EXHIBIT 10.1
MINERAL PROPERTY OPTION AGREEMENT
THIS AGREEMENT dated for December 15TH 2000
BETWEEN-
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(the Optioner")
OF THE
FIRST PART
AND:
BLUESTONE VENTURES, JNC., a body corporate, duly incorporated
under the laws of the Nevada and having an office at ▇▇▇
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(the "Optionee".)
OF THE SECOND PART
WHEREAS:
A. The Optionor is the registered and beneficial owner of four
mineral c1airn units known collectively as the Nag Lake Property which
is located in the Gravel River area, Thunder Day Mining
District, Ontario, Canada (Claim no.TB1195902) (collectively, the
"Claims");
B. The Optionor has agreed to grant to the Optionee the right,
privilege and option to explore the Claims together with the right,
privilege and option to purchase the Claims upon terms and
conditions hereinafter Set forth,
NOW THERFFORE THIS AGREEMENT WITNESSETH that in
consideration of the mutual covenants and provisos herein contained, THE
PARTIES HERETO AGREE AS FOLLOWS:
1. DEFINITIONS
For the purposes of this Agreement, exept as otherwise
expressly provided or unless
the context otherwise requires, the following words and phrases shall
have the following meanings;
(a) "Agreememt means this Mineral Property Option Agreement as
entered into between the Optionor and the Optionee herein;
(b) "Commercial Production" rneans the operation of the Claims or
any portion thereof as a producing
mine and the production of mineral products therefrom (excluding
bulk sampling or pilot plant operations,
if any) for a period of 30 consecutive days at not less than 60%
of the plants initial rated capacity;
(c) "Net Smelter Returns" means the net amount shown due by the
smelter or other place of sale from the sale of mineral products, as
indicated by its returns or settlement
sheets, after payment of (1) all freight charges from the
shipping point to the smelter or
other place of sale, (2) all other proper treatment or other
charges at such smelter or
other place of sale, and (3) federal or state royalties due
and payable on production, if any;
2. THE OPTIONOR'S REPRESENTATIONS
2.1 The Optionor represents and warrants to the Optionee that;
The Optionor is the beneficial owner of the mineral interests
comprising the Claims and holds the right to explore and
develop the Claims;
(b) Except as disclosed herein, the Optionor, as beneficial owner
of the claims, holds all of the Claims free and clear of all liens,
charges and claims of others, and the Optionor has free and unimpeded right
of access to the Claims and has use of the Claims surface for the herein
purposes;
(c) The Claim have been duly and validly located and recorded in a
good and miner-like manner pursuant to the laws of Ontario and are in good
standing in as of the date of this agreement;
(d) There are no adverse claim or challenges against or to the
Optionor's ownership of or title to any of the Claims nor to the knowledge
of the Optionor is them any basis therefore, and there are no outstanding
agreements or options to acquire or purchase the Claims thereof and
(e) The Optioner has the full right, authority and capacity to
enter into this Agreement without first obtaining the consent of any
other person or body corporate and the consummation of the transaction
herein contemplated will not conflict with or result in any breach of any
covenants or agreements contained in, or constitute a default under, or
result in the creation of any encumbrances under the provisions of any
shareholders' or directors' resolution, indenture, agreement
or other instrument whatsoever to which the Optioner is a party or by
which it is bound or to which it is subject;
2.2 The representations and warranties of the Optionor set
out in paragraph 2.1 above form a part of this Agreement and are
conditions upon which the Optionee has relied in entering into this
Agreement and shall survive the, acquisition of any interest in the Claim
by the Optionee.
3. THE OPTIONEE'S REPRESENTATIONS
The Optionee warrants mid represents to the Optionor that it
is a body corporate, duly incorporated under the laws of the State of
Nevada with full power and absolute capacity to enter into this
Agreement and that the terms of this Agreement have been authorized by
all necessary corporate acts and deeds in order to give effect to the
terms hereof.
4. GRANT OF OPTION
The Optionor hereby gives and grants
to the Optionee the sole and exclusive right and option to acquire a 100%
undivided right, title and interest in and to the Claims (the "Option"),
subject to a Net Smelter Return, royalty, by performing the acts and deeds
and paying the sums provided for in paragraph 5.
5. CONSIDERATION FOR THE GRANT OF OPTION
5.1 In order to keep the right and Option granted to the Optionee
in respect of the Claims in good standing and in force and effect, the
Optionee shall be obligated to:
(a) Share Issuances
Issue to The Optionor 250,000
non-assessable common shares in its capital stock at a deemed
price of $0.10 per share upon execution of this Agreement;
(b) Cash Payments
Pay to the Optionor a total
of $250,000
as follows:
(i) $25,000 upon execution of this Agreement;
(ii) $50,000 by January 2, 2002;
(iii) $75,000 by June 1, 2003; and
(iv) $100,000 by June 1, 2004;
(b) Expenditure Commitments
Provide funding of minimum cumulative
expenditures for exploration and development work on the Claims
of at least $85,000 under the direction of a qualified geologist
or project engineer as follows:
(i) $10,000 of expenditures to be
incurred or caused to be incurred, by the Optionee on the Claims
by January 1, 2002;
(ii) No less than a further $25,000 of expenditures to be or
caused to be incurred, by the Optionee on the Claims by October 31,
2002; and
(iii) No less than a further $50,000 of Expenditures to be
incurred, or caused to be incurred by the Optionee on the Claims by
January 1, 2003.
(e) Property Payments and Assessment Work
Pay, or cause to be paid, to the
Optionor, or on the Optionor's behalf as the
Optionee may determine, all Claim payments and assessment work
required to keep the Claims and
this Option in good standing during the term of this Agreement.
5.2 Area of Influence. For the purpose of this Agreement, the
area covered by the Claims shall include an area of influence
surrounding the outer perimeter of the Claims to a maximum of three
miles (the "Area of Influence") and all mineral claims, interests or
rights acquired (collectively, the
"Interests"), dirtectly or indirectly, within the Area of influence
before or after the date of signing of this
Agreement by the Optionor during the currency of this Agreement shall
become part of this Agreement. The Optionee agrees to reimburse the
Optionor for its out-of-pocket expenses, which are
incurred by the Optionor upon its acquisition of the interests.
6. RIGHT TO ABANDON PROPERTY INTERESTS
Should the Optionee, in its sole discretion, determine that any
part of the Claims no longer warrants further exploration and development,
then the Optionee may abandon such interests without affecting its rights
or obligations under the Agreement, so long as the
Optionee provides the Optionor with 30 days notice of its
intention to do so. Upon receipt of such notice, the Optionor my
request that the Optionee retransfer title to such interests to
the Optionor, and the Optionee hereby agrees to do so, and upon
expiry of the 30 days, or upon the earlier transfer thereof such interests
shall cease to be part of the Claims.
7. TERMINATION OF OPTION
7.1 The Option shall terminate upon 30 calendar days written
notice being first provided by the Optionor to the Optionee, if the
Optionee fails to make the required share issuance or cash
payments, or fails to complete the minimum cumulative and expenditures
and assessment work in accordance with paragraph 5. 1 within the time
periods specified.
7.2 If the Optionee sball be in default of any requirement set
forth in paragraph 5.1 herein, the Optionor shall give written notice
to the Optionee specifying the default and the Optionee shall not
lose any rights granted under this Agreement, unless within 30 days
after the giving of notice of default by the Optionor, the Optionee has
failed to take reasonable steps to cure the default by the appropriate
performance.
7.3 If the Option is terminated in accordance with paragraphs 7.1 and 7.2
herein), the Optionee shall have no interest in or to the Claims, and any
share issuances, expenditures and payments made, or caused to be made, or
incurred by the Optionee to or on behalf of the Optionor under this
Agreement shall be non-refundable by the I Optionor to the Optionee for
which the Optionee shall have no recourse.
ACQUISITION OF INTERESTS IN THE CLAIMS
At such time as, the Optionee has made the required share
issuance, minimum cumulative expenditures mid currency and other
payments, in accordance with paragraph 5 heM4 within the time periods
specified therein then the Option shall be deemed to have been
exercised by the Optionee, and the Optionee shall have thereby, witbout
any further act, acquired an undevided 100% interest in and to the
Claims subjecct to the net smelter returrns royalty described below.
9. NET SMELTER RETURNS ROYALTY
9.1 On the date the Optionee commences Commercial Production on
the Claims, the Optionor shall be entitled to receive and the Optionee shall
pay to the Optionor 2% of Net Smelter Returns,
9.2 The Optionee may at any tirne pay $500,000 to the Optionor to
reduce the Net Smelter Returns payable to the Optioinor to 1% of Net
Smelter Returns.
9.3 The Optionee shall be under no obligation whatsoever to place
the Claims into Commercial Production and in the event it is placed into
Commercial Production, the Optionee shall have the right, at any time, to
curtail or suspend such production as it, in its absolute discretion,
may determine.
9.4 Net Smelter Returns and the payments payable to the Optionor
hereunder shall be adjusted and paid quarterly, all within 90 days after
the end of each fiscal year during which the Claims were in Commercial
Production, the records relateing to the calculation of Net
Smelter Returns
during that fiscal year shall be audited and any adjustments shall be made
forthwith, and the audited statements shall, be delivered to the Optionor
who shall have 60 days after receipt of such statements to question in
writing their accuracy, and failing such question, the statements shall
be deemed Correct.
9.5 For the purposes of paragraph 9.4, the Optionor or its
representatives duly appointed in writing shall have the right at all
reasonable times, upon written request, to inspect those books and
financial records of the, Optionee as are relevant to the determination of
Net Smelter Returns, and, at the expense of tbe Optionor, to make copies
thereof
10. OPERATOR
After the execution of this Agreement, the Optionee, or at the Optionee's
option, its respective associate or nominee will act as the operator of the
Claim under this Agreement The Optionee, if operator, may resign as the
Operator at any time by giving 30 calendar days prior written notice to
the Optionor, and within such 30 day period, the Optionee may appoint
another party wbo covenants to act as the operator of tbe
claims upon such term as the Optionee sees At.
11. POWER AND AUTHORITY OF THE OPERATOR
After the execution of this Agreement, the operator shall have the full
right power and authority to do everything necessary or desirable in
connection with the exploration and developement of the Claim and to
determine the manner of operation of the Claims
as a mine including, and without limiting the generality of the foregoing,
the right, power and authority to:
(a) Regulate access to the Claims subject only to the right of the
parties hereto to have access to the Claims at all reasonable times for
the purpose of inspecting work being done thereon but at their
own risk and expense; and
(b) Employ and engage such employees, agents and independent
contractors as it may consider necessary or advisable to carry out its
duties and obligations hereunder and in this conne0ion to delegate any
of its powers and rights to perform its duties and obligations hereunder,
but the operator shall not enter into contractual relationships with an
associated company except on terms which are commercially
competitive,
12. REGISTRAYION AND TRANSFER OF PROPERTY INTERESTS
Upon the request of the Optionee, the Optionor shall assist the Optionee to
record this Agreement with the appropriate mining recorder and, when
required the Optionor shall further provide the Optionee with such recordable
documents as the Optionee and its counsel shall require to record its due
interest in respect of the Claims,
13. FURTHER ASSURANCES
The parties hereto agree to do or cause to be done all acts or things
necessary to implement and carry into effect the provisions and
intent of this Agreement.
14. FORCE MAJEURE
If the Optionee is prevented from or delayed in cornplying with any
provisions of this Agreement by reason of strikes, labour disputes,
lockouts, labour shortages, power shortages, fires, wars, acts of God,
governmental regulations restricting normal operations
or any other reason or reasons beyond the control of the Optionee, the time
limited for the performance of the various provisions of this Agreement as
set out above shall be extended by a period of time equal in length to
the period of such prevention and delay and the Optionee,
insofar as is possible, shall promptly give written notice to the, Optionor
of the particulars of the reasons for any prevention or delay under this
section, and shall take all reasonable steps to remove the cause of
such prevention or delay and shall give written notice to the Optionor
as soon as such causes ceases to exist.
CONFIDENTIAL INFORMATION
No informatiom furnished by the Optionee to the Optionor hereunder in
respect of the activities carried out on the Claims by the Optionee, or
related to the sale of mineral products derived from the Claims shall
be published by the Optionor without the prior written consent of
the Optionee, but such consent in respect of the reporting of factual
data shall not be unreasonably withheld, and shall not be withheld in
respect of information required to be publicly disclosed pursuant to
applicable securities and corporation laws.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement to date between the parties
hereto and supersedes every previous agreement., communication, expectation,
negotiation representation or understanding, whether oral or written express
orimplied, statutory or otherwise, between the parties hereto with respect
to the subject matterof this Agreement.
17. NOTICE
17.1 ▇▇▇ notice required to be given under this Agreement shall
be deemed to be well and sufficiently given delivered by facsimile or sent
by registered mail, in the case of the Optionor addressed as follows:
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Seven Mile Beach
PO Box 30620. Grand Cayman
and in the case of the Optionee addressed as follows
Bluestone Venwres Inc.
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and any notice given as aforesaid shall be deemed to have been given, if
delivered by facsimile, when transmitted or if mailed, on the second
business day after the date of mailing.
17.2 Either party hereto may from time to time by notice in
writing change its address for the purpose of this section.
18. OPTION ONLY
Until the option is exercised, this is an option only and except as
specifically provided otherwise, nothing herein contained shall be
construed as obligating the Optionee to do any acts or make any payments
hereunder and any act or acts or payments made hereunder shall not be
construed as obligating the Optionee to do any
further acts or make any further payments.
19. RELATIONSHIP OF PARTIES
Nothing contained in this Agreement shall, except to the extent
specifically authorized hereunder, be deemed to constitute either party
hereto a partner, agent or legal representative of the other party.
20. FURTHER ASSURANCES
The parties hereto agree to do or cause to be done all acts or
things necessary to implement and carry into effect the provisions and
intent of this Agreement..
21. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
22. TTTLES
The titles to the respective sections hereof shall not be deemed a part of
this Agreement but shall be regarded as having been used for
convenience only.
23. CURRENCY
All funds referred to under the terms of this Agreement shall be funds
designated in the lawful currency of the United States, of America.
24. APPLICABLE. LAW
For all purpose this Agreement will be governed exclusively by and
construed and enforced in accordance with the laws prevailing in the
Province of Ontario.
25, ENUREMENT
This Agreement, shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
26. ASSIGNMENT
This agreement may be assigned by either party hereto with the written
consent of the other party which consent shall not be
unreasonably withheld.
IN WITNESS WHEREOF this Agreement has been executed as of the day
and Year first above written.
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In the presence of :
/s/ ▇▇▇▇ ▇▇▇▇▇
THE CORPORATE SEAL of
BLUESTONE VENTURES INC,
was hereunto affixed in the presence of