EXHIBIT 10.13
AGREEMENT
BETWEEN
IDAHO GOLD CORPORATION
AND
IDAHO CONSOLIDATED METALS CORP.
(THE BUFFALO GULCH PROPERTY)
THIS AGREEMENT, dated this 9th day of July 1996 ("Effective Date"), is
between IDAHO GOLD CORPORATION, a Nevada corporation, (hereinafter referred to
as "OWNER") and IDAHO CONSOLIDATED METALS CORP., an Idaho corporation,
(hereinafter referred to as "ICMC"). OWNER and ICMC are each hereinafter
sometimes referred to individually as "Party" and collectively as "Parties".
RECITALS
OWNER controls certain unpatented mining claims located in Idaho
County, State of Idaho through its interest in the May 21, 1984 agreement
between Thunderbird Resources, Inc. and ▇▇▇▇ ▇▇▇▇▇ (U.S.) Inc. (the "Thunderbird
Agreement"). The Thunderbird Agreement and the mining claims are more
particularly described in Exhibit A hereto (hereinafter collectively called the
"Property").
OWNER is desirous of transferring the Property to ICMC for the purpose
of ICMC Exploring, Developing and Mining the same.
ICMC is desirous of acquiring the Property for such purposes.
In consideration of One Hundred and Twenty Thousand (120,000) shares of
common stock of ICMC (the ICMC "Stock") paid or to be paid by ICMC to OWNER, the
receipt and sufficiency of which are hereby acknowledged and in consideration of
the mutual covenants and agreements of the Parties herein contained, OWNER and
ICMC agree as follows:
ARTICLE I DEFINITIONS
For purposes of this Agreement certain terms and provisions used herein
are defined as follows:
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1.01 "Affiliate" means, with respect to any Party, any person,
partnership, joint venture, corporation or other form of enterprise which
directly or indirectly Controls, is Controlled by, or is under common Control
with a Party.
1.02 "Agreement" means this Agreement, as it may be amended, together
with Exhibits A - Property and B - Royalty.
1.03 "Anniversary Date" shall mean the day and month indicated in the
first paragraph of this Agreement occurring in each year subsequent to the
Effective Date of this Agreement, so long as this Agreement shall continue in
force and effect.
1.04 "Commencement of Commercial Production" means the first day
following the first period of ninety (90) consecutive days during which Products
are produced from the Property at an average rate equal to at least fifty
percent (50%) of the design capacity of the production facilities established
for producing Products from the Property.
1.05 "Control" means possession, directly or indirectly, of the power
to direct or cause direction of management and policies through ownership of
voting securities, contracts, voting trusts, or otherwise. Grammatical
variations of "Control" have a like meaning.
1.06 "Development" means all preparation for the removal of Ore for the
commercial recovery of Products from such Ore, including surveying, development
drilling and geological, geochemical and engineering analysis thereof, sampling,
prestripping and stripping, the construction or installation of a mill or any
other improvements to be used for the Mining, handling, milling, processing or
other beneficiation of Products. The active pursuit of obtaining any federal,
state or local authorization or permit related to any of the foregoing
activities included in this definition shall also be considered to be an act of
Development. Grammatical variations of "Development" have a like meaning.
1.07 "Exploration" means all activities directed toward ascertaining
the existence, location, quantity or quality of a
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commercial deposit of Ore on, in or under the Property, which activities are
conducted prior to the commencement of Development of such deposit. Such
activities include but are not limited to investigating, prospecting, surveying,
sampling and drilling. The active pursuit of obtaining any federal, state or
local authorization or permit related to any of the foregoing activities
included in this definition shall also be considered to be an act of
Exploration. Grammatical variations of "Exploration" have a like meaning.
1.08 "ICMC Stock" means One Hundred and Twenty Thousand (120,000)
shares of the common shares of ICMC which are free and clear of any assessments
but which are subject to a one (1) year trading restriction, which restriction
shall commence as of the Effective Date of this Agreement. In addition, Sixty
Thousand (60,000) shares shall be issued to OWNER on execution of this Agreement
and the remaining Sixty Thousand (60,000) shares shall be issued to OWNER one
(1) year from the Effective Date.
1.09 "IGC Data" means that information and data described in Section
2.02 in This Agreement.
1.10 "Mining" means the extraction of Ore and associated waste rock
from the Property. Grammatical variations of "Mining" have a like meaning.
1.11 "Ore" means any and all metallic and non-metallic minerals of
every kind (excluding only oil, gas, casinghead gas and associated liquid and
gaseous hydrocarbon substances), including, without limitation, deposits,
concentrates and solutions containing such minerals in all forms in which such
minerals may be found, extracted or produced, as well as any by-products
thereof.
1.12 "OWNER" includes any subsidiary, parent company, subsidiary of
parent company, division or Affiliate of OWNER (as the term "OWNER" is used
above).
1.13 "Production Rovalty" means the payments provided for in Section
4.01.
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1.14 "Products" means all commercial minerals produced from the Ore
mined from the Property.
1.15 "Property" means all right, title and interest of OWNER, as such
right, title and interest are represented and warranted in the Thunderbird
Agreement, in and to the surface estate and the mineral estate (specifically
including any and all subsurface rights) of the lands described in Exhibit A,
attached hereto and by this reference made a part hereof.
1.16 "The Thunderbird Agreement" means that certain agreement dated May
21, 1984 between Thunderbird Resources, Inc. and Amir Mins (U.S.) Inc. and any
underlying agreements thereto.
ARTICLE II
GRANT OF AGREEMENT
2.01 Transfer of the Property. Subject to the terms and conditions
contained in this Agreement and in the Thunderbird Agreement, OWNER hereby
transfers exclusively unto ICMC, its successors and assigns, the Property. The
rights transferred to ICMC by OWNER include all of OWNER's rights and privileges
(including but not limited to easements, rights-of-way, licenses, options and
contracts, plans of operation, environmental permits and licenses, but not
including forms of security for closure and reclamation), whether now owned or
hereafter acquired, that are appurtenant to the Property. The Property is
transferred to ICMC for the purpose of Exploring, Developing, mining, producing,
processing, consuming, transporting and marketing all grades and types of Ore
and their constituent Products and all other substances associated or commingled
therewith, by any method or methods deemed desirable by ICMC, whether the same
is now or hereafter becomes known to ICMC.
2.02 OWNER's Information and Data. Upon execution of this Agreement,
OWNER shall deliver to ICMC all records, data and information in its possession
or reasonably available to it relating to title in the Property, and all maps,
surveys, technical
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reports, core and drill cuttings, drill logs, and all metallurgical, geological,
geophysical, geochemical and other technical data pertaining to the Property in
its possession or reasonably available to it (the IGC Data"). OWNER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE COMPLETENESS OR
ACCURACY OF ANY INFORMATION OR DATA MADE AVAILABLE TO ICMC HEREUNDER OR TO THE
FITNESS OR SUITABILITY OF SUCH INFORMATION OR DATA FOR ANY PURPOSE.
2.03 Maintenance of Thunderbird Agreement. ICMC shall, as of July 9,
1996 and during the term of OWNER's Option provided for in Section 14.01,
assume, observe and perform each and every covenant and agreement made or given
by OWNER or its predecessor in title to be observed and performed under the
Thunderbird Agreement, specifically including the making of all cash and share
payments and the performance of all work commitments on the Property. ICMC may,
however, attempt to re-negotiate the Thunderbird Agreement (or, as permitted in
The thunderbird Agreement, any underlying agreement thereto).
ARTICLE III
NO IMPLIED OBLIGATIONS
3.01 Waiver of Implied Obligations. With regard to this Agreement,
ICMC. shall have no obligation to begin or perform prospecting, Exploration,
Development, Mining, processing, transporting or other operations on the
Property, nor to mine and remove all or, any portion of the Ore thereon, therein
or thereunder, nor is there any implied covenant to do so. OWNER expressly
acknowledges and agrees that no Mining of Ore may occur which would entitle
OWNER to receive payment of Production Royalty and OWNER further acknowledges
and agrees that ICMC, subject to ICMC's standard of operations set forth in
Section 5.01 may waste or consume portions of any Ore and ICMC shall not be
required to pay any Production Royalty on any such Ore which may be so wasted or
consumed. OWNER expressly acknowledges and agrees that the
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consideration for the grant of this Agreement may therefore constitute the sole
consideration for all rights of ICMC hereunder and that the same constitutes
full, reasonable, fair and adequate consideration for the rights granted to ICMC
by OWNER. If ICMC shall conduct Exploration, Development, mining, processing,
transporting, and other operations or activities hereunder, such operations and
activities shall be performed only to the extent, at such times and locations,
and by or with such methods as ICMC, in ICMC's sole discretion, shall deem
desirable. ICMC shall not be required to mine or protect in its Mining
operations any Ore which cannot be Mined, processed, shipped, and marketed at a
reasonable profit to ICMC at the time encountered as determined in the
reasonable judgment of ICMC.
ARTICLE IV
PRODUCTION ROYALTIES
4.01 Production Royalty. Beginning with the Commencement of Commercial
Production and continuing thereafter, ICMC shall pay to OWNER a royalty as
provided in Exhibit B, attached hereto and incorporated herein. No Production
Royalty shall be due with regard to samples of Ore which ICMC deems necessary to
test or evaluate the technical or economic feasibility of extraction, milling or
processing methods which may be used to enjoy the benefits and rights granted
hereunder. ICMC shall have the right to remove such samples free of any
Production Royalty whatsoever.
4.02 Manner of Payment. All payments of Production Royalty due or
payable to OWNER under this Article IV may be made by check or draft mailed or
delivered on or before the due date to OWNER in the name of the person
designated and at the address provided in Section 15.06 below.
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ARTICLE V
ICMC'S OPERATIONS
5.01 Standard of Care. ICMC shall perform or cause to be performed its
Exploration, Development and mining and other operations upon the Property and
under this Agreement in a good and workmanlike manner and in accordance with
sound mining and engineering practices.
5.02 Compliance with Law. All work performed or caused to be performed
by ICMC upon the Property shall be in compliance with all applicable federal,
state and local laws, rules and regulations. With regard to closure and
reclamation, ICMC shall reclaim, in accordance with state and federal laws and
regulations, any disturbance on the Property. It is specifically agreed that
ICMC assumes the responsibility to reclaim or otherwise cure all disturbances of
the Property whether made before or after the Effective Date of this Agreement.
It is agreed that prior to any Exploration, Development or Mining, ICMC
(in cooperation with OWNER) shall obtain release of all licenses, permits and
lands related to the Property that are in the name of OWNER.
5.03 Books. ICMC shall keep accurate books and records on the accrual
basis in accordance with generally accepted accounting principles. OWNER's sole
inspection and audit rights as to ICMC's books and records are as set forth in
Exhibit B.
5.04 Reports. ICMC shall furnish to OWNER, within sixty (60) days
following the effective date of termination of this Agreement, copies of all
factual, non-interpretative geologic data produced by ICMC with respect to the
Property. ICMC MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE COMPLETENESS OR ACCURACY OF ANY INFORMATION OR DATA MADE AVAILABLE TO OWNER
HEREUNDER OR TO THE FITNESS OR SUITABILITY OF SUCH INFORMATION OR DATA FOR ANY
PURPOSE.
5.05 Inspections. ICMC shall allow OWNER, as well as qualified
engineers and geologists representing OWNER, to enter into any adits, winzes and
shafts or upon the surface excavations
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and appurtenant structures operated by or on behalf of ICMC, at reasonable times
and hours, for the purpose of visually inspecting the operations pertaining to
this Agreement, upon at least five (5) days' written notice; provided, however,
OWNER shall indemnify and hold ICMC harmless, and such representatives shall
execute, if requested by ICMC, written waivers releasing ICMC from liability for
personal injury or property damage while in or upon the Property, resulting
otherwise than by the sole negligence of ICMC, its employees, contractors and
agents. whether or not a written waiver is executed by OWNER or its
representatives, OWNER indemnifies and holds ICMC harmless from liability while
OWNER and/or such representatives are in or upon the Property.
5.06 Minimum Exploration and Maintenance Expenditures. As a condition
only to the continuation of this Agreement, and subject to ICMC's right to
terminate this Agreement as set forth in Article X, ICMC hereby agrees to
commence an Exploration program with respect to the Property and to incur the
following minimum amounts of Exploration and Maintenance Expenditures (as
defined below) on the Property on or before the dates set opposite such amounts:
Minimum
Exploration and
Maintenance
Expenditures To Be Incurred Upon or Before
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$30,000 The first Anniversary Date of the Effective Date of
this Agreement;
$70,000 The second Anniversary Date of the Effective Date of
this Agreement;
$150,000 The third Anniversary Date of the Effective Date of
this Agreement;
$230,000 The fourth Anniversary Date of the Effective Date of
this Agreement; and
$310,000 The fifth Anniversary Date of the Effective Date of
this Agreement.
It is understood and agreed by the Parties that the above Exploration
and Maintenance Expenditures are cumulative.
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For example, a total of $230,000 in Exploration and Maintenance Expenditures
must be spent on the Property by the fourth Anniversary Date.
If Exploration and Maintenance Expenditures in any year exceed the
minimum amount required for such year as set forth in the above schedule, ICMC
shall be entitled to credit the excess amount against Exploration and
Maintenance Expenditures required for any subsequent Agreement Year or Years. It
is further agreed that ICMC has not expended any Exploration or maintenance
Expenditures as of the Effective Date of this Agreement.
As used herein 'Exploration and Maintenance Expenditures" means: (i)
Exploration Expenditures and Maintenance Expenditures as each isdefined below,
plus eight percent (8%) of such amounts as an allowance for administrative
services, except with respect to administration of single-third party contracts
where the overhead charge shall be five percent (5%), and (ii) all amounts
deemed to constitute Exploration Expenditures and Maintenance Expenditures under
this Exploration Agreement.
(a) "Exploration Expenditures" means all costs or other expenditures
incurred by or on behalf of ICMC in connection with the evaluation, Exploration
and Development of the Property, which expenditures may include, in ICMC's sole
discretion and without limitation, the cost of or expenditures for geological
mapping, geophysical surveying, geochemical assaying, drilling, sampling and
other work on the Property.
(b) "Maintenance Expenditures" means all costs or expenditures incurred
by or on behalf of ICMC to preserve in good standing the status and title that
the Property has on the Effective Date and to cure any defects in the title of
the Property, specifically including administration and judicial proceedings.
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ARTICLE VI
OWNERSHIP; TITLE
6.01 Ownership; Title. OWNER hereby represents and warrants as follows:
(a) OWNER is incorporated under the business corporations act of the
state of Nevada and represents that it exists and is in good standing in that
state as those terms might be construed under the state's business corporations
act; further, OWNER represents that it is qualified to conduct business in the
state in which the Property is located and is in good standing as that term
might be construed under the business corporations act of that state;
(b) this Agreement has been duly authorized by all necessary corporate
action on the part of OWNER and has been duly executed and delivered by OWNER;
(c) the Property is not the whole or substantially the whole of the
business, property, assets or undertaking of OWNER;
(d) Except as provided in the Thunderbird Agreement, there are no
royalties, fees or monies payable or required to be paid to any person or entity
with regard to the Property and there are no outstanding agreements, options or
purchase rights to acquire any part of or all the Property;
(e) OWNER has not engaged or employed any broker or finder in
connection with the negotiation, execution or delivery of this Agreement or the
Property; and
(f) OWNER has not made any assignment for the benefit of creditors,
filed any petition in bankruptcy, been adjudicated insolvent or bankrupt,
petitioned or applied to any tribunal for any receiver, conservator or trustee
of it under any reorganization arrangement, readjustment of debt, conservation,
dissolution or liquidation law or statue of any jurisdiction, and no such action
or proceeding has been commenced against OWNER by any creditor, claimant,
governmental agency or other person and OWNER has no present plans or intentions
to undertake any of the foregoing; and
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6.02 Survival. The representations and warranties contained in Section
6.01 shall survive the execution and delivery of this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF ICMC
7.01 Representations and Warranties. ICMC represents and warrants to
OWNER as follows:
(a) ICMC is incorporated under the business corporations act of the
Province of British Columbia, Canada, and represents that it exists and is in
good standing in that Province as those terms might be construed under its
business corporations act; further, ICMC represents that it is qualified to do
business in the state in which the Property is located and is in good standing
as that term might be construed under the business corporations act of that
state;
(b) this Agreement has been duly authorized by all necessary corporate
action on the part of ICMC and has been duly executed and delivered by ICMC;
(c) ICMC has not engaged or employed any broker or finder in connection
with the negotiation, execution or delivery of this Agreement or the Property;
(d) ICMC has not made any assignment for the benefit of creditors,
filed any petition in bankruptcy, been adjudicated insolvent or bankrupt,
petitioned or applied to any tribunal for any receiver, conservator or trustee
of it under any reorganization arrangement, readjustment of debt, conservation,
dissolution or liquidation law or statue of any jurisdiction, and no such action
or proceeding has been commenced against ICMC by any creditor, claimant,
governmental agency or other person and ICMC has no present plans or intentions
to undertake any of the foregoing; and
7.02 Survival. The representations and warranties contained in Section
7.01 shall survive the execution and delivery of this Agreement.
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ARTCLE VIII
TAXES
8.01 Taxes Paid by ICMC. ICMC agrees to pay all taxes levied and
assessed on improvements on the Property. ICMC's obligation to pay the aforesaid
taxes shall commence with taxes payable for the year of execution of this
Agreement. It is agreed that should OWNER receive tax bills or claims that are
the responsibility of ICMC hereunder, the same shall be forwarded to ICMC for
appropriate action.
ICMC shall not be obligated to pay any tax imposed upon any payment it
makes to OWNER under this Agreement.
ARTICLE IX
LIABILITY
9.01 Liability. ICMC will, at its sole expense, save, protect and hold
OWNER harmless against any and all claims, demands or judgments whatsoever for
loss or damage to personal property and death or injury to persons arising out
of ICMC's activities or operations on the Property or with regard to The ICMC
Stock, except those claims of OWNER, its assigns, contractors, employees,
successors or agents which are barred by the provision of Section 5.05. ICMC's
responsibilities under this section 9.01 shall terminate upon termination of
this Agreement, except for causes of action accruing before the date of
termination.
ARTICLE
X TERMINATION
10.01 Termination by ICMC. After one (1) year from the Effective Date,
ICMC may terminate this Agreement as to all or any portion of the Property at
any time upon giving ten (10) days' written notice to OWNER and thereafter ICMC
shall have no liability (specifically including Exploration and Maintenance
Expenditures) to OWNER under or in relation to this Agreement except as provided
in Section 10.04. Any partial termination of this Agreement by
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ICMC shall not reduce the Exploration and Maintenance Expenditures provided for
in this Agreement.
10.02 Default
(a) Default Procedures - Except with regard to payments due on
underlying agreements, in the event OWNER believes ICMC to be in default in the
observance or performance of any of ICMC's covenants, agreements or obligations
under this Agreement, OWNER may give written notice of such alleged default,
specifying the details of the same. ICMC shall have thirty (30) days following
said notice within which to remedy any such default described therein, or to
commence action in good faith to remedy such default or, in the case of
Exploration and Maintenance Expenditures, pay to OWNER the amount of Exploration
and Maintenance Expenditures required to be incurred under Article V that are
the subject of OWNER's written notice. Any such payment shall be deemed to be
Exploration and Maintenance Expenditures under Article V. In the case of
non-payment of a payment due on an underlying agreement, ICMC shall be deemed to
automatically be in default but shall have the right to remedy any such default
by making such payment within ten (10) days after such default.
Unless ICMC shall so comply or commence to comply, this Agreement may
be terminated at the option of OWNER; provided, however, that in the event ICMC
believes that it is not in default, ICMC may give written notice to OWNER within
the thirty (30) day period setting forth such fact. OWNER must then secure a
final judicial determination (including all appeals concerning the same) by a
court of competent jurisdiction that such default in fact exists; provided,
however, that OWNER expressly agrees that ICMC shall not be liable for any
incidental, consequential or punitive damages claimed by OWNER and no judgment
shall award to OWNER indirect, consequential or punitive damages. In the event
there is such a judicial determination, this Agreement shall not be terminable
by OWNER if ICMC shall (i) satisfy such judgment within thirty (30) days
following its entry (or if an appeal of such
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judgment is taken, following its affirmance by the highest court to which such
an appeal is made) and (11) reimburse OWNER for all of its reasonable costs and
expenses in obtaining such judgment, including attorney's fees; and provided,
further, that OWNER shall not be entitled to terminate this Agreement for any
default which by its nature is not retroactively curable if ICMC has used its
reasonable efforts to cure such a default to the extent practicable or if ICMC
has paid OWNER damages for ICMC's default where damages are an appropriate
remedy.
(b) Disputes Not to Interrupt Operations. Subject to OWNER's right
to terminate this Agreement as set forth in this Section 10.02, disputes or
differences between the parties shall not interrupt performance of or the
continuation of operations under this Agreement. With regard to Production
Royalties or any other sums payable hereunder or any part thereof, ICMC shall
have the right to escrow the portion of any such payment that is in dispute as
provided in Section 10.02(c) below. In the event of any dispute or difference,
operations may be continued in the same manner as prior to such dispute or
difference, until the matters in dispute have been finally determined between
the parties. Upon final determination, such payments or restitutions shall be
made as may be required under the terms of the settlement or final determination
of the dispute.
(c) Escrow Deposit. In the event of dispute or litigation as to
Production Royalties or any other sums payable hereunder or any part thereof,
any such Production Royalties or other payments may be deposited in escrow with
a depository bank selected by ICMC to be held until such dispute or litigation
is finally resolved or terminated. Any sums so deposited in escrow by ICMC
hereunder shall be deemed payment of Production Royalties or other sums due
hereunder for purposes of compliance by ICMC with its obligations under this
Agreement.
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10.03 Termination by Either Party. This Agreement may not be terminated
by either party except as expressly provided in Sections 10.01 or 10.02.
10.04 Obligations upon Termination.
(a) Upon Termination of the Agreement. If this Agreement is terminated
under Sections 10.01 or 10.02:
(i) ICMC shall comply with the provisions of Section 5.02
regarding closure and reclamation of the Property;
(ii) ICMC shall, as set forth in Section 9.01, remain liable
to OWNER for causes of action accruing prior to termination of this
Agreement;
(iii) ICMC shall remain liable to OWNER for the payment of the
ICMC Stock and for the payment of any Production Royalties which accrue
and are payable prior to termination of this Agreement;
(iv) ICMC shall offer to deliver to OWNER executed, recordable
transfer documents transferring its interest in and to the Property to
OWNER free and clear of any claims of those claiming by, through or
under ICMC. OWNER shall have sixty (60) days after receipt of ICMC's
notice in which to elect to accept a transfer of the Property; and
(v) ICMC shall, in the event OWNER elects to receive a
transfer of the Property, have the right for a period of one (1) year
to remove its buildings, structures, machinery, casings, tools,
equipment and other personal property, permanent improvements and
fixtures erected or placed upon the Property by ICMC after the date
hereof, except only track, pipe, timber, shaft guides, sheave wheels,
air gates, ventilation ducts, chutes and ladders in place and
protective devices (fences, caps, plugs or otherwise), which ICMC shall
leave in good condition for safety and underground support and entry.
All such buildings, structures, machinery, casings, tools, equipment or
other personal property, permanent improvements and fixtures not
removed (unless such items
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are needed to fulfill ICMC's closure and reclamation obligations) prior
to the expiration of such one (1) year following the termination of
this Agreement shall then, at the election of OWNER, be deemed affixed
to the Property and shall become and remain the sole property of OWNER.
(b) Upon Termination of Part of the Property. If part of the Property
is being released from the terms of this Agreement under Section 10.01:
(i) ICMC shall comply with the provisions of Section 5.02
regarding closure and reclamation of the part of the Property that is
being released from the terms of this Agreement;
(ii) ICMC shall remain liable to OWNER for the payment of the
ICMC Stock and for the payment of any Production Royalties which accrue
and are payable as to production from that part of the Property that is
being released from the terms of this Agreement;
(iii) ICMC shall offer to deliver to OWNER executed,
recordable transfer documents transferring to OWNER that part of the
Property that is being released from the terms of this Agreement, free
and clear of any claims of those claiming by, through or under ICMC.
OWNER shall have sixty (60) days after receipt of ICMC's Notice in
which to elect to accept a transfer of the Property subject to the
release; and
(iv) ICMC shall, in the event OWNER elects to receive a
transfer of the Property subject to release, have the right for a
period of one (1) year to remove its buildings, structures, machinery,
casings, tools, equipment and other personal property, permanent
improvements and fixtures erected or placed by ICMC after the date
hereof upon the part of the Property that is being released from the
terms of this Agreement except only track, pipe, timber, shaft guides,
sheave wheels, air gates, ventilation ducts, chutes and ladders in
place and protective devices (fences, caps, plugs or otherwise), which
ICMC shall leave in good condition for safety and underground support
and entry. All such buildings,
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structures, machinery, casings, tools, equipment or other personal
property, permanent improvements and fixtures not removed (unless such
items are needed to fulfill ICMS's closure and reclamation obligations)
prior to the expiration of such one (1) year shall then, at the
election of OWNER, be deemed affixed to the Property and shall become
the sole property of OWNER.
(c) Limitation of Liability. OWNER expressly agrees that ICMC shall not
be liable for any incidental, consequential or punitive damages claimed by
OWNER.
(d) Cross Indemnities. Upon termination of this Agreement, ICMC and
OWNER shall continue to have the indemnity responsibilities set forth in Section
15.04.
ARTICLE XI
TRANSFER RIGHTS AND RESTRICTIONS
11.01 Transfer by ICMC. ICMC shall not assign, or otherwise transfer
any rights or obligations regarding the Property or this Agreement (in whole or
in part) without first obtaining the prior written consent of OWNER, which
consent shall not be unreasonably withheld.
ARTICLE XII
FORCE MAJEURE
12.01 Force Majeure. All obligations of ICMC and all conditions with
respect to the continuation of this Agreement, specifically including the
payment of Royalty payments as set out in Section 4.01, shall be suspended and
ICMC shall not be deemed in default or liable for damages or other legal or
equitable remedies while; but only as long as, ICMC is prevented from complying
with such obligations or conditions in whole or in part by actions of
environmental pressure groups, strikes, lockouts, labor slowdowns or
disturbances, acts of God, war, explosion, flood, epidemics, unavoidable
accidents, uncontrollable delays in transportation, inability to obtain
necessary materials or services in the open
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market, unusually severe weather, inadequate facilities for the transportation
of materials, any local, state or federal law, regulation or order, or any other
matters beyond the reasonable control of ICMC, whether similar to the matters
herein specifically enumerated or not ("Force Majeure"). The time or times
specified herein for compliance by ICMC with all obligations and conditions
hereunder, including, without limitation, obligations or conditions as to the
incurring of Exploration and Maintenance Expenditures, shall thereafter be
extended for a period or periods equal to the duration of the Force Majeure
provided, however, that performance shall be resumed within a reasonable time
after such Force Majeure has ceased to exist; and provided, further, that ICMC
shall not be required to compromise or settle any labor disputes or to question
the validity or to refrain from judicially testing the validity of any local,
state or federal order, regulation or law. without limitation of the above
general provision, if ICMC is or becomes subject, at any time, to environmental
regulations or governmental restrictions ("environmental regulations or
governmental restrictions" shall include any law, rule, regulation, order,
judgment, policy, proposal, action or inaction or restriction relating to air
pollution, water pollution, surface or subsurface Exploration or mining and
surface or subsurface effects of mining or land use) which prohibit or
materially affect any operations hereunder or planned to be carried out
hereunder, ICMC shall have the right to declare the existence of a condition of
Force Majeure during the period in which ICMC is in good faith seeking a
feasible method to comply with, be exempted from, modify, obtain necessary
permits or licenses under or prevent the enactment, promulgation or enforcement
of such environmental regulations or governmental restrictions. OWNER agrees to
cooperate with ICMC in prosecuting any such actions.
ARTICLE XIII
[RESERVED]
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ARTICLE XIV
OPTION TO ENTER INTO JOINT VENTURE
14.01 Grant of Option. OWNER hereby reserves and ICMC hereby grants to
OWNER an exclusive option (hereinafter the "Option") to enter into a joint
venture in regard to the Property upon the terms and conditions set forth
herein.
14.02 Consideration. The Parties agree that the consideration contained
in this Agreement shall be sufficient consideration for the grant of this
option.
14.03 Exercise of the Option.
A. OWNER may subject to the provisions of Section 14.05 below,
exercise the Option at any time after the Effective Date hereof and prior to
five (5) years from the Effective Date of this Agreement by the delivery of
written notice to ICMC of OWNER's intent to exercise the Option, together with
two (2) originals of the Joint Venture Agreement, dated the date of the notice
and executed by OWNER. within thirty (30) days after ICMC's receipt of OWNER's
exercise of the Option, ICMC shall, unless ICMC exercises its termination right
under Section 14.05 below, execute and return to OWNER one (1) original Joint
Venture Agreement.
It is agreed by the Parties that such Joint Venture Agreement shall
generally follow the then current Rocky Mountain Mineral Law Form of joint
venture agreement and shall specifically provide that: (1) this Agreement shall
remain in effect and shall be part of the basis on which the OWNER (as to 49%)
and ICMC (as to 51%) shall have rights and obligations in and with respect to
the
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Property; provided, however, that OWNER shall not be entitled to the Production
Royalty; (2) each party will fund its proportionate share of ongoing
expenditures on the Property or have its interest deducted; (3) a management
committee will approve all operations and activities of the venture and will
consist of two members from each of ICMC and OWNER with ICMC to hold the
deciding vote so long as ICMC retains not less than 51% interest in the joint
venture; (4) ICMC will have the right to be operator of the joint venture so
long as it retains not less than a 51% interest in the joint venture; and (5) in
the event of a conflict between OWNER's rights and obligations as a joint
venture and its rights under this Agreement, its rights under this Agreement
shall be paramount.
Provided that: (1) ICMC has not exercised its right under Section 14.05
below to terminate OWNER's exercise of the Option and (2) ICMC has executed and
returned a copy of the joint venture agreement as provided for above, within
forty-five (45) days after delivery of the Option notice to ICMC, OWNER shall
pay ICMC the amount of One Hundred and Fifteen Percent (115%) of ICMC's
Exploration and Maintenance Expenditures expended on the Property from January
1, 1996, until exercise of the Option by OWNER.
14.04 Covenants Running with the Land: Specific Performance. The
covenants and agreements of OWNER and ICMC under this Option are intended to
touch and concern the Property and to be and shall be covenants running with the
land with respect to the Property and shall be binding upon OWNER and ICMC and
OWNER's and ICMC's representatives and permitted successors and assigns.
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14.05 Termination of ▇▇▇▇▇▇.▇▇ the event that OWNER does not exercise
the Option in the manner provided herein, then: (i) this Option shall, without
further action of any party, automatically terminate and thereafter be null and
void and of no further force or effect, and (ii) neither Party shall have any
further rights or obligations with respect to the Option. Additionally, ICMC
shall have the right to terminate OWNER's Option by payment to OWNER of Three
Hundred Thousand Dollars (Canadian) (Cdn $300,000) at any time up to twenty-one
(21) days after receipt by ICMC of the Option notice sent by OWNER.
ARTICLE XV
GENERAL PROVISIONS
15.01 Competition. This Agreement is, and the rights and obligations of
the Parties are, strictly limited to the Property and the Parties shall have
the. free and unrestricted right to engage in and independently receive the full
benefits of any, and all business ventures of any sort whatsoever, whether or
not competitive with the activities undertaken pursuant hereto, without
consulting the other or inviting or allowing the other to participate therein.
Neither of the Parties shall be under any fiduciary or other duty to the other
which will prevent it from engaging in or enjoying the full benefits of any
competing venture or ventures within the general scope of the activities
contemplated by this Agreement. without limiting the generality of the
foregoing, neither Party shall be under any duty to disclose to the
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other Party information and data relating to the Property which it obtains
outside the scope of its activities under this Agreement.
15.02 Memorandum for Recording. This Agreement shall not be recorded for,
by or on behalf of either Party. OWNER agrees to execute and ICMC shall record a
notice or memorandum of this Agreement, which shall be in a form suitable for
recording under the state and local laws of Idaho, specifying that the interests
of ICMC and OWNER in the Property are subject to the terms and conditions of
this Agreement.
15.03 Governing Law. This Agreement shall be governed and construed
according to the laws of Idaho and subject to the jurisdiction of the courts of
such state. In addition, this Agreement shall be subject to all applicable laws,
rules and regulations of public bodies having jurisdiction over the development
or operation of the Property.
15.04 Not a Partnership. It is not the purpose or intention of this
Agreement to create a partnership, mining partnership, commercial partnership or
any other partnership relation between the Parties hereto. Each of the Parties
shall be responsible only for its respective obligations and liabilities as set
forth in this Agreement and neither Party shall have any authority to act for or
to assume any obligations or responsibility on behalf of the other Party.
Nothing contained in this Agreement shall be deemed to constitute any Party the
partner of the other or the agent or legal representative of the other or to
create any fiduciary relationship between them. Each Party agrees to
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indemnify and hold harmless the other Party, its directors, officers, employees
and agents from and against any and all losses, claims, damages and liabilities
arising out of any act taken or made by or on behalf of the other Party, its
directors, officers, employees or agents under or in relation to this Agreement,
except pursuant to authority expressly granted herein or otherwise agreed to
between the Parties. The provisions of this Section 15.04 shall survive
termination of this Agreement
15.05 Laws and Regulations. In the conduct of its operations on the
Property, ICMC shall be responsible for compliance with applicable laws and
regulations, including laws and regulations related to Exploration, Mining,
Development and reclamation.
15.06 Manner of Giving Notices. Any notice, election, proposal,
objection or other document, including any proposed public announcement, press
release or other disclosure, required or permitted to be given hereunder
("Notices") shall be in writing addressed to the Parties as follows:
ICMC: IDAHO CONSOLIDATED METALS CORP.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ Struck
FAX NO: (▇▇▇) ▇▇▇-▇▇▇▇
OWNER: ▇/▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
FAX NO: (▇▇▇) ▇▇▇-▇▇▇▇
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All Notices shall be given: (a) by personal delivery to ICMC, (b) by
electronic communication, with the original Notice sent by registered or
certified mail in the United States of America mail, return receipt requested,
or (c) by registered or certified mail in the United States of America mail,
return receipt requested. All Notices shall be effective and shall be deemed
delivered: (a) if by personal delivery, on the date of delivery if delivered
during normal business hours, and, if not delivered during normal business
hours, on the next business day following delivery, (b) if by electronic
communication, on the next business day following receipt of the electronic
communication, and (c) if solely by mail, on the next business day after actual
receipt. A Party may at any time change its address for future Notices hereunder
by Notice in accordance with this Section 15.06.
15.07 Currency. Except as provided for in Section 14.05, all amounts of
money Currency. Except expressed or payable hereunder are expressed and shall be
paid in dollars of the United States of America.
15.08 [RESERVED]
15.09 Further Assurances. Each of the Parties hereby covenants and
agrees to execute any further and other documents and instruments and to take
any further and other actions that may be necessary to implement and carry out
the intent of this Agreement.
15.10 Binding Effect. This Agreement shall enure to the benefit of and
be binding upon the Parties hereto and their respective successors and permitted
assigns. This Agreement shall be binding upon each Party which has executed and
delivered it, whether or not it has been executed and delivered by all Parties.
15.11 Headings. The articles, sections, titles and other headings of
this Agreement (other than the definitions) are inserted only for convenience
and shall not control or affect the meaning, construction or interpretation of
the Agreement or affect its terms and provisions.
15.12 Severability. In the event any provision of this Agreement is, or
the operations contemplated hereby are, found to
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be inconsistent with or contrary to any law, rule or regulation, the latter
shall be deemed to control and this Agreement shall be regarded as modified
accordingly and shall continue in full force and effect as so modified.
15.13 Perpetuities. The Parties to this Agreement do not intend that
there shall be any violation of the Rule Against Perpetuities or any related
rule pertaining to restraints upon alienation. If any such violation should
inadvertently exist, it is the intent and desire of the Parties hereto that the
appropriate court shall reform such provision or provisions in such a way as to
approximate most closely the intent 'of the Parties hereto within the limits
permissible under such Rule or related rule.
15.14 Waiver, Modification or Amendment. No failure or delay on the
part of either OWNER or ICMC in exercising any of their respective rights
hereunder upon any failure by the other party to perform or observe any
condition, covenant or provision herein contained shall operate as a waiver
thereof, nor shall any single or partial exercise of any of such rights preclude
any other or further exercise thereof or the exercise of any other right
hereunder. Neither this Agreement nor any provision hereof may be supplemented,
changed, waived, or discharged orally, or by any course of dealing or trade
usage, but only by an instrument in writing signed by the Party against whom the
enforcement of the supplement, change, waiver, or discharge is sought.
15.15 Counterparts.This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.16 Advisors to OWNER. OWNER expressly acknowledges that it has
sought (or had the opportunity to seek) the advice of OWNER's own advisors,
including but not limited to, legal, tax, financial, geologic, and engineering,
to assist OWNER in reviewing this Agreement. OWNER expressly acknowledges that
OWNER is not relying on any oral or written statement (not expressly set forth
in this Agreement) made by ICMC, its employees or agents regarding any matters
pertaining to this Agreement.
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15.17 Acknowledgement and Agreement. ICMC hereby acknowledges that
Arctic Fox Ltd. and ▇▇▇▇ Estates Company have not consented to the transfer of
the Property and that such consent may not be received by the Effective Date of
this Agreement, if at all. OWNER and ICMC hereby waive the receipt of the
consent by Arctic Fox Ltd. and ▇▇▇▇ Estates Company as a condition precedent to
the completion of the transaction contemplated herein.
15.18 Registration of the ICMC Stock. ICMC shall bear all costs and
expenses associated with removing any restrictions on the marketability of the
ICMC Stock.
15.19 Entire Agreement. This Agreement (including Exhibits A and B
shall constitute the complete understanding and agreement of the Parties with
respect to the Property and the subject matter hereof, all previous agreements
with respect thereto being expressly rescinded and replaced hereby. No
modification or alteration of this Agreement shall be effective unless in
writing executed subsequent to the date hereof by both of the Parties. No prior
written or contemporaneous oral promises, representations or agreements shall be
binding upon the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
IDAHO GOLD CORPORATION IDAHO CONSOLIDATED METALS CORP.
By: [ILLEGIBLE SIGNATURE] By: /S/ WILF STRUCK
Title: Director/Secretary/Treasurer Title: Chief Operating Officer,
Vice President
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State of Idaho )
:ss.
County of Nez Perce )
On this 4th day of February, 1997, before me, the undersigned, a Notary
Public in and for said state, personally appeared WILF STRUCK, known and
identified to me to be person whose name is subscribed to the within instrument,
and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on the day and year first written above.
Notary Public for the State of Idaho
Residing at Lewiston
My Commission expires 9-21-02
EXHIBIT A
To
MINERAL LEASE AGREEMENT
Between
IDAHO GOLD CORPORATION
And
IDAHO CONSOLIDATED METALS CORP.
"Property"
1. The Claims
2. The Thunderbird Agreement
3. Underlying Agreements to the Thunderbird Agreement
SCHEDULE "A"
BUFFALO GULCH CLAIMS
Claim BLM # IMC
Name
A 46 95056
A 48 95058
A 49 95059
A 50 95060
A 53 95063
A 54 95064
A 55 95065
A 56 95066
A 58 95068
A 65 95075
A 66 95076
A 67 95077
A 68 95078
A 69 95079
A 70 95080
A 71 95081
A 72 95082
A 73 95083
A 74 95084
A 75 95085
A 80 95090
A 81 95091
A 82 95092
A 83 95093
A 84 95094
A 85 95095
A 86 95096
A 87 95097
A 88 95098
A 89 95099
A 90 95100
A 91 95101
A 92 95102
A 93 95103
A 94 95104
A 95 95105
A 96 95106
A 97 95107
A 98 95108
A 99 95109
Black Bear 1 72588 297158
Black Bear 2 72589 297159
Black Bear 3 72590 297160
Black Bear 4 72591 297161
Black Bear 5 72592 297162
Black Bear 6 72593 297163
EC 1 85868
EC 2 85869
EC 3 85870
EC 4 85871
EC 5 85872
EC 6 85873
EC 7 85874
EC 6 85875
EC 9 85876
EC 10 85877
EC 12 85879
EC 14 85881
EC 16 85883
EC 18 85885
EC 20 85887
EC 22 85889
EC 24 85891
EC 57 85892
EC 58 85893
EC 120 85894
EC 121 85895
EC 125 85897
EC 126 85898
Whiskey ▇▇▇▇ 1 121621
Whiskey ▇▇▇▇ 2 121622
Whiskey ▇▇▇▇ 3 121623
Whiskey ▇▇▇▇ 4 121624
EXHIBIT B
To
MINERAL LEASE AGREEMENT
Between
IDAHO GOLD CORPORATION
And
IDAHO CONSOLIDATED METALS CORP.
NET SMELTER RETURNS
SCHEDULE "B" - BUFFALO GULCH CLAIMS NET SMELTER RETURNS
1. The royalty which may be payable to Idaho Gold Corporation (hereinafter
called the "Payee") pursuant to paragraph 3(d) of the Assignment of
Interests Agreement by Idaho Consolidated Metals Corp. (hereinafter
called the "Payor") will be 3% of 100% of the Net Smelter Revenue ( as
hereinafter defined) and will be calculated and paid to the Payee in
accordance with the terms of this Schedule "B". Terms having defined
meanings in the Agreement and used herein will have the same meanings
in this Schedule as assigned to them in the Assignment of Interests
Agreement unless otherwise specified or the context otherwise requires.
2. The Net Smelter Revenue will be calculated on a calendar quarterly
basis and will, subject to paragraph 7 of this Schedule "B", be equal
to Gross Revenue less Permissible Deductions for such quarter.
3. The following words will have the following meanings:
(a) "Gross Revenue" means the aggregate of the following amounts
received in each quarterly period following the commencement
of commercial production from the Mining Properties:
(i) the revenue received by the Payor from arm's length
purchasers of all Product;
the fair market value of all Product sold by the
Payor in such period to persons not dealing at arm's
length with the Payor; and
any proceeds of insurance on Product;
(b) "Ore" means all materials from the Mining Properties, the
nature and composition of which justifies either:
(i) mining or removing from place and shipping and
selling such material, or delivering such material to
a processing plant for physical or chemical
treatment; or
(ii) leaching such material in place;
(c) "Permissible Deductions" means the aggregate of the following
charges (to the extent that they are not deducted by any
purchaser in computing payment) that are paid in each
quarterly period:
(i) sales charges levied by any sales agent on the sale
of Product,
(ii) transportation costs for Product from the Mining
Properties to the place of beneficiation, processing
or treatment and thence to the place of delivery of
Product to a purchaser thereof, including shipping,
freight, handling and forwarding expenses;
all costs, expenses and charges of any nature
whatsoever which are either paid or incurred by the
Payor in connection with refinement or beneficiation
of Product after leaving the Property, including all
weighing, sampling, assaying and representation
costs, metal losses, any umpire charges and any
penalties charged by the processor, refinery or
smelter, and
all insurance costs on Product, and any government
royalties, production taxes, severance taxes and
sales and other taxes levied on Ore, Product or on
the production or value thereof (other than any
Federal or Provincial taxes levied on the income or
profit of the Payor);
(d) "Product" means:
(i) all Ore shipped and sold prior to treatment, and
(ii) all concentrates, precipitates and products produced
from Ore.
4. The payment on account of the royalty for each calendar quarter will be
calculated and paid within 60 days after the end of each calendar
quarter. Smelter settlement sheets, if any, and a statement setting
forth calculations in sufficient detail to show the payment's
derivation (the "Statement") must be submitted with the payment.
5. In the event that final amounts required for the calculation of the
payment on account of the royalty are not available within the time
period referred to in section 4 of the Schedule "B", then provisional
amounts will be estimated and such payment will be paid on the basis of
this provisional calculation. Positive or negative adjustments will be
made to the payment on account of the royalty for the succeeding
quarter.
6. All payments on account of the royalty will be considered final and in
full satisfaction of all obligations of the Payor with respect thereto,
unless the Payee delivers to the Payor a written notice (the "Objection
Notice") describing and setting forth a specific objection to the
calculation thereof within 60 days after
2
receipt by the Payee of the Statement. If the Payee objects to a
particular Statement as herein provided, the Payee will, for a period
of 60 days after the Payor's receipt of such Objection Notice, have the
right, upon reasonable notice and at reasonable times, to have the
Payor's accounts and records relating to the calculation of the payment
in question audited by the auditors of the Payee. If such audit
determines that there has been a deficiency or an excess in the payment
made to the Payee, such deficiency or excess will be resolved by
adjusting the next quarterly payment due hereunder. The payee will pay
all the costs and expenses of such audit unless a deficiency of 5 % or
more of the amount due is determined to exist. The Payor will pay the
costs and expenses of such audit if a deficiency of 5 % or more of the
amount due is determined to exist. Failure on the part of the Payee to
made a claim against the Payor for adjustment in such 60 day period by
delivery of an Objection Notice will conclusively establish the
correctness and sufficiency of the Statement and payment on account of
the royalty for such quarter.
7. All profits and losses resulting from the Payor engaging in any
commodity futures trading, option trading, metals trading, gold loans
or any combination thereof, and any other hedging transactions with
respect to Product which is a precious metal (collectively, "Hedging
Transactions") are specifically excluded from calculations of the
payments on account of the royalty pursuant to this Schedule "B" (it
being the intent of the parties that the Payor will have the
unrestricted right to market and sell Product to third parties in any
manner it chooses and that the Payee will not have any right to
participate in such marketing activities or to share in any profits or
losses therefrom. All Hedging Transactions by the Payor and all profits
or losses associated therewith, if any, will be solely for the Payor's
account. The amount of Net Smelter Revenue derived from all Product
subject to Hedging Transactions by the Payor will be determined
pursuant to the provisions of this. paragraph 7 and not paragraph 2. As
to precious metals subject to Hedging Transactions by the Payor, Net
Smelter Revenue will be determined without reference to Hedging
Transactions and will be determined by using, for gold, the quarterly
average price of gold, which will be calculated by dividing the sum of
all London Bullion Market Association P.M. Gold Fix prices reported for
the calendar quarter in question by the number of days for which such
prices were quoted. Any Product subject to Hedging Transactions will be
deemed to be sold, and revenues received therefrom, only on the date of
the final settlement of the amount of refined Product allocated to the
account of the Payor by a third party refinery in respect of such
transactions. Furthermore, the Payor will have no obligation to fulfill
any futures contracts, forward sales, gold loans or other Hedging
Transactions which the Payor may hold with Product.
8. If the royalty becomes payable to two or more parties, those parties
will appoint, and will deliver to the Payor a document executed by all
of those parties appointing, a single agent or trustee of all such
parties to whom the
3
Payor will make all payments on account of the royalty. The Payor will
have no responsibility as to the division of the royalty payments
amount such parties, and if the Payor makes a payment or payments on
account of the royalty in accordance with the provisions of this
paragraph 8, it will be conclusively deemed that such payment or
payments have been received by the Payee. All charges of the agent or
trustee will be borne solely by the parties receiving payments on
account of the royalty.
9. Notwithstanding the foregoing, the royalty payable shall be limited to
US$3,000,000.