Exhibit 10.2
STERLING MINING COMPANY
Sunshine Mine
October 18, 2003
“Equipment Purchase Agreement”
It is hereby agreed, that Sterling Mining Company will pay to ARl the sum of $396,000US, in consideration for all mine equipment as specified in Exhibit 2 of this agreement (with the exception of the Austin Crane). This sum will be paid in six monthly installments of $66,000US.
| • | Installment #1 was paid to ARI on October 17, 2003. |
| • | This agreement includes additional equipment, beyond the scope of the list negotiated between Demotte and Mori in Reno, Nevada. These additions are specified in Exhibit 2 of this agreement. |
| • | Sterling Mining Company agrees to the terms as presented by ARI in the letter of October 9, 2003 (see Exhibit 1). |
| • | Sterling Mining Company agrees to extend the date for removal of remaining ARI property to January 15, 2004. |
| • | As noted in the second paragraph of Item l of Exhibit l, the value of the additional equipment is equal to 213 of the pre-agreed payment. Hence; Sterling retains a $22,000 credit within the payment structure. This credit is nearly equal to the offer of $20,000.00 extended for purchase of all remaining ARI warehouse inventories (see final note in Exhibit 2). Further, Sterling assumes ARI has agreed to this figure as the purchase price for any remaining warehouse inventories on the Sunshine Mine site after the deft of January 15, 2004. |
Exhibit 1
| Subj: | Re: equipment | |
| Date: | 10/9/03 12:19:04 AM Mountain Daylight Time | |
| From: | andy@grundman.net | |
| To: | Kshiell@aol.com |
Sent from the Internet (Details)
Kevin:
I hope that this email finds you in- rood spirits. Hearing the genset spinning on Saturday, and the subsequent news that you have made it to 3700 level is extremely promising. Congratulations on overcoming at least the initial obstacles on what will be an extremely large undertaking!!
I have been instructed by Ray to forward the following documents to you for your consideration.
Follows is the text of the letter transmitted to Ray regarding the sales agreement. The document is drafted in WordPerfect, so I have cut & pasted the agreement.
VIA FAX TO (208) 676-1629
Ray DeMotte
STERLING MINING COMPANY
411 Couer d’Alene Avenue, Suite 1-A
Couer d’Alene, Idaho 83814
| RE: | Revised List and Terms of equipment Sale; Letter as Agreement |
Dear Mr. DeMotte:
Following my meeting with Sterling employees at the Sunshine Mine on October 4, 2003, we reviewed the equipment subject to the proposed sale. This letter may be considered the agreement between ARI and Sterling Mining that covers the sale of these equipment.
1. The sales price for the equipment will be $396,000.00 U.S. this price is derived from the price negotiated at the Reno meeting plus the additional equipment/credit allowance provided for in my letter to Ray Demotte of October 6, 2003. As discussed in that letter, the additional equipment requested would be added to the list (with the exception of the Austin Crane), and this would provide a slight credit balance in Sterling’s favor. This would allow additional equipment to be added to the list without having to renegotiate a payment schedule.
The reason for incorporating the additional month of payments is primarily because the valuation of the additional equipment, combined with the additional 5-ton and 1-1/2 ton loci places the additional value at approximately 2/3 of the pre-agreed payment. Additionally, the consumption of $2500 to $3000 worth of solvent used to clean the hoist “genset” will be incorporated into this agreement, negating an additional invoice for the material. Accordingly, it appears extremely likely that over the next several months that Sterling will require additional parts and materials not included in this purchase agreement.
2. As we discussed in the October 6, 2003 letter, Sterling will be permitted to in corporate additional items into the purchase, but any item on the list, or subsequently added by Sterling would not be removable. Additionally, this equipment and materials is subject to ARI’s standard policy of “as is, where is.”
3. As mentioned above, the addition of two locis is covered under this agreement. As also mentioned above, the Austin Crane will remain ARI’s property, but Sterling will be provided use of the crane as necessary whenever the crane is available. Additionally, SPMI will be allowed use of a suitable forklift as necessary. Cooperation between SPMI, ARI, and SMC is mutually understood to be in the best interest of all companies.
4. With the above-noted exceptions, the Offer from SMC dated October 5, 2003 will be the primary exhibit to this agreement. The one differentiation from the offer is that the 60 days provided for removal of remaining ARI property will be extended until January 15, 2004, and will be understood that inclement weather or snow conditions will permit this period to be extended.
It is extremely exciting to see the progress made at the mine by Sterling’s directors and employees. On behalf of both SPMI and ARI, I would like to express our distinct approval of the success thus far, and wish for continued success in the rehabilitation and operation of the famous Sunshine Mine.
Sincerely, |
| ANDREW GRUNDMAN |
| General Manager |
| Sunshine Mining Company |
Exhibit 1
STERLING MINING COMPANY
Sunshine Equipment Offer
October 5, 2003
Miscellaneous | 1 | 600 Rotary Compressor | 10,000 | Orig. Purchase | ||||
Miscellaneous | 1 | Diesel Forklift w/paperhead | 18,000 | Orig. Purchase | ||||
Miscellaneous | 1 | Gas Forklift w/paperhead | 5,000 | Orig. Purchase | ||||
Lower Yard | 2 | 12B Muckers | 4,000 | Orig. Purchase | ||||
Lower Yard | 1 | Tugger | 800 | Orig. Purchase | ||||
Lower Yard | 4 | 1/2-Ton Motors | 24,000 | Orig. Purchase | ||||
Lower Yard | 1 | Jumbo | 30,000 | Orig. Purchase | ||||
Lay Down Yard | 4 | Air Operated Gates/Cons Bin | 24,000 | Orig. Purchase | ||||
Lay Down Yard | 5 | 60-Ton Coolers | 10,000 | Orig. Purchase | ||||
Lay Down Yard | 1 | New Pan Feeder | 15,000 | Orig. Purchase | ||||
Fab Shop | 1 | M8 Pump | 300 | Orig. Purchase | ||||
Fab Shop | 2 | Wire Feed Welders | 3,000 | Orig. Purchase | ||||
Fab Shop | 1 | Electric Forklift | 20,000 | Orig. Purchase | ||||
Fab Shop | 1 | Generator Set | 500 | Orig. Purchase | ||||
Fab Shop | 1 | Welder | 1,000 | Orig. Purchase | ||||
Fab Shop | 8 | Air Hoist | 8,000 | Orig. Purchase | ||||
Fab Shop | 1 | 1/2-Ton Motor | 6,000 | Orig. Purchase | ||||
Fab Shop | 1 | Charger | 500 | Orig. Purchase | ||||
DD Core Shed | 4 | 22 Muckers | 40,000 | Orig. Purchase | ||||
DD Core Shed | 1 | 12B Mucker | 2,000 | Orig. Purchase | ||||
Pipe Yard | 1 | LM56 Mucker | 8,000 | Orig. Purchase | ||||
Carp/Oil Room | 1 | Sump Pumps | 3,000 | Orig. Purchase | ||||
Carp/Oil Room | 2 | 20HP Sump Pumps | 8,000 | Orig. Purchase | ||||
Carp/Oil Room | 2 | 10HP Sump Pump | 3,000 | Orig. Purchase | ||||
Carp/Oil Room | 6 | 30HP Slushers | 21,000 | Orig. Purchase | ||||
Carp/Oil Room | 2 | Charger | 1,000 | Orig. Purchase | ||||
Saw Mill/Hoist | 1 | Large Tugger | 1,500 | Orig. Purchase | ||||
Saw Mill/Hoist | 5 | 30HP Pumps | 9,000 | Orig. Purchase | ||||
Sand Tank | 6 | Small Air Pumps | 1,200 | Orig. Purchase | ||||
Sand Tank | 6 | M15 Pumps | 2,400 | Orig. Purchase | ||||
Sand Tank | 1 | 3HP Flygt Pump | 1,500 | Orig. Purchase | ||||
Sand Tank | 7 | 6-Ton Motors | 42,000 | Orig. Purchase | ||||
Sand Tank | 2 | 5-Ton Motors | 10,000 | Orig. Purchase | ||||
Sand Tank | 3 | 6-Ton Motor | 36,000 | Orig. Purchase | ||||
Warehouse | 1 | Rebuilt Controller | 7,000 | Orig. Purchase | ||||
Sand Tank | 3 | Chargers | 3,000 | Orig. Purchase | ||||
Sand Tank | 1 | HUL Tugger | 1,500 | Orig. Purchase | ||||
Saw Mill/Hoist | 5 | Chargers | 5,000 | Orig. Purchase | ||||
Saw Mill/Hoist | 1 | 1-Ton OH Hoist | 400 | Orig. Purchase | ||||
Car Shop | 1 | Kabota Tractor | 2,000 | Orig. Purchase | ||||
Car Shop | 1 | Lg Pipe Machine | 2,000 | Orig. Purchase | ||||
Car Shop | 1 | Small OH Hoist | 500 | Orig. Purchase | ||||
Car Shop | 1 | 5-Ton OH Hoist and Trolley | 5,000 | Orig. Purchase | ||||
Car Shop | 1 | Hydraulic Press Welder | 1,000 | Orig. Purchase | ||||
Oil Room | 1 | 15HP Joy Air Slusher w/Bucket | 4,000 | Orig. Purchase | ||||
Oil Room | 5 | 30HP Slushers | 3,500 | Orig. Purchase | ||||
Oil Room | 1 | Shot Crete Machine | 1,500 | Orig. Purchase | ||||
Oil Room | 1 | Charger | 1,000 | Orig. Purchase | ||||
Fab Shop | 1 | 1-Ton OH Hoist | 400 | Orig. Purchase | ||||
Mechanic Shop | 2 | Lathe | 5,000 | Orig. Purchase | ||||
Mechanic Shop | Lot | Tools for Lathe | 2,000 | Orig. Purchase | ||||
Mechanic Shop | 1 | Pressure Washer | 1,500 | Orig. Purchase | ||||
| EQUIPMENT ADDITIONS | ||||||||
Timber Yard | 1 | Austin Crane | 8,000 | 5,000 | ||||
Timber Yard | Lot | Jewel Shaft Timber | 3,000 | |||||
| 1 | 300HP Borehole Fan | 0 (Part of Operation) | ||||||
| 1 | 200HP 37 Level Fan | 0 (Part of Operation) | ||||||
Fab Shop | 1 | Hobart 400 Welder | 500 | |||||
Carp/Oil Room | 2 | 110 gal. Fuel Trucks | 400 | |||||
| Carp/Oil Room | 8 | Timber Trucks | 2,000 | |||||
Hoist Room | 1 | 30KW Gen Set | 5,000 | |||||
Core Shed Yard | Lot | 12ft Pump Column and Shaft Pipe | 2,950 | |||||
Sand Tank | 1 | Clam Mucker | 1,500 | 750 | ||||
| 6 | Serumie Pumps | 12,000 | ||||||
| 12 | Vent Fans | 8,400 | ||||||
| 4 | Jumbo Tires | 0 (Incl. w/Jumbo) | ||||||
6 Door Building/ Core Shed | All | Vent Fans Except New 440 Volt Fan | 0 (Part of Operation) | |||||
| • | Warehouse Basement |
SMC retains full inventory with the exception of all electrical, cables which will become property of ARI.
| • | Warehouse Main Floor |
SMC retains all parts for fixed infrastructure and 50% of bearing inventory, as well as 50% of conventional mining equipment parts inventory. ARI is awarded all bolt inventory and threaded pipe inventory.
| • | Warehouse Upper Floor |
SMC retains all parts relating to hoists, hoist controls and fixed infrastructure. SMC retains 50% of loci parts inventory. ARI is awarded 50% of the loci parts inventory and all of the common electrical hardware and grinding wheels.
| • | LOCI CAR SHOP |
SMC retains 50% inventory and all shop machines and tools except for two small pipe fitting machines and bronze bar/mild steel stock. ARI receives 50% of parts inventory, two small pipe fitting machines and all bronze bar/mild steel stock.
NOTE:
All inventory belonging to ARI must be removed from Sunshine mine site within 60 days of the signing of this agreement, however as a second option SMC will offer to pay an additional $20,000 as payment in full for any remaining ARI inventories. In the event ARI experiences a shortage of available storage space, SMC agrees to make available storage space in the six-stall building near the core shed for a period of 6 months from the signing of this agreement. SMC further agrees to provide two employees, for not more than 30 working days per employee, for a total of 480 man hours, to assist ARI in removal of merchandise from the site.
Signature Page
This document is the complete and final agreement relating to the sale of equipment at the Sunshine mine.
| STERLING MINING COMPANY | ||||||||
Representative ` | /s/ | Date October 15, 2003 | ||||||
| AMERICAN RECLAMATION, INC. | ||||||||
Representative ` | /s/ | Date 10-23-03 | ||||||