Option Agreement
THIS AGREEMENT, made as of the 14th day of June, 2002, is
BETWEEN:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇ (the
"Optionors")
OF THE FIRST PART
AND:
NORCAN EXPLORATION, INC., a Nevada corporation, having a registered office
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Optionors are the owners of certain mineral claims located in the
Province of British Columbia, Canada (the "Mineral Claims");
B. The Optionors have agreed to grant an exclusive option to the Optionee to
acquire an interest in and to the Mineral Claims, on the terms and conditions
hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of Ten
Dollars ($10.00) now paid by the Optionee to the Optionors (the receipt of which
is hereby acknowledged), the parties agree as follows:
DEFINITIONS
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1. For the purposes of this Agreement the following words and phrases shall
have the following meanings, namely:
(a) ""Commencement of Commercial Production"" means:
(i) if a Mill is located on the Property, the last day of a period of 40
consecutive days in which, for not less than 30 days, the Mill
processed ore from the Property at 60 percent of its rated
concentrating capacity; or
(ii) if no Mill is located on the Property, the last day of a period of 30
consecutive days during which ore has been shipped from the Property
on a reasonably regular basis for the purpose of earning
revenues, but no period of time during which ore or concentrate is shipped
from the Property for testing purposes, and no period of time during which
milling operations are undertaken as
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initial tune-up, shall be taken into account in determining the date of
Commencement of Commercial Production;
(b) ""Exploration Expenditures"" means the sum of:
(i) all costs of acquisition and maintenance of the Property, all
expenditures on the exploration and development of the Property, and
all other costs and expenses of whatsoever kind of nature including
those of a capital nature, incurred or chargeable by the Optionee with
respect to the exploration of the Property;
(ii) as compensation for general overhead expenses which the Optionee may
incur, an amount equal to 10% of all amounts included in subparagraph
(i) in each year but only 5% of such amounts when paid by the Optionee
under any contract involving payments by it in excess of $100,000 in
one year;
(c) "Option" means the option to acquire a 100% undivided interest in and to
the Property as provided in this Agreement;
(d) "Option Period" means the period from the date of this Agreement to and
including the date of exercise or termination of the Option;
(e) "Property" means the mineral claims described in Schedule "A" hereto
including any replacement or successor claims, and all mining leases and
other mining interests derived from any such claims. Any reference herein
to any mineral claim comprising the Property includes any mining leases or
other interests into which such mineral claim may have been converted;
(f) "Property Rights" means all licenses, permits, easements, rights-of-way,
certificates and other approvals obtained by either of the parties either
before or after the date of this Agreement and necessary for the
exploration of the Property.
(g) ""Royalty"" means the amount of royalty from time to time payable to the
Optionor hereunder and as defined in Section 9 herein.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONORS
----------------------------------------------------------------
2. (a) The Optionors represent and warrant to and covenant with the Optionee
that:
(i) they are legally entitled to hold the Property and the Property Rights
and will remain so entitled until the interest of the Optionors in the
Property which is subject to the Option has been duly transferred to
the Optionee as contemplated hereby;
(ii) they are, and at the time of each transfer to the Optionee of an
interest in the mineral claims comprising the Property pursuant to the
exercise of the Option they will be, the recorded holders and
beneficial owners of all of the mineral claims comprising the Property
free and clear of all liens, charges and claims of others, except as
noted on Schedule "A", and no taxes or rentals are or will be due in
respect of any of the mineral claims;
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(iii) the mineral claims comprising the Property have been to the best of
the Optionors' knowledge and belief duly and validly located and
recorded pursuant to the laws of the jurisdiction in which the
Property is situate and, except as specified in Schedule "A" and
accepted by the Optionee, are in good standing with respect to all
filings, fees, taxes, assessments, work commitments or other
conditions on the date hereof and until the dates set opposite the
respective names thereof in Schedule "A";
(iv) there are not any adverse claims or challenges against or to the
ownership of or title to any of the mineral claims comprising the
Property, nor to the knowledge of the Optionors is there any basis
therefor, and there are no outstanding agreements or options to
acquire or purchase the Property or any portion thereof, and no person
has any royalty or other interest whatsoever in production from any of
the mineral claims comprising the Property other than as set out in
Schedule "A";
(v) no proceedings are pending for, and the Optionors are unaware of any
basis for the institution of any proceedings leading to the placing of
the Optionors in bankruptcy or subject to any other laws governing the
affairs of insolvent persons; and
(vi) the Property is not the whole or substantially the whole of the
undertaking of the Optionors.
(b) The representations and warranties contained in this section are provided
for the exclusive benefit of the Optionee, and a breach of any one or more
thereof may be waived by the Optionee in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same
or any other representation or warranty, and the representations and
warranties contained in this section shall survive the execution of this
Agreement and of any transfers, assignments, deeds or further documents
respecting the Property.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE
---------------------------------------------------------------
3. (a) The Optionee represents and warrants to and covenants with the
Optionors that:
(i) it has been duly incorporated, amalgamated or continued and validly
exists as a corporation in good standing under the laws of its
jurisdiction of incorporation, amalgamation or continuation;
(ii) it is lawfully authorized to hold mineral claims and real property
under the laws of the jurisdiction in which the Property is situate;
(iii) it has duly obtained all corporate authorizations for the execution
of this Agreement and for the performance of this Agreement by it, and
the consummation of the transactions 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 encumbrance under the provisions of the Articles or the
constating documents of the Optionee or any shareholders' or
directors' resolution, indenture, agreement or other instrument
whatsoever to
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which the Optionee is a party or by which it is bound or to which it
or the Property may be subject; and
(iv) no proceedings are pending for, and the Optionee is unaware of any
basis for the institution of any proceedings leading to, the
dissolution or winding up of the Optionee or the placing of the
Optionee in bankruptcy or subject to any other laws governing the
affairs of insolvent corporations.
(b) The representations and warranties contained in this section are provided
for the exclusive benefit of the Optionors and a breach of any one or more
thereof may be waived by the Optionors in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same
or any other representation or warranty, and the representations and
warranties contained in this section shall survive the execution hereof.
GRANT AND EXERCISE OF OPTION
--------------------------------
4. (a) The Optionors hereby grant to the Optionee the sole and exclusive right
and option to acquire a 100% undivided interest in and to the Property free
and clear of all charges, encumbrances and claims, except for those set out
in Schedule "A".
(b) The Option shall be exercised by the Optionee:
(i) paying the Optionors $1,263.00 US on the execution of this Agreement,
the receipt of which is hereby acknowledged by the Optionors;
(ii) paying the Optionors $41,737.00 US as follows:
(A) $1,895.00 US on or before the first anniversary of the date of
this Agreement;
(B) an additional $8,242.00 on or before the second anniversary of
the date of this Agreement;
(C) an additional $12,600.00 on or before the third anniversary of
the date of this Agreement; and
(D) an additional $19,000.00 on or before the fourth anniversary of
the date of this Agreement.
(iii) incurring Exploration Expenditures of $1,516 US on the Property as
follows:
(A) $252 on or before March 31, 2003;
(B) a further $252 on or before March 31, 2004;
(C) a further $252 on or before March 31, 2005;
(D) a further $380 on or before March 31, 2006; and
(E) a further $380 on or before March 31, 2007.
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In the event that the Optionee spends, in any of the above periods, less than
the specified sum, it may pay to the Optionors the difference between the amount
it actually spent and the specified sum before the expiry of that period in full
satisfaction of the Exploration Expenditures to be incurred. In the event that
the Optionee spends, in any period, more than the specified sum, the excess
shall be carried forward and applied to the Exploration Expenditures to be
incurred in succeeding periods.
(c) If and when the Option has been exercised, a 100% undivided right, title
and interest in and to the Property shall vest in the Optionee free and clear of
all charges, encumbrances and claims, except for the obligations of the Optionee
to pay the Optionor the Royalty, if any, and to give the Optionor a right of
first refusal on any mineral claim comprising a part of the Property which the
Optionee wishes to abandon.
(d) In the event that the Optionee does not fully exercise the Option by
fulfilling the terms set out in subparagraph (b) by the 20th anniversary of this
Agreement the Option and this Agreement shall terminate.
TRANSFER OF PROPERTY
---------------------
5. The Optionors shall, forthwith after the exercise of the Option by the
Optionee, deliver to the Optionee duly executed transfers of the appropriate
interest in the Property which shall have been acquired by the Optionee upon
exercise of the Option.
RIGHT OF ENTRY
----------------
6. Throughout the Option Period, the directors and officers of the Optionee
and its servants, agents and independent contractors, shall have the sole and
exclusive right in respect of the Property to:
(a) enter thereon;
(b) have exclusive and quiet possession thereof;
(c) do such prospecting, exploration, development and other mining work as
the Optionee in its sole discretion may determine advisable;
(d) bring upon and erect upon the Property such buildings, plant, machinery
and equipment as the Optionee may deem advisable;
(e) remove and dispose of reasonable quantities of ores, minerals and metals
for the purposes of obtaining assays or making other tests; and
(f) act as operator of the Property.
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OBLIGATIONS OF THE OPTIONEE DURING OPTION PERIOD
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7. During the Option Period, the Optionee shall:
(a) maintain in good standing those mineral claims comprising the Property
by the doing and filing of assessment work or the making of payments in lieu
thereof, by the payment of taxes and rentals, and the performance of all other
actions which may be necessary in that regard and in order to keep such mineral
claims free and clear of all liens and other charges arising from the Optionee's
activities thereon except those at the time contested in good faith by the
Optionee;
(b) permit the Optionors and their agents, employees and designated
consultants, at their own risk and expense, access to the Property at all
reasonable times, and the Optionors agree to indemnify the Optionee against and
to save it harmless from all costs, claims, liabilities and expenses that the
Optionee may incur or suffer as a result of any injury (including injury causing
death) to the Optionors to or any agent, employee or designated consultant of
the Optionors while on the Property
(c) do all work on the Property in a good and workmanlike fashion and in
accordance with all applicable laws, regulations, orders and ordinances of any
governmental authority;
(d) indemnify and save the Optionors harmless in respect of any and all
costs, claims, liabilities and expenses arising out of the Optionee's activities
on the Property, but the Optionee shall incur no obligation hereunder in respect
of claims arising or damages suffered after termination of the Option if upon
termination of the Option any workings on or improvements to the Property made
by the Optionee are left in a safe condition;
(e) permit the Optionors, at their own expense, reasonable access to the
results of the work done on the Property during the last completed calendar
year; and
(g) deliver to the Optionors, forthwith upon receipt thereof, copies of all
reports, maps, assay results and other technical data compiled by or prepared at
the direction of the Optionee with respect to the Property.
TERMINATION OF OPTION BY OPTIONEE
-------------------------------------
8. (a) The Optionee may terminate the Option by giving notice of such
termination to the Optionor.
(b) If the Option is terminated the Optionee shall:
(i) leave in good standing for a period of at least 6 months from the
termination of the Option Period those mineral claims comprising the
Property;
(ii) deliver or make available at no cost to the Optionors within 90 days
of such termination, all drill core, copies of all reports, maps,
assay results and other relevant technical data compiled by, prepared
at the direction of, or in the
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possession of the Optionee with respect to the Property and not
theretofore furnished to the Optionors.
(c) Notwithstanding the termination of the Option, the Optionee shall have
the right, within a period of 180 days following the end of the Option Period,
to remove from the Property all buildings, plant, equipment, machinery, tools,
appliances and supplies which have been brought upon the Property by or on
behalf of the Optionee, and any such property not removed within such 180 day
period shall thereafter become the property of the Optionor.
ROYALTY
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9. (a) Upon the Commencement of Commercial Production, the Optionee shall
pay to the Optionors the Royalty, being equal to 3% of Net Smelter Returns on
the terms and conditions as set out in this section and in Schedule "B".
(b) Installments of the Royalty payable under paragraph (a) shall be paid by
the Optionee as follows:
(i) within 45 days after the end of each of the Optionee's first three
fiscal quarters in each fiscal year and within 60 days of the end of
the Optionee's last fiscal quarter in each fiscal year, the Optionee
shall pay to the Optionor an amount equal to 25% of the estimated
Royalty, if any, for the fiscal year, adjusted if necessary after the
first quarter of any fiscal year to reflect any change during the
fiscal year in estimated Royalty; and
(ii) within 120 days after the end of the Optionee's fiscal year, the
balance, if any, of Royalty payable in respect of the fiscal year last
completed.
(c) After Commencement of Commercial Production, the Optionee shall, within
45 days after the end of each fiscal quarter, furnish to the Optionors quarterly
unaudited statements respecting operations on the Property, together with a
statement showing the calculation of Royalty for the fiscal quarter last
completed.
(d) Forthwith after the end of each fiscal year, commencing with the year in
which Commencement of Commercial Production occurs, the accounts of the Optionee
relating to operations on the Property shall be audited by the auditors of the
Optionee, at its expense, and the statement of operations, which shall include
the statement of calculation of Royalty for the year last completed. The
Optionors shall have 45 days after receipt of such statements to question the
accuracy thereof in writing and, failing such objection, the statements shall be
deemed to be correct and unimpeachable thereafter.
(e) If the audited financial statements furnished pursuant to paragraph (d)
disclose any overpayment of Royalty by the Optionee during the fiscal year, the
amount of the overpayment shall be debited against future installments of
Royalty payable hereunder.
(f) If the audited financial statements furnished pursuant to paragraph (d)
disclose any underpayment of Royalty by the Optionee during the year, the amount
thereof shall be paid to the Optionors forthwith after determination thereof.
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(g) The Optionee agrees to maintain for each mining operation on the
Property, up-to-date and complete records relating to the production and sale of
minerals, ore, bullion and other product from the Property, including accounts,
records, statements and returns relating to treatment and smelting arrangements
of such product, and the Optionors or their agents shall have the right at all
reasonable times, including for a period of 12 months following the expiration
or termination of this Agreement, to inspect such records, statements and
returns and make copies at their own expense for the purpose of verifying the
amount of Royalty payments to be made by the Optionee to the Optionors pursuant
hereto. The Optionors shall have the right at their own expense to have such
accounts audited by independent auditors once each fiscal year.
(h) Upon the Optionors receiving a total of $850,000 from payments of
Royalty, the Royalty shall terminate. The Optionee shall always have the right
to prepay such amount before it is actually due.
POWER TO CHARGE PROPERTY
---------------------------
10. At any time after the Optionee has exercised the Option, the Optionee
may grant mortgages, charges or liens (each of which is herein called a
"mortgage") of and upon the Property or any portion thereof, any mill or other
fixed assets located thereon, and any or all of the tangible personal property
located on or used in connection with the Property to secure financing of
development of the Property, provided that, unless otherwise agreed to by the
Optionors, it shall be a term of each mortgage that the mortgagee or any person
acquiring title to the Property upon enforcement of the mortgage shall hold the
same subject to the right of the Optionors to receive the Royalty hereunder as
if the mortgagee or any such person had executed this Agreement.
TRANSFERS
---------
11. (a) The Optionee may at any time either during the Option Period or
thereafter, sell, transfer or otherwise dispose of all or any portion of its
interest in and to the Property and this Agreement provided that any purchaser,
grantee or transferee of any such interest shall have first delivered to the
Optionors its agreement relating to this Agreement and to the Property,
containing:
(i) a covenant to perform all the obligations of the Optionee to be
performed under this Agreement in respect of the interest to be
acquired by it from the Optionee to the same extent as if this
Agreement had been originally executed by such purchaser, grantee or
transferee; and
(ii) a provision subjecting any further sale, transfer or other disposition
of such interest in the Property and this Agreement or any portion
thereof to the restrictions contained in this paragraph (a).
(b) No assignment by the Optionee of any interest less than its entire
interest in this Agreement and in the Property shall, as between the Optionee
and the Optionors, discharge it
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from any of its obligations hereunder, but upon the transfer by the Optionee of
the entire interest at the time held by it in this Agreement, whether to one or
more transferees and whether in one or in a number of successive transfers, the
Optionee shall be deemed to be discharged from all obligations hereunder save
and except for the fulfillment of contractual commitments accrued due prior to
the date on which the Optionee shall have no further interest in this Agreement.
(c) If the Optionors should receive a bona fide offer from an independent
third party (the "Proposed Purchaser") dealing at arm's length with the
Optionors to purchase all or a part of its interest in the Property, which offer
the Optionors desires to accept, or if the Optionors intends to sell all or a
part of its interest in the Property:
(i) The Optionors shall first offer (the "Offer") such interest in writing
to the Optionee upon terms no less favourable than those offered by
the Proposed Purchaser or intended to be offered by the Optionors, as
the case may be.
(ii) The Offer shall specify the price, terms and conditions of such sale,
the name of the Proposed Purchaser and shall, in the case of an
intended offer by the Optionors, disclose the person or persons to
whom the Optionors intends to offer its interest and, if the offer
received by the Optionors from the Proposed Purchaser provides for any
consideration payable to the Optionors otherwise than in cash, the
Offer shall include the Optionors' good faith estimate of the cash
equivalent of the non-cash consideration.
(iii) If within a period of 60 days of the receipt of the Offer the
Optionee notifies the Optionors in writing that it will accept the
Offer, the Optionors shall be bound to sell such interest to the
Optionee on the terms and conditions of the Offer. If the Offer so
accepted by the Optionee contains the Optionors' good faith estimate
of the cash equivalent of the non cash consideration as aforesaid, and
if the Optionee disagrees with the Optionors' best estimate, the
Optionee shall so notify the Optionors at the time of acceptance and
the Optionee shall, in such notice, specify what it considers, in good
faith, the fair cash equivalent to be and the resulting total purchase
price. If the Optionee so notifies the Optionors, the acceptance by
the Optionee shall be effective and binding upon the Optionors and the
Optionee, and the cash equivalent of any such non-cash consideration
shall be determined by binding arbitration and shall be payable by the
Optionee, subject to prepayment as hereinafter provided, within 60
days following its determination by arbitration. The Optionee shall in
such case pay to the Optionors, against receipt of an absolute
transfer of clear and unencumbered title to the interest of the
Optionors being sold, the total purchase price which is specified in
its notice to the Optionors and such amount shall be credited to the
amount determined following arbitration of the cash equivalent of any
non-cash consideration.
(iv) If the Optionee fails to notify the Optionors before the expiration of
the time limited therefor that it will purchase the interest offered,
the Optionors may sell and transfer such interest to the Proposed
Purchaser at the price and on the terms and conditions specified in
the Offer for a period of 60 days, but the terms of this paragraph
shall again apply to such interest if the sale to the Proposed
Purchaser is not completed within such 60 days.
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(v) Any sale hereunder shall be conditional upon the Proposed Purchaser
delivering a written undertaking to the Optionee, in form and
substance satisfactory to its counsel, to be bound by the terms and
conditions of this Agreement.
SURRENDER OF PROPERTY INTERESTS PRIOR TO TERMINATION OF AGREEMENT
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12. The Optionee may at any time during the Option Period elect to abandon
any one or more of the mineral claims comprised in the Property by giving notice
to the Optionors of such intention. Any claims so abandoned shall be in good
standing under the laws of the jurisdiction in which they are situate for at
least 6 months from the date of abandonment. Upon any such abandonment, the
mineral claims so abandoned shall for all purposes of this Agreement cease to
form part of the Property and, if title to such claims has been transferred to
the Optionee the Optionee shall retransfer such title to the Optionors at the
Optionee's expense.
AREA OF COMMON INTEREST
--------------------------
13. If the Optionor and/or associated parties acquires, through staking,
properties located within the following area of influence; extending one (1.0)
miles in an easterly, northerly, southerly and westerly direction, these
properties will be included under the terms of this Agreement.
FORCE MAJEURE
--------------
14. (a) If the Optionee is at any time either during the Option Period or
thereafter prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lock-outs, labour shortages, power shortages,
fuel shortages, fires, wars, acts of God, governmental regulations restricting
normal operations, shipping delays or any other reason or reasons, other than
lack of funds, beyond the control of the Optionee, the time limited for the
performance by the Optionee of its obligations hereunder shall be extended by a
period of time equal in length to the period of each such prevention or delay,
but nothing herein shall discharge the Optionee from its obligations hereunder
to maintain the Property in good standing.
(b) The Optionee shall give prompt notice to the Optionors of each event of
force majeure under paragraph (a) and upon cessation of such event shall furnish
to the Optionors with notice to that effect together with particulars of the
number of days by which the Obligations of the Optionee hereunder have been
extended by virtue of such event of force majeure and all preceding events of
force majeure.
(c) After the Commencement of Commercial Production, the Optionee shall
work, mine and operate the Property during such time or times as the Optionee in
its sole judgment considers such operations to be profitable. The Optionee may
suspend or curtail operations, both before and after Commencement of Commercial
Production, during periods when the products derived
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from the Property cannot be profitable sold at prevailing prices or if an
unreasonable inventory thereof, in the Optionee's sole judgment, has accumulated
or would otherwise accumulate.
CONFIDENTIAL INFORMATION
-------------------------
15. No information furnished by the Optionee to the Optionors hereunder in
respect of the activities carried out on the Property by the Optionee shall be
published or disclosed by the Optionors 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 or
corporation laws, regulations or policies.
ARBITRATION
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16. (a) All questions or matters in dispute under this Agreement shall be
submitted to arbitration pursuant to the terms hereof:
(b) It shall be a condition precedent to the right of any party to submit
any matter to arbitration pursuant to the provisions hereof, that any party
intending to refer any matter to arbitration shall have given not less than 10
days' prior notice of its intention to do so to the other party, together with
particulars of the matter in dispute. On the expiration of such 10 days, the
party who gave such notice may proceed to refer the dispute to arbitration as
provided in paragraph (c).
(c) The party desiring arbitration shall appoint one arbitrator, and shall
notify the other party of such appointment, and the other party shall, within 15
days after receiving such notice, either consent to the appointment of such
arbitrator which shall then carry out the arbitration or appoint an arbitrator,
and the two arbitrators so named, before proceeding to act, shall, within 30
days of the appointment of the last appointed arbitrator, unanimously agree on
the appointment of a third arbitrator to act with them and be chairman of the
arbitration herein provided for. If the other party shall fail to appoint an
arbitrator within 15 days after receiving notice of the appointment of the first
arbitrator, the first arbitrator shall be the only arbitrator. If the two
arbitrators appointed by the parties shall be unable to agree on the appointment
of the chairman, the chairman shall be appointed under the provisions of the
Commercial Arbitration Act of British Columbia. Except as specifically
otherwise provided in this section, the arbitration herein provided for shall be
conducted in accordance with such Act. The chairman, or in the case where only
one arbitrator is appointed, the single arbitrator, shall fix a time and place
in Vancouver, British Columbia, for the purpose of hearing the evidence and
representations of the parties, and he shall preside over the arbitration and
determine all questions of procedure not provided for under such Act or this
section. After hearing any evidence and representations that the parties may
submit, the single arbitrator, or the arbitrators, as the case may be, shall
make an award and reduce the same to writing, and deliver one copy thereof to
each of the parties. The expense of the arbitration shall be paid as specified
in the award.
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(d) The parties agree that the award of a majority of the arbitrators, or in
the case of a single arbitrator, of such arbitrator, shall be final and binding
upon each of them.
DEFAULT AND DISCONTINUATION OF ANY MINING OPERATIONS
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17. (a) If at any time during the Option Period the Optionee is in default
of any provision in this Agreement, the Optionors may terminate this Agreement,
but only if:
(i) they shall have first given to the Optionee a notice of default
containing particulars of the obligation which the Optionee has not
performed, or the warranty breached; and
(ii) the Optionee has not, within 45 days following delivery of such notice
of default, cured such default or commenced proceedings to cure such
default by appropriate payment or performance, the Optionee hereby
agreeing that should it so commence to cure any default it will
prosecute the same to completion without undue delay.
Should the Optionee fail to comply with the provision of subparagraph (ii), the
Optionors may thereafter terminate this Agreement by giving notice thereof to
the Optionee.
(b) The Optionee may permanently discontinue mining operations on the
Property at any time after the Commencement of Commercial Production when in its
opinion no further mining operations can be economically carried out thereon. At
such time, the Optionee shall dispose of all mining plant and equipment used on
the Property, effect all reclamation work as required by law and otherwise
dispose of the Property as it thinks fit. Any purchaser of the Property after
termination of mining operations on the Property shall take the Property free
and clear of all claims by the Optionors. The accounts of the Optionee relating
to its mining operations on the Property shall be audited by the auditors of the
Optionee as soon as practicable after the sale or disposition of all mining
plant, equipment and the Property and completion of reclamation. Final
settlement of any Royalty payable to the Optionors shall be effected without
delay after receipt of the final audited statements. After receipt of such final
audited statements and payment of Royalty, if any, this Agreement and the mutual
obligations of the Optionee and the Optionors hereunder shall terminate.
RULE AGAINST PERPETUITIES
---------------------------
18. If any right, power or interest held by or to be acquired by any party
in the Property under this Agreement would violate the rule against
perpetuities, then such right, power or interest shall terminate at the
expiration of 20 years after the date of this Agreement.
NOTICES
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19. (a) Each notice, demand or other communication required or permitted
to be given under this Agreement shall be in writing and shall be sent by
prepaid registered mail deposited in a Post Office in Canada or the United
States addressed to the party entitled to receive the same, or delivered,
telexed, telegraphed or telecopied to such party at the address for such party
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specified above. The date of receipt of such notice, demand or other
communication shall be the date of delivery thereof if delivered, telexed,
telegraphed or telecopied, or, if given by registered mail as aforesaid, shall
be deemed conclusively to be the third business day after the same shall have
been so mailed except in the case of interruption of postal services for any
reason whatever, in which case the date of receipt shall be the date on which
the notice, demand or other communication is actually received by the addressee.
(b) Either party may at any time and from time to time notify the other
party in writing of a change or address and the new address to which notice
shall be given to it thereafter until further change.
GENERAL
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20. (a) This Agreement shall supersede and replace any other agreement or
arrangement, whether oral or written, heretofore existing between the parties in
respect of the subject matter of this Agreement.
(b) No consent or waiver expressed or implied by either party in respect of
any breach or default by the other in the performance by such other of its
obligations hereunder shall be deemed or construed to be a consent to or a
waiver of any other breach or default.
(c) The parties shall promptly execute or cause to be executed all
documents, deeds, conveyances and other instruments of further assurance and do
such further and other acts which may be reasonably necessary or advisable to
carry out fully the intent of this Agreement or to record wherever appropriate
the respective interest from time to time of the parties in the Property.
(d) This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
(e) This Agreement shall be governed by and construed in accordance with the
laws of British Columbia and shall be subject to the approval of all securities
regulatory authorities having jurisdiction.
(f) Time shall be of the essence in this Agreement.
(g) Wherever the neuter and singular is used in this Agreement it shall be
deemed to include the plural, masculine and feminine, as the case may be.
(h) The headings of this Agreement are inserted for convenience only, shall
not constitute a part of this Agreement or be used to construe or interpret any
provision hereof.
(i) In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall be severed from this Agreement. In either case the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
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(j) Any reference in this Agreement to currency shall be deemed to be United
States currency.
(k) This Agreement may be executed simultaneously in two or more
counterparts, by facsimile or otherwise, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument. The parties hereto shall be entitled to rely on delivery by
facsimile machine of an executed copy of this Agreement as due execution and
delivery of this Agreement by the party effecting such delivery so as to bind
such party in accordance with the terms hereof.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________ ___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NORCAN EXPLORATION, INC. by its authorized signatory
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
___________________________
Signature of Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name of Authorized Signatory
PRESIDENT
---------------------------------
Position of Authorized Signatory
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DESCRIPTION OF PROPERTY
SCHEDULE "A"
CLAIM NAME TENURE NO. EXPIRY DATE UNITS
----------- ----------- ------------------ -----
Canyon 1 391561 January 15, 2003 1
Canyon 2 391562 January 15, 2003 1
Canyon 3 391563 January 15, 2003 1
Canyon 4 391564 January 15, 2003 1
All located in the Omineca Mining Division of British Columbia.
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SCHEDULE "B"
NET SMELTER RETURNS
1. For the purposes of this Agreement "Net Smelter Returns" shall mean the
actual proceeds received from any mint, smelter or other purchaser for the sale
of bullion, concentrates or ores produced from the Property and sold, after
deducting from such proceeds the following charges to the extent that they are
not deducted by the purchaser in computing payment:
(a) in the case of the sale of bullion, refining charges only;
(b) in the case of the sale of concentrates, smelting and refining charges,
penalties and the cost of transportation of such concentrates from the Property
to any smelter or other purchaser; and
(c) in the case of ores shipped to a purchaser, refining charges for bullion
and charges for smelting, refining and the cost of transportation from the mill
to any smelter or other purchaser for concentrates.
2. The Optionee shall have the right to commingle with ore from the
Property, ore produced from other properties owned or controlled by the
Optionee, provided the Optionee shall adopt and employ reasonable practices and
procedures for weighing, sampling and assaying in order to determine the amounts
of products derived from, or attributable to, ore mined and produced from the
Property. The Optionee shall maintain accurate records of the results of such
sampling, weighing and assaying with respect to any ore mined and produced from
the Property. The Optionor or its authorized agent shall be permitted the right
to examine at all reasonable times such records pertaining to commingling of
ores or to the calculations of Net Smelter Returns.
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