subdivision as provided for herein, upon payment to Lessor
of the annual advance rental in an amount equal to the sums provided for herein
as annual minimum royalties, this lease shall remain in effect as to those
forty-acre subdivisions of the leased premises occupied or required for the
purposes of rights of way in connection with its use of adjoining or nearby
property for mining purposes and for stockpiling waste, ore or concentrated
materials mined from the leased premises or adjoining property for so long as
this lease remains in effect as to any remaining portion of the leased premises.
21. In the event of termination of this lease, in whole or in part,
Lessee shall surrender to Lessor peaceable possession of the leased premises so
terminated and shall deliver to Lessor a duly executed quitclaim deed therefor.
Lessee shall provide with said quitclaim deed a certificate of title from a
responsible title company covering the lands so quitclaimed for the period of
time that Lessee is in possession of the premises under this lease, which
certificate is made at the time of recordation of such quitclaim deed, and if
there are any rights, interests, claims, liens or encumbrances conveyed,
created, done, made or suffered by Lessee, or anyone claiming under Lessee,
Lessee shall take such actions, steps and proceedings as may be deemed
necessary to terminate and extinguish any such rights, interests, liens and
encumbrances, failing in which Lessor may do so at the sole expense of Lessee,
which expense, plus reasonable attorney fees, Lessee agrees to pay to Lessor on
demand.
22. Lessee shall have one year after termination of this lease, as to
all or any portion of the leased premises, to remove therefrom the property and
improvements owned by Lessee, provided Lessee is not then in default under the
provisions hereof, except that building and machinery foundations and
underground support structures shall be left
-16-
in place and title thereto shall vest in Lessor, unless Lessor shall give its
written consent to Lessee to remove the same. Upon Lessee's failure to remove
the above property and improvements authorized to be removed within said
one-year period, from the leased premises or portion thereof, for which this
lease has been terminated, title to said property and improvements shall vest in
Lessor, provided that if Lessee is hampered by snowdrifts, washouts, inclement
weather, or other causes beyond Lessee's control from completing the removal of
such property and improvements within the time specified, Lessor agrees to
extend the removal time for a reasonable period, if so requested by Lessee prior
to expiration of said one-year period. Upon termination of this lease, in whole
or in part, Lessee shall leave the leased premises in satisfactory condition,
including proper fencing and protection of all openings, caves, excavations and
holes in such manner as may be required by applicable laws, regulations and
orders of governmental bodies having jurisdiction in the premises and in
accordance with good mining engineering practice. If at the end of one year
after such termination of this lease, Lessee fails to leave the leased premises
in such satisfactory condition, Lessor may remove said property and improvements
and restore the leased premises to a satisfactory condition, at Lessee's
expense, which expense Lessee agrees to pay to Lessor upon demand.
If Lessee, within or prior to said one-year period after termination of
this lease, shall have removed from the leased premises, as to which said
termination is effective, ores, mineral-bearing materials or concentrates,
Lessor shall be entitled to payment of royalties therefor, as provided in
Section 8 herein, and Lessor shall have a lien thereon for the fair value
thereof, until such ores, mineral-bearing materials and concentrates are sold or
Lessee has paid to Lessor the royalties due and payable therefor. In the event
Lessee removes ores, mineral-bearing materials or concentrates mined from the
leased premises and fails to sell the same within ninety days thereafter, Lessee
agrees to pay to Lessor the fair value thereof within one hundred twenty days
after the date of their removal by Lessee.
-17-
23. If Lessee is adjudicated a bankrupt, or shall make an assignment
for the benefit of creditors, or file a voluntary petition under any law having
for its purpose the adjudication of Lessee a bankrupt, or the extension of time
of payment, composition, adjustment, modification, settlement or satisfaction of
the liabilities of Lessee, or a receiver be appointed for the property of Lessee
by reason if the insolvency of Lessee, notwithstanding anything to the contrary
elsewhere in the lease, Lessor shall have the immediate right to terminate this
lease and to take exclusive possession of the leased premises. The acceptance of
rent or other payments for the use of the leased premises shall not constitute a
waiver of Lessor's right to terminate this lease as above set forth.
24. Any notice, demand or report which either of the parties hereto may
be required or may desire to give to the other party hereto shall be in writing
and shall be sufficiently given if mailed by United States certified mail in a
sealed and postpaid envelope addressed as hereinafter provided. Any such
instrument to be directed to Lessor shall be addressed to it and payments shall
be made hereunder to it at Natural Resources, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Any such instrument to be directed to Lessee shall be addressed to
Lessee at: ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ MSH ITI.
The place to which such notices, demands or reports shall be addressed
and the place where payments hereunder shall be made may be changed from time to
time by the party or parties whose address is to be changed by notice given as
above provided.
25. Lessee agrees to pay to Lessor interest at the rate of 10% per
annum upon any and all amounts whatsoever due under this lease to Lessor, such
interest to be due and payable on all amounts remaining unpaid for more than 30
days from the date payment of each such amount is due and owing to Lessor or
from the date of each breach by Lessee of an obligation hereunder, as the case
may be.
-18-
26. This instrument is intended as, and is, a lease. Lessor will not be
called upon or required to make any repairs, or incur any expense of any kind or
nature upon or in connection with said property for and during the term of this
lease, but all such expenses shall be borne by Lessee.
27. Time and specific performance are of the essence of this lease.
28. No assignment of this lease or any sublease or agreement affecting
this lease shall be valid unless made with the written consent of Lessor, except
to any parent or subsidiary corporation or to any corporation in which Lessee
holds the majority of the outstanding capital stock. Subject to the above, this
lease shall inure to the benefit and be binding upon the successors and assigns
of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this lease as
of the day and year first hereinabove written.
SOUTHERN PACIFIC LAND COMPANY
By /s/ [ILLEGIBLE]
----------------------------------
General Manager, Natural Resources
Attest /s/ [ILLEGIBLE]
------------------------------
Assistant Secretary
LONG LAC MINERAL EXPLORATION LIMITED
By /s/ [ILLEGIBLE]
----------------------------------
PRESIDENT
/s/ [ILLEGIBLE]
------------------------------------
SECRETARY
-19-
EXHIBIT "A"
Attached to and made a part of Mining Lease No. SPL-634 dated 15th day
of February, 1976, from SOUTHERN PACIFIC LAND COMPANY to LONG LAC MINERAL
EXPLORATION LIMITED.
MDM
Description Sec. Twp. Rge. Acres
E 1/2 25 36N 49E 320.00
EXHIBIT I
SECOND AMENDMENT TO ASSIGNMENT AND AGREEMENT
THIS SECOND AMENDMENT TO ASSIGNMENT AND AGREEMENT (the "Second
Amendment"), dated as of the 18th day of December, 1989, is by and between LAC
MINERALS (USA) INC. ("LAC") and BARRICK GOLDSTRIKE MINES INC. ("Barrick").
RECITALS
A. LAC is the successor in interest to Long Lac Mineral Exploration
Limited, the assignor under the Assignment and Agreement dated February 24, 1979
by and between Long Lac Mineral Exploration Limited and Western States Minerals
Corporation (the "Assignment and Agreement").
B. The Assignment and Agreement was amended by the First Amendment to
Assignment and Agreement dated October 16, 1981 (the "First Amendment").
▇. ▇▇▇▇▇▇▇ is the successor in interest to Western States Minerals
Corporation, assignee under the Assignment and Agreement and the First
Amendment.
D. LAC and Barrick now desire to amend the Assignment and Agreement a
second time (the "Second Amendment") for the purposes of, among other things,
modifying the right of Barrick to release property from the Assignment and
Agreement and to permit LAC to seek damages in the event of a default under the
Assignment and Agreement, to permit LAC to take its royalty "in kind", and to
receive production reports for royalty purposes.
AGREEMENT
For good and valuable consideration, the sufficiency of which is hereby
confessed and acknowledged, LAC and Barrick agree as follows:
1. The first paragraph of Section 6 of the Assignment and Agreement is
deleted in its entirety and in place thereof is substituted the following:
Subject to the provisions of this paragraph, Barrick shall
have the right, but not the obligation, at any time to reconvey,
abandon, or release any or all or any one of the SJ claims, and all or
any portion of the SP Lease and thereby terminate this Agreement as to
such property. If Barrick
-1-
desires to reconvey, abandon or release all or any portion of the
Subject Properties, Barrick shall give written notice to LAC. LAC shall
then have 45 days in which to advise Barrick in writing of its desire
to accept a reconveyance or to decline a reconveyance of such property.
During such period Barrick shall permit LAC to inspect such property
and to have access to records in ▇▇▇▇▇▇▇'▇ possession or control with
respect thereto, and shall authorize the release to LAC of information
or documents in the hands of third parties, including governmental
bodies, with respect to such property. If LAC declines a reconveyance
or if LAC fails to respond to ▇▇▇▇▇▇▇'▇ notice in writing within 45
days, Barrick shall be free to abandon or release such property and
LAC shall have no further rights in such property. With respect to any
of the properties covered by the SP Lease, Barrick also shall comply
with the provisions of the SP Lease.
2. Section 12 is amended by changing the addresses as follows:
for LAC:
LAC MINERALS (USA) INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
P.O. Box 156
Toronto, Ontario
Canada M5J 2J4
for Barrick:
Barrick Goldstrike Mines Inc.
▇.▇. ▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
3. Section 17 of the Assignment and Agreement is deleted in its
entirety and in place thereof is substituted the following:
17. Default. From and after the date of this Second Amendment,
should any material default in any of the terms or provisions hereof
occur, LAC shall give notice to Barrick in writing, as hereinafter
provided, designating such asserted default. Barrick shall thereafter
have a period of sixty (60) days from the date of receipt of such
notice in which to correct or commence action to correct the default of
which it has received notice. Should Barrick fail to correct said
defaults within the said 60 day period, or having commenced action to
correct should fail to continue such action to completion with
diligence, LAC may, at its election, upon written notice to Barrick,
cancel and terminate this Agreement or institute proceedings to recover
damages for the default.
-2-
4. A new Section 22 is added to the Assignment and Agreement, as
follows:
22. Royalty In Cash or In Kind.
(a) LAC may elect to receive its share of royalty "in
cash" or "in kind" as refined bullion (based on "net smelter returns" as defined
in the First Amendment to Assignment and Agreement dated October 16, 1981). The
election may be exercised once per year on a calendar year basis during the life
of production from the Subject Properties. Notice of its election to receive the
following year's royalty in cash or in kind shall be made in writing by LAC
delivered to Barrick on or before November 1 of each year. In the event no
written election is made by LAC, the royalty will continue to be paid as it is
then being paid.
(b) If LAC elects to receive its royalty in cash,
such royalty shall be payable on the 30th day of each month following the month
in which gold or other refined products are delivered or made available to
Barrick from the refiner. For products produced from the Subject Properties
other than refined gold or other refined products, payment shall be made within
30 days of the end of the month in which such products are sold. The price used
for calculating the cash amount due to LAC shall be based upon the average spot
price for gold or other products during the month in which gold or other
products are sold and shall not reflect the actual proceeds received by Barrick
as a result of any "hedging" or "trading" techniques employed by Barrick. For
gold, the London p.m. fix shall be used to determine the average monthly spot
price.
(c) (i) If LAC elects to receive its share of royalty
in kind, LAC shall open a bullion storage account at each refinery or mint
designated by Barrick as a possible recipient of dore or bullion in which LAC
owns an interest. LAC shall be solely responsible for all costs and liabilities
associated with maintenance of such account or accounts.
(ii) Royalty shall be due to LAC upon completion
by the mint or refinery from time to time of the refining of any gold or silver
produced from the Subject Properties. On or before the tenth day of each
calendar month, Barrick shall deliver written instructions to the mint or
refinery, with a copy to LAC, directing the mint or refinery to deliver gold or
silver bullion due to LAC in respect of the royalty, by crediting to LAC's
account a percentage of all ounces of gold or silver bullion refined. The
percentage of bullion to be credited to LAC's account will be based upon LAC's
share of the previous months' production from the Subject Properties as
calculated pursuant to the Commingling Agreement between Barrick and LAC. The
instruction shall remain in effect until the date the next monthly instruction
is made by Barrick.
-3-
(iii) Title to gold or silver bullion paid to
LAC under this Agreement shall pass to LAC at the time such gold or silver
bullion is credited to LAC's account at the mint or refinery.
(d) LAC agrees to hold harmless Barrick for any
liability imposed as a result of the election by LAC to receive royalty in kind
and from any losses incurred as a result of LAC's trading or hedging activities.
LAC assumes all responsibility for any shortages which occur as a result of
LAC's anticipation of credits to its account in advance of the actual deposit or
credit to its account by a refiner or smelter of ounces.
(e) Within 30 days of the receipt of a statement
showing charges incurred by Barrick for transportation, smelting or other costs
deductible under the First Amendment to Assignment and Agreement, LAC shall
remit to Barrick full payment for such charges. If LAC does not pay such charges
when due, Barrick shall have the right, at its election, to deduct the gold
equivalent of such charges from the ounces of gold to be credited to LAC in the
following month.
5. A new Section 23 is added to the Assignment and Agreement, as
follows:
23. Reports on Production. Barrick shall report by facsimile
transmission, the following information:
(a) Barrick shall report to LAC by facsimile
transmission information related to the production of ore and dore and
refinement of bullion in which LAC owns an interest on the following basis:
(i) on a weekly basis, a photocopy of all
shipping reports.
(ii) by the 10th day of each month for the
preceding month, a report detailing:
(A) the number of tons of ore treated or
processed in each facility;
(B) the average grade of ore treated or
processed in each facility;
(C) the ounces of gold and silver produced
at each facility;
(D) LAC's percentage share of ore treated or
processed and ounces of gold and silver
produced at each facility calculated in
accordance with the Commingling Agreement
between LAC and Barrick;
-4-
(E) the dore production; and
(F) LAC's percentage of dore production
calculated in accordance with the
Commingling Agreement between LAC and
Barrick.
(ii) within 30 business days after the end
of each calendar month, a report:
(A) the total number of refined ounces
reported in refiner's statements received
during the previous month and the number of
ounces credited to LAC's account; and
(B) all costs chargeable to LAC under the
Assignment and Agreement, including all
custom smelting costs, treatment charges and
penalties, transportation, and insurance
costs.
(b) Should the reports on production by Barrick to
LAC be deficient, then LAC shall notify Barrick of the deficiencies and Barrick
shall use its best efforts to correct such deficiencies and modify future
reporting procedures to provide LAC with such information as LAC requests.
(c) Barrick shall instruct each mint or refinery at
which LAC has opened a storage account to report directly to LAC immediately
after refining each shipment of dore bars to such mint or refinery, the
following:
i) a list of each dore bar received, its serial
number, the date received and the date
refining was completed.
ii) the number of ounces of all gold and silver
bullion produced from each such shipment,
and the number of ounces of gold and silver
credited to LAC's account, together with
LAC's assigned account number.
All reports shall be sent by facsimile transmission, with copy by mail,
to the following address:
LAC Minerals (USA) Inc.
Attention: Chief Financial Officer
Suite 2100, P.O. Box ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇)
-5-
6. A new Section 24 is added to the Assignment and Agreement, as
follows:
24. Quarterly Reconciliation.
(a) The parties recognize that a period of time
exists between the production of ore, the production of dore from ore, the
production of bullion from dore and the receipt of refiner's statements for
refined bullion. As a result, the monthly instructions from Barrick to the
refiner set forth in Section 22(c) above for purposes of crediting LAC's account
with bullion will not coincide exactly with the actual amount of bullion refined
from ores produced from the Subject Properties. The parties agree, therefore, to
reconcile on a quarterly basis the production of ores and dore for the quarter.
The reconciliation will be made by Barrick and delivered to LAC within 60 days
of the end of each calendar quarter.
(b) In the event that LAC has been underpaid in the
previous calendar quarter, Barrick shall instruct the refiner to credit LAC's
account during the ensuing month with the number of ounces necessary to bring
LAC's royalty into balance. If LAC has been overpaid in the previous calendar
quarter, Barrick shall instruct the refiner to withhold the number of ounces
necessary to bring LAC's royalty into balance. In neither case will either party
be required to make direct payments or repayments to the other party and neither
party shall otherwise be liable to the other for any such overpayments or
underpayments.
7. A new Section 25 is added to the Assignment and Agreement, as
follows:
25. Confidentiality. LAC shall not, without the prior written
consent of Barrick, knowingly disclose to any third party any information or
data obtained pursuant to LAC's exercise of its rights under Section 1 of this
Agreement which is not generally available to the public; provided, however, LAC
may disclose information or data pertinent to its royalty: (i) if required for
compliance with applicable laws, rules, regulations, or orders of a governmental
agency or stock exchange having jurisdiction; (ii) to any third party to whom
LAC, in good faith, anticipates selling or assigning its interest in the Subject
Properties, or (iii) to a prospective lender to whom an interest in payments of
production royalties to be made to LAC has been granted as security, provided
that Barrick shall have been provided with a confidentiality agreement executed
by such third party (excluding government agencies) or lender, which agreement
shall include the confidentiality provision of this Section 4.
8. Exhibit A to this Assignment and Agreement is replaced in its
entirety with Exhibit "A" attached to this Second Amendment.
-6-
9. As amended by the First Amendment to Assignment and Agreement and by
this Second Amendment, the Assignment and Agreement is hereby ratified,
republished and confirmed, and as amended remains in full force and effect
subject, however, to applicable provisions of that certain Settlement Agreement
dated as of December 18, 1989, between LAC and Barrick, and the Commingling
Agreement made pursuant thereto.
"LAC"
LAC MINERALS (USA) INC.
By: /s/ [ILLEGIBLE]
--------------------------------
Title: PRESIDENT
"BARRICK"
BARRICK GOLDSTRIKE MINES INC.
By: /s/ [ILLEGIBLE]
--------------------------------
Title: Vice President
-7-
DESCRIPTIONS OF PROPERTIES
I. UNPATENTED MINING CLAIMS
The following described unpatented lode mining claims located in the
▇▇▇▇ Mining District, Eureka County, Nevada which are situated substantially in
the N 1/2 S 1/2, S 1/2 NE 1/4, and SE 1/4 NW 1/4 of Section 24, T. 36 N., R. 49
E., M.D.B.&M.
DATE OF EUREKA CO. BLM
CLAIM NAME LOCATION BOOK/PAGE SERIAL NO.
SJ 1 01/15/88 175/196 471413
SJ 2 01/15/88 175/197 471414
SJ 3 01/15/88 175/198 471415
SJ 4 01/15/88 175/199 471416
SJ 5 01/15/88 175/200 471417
SJ 6 01/15/88 175/201 471418
SJ 7 01/15/88 175/202 471419
SJ 8 01/15/88 175/203 471420
SJ 9 01/15/88 175/204 471421
SJ 10 01/15/88 175/205 471422
SJ 11 01/15/88 175/206 471423
SJ 12 01/15/88 175/207 471424
SJ 13 01/15/88 175/208 471425
SJ 14 01/15/88 175/209 471426
SJ 15 01/15/88 175/210 471427
SJ 16 01/15/88 175/211 471428
Additional Certificates of Location for the SJ Nos. 1-16 have been filed as
follow:
SJ 1 07/21/87 162/051 427376
SJ 2 07/21/87 162/052 427377
SJ 3 07/21/87 162/053 427378
SJ 4 07/21/87 162/054 427379
SJ 5 07/15/87 162/055 427380
SJ 6 07/15/87 162/056 427381
SJ 7 07/15/87 162/057 427382
SJ 8 07/15/87 162/058 427383
SJ 9 07/15/87 162/059 427384
SJ 10 07/15/87 162/060 427385
SJ 11 07/16/87 162/061 427386
SJ 12 07/16/87 162/062 427387
SJ 13 07/16/87 162/063 427388
SJ 14 07/16/87 162/064 427389
SJ 15 07/16/87 162/065 427390
SJ 16 07/16/87 162/066 427391
SJ 1 08/14/75 52/327 73188
SJ 2 08/14/75 52/328 73189
SJ 3 08/14/75 52/329 73190
SJ 4 08/14/75 52/330 73191
SJ 5 08/14/75 52/331 73192
SJ 6 08/14/75 52/332 73193
SJ 7 08/14/75 52/333 73194
SJ 8 08/14/75 52/334 73195
SJ 9 08/14/75 52/335 73196
SJ 10 08/14/75 52/336 73197
SJ 11 08/14/75 52/337 73198
SJ 12 08/14/75 52/338 73199
SJ 13 08/14/75 52/339 73200
SJ 14 08/14/75 52/340 73201
SJ 15 08/14/75 52/341 73202
SJ 16 08/14/75 52/342 73203
II. MINING LEASE
The following described Mining Lease located in the ▇▇▇▇ Mining
District, Eureka County, Nevada:
Mining Lease No. SPL-634 dated February 15, 1976 by and between
Southern Pacific Land Company and Long Lac Mineral Exploration Limited
covering the E 1/2 of Section 25, T. 36 N., R. 49 E., M.D.B.&M. A
Memorandum of Lease is recorded in Book 75 at page 427 of the Eureka
County records.
