EXHIBIT 4.119
THIS AGREEMENT dated for reference and made effective ________
BETWEEN:
GOLDEN CHALICE RESOURCES INC., a company incorporated pursuant to the
laws of British Columbia, and having an office at 711 - ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
("GCR")
AND:
▇▇▇▇▇▇ GOLD CORP., a company incorporated pursuant to the laws of
British Columbia, and having an office at 711 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
("AGX")
WHEREAS:
A. GCR and AGX each hold a fifty percent (50%) undivided interest in
certain mineral properties more particularly described in Schedule "A" attached
to this Agreement;
B. The parties wish to create a joint venture to carry out the continued
exploration and development of the Property on the terms and subject to the
conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual promises, covenants, conditions, representations and warranties herein
set out, the parties hereto agree as follows:
1. INTERPRETATION
1.01 In this Agreement the following words, phrases and expressions shall
have the following meanings:
(a) "ACCOUNTING PROCEDURE" means the procedure attached to this
Agreement as Appendix I.
(b) "AFFILIATE" shall have the meaning attributed to it in the
BUSINESS CORPORATIONS ACT (British Columbia), as amended.
(c) "ASSETS" means all tangible and intangible goods, chattels,
improvements or other items including, without limiting
generality, land, buildings, and equipment (but excluding the
Property) acquired for or made to the Property as at the
Operative Date and under this Agreement in connection with the
Mining Operations.
(d) "COMPLETION DATE" means the date determined by the Management
Committee on which it is demonstrated to the satisfaction of
the Management Committee that the preparing and equipping of
the Mine is complete and is the date on which commercial
production commences.
(e) "CONSTRUCTION" means every kind of work carried out during the
Construction Period by the Operator in accordance with the
Feasibility Report and Production Notice related thereto, as
approved by the Management Committee.
(f) "CONSTRUCTION PERIOD" means, unless the Production Notice is
subsequently withdrawn, the period beginning on the date a
Production Notice is given and ending on the Completion Date.
(g) "COSTS" means all items of outlay and expense whatsoever,
direct or indirect, with respect to Mining Operations,
recorded by the Operator in accordance with this Agreement and
shall include all obligations and liabilities incurred or to
be incurred with respect to the protection of the environment
such as future decommissioning, reclamation and long-term care
and monitoring, even if not then due and payable so long as
the amounts can be estimated with reasonable accuracy, and
whether or not a mine reclamation trust fund has been
established. Without limiting generality, the following
categories of Costs shall have the following meanings:
(i) "CONSTRUCTION COSTS" means those Costs recorded by
the Operator during the Construction Period,
including, without limiting generality, the
Operator's fee contemplated in article 11;
(ii) "EXPLORATION COSTS" means those Costs recorded by the
Operator during the Exploration Period, including,
without limiting generality, the Operator's fee
contemplated in article 11;
(iii) "MINE COSTS" means Construction Costs and Operating
Costs; and
(iv) "OPERATING COSTS" means those Costs recorded by the
Operator subsequent to the Completion Date,
including, without limiting generality, the
Operator's fee contemplated in article 11 and the
royalty payable to the Underlying Royalty Holder
pursuant to the Underlying Agreement.
(h) "EXPLORATION PERIOD" means the period beginning the Operative
Date and ending the date a Production Notice is given and
Construction Costs are fully committed.
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(i) "FEASIBILITY REPORT" means a detailed report, in form and
substance sufficient for presentation to arm's length
institutional lenders considering project financing, showing
the feasibility of placing any part of the Property into
commercial production as a Mine and shall include a reasonable
assessment of the various categories of ore reserves and their
amenability to metallurgical treatment, a complete description
of the work, equipment and supplies required to bring such
part of the Property into commercial production and the
estimated cost thereof, a description of the mining methods to
be employed and a financial appraisal of the proposed
operations and including at least the following:
(i) a description of that part of the Property to be
covered by the proposed Mine;
(ii) the estimated recoverable reserves of Minerals and
the estimated composition and content thereof;
(iii) the proposed procedure for development, mining and
production;
(iv) results of ore amenability treatment tests (if any);
(v) the nature and extent of the facilities proposed to
be acquired, which may include mill facilities if the
size, extent and location of the ore body makes such
mill facilities feasible, in which event the study
shall also include a preliminary design for such
mill;
(vi) the total costs, including capital budget, which are
reasonably required to purchase, construct and
install all structures, machinery and equipment
required for the proposed Mine, including a schedule
of timing of such requirements;
(vii) all environmental impact studies and costs of
implementation;
(viii) the period in which it is proposed the Property shall
be brought to commercial production; and
(ix) such other data and information as are reasonably
necessary to substantiate the existence of an ore
deposit of sufficient size and grade to justify
development of a mine, taking into account all
relevant business, tax and other economic
considerations including a cost comparison between
purchasing or leasing and renting of facilities and
equipment required for the operation of the Property
as a Mine.
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(k) "INTEREST" means an undivided beneficial percentage interest
in the Property, the Assets and any Mine, calculated, during
the Exploration Period, according to article 7 and subsequent
to the Exploration Period according to article 10.
(l) "JOINT OPERATION" shall have the meaning attributed to it in
paragraph 2.01.
(m) "MANAGEMENT COMMITTEE" means the committee established
pursuant to article 4.
(n) "MINE" means the workings established and Assets acquired,
including, without limiting generality, development headings,
plant and concentrator installations, infrastructure, housing,
airport and other facilities in order to bring the Property
into commercial production in accordance with the Production
Notice.
(o) "MINERALS" means any and all ores (and concentrates derived
therefrom) and minerals, precious and base, metallic and
nonmetallic, in, on or under the Property which may lawfully
be explored for, mined and sold.
(p) "MINING OPERATIONS" means every kind of work done by the
Operator:
(i) on or in respect of the Property in accordance with a
Program or Production Notice or Operating Plan; or
(ii) if not provided for in a Program or Production Notice
or Operating Plan, unilaterally and in good faith to
maintain the Property in good standing, to prevent
waste or to otherwise discharge any obligation which
is imposed upon it pursuant to this Agreement and in
respect of which the Management Committee has not
given it directions;
including, without limiting generality, investigating,
prospecting, exploring, developing, property maintenance,
preparing reports, estimates and studies, designing,
equipping, improving, surveying, construction and mining,
milling, concentrating, rehabilitation, reclamation, and
environmental protection.
(q) "NET PRODUCTION RETURNS" shall have the meaning attributed to
it in Appendix II.
(r) "OPERATING PLAN" means the annual plan of Mining Operations
submitted pursuant to paragraph 14.02.
(s) "OPERATIVE DATE" means the date upon which this Agreement
becomes effective.
(t) "OPERATOR" means the party appointed as the Operator in
accordance with article 5.
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(u) "PARTICIPANT" means a party that is contributing to
Exploration Costs or Mine Costs, as the case may be.
(v) "PARTY" or "PARTIES" means the parties to this Agreement and
their respective successors and permitted assigns which become
parties pursuant to this Agreement.
(w) "PRIME RATE" means the rate of interest stated by the Canadian
Imperial Bank of Commerce, Main Branch, Vancouver, British
Columbia, as being charged by it on Canadian Dollar demand
loans to its most creditworthy domestic commercial customers.
(x) "PRODUCTION NOTICE" means a notice which is given to each of
the parties pursuant to paragraph 9.02.
(y) "PROGRAM" means the work plan and budget of Mining Operations
conducted during the Exploration Period and adopted pursuant
to paragraph 7.02.
(z) "PROPERTY" means the mineral properties that become subject to
this Agreement on the Operative Date, any additional mineral
properties that become part of the Property pursuant to this
Agreement, the Minerals thereon, all information obtained from
Mining Operations and those rights and benefits appurtenant to
the Property that are acquired for the purpose of conducting
Mining Operations.
(aa) "PROPORTIONATE SHARE" means that share which is equal to a
party's percentage Interest.
(cc) "SIMPLE MAJORITY" means a decision made by the Management
Committee by more than fifty percent (50%) of the votes
represented and entitled to be cast at a meeting thereof.
(dd) "SPECIAL MAJORITY" means a decision made by the Management
Committee by more than seventy-five percent (75%) of the votes
represented and entitled to be cast at a meeting thereof.
(bb) "UNDERLYING ROYALTY HOLDER" means a person set out in Appendix
III who holds a royalty pursuant to the Underlying Agreement.
(ee) "UNDERLYING AGREEMENT" mean an agreement set out in Appendix
III made between an Underlying Royalty Holder and GCR.
(ff) "$" means Canadian Dollars.
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1.02 The words "ARTICLE", "PARAGRAPH", "SUBPARAGRAPH", "HEREIN" and
"HEREUNDER" refer to this Agreement. The words "THIS AGREEMENT" include
every Schedule or Appendix attached hereto.
1.03 The captions and the emphases of the defined terms have been inserted
for convenience and do not define the scope of any provision.
2. FORMATION OF THE JOINT OPERATION
2.01 The parties hereby agree to associate and participate in a joint
operation (the "JOINT OPERATION") for the purpose of exploring the
Property and, if deemed warranted, bringing the Property or a portion
thereof into commercial production by establishing and operating a
Mine.
2.02 Except as expressly provided in this Agreement, each party shall have
the right independently to engage in and receive full benefits from
business activities, whether or not competitive with the Joint
Operation, without consulting any other party. The doctrines of
"corporate opportunity" or "business opportunity" shall not be applied
to any other activity, venture or operation of any party and no party
shall have any obligation to another party with respect to any
opportunity to acquire any assets outside of the Property at any time,
or within the Property after the termination of this Agreement. Unless
otherwise agreed in writing, no party shall have any obligation to
mill, beneficiate or otherwise treat any Minerals or any other party's
share of Minerals in any facility owned or controlled by such party.
3. INTERESTS
3.01 Except as otherwise provided herein, the parties shall bear all Costs
and all liabilities arising under this Agreement and the Underlying
Agreement and shall own the Property, the Assets and any Mine all in
proportion to their respective Interests.
3.02 On the Operative Date the respective Interests of the parties shall be
as follows:
GCR 50%
AGX 50%
4. MANAGEMENT COMMITTEE
4.01 A Management Committee shall be established on or forthwith after the
Operative Date. Except as herein otherwise provided, the Management
Committee shall make all decisions in respect of Mining Operations.
4.02 Each party owning an Interest shall forthwith appoint one
representative and one alternate representative to the Management
Committee. The alternate representative may act for a party's
representative in his absence.
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4.03 The Operator shall call a Management Committee meeting at least once
every twelve (12) months unless otherwise waived in writing by the
Management Committee, and, in any event within fourteen (14) days of
being requested to do so by any representative.
4.04 The Operator shall give notice, specifying the time and place of, and
the agenda for, the meeting to all representatives at least seven days
before the time appointed for the meeting. Unless otherwise agreed to
by the Management Committee, all meetings of the Management Committee
shall be held in Vancouver, British Columbia. Each agenda for a meeting
shall include the consideration and approval of the minutes of the
immediately preceding meeting of the Management Committee.
4.05 Notice of a meeting shall not be required if representatives of all of
the parties are present and unanimously agree upon the agenda.
4.06 A quorum for any Management Committee meeting shall be present if a
representative of each of the parties holding an Interest is present.
If a quorum is present at the meeting, the Management Committee shall
be competent to exercise all of the authorities, powers and discretions
herein bestowed upon it hereunder. The Management Committee shall not
transact any business at a meeting unless a quorum is present at the
commencement of the meeting. If a quorum is not present within thirty
(30) minutes following the time appointed for the commencement of the
Management Committee meeting, the meeting shall be automatically
re-scheduled for the same time of day and at the same place five
business days later, and the Operator shall be under no obligation to
give any party notice thereof. A quorum shall be deemed to be present
at such re-scheduled meeting for all purposes under this Agreement if
at least one representative is present, and a party or parties holding
not less than 25% in Interest is or are represented. A representative
may attend and vote at a meeting of the Management Committee by
telephone conference call in which each representative may hear, and be
heard by, the other representatives.
4.07 The Management Committee shall decide every question submitted to it by
a vote with each representative being entitled to cast that number of
votes which is equal to its party's Interest percentage. Other than as
is expressly set out herein to the contrary, the Management Committee
shall make decisions by Simple Majority. In the event of a tied vote,
the chairman shall have a casting vote in addition to the votes to
which the chairman is entitled to cast as the representative of a
party.
4.08 The representative and alternate representative of the Operator shall
be the chairman and secretary, respectively, of the Management
Committee meeting.
4.09 The secretary of the Management Committee meeting shall take minutes of
that meeting and circulate copies thereof to each representative within
a reasonable time following the termination of the meeting, and in any
event no later than the time of delivery of the notice of the next
following meeting of the Management Committee.
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4.10 The Management Committee may make decisions by obtaining the consent in
writing of the representatives of all parties. Any decision so made
shall be as valid as a decision made at a duly called and held meeting
of the Management Committee.
4.11 Management Committee decisions made in accordance with this Agreement
shall be binding upon all of the parties.
4.12 Each party shall bear the expenses incurred by its representative and
alternate representative in attending meetings of the Management
Committee.
4.13 The Management Committee may, by agreement of the representatives of
all the parties, establish such other rules of procedure, not
inconsistent with this Agreement, as the Management Committee deems
fit.
4.14 Reference in this section to the "parties" shall apply during the
Exploration Period. After the date of a Production Notice this section
shall be read as if the word "Participant" appeared wherever the word
"party" appears.
5. OPERATOR
5.01 GCR shall act as Operator for so long as its Interest is 50% or more.
If GCR's Interest is less than 50%, the Management Committee shall
select a party, if it so consents, to be the Operator.
5.02 The party acting as Operator may resign as Operator on at least ninety
(90) days' notice to all the parties.
5.03 The Management Committee may, by Special Majority (with the Operator
not being entitled to vote on such resolution), remove the party acting
as Operator, effective the date designated by the Management Committee
if:
(a) that party makes an assignment for the benefit of its
creditors, or consents to the appointment of a receiver for
all or substantially all of its property, or files a petition
in bankruptcy or is adjudicated bankrupt or insolvent; or
(b) a court order is entered without that party's consent:
(i) appointing a receiver or trustee for all or
substantially all of its property; or
(ii) approving a petition in bankruptcy or for a
reorganization pursuant to the applicable bankruptcy
legislation or for any other judicial modification or
alteration of the rights of creditors; or
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(c) the Operator is in default under this Agreement and fails to
cure such default, or to commence bona fide curative measures,
within thirty (30) days of receiving notice of the default
from a non-Operator;
(d) the Operator fails to meet any of its obligations pursuant to
paragraph 6.04; or
(e) the Operator undergoes a change in "Control" (as hereinafter
defined).
5.04 In paragraph 5.03, "CONTROL" means the ability, directly or indirectly
through one or more intermediaries, to direct or cause the direction of
the management and policies of the Operator through (i) the legal or
beneficial ownership of voting securities; (ii) the right to appoint
managers, directors or corporate management; (iii) contract; (iv)
operating agreement; (v) voting trust; or otherwise.
5.05 If a party resigns or is removed as Operator, the Management Committee
(the representative of the former Operator not being entitled to vote
on the resolution) shall thereupon select another party to become the
Operator effective the date established by the Management Committee.
5.06 The new Operator shall assume all of the rights, duties, liabilities
and status of the previous Operator as provided in this Agreement. The
new Operator shall have no obligation to hire any employees of the
former Operator resulting from this change of Operator.
5.07 Upon ceasing to be Operator, the former Operator shall forthwith
deliver to the new Operator custody of all Assets, Property, books,
records, and other property both real and personal which it prepared or
maintained in its capacity as Operator.
5.08 If the Operator resigns or is removed and no other party consents to
act as Operator, the Joint Operation shall be terminated and the party
which was the Operator may, if it consents to act, continue to act as
Operator to effect the termination and the other parties shall be
obligated to fund their respective Proportionate Shares of the Costs
incurred.
6. RIGHTS, DUTIES AND STATUS OF OPERATOR
6.01 The Operator in its operations hereunder shall be deemed to be an
independent contractor. The Operator shall not act or hold itself out
as agent for any of the parties nor make any commitments on behalf of
any of the parties unless specifically permitted by this Agreement or
directed in writing by a party.
6.02 Subject to any specific provision of this Agreement and subject to it
having the right to reject any direction on reasonable grounds by
virtue of its status as an independent contractor, the Operator shall
perform its duties hereunder in accordance with the directions of the
Management Committee and in accordance with this Agreement.
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6.03 The Operator shall manage and carry out Mining Operations substantially
in accordance with Programs, Feasibility Reports and Production
Notices, Operating Plans, Mine Maintenance Plans and Mine Closure Plans
adopted by the Management Committee and in connection therewith shall,
in advance if reasonably possible, notify the Management Committee of
any change in Mining Operations which the Operator considers material
and if it is not reasonably possible, the Operator shall notify the
Management Committee so soon thereafter as is reasonably possible.
6.04 The Operator shall have the sole and exclusive right and authority to
manage and carry out all Mining Operations in accordance herewith and
to incur the Costs required for that purpose. In so doing the Operator
shall:
(a) comply with the provisions of all agreements or instruments of
title under which the Property or Assets are held;
(b) pay all Costs properly incurred promptly as and when due;
(c) keep the Property and Assets free of all liens and
encumbrances (other than those, if any, in effect on the
Operative Date, those the creation of which is permitted
pursuant to this Agreement, or builder's or mechanic's liens)
arising out of the Mining Operations and, in the event of any
lien being filed as aforesaid, proceed with diligence to
contest or discharge the same;
(d) with the approval of the Management Committee prosecute claims
and, where a defence is available, defend litigation arising
out of the Mining Operations, provided that any Participant
may join in the prosecution or defence at its own expense;
(e) subject to paragraph 20.05, perform such assessment work or
make payments in lieu thereof and pay such rentals, taxes or
other payments and do all such other things as may be
necessary to maintain the Property in good standing,
including, without limiting generality, staking and restaking
mining claims, and applying for licenses, leases, grants,
concessions, permits, patents and other rights to and
interests in the Minerals;
(f) maintain books of account in accordance with the Accounting
Procedure, provided that the judgment of the Operator as to
matters related to the accounting, for which provision is not
made in the Accounting Procedure, shall govern if the
Operator's accounting practices are in accordance with
accounting principles generally accepted in the mining
industry in Canada;
(g) perform its duties and obligations hereunder in a sound and
workmanlike manner, in accordance with sound mining and
engineering practices and other practices customary in the
Canadian mining industry, and in substantial compliance with
all
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applicable federal, provincial, Territorial and municipal
laws, by-laws, ordinances, rules and regulations and this
Agreement;
(h) prepare and deliver the reports provided for in paragraph
21.02; and
(i) have such additional duties and obligations as the Management
Committee may from time to time determine.
7. EXPLORATION PROGRAMS
7.01 The Operator shall prepare draft Programs for consideration by the
Management Committee. Unless otherwise agreed to by a Special Majority,
each Program shall cover a calendar year. The draft Program shall
contain a statement in reasonable detail of the proposed Mining
Operations, estimates of all Exploration Costs to be incurred and an
estimate of the time when they will be incurred, and shall be delivered
to each Participant by no later than sixty (60) days prior to the
period to which the draft Program relates. Each draft Program shall be
accompanied by such reports and data as are reasonably necessary for
each party to evaluate and assess the results from the Program for the
then current year and, to the extent not previously delivered, from
earlier Programs.
7.02 The Management Committee shall review the draft Program prepared and,
if it deems fit, adopt the Program with such modifications, if any, as
the Management Committee deems necessary. The Operator shall be
entitled to an allowance for a Cost overrun of ten (10) percent in
addition to any budgeted Exploration Costs and any Costs so incurred
shall be deemed to be included in the Program, as adopted.
7.03 The Operator shall forthwith submit the adopted Program to the parties.
Each party may, within thirty (30) days of receipt of the Program, give
notice to the Operator committing to contribute its Proportionate Share
of the Exploration Costs for that Program. A party which fails to give
that notice within the thirty (30) day period shall be deemed to have
elected not to contribute to that Program.
7.04 If any party elected not to contribute to a Program, the amounts to be
contributed by the parties who elected to contribute shall be increased
PRO RATA, subject to the right of any of them to elect, prior to the
commencement of the Program, not to contribute more than its
Proportionate Share. If one or more party so elects to contribute no
more than its Proportionate Share and the other parties do not elect to
contribute PRO RATA to the resulting shortfall, the Operator shall in
good faith revise the Program and Budget such that the technical
objectives of the original Program are retained to the extent that is
reasonably practicable given the reduced contributions to Costs. The
Operator shall, within fifteen (15) days following the end of the
thirty (30) day period set out in paragraph 7.03, deliver to each party
a copy of the said revised Program which, if the budget contemplates
Costs of at least 80% of those contemplated in the original adopted
Program, shall then be deemed for all purposes under this Agreement to
be the adopted Program . If the budget for the revised Program
contemplates Costs of less than 80% of those contemplated in the
original adopted Program, the revised Program shall be re-submitted to
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the Management Committee as a draft Program pursuant to paragraph 7.01,
and the procedure set out in paragraph 7.01 to 7.04 inclusive shall be
repeated.
7.05 The Operator shall be entitled to invoice each Participant:
(a) no more frequently than monthly, for its Proportionate Share
of Exploration Costs incurred and paid by the Operator in
carrying out a Program; or
(b) not more than sixty (60) days in advance of requirements, for
an advance of that Participant's Proportionate Share of
Exploration Costs estimated to be incurred and paid by the
Operator in carrying out a Program.
Each invoice shall be signed by a financial officer of the Operator.
Each Participant shall pay to the Operator the amount invoiced within
thirty (30) days of receipt of the invoice. If a Participant protests
the correctness of an invoice it shall nevertheless be required to make
the payment.
7.06 If any Participant, after having committed to contribute pursuant to
paragraph 7.03, fails to pay an invoice within the thirty (30) day
period referred to in paragraph 7.05 the Operator may by notice demand
payment. If no payment is made within the period of thirty (30) days
next succeeding the receipt of the demand notice, that Participant
shall be deemed to have forfeited its right to contribute to any
further Costs under this Agreement and it shall be deemed to have
elected not to contribute to each Program subsequently conducted and to
any Production Notice, and accordingly, shall have its Interest reduced
in the manner contemplated in paragraphs 7.09 and 10.02(b).
7.07 The Operator shall expend all monies advanced by a Participant ratably
with the advances of the other Participants. If the Operator suspends
or prematurely terminates a Program, any funds advanced by a
Participant in excess of that Participant's Proportionate Share of
Exploration Costs incurred prior to the suspension or premature
termination shall be refunded within sixty (60) days of the suspension
or premature termination. Unless approved unanimously by the Management
Committee, the Operator shall be exclusively liable for the payment of
all Costs incurred in excess of 110 percent of any budgeted Exploration
Costs.
7.08 Unless otherwise directed by the Management Committee, the Operator may
suspend or terminate prematurely any Program when the Operator, in good
faith, considers that conditions are not suitable for the proper
continuation or completion of the Program or the results obtained to
that time eliminate or substantially impair the technical rationale on
which the Program was based. If any Program is altered, suspended or
terminated prematurely so that the Exploration Costs incurred on that
Program as altered, suspended or terminated are less than 80 percent of
the Exploration Costs set out in the adopted Program, any party which
elected not to contribute to that Program shall be given notice of the
alteration, suspension or termination by the Operator and shall be
entitled to contribute its Proportionate Share of the Exploration Costs
incurred on that Program by payment thereof to the Operator within
thirty (30) days after receipt of the notice, but shall not be entitled
to review the results of the Program until it has made full
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payment. If payment is not made by that party within the thirty (30)
days aforesaid it shall forfeit its right to contribute to that Program
without a demand for payment being required to be made thereafter by
the Management Committee. If payment is made by that party within the
thirty (30) days as aforesaid, the Operator shall distribute the
payment to the original Participants PRO RATA according to their
respective contributions to the Program, and shall deliver to the new
Participant copies of all data previously delivered to the other
Participants with respect to that Program.
7.09 If a party elected not to contribute to the Exploration Costs of any
Program the Interest of that party shall be decreased and the Interest
of each Participant contributing in excess of its Proportionate Share
of the Exploration Costs shall be increased so that, subject to
paragraph 7.10, at all times during the Exploration Period the Interest
of each party will be that percentage which is equivalent to its
Exploration Costs expressed as a percentage of the Exploration Costs of
all parties. Notwithstanding the foregoing but subject to paragraph
7.10 hereof, the party whose Interest has been reduced (other than a
party who has forfeited the right to contribute pursuant to paragraph
7.06) shall be entitled to receive details of and to contribute to
future Programs to the extent of its then Interest. On the Operative
Date, the parties' respective Interests shall be deemed to be as
follows:
INTEREST
--------
GCR 50%
AGX 50%
7.10 If the effect of the application of paragraph 7.09 is to reduce the
Interest of any party to less than 15%, such party shall then be deemed
to have assigned and conveyed its Interest to the Participants, if more
than one then in proportion to their respective Interests, and shall be
entitled to receive as its sole remuneration and benefit in
consideration of that assignment and conveyance, by way of royalty, 1%
of Net Production Returns.
7.11 If the Operator fails to submit a draft Program or a revised Program by
the date set out in this Agreement, the following shall apply:
(a) the Operator shall not be entitled to submit a draft Program
or revised Program for the subject period;
(b) any Participant other than the Operator whose Interest is not
less than 20% may, within fifteen (15) days following the date
by which the Operator's draft Program or revised Program was
due, submit a draft Program (the "NON-OPERATOR'S PROGRAM") for
the subject period for consideration by the Management
Committee;
(c) the Management Committee shall review the Non-Operator's
Program and, if it deems fit (the Operator not being entitled
to vote with respect thereto), adopt the Non-Operator's
Program with such modifications, if any, as the Management
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Committee deems necessary; the adopted Program shall then be
submitted to the parties pursuant to paragraph 7.03;
(d) if the Operator is a party and elects to contribute to the
Non-Operator's Program, it shall remain as the Operator for
the duration of the Non-Operator's Program.
(e) if the Operator is a party and elects not to contribute to the
Non-Operator's Program, it shall cease to be the Operator for
the duration of the Non-Operator's Program, and the Management
Committee shall appoint another party as Operator (the former
Operator not being entitled to vote with respect thereto);
(f) following the completion of the Non-Operator's Program the
former Operator shall, subject to the provisions of paragraph
5.01, automatically become the Operator.
8. FEASIBILITY REPORT
8.01 Except as provided in paragraph 8.02, a Feasibility Report shall only
be prepared with the approval of the Management Committee. The Operator
shall provide copies of the completed Feasibility Report to each of the
parties forthwith upon receipt, together with copies of all of the
latest technical data and information generated or received by the
Operator from the immediately preceding Program and not contained in
the Feasibility Report.
8.02 Notwithstanding the provisions of paragraph 8.01, if a party (the
"PROPONENT") is of the view that a Feasibility Report should be
prepared, such party shall give notice thereof to the Operator and the
Operator shall call a Management Committee meeting to consider the
matter. If the Management Committee fails to approve the preparation of
the Feasibility Report supported by the Proponent, the Proponent may,
either alone or with other parties, at its or their sole cost, prepare
a Feasibility Report. If such Feasibility Report indicates that
production from the Property would be profitable to the Proponent, the
Proponent shall deliver the Feasibility Report to the Operator who
shall then call a Management Committee meeting to consider the
Proponent's Feasibility Report. If the Management Committee adopts the
Feasibility Report, the non-contributing parties may either pay the
Proponent an amount equal to 150% of their respective proportionate
costs of the preparation of the Feasibility Report, or shall suffer
reduction of their respective Interests pursuant to paragraph 7.09.
Upon the adoption by the Management Committee of the Proponent's
Feasibility Report, it shall become a Feasibility Report for all
purposes hereunder.
8.03 The parties shall meet at reasonable intervals and times to review the
Feasibility Report and discuss whether the establishing and bringing of
a Mine into commercial production in conformity with the Feasibility
Report is feasible or desirable.
14
9. PRODUCTION NOTICE
9.01 The Operator shall call a Management Committee meeting to consider the
Feasibility Report for a date no sooner than three months and no later
than six months after the Feasibility Report was provided to each of
the parties.
9.02 The Management Committee shall consider the Feasibility Report prepared
and may by Special Majority, approve the Feasibility Report, with such
modifications, if any, as it considers necessary or desirable, together
with an estimate of Construction Costs. If a Feasibility Report is
approved as aforesaid the Management Committee shall forthwith cause a
Production Notice to be given to each of the parties by the Operator
stating that the Management Committee has approved that a Mine be
established and brought into production in conformity with the
Feasibility Report and estimated Construction Costs as so approved.
10. ELECTION TO CONTRIBUTE
10.01 Each party with an Interest may, within sixty (60) days of the receipt
of the Production Notice, give the Operator notice committing to
contribute its Proportionate Share of Construction Costs. A party which
fails to give that notice within the sixty (60) day period shall be
deemed to have elected not to contribute to Construction Costs.
10.02 If any party elects not to contribute to Construction Costs that party,
subject to its rights under paragraph 10.04, shall forfeit the right to
contribute to any further Costs under this Agreement, and those parties
which elected to contribute as aforesaid may thereupon elect to
increase their contribution to Construction Costs, if more than one
party then in proportion to their respective Interests, by the amount
which any party has declined to contribute. If elections are made so
that Construction Costs are fully committed:
(a) the Interest of each Participant shall be increased and that
of each non-Participant shall be decreased as Costs are
incurred so that the Interest of each party at all times is
that percentage which is equivalent to
(i) the sum of its Exploration Costs and its contribution
to Construction Costs;
divided by
(ii) the sum of the total Exploration Costs and the total
Construction Costs of all the parties;
multiplied by
(iii) 100;
15
(b) then, at the Completion Date, each non-Participant shall be
deemed to have assigned and conveyed its Interest to the
Participants, if more than one then in proportion to their
respective Interests, and shall be entitled to receive as its
sole remuneration and benefit in consideration of that
assignment and conveyance, by way of royalty, that percent of
the Net Production Returns, as and when available, which is
equivalent to the Interest, calculated at the Completion Date.
(c) each Participant shall severally calculate and cause to be
paid to each non-Participant any Net Production Returns
derived from the Property in the manner provided in Appendix
II; and
(d) notwithstanding the provisions of subparagraphs 10.02(b) and
(c), if the effect of the application of subparagraph 10.02(a)
reduces any party's Interest to less than one percent it shall
forfeit its Interest to the Participants, if more than one
then in proportion to their respective Interests, and that
party shall have no further right or interest under this
Agreement.
10.03 If, after the operation of paragraph 10.02, Construction Costs are not
fully committed the Production Notice shall be deemed to be withdrawn,
and shall not be resubmitted, either in the same or a revised form, for
a period of at least six (6) months following such withdrawal.
10.04 If, after the operation of paragraph 10.02, Construction Costs are
fully committed, the Participants shall diligently proceed with
bringing a Mine into production in substantial conformity with the
Feasibility Report. If the Participants fail to commence the
implementation of the Feasibility Report within twelve (12) months of
Construction Costs being fully committed, for reasons other than
general economic conditions in the mining industry, any party which
forfeited the right to contribute to Construction Costs pursuant to
paragraph 10.02 shall have the right, exercisable in the thirty (30)
days following the expiration of such twelve (12) month period, to
reacquire from the Participants not less than all of its Interest as
last held, by paying its Proportionate Share of Construction Costs
incurred to the end of such twelve (12) month period (together with
interest at the Prime Rate plus 3%) to the Participants in proportion
to their respective Interests.
10.05 During the twelve (12) month period referred to in paragraph 10.04,
neither the Operator nor any Participant shall be obliged to provide
any non-Participant with the results of any work carried out on the
Property, the Participants' sole obligation during such period being to
provide any non-Participant, on the written request of such
non-Participant made only once during the said twelve (12) months, with
a summary of the nature of the work carried out and the total Costs
thereof.
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11. OPERATOR'S FEE
11.01 The Operator may charge the following sums (collectively the
"Operator's Fee") in return for its services as Operator and to
compensate it for its head office overhead functions (which the
Operator may not charge directly or indirectly):
(a) with respect to Programs: 15% of all Exploration Costs
(excluding GST) for which the Operator has invoiced AGX;
(b) with respect to Construction: 1% of all Construction Costs
(excluding GST); and
(c) subsequent to the Completion Date: 3.5% of all Operating Costs
(excluding GST).
12. MINE FINANCING
12.01 The contributions of the Participants toward the Mine Costs shall be
individually and separately provided by them.
12.02 Any party may pledge, mortgage, charge or otherwise encumber its
Interest in order to secure moneys borrowed and used by that party for
the sole purpose of enabling it to finance its participation under this
Agreement or in order to secure by way of floating charge as a part of
the general corporate assets of that party moneys borrowed for its
general corporate purposes, provided that the pledgee, mortgagee,
holder of the charge or encumbrance (the "CHARGEE") shall hold the same
subject to the provisions of this Agreement and that if the Chargee
realizes upon any of its security it will comply with this Agreement.
The Agreement between the party hereto, as borrower, and the Chargee
shall contain specific provisions to the same effect as the provisions
of this paragraph.
13. CONSTRUCTION
13.01 Subject to paragraphs 10.02 and 10.03, the Management Committee shall
cause the Operator to, and the Operator shall, proceed with
Construction with all reasonable dispatch after a Production Notice has
been given. Construction shall be substantially in accordance with the
Feasibility Report subject to any variations proposed in the Production
Notice, and subject also to the right of the Management Committee to
cause such other reasonable variations in Construction to be made as
the Management Committee, by Special Majority, deems necessary and
advisable.
14. OPERATION OF THE MINE
14.01 Commencing on the Completion Date, all Mining Operations shall be
planned and conducted and all estimates, reports and statements shall
be prepared and made on the basis of a calendar year.
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14.02 With the exception of the year in which the Completion Date occurs, an
Operating Plan for each calendar year shall be submitted by the
Operator to the Participants not later than November 1 in the year
immediately preceding the calendar year to which the Operating Plan
relates. Each Operating Plan shall contain the following:
(a) a description of the proposed Mining Operations;
(b) a detailed estimate of all Mine Costs plus a reasonable
allowance for contingencies;
(c) an estimate of the quantity and quality of the ore to be mined
and the concentrates or metals or other products and
by-products to be produced; and
(d) such other facts as may be necessary to reasonably illustrate
the results intended to be achieved by the Operating Plan.
Upon request of any Participant the Operator shall meet with that
Participant to discuss the Operating Plan and shall provide such
additional or supplemental information as that Participant may
reasonably require with respect thereto.
14.03 The Management Committee shall adopt each Operating Plan, with such
changes as it deems necessary, by November 30 in the year immediately
preceding the calendar year to which the Operating Plan relates;
provided, however, that the Management Committee, by Special Majority,
may from time to time and any time amend any Operating Plan.
14.04 The Operator shall include in the estimate of Mine Costs referred to in
subparagraph 14.02(b) hereof the establishment of a trust or escrow
fund providing for the reasonably estimated costs of satisfying
continuing obligations that may remain after the permanent termination
of Mining Operations, in excess of amounts actually expended. Such
continuing obligations are or will be incurred as a result of the Joint
Operation and shall include such things as monitoring, stabilization,
reclamation or restoration obligations, severance and other employee
benefit costs and all other obligations incurred or imposed as a result
of the Joint Operation which continue or arise after the permanent
termination of Mining Operations and the termination of this Agreement
and settlement of all accounts. The payment of such continuing
obligations shall be made on the basis of units of production, and
shall be in amounts reasonably estimated to provide over the lifetime
of proven and probable reserves funds adequate to pay for such
reclamation and long term care and monitoring. The Participants shall
contribute to the trust or escrow fund cash (or provide letters of
credit or other forms of security readily convertible to cash in form
approved by the Management Committee). The amount contributed from time
to time for the satisfaction of such continuing obligations shall be
classified as Costs hereunder but shall be segregated into a separate
account.
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15. PAYMENT OF MINE COSTS
15.01 The Operator may invoice each Participant, from time to time, for that
Participant's Proportionate Share of Construction Costs or Operating
Costs incurred to the date of the invoice, or at the beginning of each
month for an advance equal to that Participant's Proportionate Share of
the estimated cash disbursements to be made during the month. Each
Participant shall pay its Proportionate Share of the Construction Costs
or Operating Costs or the estimated cash disbursements aforesaid to the
Operator within thirty (30) days after receipt of the invoice. If the
payment or advance requested is not so made, the amount of the payment
or advance shall bear interest calculated monthly not in advance from
the 30th day after the date of receipt of the invoice thereof by that
Participant at a rate equivalent to the weighted average Prime Rate for
the month plus 3% until paid. The Operator shall have a lien on each
Participant's Interest in order to secure that payment or advance
together with interest which has accrued thereon.
15.02 If any Participant fails to pay an invoice contemplated in paragraph
15.01 within the thirty (30) day period aforesaid, the Operator may, by
notice, demand payment. If no payment is made within thirty (30) days
of the Operator's demand notice, the Operator may, without limiting its
other rights at law, enforce the lien created by paragraph 15.01 by
taking possession of all or any part of that Participant's Interest.
The Operator may sell and dispose of the Interest which it has so taken
into its possession by:
(a) first offering that Interest to the other Participants, if
more than one then in proportion to the respective Interests
of the Participants who wish to accept that offer, for that
price which is the fair market value stated in the lower of
two appraisals obtained by the Operator from independent, well
recognized appraisers competent in the appraisal of mining
properties; and
(b) if the Participants have not purchased all or part of that
Interest as aforesaid, then by selling the balance, if any,
either in whole or in part or in separate parcels at public
auction or by private tender (the Participants being entitled
to bid) at a time and on whatever terms the Operator shall
arrange, having first given notice to the defaulting
Participant of the time and place of the sale.
As a condition of the sale as contemplated in subparagraph 15.02(b),
the purchaser shall agree to be bound by this Agreement and, prior to
acquiring the Interest, shall deliver notice to that effect to the
parties, in form acceptable to the Operator. The proceeds of the sale
shall be applied by the Operator in payment of the amount due from the
defaulting Participant and interest as aforesaid, and the balance
remaining, if any, shall be paid to the defaulting Participant after
deducting reasonable costs of the sale. Any sale or disposal made as
aforesaid shall be a perpetual bar both at law and in equity by the
defaulting Participant and its successors and assigns against all other
Participants.
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16. DISTRIBUTION IN KIND
16.01 It is expressly intended that, upon implementation of any Production
Notice hereunder, the association of the parties hereto shall be
limited to the efficient production of Minerals from the Property and
related activities, and that each of the parties shall be entitled to
use, dispose of or otherwise deal with its Proportionate Share of
Minerals as it sees fit. Each Participant shall take in kind, f.o.b.
truck or railcar on the Property, and separately dispose of its
Proportionate Share of the Minerals produced from the Mine. From the
time of delivery, each Participant shall have ownership of and title to
its Proportionate Share of Minerals separate from, and not as tenant in
common with, the other Participants, and shall bear all risk of loss of
Minerals. Extra costs and expenses incurred by reason of the
Participants taking in kind and making separate dispositions shall be
paid by each Participant directly and not through the Operator or
Management Committee.
16.02 Each Participant shall construct, operate and maintain, all at its own
cost and expense, any and all facilities which may be necessary to
receive and store and dispose of its Proportionate Share of the
Minerals at the rate the same are produced.
16.03 If a Participant has not made the necessary arrangements to take in
kind and store its share of production as aforesaid the Operator shall,
at the sole cost and risk of that Participant store, in any location
where it will not interfere with Mining Operations, the production
owned by that Participant. The Operator and the other parties shall be
under no responsibility with respect thereto. All of the Costs involved
in arranging and providing storage shall be billed directly to, and be
the sole responsibility of the Participant whose share of production is
so stored. The Operator's charges for such assistance and any other
related matters shall be billed directly to and be the sole
responsibility of the Participant. All such ▇▇▇▇▇▇▇▇ shall be subject
to the provisions of paragraphs 15.01 and 15.02 hereof.
17. SURRENDER OF INTEREST
17.01 Any party not in default hereunder may, at any time upon notice,
surrender its entire Interest to the other parties by giving those
parties notice of surrender.
The notice of surrender shall:
(a) indicate a date for surrender not less than three months after
the date on which the notice is given; and
(b) contain an undertaking that the surrendering party will:
(i) satisfy its Proportionate Share, based on its then
Interest, of all obligations and liabilities which
arose at any time prior to the date of surrender;
(ii) if the Operator has not included in Mine Costs the
costs of continuing obligations as set out in
paragraph 14.04 hereof, pay on the date of
20
surrender its reasonably estimated Proportionate
Share, based on the surrendering party's then
Interest, of the Costs of rehabilitating the Mine
site and of reclamation based on the Mining
Operations completed as at the date of surrender; and
(iii) will hold in confidence, for a period of two years
from the date of surrender, all information and data
which it acquired pursuant to this Agreement.
17.02 Upon the surrender of its entire Interest as contemplated in paragraph
17.01 and upon delivery of a release in writing, in form acceptable to
counsel for the Operator, releasing the other parties from all claims
and demands hereunder, the surrendering party shall be relieved of all
obligations or liabilities hereunder except for those which arose or
accrued or were accruing due on or before the date of the surrender.
17.03 A party to whom a notice of surrender has been given as contemplated in
paragraph 17.01 may elect, by notice within 90 days to the party which
first gave the notice to accept the surrender, in which case paragraphs
17.01 and 17.02 shall apply, or to join in the surrender. If all of the
parties join in the surrender the Joint Operation shall be terminated
in accordance with article 18.
18. TERMINATION OF MINING OPERATIONS
18.01 The Operator may, at any time subsequent to the Completion Date, on at
least 30 days notice to all Participants, recommend that the Management
Committee approve that the Mining Operations be suspended. The
Operator's recommendation shall include a plan and budget (the "MINE
MAINTENANCE PLAN"), in reasonable detail, of the activities to be
performed to maintain the Assets and Property during the period of
suspension and the Costs to be incurred. The Management Committee may,
by Special Majority, at any time subsequent to the Completion Date,
cause the Operator to suspend Mining Operations in accordance with the
Operator's recommendation with such changes to the Mine Maintenance
Plan as the Management Committee deems necessary. The Participants
shall be committed to contribute their Proportionate Share of the Costs
incurred in connection with the Mine Maintenance Plan. The Management
Committee, by Special Majority, may cause Mining Operations to be
resumed at any time.
18.02 The Operator may, at any time following a period of at least ninety
(90) days during which Mining Operations have been suspended, upon at
least thirty (30) days notice to all Participants, or in the events
described in paragraph 18.01, recommend that the Management Committee
approve the permanent termination of Mining Operations. The Operator's
recommendation shall include a plan and budget (the "MINE CLOSURE
PLAN"), in reasonable detail, of the activities to be performed to
close the Mine and reclaim and rehabilitate the Property, as required
by applicable law, regulation or contract by reason of this Agreement.
The Management Committee may, by unanimous approval of the
representatives of all Participants,
21
approve the Operator's recommendation with such changes to the Mine
Closure Plan as the Management Committee deems necessary.
18.03 If the Management Committee approves the Operator's recommendation as
aforesaid, it shall cause the Operator to:
(a) implement the Mine Closure Plan, whereupon the Participants
shall be committed to pay, in proportion to their respective
Interests, such Costs as may be required to implement that
Mine Closure Plan;
(b) remove, sell and dispose of such Assets as may reasonably be
removed and disposed of profitably and such other Assets as
the Operator may be required to remove pursuant to applicable
environmental and mining laws; and
(c) sell, abandon or otherwise dispose of the Assets and the
Property.
The disposal price for the Assets and the Property shall be the best
price reasonably obtainable and the net revenues, if any, from the
removal and sale shall be credited to the Participants in proportion to
their respective Interests.
18.04 If the Management Committee does not approve the Operator's
recommendation contemplated in paragraph 18.02, the Operator shall
maintain Mining Operations in accordance with the Mine Maintenance Plan
as pursuant to paragraph 18.01.
19. THE PROPERTY
19.01 Title to the Property shall be held in the name of the Operator in
trust for the parties in proportion to their respective Interests as
adjusted from time to time. Each of the parties shall have the right to
receive, forthwith upon making demand therefor from the Operator, such
documents as it may reasonably require to confirm its Interest.
19.02 This Agreement, or a memorandum of this Agreement, shall, upon the
written request of any party, be recorded in the office of any
governmental agency so requested, in order to give notice to third
parties of the respective interests of the parties in the Property and
this Agreement. Each party hereby covenants and agrees with the
requesting party to execute such documents as may be necessary to
perfect such recording.
20. ACQUISITION OF ADDITIONAL MINERAL PROPERTIES
20.01 There shall be no area of common interest, however, GCR shall have the
sole and exclusive right to acquire additional mineral properties
contingent to the Property and elect, in its sole discretion, to offer
to have those mineral properties form part of this Agreement. If GCR
acquires additional mineral properties and elects to make it part of
this Agreement, it shall forthwith give notice to the other party of
that staking or acquisition, the total cost thereof and all
22
details in the possession of GCR with respect to the details of the
acquisition, the nature of the property and the known mineralization.
20.02 AGX may, within thirty (30) days of receipt of the GCR's notice, elect,
by notice to GCR, to require that the mineral properties and the right
or interest acquired be included in and thereafter form part of the
Property for all purposes of this Agreement.
20.03 If the election aforesaid is made, AGX shall reimburse GCR for the cost
of acquisition.
20.04 If AGX does not make the election aforesaid within that period of
thirty (30) days, the right or interest acquired shall not form part of
the Property and GCR shall be solely entitled thereto.
20.05 Notwithstanding subparagraph 6.04(e), the Operator shall be entitled,
at any time and from time to time to surrender all or any part of the
Property or to permit the same to lapse, but only upon first either
obtaining the unanimous consent of the Management Committee, or giving
60 days notice of its intention to do so to the other parties. In this
latter event, the parties, other than the Operator, shall be entitled
to receive from the Operator, on request prior to the date of the
surrender or lapse, pro rata in accordance with their respective
Interests, a conveyance of that portion of the Property intended for
surrender or lapse, together with copies of any plans, assay maps,
diamond drill records and factual engineering data in the Operator's
possession and relevant thereto. Any part of the Property so acquired
shall cease to be subject to this Agreement.
21. INFORMATION AND DATA
21.01 At all times during the subsistence of this Agreement the duly
authorized representatives of each Participant shall, at its and their
sole risk and expense and at reasonable intervals and times, have
access to the Property and to all technical records and other factual
engineering data and information relating to the Property which is in
the possession of the Operator.
21.02 During the Exploration Period while Programs are being carried out, the
Operator shall furnish the Participants with monthly progress reports
and with a final report within 60 days following the conclusion of each
Program. The final report shall show the Mining Operations performed
and the results obtained and shall be accompanied by a statement of
Costs and copies of pertinent plans, assay maps, diamond drill records
and other factual engineering data. During the Construction Period and
during the implementation of an Operating Plan the Operator shall
provide monthly progress reports to the Participants, which report
shall include information on any changes or developments affecting the
Mine that the Operator considers are material.
21.03 All information and data concerning or derived from the Mining
Operations shall be kept confidential and, except to the extent
required by law or by regulation of any Securities Commission or Stock
Exchange, shall not be disclosed to any person other than an Affiliate
without the prior consent of all the Participants, which consent shall
not unreasonably be withheld.
23
21.04 The text of any news releases or other public statements which a party
intends to make with respect to the Property or this Agreement shall,
to the extent practicable, be made available to the other parties prior
to publication and the other parties shall have the right to make
suggestions for changes therein.
22. LIABILITY OF THE OPERATOR
22.01 Subject to paragraph 22.02, each party shall indemnify and save the
Operator harmless from and against any loss, liability, claim, demand,
damage, expense, injury or death (including, without limiting the
generality of the foregoing, legal fees) resulting from any acts or
omissions of the Operator or its officers, employees or agents.
22.02 Notwithstanding paragraph 22.01, the Operator shall not be indemnified
nor held harmless by any of the parties for any loss, liability, claim,
damage, expense, injury or death, (including, without limiting the
generality of the foregoing, legal fees) resulting from the negligence
or willful misconduct of the Operator or its officers, employees or
agents.
22.03 An act or omission of the Operator or its officers, employees or agents
done or omitted to be done:
(a) at the direction of, or with the concurrence of, the
Management Committee; or
(b) unilaterally and in good faith by the Operator to protect life
or property
shall be deemed not to be negligence or willful misconduct.
22.04 The obligation of each party to indemnify and save the Operator
harmless pursuant to paragraph 22.01 shall be in proportion to its
Interest as at the date that the loss, liability, claim, demand,
damage, expense, injury or death occurred or arose.
22.05 The Operator shall not be liable to any other party nor shall any party
be liable to the Operator in contract, tort or otherwise for special or
consequential damages, including, without limiting the generality of
the foregoing, loss of profits or revenues.
23. ASSIGNMENT
23.01 At any time or times the parties hereto shall be permitted to assign
this Agreement without the consent of the other parties if the assignee
is a subsidiary, associated or affiliated company of the party so
assigning, any corporation formed as a result of a merger or
amalgamation with a party hereto, or any corporation formed as a result
of a statutory plan of arrangement involving a party hereto, provided
written notice is given to all the parties hereto
24
and the successor corporation agrees to be a party to this Agreement
and be bound by the terms thereof.
24. RELATIONSHIP OF PARTIES
24.01 The rights, duties, obligations and liabilities of the parties shall be
several and not joint nor joint and several, it being the express
purpose and intention of the parties that their respective Interests
shall be held as tenants in common.
24.02 Nothing herein contained shall be construed as creating a partnership
of any kind or as imposing upon any party any partnership duty,
obligation or liability to any other party hereto.
24.03 No party shall, except when required by this Agreement or by any law,
by-law, ordinance, rule, order or regulation, use, suffer or permit to
be used, directly or indirectly, the name of any other party for any
purpose related to the Property or this Agreement.
25. PARTITION
25.01 Each of the parties hereto waives, during the term of this Agreement,
any right to partition of the Property or the Assets or any part
thereof and no party shall seek to be entitled to partition of the
Property or the Assets whether by way of physical partition, judicial
sale or otherwise during the term of this Agreement.
26. TAXATION
26.01 All Costs incurred hereunder shall be for the account of the party or
parties making or incurring the same, if more than one then in
proportion to their respective Interests, and each party on whose
behalf any Costs have been incurred shall be entitled to claim all tax
benefits, write-offs, and deductions with respect thereto.
27. FORCE MAJEURE
27.01 Notwithstanding anything herein contained to the contrary, if any
Participant is prevented from or delayed in performing any obligation
under this Agreement, and such failure is occasioned by any cause
beyond its reasonable control, excluding only lack of finances, then,
subject to paragraph 27.02, the time for the observance of the
condition or performance of the obligation in question shall be
extended for a period equivalent to the total period the cause of the
prevention or delay persists or remains in effect regardless of the
length of such total period.
27.02 Any party hereto claiming suspension of its obligations as aforesaid
shall promptly notify the other parties to that effect and shall take
all reasonable steps to remove or remedy the cause and effect of the
force majeure described in the said notice insofar as it is reasonably
able so to do and as soon as possible; provided that the terms of
settlement of any labour disturbance or dispute, strike or lockout
shall be wholly in the discretion of the party
25
claiming suspension of its obligations by reason thereof, and that
party shall not be required to accede to the demands of its opponents
in any such labour disturbance or dispute, strike, or lockout solely to
remedy or remove the force majeure thereby constituted. The party
claiming suspension of its obligations shall promptly notify the other
parties when the cause of the Force Majeure has been removed.
27.03 The extension of time for the observance of conditions or performance
of obligations as a result of force majeure shall not relieve the
Operator from its obligations to keep the Property in good standing
pursuant to sub-paragraphs 6.04(a) and 6.04(e).
28. NOTICE
28.01 All invoices, notices, consents and demands under this Agreement shall
be in writing and may be delivered personally, transmitted by fax (with
transmission confirmed in writing), or may be forwarded by first class
prepaid registered mail to the address for each party specified in this
Agreement or to such addresses as each party may from time to time
specify by notice. Any notice delivered or sent by fax shall be deemed
to have been given and received on the business day next following the
date of delivery or transmission. Any notice mailed as aforesaid shall
be deemed to have been given and received on the fifth business day
following the date it is posted, provided that if between the time of
mailing and the actual receipt of the notice there shall be a mail
strike, slowdown or other labour dispute which affects delivery of the
notice by mails, then the notice shall be effective only if actually
delivered.
29. WAIVER
29.01 No waiver of any breach of this Agreement shall be binding unless
evidenced in writing executed by the party against whom charged. Any
waiver shall extend only to the particular breach so waived and shall
not limit any rights with respect to any future breach.
30. AMENDMENTS
30.01 This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. An amendment or
variation of this Agreement shall only be binding upon a party if
evidenced in writing executed by that party.
31. TERM
31.01 Unless earlier terminated by agreement of all parties having an
Interest or as a result of one party acquiring both a 100 percent
Interest and a 100 percent interest in the Net Production Returns, the
Joint Operation and this Agreement shall remain in full force and
effect for so long as any party has any right, title or interest in the
Property. Termination of this Agreement shall not, however, relieve any
party from any obligations theretofore accrued but unsatisfied, nor
from its obligations with respect to rehabilitation of the Mine site
and reclamation.
26
32. TIME OF ESSENCE
32.01 Time is of the essence of this Agreement.
33. RIGHT OF FIRST REFUSAL
33.01 If a party (hereinafter in this paragraph referred to as the "OWNER"):
(a) receives a bona fide offer from an independent third party
(the "PROPOSED PURCHASER") dealing at arm's length with the
Owner to purchase all or any part all of the Owner's Interest
or its interest in this Agreement (which for certainty shall
include the Owner's right to receive Net Production Returns),
which offer the Owner desires to accept; or
(b) intends to sell all or any part of its Interest or its
interest in this Agreement,
the Owner shall first offer (the "OFFER") such interest in writing to
the other party upon terms no less favourable than those offered by the
Proposed Purchaser or intended to be offered by the Owner, as the case
may be. The Offer shall specify the price and terms and conditions of
such sale, the name of the Proposed Purchaser (which term shall, in the
case of an intended offer by the Owner, mean the person or persons to
whom the Owner intends to offer its interest) and, if the offer
received by the Owner from the Proposed Purchaser provides for any
consideration payable to the Owner otherwise than in cash, the Offer
shall include the Owner's good faith estimate of the cash equivalent of
the non-cash consideration. If within a period of 60 days of the
receipt of the Offer, the other party notifies the Owner in writing
that it will accept the same, the Owner shall be bound to sell such
interest to the other party (subject as hereinafter provided with
respect to price) on the terms and conditions of the Offer. If the
Offer so accepted by the other party contains the Owner's good faith
estimate of the cash equivalent consideration as aforesaid, and if the
other party disagrees with the Owner's best estimate, the other party
shall so notify the Owner at the time of acceptance and the other party
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 other party so notifies the Owner, the acceptance by the other
party shall be effective and binding upon the Owner and the other party
and the cash equivalent of any such non-cash consideration shall be
determined by binding arbitration under the COMMERCIAL ARBITRATION ACT
(British Columbia) and shall be payable by the other party, subject to
prepayment as hereinafter provided, within sixty (60) days following
its determination by arbitration. The other party shall in such case
pay to the Owner, against receipt of an absolute transfer of clear and
unencumbered title to the interest of the Owner being sold, the total
purchase price which it specified in its notice to the Owner and such
amount shall be credited to the amount determined following arbitration
of the cash equivalent of any non-cash consideration. If the other
party fails to notify the Owner before the expiration of the time
limited therefor that it will purchase the interest offered, the Owner
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 sixty (60) days, provided that the terms of this paragraph
shall again apply to such interest if the sale to the Proposed
Purchaser is not completed within the said sixty (60)days. Any sale
hereunder shall be conditional upon the
27
Proposed Purchaser delivering a written undertaking to the other party,
in form and content satisfactory to its counsel, to be bound by the
terms and conditions of this Agreement.
34. ARBITRATION
34.01 If any question, difference or dispute shall arise between the parties
or any of them in respect of any matter arising under this Agreement or
in relation to the construction hereof the same shall be determined by
the award of three arbitrators to be named as follows:
(a) the party or parties sharing one side of the dispute shall
name an arbitrator and give notice thereof to the party or
parties sharing the other side of the dispute;
(b) the party or parties sharing the other side of the dispute
shall, within fourteen (14) days of receipt of the notice,
name an arbitrator; and
(c) the two arbitrators so named shall, within fifteen (15) days
of the naming of the latter of them, select a third
arbitrator.
The decision of the majority of the arbitrators shall be made within
thirty (30) days after the selection of the latter of them. The expense
of the arbitration shall be borne equally by the parties to the
dispute. If the parties on either side of the dispute fail to name
their arbitrator within the time limited or to proceed with the
arbitration, the arbitrator named may decide the question. The
arbitration shall be conducted in accordance with the provisions of the
COMMERCIAL ARBITRATION ACT (British Columbia), and the decision of the
arbitrator or a majority of the arbitrators, as the case may be, shall
be conclusive and binding upon all the parties.
35. SUCCESSORS AND ASSIGNS
35.01 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
36. GOVERNING LAW
36.01 This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of British Columbia.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day, month and year first above written.
THE COMMON SEAL of )
GOLDEN CHALICE RESOURCES INC. )
was hereunto affixed in the presence of: )
)
------------------------------ )
Authorized Signatory )
)
------------------------------ )
Authorized Signatory )
THE COMMON SEAL of )
)
was hereunto affixed in the presence of: )
)
------------------------------ )
Authorized Signatory )
)
------------------------------ )
Authorized Signatory )
28
THIS IS SCHEDULE "A" TO THAT CERTAIN AGREEMENT BETWEEN GOLDEN CHALICE RESOURCES
INC. AND KLONDIKE GOLD CORP. MADE AS OF APRIL 1, 2005.
--------------------------------------------------------------------------------
INSERT LIST OF CLAIMS
--------------------------------------------------------------------------------
PROPERTY TOWNSHIP CLAIM NUMBER NO. OF UNIT DUE DATE WORK REQUIRED
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202812 16 2007-Apr-18 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202807 16 2007-Apr-18 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202808 16 2007-Apr-18 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202809 16 2007-Apr-18 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202810 12 2007-Apr-18 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202811 16 2007-Apr-18 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202813 4 2007-Apr-18 $1,600
------------------------------------------------------------------------------
Echum ▇▇▇▇▇▇ 3018230 15 2007-Dec-06 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 3018231 15 2007-Dec-06 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 3018232 15 2007-Dec-06 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 3018233 12 2007-Dec-06 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 3018234 11 2007-Dec-06 $4,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 3018235 11 2007-Dec-06 $4,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018221 12 2007-Dec-06 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018223 8 2007-Dec-06 $3,200
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018224 16 2007-Dec-06 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018225 16 2007-Dec-06 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018226 15 2007-Dec-06 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018227 8 2007-Dec-06 $3,200
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 3018229 15 2007-Dec-06 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 3018142 9 2007-Jun-07 $3,600
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202714 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202716 12 2007-Mar-01 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202723 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202725 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202726 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202727 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202728 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202729 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202730 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202733 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202734 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202735 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4202736 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202715 12 2007-Mar-01 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202717 12 2007-Mar-01 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202718 12 2007-Mar-01 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202719 12 2007-Mar-01 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
29
--------------------------------------------------------------------------------
PROPERTY TOWNSHIP CLAIM NUMBER NO. OF UNIT DUE DATE WORK REQUIRED
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202720 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202721 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4202722 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202724 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202731 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202732 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4202737 16 2007-Mar-01 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4201953 7 2007-Nov-29 $2,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4201954 16 2007-Nov-29 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4201955 16 2007-Nov-29 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4201956 12 2007-Nov-29 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4201961 15 2007-Nov-29 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4201962 16 2007-Nov-29 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209163 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209164 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209165 4 2007-Oct-28 $1,600
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209166 4 2007-Oct-28 $1,600
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209167 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209177 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209178 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4209214 1 2007-Oct-28 $400
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209187 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209188 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209189 10 2007-Oct-28 $4,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209190 12 2007-Oct-28 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209191 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209192 10 2007-Oct-28 $4,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum BRUYERE 4209193 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209184 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209185 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209186 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209194 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209195 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209198 4 2007-Oct-28 $1,600
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209199 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209200 13 2007-Oct-28 $5,200
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209201 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209202 12 2007-Oct-28 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209203 6 2007-Oct-28 $2,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209204 14 2007-Oct-28 $5,600
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209205 10 2007-Oct-28 $4,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209206 12 2007-Oct-28 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇▇ 4209211 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209168 6 2007-Oct-28 $2,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209169 8 2007-Oct-28 $3,200
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209170 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209171 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209172 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
30
--------------------------------------------------------------------------------
PROPERTY TOWNSHIP CLAIM NUMBER NO. OF UNIT DUE DATE WORK REQUIRED
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209173 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209174 11 2007-Oct-28 $4,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209175 12 2007-Oct-28 $4,800
------------------------------------------------------------------------------
Echum ECHUM 4209179 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209180 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209181 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209182 8 2007-Oct-28 $3,200
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209183 2 2007-Oct-28 $800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209196 12 2007-Oct-28 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209197 4 2007-Oct-28 $1,600
------------------------------------------------------------------------------
Echum ECHUM 4209207 12 2007-Oct-28 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209208 15 2007-Oct-28 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209209 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ECHUM 4209210 16 2007-Oct-28 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum ▇▇▇▇▇ 4208623 9 2008-Mar-06 $3,600
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209530 15 2008-Mar-23 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209531 15 2008-Mar-23 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209532 15 2008-Mar-23 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209533 15 2008-Mar-23 $6,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209534 10 2008-Mar-23 $4,000
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209535 16 2008-Mar-23 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209536 16 2008-Mar-23 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209537 16 2008-Mar-23 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209538 16 2008-Mar-23 $6,400
---------- ---------- -------------- ------------ ------------- ---------------
Echum COPENACE 4209539 12 2008-Mar-23 $4,800
---------- ---------- -------------- ------------ ------------- ---------------
Pursuant to an Option Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and GCR
dated as of September 15, 2005 and amended January 4, 2006, a 50% working
interest in the following claims:
TOWNSHIP CLAIM NUMBERS # OF UNITS
---------------------------------------------- ------------- -------------
▇▇▇▇▇▇ ....................................... 1192386 16
▇▇▇▇▇▇ ....................................... 1243337 16
▇▇▇▇▇▇ ....................................... 1243338 4
▇▇▇▇▇▇ ....................................... 1243360 1
▇▇▇▇▇▇ ....................................... 1243339 4
ECHUM ........................................ 1192385 16
▇▇▇▇▇ ........................................ 1243341 1
▇▇▇▇▇ ........................................ 1243340 4
▇▇▇▇▇ ........................................ 3018154 6
ECHUM ........................................ 3018155 1
ECHUM ........................................ 1243342 2
ECHUM ........................................ 3018152 1
ECHUM ........................................ 3018153 1
▇▇▇▇▇▇ ....................................... 3015681 5
▇▇▇▇▇▇ ....................................... 3015682 1
▇▇▇▇▇▇ ....................................... 1192260 16
▇▇▇▇▇▇ ....................................... 1192302 16
▇▇▇▇▇▇ ....................................... 1192301 16
▇▇▇▇▇▇ ....................................... 1192259 16
31
Pursuant to a Mineral Exploration License Agreement between 3011650 Nova Scotia
Limited and GCR dated as of July 1, 2005 and amended March 4, 2006, a 50%
working interest in the following property:
Number of grid Number of grid
Northerly Easterly claims (gross) claims (net) Township
----------- --------------- -------------- ---------------- ---------------
5 329 500 675 500-676 500 5 4.26 Esquaga
----------- --------------- -------------- ---------------- ---------------
5 328 500 673 500-679 500 7 5.40 Esquega
----------- --------------- -------------- ---------------- ---------------
5 327 500 683 500-677 500 6 5.12 Esquega
----------- --------------- -------------- ---------------- ---------------
5 326 500 674 500 1 0.61 Esquega
----------- --------------- -------------- ---------------- ---------------
32
THIS IS APPENDIX I TO THAT CERTAIN AGREEMENT BETWEEN GOLDEN CHALICE RESOURCES
INC. AND ______ MADE AS OF________.
--------------------------------------------------------------------------------
ACCOUNTING PROCEDURE
1. INTERPRETATION
1.01 Terms defined in the Agreement shall, subject to any contrary
intention, have the same meanings herein. In this Appendix the
following words, phrases and expressions shall have the following
meanings:
(a) "AGREEMENT" means the Agreement to which this Accounting
Procedure is attached as Appendix I.
(b) "COUNT" means a physical inventory count.
(c) "EMPLOYEE" means those employees of the Operator who are
assigned to and directly engaged in the conduct of Mining
Operations, whether on a full-time or part-time basis.
(d) "EMPLOYEE BENEFITS" means the Operator's cost of holiday,
vacation, sickness, disability benefits, field bonuses,
amounts paid to and the Operator's costs of established plans
for employee's group life insurance, hospitalisation, pension,
retirement and other customary plans maintained for the
benefit of Employees and Personnel, as the case may be, which
costs may be charged as a percentage assessment on the
salaries and wages of Employees or Personnel, as the case may
be, on a basis consistent with the Operator's cost experience.
(e) "FIELD OFFICES" means the necessary sub-office or sub-offices
in each place where a Program or Construction is being
conducted or a Mine is being operated.
(f) "GOVERNMENT CONTRIBUTIONS" means the cost or contributions
made by the Operator pursuant to assessments imposed by
governmental authority which are applicable to the salaries or
wages of Employees or Personnel, as the case may be.
(g) "JOINT ACCOUNT" means the books of account maintained by the
Operator to record all assets, liabilities, costs, expenses,
credits and other transactions arising out of or in connection
with the Mining Operations.
(h) "MATERIAL" means the personal property, equipment and supplies
acquired or held, at the direction or with the approval of the
Management Committee, for use in the Mining Operations and,
without limiting the generality, more particularly
"Controllable Material" means such Material which is
ordinarily classified as
33
Controllable Material, as that classification is determined or
approved by the Management Committee, and controlled in mining
operations.
(i) "PERSONNEL" means those management, supervisory,
administrative, clerical or other personnel of the Operator
normally associated with the Supervision Offices whose
salaries and wages are charged directly to the Supervision
Office in question.
(j) "REASONABLE EXPENSES" means the reasonable expenses of
Employees or Personnel, as the case may be, for which those
Employees or Personnel may be reimbursed under the Operator's
usual expense account practice, as accepted by the Management
Committee; including without limiting generality, any
relocation expenses necessarily incurred in order to properly
staff the Mining Operations if the relocation is approved by
the Management Committee.
(k) "SUPERVISION OFFICES" means the Operator's offices or
department within the Operator's offices from which the Mining
Operations are generally supervised.
2. STATEMENTS AND ▇▇▇▇▇▇▇▇
2.01 The Operator shall, by invoice, charge each Participant with its
Proportionate Share of Exploration Costs and Mine Costs in the manner
provided in sections 7 and 15 of the Agreement respectively.
2.02 The Operator shall deliver, with each invoice rendered for Costs
incurred a statement indicating:
(a) all charges or credits to the Joint Account relating to
Controllable Material ; and
(b) all other charges and credits to the Joint Account summarised
by appropriate classification indicative of the nature of the
charges and credits.
2.03 The Operator shall deliver with each invoice for an advance of Costs a
statement indicating:
(a) the estimated Exploration Costs or, in the case of Mine Costs
the estimated cash disbursements, to be made during the next
succeeding month;
(b) the addition thereto or subtraction therefrom, as the case may
be, made in respect of Exploration Costs or Mine Costs
actually having been incurred in an amount greater or lesser
than the advance which was made by each Participant for the
penultimate month preceding the month of the invoice; and
34
(c) the advances made by each Participant to date and the
Exploration Costs or Mine Costs incurred to the end of the
penultimate month preceding the month of the invoice.
3. DIRECT CHARGES
3.01 The Operator shall charge the Joint Account with the following items:
(a) CONTRACTOR'S CHARGES:
All costs directly relating to the Mining Operations incurred
under contracts entered into by the Operator with third
parties.
(b) LABOUR CHARGES:
(i) The salaries and wages of Employees in an amount
calculated by taking the full salary or wage of each
Employee multiplied by that fraction which has as its
numerator the total time for the month that the
Employees were directly engaged in the conduct of
Mining Operations and as its denominator the total
normal working time for the month of the Employee;
(ii) the Reasonable Expenses of the Employees; and
(iii) Employee Benefits and Government Contributions in
respect of the Employees in an amount proportionate
to the charge made to the Joint Account in respect to
their salaries and wages.
(c) OFFICE MAINTENANCE:
(i) The cost or a pro rata portion of the costs, as the
case may be, of maintaining and operating the Field
Offices and the Supervision Offices. The basis for
charging the Joint Account for such maintenance costs
shall be as follows:
(A) the expense of maintaining and operating
Field Offices, less any revenue therefrom;
and
(B) that portion of maintaining and operating
the Supervision Offices which is equal to
(1) the anticipated total operating expenses of
the Supervision Offices
divided by
(2) the anticipated total staff man days for the
Employees whether in connection with the
Mining Operations or not;
multiplied by
(3) the actual total time spent on the Mining
Operations by the Employee expressed in man
days.
(ii) Without limiting generality, the anticipated total
operating expenses of the Supervision Offices shall
include:
(A) the salaries and wages of the Operator's
Personnel which have been directly charged
to the Supervision Offices;
(B) the Reasonable Expense of the Personnel; and
(C) Employee Benefits.
(iii) The Operator shall make an adjustment in respect of
the Office Maintenance cost forthwith after the end
of each Operating Year upon having determined the
actual operating expenses and actual total staff man
days referred to in clause 3.01(c)(i)(B) of this
Appendix I.
(d) MATERIAL:
Material purchased or furnished by the Operator for use on the
Property as provided under section 4 of this Appendix I.
(e) TRANSPORTATION CHARGES:
The cost of transporting Employees and Material necessary for
the Mining Operations.
(f) SERVICE CHARGES:
(i) The cost of services and utilities procured from
outside sources other than services covered by
paragraph 3.01(h). The cost of consultant services
shall not be charged to the Joint Account unless the
retaining of the consultant is approved in advance by
the Management Committee; and
(ii) Use and service of equipment and facilities furnished
by the Operator as provided in subsection 4.04 of
this Appendix I.
35
(g) DAMAGES AND LOSSES TO JOINT PROPERTY:
All costs necessary for the repair or replacement of Assets
made necessary because of damages or losses by fire, flood,
storms, theft, accident or other cause. If the damage or loss
is estimated by the Operator to exceed $10,000, the Operator
shall furnish each Participant with written particulars of the
damages or losses incurred as soon as practicable after the
damage or loss has been discovered. The proceeds, if any,
received on claims against any policies of insurance in
respect of those damages or losses shall be credited to the
Joint Account.
(h) LEGAL EXPENSE:
All costs of handling, investigating and settling litigation
or recovering the Assets, including, without limiting
generality, attorney's fees, court costs, costs of
investigation or procuring evidence and amounts paid in
settlement or satisfaction of any litigation or claims;
provided, however, that, unless otherwise approved in advance
by the Management Committee, no charge shall be made for the
services of the Operator's legal staff or the fees and
expenses of outside solicitors.
(i) TAXES:
All taxes, duties or assessments of every kind and nature
(except income taxes) assessed or levied upon or in connection
with the Property, the Mining Operations thereon, or the
production therefrom, which have been paid by the Operator for
the benefit of the parties.
(j) INSURANCE:
Net premiums paid for
(i) such policies of insurance on or in connection with
Mining Operations as may be required to be carried by
law; and
(ii) such other policies of insurance as the Operator may
carry for the protection of the parties in accordance
with the Agreement; and
the applicable deductibles in event of an insured loss.
(k) RENTALS:
Fees, rentals and other similar charges required to be paid
for acquiring, recording and maintaining permits, mineral
claims and mining leases and rentals and royalties which are
paid as a consequence of the Mining Operations.
36
(l) PERMITS:
Permit costs, fees and other similar charges which are
assessed by various governmental agencies.
(m) OTHER EXPENDITURES:
Such other costs and expenses which are not covered or dealt
with in the foregoing provisions of this subsection 3.01 of
this Appendix I as are incurred with the approval of the
Management Committee for Mining Operations or as may be
contemplated in the Agreement.
4. PURCHASE OF MATERIAL
4.01 Subject to subsection 4.04 of this Appendix I the Operator shall
purchase all Materials and procure all services required in the Mining
Operations.
4.02 Materials purchased and services procured by the Operator directly for
the Mining Operations shall be charged to the Joint Account at the
price paid by the Operator less all discounts actually received.
4.03 Any Participant may sell Material or services required in the Mining
Operations to the Operator for such price and upon such terms and
conditions as the Management Committee may approve.
4.04 Notwithstanding the foregoing provisions of this section 4, the
Operator, after having obtained the prior approval of the Management
Committee, shall be entitled to supply for use in connection with the
Mining Operations equipment and facilities which are owned by the
Operator and to charge the Joint Account with such reasonable costs as
are commensurate with the ownership and use thereof.
5. DISPOSAL OF MATERIAL
5.01 The Operator, with the approval of the Management Committee may, from
time to time, sell any Material which has become surplus to the
foreseeable needs of the Mining Operations for the best price and upon
the most favourable terms and conditions available.
5.02 Any Participant may purchase from the Operator any Material which may
from time to time become surplus to the foreseeable need of the Mining
Operations for such price and upon such terms and conditions as the
Management Committee may approve.
5.03 Upon termination of the Agreement, the Management Committee may approve
the division of any Material held by the Operator at that date, which
Material may be taken by the Participants in kind or be taken by a
Participant in lieu of a portion of its Proportionate Share of the net
revenues received from the disposal of the Assets and Property. If the
division to a
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Participant be in lieu, it shall be for such price and on such terms
and conditions as the Management Committee may approve.
5.04 The net revenues received from the sale of any Material to third
parties or to a Participant shall be credited to the Joint Account.
6. INVENTORIES
6.01 The Operator shall maintain records of Material in reasonable detail
and records of Controllable Material in detail.
6.02 The Operator shall perform Counts from time to time at reasonable
intervals, and in any event at the end of each calendar year. The
independent external auditor of the Operator shall be given reasonable
notice of each Count, and shall be given the opportunity to attend the
Count.
6.03 Forthwith after performing a Count, the Operator shall reconcile the
inventory with the Joint Account. The Operator shall not be held
accountable for any shortages of inventory except such shortages as may
have arisen due to a lack of diligence on the part of the Operator.
7. ADJUSTMENTS
7.01 Payment of any invoice by a Participant shall not prejudice the right
of that Participant to protest the correctness of the statement
supporting the payment; provided, however, that all invoices and
statements presented to each Participant by the Operator during any
calendar year shall conclusively be presumed to be true and correct
upon the expiration of 12 months following the end of the calendar year
to which the invoice or statement relates, unless within that 12 month
period that Participant gives notice to the Operator making claim on
the Operator for an adjustment to the invoice or statement.
7.02 The Operator shall not adjust any invoice or statement in favour of
itself after the expiration of 12 months following the end of the
calendar year to which the invoice or statement relates.
7.03 Notwithstanding subsections 7.01 and 7.02 of this Appendix I, the
Operator may make adjustments to an invoice or statement which arise
out of a Count of Material or Assets within 60 days of the completion
of the Count.
7.04 A Participant shall be entitled upon notice to the Operator to request
that the independent external auditor of the Operator provide that
Participant with its opinion that any invoice or statement delivered
pursuant to the Agreement in respect of the period referred to in
subsection 7.01 of this Appendix I has been prepared in accordance with
this Agreement.
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7.05 The time for giving the audit opinion contemplated in subsection 7.04
of this Appendix I shall not extend the time for the taking of
exception to and making claims on the Operator for adjustment as
provided in subsection 7.01 of this Appendix I.
7.06 The cost of the auditor's opinion referred to in subsection 7.04 of
this Appendix I shall be solely for the account of the Participant
requesting the auditor's opinion, unless the audit disclosed a material
error adverse to that Participant, in which case the cost shall be
solely for the account of the Operator.
7.07 Upon not less than ten (10) business days' notice to the Operator, and
no more frequently than twice during the currency of each Operating
Plan, a Participant shall be entitled to inspect the Joint Account , at
the location(s) where such records are normally kept. All costs
incurred in carrying out such inspection shall be borne by the
Participant. All disagreements or discrepancies identified by the
Participant shall be referred to the independent external auditor for
final resolution.
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THIS IS APPENDIX II TO THAT CERTAIN AGREEMENT (THE "AGREEMENT") MADE BETWEEN
GOLDEN CHALICE RESOURCES INC. AND ________ MADE AS OF ___________.
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NET PRODUCTION RETURNS ROYALTY
1. INTERPRETATION
1.01 In this Appendix the following words, phrases and expressions shall
have the following meanings:
(a) "NET PRODUCTION RETURNS" means Net Sales Returns and Net
Smelter Returns
(b) "NET SALES RETURNS" means the gross proceeds from the sale or
disposition of Stone Products to an independent purchaser,
after deducting therefrom the cost of Valuation, Sorting,
Shipping and Insurance in connection with the Stone Products
as well as any sales, excise, production, export and other
duties, levies, assessments and taxes (except income taxes)
payable on the production or sale of Stone Products (but not
income taxes), and for the purposes hereof:
(i) "INSURANCE" means all insurance that the Operator
considers advisable to protect all or part of the
Stone Products in the possession or control of the
Operator (including, without limitation, during
shipping) until the passing of title thereto or risks
therefor (whichever is the later) and including,
without limitation, the insurance or bonding of any
person who does or may come into contact with any
such Stone Products at any point during the
operations of the Operator whether such person is an
employee of the Operator or otherwise;
(ii) "SHIPPING" means all methods of transportation or
places of storage of Stone Products from the moment
they leave the Property until the passing of title
thereto or risks therefor (whichever is the later) to
an independent purchaser, including, without
limitation, any cost that may be incurred by reason
of such methods or places used or any sorting or
valuation facilities being situated off the Property;
(iii) "SORTING" means separation of Stone Products from
waste materials and dividing them into groups
according to quality, size, or other characteristics,
and then the division of such groups into appropriate
lots or groups for valuing and/or sale, it being
acknowledged that in the case of gem quality Stone
Products, a group or lot may be a single stone; and
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(iv) "VALUATION" means the establishing of a value for
each lot or group of sorted Stone Products for
purposes of reference when negotiating with a
potential purchaser of the same.
(c) "NET SMELTER RETURNS" means the gross proceeds from the sale
or disposition of Other Products removed from the Property
after deducting the costs of treatment, tolling, smelting,
refining and minting of such products and all costs associated
therewith such as transporting, insuring, handling, weighing,
sampling, assaying and marketing, as well as all penalties,
representation charges, referee's fees and expenses, import
taxes and export taxes.
(d) "OTHER PRODUCTS" means metals, bullion, concentrates or ores
mined or produced from the Property
(e) "PRODUCTS" shall be interpreted as a collective reference to
Stone Products and Other Products
(f) "ROYALTY" means the royalty described under section 7.10 and
10.02 of the Agreement.
(g) "ROYALTY HOLDER" means a person entitled to a Royalty.
(h) "SMELTER" means conventional smelters as well as any other
type of production plant used in lieu of a conventional
smelter to reduce ores or concentrates.
(i) "STONE PRODUCTS" means diamonds, gems and other precious and
semi-precious stones mined or produced from the Property
2. CALCULATION OF NET PRODUCTION RETURNS
2.01 In calculating "Net Sales Returns" the following provisions shall
apply:
(a) If Stone Products are sold to any entity with which the
Operator does not deal at arm's length, the Stone Products
shall for the purposes hereof be deemed to have been sold at
prices determined by an independent valuator chosen by the
Royalty Holder.
(b) The Operator shall not have the right to commingle Stone
Products produced from the Property with similar products
produced from other properties.
2.02 In calculating "Net Smelter Returns" the following provisions shall
apply:
(a) If smelting, refining, treatment, assay or sampling of Other
Products is performed by facilities owned or controlled by the
Operator or any of its affiliates, all charges, costs and
penalties therefor to be deducted pursuant to the foregoing
paragraph shall be equal to and not exceed actual costs
incurred by the Operator in
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carrying out such processes and shall not exceed such amounts
which the Operator would have incurred if such operations were
conducted at facilities operating at arm's length to the
Operator, and which were then offering comparable services for
comparable quantities and quality of Other Products.
(b) The Operator shall have the right to commingle Other Products
produced from the Property with ores and minerals produced
from other properties. Before commingling, Other Products from
the Property shall be weighed, sampled, assayed, measured or
gauged by the Operator in accordance with sound mining and
metallurgical practices for moisture, penalty substances and
payable content. Records shall be kept by the Operator for a
reasonable time showing weights, moisture and assays of
payable content. Prior to commingling, the Operator shall give
thirty (30) days notice to the Royalty Holder specifying its
decision to commingle and outlining the procedures it proposes
to follow.
3. GENERAL
3.01 In the calculation of the Royalty, the applicable percentage shall be
applied to 100% of the Net Sales Returns or Net Smelter Returns, as the
case may be.
3.02 Royalties shall accrue at the time of sale or deemed sale, as
applicable, and they shall become due and payable in cash on a calendar
quarter basis, on the twentieth (20th) day of the month next following
the calendar quarter in which they accrue.
3.03 At the time of making each Royalty payment to the Royalty Holder, the
Operator shall provide the Royalty Holder with a certificate of a
senior officer of the Royalty Holder certifying as to the accuracy of
the calculations of the Royalty payment and setting out the method of
the calculation thereof to which shall be attached a true copy of the
related smelter or sales receipt or receipts.
3.04 Net sales returns and net smelter returns upon the respective Products
shall be calculated exclusively as provided herein, and the Royalty
computed thereon shall be determined without regard to any "hedging",
"forward", "futures" or comparable sales (collectively referred to as
"FUTURE TRADING") of such Products by or on behalf of the Operator. The
Royalty Holder shall not be entitled to any benefit of or be subject to
any loss attributable to such future trading by the Operator.
3.05 The Operator shall cause to be kept proper books of account, records
and supporting materials covering all matters relevant to the
calculation of Royalties payable to the Royalty Holder, and the
reasonable verification thereof; and the Royalty Holder shall have,
from time to time, the unfettered right, during regular business hours
and on reasonable notice, to carry out at its sole cost and expense an
audit by established independent professionals chosen by the Royalty
Holder, of the methodology and manner of calculating all Royalty
payments hereunder and the Operator shall provide, during
42
regular business hours and on reasonable notice, unrestricted access to
its books, accounts, records, vouchers, smelter settlements, sales
receipts and related documentation for this purpose. Should there be
any difference in the amount of the Royalty payment or payments which
are ultimately determined by the process described in this section to
be in the Royalty Holder's favour, which exceed three (3%) percent of
the amount of the Royalty paid to the Royalty Holder, then the cost of
said audit, to the extent reasonable, shall be reimbursed to the
Royalty Holder by the Operator.
3.06 Any dispute relating to the quantum or methodology of calculating all
Royalties payable hereunder shall be settled by arbitration pursuant to
the provisions of Article 34 of the Agreement.
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THIS IS APPENDIX III TO THAT CERTAIN AGREEMENT (THE "AGREEMENT") MADE BETWEEN
GOLDEN CHALICE RESOURCES INC. AND KLONDIKE GOLD CORP. MADE AS OF APRIL 1, 2005.
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UNDERLYING ROYALTY HOLDERS AND UNDERLYING AGREEMENTS
1. A 3% Net Smelter Return ("NSR") with a 1.5% buy back for $1,500,000
held by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Option Agreement dated as of September 15, 2005 and amended
January 4, 2006,
2. Pursuant to the Otter Pond and Hawk Junction Option Agreement between
733526 Ontario Ltd., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Company dated
as of January 4, 2006 cash payments of $100,000 over three years and
75,000 shares in 2008 and 100,000 shares in 2009.
3. Pursuant to a Mineral Exploration License Agreement between 3011650
Nova Scotia Limited and GCR dated as of July 1, 2005 and amended March
4, 2006 a royalty equal to 3% for all minerals and diamonds and
precious or semi-precious stones with a buy back of 1% for all minerals
except precious or semi-precious stones for $2,000,000.
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