EXHIBIT 10.24.2
MINING LEASE
Mining Lease dated as of June 19, 2003 ("Effective Date") between ▇▇▇▇
▇▇▇▇▇▇▇, whose principal address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ ("Owner") and La Cuesta International, Inc., an Arizona corporation
having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ("Lessee").
1. Lease and Term. (a) Owner leases to Lessee all of its undivided
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interest in the property described in Exhibit A, together with all (i) tailings,
dumps and mine wastes on such property, (ii) surface rights, easements and
rights of way incident or appurtenant to such property, (iii) mining mineral and
water rights incident or appurtenant to such property, and (iv) improvements,
fixtures, personal property, mining machinery and tools on such property that
are or may be useful or convenient for mining, milling and beneficiation of ores
and minerals and related uses ("Mining Property").
(b) The primary term of this agreement is ten (10) years, unless Lessee
elects to purchase Owner's interest as provided in Section 1c, or unless this
agreement is sooner surrendered or terminated as herein provided, or for so long
thereafter as any minerals are produced and sold in commercial quantities, or
for so long as Lessee continues to pay the rental payments as described in
Section 2a.
(c) On or before June 19, 2008, Lessee or its successors or assigns, at
its sole option, may purchase One Hundred Percent (100%) of Owner's right, title
and interest to the property, including the future obligations to all Rental
Payments and Royalties for One Hundred Thousand Dollars ($100,000.00).
2. Rentals. (a) In accordance to a June 9, 2003 letter agreement,
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Lessee has previously paid Owner One Thousand Dollars ($1,000.00) in rents for
the Mining Property. Lessee shall pay Owner the following additional "Rental
Payments" in accordance with the time schedule and dollar amounts below:
On or before December 19, 2003 $2,000.00
On or before December 19, 2004 $3,000.00
On or before December 19, 2005 $3,000.00
On or before December 19, 2006 $5,000.00
Every 12 months after December 19, 2006 $5,000.00
3. Royalty. (a) Lessee shall pay Owner a production royalty of One
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Percent (1%) the Net Smelter Returns for all ores and minerals mined or
otherwise recovered from the Mining Property and thereafter sold by or for the
account of Lessee before or after processing, smelting or refining ("Ores and
Minerals"), or Five Thousand Dollars ($5,000.00) per year, whichever is greater.
(b) "Net Smelter Returns" means amounts actually received by Lessee from
any mint, smelter, refinery or other purchaser from the sale of Ores and
Minerals less the following charges to the extent that they were not deducted by
the purchaser in computing payment to Lessee:
(1) smelting and refining charges; penalties; smelter assay
costs and umpire assay costs; costs of freight and handling of ores,
metals, ore concentrates from the Mining Property to any mint,
smelter, refinery or other purchase; marketing costs; insurance on all
such ores, metals or concentrates; customs duties; severance,
royalties, ad valorem or mineral taxes or the like, and export and
import taxes or tariffs payable in respect of said ores, metal or
concentrates.
(c) Royalties shall be paid on or before the 45th day after the last
day of each Lessee fiscal quarter in which Lessee receives payment for sale of
Ores and Minerals. Each such payment shall be provisional and subject to
adjustment as of the end of each Lessee fiscal year.
(e) With thirty (30) days after the end of each calendar quarter in
which proceeds from the sales of Ores and Minerals derived from the Mining
Property are received, Lessee shall deliver to Owner an unaudited statement of
royalties paid Owner during the calendar quarter and the calculation thereof.
All quarterly statements shall be deemed true and correct sixty (60) days after
presentation, unless within that period Owner delivers notice to Lessee
specifying with particularity the grounds for each exception. Owner shall be
entitled at Owner's expense to an annual independent audit of the statement by a
certified public accountant of recognized standing acceptable to Lessee, but
only if Owner delivers a demand for audit to Lessee within sixty (60) days after
presentation of the related quarterly statement.
4. Exclusive Possession. Lessee shall have exclusive possession and
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quiet enjoyment of the Mining Property while this agreement is in effect.
5. Title. (a) Owner represents that Owner is in exclusive possession of
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and owns the Mining Property.
(b) Owner warrants that the Mining Property is free and clear of all liens
and encumbrances created, suffered or allowed by Owner, including any lease,
right or license, except taxes not yet due and payable. Owner at Owner's
expense shall at Lessee's request take all action necessary to cure any defect
in or remove any cloud on title to the Mining Property, including participation
in judicial proceedings and recordation of any unrecorded documents. If after
notice or demand Owner fails to do so, Lessee may take curative action in
Owner's name and deduct its reasonable costs and expenses, including attorney's
fees, from amounts otherwise due Owner.
(c) Owner shall not create, suffer or allow any such liens or encumbrances
on the Mining Property unless expressly subordinated to Lessee's rights
hereunder. Lessee, at its option, may discharge any lien or encumbrance on the
Mining Property or any interest therein acquire all the rights of the holder
thereof and any amounts so paid from any amounts otherwise due Owner.
(d) Owner shall provide Lessee with all data and information related to
title to the Mining Property and copies of all unrecorded documents related
thereto in Owner's possession or control.
(e) Neither Lessee's execution of this agreement, nor Lessee's failure to
disapprove Owner's title, shall constitute an admission of or estoppel as to the
validity of Owner's title.
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6. Lesser Interest; Adverse Claims. (a) If Owner should own less than
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the entire ownership interest in the Mining Property (even if a lesser interest
is referred to herein), all production royalties and rentals payable to Owner
shall be paid only in proportion to Owner's actual ownership. If the Mining
Property or any part thereof should be subject to any royalty or interest in
production other than those expressly reserved to Owner herein, Lessee may
deduct all costs and expenses it incurs by reason of such royalty or interest
from amounts otherwise due Owner.
(b) Lessee shall have no obligation to Owner to protect or defend the
title to the Mining Property if any third person asserts any claim to the Mining
Property for any reason except Lessee's failure to perform obligations expressly
required by this agreement.
(c) If any third person asserts any claim to the Mining Property, to any
royalty or interest in production or to any amounts payable by Lessee, Lessee
may deposit any amounts otherwise due Owner in escrow until the dispute is
finally resolved. Lessee may deduct all costs and expenses, including
attorney's fees and court costs, it incurs by reason of such claim from all
amounts otherwise due Owner.
7. Operation Rights. (a) Owner grants Lessee unrestricted access to the
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Mining Property and the exclusive rights:
(i) to explore, develop and mine, and to extract, remove, store and
dispose of any and all ores, minerals, air, water, waste or other materials
from the Mining Property by means of underground or surface mining
operations or workings in or on the Mining Property or other property and
to deposit on the Mining Property all such materials whether from the
Mining Property or other property;
(ii) to carry on crushing, screening, milling, treatment, processing,
beneficiating, smelting and refining operations on or in the Mining
Property or other property with respect to ores, minerals and other
materials from the Mining Property or other property, including existing
tailings, wastes and dumps;
(iii) to use any part of the Mining Property for stockpiles, tailings,
waste dumps and ▇▇▇▇▇ pads and for any other purpose incident to mining,
milling, processing and other operations on the Mining Property or other
property;
(iv) to erect or construct, use and maintain on the Mining Property
such roads, impoundments, pipelines, power lines, facilities, buildings,
structures, machinery and equipment as Lessee may require for the conduct
of its operations on the Mining Property or other property;
(v) to continue to keep this agreement in effect and use the Mining
Property for mining, milling, treatment, processing, beneficiation,
smelting, refining or storage of ores, minerals and other materials from
other property with such use constituting the conduct of development and
mining operations for purposes of Section 1(c)(ii); and
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(vi) to stockpile, inventory or sell or otherwise dispose of ores,
minerals and other materials in such forms, at such times and on such terms
as Lessee alone may determine.
(b) Lessee shall conduct its operations in a good and workmanlike manner
in substantial compliance with the generally accepted understanding of
applicable laws and regulations as from time to time existing in the mining
industry and in conformity with Federal, State and County statutes.
8. Commingling. Lessee may commingle ores and minerals from the Mining
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Property with other ores and minerals. Before commingling, Lessee shall weigh
(or calculate by volume), sample and assay such ores and minerals in accordance
with sound mining and metallurgical practices for moisture and payable content.
Lessee shall keep records of such determination for one year after the end of
the Lessee fiscal year in which such determinations are made.
9. Indemnity; Limitations of Liability. (a) Lessee shall keep the
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Mining Property free of liens from labor performed and materials furnished for
Lessee. Lessee shall hold Owner harmless from all liability to third persons
caused by Lessee's operations on the Mining Property, which result in injury to
or death of persons or livestock or damage to personal property, or liability
for violation of applicable laws or regulations.
(b) In no event shall Lessee's liability for damage or economic loss to
Owner's interest in the Mining Property, whether resulting from Lessee's
negligence or otherwise, exceeds 150% of the fair market value of the affected
property (not including its value for mining or related purposes).
(c) Within a reasonable time after termination of this agreement, Lessee
shall being and diligently pursue to completion any reclamation then required by
applicable laws, regulations and permits by reason of Lessee's operations on
Owner's real property. Lessee's liability with respect to disturbance of
Owner's property shall be limited to compliance with such laws, regulations and
permits. Lessee shall have no obligation or responsibility for any wastes,
dumps, tailings, residues or other conditions on Owner's property on the
Effective Date or after completion of such required reclamations.
(d) The payments as expressly required by this agreement are in lieu of
any obligation of Lessee, express or implied, to explore, develop or mine the
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Mining Property or to make any other efforts or expenditures in connection
therewith.
(e) The obligations and limitations of liability in this Section shall
survive termination of this agreement.
10. Taxes. Owner shall pay all taxes on the Mining Property. Lessee
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shall reimburse Lessor upon presentation of paid tax bills or other proof or
payment for all real property taxes on the Mining Property accruing while this
agreement is in effect but taxes for periods in which this agreement begins and
ends shall be apportioned. Lessee shall pay all taxes on Lessee's operations
and on all personal property and fixtures placed on the Mining Property by
Lessee. All taxes shall be paid before delinquent, but neither party shall be
under any obligation to pay
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any tax while contesting it in good faith. Lessee shall have the right, but not
the obligation, to pay any taxes, delinquency charges, late fees or penalties
which could become a lien or encumbrance on the Mining Property if Owner fails
to do so and to recover amounts so paid from Owner.
11. Inspection. At reasonable times and with reasonable advance notice to
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Lessee, Owner may at Owner's risk and expense (i) enter the Mining Property to
make reasonable inspections of Lessee's operations and (ii) inspect records
necessary to substantiate Lessee's performance of its obligations under this
agreement. Lessee shall have no obligation to disclose to Owner any
interpretive data or exploration concepts prepared or developed by Lessee.
12. Avoidance of Forfeiture. (a) Default by Lessee in performance of any
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obligation arising hereunder shall not work a forfeiture or termination of this
agreement, nor cause a forfeiture, termination or reversion of the estate
created hereby.
(b) If Lessee commits a default, Owner shall give Lessee notice specifying
the default with particularity. Owner's sole remedy shall be recovery of actual
compensatory damages plus interest at the judgment rate from the date Lessee
receives notice of default. If Lessee by notice to Owner disputes the existence
of the default, no interest shall accrue if Lessee, within thirty days after the
default is finally determined, initiates and diligently pursues to completion
efforts to cure the default.
13. Termination; Surrender. (a) Lessee may terminate this agreement at
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any time effective on giving Owner a thirty (30) day written notice of
termination and by thereafter delivering to Owner a written instrument of
termination in recordable form.
(b) Lessee may surrender any portion of the Mining Property at any time by
giving Owner notice of surrender in recordable form. Acreage so surrendered
shall thereafter be excluded from the Mining Property for all purposes of this
agreement. The rights of minimum royalties under provisions 4(c)(i) shall not
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be adjusted even if a portion of the land covered by this lease is surrendered
by Lessee.
(c) Upon termination or surrender, all rights and obligations of the
parties with respect to the affected acreage shall terminate, except for (i)
Lessee's obligation to pay royalties for Ores and Minerals previously mined or
otherwise removed and sold and (ii) any rights or obligations which expressly
survive termination, including reclamation.
14. Additional and After-Acquire Rights. If Owner (or any of them)
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acquires any right or interest in the Mining Property or within the boundaries
of the Mining Property while this agreement is in effect, (i) Owner shall
promptly notify Lessee, (ii) such right or interest shall automatically become
part of the Mining Property for all purposes of this agreement and (iii) Owner
shall sign, acknowledge and deliver to Lessee an amendment to this agreement and
to any short form of this agreement so as to include such right or interest as
part of the Mining Property.
15. Removal of Property. Lessee shall have the right, but not the
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obligation, to remove, at any time or times within one year after termination of
this agreement, from the Owner's real property, all fixtures and personal
property, including ores, minerals, tailings, dumps and wastes, and improvements
which Lessee has erected or placed thereon, except mine
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supports in place. Owner shall not be responsible for any such property of
Lessee. Lessee may post watchmen on the Mining Property during such period.
16. Data. (a) Upon execute of this agreement, Owner shall make available
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to Lessee for copying and general use all hydrological, geological, geophysical
and engineering data and maps, logs of drill holes, cuttings and cores, gamma
and other logging results, assay, sampling and similar data concerning the
Mining Property in Owner's possession or control. Owner shall have no liability
for any use of or reliance thereon by Lessee.
(b) Upon request by Owner made within sixty days after termination of this
agreement, Lessee shall deliver to Owner a copy or summary of all assay results
and drill hole logs and a copy of all drill hole location maps (but excluding
interpretations or evaluations thereof) which Lessee has obtained or prepared as
a result of work on the Mining Property under this agreement. Lessee shall have
no liability for any use of or reliance thereon by Owner.
17. Method of Payment. All payments due Owner shall be deemed received by
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Owner if paid to ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Space ▇▇. ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Lessee shall not be liable for the ultimate distribution to
Owner or Owner's successors or assigns of payments so made by Lessee.
18. Rights-of-Way. While this agreement is in effect, Lessee shall have
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non-exclusive rights-of-way upon, over, into and through the Mining Property and
other property now or hereafter owned, leased or otherwise controlled by Owner
(or any of them) in the vicinity of the Mining Property to construct, improve
and maintain such pipe lines, communication lines, electrical power or
transmission lines, roads, railroads, tramways, flumes, tunnels, drifts and
other facilities as may be necessary or convenient for Lessee's operations under
this agreement.
19. Force Majeure. (a) If Lessee shall be prevented by Force Majeure
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from timely performance of any obligations arising under this agreement other
than payment of money, the failure shall be excused and the period for
performance shall be extended for a period equal to the duration of Force
Majeure. Lessee shall promptly give Owner notice of commencement and
termination of Force Majeure. Lessee shall promptly give Owner notice of
commencement and termination of Force Majeure. Lessee shall use reasonable
diligence to remove Force Majeure but shall not be required against its will to
institute legal proceedings, adjust any labor dispute or challenge the validity
of any law, regulation, action or inaction of government.
(b) "Force Majeure" includes any cause beyond Lessee's reasonable control,
whether or not foreseeable, including but not limited to: law, regulation,
action or inaction of government; inability to obtain on terms acceptable to
Lessee any public or private license, permit or authorization which may be
required for operations in connection with the Mining Property or other
property, including removal and disposal of waters, wastes or tailings and
reclamation; market and other conditions rendering the prospects for
exploitation of the Mining Property unprofitable or uneconomic; mining casualty;
damage to or destruction of mine or mill plant or facility; fire; explosion;
inclement weather; flood; civil commotion; labor dispute; inability to obtain
workmen or material; delay in transportation; and acts of God.
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20. Arbitration. Any dispute arising out of or related to the
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negotiation, existence, performance, breach or termination of this agreement
shall be finally determined by arbitration under the then Commercial Arbitration
Rules of the American Arbitration Association. The exclusive place of
arbitration shall be El Centrl, California. The arbitrators shall issue their
award within ninety days after submission of the dispute to arbitration. Costs
of arbitration shall be borne equally. Judgment on any award may be entered in
any court having jurisdiction over the person or property of the party against
whom the award is entered.
21. Notices. All notices and other communications to either party shall
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be in writing and delivered personally or sent by prepaid mail, Telex,
telecopier or other means providing for receipt of the communication in written
form. All notices of default or arbitration and demands for performance or
assurance, if delivered personally to Lessee, shall be delivered to Lessee's
Land Administrator and, if mailed to either party, shall be sent by certified or
registered mail, return receipt requested. Any notice of termination shall be
effective if given orally to Lessor and promptly confirmed be Lessee in writing.
Notices sent by ordinary mail shall be effective five days after the date of
mailing. Notices sent by certified or registered mail shall be effective on the
next business day after the date of actual delivery. Until a change of address
is so given, notices shall be addressed to Lessee and Owner, respectively:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
La Cuesta International, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Space No. 1
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notices so sent or delivered to Owner shall be as effective as if given to each
of the persons named as Owner.
22. Counterparts. This agreement may be executed in more than one
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counterpart. If less than all of the persons named as Owner sign this agreement
or such other agreement, it shall nevertheless bind each signatory.
23. Short Form. Lessee and Owner shall sign and acknowledge a short form
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of this agreement to give notice hereof to third persons. Lessee may record the
short form or this agreement, or both.
24. Transfer. Except as otherwise expressly provided in this agreement,
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any party may from time to time transfer interests in this agreement or in the
Mining Property. The transferor shall give, as soon as reasonably practical,
notice thereof to the other party, including the names and addresses of the
transferees, a copy of the document of transfer and the recording data for any
document relating to the transfer.
25. Entire Agreement; Interpretation. This agreement contains the entire
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agreement of the parties. There are no other conditions, agreements,
representations, warranties or understandings, express or implied. The division
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of this agreement into sections and the use of captions are solely for
convenience of reference and shall not be used in its interpretation.
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26. Effect. (a) All covenants, conditions and terms of this agreement
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shall be of benefit to, and shall run with, the Mining Property and shall bind
and inure to the benefit of the parties and their respective successors and
assigns.
(b) This agreement has been negotiated between the parties at arm's
length. The sole relationship between the parties is that of lessor/lessee.
Nothing in this agreement shall be construed to create between the parties,
expressly or by implication, any partnership, joint enterprise, relationship of
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trust and confidence or other special relationship, or any relationship of
master and servant or principal and agent, or the like
(c) The implied obligations of good faith and fair dealing shall not be
applied or construed so as to prevent any party from claiming or enforcing any
right, benefit, remedy, excuse or limitation of liability provided by this
agreement.
27. Special Provision. Owner retains the right to collect and remove
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rocks and rock specimens on a small, rock-collector, non-commercial scale as
long as such collection is lawful and does not interfere with exploration or
mining activities of Lessee.
LESSEE: OWNER:
La Cuesta International, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
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