Mining Lease and Option to Purchase Agreement
This Mining Lease and Option to Purchase Agreement
("Agreement") is made and entered into by and between New
Concept Mining, Inc., a Nevada corporation ("Owner"), and Royal
Gold, Inc., a Delaware corporation ("Royal Gold").
Recitals
A. Owner owns two (2) patented and fifteen (15)
unpatented mining claims situated in Nye County, Nevada, which
are described in Exhibit A-1 attached to this Agreement.
B. Owner and Crown Resources Corp. of Colorado, a
Colorado corporation ("Crown"), are parties to the Purchase Option
Agreement dated as of November 2, 1994, concerning the twenty-six
(26) unpatented mining claims and one patented mining claim
situated in Nye County, Nevada, which are described in Exhibit A-2
attached to this Agreement.
C. Owner and the Norman Coombs/Bottom Family
Trust ("Bottom Trust") are parties to the Mining, Exploration and
Development Lease/Purchase Agreement dated effective March 13,
1996, concerning forty-one (41) unpatented mining claims situated
in Nye County, Nevada, which are described in Exhibit A-3 attached
to this Agreement.
D. Owner, Dixie Exploration Company, a Nevada
corporation, and Anthony C. Selig (the latter two parties being
collectively referred to as "Dixie-Selig") are parties to the
Lease/Purchase Agreement dated as of March 14, 1997, concerning
the thirty-three (33) unpatented mining claims situated in Nye
County, Nevada, which are described in Exhibit A-4 attached to this
Agreement.
E. Owner and Royal Gold are parties to the Letter of
Intent dated October 27, 1997, and desire to formalize the agreement
between them. This Agreement supersedes the Letter of Intent.
Now, therefore, in consideration of their mutual promises, the
parties agree as follows:
1. Definitions. The following defined terms, wherever used in
this Agreement, shall have the meanings described below:
1.1 "Bottom Agreement" means the agreement described
in Recital C.
1.2 "Bottom Option" means the option to purchase the
Bottom Agreement granted by Owner to Royal Gold in accordance
with Section 6 and Section 45.
1.3 "Closing" means the delivery of the Purchase Price
for the Option and the exchange of the instruments deposited in
escrow as described in Section 6.
1.4 "Closing Date" means the date on which the Closing
occurs.
1.5 "Crown Agreement" means the agreement described
in Recital B.
1.6 "Diligence Period" means the period beginning on the
Effective Date and ending on the earlier of December 31, 1997, or
the date on which Royal Gold elects to proceed under this
Agreement in accordance with Section 45.
1.7 "Dixie Agreement" means the agreement described
in Recital D.
1.8 "Effective Date" means the date this Agreement has
been executed by all parties.
1.9 "Lease Year" means each one (1) year period
following the Effective Date and each anniversary of the Effective
Date. "Lease Anniversary" means each anniversary of the Effective
Date.
1.10 "Minerals" means gold, silver, platinum, antimony,
mercury, copper, lead, zinc, and all other metals, mineral elements
and mineral compounds, and geothermal resources, which are
contemplated to exist on the Property or which are after the Effective
Date discovered on the Property and which can be extracted, mined
or processed by any method presently known or developed or
invented after the Effective Date.
1.11 "Minimum Payments" means the payments payable
by Royal Gold in accordance with Section 5.2.
1.12 "Net Smelter Returns" means the net smelter returns
from production of Minerals and Ore from the Property to be
determined and paid in accordance with Exhibit B attached to and by
this reference incorporated in this Agreement.
1.13 "Option" means the option to purchase the Property
granted by Owner to Royal Gold in accordance with Section 6.
1.14 "Ore" means material from the Property, the nature
and composition of which, in Royal Gold's sole judgment, justifies
either: (1) mining or removing from the Property during the term of
this Agreement, and shipping and selling the same, or delivering the
same to a processing plant for physical or chemical treatment; or (2)
treatment, including leaching, on the Property during the term of this
Agreement.
1.15 "Owner" means New Concept Mining, Inc., a Nevada
corporation, and its successors and assigns.
1.16 "Product" means the following:
1.16.1 All Minerals and Ore mined or removed from
the Property during the term of this Agreement and shipped and sold
by Royal Gold before treatment; and,
1.16.2 All concentrates, precipitates and mill
products produced by or for Royal Gold from Minerals and Ore
mined from the Property and sold by Royal Gold, or from Minerals
and Ore leached or treated on the Property and sold by Royal Gold
during the term of this Agreement.
1.17 "Property" means the lands and unpatented mining
claims described in Recital A of this Agreement and all of Owner's
right, title, and interest in the lands and the unpatented mining
claims described in Exhibits A-1, A-2, A-3 and A-4 and made
subject to this Agreement, including all Minerals and mineral rights.
1.18 "Purchase Price" means the price to be paid by Royal
Gold for its purchase of the Property on exercise of the Option.
1.19 "Royal Gold" means Royal Gold, Inc., a Delaware
corporation, and its successors and assigns.
1.20 "Royalty" means the Net Smelter Returns production
royalty payable to Owner in accordance with Section 5.3.
1.21 "Underlying Agreements" means, collectively, the
Crown Agreement, the Bottom Agreement and the Dixie Agreement,
as they may be amended from time to time.
1.22 "Waste" means earth, rock or material mined or
removed from the Property during the term of this Agreement, but
which is not Ore.
2. Relationship of the Parties.
2.1 Limitation. Royal Gold's performance of its duties
and obligations under this Agreement shall not obligate Royal Gold
to perform any additional services to Owner nor to invest any funds
in the exploration for, development or production of Minerals on or
under the Property. Royal Gold may explore, conduct geological,
geochemical and geophysical investigations, sample, drill or
otherwise explore for, in the manner and to the extent that Royal
Gold, in its sole discretion, deems advisable. Only the express
duties and obligations described in this Agreement are binding upon
Royal Gold, and, except as expressly provided in this Agreement,
Royal Gold shall have no duties or obligations, implied or otherwise,
to explore for, develop or mine Minerals or Ore from the Property,
it being agreed that Royal Gold's Minimum Payments are in lieu of
any implied duties or obligations.
2.2 No Partnership. This Agreement shall not be
deemed to constitute any party as the partner, agent or legal
representative of any other party, or to create any partnership,
mining partnership or other partnership relationship, or fiduciary
relationship between them, for any purpose.
2.3 Competition. Except as expressly provided in this
Agreement, each party shall have the free and unrestricted right
independently to engage in and receive the full benefits of any and
all business endeavors of any sort outside the Property or outside the
scope of this Agreement whether or not competitive with the
endeavors contemplated under this Agreement without consultation
with or participation of the other party. In particular, without
limiting the foregoing, neither party to this Agreement shall have
any obligation to the other as to any opportunity to acquire any
interest, money, property or right offered to it outside the scope of
this Agreement.
3. Grant of Exploration Privilege, Sublease and Assignment.
3.1 Diligence Examination. Owner grants to Royal
Gold the exclusive right and privilege to enter on the Property for
the purposes of examining the condition of the Property and
identification of any environmental conditions which are or might be
violative of any federal, state or local law, regulation or ordinance
concerning preservation or protection of the environment.
3.2 Grant of Exploration Privilege. Owner grants to
Royal Gold the exclusive right and privilege to enter on the Property
for the purposes of exploration and prospecting for any and all
Minerals, mineral substances, metals, ore-bearing materials and
rocks of every kind, including the right of ingress and egress for
personnel, machinery, equipment, supplies and products and the
right to use so much of the surface of and water on or appurtenant to
the Property as Royal Gold needs.
3.3 Lease. Owner leases exclusively to Royal Gold the
Property for the purposes of development, mining, production,
removal and sale of all Minerals, mineral substances, metals, Ore,
ore-bearing materials and rocks of every kind. The rights granted
under this Agreement include all the right, title and interest of
Owner in the Property, lands and mining claims described in this
Agreement, including, but not limited to, the surface and subsurface,
all Ore, Minerals, mineral elements and compounds, and mineral
rights, all water and water rights, geothermal resources and
geothermal water, in, upon and under the Property, all of the
interests of Owner in all options, contracts, easements and rights-of-
way reserved or granted in, upon or pertaining to the Property, and
all right, title and interest which may be acquired by or for Owner in
or pertaining to the Property or any part, during the term of this
Agreement, together with any and all veins, lodes and mineral
deposits now owned or acquired by Owner after the Effective Date
extending from or into or contained in the Property, and all
tenements, hereditaments and appurtenances.
3.4 Assignment and Sublease. Owner assigns
exclusively to Royal Gold all of Owner's interests under the
Underlying Agreements (reserving to Owner, however, the
obligations described in this Section 3.4), and subleases to Royal
Gold the property interests subject to the Underlying Agreements.
Royal Gold accepts the assignment and sublease and agrees to
perform all of the obligations of Owner under the Underlying
Agreements, except for the obligations reserved to Owner in this
Section 3.4, which accrue or arise after the Effective Date so long as
they are subject to this Agreement. During the term of this
Agreement, Royal Gold shall have the exclusive right to exercise all
elections, privileges and rights granted to Owner, or Owner's
predecessors-in-interest, under each of the Underlying Agreements,
and Owner grants and transfers to Royal Gold full power and right
of substitution and subrogation in and to all credits in Owner's favor
and all covenants, representations and warranties made by each
lessor, sublessor or optionor of Owner under the Underlying
Agreements. On Royal Gold's exercise of the Option, Owner shall
assign, convey and transfer to Royal Gold all of Owner's right, title
and interest in and under each of the Underlying Agreements and in
and to all of the property interests subject to each of the Underlying
Agreements. There are reserved to Owner, and Owner agrees to pay
and perform, the payment obligations of Owner under the Dixie
Agreement. Within five (5) business days following the due date of
each payment payable by Owner under the Dixie Agreement, Owner
shall deliver to Royal Gold documentary proof that Owner has paid
the payments payable by Owner under the Dixie Agreement. If
Owner fails to pay the payments payable under the Dixie Agreement
or Owner fails to timely deliver proof of payment of such payments,
Royal Gold, in its sole and exclusive election and without obligation
to do so, may make the payments payable by Owner under the Dixie
Agreement. Any and all payments paid by Royal Gold on Owner's
behalf in accordance with this Section shall be credited to Royal
Gold's account and against Royal Gold's payment obligations under
this Agreement.
3.5 Uses. Royal Gold is granted the right to use the
Property including, but without being limited to, the full right,
authority and privilege of placing and using excavations, open pit
mines, injection and production wells, openings, shafts, ditches and
drains, and of constructing, erecting, maintaining, using and, at its
election, removing any and all buildings, structures, plants,
roadways, pumps, pipelines, electrical power lines and facilities,
stockpiles, waste piles, heap leach pads, tailings ponds and facilities,
settling ponds, and all other improvements, property and fixtures for
mining, removing, beneficiating, concentrating, smelting, extracting,
leaching (in place or otherwise), refining and shipping of Minerals,
Ore or Product, or for any incidental activities, whether presently
contemplated or known to be used in the mining, extraction,
production or processing of Minerals, water or geothermal water, or
geothermal resources, or to any of the rights or privileges of Royal
Gold under this Agreement. Royal Gold is further granted the right,
to the extent Owner lawfully may grant the right, to divert streams,
to remove lateral and subjacent supports, to use, cave, subside,
consume, or destroy the surface or any part of it, to deposit earth,
rocks, waste, lean Ore and materials on any part of the Property, to
leach the same, and to commit waste.
3.6 Water Rights. Owner leases to Royal Gold all of
Owner's water rights appurtenant to the Property. Subject to the
regulations of the state in which the Property is situated concerning
the appropriation and taking of water, Royal Gold shall have the
right to appropriate and use water, to drill wells for the water on the
Property and to lay and maintain all necessary water lines as may be
required by Royal Gold in its operations on the Property.
4. Term. The term of this Agreement shall be from the Effective
Date for twenty (20) years, and for so long after the end of the
primary term as Royal Gold conducts exploration or development
activities on the Property or Royal Gold mines or produces Minerals
or Ore from the Property, unless this Agreement is sooner terminated
or cancelled in accordance with its terms or Royal Gold exercises
and consummates the Option.
5. Payments. Royal Gold shall make the following payments
under this Agreement:
5.1 Acknowledgment of Prior Payment. Owner
acknowledges that Royal Gold has paid or will pay to the Bottom
Trust the sum of Fifty Thousand Dollars ($50,000.00) representing
payment of a minimum payment due and payable by Owner to the
Bottom Trust on or about September 13, 1997, in accordance with
the Bottom Agreement.
5.2 Minimum Payments. Royal Gold shall pay to the
lessors, sublessors and optionors, as applicable, under the
Underlying Agreements the minimum payments payable in
accordance with the Underlying Agreements which accrue during
the term of this Agreement and after expiration of the Diligence
Period (provided Royal Gold elects to proceed under this Agreement
in accordance with Section 45), except the payments payable under
the Dixie Agreement which Owner acknowledges Owner, and not
Royal Gold, shall pay in accordance with Section 3.4.
5.3 Production Royalty. Royal Gold shall pay to Owner
the Royalty described in this Section 5.3. Payments of the Royalty
shall be determined at the end of each calendar quarter after the
Effective Date. The Royalty shall be determined quarterly on the
basis such that payments will be determined as of and payable within
thirty (30) days after the last day of each calendar quarter during
which Royal Gold receives any Net Smelter Returns. The Royalty
payable by Royal Gold to Owner under this Agreement shall be
based solely on the payments actually received by Royal Gold for
Net Smelter Returns. Royal Gold shall have no obligation to
account to Owner, and Owner shall have no interest or right of
participation in, any profits or proceeds of futures contracts, forward
sales, hedging or other similar marketing mechanisms used by Royal
Gold or any of its affiliates concerning any Minerals, Ores or
Product. Royal Gold shall have no obligation to Owner to complete
or perform any futures contracts, forward sales, hedging or any other
marketing agreement which Royal Gold or any of its affiliates may
hold concerning Minerals, Ores or Product. The Royalty percentage
rate payable to Owner shall be four percent (4%) of the Net Smelter
Returns less: (a) one-half (1/2) of the amount of any production
royalties payable by Royal Gold in accordance with the terms of the
Underlying Agreements, provided that Royal Gold shall deduct
production royalties against only the portion of the Royalty
attributable to production of Minerals from the property interests
subject to the respective Underlying Agreements in respect of which
the production royalties are paid; and (b) one-half (1/2) of the
amount of any production or other royalty that may after the
Effective Date be assessed by the United States against the
production of Minerals from the Property.
5.4 Method of Payment. All payments made by Royal
Gold to Owner shall be paid by check delivered to Owner's address
for notice purposes. Royal Gold shall be obligated to deliver only
a single check or payment, and Royal Gold shall have no
responsibility for disbursement or distribution of any payment after
receipt by the described payee. If Owner constitutes two or more
parties, such parties shall designate a single agent or depository for
payment of all payments to be made by Royal Gold under this
Agreement. At the time of making a Royalty payment, Royal Gold
shall deliver to Owner a statement showing the amount of the
Royalty due and the manner in which it was determined and shall
submit to Owner data reasonably necessary to enable Owner to
verify the determination.
5.5 Payment Credits. The payment paid by Royal Gold
to the Bottom Trust before the Effective Date and all Minimum
Payments paid by Royal Gold to the lessors, sublessors and
optionors, as applicable, in accordance with the Underlying
Agreements shall be credited cumulatively to Royal Gold's account
and against Royal Gold's obligations under this Agreement and the
Underlying Agreements. All such payments made by Royal Gold,
together with all Royalty payments made by Royal Gold, shall be
credited cumulatively to Royal Gold's account and against the
Purchase Price.
5.6 Audit. At Owner's expense, Owner or its authorized
agents shall have a right to audit and inspect Royal Gold's accounts
and records used in calculating the Royalty payments, which right
may be exercised as to each payment at any reasonable time during
a period of two (2) years from the date on which the payment was
made by Royal Gold. If no such audit is performed during such
period, such accounts, records and payments shall be conclusively
deemed to be true, accurate and correct. If any audit determines that
there has been an underpayment of five percent (5%) or more of any
previous Royalty payment, then Royal Gold shall bear the expense
of such audit.
6. Purchase Option. Owner grants to Royal Gold the exclusive
right to purchase all of Owner's interests in: (a) the Bottom
Agreement; and (b) the Underlying Agreements and the Property.
Royal Gold may exercise the Bottom Option in accordance with
Section 45. Royal Gold may exercise the Option in respect of the
Underlying Agreements and the Property in accordance with this
Section 6. The Purchase Price for the Owner's interests in the
Underlying Agreements and the Property shall be Four Million
Three Hundred Fifty Thousand Dollars ($4,350,000.00) in United
States currency. Royal Gold may exercise the Option at any time on
or before November 30, 2001. Owner's assertion of a default by
Royal Gold under this Agreement shall not bar or negate Royal
Gold's right to exercise the Option.
6.1 Notice of Election. Royal Gold may give written
notice of its election to exercise the Option or Royal Gold may pay
the entire Purchase Price which shall be deemed Royal Gold's
exercise of the Option. On Owner's receipt of Royal Gold's notice
of its exercise of the Option or on Royal Gold's payment of the
entire Purchase Price, the parties shall make diligent efforts to close
the conveyance of the Property to Royal Gold within thirty (30) days
after Owner's receipt of Royal Gold's notice or as soon as the
transaction can be closed.
6.2 Escrow and Delivery of Instruments. On execution
of this Agreement, Owner and Royal Gold shall execute and deliver
to an escrow agent satisfactory to Royal Gold the following: (a)
Owner shall execute and deliver a conveyance of the Property and
an irrevocable assignment of the Underlying Agreements each in
form acceptable to Royal Gold and proper for recording; (b) Owner
and Royal Gold shall execute and deliver such general conditions as
are reasonably requested by the escrow agent; and (c) Owner and
Royal Gold shall provide such other assurances and execute and
deliver such other instruments as are reasonably requested by Royal
Gold, Owner or the escrow agent for the purpose of closing the
purchase under this Agreement. On Royal Gold's exercise of the
Option and Royal Gold's payment of the Purchase Price to Owner,
the escrow agent shall deliver to Royal Gold the documents
delivered by Owner and Royal Gold to the escrow agent. If this
Agreement is otherwise terminated in accordance with its terms, the
escrow agent shall deliver to Owner the documents delivered by
Owner and Royal Gold to the escrow agent.
6.3 Closing Costs. Royal Gold shall pay the real
property transfer tax, if any, the costs of escrow, and all recording
costs incurred in the Closing.
6.4 Taxes. Payment of any and all state and local real
and personal property taxes levied on the Property purchase and not
otherwise provided for in this Agreement shall be prorated between
the parties as of the Closing on the basis of a thirty (30) day month.
6.5 Payment of Purchase Price. On the Closing, Royal
Gold shall pay to Owner, if it has not previously done so, in cash or
by check, the balance of the Purchase Price.
6.6 Effect of Exercise. On the Closing, Royal Gold shall
acquire and own all of Owner's right, title and interest in and to the
Property and the Underlying Agreements, and Owner shall have no
right, title or interest in and to the Property or the Underlying
Agreements. The Royalty shall terminate.
7. Compliance With The Law. All exploration and
development work performed by Royal Gold during the term of this
Agreement shall conform with the applicable laws and regulations
of the state in which the Property is situated and the United States of
America. Royal Gold shall be fully responsible for compliance with
all applicable federal, state and local reclamation statutes, regulations
and ordinances relating to such work, all at Royal Gold's
cost, and Royal Gold shall indemnify, defend and hold Owner
harmless from any and all claims, assessments, fines and actions
arising from Royal Gold's failure to perform the foregoing
obligations. Owner agrees to cooperate with Royal Gold in Royal
Gold's application for governmental licenses, permits and approvals,
the costs of which shall be borne by Royal Gold.
8. Mining Practices; Inspection of Data.
8.1 Mining Practices. Royal Gold shall work the
Property in a miner-like fashion.
8.2 Inspection of Data. During the term of this
Agreement and at Owner's expense, Owner shall have the right to
examine noninterpretive factual data regarding the Property,
provided that such data is in Royal Gold's possession and that it is
examined during reasonable business hours and upon prior notice,
provided, however, that the rights of Owner to examine such data
shall be exercised in a manner such that such inspection does not
delay, hinder or interfere with the operations of Royal Gold.
8.3 Measurements; Analysis. Royal Gold shall measure
Ore and grade and take and analyze samples in accordance with
mining industry practices, and shall keep accurate records as a basis
for computing the Royalty payments. These records shall be
available for inspection by Owner, at Owner's expense, at reasonable
times subject to the provisions of this Agreement regarding
accounts, inspection, records and payments.
9. Production Records. Royal Gold shall keep accurate
records of the sale or shipment of Product from the Property, and
these records shall be available for inspection by Owner, at Owner's
expense, at reasonable times subject to the provisions of this
Agreement regarding accounts, inspection, records and payments.
10. Consolidation of Operations.
10.1 Cross Mining. Royal Gold is granted the right to
mine and remove Minerals, Ore, Product and materials from the
Property through or by means of shafts, openings or pits which may
be in or upon adjoining or nearby lands owned or controlled by
Royal Gold. Royal Gold may use the Property and any shafts,
openings and pits on the Property for the mining, removal, treatment
and transportation of ores and materials from adjoining or nearby
lands, or for any purpose connected with such activities. Royal Gold
shall have the right to treat or process, in any manner (including in
situ or solution mining), any Minerals, Ore, material and products
mined or produced from the Property and from other lands. Such
treatment may be conducted wholly or in part at facilities established
or maintained on the Property or on other lands. The tailings and
residue from such treatment shall be deemed Waste and may be
deposited on the Property or on other lands and Royal Gold shall
have no obligation to remove such Waste from the Property nor to
return to the Property Waste resulting from the processing of Ores
or materials from the Property.
10.2 Unitization. Royal Gold's operations on the Property
and its operations on other lands may be conducted upon the
Property and upon any and all such other lands as a single mining
operation, to the same extent as if all such properties constituted a
single tract of land.
10.3 Boundary Areas. Owner waives all rights, statutory
and otherwise, to require Royal Gold to maintain adjacent support
for the Property and any contiguous property owned, leased, or
controlled by Royal Gold or any other party. Owner waives its right
to prohibit Royal Gold from mining within any minimum distance
of any boundary line of the Property and contiguous lands, and
grants to Royal Gold the authority to act as Owner's agent and
representative to enter into agreements with the owners of
contiguous properties so as to allow mining of all Ores located on,
near or under the boundary of the Property. Owner waives all
extralateral rights appurtenant to each unpatented mining claim
which constitutes part of the Property, and agrees that Royal Gold's
obligations to account for and to pay the Royalty shall apply and
extend only to Minerals and Ores produced from within the vertical
planes of the exterior boundaries of the Property extended downward
to the center of the earth.
11. Stockpiling; Waste.
11.1 Stockpiling. Royal Gold shall have the right to
stockpile on the Property or on other lands any Minerals, Ore,
Product, materials or Waste mined or produced from the Property at
such place or places as Royal Gold may elect, without the obligation
to remove them from where stockpiled or to return them to the
Property. The stockpiling of Minerals, Ore, Product or materials
from the Property on other lands shall not be deemed a removal or
shipment requiring payment in respect of Owner's interest. Royal
Gold shall have the right to stockpile on the Property any ore,
materials or waste mined or produced by Royal Gold from other
lands without obligation to remove the same at any time. Owner
agrees to recognize the rights and interests of others in such other
ores, materials and waste stockpiled on the Property and to permit
their removal by Royal Gold or the owner of such other ores,
materials and wastes.
11.2 Waste. Waste, overburden, surface stripping and
other materials from the Property may be deposited on or off the
Property. Nothing in this Section shall limit the provisions of this
Agreement concerning stockpiling Product on or off the Property.
12. Mixing. Royal Gold shall have the right to commingle
Minerals, Ore and Product from the Property and materials from
other properties. Before commingling, Minerals, Ore and Product
from the Property and other ore and materials shall be measured and
sampled by Royal Gold in accordance with sound mining and
metallurgical practice. Representative samples of Ore and other ores
shall be retained by Royal Gold, and assays of these samples shall
be made before commingling to determine the metal content of each
ore. Royal Gold shall keep records of the measurements, samples
and assays of metal content of the Ore and other ore.
13. Treatment. Royal Gold shall have the right, but shall not be
required, to beneficiate, concentrate, smelt, refine, leach and
otherwise treat, in any manner, any Minerals, Ore, Product and
materials mined or produced from the Property and from other lands.
Such treatment may be conducted wholly or in part at a plant or
plants established or maintained on the Property or on other lands.
The tailings and residue from such treatment may be deposited on
the Property or on other lands. Owner shall have no right, title or
interest in the tailings or residue; provided, however, that any of the
tailings or residue remaining on the Property for a period of one (1)
year after the date on which this Agreement has expired, or has been
terminated by Royal Gold as to all of the Property, except on Royal
Gold's exercise of the Option, shall be deemed abandoned by Royal
Gold and shall become the property of Owner.
14. Scope of Agreement. This Agreement shall extend to and
include only the unpatented mining claims and patented mining
claims which comprise the Property on the Effective Date as
described in Exhibits A-1 through A-4.
15. Work Obligations.
15.1 Assessment Work. Beginning with the annual
assessment work period of September 1, 1998, to September 1,
1999, and for each annual assessment work year commencing during
the term of this Agreement, Royal Gold shall perform for the benefit
of the Property work of a type customarily deemed applicable as
assessment work and of sufficient value to satisfy the annual
assessment work requirements, if any, of all applicable federal, state
and local laws, regulations and ordinances, and shall prepare
evidence of the same in form proper for recordation and filing, and
shall timely record and/or file such evidence in the appropriate
federal, state and local office as required by applicable federal, state
and local laws, regulations and ordinances, provided that if Royal
Gold elects to terminate this Agreement or surrender any of the
unpatented mining claims which are part of the Property before July
1 of any year, it shall have no further obligation to perform annual
assessment work nor to prepare, record and/or file evidence of the
same with respect to that year for all of the unpatented mining
claims or the surrendered unpatented mining claims, as the case may
be. If under applicable federal laws and regulations federal annual
mining claim maintenance or rental fees are required to be paid for
the unpatented mining claims which constitute all or part of the
Property, beginning with the annual assessment work year of
September 1, 1998, to September 1, 1999, Royal Gold shall timely
and properly pay the federal annual mining claim maintenance or
rental fees, and shall execute and record or file, as applicable, proof
of payment of the federal annual mining claim maintenance or rental
fees and of Owner's intention to hold the Property, provided that if
Royal Gold elects to terminate this Agreement or surrender any of
the unpatented mining claims which are part of the Property before
July 1 of any year, it shall have no further obligation to pay the fees
and record or file proof of payment of the fees with respect to that
year for all of the unpatented mining claims or the surrendered
unpatented mining claims, as the case may be.
15.2 Work Commitment. During each Lease Year,
Royal Gold shall expend the sum of Two Hundred Fifty Thousand
Dollars ($250,000.00) on or for the exploration and development of
the Property. The work commitment expenditures may consist of
expenses incurred solely in connection with exploration on and
development of the Property for: (a) geochemical, geological and
geophysical survey and sampling of the property; (b) allocable
salaries and wages of Royal Gold's employees; (c) travel and living
expenses of Royal Gold employees; (d) consultants' and contractors'
services; (e) drilling; (f) sampling and assaying; (g) location,
amendment and relocation of unpatented mining claim; (h)
examination of or preservation of title to the Property; and (i) all
other expenses reasonably incurred by Royal Gold to explore for
Minerals on and to develop the Property. On Owner's written
demand, Royal Gold shall produce documentary evidence sufficient
to prove Royal Gold has performed its work commitment
obligations. If Royal Gold terminates this Agreement during any
Lease Year before Royal Gold has performed its work commitment
obligation for such Lease Year, Royal Gold shall expend an amount
representing the proportion of the expenditure requirement prorated
to and including the date of termination of this Agreement, provided,
however, alternatively, Royal Gold may pay to Owner the difference
between $250,000.00 and the amount actually incurred by Royal
Gold on and before the termination date. If during any Lease Year
Royal Gold does not incur expenditures in an amount equal to or
greater than $250,000.00, Royal Gold may pay to Owner the
difference between $250,000.00 and the amount actually incurred by
Royal Gold during the Lease Year. All work commitment
expenditures incurred by Royal Gold during any Lease Year in
excess of $250,000.00 shall be credited, insofar as such expenditures
will go, against Royal Gold's work commitment obligations for any
one or more subsequent Lease Years. If Royal Gold is unable to
obtain any approval, consent, license or permit required by an
federal, state or local government agency for Royal Gold's
performance of its work obligations within thirty (30) days after
Royal Gold's application for such approval, consent, license or
permit, the period during which Royal Gold must complete its work
obligation shall be extended by the time required for Royal Gold to
obtain such approval, consent, li cense or permit. Royal Gold shall
notify Owner that Royal Gold must extend the work obligation
period, and Royal Gold shall deliver to Owner documentation which
evidences Royal Gold's application for and the delays incurred by
Royal Gold in respect of any approval, consent, license or permit.
16. Patent Application. Royal Gold may, at its expense, seek
to patent, in Owner's name, any or all of the unpatented mining
claims which constitute all or part of the Property. Owner pledges
full cooperation to Royal Gold in executing any documents
necessary to accomplish patenting if so desired by Royal Gold. If
Royal Gold begins patent proceedings and Royal Gold desires to
discontinue them, or if this Agreement is terminated while patent
proceedings are pending, Royal Gold shall have no further
obligation with respect to the patent proceedings, except to pay any
unpaid expenses accrued in such proceedings before its request to
discontinue, or before termination, whichever occurs first. If the
patent application results in cancellation of any unpatented claims,
under no circumstances shall Royal Gold be liable for any claims,
losses or damages resulting from such cancellation. Owner appoints
Royal Gold as Owner's lawful attorney-in-fact for the purpose of
patent applications. All patents shall be part of the Property and the
parties will promptly after issuance of each patent execute and
deliver an addendum to this Agreement and a memorandum of this
Agreement to such effect.
17. Amendment of Mining Laws. The parties acknowledge
that legislation for the amendment or repeal of the mining laws of
the United States applicable to the Property has been, and may be,
considered by the United States Congress. The parties desire to
insure that any and all interests of the parties in the lands subject to
the unpatented mining claims which comprise all or part of the
Property, including any rights or interests acquired in such lands
under the mining laws as amended, repealed or superseded, shall be
part of the Property and shall be subject to the Agreement. If the
mining laws applicable to the unpatented mining claims subject to
this Agreement are amended, repealed or superseded, the termination
or conversion of Owner's interest in the Property pursuant to such
amendment, repeal or supersession of the mining laws shall not be
considered a deficiency or defect in Owner's title in the Property,
and Royal Gold shall have no right or claim against Owner resulting
from the conversion, diminution, or loss of Owner's interest in and
to the Property except as expressly provided in this Agreement.
If pursuant to any amendment or supersession of the mining
laws Owner is granted the right to convert its interest in the
unpatented mining claims comprising the Property to a permit,
license, lease, or other right or interest, Royal Gold may, in Royal
Gold's discretion, elect to exercise such right of conversion in
Owner's name. Owner shall promptly execute and deliver any and
all instruments necessary or convenient to Royal Gold's election of
the right of conversion. Owner shall bear the cost of the application
for such conversion, however, Royal Gold shall during the term of
this Agreement pay to the United States all periodic payments
required to preserve or maintain such converted interests, including,
without limitation, permit, license, lease, production royalties,
holding fees, or other periodic payments. All converted interests or
rights shall be deemed to be part of the Property subject to this
Agreement. Upon the grant or issuance of such converted interests
or rights, the parties shall execute and deliver an addendum to this
Agreement, in recordable form, by which such converted interests
or rights are made subject to this Agreement.
18. Liens and Notices of Non-Responsibility. Owner and
Royal Gold agree to keep the Property at all times free and clear of
all liens, charges and encumbrances of any and every nature and
description done, made or caused by them, and to pay all
indebtedness and liabilities incurred by or for them which may or
might become a lien, charge or encumbrance against the Property
before such indebtedness and liabilities shall become a lien, charge
or encumbrance; except that Royal Gold need not discharge or
release any such lien, charge or encumbrance so long as Royal Gold
disputes or contests the lien, claim or encumbrance. The parties
agree that Owner shall be informed immediately of the execution of
this Agreement by Royal Gold in order that Owner can properly and
timely record a notice of non-responsibility in the office of the
county recorder of the county in which the Property is located.
Nothing in this Agreement shall be construed to prevent Royal Gold
from assigning, pledging, encumbering or otherwise transferring its
interest in this Agreement or the Property for the purpose of
acquiring financing for its activities or operations on the Property or
for any other purpose, which acts are expressly authorized.
19. Taxes.
19.1 Real Property Taxes. Owner shall pay any and all
real property taxes assessed against the Property before execution of
this Agreement. Royal Gold shall pay promptly before delinquency
all real property taxes and assessments, whether general, special,
ordinary or extraordinary, that may be levied or assessed during the
term of this Agreement and on the Property then remaining subject
to this Agreement, except those which are assessed or imposed
against or levied on Owner's share of production or net proceeds of
Minerals, Ore or Product, or in respect of any payments to Owner
under this Agreement. All taxes which Royal Gold is obligated to
pay for the year in which this Agreement is executed and for the year
in which this Agreement terminates shall be prorated between
Owner and Royal Gold, except that neither Owner nor Royal Gold
shall be responsible for the payment of any taxes which are based
upon income, net proceeds, production or revenues from the
Property assessed solely to the other party. Royal Gold always shall
have the right to contest, in the courts or otherwise, in its own name
or in the name of Owner, the validity or amount of any such taxes or
assessments, if it deems the same unlawful, unjust, unequal or
excessive, or to take such other steps or proceedings as it may deem
necessary to secure a cancellation, reduction, readjustment or
equalization, before it shall be required to pay the taxes. Royal Gold
shall upon request furnish to Owner copies of receipts or proof of
payment for all such taxes and assessments when paid.
19.2 Personal Property Taxes. Each party shall pay all
taxes assessed against such party's personal property, improvements
or structures placed or used on the Property.
19.3 Income Taxes. Royal Gold shall not be liable for
any taxes levied on or measured by income or net proceeds, or other
taxes applicable to Owner, based upon payments under this
Agreement or based upon the production or net proceeds of
Minerals, Ore or Product from the Property. Each of Owner and
Royal Gold shall pay the net proceeds of mines taxes assessed
against such party's respective share of production of Minerals, Ore
or Product from the Property.
19.4 Delivery of Tax Notices. If Owner receives tax bills
or claims which are Royal Gold's responsibility, Owner shall
promptly forward them to Royal Gold for appropriate action, and if
they are not received by Royal Gold by the later of: (a) ten (10)
business days before any payment is due; or (b) five (5) business
days after Owner's receipt of the tax bills or claims. Royal Gold
shall not be responsible for any interest, penalty, charge, expense, or
other liability arising from late payment. Owner agrees to indemnify
and save harmless Royal Gold from all of the interest, penalties,
charges, expense or liabilities that may be incurred by Royal Gold
from time to time as a result of Owner's failure to promptly forward
tax bills or claims to Royal Gold.
20. Indemnity. Royal Gold shall defend, indemnify and save
harmless Owner, its successors and assigns, of and from any and all
liability whatsoever for any claims, actions or damages, including
court costs and attorney's fees, in any way arising from or relating to
Royal Gold's occupation, ownership and use of the Property, or its
operations on or in the Property after the Effective Date. Owner
shall defend, indemnify and save harmless Royal Gold, its
successors and assigns, of and from any and all liability whatsoever
for any claims, actions or damages, including court costs and
attorney's fees, in anyway arising from or relating to Owner's
occupation, ownership and use of the Property, or its operations on
or in the Property, before the Effective Date or after termination of
this Agreement, except on Royal Gold's exercise of the Option, or
after Royal Gold's reconveyance to Owner of any unpatented mining
claims surrendered by Royal Gold in accordance with this
Agreement. The parties' defense, indemnification and hold harmless
obligations shall extend to and include any and all claims, actions or
damages arising from or relating to federal, state or local laws,
regulations or ordinances concerning the preservation of the
environment or reclamation of the Property, including the
Comprehensive Environmental Response, Compensation and
Liability Act, and the Resource Conservation and Recovery Act, and
shall survive termination of this Agreement. Owner shall be named
as an additional insured on all insurance policies maintained by
Royal Gold with respect to the Property and Royal Gold's operations
on the Property.
21. Inspection. At Owner's expense and on Owner's advance
request and notice to Royal Gold, Owner or Owner's duly authorized
representatives shall be permitted to enter on the Property and Royal
Gold's workings at reasonable times for the purpose of inspection,
but they shall enter on the Property at their own risk and in such a
manner as not to unreasonably delay, hinder, or interfere with the
operations of Royal Gold. Owner shall defend, indemnify and hold
Royal Gold harmless from any and all damages, claims or demands
arising from injury to Owner, Owner's agents or representatives or
any third party, on the Property or on any access to the Property
arising from or relating to Owner's entry and inspection.
22. Title Information and Data. On execution of this
Agreement, Owner shall promptly obtain and deliver to Royal Gold
copies of all title abstracts, documents, opinions and reports affecting
the Property which Owner has in its possession or available to
it, including copies of any plats and field notes of surveys of the
Property. Owner agrees to deliver to Royal Gold copies of any
exploration data, assays, logs, maps, geological, geochemical and
geophysical surveys and reports that Owner may have in its
possession, without charge.
23. Representation of Title.
23.1 Unpatented Mining Claims. Regarding the
unpatented mining claims which constitute all or a portion of the
Property, Owner covenants, represents and warrants, which
covenants, representations and warranties shall survive termination
of this Agreement, that: (a) the claims were properly located in
accordance with applicable federal and state laws and regulations;
(b) all assessment work requirements for the claims have been
performed and all filings and recordings of proof of performance
have been made properly and all federal annual unpatented mining
claim maintenance and rental fees have been paid properly and
timely; (c) the claims are in good standing and Owner has good title
to and owns the entire undivided legal and equitable interest in the
claims, subject to the paramount title of the United States and other
matters of title disclosed in this Agreement; (d) Owner has good
right and full power to lease and to convey the interests described in
this Agreement; (e) the claims are free and clear of all liens, claims
and encumbrances except as otherwise provided in this Agreement
(and the Exhibits attached to this Agreement); (f) Owner shall not
commit any act or acts which will encumber or cause a lien to be
placed on the claims; and (g) Owner will defend title to the claims
consistent with these representations and warranties. Owner makes
no representation or warranty concerning the discovery or presence
of valuable minerals on the unpatented mining claims which
comprise all or a portion of the Property.
23.2 Patented Mining Claims. Regarding the patented
lands which constitute all or a portion of the Property, Owner
covenants, represents and warrants, which covenants,
representations and warranties shall survive termination of this
Agreement, that: (a) Owner has good title to and owns the entire
undivided legal and equitable interest in the patented lands; (b)
Owner has good right and full title to lease and convey the interests
in the patented lands described in this Agreement; (c) the patented
lands are free and clear of all liens, claims and encumbrances,
except as otherwise provided in this Agreement (and the Exhibits
attached to this Agreement); (d) Owner shall not commit any act or
acts which will encumber or cause a lien to be placed on the
patented lands; and (e) Owner will defend title to the patented lands
consistent with these representations and warranties.
23.3 Underlying Agreements. Owner covenants,
represents and warrants, which covenants, representations and
warranties shall survive termination of this Agreement, that: (a)
Owner's execution and delivery of this Agreement and the
instruments to be executed and delivered by Owner in accordance
with the terms of this Agreement will not conflict with or result in
a breach of or default under any of the terms, conditions or
provisions of any of the Underlying Agreements; (b) there are no
actions, claims, litigation, proceedings or suits pending or
threatened against Owner or any of the Properties which could, if
continued, adversely affect Owner's ability to fulfill Owner's
obligations under this Agreement; (c) Owner has not previously
assigned, optioned, subleased or otherwise encumbered its interest
in the Underlying Agreements; (d) except as to the matter referred
to in Section 5.1 concerning the Bottom Agreement, there has been
no act or omission by Owner which could result by notice or lapse
of time in the abandonment, breach, default, forfeiture,
relinquishment or termination of any of the Underlying
Agreements; and (e) at Royal Gold's request, Owner will request
and obtain from each lessor, sublessor or optionor, as applicable,
under the Underlying Agreements an instrument in accordance with
which each such party certifies that the Underlying Agreement to
which it is a party is fully effective and in good standing.
24. Remedies for Defects in Title.
24.1 Royal Gold's Remedies. If Owner owns an interest
in the Property which is less than the entire interest, except such
lesser interests as are described in this Agreement, Royal Gold may
seek any remedies available to it at law or in equity, including, but
not limited to, acquisition of any interest not owned by Owner, the
restitution of any and all payments made by Royal Gold pursuant to
this Agreement, recovery of costs incurred by Royal Gold pursuant
to this Agreement, termination or rescission of this Agreement and
recovery of damages incurred by Royal Gold. If Owner does not
promptly remedy any defects in title or to pay, when due, rents,
mortgages or other liens against the Property, Royal Gold shall have
the right, but shall not be obligated, to remedy such defects or to pay
such amounts, and if it does so, Royal Gold shall be subrogated to
all the rights of the holder of such rights. Royal Gold shall have the
right to offset and credit against payments due to Owner under this
Agreement and any conveyance by which Owner reserves the
Royalty all of Royal Gold's costs incurred and payments made to
remedy such defects or to pay such amounts, including any and all
costs incurred by Royal Gold to acquire from any third party any
interest in the Property or any portion of the Property. If Royal Gold
acts to remedy such defects, such action shall not constitute an
election of remedies on part of Royal Gold.
24.2 Lesser Interest. as otherwise disclosed in the
Exhibits attached to this Agreement, Owner owns an interest in the
Property which is less than the entire and undivided estate in the
Property, the Purchase Price and the Royalty shall be reduced
proportionately in accordance with the nature and extent of Owner's
interest so that the Purchase Price and the Royalty shall be paid to
Owner only in the proportion that Owner's interest bears to the entire
and undivided estate in the Property. Such reduction shall in no way
be construed as a measure of damages that may be suffered by Royal
Gold or to in any way limit the rights of Royal Gold to seek the
remedies available to it.
24.3 Escrow of Payments Pending Dispute. If at any
time a third party asserts a claim of ownership in the Property or the
Minerals which is adverse to the interest of Owner or Royal Gold,
or if Royal Gold is advised by legal counsel for Royal Gold that it
appears that a third party may have such a claim, Royal Gold may
deposit any payments which would otherwise be due to Owner into
escrow and give notice of such deposit to Owner. In the event of a
dispute concerning ownership of the Property, the Minerals, the
surface of the Property or the Royalty, payment of the Minimum
Payments, or the Royalty payments, or the Purchase Price, as
applicable, may be deferred until twenty (20) days after Royal Gold
is furnished satisfactory evidence that such dispute has been finally
settled and all provisions as to keeping this Agreement in force shall
relate to such extended time for payment.
24.4 Survival of Royal Gold's Rights. The provisions of
this Section shall survive any termination of this Agreement.
25. Amendment and Relocation of Claims. Royal Gold shall
have the right to amend or relocate in the name of Owner any of the
unpatented mining claims subject to this Agreement which Royal
Gold deems advisable to so amend or relocate. Royal Gold shall
have the right to abandon any unpatented mining claims subject to
this Agreement and relocate the lands formerly appropriated by
abandoned mining claims as mill sites. Owner appoints Royal Gold
as Owner's lawful attorney-in-fact for the purpose of the location,
amendment or relocation of any such claims. All amended or new
locations shall be part of the mining claims subject to this
Agreement and the parties will promptly after amendment or
location of such claims execute and deliver an addendum to this
Agreement and an amended memorandum of this Agreement to such
effect.
26. Covenants, Warranties and Representations. Each of the
parties covenants, warrants and represents for itself as follows:
26.1 Compliance with Laws. That it has complied with
and will comply with all applicable laws and regulations of any
governmental body, federal, state or local, regarding the terms of and
performance of its obligations under this Agreement.
26.2 No Pending Proceedings. That there are no lawsuits
or proceedings pending or threatened which affect its ability to
perform the terms of this Agreement.
26.3 Authority. That it has the full right, title and
authority to enter into this Agreement and to perform its obligations,
and neither this Agreement, nor its performance, violates or
constitutes a default under the provisions of any other agreement to
which it is a party or by which it is bound.
26.4 Commissions; Finder's Fees. That it has not
utilized the services of a broker or a finder in the negotiation and/or
execution of this Agreement, and that it has not incurred any
obligation to pay a broker's commission or finder's fee upon the
execution and consummation of this Agreement.
26.5 Performance of Obligations. That it shall have
performed, satisfied and complied with all covenants, agreements
and conditions required by it on or before the Closing Date.
26.6 Costs. That it shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
27. Owner's Covenants, Representations and Warranties.
Owner covenants, represents and warrants as follows:
27.1 Noninterference. Owner covenants that Owner will
not do or permit to be done any act which would or might hinder or
impair the rights of Royal Gold to exercise any right granted to
Royal Gold under this Agreement or to acquire all right, title and
interest in and to the Property. Owner acknowledges that the rights
granted to Royal Gold under this Agreement are exclusive to Royal
Gold, and Owner covenants that Owner will not enter into any
agreement, contract, lease, option or other instrument for the grant
to any other party of any rights to explore for, develop or mine any
Minerals on the Property.
27.2 Estoppel Certificate. On Royal Gold's written
request, Owner will execute and deliver to Royal Gold an estoppel
certificate, in form acceptable to Royal Gold, whereby Owner
confirms that this Agreement is in full force and effect and that there
are no defaults by Owner or Royal Gold under this Agreement.
27.3 Environmental Conditions. Owner is not aware of
nor has it received notice from any governmental agency of any
condition existing on the Property or created by Owner which is or
might be a violation of any applicable federal, state or local law,
regulation or ordinance.
27.4 Non-Foreign Status. Owner is not a "foreign
person" as defined under section 1445(f) of the Internal Revenue Code.
At Royal Gold's request Owner shall furnish Royal Gold an affidavit
confirming its non-foreign status in such form as is reasonably
required by Royal Gold.
28. Termination by Owner. In the event of any default or
failure by Royal Gold to comply with any of the Covenants, terms
or conditions of this Agreement, Owner shall be entitled to give
Royal Gold written notice of the default, specifying details of the
same. If such default is not remedied within thirty (30) days after
receipt of the notice, provided the same can reasonably be done
within that time, or, if not, if Royal Gold has not within that time
commenced action to cure the same or does not after such
commencement diligently prosecute such action to completion,
Owner may terminate this Agreement by delivering notice to Royal
Gold of Owner's termination of this Agreement. Termination shall
not be based on a default or on a failure to remedy the same which
results from any cause beyond the reasonable control of Royal Gold,
including, without limitation, the force majeure provisions of this
Agreement. If Royal Gold contests any alleged default, Royal Gold
may give written notice of such contest to Owner during the period
allowed for Royal Gold's cure of any alleged default. If Royal Gold
notifies Owner of Royal Gold's contest of the alleged default, Owner
shall have no right to deliver notice of termination or to terminate
this Agreement until such time as a court of competent jurisdiction
enters a decree or order that Royal Gold is in fact in default under
this Agreement and the times for amendment, appeals and review of
the decree or order have expired. If a court of competent jurisdiction
enters a decree or order that Royal Gold is in fact in default under
this Agreement, Royal Gold shall have thirty (30) days after entry of
the decree or order and expiration of all times for amendment, appeal
and review of the decree or order during which to commence action
to cure the default as determined by the court of competent
jurisdiction.
29. Surrender and Termination.
29.1 Termination by Royal Gold. Royal Gold may at
any time terminate this Agreement by giving written notice to
Owner. On or promptly after delivery of the notice of termination,
Royal Gold shall deliver to Owner a written release of this
Agreement in proper form for recording. If Royal Gold terminates
this Agreement, Royal Gold shall not be required to perform the
obligations or the work commitment, if any, or pay the Minimum
Payments which accrue or come due after the termination date,
except as expressly provided in this Agreement. Owner shall
assume and perform all duties, obligations and responsibilities in
respect of the Property which accrue or arise after the date of
termination, and Owner shall defend, indemnify and hold Royal
Gold harmless from any claims, damages, liabilities, losses or
responsibilities arising from or relating to Owner's activities on
ownership, possession or use of the Property.
29.2 Partial Surrender of Mining Claims. During the
term of this Agreement, Royal Gold may at any time surrender any
unpatented mining claim which constitutes part of the Property. If
during the term of this Agreement, Royal Gold intends to surrender
any unpatented mining claim, it shall give written notice to Owner.
Owner shall have ten (10) days following Owner's receipt of Royal
Gold's notice during which to notify Royal Gold that Owner requests
a reconveyance to Owner of the mining claim(s) proposed to be
surrendered by Royal Gold. If Owner does not timely request a
reconveyance of the mining claim(s), Owner shall be deemed to
have irrevocably waived its right to request a reconveyance of the
surrendered mining claim(s). If Owner timely requests that Royal
Gold reconvey the mining claim(s), Royal Gold shall promptly
execute and deliver to Owner a quitclaim deed of Royal Gold's right,
title and interest in and to the mining claim(s) proposed to be
surrendered. At such time Owner shall assume and perform all
duties, obligations and responsibilities in respect of the mining
claim(s) which accrue or arise after the date of Royal Gold's
execution of the quitclaim deed, and Owner shall defend, indemnify
and hold harmless Royal Gold from any claims, damages, liabilities,
losses or responsibilities arising from or relating to Owner's
activities on, ownership, possession or use of the reconveyed mining
claim(s).
29.3 Surrender of Underlying Agreements. During the
term of this Agreement, Royal Gold may at any time surrender any
Underlying Agreement which constitutes part of the Property. If
during the term of this Agreement, Royal Gold intends to surrender
any Underlying Agreement, it shall give written notice to Owner.
Owner shall have ten (10) days following Owner's receipt of Royal
Gold's notice during which to notify Royal Gold that Owner requests
a reassignment to Owner of the Underlying Agreement proposed to
be surrendered by Royal Gold. If Owner does not timely request a
reassignment of the Underlying Agreement, Owner shall be deemed
to have irrevocably waived its right to request a reassignment of the
surrendered Underlying Agreement. If Owner timely requests that
Royal Gold reassign the Underlying Agreement, Royal Gold shall
promptly execute and deliver to Owner an assignment of Royal
Gold's right, title and interest in and to the Underlying Agreement
proposed to be surrendered. At such time Owner shall assume and
perform all duties, obligations and responsibilities in respect of the
Underlying Agreement which accrue or arise after the date of Royal
Gold's execution of the assignment, and Owner shall defend,
indemnify and hold Royal Gold harmless from any claims, damages,
liabilities, losses or responsibilities arising from or relating to
Owner's activities on, ownership, possession or use of the
reconveyed Underlying Agreement.
30. Entry After Termination. After termination of this
Agreement, except on Royal Gold's exercise of the Option, Royal
Gold shall have one hundred and one hundred eighty (180) days
during which to remove from the Property all buildings, structures,
and equipment. Also, Royal Gold shall have the right to enter on the
Property, without obligation, to pay any payments to Owner or to
perform any other obligations under this Agreement, for the purpose
of reclamation, remediation or restoration of the Property as required
under any applicable federal, state or local laws, regulations or
ordinances.
31. Data. Upon termination of this Agreement, except on Royal
Gold's exercise of the Option, Owner shall have the right to request
copies of all noninterpretive factual data regarding the Property in
Royal Gold's possession at the time of termination which have
before termination not been delivered to Owner. Royal Gold agrees
that it will within thirty (30) days after receipt of a timely written
demand by Owner deliver to Owner a copy of all such
noninterpretive factual data. Royal Gold shall have no liability on
account of any such information received or acted on by Owner or
any other party to whom Owner delivers such information. Owner
must exercise its right to request the information in writing and must
give such written request within thirty (30) days after termination of
this Agreement, and absent such timely written demand, Royal Gold
shall have no obligation under this Section to provide such
information.
32. Confidentiality. The data and information, including the
terms of this Agreement, coming into the possession of Owner or
Royal Gold by virtue of this Agreement, shall be deemed
confidential and shall not be disclosed to outside third parties except
as may be required to publicly record or protect title to the Property
or to publicly announce and disclose information under the laws and
regulations of the United States or any state or local government or
any country, or under the rules and regulations of any stock
exchange on which stock of any party, or the parent or affiliates of
any party, is listed. Each of the parties agrees, with respect to any
public announcements or disclosures so required, including the
announcement of the execution of this Agreement, if any, to inform
the other party of the content of the announcement or disclosure in
advance of its intention to make such announcement or disclosure in
sufficient time to permit the other party to jointly or simultaneously
make a similar public announcement or disclosure if the other party
so desires. Nothing in this Agreement shall limit or restrict the right
of either party to provide, deliver or release to parent companies,
companies with a common parent, subsidiary companies, affiliated
or related companies and/or co-venturers the data and information,
including the terms of this Agreement, coming into the possession
of such party by virtue of this Agreement.
33. Force Majeure. The respective obligations of either party,
except Royal Gold's obligation to pay the Minimum Payments and
perform the annual assessment work or pay the federal annual
mining claim maintenance or rental fees required under this
Agreement, shall be suspended during the time and to the extent that
such party is prevented from compliance, in whole or in part, by war
or war conditions, actual or potential, earthquake, fire, flood, strike,
labor stoppage, accident, riot, unavoidable casualty, act or restraint,
present or future, of any lawful authority, statute, governmental
regulation or ordinance, environmental restrictions or conditions,
permit or license approvals, act of God, act of public enemy, delays
in transportation, lack of market for the sale of Ore, Minerals or
Product, or other cause of the same or other character beyond the
reasonable control of such party.
34. Disputes not to Interrupt Operations. Disputes or
differences between the parties shall not interrupt performance of
this Agreement or the continuation of Royal Gold's operations.
In the event of any dispute or difference, operations may be continued,
and settlements and payments may be made in the same manner as before
such dispute or difference.
35. Memorandum Agreement. Upon execution of this
Agreement, the parties shall execute and deliver a short form of this
Agreement which shall be recorded in the office of the recorder of
each county in which all or part of the Property is located. The
execution and recording of the memorandum of agreement shall not
limit, increase or in any manner affect any of the terms of this
Agreement, or any rights, interest or obligations of the parties.
36. Notices. Any notices required or authorized to be given by
this Agreement shall be in written form. Any notices required or
authorized to be given by this Agreement may be sent by registered
or certified delivery, postage prepaid and return receipt requested,
addressed to the proper party at the following address or such
address as the party shall have designated to the other parties in
accordance with this Section. Any notice required or authorized to
be delivered by this Agreement shall be deemed to have been
sufficiently delivered or served in written form if: (a) mailed in
accordance with this Section; (b) personally delivered to the proper
party; or (c) delivered by telex, telegraph, facsimile or other
electronic transmission and actually received by such party.
Delivery of notice shall be effective on the first business day after
the party deposits the notice for mailing or delivers the notice by the
other means authorized in this Section, as applicable
If to Owner: New Concept Mining, Inc.
1017 South Mountain
Monrovia, California 91016
If to Royal Gold: Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
37. Binding Effect of Obligations. This Agreement shall be
binding upon and inure to the benefit of the respective parties and
their successors and assigns.
38. Whole Agreement. This Agreement supersedes all prior
agreements between the parties. The whole agreement between the
parties is written in this Agreement and in a memorandum of
agreement of even date which is intended to be recorded. There are
no terms or conditions, express or implied, other than those
expressly stated in this Agreement. This Agreement may be
amended or modified only by an instrument in writing, signed by the
parties with the same formality as this Agreement.
39. Governing Law and Forum Selection. This Agreement
shall be construed and enforced in accordance with the laws of the
state in which the Property is situated. The parties submit to the
jurisdiction of the state courts within and the United States District
Court for the district and division in which the Property is situated,
and waive any objections to the jurisdiction of such courts and venue
of any actions or proceedings in such courts arising from or relating
to this Agreement.
40. Multiple Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be
an original, but all of which shall constitute the same Agreement.
41. Other Interests. Owner represents that Royal Gold has not
induced or caused Owner to terminate any previous license, lease
agreement, or otherwise, for the Property subject to this Agreement,
and/or to discontinue or interfere with a business relationship with
any such licensee(s) or Royal Gold(s), or otherwise. Owner agrees
to defend, indemnify and hold harmless Royal Gold against any and
all claims, demands or suits for damages or injunctive relief which
may be brought against Royal Gold, incident to, arising from, in
connection with or resulting from any such termination and/or
discontinuance of a business relationship.
42. Severability. If any part, term or provision of this
Agreement is held by a court of competent jurisdiction to be illegal
or in conflict with any law of the United States or any state, the
validity of the remaining portions or provisions shall not be affected,
and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term
or provision held to be invalid.
43. Assignment.
43.1 By Royal Gold. Royal Gold may assign, sublease or
transfer this Agreement or any part of its interest as Royal Gold
determines in its discretion, provided that the proposed assignee,
sublessee or transferee executes and delivers to Owner a written
instrument in accordance with which the proposed assignee,
sublessee or transferee agrees to assume, perform and undertake all
of Royal Gold's obligations under this Agreement which accrue on
and after the effective date of the proposed assignment, sublease or
transfer, and, provided, that the proposed assignee, sublessee or
transferee has the financial ability to assume and perform such
obligations. If Royal Gold assigns its interest under this Agreement,
it shall be relieved of any obligations or liabilities under this
Agreement which accrue after the effective date of the assignment.
43.2 By Owner. If Owner intends to transfer all or any
part of its interest in the Property or in or under this Agreement in
accordance with the terms of an agreement which Owner determines
is acceptable, Owner shall promptly notify Royal Gold of Owner's
intentions. The notice shall state all pertinent terms and conditions
of the intended transfer, and shall be accompanied by a copy of the
agreement, contract, offer or other instrument governing the terms
of the transfer. If the consideration for the intended transfer is, in
whole or in part, other than monetary, the notice shall describe such
consideration and its monetary equivalent (based upon the fair
market value of the nonmonetary consideration and stated in terms
of cash or currency). Royal Gold shall have sixty (60) days from the
date Royal Gold receives such notice to notify Owner that Royal
Gold elects to acquire the offered interest at the same price (or its
monetary equivalent in cash or currency) and on the same terms and
conditions as described in Owner's notice. If Royal Gold fails to
elect within the period provided for in this Section, Owner shall have
thirty (30) days following the expiration of such period to
consummate the transfer to a third party at a price upon terms no less
favorable to Owner than those offered by Owner to Royal Gold in
Owner's notice. If Owner fails to consummate the transfer to a third
party within the period described in this Section, Royal Gold's
preferential right to acquire such offered interest shall be deemed to
be revived. Any subsequent proposal by Owner to transfer its
interest in the Property in or under this Agreement shall be
conducted in accordance with all of the procedures described in this
Section. No change in ownership of Owner's interest in the Property
shall affect Royal Gold's obligations under this Agreement unless
and until Owner delivers and Royal Gold receives certified copies of
instruments recorded or other documents necessary to demonstrate
the change in ownership of Owner's interest. No other type of
notice, whether actual or constructive, shall be binding on Royal
Gold. Until Royal Gold receives Owner's notice and the documents
required to be delivered under this Section, Royal Gold may
continue to make all payments under this Agreement as if the
transfer of Owner's ownership interest had not occurred. No division
of Owner's ownership as to all or any part of the Property shall
enlarge Royal Gold's obligations or diminish Royal Gold's rights
under this Agreement, and Royal Gold may disregard any such
division.
44. Attorney's Fees and Costs. If any action or proceeding is
commenced by one party against any other party to this Agreement,
the party prevailing in such proceeding or action, as determined by
final judgment in any such proceeding or action, shall be entitled to
such party's costs incurred, including reasonable attorney's fees and
court costs.
45. Conditions and Bottom Option. Royal Gold's obligations
under this Agreement are conditional on completion on or before
expiration of the Diligence Period to Royal Gold's satisfaction,
determined in its sole discretion, of the following conditions:
45.1 Environmental Assessment. Royal Gold shall have
completed an environmental assessment and examination of the
Property. Royal Gold's conduct of an environmental assessment and
examination of the Property shall not release or waive any of
Owner's covenants, representations, obligations or warranties or
Royal Gold's rights under this Agreement.
45.2 Litigation and Title Examination. Royal Gold shall
have completed its examination and evaluation of Owner's title to
the Property and any actions or proceedings concerning title to the
Property. Royal Gold's examination and evaluation of Owner's title
to the Property and any litigation or proceedings shall not release or
waive any of Owner's covenants, obligations, representations or
warrants or Royal Gold's rights under this Agreement.
At any time during the Diligence Period, Royal Gold may:
(a) terminate this Agreement in its entirety; (b) elect to exercise the
Bottom Option, in which case Owner shall execute and deliver to
Royal Gold an assignment of all of Owner's right, title and interest
in and to the Bottom Agreement and the part of the Property subject
to it, in form acceptable to Royal Gold, and terminate this
Agreement in respect of the other Underlying Agreements and the
portions of the Property subject to the other Underlying Agreements;
or (c) notify Owner that Royal Gold elects to proceed under this
Agreement. If Royal Gold exercises the Bottom Option, Royal Gold
shall assume and perform all of Owner's obligations under the
Bottom Agreement, and Owner shall have no right, title or interest
in or under the Bottom Agreement or in the part of the Property
subject to the Bottom Agreement. In such case, this Agreement shall
terminate in respect of the other Underlying Agreements, and Royal
Gold shall have no obligations whatever to Owner under this
Agreement in respect of the other Underlying Agreements or the
parts of the Property subject to such other Underlying Agreements.
If Royal Gold elects to proceed under this Agreement, all of Royal
Gold's obligations, including those which accrue on expiration of
the Diligence Period, shall be binding on it.
The parties have executed this Agreement effective as of
November 21, 1997.
New Concept Mining, Inc.
By: /S/
Bill Foster, President
Tax Identification No.
Royal Gold, Inc.
By: /S/
Peter Babin, President
STATE OF FLORIDA, )
ss.
COUNTY OF )
This Mining Lease and Option to Purchase Agreement was
acknowledged before me on December _____, 1997, by Bill Foster
as President of New Concept Mining, Inc.
Notary Public
My commission
expires
STATE OF COLORADO, )
ss.
COUNTY OF DENVER. )
This Mining Lease and Option to Purchase Agreement was
acknowledged before me on December _____, 1997, by Peter Babin
as President of Royal Gold, Inc.
Notary Public
My commission
expires