Exhibit 10.1
PROPERTYPURCHASE ANDSALE AGREEMENT
DAVID & RICHARD PROPERTIES – DOMINICAN REPUBLIC
THIS AGREEMENT is datedthe 30day of June, 2014.
BETWEEN: CORPORACION MINERA SAN JUAN,S.R.L.,
Calle Manuelde Jesus Troncoso #38, apto. A21, Edificio ElEscorial, Piantini.
Santo Domingo 1000 Dominican Republic
(“CMSJ”)
AND: Each of GEXPLO S.R.L. (“Gexplo”)and SANTO MINING CORP. (“SANP”)
Ave. Sarasota #20, Torre Empresarial, Suite 1103, Santo Dominigo,
Dominican Republic
(Gexplo and SANP togetherthe “Vendor”)
WHEREAS Gexplo and SANP together hold a 100% interestin thosetwo mineral explorationconcessionapplications for the mineral properties known as the David and Richard properties (the “Properties”), as moreparticularly described in Schedule “A” hereto;
AND WHEREAS CMSJ has agreed to purchase and the Vendor has agreed to sell all of the Vendor’s interest
in the Properties in accordance with the terms of this Agreement;
AND WHEREAS CMSJ is the wholly owned subsidiary of Precipitate Gold Corp. (“PRG”), a publiccompany listed on the TSX Venture Exchange;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants andagreements herein contained, and forpurposes of documenting the mutual understanding among the parties,each jointly and severally agrees as follows,
1. DEFINITIONS
1.1 In this Agreementand in the Schedules and the recitals hereto:
“Applications” mean the applications made by the Vendor for two exploration concessions with respect to theProperties, as made to the Ministry of Industry and Commerce of the Dominican Republic, or such other rightsand intereststhe Vendormay have with respectto the Properties.
“Encumbrance” means any encumbrance, lien, charge, pledge, mortgage, title retention agreement, securityinterest of any nature, adverse claim, exception, restriction, reservation, option, pre-emptive right or privilegeof any nature orkind whatsoeverorany contract to create any of the foregoing.
“Environmental Laws” means any statute, bylaw or regulation relating to protection of the environment, orany lawful order under any of them and any common lawrule giving rise to liability in connection withpollution.
“Exchange” means the TSX Venture Exchange.
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“Hazardous Materials” means any contaminant, pollutant, waste, hazardous material, toxicsubstance,radioactive substance, petroleum and its derivatives and by products and other hydrocarbons, dangeroussubstances and dangerous goods, allas identified ordefined in any EnvironmentalLaws.
“Properties” means those two mineral claim blocks known as David (comprising 1,400 hectares more or less)and Richard (comprising 220 hectares more or less), (each of the Properties being a “Property”), which are toform the basis of two exploration concessions to which the Applications pertain; all asmoreparticularlydescribed in Schedule “A” hereto, together with all prospecting, research, exploration, exploitation, operatingand mining permits, licences and leases associated therewith, mineral, surface, water and ancillaryorappurtenant rights attached or accruing thereto, and any mining licence or other form of substitute or successormineral title or interest granted, obtained or issued in connection with or in place of or in substitution for anysuch Properties (including, without limitation, any Properties issued to cover any internal gaps or fractions inrespectof such ground).
“Property Information” means allmaps, drillhole logs, assay results, reports, data and otherinformationcompiled or prepared by or on behalf of the Vendor with respect to work on or with respect to the Properties,and allcore, samples and sample pulps and rejects.
2. ACQUISITION AND DISPOSITION OF THE PROPERTY
2.1 The Vendor hereby agrees to sell, transfer and assign to CMSJ all of the Vendor’s right, title and interestin and to the Applications and the Properties forand in consideration of CMSJ:
(a) assuming allof the Vendor’s obligations underits Applications;
(b) granting to the Vendor a 2.0% net smelter return royalty in any future production from the
Propertiescalculated in accordance with Schedule “B” hereto (the “Royalty”);and
(c) delivering to the Vendor a total of 100,000 common share purchase warrants in the capital of PRG
(“Warrants”);
(collectively the “Purchase Price”);to beassumed, granted, issued and delivered within five business daysfollowingcompletion of allconditions precedent setoutin section 4.1 hereto.
2.2 As to CMSJ’s assumption of the Vendor’s obligations under its Applications, CMSJ agrees to assumethe Vendor’s exploration budget obligations included in the Vendor’s current Applications or amend the sameto include aexplorationbudget that will beacceptableto the Ministryof Industryand Commerceof theDominican Republic.
2.3 As to the Royalty, (i) it will apply to all base and precious metals, rare earth minerals and gemsproduced from the Properties, (ii) at any time, CMSJ may purchase some or all of the Royalty for the price ofUS$500,000for each one-quarter of the Royalty (0.5% NSR) acquired (total purchase price of US$2,000,000);and (ii) the Vendor will advise CMSJ as to the allocation between Gexplo and SANC of payments to be madeby CMSJ underthe Royalty.
2.4 The Vendor will advise CMSJ as to the allocation betweenGexplo and SANC of the Warrants to beissued pursuant to section 2.1(c). Each Warrant will entitletheholder to acquireonecommonshareinthecapital of PRG (“Warrant Shares”) at the exercise price of C$0.30 per share for a period of three monthsfrom the date of issue. The certificates representing the Warrants will, among other things, include provisionsfor the appropriate adjustment in the class, number and price of the shares issued on exercise of the Warrantsupon the occurrence of certain events, including any subsequent subdivision, consolidation or reclassificationof PRG’scommon shares, the paymentof stock dividends orany business reorganization of PRG.
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2.5 Should the Vendor exercise any of the Warrants and thereafter seek to sell some or all of the WarrantShares, itwillfirstnotify PRG of the same and allow PRG at least 10 calendar days to arrange for buyers ofthe WarrantShares. The purpose of this section to allow PRG to manage the market for its common shares;and PRG willnot be obliged to arrange buyers for the Warrant Shares and the Vendor will not be obliged toacceptany offerto buy the same.
3. REPRESENTATIONS AND COVENANTS OF THE PARTIES
3.1 The Vendor hereby represents and covenants to CMSJ that:
(a) Gexplo is a company duly incorporated under the laws of the Dominican Republic, and is a valid andsubsisting company in good standing with allapplicable governmental authorities.
(b) SANC is a company duly incorporated under the laws of Nevada, USA, and is a valid and subsisting company in good standing with allapplicable governmental authorities.
(b) It has the full power, capacity and authority to enter into and perform its obligations under this
Agreementand any agreementorinstrumentreferred to orcontemplated herein.
(c) Neither the execution and delivery of this Agreement nor any of the agreements referred to herein orcontemplated hereby, nor the consummation of the transactions hereby contemplated conflictwith,result in the breach of or accelerate the performance required by, any agreement to which eitherGexplo orSANC is a party.
(d) The Vendor is the sole holder of all right, title and interest in and to the Applications; and there are noadverse claims or challenges against or to the ownership or title to either the Applications or rights totheProperty areas, norto the bestof the Vendor’s knowledge is there any basis therefor.
(e) There are no Encumbrances affecting either of the Applications or the Properties (other than surfacerightsheld bythird parties, and royalties, duties, assessmentsand amountspaid to governmentalauthorities in the normalcourse).
(f) To the Vendor’s knowledge, the Applications have been duly and properly prepared and submitted inaccordance with applicable mining law in the Dominican Republic.
(g) There is no litigation, claim or proceeding, including appeals or applications for review, in progress or(to the best of the Vendor’s knowledge) pending or threatened against or relating to either Gexplo orSANC, or affecting the Applications or the Vendor’s interests in the Properties before any domesticcourt, governmental department, commission, board, bureau or agency, or arbitration panel, and thereis not presently outstanding against Gexplo, SANC or the Properties any judgment, decree, injunction,rule or order of any court, governmental department, commission, agency or arbitratorwhichmaterially adversely affects the Applications orthe Properties.
(h) To the bestof theVendor’s knowledge, itis not in breach of any law, ordinance, statute, regulation,bylaw, order, decree, orpermitto which itis subjectorwhich applies to it.
(i) Each of the Applications (i) was duly and validly applied for and registered with the applicable miningauthorities pursuant to all applicable laws and regulations; (ii) is accurately described in Schedule “A”hereto; and (iii)is free and clearof allliens, charges, royalties and encumbrances.
(j) There are no outstanding agreements or options to acquire or purchase any interest in any of theProperties, or to explore, develop or exploit any part of the Properties, and no person has any royaltyorotherinterestwhatsoeverin the Properties orany production therefrom.
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(k) There are no pending or threatened actions, suits, claims orproceedingsregardingthe Properties orany portion thereof.
(l) The Vendor has (i) paid all applicable taxes due and payable in the Dominican Republic, and (ii) paidallassessments and reassessments due and payable in respectof such taxes.
(m) There is not pending or, to the best of the knowledge of the Vendors, threatened or contemplated, anysuit, action, legalproceeding, litigation orgovernmentalinvestigation of any sortwhich would:
(i) in any manner restrain or prevent the Vendor from effectually or legally indirectly selling itsinterests in the Applications or rights in and to the Properties to CMSJ in accordance with thisAgreement;
(ii) cause any Encumbrance to be attached to the Applications orthe Properties;or
(iii) makeCMSJ liable fordamages to any third party.
(n) To the best of its knowledge after reasonable inquiry, (i) no Hazardous Substance has been placed,held, located, used or disposed of, on, under or at any of the lands comprising the Properties by anyperson, and (ii)no claim has everbeen asserted and there are no present circumstances which couldreasonably form the basis forthe assertion of any claim for losses of any kind as a direct or indirectresult of the presence on or under or the escape, seepage, leakage, spillage, discharge, emissionorrelease from any of the Properties of any Hazardous Substance.
(o) There are no outstanding work orders or actions required or reasonably anticipated to be required to betaken in respect of the rehabilitation or restoration of any of the Properties or relating to environmentalmatters in respectthereof orany operations thereon, norhas the Vendorreceived notice of same.
(p) To the best of its knowledge, all previous exploration on the Properties has been carried out inaccordance with applicable law in a sound and workmanlike mannerand in compliance with soundgeologicaland geophysicalexploration and mining, engineering and metallurgicalpractices.
(q) There is no adverse claim or challenge againstthe Applications orto the ownership of or title to the Properties, norto its knowledge is there any basis therefore.
(r) There has been no notice from any governmental agency of any intention of expropriating the Properties forthe purpose of convertingany orallof itinto any protected area such as a park.
(s) To the best of theirknowledge, there has been no notice from any person orgroup of any claim forpossession oroccupation of the Properties.
(t) To the best of its knowledge, there are no restrictions to access to the Properties along existingroadways.
(u) The Vendor does not have any information or knowledge ofany facts pertaining to the Applications,the Properties, the title thereto, or substances thereon or therefrom, not disclosed in writing to CMSJ,which if known to CMSJ might reasonably beexpected to deter CMSJ from completingthetransactions contemplated hereby.
3.2 CMSJ hereby represents and covenants to the Vendor that:
(a) it has the full power, capacity and authority to enter into and perform its obligations under this Agreementand any agreementorinstrumentreferred to orcontemplated herein;
(b) neitherthe execution and delivery of this Agreement nor any of the agreements referred to herein orcontemplated hereby, nor the consummation of the transactions hereby contemplated conflictwith,result in the breach of or accelerate the performance required by, any agreement to which it is a party;
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(c) it is a wholly owned subsidiary of PRG; and PRG’s common shares are listed and posted for tradingon the Exchange, and itis in good standing with each of the British Columbia, Alberta, Ontario andYukon Securities Commissions and the Exchange.
3.3 The representations and warranties set out herein are conditions on which the parties have relied inentering into this Agreement and will survive the closing hereof, and each of the parties willindemnify andsave the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with anybreach of any representation, warranty, covenant, agreement or condition made byit and contained inthisAgreement.
3.4 The Vendor covenants and agrees with CMSJ thatup to and including the closing:
(a) the Vendor will provide or make available to CMSJ and its authorized representatives all Property
Information relating to the Applications and the Properties, and
(b) the Vendor will permit CMSJ, and its authorized representatives, to make such investigation of theProperties and the Applications as CMSJ deems necessary or advisable to familiarize itself with suchmatters and to have reasonable access to all records, documents and other information related thereto.
4. CONDITIONS PRECEDENT
4.1 This Agreement, and the obligations of the parties, are subjectto:
(a) completion of CMSJ’s due diligence review, to CMSJ’s satisfaction, to be completed within 30 daysfollowing receiptof all Property Information from the Vendor. CMSJwill advise the Vendor of itsdecision to accept orreject thepurchaseof thePropertiesonorbeforetheend of thesaid 30 dayperiod;and
(b) receipt of Exchange approval. CMSJ agrees to cause PRG to make application for Exchange approvalforthwith following execution of this Agreement; and to advise the Vendor of all correspondence withthe Exchange.
5. CLOSING
5.1 Upon paymentof the Purchase Price in full, the Vendor will:
(a) do all things necessary to transfer title of the Applications and the Properties to CMSJ, and to have thesame registered in the name of CMSJ orits nominee;and
(b) transfer and deliver to CMSJ all Property Information, either in its possession or which itcanreasonably obtain.
6. SHARING OF AND CONFIDENTIAL NATURE OF INFORMATION
6.1 Each party agrees that all information obtained hereunder will be the exclusive property of the partiesand not publicly disclosed or used other than for the activities contemplated hereunder except as required bylaw or by the rules and regulations of any regulatory authority or stock exchange having jurisdiction or with thewritten consentof the otherparty, such consentnotto be unreasonably withheld. Should CMSJ elect not tocomplete the purchase of the Applications and the Properties following its due diligence review, it will returnallProperty Information provided to it by the Vendor; and all information reviewed by CMSJduring its duediligence review willbe and remain confidential and the sole property of the Vendor.
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7. ASSIGNMENT
7.1 Either party may at any time assign or transfer any or all of its interest herein, provided such assigneeagrees to abide by and be bound by the terms of this Agreement in the same manner and to the same effect as ifan originalsignatory hereto.
8. NOTICES
8.1 Any notice, direction or other instrument required or permitted to be given under this Agreement willbe in writing and may be given by the delivery of the same or by mailing the same by prepaid registered orcertified mail or by sending the same by facsimile, e-mail or other similar form of communication, in each caseaddressed to the address firstlisted above orthe following facsimile numbers ore-mailaddresses:
(a) If to CMSJ atfax:604-558-1590;oremail: jwilson@precipitategold.com
(b) If to the Vendor atfax:●;or email:afrench@santominingcorp.com
8.2 Any notice, direction orotherinstrumentwill:
(a) if delivered, be deemed to have been given and received on the day itwas delivered;
(b) if mailed, be deemed to have been given and received on the fifth (5th) business day following the dayof mailing, except in the event of disruption of the postal service in which event notice will be deemedto be received only when actually received;and
(c) if sent by facsimile, email or other similar form of communication, be deemed to have been receivedby thatpartyupon the sending party receiving electronic confirmation of delivery.
8.3 Any party may atany time give to the others notice in writing of any change of address of the partygiving such notice and from and after the giving of such notice the address or addresses therein specified willbe deemed to be the address of such party forthe purposes of giving notice hereunder.
9. GENERAL
9.1 The parties will execute such further and other documents and do such further and other things as maybe necessary orconvenientto carry outand give effectto the intentof this Agreement.
9.2 This Agreement will enure to the benefit of and be binding upon the parties hereto and their respectivesuccessors and assigns.
9.3 This Agreement shall constitute the entire agreement between the parties and, except as hereafter setout, replaces and supersedes all prior agreements, memoranda, correspondence, communications, negotiationsand representations, whether oral or written, express or implied, statutory or otherwise between the parties withrespectto the subjectmatterherein.
9.4 This Agreement will be governed by and construed according to the laws of British Columbia and thelaws of Canada applicable therein. All actions arising from this Agreement will be commenced and maintainedin the Supreme Courtof British Columbia.
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SCHEDULE “A”
PROPERTIES
The Properties consists of Applications for explorationconcessions fortwo contiguous claim blocks; located in the Dominican Republic, as follows:
| Registered | Date of | ||
Claim Name
David | Folio #
S9-119 | Hectares
1,400 | Applicant
Gexplo S.R.L. | Application
June 28, 2012 |
Richard |
S9-093 |
220 |
Gexplo S.R.L. |
May 23, 2012 |
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SCHEDULE “B”
NETSMELTER RETURN ROYALTY
1. Pursuant to the Property Purchase and Sale Agreement to which this Schedule is attached, the Vendor (the“Recipient”) may receive a Net Smelter Return royalty (the “NSR Royalty”) based on proceeds receivedby CMSJ (the “Producer”) from production from the Properties as described in Schedule “A”of theAgreement, free and clearof allcosts of developmentand operations.
2. “Net Smelter Return” shall mean the actual proceeds received by the Producer from any mint, smelter, orother purchaser for the sale of ores, metals, minerals, gems or concentrated products (“Product”) from theProperties derived from commercial production (and not from bulk sampling or pilot plant operations) andsold afterdeducting from such proceeds the following charges to the extentthat they were not deductedfrom such proceeds by the purchaser in computing payment: smelting and refining charges; penalties; costof transportation of ores, metals or concentrates from the Properties to anymint, smelterorotherpurchaser; and any export and import taxes on said ores, metals or concentrates levied by the country intowhich such ore, metals or concentrates are imported, if such charges or costs are deducted fromtheproceeds received.
3. Payment of the NSR Royalty shall be made quarterly within 30 days after the end of each fiscal quarter ofthe Producer, on actualproceeds received by the Producer from the sale of Product from the Properties,and shall be accompanied by unaudited calculations and statements pertaining to the operations carried outon the Properties. Within 90 days after the end of each fiscal year of the Producer in whichtheNSRRoyalty is payable, the recordsrelatingto thecalculationof Net SmelterReturnforsuchyearshall beaudited and any resulting adjustments in the payment of the NSR Royalty payable shall be made forthwith. Acopy of the said audit shall be delivered to the Recipients within30 daysof theend of such90-dayperiod.
4. Each annual audit shall be final and not subject to adjustment unless the Recipients deliver to the Producerwritten exceptions inreasonabledetail withinthreemonthsaftertheRecipients receivethereport. TheRecipients, or their representatives duly authorized in writing, shall at their expense have the right to auditthe books and records of the Producer related to the Net Smelter Return to determine the accuracy of thereport, but shall not have access to any other books and records of the Producer. The audit shall beconducted by a chartered or certified public accountant of recognized standing (the “Auditor”). TheProducer shall have the right to restrict access to its books and records until execution of a writtenagreementby the Auditor that all information will be held in confidence and used solely for purposes ofaudit and resolution of any disputes related to the report. A copy of the Auditor’s report shall be deliveredto the Producer and the amount which should have been paid according to the Auditor’s reportshallbepaid forthwith, one party to the other. In the event that the said discrepancy isto thedetriment of theRecipients and exceeds 5.0% of the amount actually paid by the Producer, then the Producer shall pay theentire costof the audit.
5. In the event smelting or refining are carried out in facilities owned or controlled, in whole or in part, by theProducer, charges, costs and penalties with respect to such operations, excluding transportation, shall meanreasonable charges, costs and penaltiesforsuchoperationsbut not inexcessof theamountsthat theProducer would have incurred if such operations were carried out at facilities not owned or controlled bythe Producerthen offering comparable custom services.
6. The Recipients shall at their election have the right to take their NSR Royalty in kind as it may pertain toprecious metals defined as gold and platinum group elements, in whole orin part.