U.S. Office
3266 W. Galveston Dr., #101
Apache Junction, AZ 85120
480-288-6530 tel
480-288-6532 fax | PASSPORT
POTASH INC.
Cultivating Global Growth | Canadian Office
608, 1199 West Pender Street
Vancouver, B.C. V6E 2R1
604-687-0300 tel
|
Strictly Private and Confidential
February 13, 2012
Southwest Exploration
19935 E. Sonoqui Blvd.
Queen Creek, Arizona 85242
Attention: Floyd Bleak, CEO
Re: Mineral Property Option Agreement
Dear Mr. Bleak:
Passport Potash Inc. ("PPI"), formerly Passport Metals Inc., and Southwest Exploration Inc. ("Southwest" and collectively the "Parties") entered into that certain Mineral Property Option Agreement dated the 30th day of September 2008 ("Option Agreement"), wherein Southwest granted to PPI an option to purchase a 100% interest in the Arizona State Land Department exploration leases attached hereto as Exhibit A (the “Interest"). PPI has fulfilled the terms of the Option Agreement and exercised its option to purchase the 100% Interest.
The Option Agreement is subject to a 1% Net Smelter Royalty ("NSR") in favor of Southwest, which PPI has the option to purchase in full, according to section 5.4 of the Option Agreement, for a cash payment of US$1,000,000 ("NSR Payment"). PPI desires to exercise its option to purchase the full NSR.
Upon receipt of the NSR Payment, Southwest agrees to sign and return to PPI the enclosed Quit Claim Deed and acknowledges that a 100% right, title and interest in and to the NSR vests in PPI, or its subsidiaries, free and clear of all charges, encumbrances and claims.
If the foregoing is in accordance with your understanding, please indicate Southwest's agreement by signing and returning a copy of this letter, and by signing and returning the enclosed Quit Claim Deed.
Remainder of Page Left Intentionally Blank
Signature Page to Follow
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Sincerely,
PASSPORT POTASH INC.
| By: | /s/ Joshua Bleak | |
| | Joshua Bleak, CEO | |
Accepted and agreed to as of the date first set out above.
SOUTHWEST EXPLORATION INC.
| By: | /s/ Floyd Bleak | |
| | Floyd Bleak, President | |
Exhibit A
Arizona State Land Department Exploration Leases
| Lease Number | Township | Range | Section | Acres |
| 08-113251 | 16N | 23E | 06 | 727.03 |
| 08-113252 | 16N | 23E | 14 | 480 |
| 08-113254 | 16N | 23E | 16 | 640 |
| 08-113255 | 16N | 23E | 18 | 725.34 |
| 08-113256 | 16N | 23E | 20 | 640 |
| 08-113257 | 16N | 23E | 22 | 640 |
| 08-113258 | 16N | 23E | 24 | 640 |
| 08-113259 | 16N | 23E | 26 | 640 |
| 08-113260 | 16N | 23E | 28 | 640 |
| 08-113261 | 16N | 23E | 30 | 720.94 |
| 08-113262 | 16N | 23E | 32 | 640 |
| 08-113263 | 16N | 23E | 34 | 640 |
| 08-113264 | 16N | 23E | 36 | 640 |
When Recorded, Mail To:
PPI Holding Corporation
3346 W. Guadalupe Rd.
Apache Junction, AZ 85120
Exempt Per A.R.S. 11-1134(A1)
QUITCLAIM DEED
KNOW ALL MEN BY THESE PRESENTS:
That Southwest Exploration, Inc, an Arizona corporation, (the "Grantor") for the consideration of Ten (10) Dollars, and other valuable consideration, hereby conveys and quitclaims unto PPI Holding Corporation, an Arizona corporation, any and all of the Grantor's right, title, and interest in the NSR Royalty in certain exploration leases situated in the State of Arizona, United States of America, the specific descriptions of which are attached hereto as Schedule "A", as the terms of the purchase of the NSR Royalty have been satisfied in full as set forth in Part 5 of the Mineral Property Option Agreement dated as of the 30 day of September, 2008 between the Grantor and Passport Metals, Inc.
IN WITNESS WHEREOF, SOUTHWEST EXPLORATION, INC has executed and delivered this Quitclaim Deed as of this 13 day of March, 2012.
GRANTOR, SOUTHWEST EXPLORATION, INC
| /s/ Floyd Bleak | |
| Grantor, President of Southwest Exp | |
| State of Arizona | ) | |
| | )ss. | ACKNOWLEDGEMENT |
| County of Maricopa | ) | |
On this 13TH day of March, 2012, before me, the undersigned Notary Public, personally appeared Floyd Bleak, known to me to by the individual(s) who executed the foregoing instrument and acknowledged the same to be his (her) (their) free act and deed.
My Commission Expires: June 29, 2015 Dawn M. Whitley
Notary Public
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Schedule A
| Lease Number | Township | Range | Section | Acres |
| 08-113251 | 16N | 23E | 06 | 727.03 |
| 08-113252 | 16N | 23E | 14 | 480 |
| 08-113254 | 16N | 23E | 16 | 640 |
| 08-113255 | 16N | 23E | 18 | 725.34 |
| 08-113256 | 16N | 23E | 20 | 640 |
| 08-113257 | 16N | 23E | 22 | 640 |
| 08-113258 | 16N | 23E | 24 | 640 |
| 08-113259 | 16N | 23E | 26 | 640 |
| 08-113260 | 16N | 23E | 28 | 640 |
| 08-113261 | 16N | 23E | 30 | 720.94 |
| 08-113262 | 16N | 23E | 32 | 640 |
| 08-113263 | 16N | 23E | 34 | 640 |
| 08-113264 | 16N | 23E | 36 | 640 |
