MagnaManagementLtd.2153-349WGeorgiaSt.Vancouver.BCV6B3V3Tel 604669-9000Fax604899-8827
MEMORANDUM OFUNDERSTANDING("MOU")
Between:
Marlene Moen, Gene Nellis,Hartmut Baitis and lnga Baitis(collectively "Owners")
And
MagnaManagementLtd. and/or Nominee ("Magna")
Pursuantto the terms and conditions of thisMOU, Magna shall have exclusive proprietary marketing rights (the "Rights") for the "Pony" property located near Pony, Montana owned by the Owners (the "Property") which isdescribed in the attached Exhibit A.In order to acquire andretain the Rights, Magna shallpay the Owners the sum of $20,000 USD upon execution of thisMOUand the sum of$20,000 USD onthe 5th day ofeach succeeding month beginning on June 5, 2012 through October 5, 2012 for a total ofsix payments which are non-refundablebut which will be applied to the finalpayment of the total consideration required tobe paidunder section1 below. Provided,however, notwithstanding the foregoing,in the event that Magna obtains approval from the Canadian stock exchange (the "43-101 Approval") prior to October 5, 2012, thefirst payment described insection 1 below shall be due within ten (10)days after receipt of the 43-101Approval.
That Magna shall follow the following parameters in the event ofa "vend-in" to a public company:
1. Thatthe total consideration is $3,000,000 USD in cashpaid in equal payments quarterly beginning on the earlier of November 5, 2012 or ten(10) days after receipt of the 43-101Approval (the "Closing Date") with eachquarterly payment in the amount of$250,000 USD which shall include interestat the rate imputed under IRS regulations.The total considerationshall be paidover a period of three years. Each paymentis non-refundable and allows Magna or its nominee the right to exercise possessory rights to the.Property so longas the payments are timely made.
2. Thatthe Property shall be madeavailablefor a 43-101that may be immediately commencedafter the first $20,000 USD monthlypayment is made.
3. Ownersshall not payany broker or finder or other person a commission, finder's fee, brokeragefee or any.similar feein connectionwith this MOU orthistransaction.
4. At least ten(10) days prior to the Closing Date, Magna shall submit toOwners adefinitive Mining Lease and Option Agreement forOwners'consideration. The parties shall enter into a definitive MiningLease andOption Agreement prior to the Closing Date.
5. All net revenues received from a thirdparty processor (such as Golden Sunlight Mine-Barrick) from processing orestockpiles, tailings and dumps from the Property shall be paid to Owners and applied to the total consideration owed to Owners.
6. Owners retain a perpetual royaltyon productionfrom the Propertyof a 2% NSR (the "Royalty"). The Royalty alsoapplies to production on all unpatented claims that are located by Magna or its assignsatany time that are located within one (1) mile ofthe exteriorboundaries oftheProperty.
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Magna Management Ltd. 2153-349 W Georgia St. Vancouver. BC V6B 3V3 Tel 604 669-9000 Fax 604 899-8827
That this Memorandum of Understanding will be formalized at the option of the parties with their respective lawyers.
Signed: | Date Signed: |
/s/ Marlene Moen | 5/3/2012 |
Marlene Moen | |
/s/ Gene Nellis | 5/3/2012 |
Gene Nellis | |
/s/ Hartmut Baitis | 5/3/2012 |
Hartmut Baitis | |
/s/ Inga Baitis | 5/3/2012 |
Inga Baitis | |
And | |
/s/ Magna Management Ltd. | 5/3/2012 |
Magna Management Ltd. and/or Associate |
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