Exhibit 10.1 Big Jim Agreement dated May 10, 1979
AGREEMENT
THIS AGREEMENT is made and entered into as of the 10th day ofMay,1979 by and between the following parties:
BULLION MONARCH COMPANY, a Utah corporation (BULLION); POLAR RESOURCES CO., a Nevada corporation (POLAR);
UNIVERSAL GAS (MONTANA), INC., a Montana corporation, and UNIVERSAL EXPLORATIONS, LTD., a Canadian corporation (UNIVERSAL);
CAMSELL RIVER INVESTMENTS, LTD., a Canadian corporation (CAMSELL);
LAMBERT MANAGEMENT LTD., a Canadian corporation (LAMBERT) and
ELTEL HOLDINGS LTD., a Canadian corporation (ELTEL);
W I T N E S S E T H:
WHEREAS the parties hereto would all profit from the mining of and production of certain mining properties located in the Lynn Mining District, Eureka County, Nevada, more fully described in Exhibit A-l attached hereto and incorporated herein by reference, hereinafter collectively referred to as the "Subject Property;" and
WHEREAS the parties have interest in exploring a wider range of mineral properties in which the Subject Property is embedded, hereinafter referred to as the "Area of Interest," more fully described in Exhibit A-2 attached hereto and incorporated herein by reference; and
WHEREAS the parties hereto are desirous of developing the Subject Property's mineral potential by building adequate milling facilities and developing a mine ("the Project"); and
WHEREAS BULLION purports to own a royalty interest in and to the Subject Property as is more fully set forth in Exhibit A-1;
WHEREAS POLAR purports to own a 100% interest in and to part of the Subject Property as is more fully set forth in Exhibit subject to possible outstanding interests and royalties, purports to own a 100% interest in and to other portions of the Subject Property as is more fully set forth in Exhibit A-1, and has under a lease and Option a 77½% interest to other portions of the Subject Property; and
WHEREAS CAMSELL, LAMBERT and ELTEL are interrelated organizations acting in concert as to the Subject Property, collectively being referred to hereinafter as"CAMSELL" unless specifically referred to otherwise, and have invested monies in the development of the Subject Property to date, their interest and relationship to the Project being governed by that certain Letter Agreement with Polar dated March 14, 1979, as amended by the letters of March 16,1979, April 6, 1979 and April 10, 1979, attached thereto, all attached hereto as Exhibit B; and
WHEREAS UNIVERSAL GAS (MONTANA), INC. is presently financing further development of the mining and production potential of the Subject Property, primarily for the production of precious metals basically under the terms of that certain Agreement with POLAR dated March 14, 1979 attached hereto as Exhibit C; and
WHEREASUNIVERSAL EXPLORATIONS, LTD. is prepared and able to guarantee the financial obligations of UNIVERSAL GAS (MONTANA) INC. contained herein, both corporations wil1 be collectively referred to as UNIVERSAL herein with the understanding amongst the
parties hereto that UNIVERSAL GAS (MONTANA), INC. will be the active participant referred to as UNIVERSAL while any reference to UNIVERSAL EXPLORATIONS, LTD. under the collective term UNIVERSAL speaks only to its financial backing of the UNIVERSAL obligations recited herein;
NOW THEREFORE, in consideration of the conditions, covenants, promises, obligations, payments and agreements herein contained, the parties agree as follows:
1.
SOLE AGREEMENT: That as between the parties hereto this Agreement shall be the sole and only agreement governing the ownership, operations and payment from the Subject Property, canceling, revoking, rescinding and terminating any and all other deeds, conveyances, contracts or agreements between the parties hereto, or any combination thereof, affecting the Subject Property, except any agreement that may exist between CAMSELL, LAMBERT and ELTEL as to investment in Subject Property development and divisions of proceeds received there from, and except any agreement, contract or deed specifically preserved by the terms hereof. Should the terms of any agreement, letter agreement or other document or understanding preserved by specific reference herein be in conflict with this Agreement the terms of this Agreement shall control.
2. OWNERSHIP OF SUBJECT PROPERTY: That as between the parties hereto it is understood and agreed that the ownership of the Subject Property as presently constituted is as set forth in Exhibit A-1 attached hereto, subject only to the terms and conditions of this Agreement specifically referred to herein. In addition, it is understood, agreed and warranted amongst the parties hereto that except
for agreements, deeds and other documents specifically mentioned herein that none of the parties hereto, individually, in combination or collectively, have conveyed or encumbered the Subject Property.
A.
Simultaneously herewith, BULLION shall execute and deliver a Grant Deed to UNIVERSAL conveying all of its right, title and interest in the Subject Property to UNIVERSAL. Such interest of BULLION conveyed to UNIVERSAL shall be subject to the payment provisions of Paragraph 4,infra.
B.
Simultaneously herewith, POLAR shall execute and de-liver a Grant Deed to UNIVERSAL conveyingall of its right, title and interest in the Subject Property to UNIVERSAL, subject to the terms and conditions of the `arch 14, 1979 POLAR - UNIVERSAL, Agreement.
C.
Simultaneously herewith, CAMSEEL shall execute and deliver a Quitclaim Deed to UNIVERSAL conveying and quitclaiming all of its right, title and interest in the Subject Property to UNIVERSAL.
D.
At all times pertinent hereto, UNIVERSAL shall have the right to pledge or otherwise hypothecate the titles to any persons, or the whole of, the Subject Property for the purpose of obtaining financing for development of the Subject Property, except that no more than a total of FIFTY PERCENT (50%) of the then current market value of such property shall be so hypothecated or encumbered. At the time, under the March 14, 1979 Agreement, Exhibit C, UNIVERSAL reaches the "earning point", its conveyance to POLAR of 50% interest shall be unencumbered.
3. UNIVERSAL AS OPERATOR: That on March 14, 1979 POLAR and UNIVERSAL entered into an Agreement, a copy of which is attached hereto as Exhibit C and incorporated herein by reference, whereby UNIVERSAL, under the terms and conditions thereof, was to become the sole and only operator of the mineral production from the Subject Property as of March 1, 1979, and that all of the parties hereto agree to the terms of said Agreement allowing UNIVERSAL the sole and only control over further development and production from the Subject Property pursuant to the March 14, 1979 Agreement and ratify the same as if they had been signatory thereto.
4. PAYMENTS TO BULLION:
A. Commencing May 1, 1979, UNIVERSAL shall pay to BULLION an advance minimum royalty of $2,500.00 each and every month through October 1979 or until gross production sales from the Subject Property have reached the amount of $62,500.00 per month, whichever comes first.
B. Commencing on November 1, 1979, UNIVERSAL shall pay to BULLION an advance minimum royalty of $5,000.00 each and every month until gross production sales from the Subject Property has reached The amount of $125,000.00 per month, or until Bullion has received an aggregate of $25O,000.00 under these subparagraphs, A and B
C. BULLION shall receive a FOUR PERCENT (4%) gross smelter return from production from the Subject Property (based on 100% operating' interest in UNIVERSAL, otherwise prorated) until BULLION has received an aggregate of $500,000.00 under these subparagraphs, A, B and C.
D. Thereafter BULLION shall receive a TWO PERCENT (2%) gross smelter return royalty from production from the Subject Property (based on 100% operating interest in UNIVERSAL, otherwise prorated) until BULLION has received an aggregate of $1,000,000.00 under these subparagraphs, A, B, C and D.
E. Thereafter BULLION shall receive a ONE PERCENT (1%) gross smelter return royalty from production from the Subject Property (based on 100% operating interest in UNIVERSAL, otherwise prorated).
Gross smelter return," as used above, shall mean the amount of earned revenues, as used in accordance with generally accepted accounting principles, payable to UNIVERSAL by any smelter or other purchaser of metals, ores, minerals or mineral substances, or concentrates produced therefrom for products mined from the Subject Property.
Upon SIXTY (60) days' written notice by BULLION to UNIVERSAL, BULLION may elect to take any monthly production royalty in kind but will be totally responsible for all loading and transportation and the costs thereof. BULLION agrees not to materially interfere with UNIVERSAL'S operations should it elect to receive payment in kind, and will hold all the remaining parties hereto harmless from its actions in loading and transporting the in kind payments.
All advance royalty payments shall be due on the first day of each month and production royalties shall be due no later than FORTY-FIVE (45) days after the date payment for production sales is received by UNIVERSAL.
5. OBLIGATIONS OF BULLION AND POLAR: BULLION and POLAR shall assume and retain all obligations that they have independently incurred by virtue of their activities on and for the Subject Property prior to the date of this Agreement and, in particular, BULLION, shall assume and retain the obligation of that certain Deed of Trust made in favor of Ira J. Jaffee, Trustee, as Beneficiary, recorded in the Official Records of Eureka County, Nevada, 'Book 41, Page 362. At all times pertinent hereto, UNIVERSAL shall have the unqualified right to direct any and all funds due BULLION or POLAR hereunder to remove any obligations of BULLION or POLAR, respectively, secured by the Subject Property, or any portion thereof, and such will be credited toward the payment schedule due BULLION or POLAR. See Paragraph 4,supra.
6. PURCHASE OF BULLION'S INTEREST: That at the time BULLION has received an aggregate of $1,000,000.00 under the terms and conditions of Paragraph 4,supra, BULLION will have beendeemedto havesold and UNIVERSAL and POLAR deemed to have purchased all of Bullion's rich, title and interest in the Subject Property (50% each, subject to the terms and conditions of the Marc: 14, 1979 Agreement, ExhibitC)and forever relieving UNIVERSAL and POLAR from any contractual commitment to BULLION by virtue of UNIVERSAL or POLAR's actions or operations on the Subject Property, save and except for the ONE PERCENT (l% gross smelter return royalty fromproduction from the Subject Property (based on 100% operating interest in UNIVERSAL, otherwise prorated) set forth in Paragraph 4 (E) ,supra. At...that time, UNIVERSAL and POLAR will execute and deliver to BULLION a Royalty deed forever evidencing such royalty interest,' ONE-HALF PERCENT (1/2%) being chargeable each against UNIVERSAL and POLAR.
7. DEFAULT OF OBLIGATIONS TO BULLION: If, at any time, UNIVERSAL is in default of its payment obligations to BULLION, BULLION, upon FORTY-FIVE (45) days' written notice to all of the parties hereto, may terminate this Agreement and demand that UNIVERSAL execute and deliver to BULLION a Quitclaim Deed of all of its right, title and interest to that portion of the then SubjectProperty that is specifically listed in Exhibit A attached hereto, but not the additional properties added to the Subject Property list subsequent to the date of this Agreement. During the notice period, UNIVERSAL, or any other party hereto not BULLION, or anyone on their behalf, may pay such obligation to BULLION and cure such default.
8. PRODUCTION EXPENSE OVERRUN: Pursuant to the terms of the Letter Agreement between POLAR and CAMSELL dated March 14, Exhibit B, POLAR and CAMSELL agree to share in cost overruns incurred by UNIVERSAL in bringing the Project into production should UNIVERSAL's initial development costs prior to production exceed ONE MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 ($1,250,000.00), or should UNIVERSAL's initial development costs and production costs exceed $1,250,000.00 at any time after production commences but production expenses exceed production payments or revenues.
The parties agree to share in cost overruns in excess of $1,250,000.00 commitment of UNIVERSAL in the following percentage
UNIVERSAL 50%
POLAR-CAMSELL 50%
Except as herein outlined, the terms, conditions and penalties for cost overruns and the non-participation in such overruns are governed by Clause 10(D), Schedule B, POLAR - UNIVERSAL Agreement of March 14, 1979.
9.
DIVISION OF PROCEEDS: The proceeds of production shall be governed by the terms of this Agreement only (except for the CAMSELL, LAMBERT and ELTEL arrangements). As operator under the March 14, 1979 Agreement (see Paragraph 3,supra), UNIVERSAL shall have the right to pay all normal operating and production expenses, including insurance and taxes (excepting income taxes accruing to the individual parties hereto, but specifically including net proceed of mine taxes, real and personal property taxes associated with mining and income taxes accruing to the venture), pursuant to normal and usual accounting practices and the terms of the March 14, 1979 Agreement from production payments received. In addition, UNIVERSAL shall be able to treat as production expenses and deduct from production payments received all rentals, advance royalties and production royalties paid to BULLION, the Poulsen Group and any others. The amounts received from products produced from the Subject (production payments) less the production expenses, as defined herein and in the March 14, 1979 Agreement between POLAR and UNIVERSAL, shall be the net production receipts.
As between the parties hereto, the net production receipts shall be divided as follows:
A. BULLION: none, being only entitled to the payments set forth above in Paragraph 4;
B. UNIVERSAL: FIFTY PERCENT (50%); and
C. POLAR, CAMSELL: FIFTY PERCENT (50%), pursuant to that Letter Agreement between POLAR and CAMSELL dated March 14, 1979, Exhibit B.
Nothing herein shall be construed as prohibiting POLAR CAMSELL from taking their interest in kind provided that they give UNIVERSAL SIXTY (60). days' written notice of such election. POLAR CAMSELL will be totally responsible for all loading and transportation and the costs thereof. POLAR-CAMSELL will not materially interfere with UNIVERSAL's operations should it elect to receive payment in kind and will hold all the remaining parties hereto harmless from its actions in loading and transporting the in kind payments. It is understood and agreed that all such in kind payments are net, after deduction of the proportionate amount of mini and operation costs.
10. TERMINATION BY UNIVERSAL: UNIVERSAL's participation in the Project is governed by the terms and conditions of the POLAR - UNIVERSAL Agreement of March 14, 1979, Exhibit C, except as specifically modified herein. Upon fulfilling its obligations thereunder, UNIVERSAL has the right to terminate its position as Project Operator and to terminate its further participation in Project development and expenses thereof. Such termination is governed by the terms and conditions of the March 14, 1979 UNIVERSAL - POLAR Agreement and, in particular, Schedule B attached thereto.
11. ADDITIONAL PROPERTY ACQUISITIONS: UNIVERSAL,, as operator, shall have the exclusive right to acquire additional mineral properties within the Area of Interest on behalf of the parties hereto, be such acquisition by virtue of the rights and privileges under the 1872 Mining Law, or the leasing or purchase of private lands and minerals, or unpatented mining claims. All parties hereto agree to immediately quitclaim and assign to UNIVERSAL any and all other real property or interest in such that they may have within the Area of Interest, Exhibit A-2, as of the date of this Agreement, subjecting the same to the terms and conditions of this Agreement, excepting any interest of BULLION in and to those properties presently being worked by Western States Minerals (Pancana).
Upon acquiring such properties within the Area of Interest, UNIVERSAL shall offer to include such into the Subject Property upon payment by POLAR-CAMSELL of FIFTY PERCENT (50%) of all acquisition costs incurred in acquiring such properties. Acquisition costs shall include, but are not limited to, purchase price, rental fees, real estate finder's commissions, legal fees, closing costs, title examinations, appraisal fees and costs incurred by UNIVERSAL in otherwise evaluating the property to be acquired.
Should POLAR-CAMSELL reject such offer or fail to pay or reach agreementfor paying such acquisition on cost within FORTY-FIVE (45) days of such offer by UNIVERSAL, then such properties within the Area of Interest shall not become part of the Subject Property as they apply POLAR-CAMSELL and will remain the sole property of UNIVERSAL without any obligations
POLAR-CAMSELL , but subject to the royalty interest of BULLION.
However, should POLAR accept such offer and pay or reach an agreement with UNIVERSAL for paying such acquisitions costs, the newly acquired properties shall become part of the Subject Property and will be treated thereafter under the terms of this Agreement pertaining to the Subject Property.
12. POULSEN LEASE AND OPTION: The parties hereto recognize the Lease and Option of POLAR with the Poulsens, a copy of which is attached hereto as Exhibit D. UNIVERSAL shall make all payments due thereunder and shall credit such as a development or production expense.
While under Lease, the Paulsen properties shall be, and are, part of the Subject Property, however, at any time, UNIVERSAL may elect to exercise the purchase option. Upon doing so, UNIVERSAL shall offer such to POLAR-CAMSELL under the terms of Paragraph 12,supra. Failure of POLAR-CAMSELL to participate in the acquisition (purchase shall remove such properties from Subject Property status as the same applies to POLAR-CAMSELL.
13. TERM: The term of this Agreement, as it affects the continuing contractual relationships between the parties hereto is for a period of NINETY-NINE (99) years commencing on the date hereof, unless sooner terminated, surrendered or forfeited
14. TITLE PERFECTION: The parties hereto recognize that title to the Subject property, or portions thereof, may contain certain imperfections, clouds thereon or outstanding interests that may require acquisition, clearing or otherwise perfecting. UNIVERSAL shall, in its discretion, seek out such imperfections and cure the same. All expenses incurred by UNIVERSAL in investigating title to the Subject Property from March 1, 1979, and curing imperfections or acquiring outstanding interests in the same shall be treated as a development or production expense by UNIVERSAL pursuant to the March 14, 1979 POLAR - UNIVERSAL Agreement.
15. INSPECTION, RECORDS: At all times pertinent hereto, the non-operating parties shall have the right to reasonable inspection of the Subject Property and all geological and production records upon giving FIVE (5) days' written notice to UNIVERSAL. Such inspection shall be at the Subject Property or at any offices of UNIVERSAL in the Elko-Carlin, Nevada area. Personal inquiry by the parties hereto directly to UNIVERSAL shall be made only to the following UNIVERSAL officers and employees, and no others:
Joseph A. Mercier Dan Mercier Don Hargrove
or their nominees.
Monthly, or the monthly anniversary of this Agreement, UNIVERSAL shall prepare and deliver to the parties hereto a summary report of development on the Subject property, including building construction, geological finds, etc., and setting forth production and development expenditures.
16.
NOTICES
All notices - fired herein shall be writing by certified or registered mail, (United States or Canada, as the case may be), return receipt requested for the Canadian equivalent of such service;, to the addresses listed below. Service ofsuch notice is to be deemed accomplished as of the date of mailing:
BULLION MONARCH COMPANY
Attention: R. D. Morris
Henderson Bank Building
Elko, NV
89801
UNIVERSAL GAS (MONTANA), INC.
Attention: Joe Mercier, President
640 8th Avenue, S. W.
Calgary, Alberta CANADA T2P 1G7
With a copy to: UNIVERSAL GAS (MONTANA), INC.
Attention: John C. Miller, Esq.
Blohm Building, Suite 201
Elko, NV 89801
POLAR RESOURCES CO. Attention: C. Warren Hunt
1119 Sydenham Road, S. W.
Calgary, Alberta CANADA T2T OT5
CAMSELL RIVER INVESTMENTS
Attention: K. H. Lambert 808 Home Oil Tower
324 8th Avenue, S. W.
Calgary, Alberta CANADA T2P 2Z2
LAMBERT MANAGEMENT LTD.
Attention: K. H. Lambert
808 Home Oil Tower 324 8th Avenue, S. W.
Calgary, Alberta CANADA T2P 2Z2
ELTEL HOLDINGS LTD. Attention: K. H. Lambert
808 Home Oil Tower 324 8th Avenue, S. W.
Calgary, Alberta CANADA T2P 2Z2
17.
RECORDATION: This Agreement may be recorded into the Official Records either Eureka County or Elko County, Nevada or both, by any one of the parties hereto.
18.
BINDING EFFECT: The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto.
19. ASSIGNABILITY: The respective positions and interests of the parties hereto shall be freely assignable except that such assignment shall not be binding on or affect the remaining parties hereto in any manner, unless and until such assignment is noted in writing to UNIVERSAL, or any successor Operator.
IN WITNESS WHEREOF, the parties hereto set their hands as of the day and year first above written.
BULLION MONARCH COMPANY, a Utah corporation
BY:/s/
TITLE:
POLAR RESOURCES CO., a Nevada corporation
BY: /s/
UNIVERSAL GAS (MONT .CIA) , INC. a Montana corporation
BY:/s/
TITLE:
CAMSELL RIVER INVESTMENTS, a Canadian corporation
By:/s/K H Lambert
TITLE: President
LAMBERT MANAGEMENT LTD., a Canadian corporation
By:/s/K H Lambert
Title: President
ELTEL HOLDINGS LTD., A Canadian corporation
By:/s/K H Lambert
Title Director & Secretary
UNIVERSAL EXPLORATIONS, LTD. a Canadian corporation
By:/s/
Title:
STATE OF NEVADA )
SS.
COUNTY OF )
On May 10,1979, personally appeared before John C. Miller, a Notary Public,,a duly qualified and officer of/BULLION MONARCH COMPANY, who acknowledged to that he executed the above instrument in that capacity.
NOTARY PUBLIC'
JOHN C. MILLER
)
)ss
COUNTY OF )
On May 10, 1979, personally appeared before me, a Notary Public, duly qualified and acting officer of POLAR RESOURCES CO., who acknowledged to me that he executed the above instrument in that capacity.
/s/
NOTARY PUBLIC
)
)SS
COUNTY OF )
On May 10
,1979, personally appeared, before me, a Notary Public,a duly qualified and acting officer of UNIVERSAL GAS (MONTANA), INC., who acknowledged to me that he executed the above instrument in that capacity
COUNTY OF
On May 10, 1979, personally appeared before me, a Notary Public, a duly qualified and acting officer of CAMSELL RIVER INVESTMENTS, who acknowledged to me that me that he executed the above instrument in that capacity.
/s/NOTARY PUBLIC
AFFIDAVIT OF EXECUTION
I Susan Lee Nicholl of the City of Calgary, in the Province of Alberta, make oath and say that:
1.
I was personally present and did see Mr. C. Warren Hunt named in the within or in annexed instrument who is personally known to me to be the person named therein, duly signed and executed the same for the purposes named therein.
2.
That the same was executed at the City of Calgary, in the Province of Alberta and that I am the subscribing witness thereto.
3.
That I know the said Mr. C. Warren Hunt and he is, in my belief, of the full age of twenty-one years.
/S/Susan Lee Nicholl
SWORN BEFORE ME AT THE CITY OF CALGARY, IN THE PROVINCE OF ALBERTA, THIS 1st DAY OF JUNE, 1979
)
SS.
COUNTY OF )
On May ,1979, personal1 appeared before me, a Notary Public, qualified and acting officer of LAMBERT MANAGEMENT LTC., acknowledged to me that he executed the above instrument in that capacity.
)
SS.
COUNTY OF )
On May 10, 1979, personally appeared before me, a Notary Public, a duly qualified and acting officer of ELTEL HOLDINGS LTD., who acknowledged to me that he executed the above instrument in that capacity.
COUNTY OF
On May 10, 1979 personally appeared before me, a NotaryPublic,a duly qualified acting officer of UNIVERSAL EXPLORATIONS, LTD., who acknowledged to me that he executed the above instrument in that capcity.
EXHIBIT A-2AREA OF INTEREST
All those lands contained in the Sections and Townships listed below approximately encompassing the area EIGHT (8) miles in a northerly direction, EIGHT (8) miles in a southerly direction, EIGHT (8) miles in an easterly direction and EIGHT (8) miles in a westerly direction from Section 10, Township 35 North, Range 50. East, M.D.B.&M., Eureka County, Nevada.
Township 34 North, Range 49 East Sections: 1-5, 8-17 and 20-24
Township 35 North, Range 49 East Sections: 1-5, 8-17, 20-29 and 32-36
Township 36 North, Range 49 East Sections: 1-5, 8-17, 20-29 and 32-36
Township 37 North, Range 49 East Sections: 32-36
Township 34 North, Range 50 East Sections: 1-24
Township 35 North, Range 50 East
Township 36 North,Range 50 East Sections: All
Township 37 North,Range 50 East Sections:
31-36 Range Sections: 3-10 and 15-22
Township 35 North, Range 51 East Sections:
3-10, 15-22 and 27-34
Township 36 North,Range 51East
Sections: 10, 15-22 and 27-34 Township 37 North, Range 51 East
Sections:
31-34
EXHIBIT A-1SUBJECT PROPERTY
The following described unpatented and patented mining claims generally located in Sections 1, 2, 10, 11 and 12 of Township 35 North, Range 50 East, M.D.B.&M., Lynn Mining District, Eureka County, Nevada:
Unpatented Claims
Polar
Bullion
Big Jim
100%
Royalty
Big Jim 1 to 31, inclusive
Cracker Jack
Cracker Jack 1 to 5, inclusive
Yellow Rose 6 to 21, inclusive
Polar 1 to 20, inclusive
Hill Top
Hill Top 1 to 2, inclusive
Hill Top Fractional
Hill Top 1 to 4 Fractional
"
Unity 1
Unity 2
"
Barg
Badger 1
Compromise 4 to 7, inclusive
Lamira
"
Paragon
"
Paragon 2 Paragon 4
Paragon Fractional
Patented Claims (PoulsenLease and Option)
U.S. Patent #
U.S. Survey #
Polar
Bullion
Big Six No. 3
783757
4332
77 1/2%
Royalty
Holt
881735
4422
"
"
July
935874
4528
"
"
Great Divide
945439
4393
”
"
Bald Eagle
046758
4527
"
"
LAMBERT MANAGEMENT LTD.
Telephone: (403) 233.0047 Telephone: (403)454-2
HOME OIL TOWER 13716 - 101 AVENUE.
324 - 8 AVENUE S.W. EDMONTON, ALBERT
CALGARY, ALBERTA CANADA T5NCJ7 CANADA T2P279
March 14, 1979
Polar Resources Co.
1119 Sydenham Road, S. W. Calgary, Alberta
T2T OT5
Attention: Mr. Warren Hunt
Dear Sirs:
RE: Gold Claims Lynn Mining District Eureka County, Nevada
As you are aware, since early 1976 Camsell River Investments Ltd. has entered into several agreements with you relating to the Bullion Monarch Company gold claims in Nevada and has also entered into agreements relating to the same properties with Bullion Monarch Company. As a result of these agreements, Camsell and its silent coventurers, Lambert Management Ltd. and Eltel Holdings Ltd. have advanced about 505,000,U.S. to you and $300,000. U.S. to Bullion Monarch Company and have expended a further $10,000. U.S. or so on drilling invoices and other expenses relating to the properties.
Our mutual files on this matter are extensive and the legal determination of the various agreements would undoubtedly take more time and effort to resolve than is Prudent, and the circumstances. We have always maintained that we do not wish to hamper your efforts to put the properties into production so long as an equitable arrangement can be cached between us.. Based on the proposed agreement you have negotiated with Universal Gas (Montana) Inc. (hereinafter called the "Mill Agreement") and our meetings and telephone conversations of March 10, 11, 12 and 13, we believe we have reached an agreement acceptable to you and theparties we represent. This agreement between you and the "Camsell Group" would enable Universal to obtain the interest it has bargained for in the Mill Agreement and would resolve our diverse interests in an amiable fashion.
The Agreement is as follows:
1)
All of the interests of any nature whatsoever of Polar Resources Co. and those of other parties represented by Polar Resources Co. (hereinafter called the "Polar Group") and all of the interests of any nature whatsoever of Camsell River Investments Ltd. and those of the parties represented by Camsell River Investments Ltd. (hereinafter called the "Camsell Group") in "The Mining Properties" as defined in the Mill Agreement shall be pooled and then reallocated 50% to Universal Gas (Montana) Inc. pursuant to the Mill Agreement and 50% collectively to the Polar Group and the Camsell Group (hereinafter called the"Polar-Camsell Group").
2)
The Camsell Group will receive 100% of the cash flow from the Polar-Camsell Group's 50% interest in the Mining Properties until the Camsell Group has received an amount equivalent to its expenditures relating to the Mining Properties before interest as established by independent audit. This amount is about $815,000 U.S.
3)
After the Camsell Group has received the amount indicated in paragraph 2 above, the Polar
Group will receive 100% of the cash flow from the Polar-Camsell Group's 50% interest in the Mining Properties until the Polar Group has received an amount equivalent to its expenditures relating to the Mining Properties before interest as established by independent audit. This amount is about $450,000. U.S.
4)
After the Polar Group has received the amount indicated in paragraph 3 above, the Polar Group and the Camsell group will split the cash flow from the Polar-Camsell Group’s 50% interest in the Mining Properties on a 50-50 basis until the Camsell Group has received an amount equivalent to the amount of interest the Camsell Group would have paid to its banker calculated on all Camsell Group advances to Polar Resources Co. and Bullion Monarch Company from the dates of advance at the Canadian Imperial Bank of Commerce prime rate from time to time plus 2% per annum, compounded semi annually. Any cash received by the Camsell Group pursuant to this agreement would be credited to the “phantom bank account” on the date of receipt in order to determine the amount to be ultimately received by the Camsell Group pursuant to this paragraph 4.
5)
After the Camsell Group has received the amount calculated pursuant to paragraph 4 above, the Polar-Camsell Group's interests shall be divided and an undivided 30% of the interest shall be transferred to the Camsell Group and an undivided 70% shall be transferred to the Polar Group.
6)
Title to the Polar-Camsell Group's interest in the Mining Properties shall be held in trust by Polar Resources Co. pursuant to the terms of this Agreement and this Agreement and its successor shall be filed against the title to the Mining Properties in the appropriate offices in the state of Nevada. Polar shall deliver to the Camsell Group a legal opinion from a Nevada attorney stating that the terms and conditions of this Agreement are enforceable by the Camsell Group as against Polar Resources Co. and that the Camsell Group's interests have been adequately registered to protect its interests as against third parties.
7)
The proceeds Polar Resources Co. receives from Universal Gas (Montana) Inc. on the sale of the assets listed in the Mill Agreement shall be distributed as follows:
a)
The Polar Group shall receive 100% of the proceeds from the sale of assets acquired after December 31, 1976.
b)
The Camsell Group shall receive 80.4% of the proceeds from the sale of assets acquiredprior to January 1, 1977 and the Polar Group shall receive the balance.
c)
Polar Resources Co. shall account to the Camsell Group for any assets held on December 31, 1976 which have been disposed of by Polar Resources Cc. subsequent to December 1, 1976 but prior to the execution of the Mill Agreement. The Camsell Group shall receive an amount equal to 80.4% of such disposition on proceeds from Polar Resources Co. and the source funds for such payment shall be the Polar Group's share of the proceeds of the sale of assets pursuant to the Mill Agreement.
8)
The Polar-Camsell Group recognizes a fee of $1,500. per month payable to Polar Resources Co. from the cash flow generated by the mill for the services of Warren Hunt from the date of commencement of milling operations and also recognizes the need to employ a full time representative at the mine as soon as gold production commences in meaningful amounts.
9)
In the event of cost overruns beyond the $1,250,000. U.S. stated in the Mill Agreement, the Polar-Camsell Group acknowledges that it will be responsible for 50% of such Overruns. These overruns shall be allocated as between the Polar Group and the Camsell Group as follows:
a)
For exploration, mine development, and mine operation expenses on the Big Jim claims 24and 25 and for mill development expenses related to that mine, 50% shall be paid by the Polar Group and 50% shall be paid by the Camsell Group.
b)
For all other expenses 70% shall be paid by the Polar Group and 30% shall be paid by the Camsell Group.
10)
This Agreement is subject to the execution of the Mill Agreement and is subject to revision of the method contemplated in paragraph 1 to arrive at the interests outlined in paragraphs 2 3, 4 and 5 if subsequent investigation reveals that the tax consequences of such method are adverse. The intent is that the Agreement will be structured so as to minimize adverse tax implications in Canada and the United States for all parties concerned while at the same time arriving at the same distribution of cash flow from the Mining Properties;
11)
This Agreement shall be interpreted in accordance with the laws of the Province of Alberta.
12)
Each of the parties shall execute any further agreements required by legal counsel for any party to implement the terms or'intent of this Agreement.
If you agree with the above terms and conditions se indicate your acceptance on the copy of this letter enclosed.
Yours very truly,
Lambert Management Ltd.
/s/K. H. Lambert
K. H. Lambert
President
Accepted the 15th day of March, 1979PolarResources Ltd.
/s/C. Warren Hunt President
Accepted this 14th day of March, 1979 Eltel Holdings Ltd.
/s/
K. H. Lambert Secretary
Accepted this 14th day of March, 1979
Camsel River Investments I
K.H. Lambert President
LAMBERT MANAGEMENT LTD.
Telephone: (403) 233-0047 808 HOME OIL TOWER 324 • 8 AVENUE S.W. CALGARY, ALBERTA CANADA T2P 2Z2
March 16, 1979
Polar Resources Co.
1119 Sydenham Road, S. W. Calgary, Alberta
T2T OT5
Attention: Mr. Warren Hunt
Dear Sirs:
RE: Gold Claims Lynn Mining District Eureka County, Nevada
Further to our letter of March 14, 1979 and the writer's meeting with your Messrs. Hunt and Ross Hamilton on March 14, 1979, we wish to confirm that the agreement contained in the said letter is amended by adding the following:
9.1(a)
Any funds advanced pursuant to sub paragraph 9(a) shall be repaidpro rata from the Polar-Camsell Group's first cash flow from the mill prior to the commencement of payments to the Camsell Group pursuant to paragraph 2.
9.1(b)
Any funds advancedpursuant to sub paragraph 9 (b) shall be repaid pro rata from the Polar-Camsell Group's cash flow from the mill after the obligations to the Camsell Group outlined in paragraph 1 have been satisfied.
9.2
The penalty provisions in the Mill agreement shall apply mutatis mutandis to the Polar Group and the Camsell Group in the event of a default by either Group on an obligation to advance further funds pursuant to paragraph °.
If you agree with the above additional terms and conditions please indicate your. acceptance on the copy of this letter enclosed.
Yours very truly,
Lambert Management Ltd.
/s/K. H. Lambert
K. H. Lambert
![[ex101002.gif]](https://capedge.com/proxy/10-12G/0001010412-10-000196/ex101002.gif){kind=small}
LAMBERT MANAGEMENT LTD.