EXHIBIT 10.15
CHAMPION PROPERTY, NEW MEXICO
ACQUISITION AGREEMENT
THIS AGREEMENT is made as of the 16th day of November, 1994
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the laws
of British Columbia and having a head office at 860 - 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(hereinafter referred to as "SUMMO CANADA")
OF THE FIRST PART,
AND:
SUMMO USA CORPORATION, a company incorporated under the laws of the
State of Colorado and having a head office at Suite 1100, 1776 Lincoln
Street, Denver, Colorado, 80203
(hereinafter referred to as "SUMMO USA")
OF THE SECOND PART,
AND:
ST. MARY MINERALS INC., a company incorporated under the laws of the
State of Colorado and having a head office at Suite 1100, 1776 Lincoln
Street, Denver, Colorado, 80203
(hereinafter referred to as "ST. MARY")
OF THE THIRD PART.
RECITALS
A. WHEREAS St. Mary holds interests in a mining property known as the
Champion copper property in Taos County, New Mexico;
B. AND WHEREAS St. Mary's entire right and title and interest in and to
the unpatented and patented mining claims and millsites located in the Picuris
and Copper Mountain Mining District, Taos County, New Mexico and known as the
Champion copper property all as described more particularly in Schedule "A"
attached hereto and is referred to collectively herein as the "PROPERTY";
C. AND WHEREAS St. Mary wishes to sell and Summo USA wishes to acquire
all of St. Mary's interest in the Property.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements herein contained and subject to the terms and
conditions hereinafter set out, the parties hereto agree as follows:
1. PURCHASE AND SALE
1.01 St. Mary hereby sells, assigns and transfers to Summo USA its entire
right, title and interest in and to the Property except for a royalty interest
of 1.5% of Net Smelter Returns as defined below, in consideration of the
following:
(a) the issuance of 80,000 common shares in the capital of Summo Canada to
be issued to St. Mary upon receipt of shareholder and regulatory
approval;
(b) the right to retain the royalty interest and to receive the "Royalty"
(as hereinafter defined); and
(c) the assumption of all of St. Mary's duties, obligations and
liabilities contained in the following underlying agreements:
(i) Exploration and Purchase Option Agreement dated for
reference August 1, 1994 with Boyce Cook, Margaret Cook,
Josephine Hill and Donald Charles Giaccarni, a copy of which
is attached hereto as Schedule "B" and referred to herein as
the "COOK AGREEMENT";
(ii) Exploration and Purchase Option Agreement dated for
reference August 1, 1994 with Josephine Hill, Donald Charles
Giaccarni, Ruby E. Neill, Bruce Neill and Vivian Rutherford,
a copy of which is attached hereto as Schedule "C" and
referred to herein as the "RUTHERFORD AGREEMENT"; and
(iii) Finder's Fee Agreement dated for reference May 20, 1994 with
Applied Geologic Studies, Inc., a copy of which is attached
hereto as Schedule "D" and referred to herein as the
"FINDER'S FEE AGREEMENT".
2. REPRESENTATIONS AND WARRANTIES OF ST. MARY
2.01 St. Mary represents to each of Summo USA and Summo Canada that:
(a) the interests assigned to Summo USA hereunder comprise St. Mary's
entire right, title and interest in and to the Property and,
notwithstanding the generality of the foregoing, St. Mary's entire
right, title and interest in and to the Cook Agreement, the Rutherford
Agreement and the Finder's Fee Agreement (referred to collectively
herein as the "UNDERLYING AGREEMENTS";
(b) as of November 16, 1994 the Underlying Agreements were in good
standing and no party was in default thereunder;
(c) it has full right, power and authority to transfer and assign to Summo
USA its entire right, title and interest in and to the Underlying
Agreements in accordance with this agreement;
(d) the entering into this agreement does not conflict with any applicable
law or with its charter documents nor does it conflict with, or result
in a breach of, or accelerate the performance required by any contract
or other commitment to which it is a party or by which it is bound;
(e) it has advised Summo USA of all of the material information relating
to the mineral potential of the Property of which St. Mary has
knowledge.
2.02 The representations and warranties hereinbefore set out are conditions
upon which each of Summo Canada and Summo USA has relied on entering into this
agreement and St. Mary hereby forever indemnifies and saves each of Summo Canada
and Summo USA harmless from all loss, damage, costs actions and suits arising
out of or in connection with any breach of any representation or warranty made
by it and contained in this agreement.
3. REPRESENTATIONS AND WARRANTIES OF SUMMO
3.01 Each of Summo Canada and Summo USA severally and not jointly
represents and warrants to St. Mary that:
(a) it has full corporate power and authority to enter into this
agreement, subject only to the requirement that it obtain shareholder
approval to the issuance of 80,000 Common shares to St. Mary; and
(b) the entering into this agreement does not conflict with any applicable
laws or with its charter documents not does it conflict with, or
result in a breach of, or accelerate the performance required by any
contract or other commitment to which it is a party or by which it is
bound.
3.02 The representations and warranties hereinbefore set out are conditions
upon which St. Mary has relied on entering into this agreement and each of Summo
Canada and Summo USA hereby forever indemnifies and saves St. Mary harmless from
all loss, damage, costs actions and suits arising out of or in connection with
any breach of any representation or warranty made by it and contained in this
agreement.
4. COVENANTS OF SUMMO
4.01 Summo Canada and Summo USA hereby covenants with and to St. Mary that:
(a) Summo Canada will issue 80,000 common shares in its capital to St.
Mary, upon
receipt of shareholder and regulatory approval;
(b) Summo USA shall maintain in good standing the Underlying Agreements;
(c) Summo USA shall use its best efforts to conduct all its operations on
the Property in compliance with all applicable laws, regulations and
policies; and
(d) they will allow St. Mary access at all times to all maps, reports,
assay results and other technical data prepared or obtained by them in
connection with their operations on the Property.
5. RIGHT OF ENTRY
5.01 During the currency of this agreement Summo USA, its servants, agents
and workmen and any persons duly authorized by Summo USA shall have the
exclusive right to enter upon and take possession of and prospect, explore and
develop the Property in such manner as Summo USA in its sole discretion may
deem advisable.
6. ROYALTY
6.01 In this agreement, the "ROYALTY" means the obligation of Summo USA and
any successor to its interest to pay to St. Mary 1.5% of Net Smelter Returns as
defined, calculated and paid pursuant to Schedule "E" herein. This royalty
interest ownership of St. Mary shall run with the land and shall be binding upon
Summo USA, its successors and assigns.
7. TERMINATION
7.01 If Summo Canada has not issued to St. Mary the 80,000 Common shares in
the capital of Summo Canada referred to in paragraph 1.01(a), by July 1, 1995,
Summo USA shall reconvey to St. Mary all of its interest in the Property, but
shall remain liable for the performance of any duties, obligations and
liabilities, including payments under the agreements set forth in 1.01(c)(i),
(ii) and (iii) that have accrued to the date of termination, and shall indemnify
and hold St. Mary harmless therefrom.
8. INDEPENDENT ACTIVITIES
8.01 Except as expressly provided herein, each party shall have the free
and unrestricted right to independently engage in and receive the full benefit
of any and all business endeavours of any sort whatsoever, whether or not
competitive with the endeavours contemplated herein without consulting the other
or inviting or allowing the other to participate therein. No party shall be
under any fiduciary or other duty to the other which will prevent it from
engaging in or enjoying the benefits of competing endeavours within the general
scope of the endeavours contemplated herein. The legal doctrines of "corporate
opportunity" sometimes applied to persons engaged in a joint venture or having
fiduciary status shall not apply in the case of any party. In particular,
without limiting the foregoing, no party shall have an obligation to any other
party as to:
(a) any opportunity to acquire, explore and develop any mining property,
interest or right presently owned by it or offered to it outside of
the Property at any time; and
(b) the erection of any mining plant, mill, smelter or refinery, whether
or not such mining plant, mill, smelter or refinery treats ore or
concentrates from the Property.
9. UNAVOIDABLE DELAYS
9.01 If any party should be delayed in or prevented from performing any of
the terms, covenants or conditions of this agreement by reason of a cause
beyond the control of such party, including fires, floods, earthquakes,
subsidence, ground collapse or landslides, interruptions or delays in
transportation or power supplies, strikes, lockouts, wars, acts of God,
government regulation or interference, including but without restricting the
generality of the foregoing, forest or highway closures or any other cause
beyond such party's control, then any such failure on the part of such party
to so perform shall not be deemed to be a breach of this agreement and the
time within which such party is obliged to comply with any such term,
covenant or condition of this agreement shall be extended by the total period
of all such delays. In order that the provisions of this article may become
operating, such party shall given notice in writing to the other party,
forthwith and for each new cause of delay or prevention and shall set out in
such notice particulars of the cause thereof and the day upon which the same
arose, and shall give like notice forthwith following the date that such
cause ceased to subsist.
10. ARBITRATION
10.01 If there is any disagreement, dispute or controversy (hereinafter
collectively called a "DISPUTE") between the parties with respect to any matter
arising under this agreement or the construction hereof, then the Dispute shall
be determined by arbitration in accordance with the rules of the American
Arbitration Association using a panel of three arbitrators.
11. NOTICES
11.01 Any notice, election, consent or other writing required or permitted
to be given hereunder shall be deemed to be sufficiently given if delivered or
if mailed by registered air mail or by telegram or fax, addressed as follows:
In the case of St. Mary:
St. Mary Minerals Inc.
Suite 1100 - 1776 Lincoln Street
Denver, Colorado
80203
Attention: Gregory Hahn
- --------- ------------
with a copy to:
Cohen, Brame & Smith
Attorneys at Law
One Norwest Centre, Suite 1800
1700 Lincoln Street
Denver, Colorado
80203
Attention: Roger Cohen
- --------- -----------
In the case of Summo USA:
Summo USA Corporation
Suite 1100 - 1776 Lincoln Street
Denver, Colorado
80203
Attention: Gregory Hahn
- --------- ------------
with a copy to:
Cohen, Brame & Smith
Attorneys at Law
One Norwest Centre, Suite 1800
1700 Lincoln Street
Denver, Colorado
80203
Attention: Roger Cohen
- --------- -----------
In the case of Summo Canada:
Summo Minerals Corporation
Suite 860 - 625 Howe Street
Vancouver, B.C.
V6C 2T6
Attention: the Corporate Secretary
- --------- -----------------------
with a copy to:
SCOTT, BISSETT
Barristers & Solicitors
1040 - 999 West Hastings Street
Vancouver, B.C.
V6C 2W2
Attention: Graham H. Scott
- --------- ---------------
and any such notice given as aforesaid shall be deemed to have been given to
the parties hereto if delivered, when delivered, or if mailed, on the tenth
business day following the date of mailing, or, if telegraphed or faxed, on the
next succeeding day following the telegraphing or faxing thereof
PROVIDED HOWEVER that during the period of any postal interruption in either the
country of mailing or the country of delivery, any notice given hereunder by
mail shall be deemed to have been given only as of the date of actual delivery
of the same. Any party may from time to time by notice in writing change its
address for the purpose of this paragraph.
12. APPROVALS
12.01 The parties acknowledge and agree that this agreement is subject to
the acceptance of the securities regulatory bodies having jurisdiction and the
shareholders of Summo Canada, and the parties hereby agree to use their
respective best efforts to do all things reasonable and necessary in order to
obtain such acceptance and approvals.
13. GENERAL TERMS AND CONDITIONS
13.01 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out the
intent of this agreement.
13.02 This agreement shall represent the entire understanding between the
parties with respect to the Property, and supersedes and replaces the letter
agreement dated November 16, 1994. No representations or inducements have been
made save as herein set forth. No changes, alterations, or modifications of
this agreement shall be binding upon either party until and unless a memorandum
in writing to such effect shall have been signed by all parties hereto.
13.03 The titles to the articles to this agreement shall not be deemed to
form part of this agreement but shall be regarded as having been used for
convenience of reference only.
13.04 The schedules to this agreement shall be construed with and as an
integral part of this agreement to the same extent as if they were set forth
verbatim herein.
13.05 All references to dollar amounts contained in this agreement are
references in United States funds.
13.06 This agreement shall be governed by and interpreted in accordance with
the laws of the State of Colorado.
13.07 This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
13.08 Time shall be of the essence of this agreement.
IN WITNESS WHEREOF this agreement has been executed by the parties
hereto as of the day and year first above written.
SUMMO MINERALS CORPORATION
Per:
/s/ [ILLEGIBLE]
- -------------------------
Authorized Signature
Per:
/S/ [ILLEGIBLE]
- -------------------------
Authorized Signature
ST. MARY MINERALS INC.
By:/S/ [ILLEGIBLE]
---------------------
[Name:] [ILLEGIBLE]
----------------
[Title:] PRESIDENT
---------------
SUMMO USA CORPORATION
By: /s/ Gregory P. Hahn
---------------------
[Name:] Gregory P. Hahn
----------------
[Title:] Vice President
---------------
SCHEDULE "A"
TO THAT CERTAIN AGREEMENT (THE "AGREEMENT")
MADE AS OF THE 16TH DAY OF NOVEMBER, 1994 BETWEEN
SUMMO MINERALS CORPORATION OF THE FIRST PART
AND SUMMO USA CORPORATION OF THE SECOND PART AND
ST. MARY MINERALS INC. OF THE THIRD PART
THE "PROPERTY"
In this Schedule "A", all defined terms shall have the same meaning as set out
in the Agreement. The "Property" means St. Mary's entire right, title and
interest, except for the royalty interest of 1.5% of Net Smelter Returns, in the
following:
1. COOK AGREEMENT
The following unpatented mining claims located in the Picuris and Copper
Mountain Mining District, Taos County, New Mexico:
Recorded Amended BLM
Claim Name Book Page Book Page NMMC Number
---------- ---- ---- ---- ---- -----------
Blue Jay S30 46 S37 439 68901
Chipmunk S30 47 S37 443 68902
Mustang S30 498 S37 444 68903
Shiner S30 499 S37 448 68904
Lizzie S37 4 S37 441 68905
Magpie S37 5-6 S37 442 68906
M95 109
Daisy S37 3 S37 440 68907
2. RUTHERFORD AGREEMENT
The following patented mining claims and millsites located in the Picuris
and Copper Mountain Mining District, Taos County, New Mexico:
Jumbo Lode, Mineral Survey No. 1049, BLM Book A-50, Pages 338-340
Aztec Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Sunset Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Oxide King Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Champion Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Aztec Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Sunset Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Oxide King Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Champion Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
A-1
SCHEDULE "A" (Continued)
3. Unpatented mining claims located in Township 23 North, Range 11 East, Taos
County, New Mexico:
Recorded Amended BLM Serial
Claim Name Book Page Book Page No. - NMMC
---------- --------- --------- ----------
CH 1 M172 280 163015
CH 2 M172 283 163016
CH 3 M172 284 163017
CH 4 M172 285 163018
CH 5 M172 286 163019
CH 6 M172 287 163020
CH 7 M172 288 163021
CH 8 M172 289 163022
CH 9 M172 290 163023
CH 10 M172 291 160024
CH 11 M172 292 163025
CH 12 M172 293 163026
CH 13 M172 294 163027
CH 14 M172 295 163028
CH 15 M172 296 163029
CH 16 MI72 297 163030
CH 17 M172 298 163031
CH 18 M172 299 163032
CH 19 M172 300 163033
CH 20 M172 301 163034
CH 21 M173 300 163152
CH 22 M173 303 163153
CH 23 M173 304 163154
CH 24 M173 305 163155
CH 25 M173 306 163156
CH 26 M173 307 163157
CH 27 M173 308 163158
CH 28 M173 309 163159
CH 29 M173 310 163160
CH 30 M173 311 163161
CH 31 M173 312 163162
CH 32 M173 313 163163
CH 33 M173 314 163164
CH 34 M173 315 163165
CH 35 M173 316 163166
CH 36 M173 352 163167
CH 37 M173 353 163168
CH 38 M173 354 163169
CH 39 M173 355 163170
CH 40 M173 356 163171
CH 41 M173 357 163172
CH 42 M173 358 163173
CH 43 M173 359 163174
CH 44 M173 360 163175
A-2
SCHEDULE "A" (Continued)
CH 45 M173 361 163176
CH 46 M173 362 163177
CH 47 M173 363 163178
CH 48 M173 364 163179
CH 49 M173 370 163180
CH 50 M173 371 163181
CH 51 M173 372 163182
CH 52 M173 373 163183
CH 53 M173 374 163184
CH 54 M173 375 163185
CH 55 M173 376 163186
CH 56 M173 377 163187
CH 57 M173 378 163188
CH 58 M173 379 163189
CH 59 M173 380 163190
CH 60 M173 381 163191
CH 61 M173 382 163192
CH 62 M173 383 163193
CH 63 M173 384 163194
CH 64 M173 385 163195
A-3
Schedule "B" to the Acquisition Agreement dated for reference November 16,
1994.
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the lst day
of August, 1994, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners") and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
(hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain unpatented mining claims
situate in Taos County, New Mexico, herein referred to as "the Property," and
more particularly described on EXHIBIT B attached hereto and made a part
hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire
an option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct
by St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
to Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement the
sole and exclusive option (the "Option") to purchase the Property, together
with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all liens and
encumbrances, for a total purchase price of Five Hundred Thousand Dollars
($500,000.00). St. Mary shall be entitled to a credit against the purchase
price for all amounts paid under the provisions of Section 6. hereof and
for all costs and expenses incurred under the provisions of Section 4
hereof. If the Property is
placed in commercial production at any time during the term of this
Agreement, St. Mary shall exercise the option by providing written notice
of exercise to Owners. Within three (3) years after such notice, but no
later than August 1, 2015, St. Mary shall deliver the balance of the
purchase price to Owners. "Commercial production" shall mean the processing
and sale of ores, concentrates, metals and other mineral products which
have been mined on the Property but which shall not include processing for
the purpose of testing or milling by a pilot plant.
2. ESCROW. Contemporaneously with the execution of this Agreement, Owners
shall execute, acknowledge, and deliver to the Escrow Agent one or more
general warranty deeds conveying the Property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and incorporated
herein.
Owners and St. Mary hereby appoint CB&S Nominee Corporation, 1800 One
Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203 as
their Escrow Agent to receive and distribute all payments and to hold the
deed and deliver it to the party entitled hereunder to receive the same.
The parties hereto agree that the Escrow Agent shall act pursuant to Escrow
Instructions executed contemporaneously herewith.
3. EXCLUSIVE POSSESSION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable. Owners further
warrant to St. Mary the quiet enjoyment of the Property and the right to
explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
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(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Property or the ground covered thereby. If
Owners fail or refuse to take any such action, St. Mary may take any such
action in Owners' name. Owners agree to cooperate with St. Mary in any
such action taken. If the United States or any third person attacks the
validity of any of the unpatented mining claims included in the Property
for any reason, St. Mary shall have no obligation to defend the validity of
the claim.
(d) St. Mary shall not be estopped to deny the validity of Owners'
title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Property is less than one hundred percent, the interest
claimed by such Owner is set forth in Exhibit A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in Exhibit A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $5,000, receipt
of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further annual option payments on or
before the dates and in the amounts as follows:
August 1, 1995 $ 5,000
August 1, 1996 10,000
August 1, 1997 10,000
August 1, 1998 10,000
August 1, 1999 10,000
August 1, 2000 15,000
August 1, 2001 15,000
August 1, 2002 15,000
August 1, 2003 15,000
August 1, 2004 15,000
August 1, 2005 20,000
August 1, 2006 20,000
August 1, 2007 20,000
August 1, 2008 20,000
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August 1, 2009 20,000
August 1, 2010 20,000
August 1, 2011 20,000
August 1, 2012 20,000
August 1, 2013 20,000
August 1, 2014 20,000
August 1, 2015 175,000
--------
$500,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to and shall be made payable to and shall be transmitted to the Escrow
Agent. The Escrow Instructions to be executed contemporaneously herewith
will instruct the Escrow Agent how the payments shall be disbursed. Upon
making the payments to the Escrow Agent, St. Mary shall be deemed to have
made the payments to Owners, their heirs, representatives, successors, and
assigns, and thereupon St. Mary shall be discharged to the extent thereof
as if the payments has been made directly to Owners, or to any person, firm
or corporation entitled thereto, and St. Mary shall not be liable for the
ultimate distribution or receipt of any payment or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have
free and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
4
(b) STANDARDS OF OPERATIONS. St. Mary shall conduct all operations on
the Property in a good and workmanlike manner and in accordance with
accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operating permits issued to St. Mary by
these agencies under which St. Mary shall conduct its operations. If this
Agreement is terminated, St. Mary shall reclaim only those portions of the
Property disturbed by its operations, and in compliance with all
applicable governmental laws, regulations and orders. St. Mary shall have
the right, without payment of any additional consideration to Owners, to
enter upon the Property subsequent to termination of this Agreement for
purposes of performing such reclamation work.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations
on or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement subject to the provisions of
Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
5
11. TAXES. Owners shall pay all taxes levied against the Property prior
to the date of this Agreement. St. Mary shall pay or reimburse Owners for
all taxes levied against the Property during, the term of this Agreement.
In the case of taxes for the calendar year in which this Agreement
commences, and for the calendar year in which this Agreement ends, there
still be an apportionment between the parties, St. Mary to bear the
proportion of taxes upon the Property applicable to the part of the calendar
year included hereunder, and Owners to bear the balance of the taxes. St.
Mary shall pay all taxes levied during the term of this Agreement
against all buildings, structures, machinery, equipment, personal property,
fixtures, and improvements placed upon the Property by St. Mary, and all
taxes levied against St. Mary as an employer of labor. All taxes shall be
paid when due and before delinquent, but St. Mary shall be under no
obligation to pay any tax so long as the tax is being contested in good
faith and by appropriate legal proceedings and the nonpayment thereof does
not adversely affect any right, title, or interest of Owners in or to the
Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if
it qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence
of Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
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14. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying and sampling, and similar
data conceding the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a result
of its exploration work under this Agreement and which are then in St.
Mary's possession or control. Upon Owners' request made within ninety (90)
days after termination of this Agreement, St. Mary shall at Owners' expense
provide Owners with the drill core or cuttings designated by Owners and
with copies of any portion of the factual geological and geophysical data
and maps (not including interpretive data), logs of drill holes, and
results of assaying and sampling designated by Owners. St. Mary makes no
representation or warranty as to the accuracy or completeness of any such
data or information, and shall not be liable on account of any use by
Owners or any other person of any such data or information. St. Mary shall
not be liable for the loss or destruction of any drill core or cuttings.
15. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
16. TERM, TERMINATION AND SURRENDER.
7
(a) The term of this Agreement shall be for a period of twenty-one
(21) years from the date hereof unless sooner surrendered or otherwise
terminated, or until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date therefor as provided in Section 6(b)
hereof shall constitute also a termination of this Agreement effective upon
the expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 17 and 18 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof) shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to
the appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due prior to
the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six months after the termination
of this Agreement St. Mary shall have the right (but not the obligation
except to the extent set forth in Section 8(c) hereof) to remove from the
Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or
placed on or in the Property by St. Mary, except mine timbers in place.
St. Mary may keep one or more watchmen on the Property during the six-month
period.
18. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
8
19. EASEMENTS. If requested by St. Mary during the term of this Agreement
or following the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over, or through the Property or upon, over, or through other property
owned by Owners, for the construction, maintenance, use, and removal of
pipe lines, telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels, and other
facilities necessary or convenient for St. Mary's operations on the
Property or on other property.
20. AMENDMENTS, RELOCATIONS AND PATENTS. During the term of this
Agreement, St. Mary shall have the right (but not the obligation), in
the name of Owners, to amend or relocate any or all of the unpatented
mining claims included in the Property, to locate placer claims on
ground theretofore covered by lode claims and vice versa, and to locate
any millsites on ground theretofore covered by mining claims and vice
versa, and to locate any fractions resulting from the location,
amendment or relocations of mining claims or millsites. At the request
of St. Mary, Owners shall apply for a patent for any or all of the
unpatented mining claims and millsites. For purposes of implementing
the provisions of the Section, Owners do hereby nominate, constitute and
appoint St. Mary as their true and lawful attorney-in-fact to execute,
deliver and record on behalf of the Owners and in their name, place and
stead all such documents as St. Mary may deem necessary or appropriate
for such purposes. All expenses authorized by St. Mary in connection
with locating, amending, or relocating mining claims or millsites or
prosecuting patent proceedings shall be borne by St. Mary. The rights of
St. Mary under this Agreement shall extend to all such locations,
amended locations, relocations and patented mining claims and millsites.
21. COMPLIANCE WITH FEDERAL LAND POLICY AND MANAGEMENT ACT.
(a) Owners warrant that the location notices or location certificates
for the unpatented mining claims included in the Property have been
properly filed in the proper office of the Bureau of Land Management
pursuant to 43 U.S.C. Section 1744 (b).
9
(b) Owners warrant that evidence of assessment work or notices of
intention to hold have been properly recorded in the proper county (or
recording district) office and filed in the proper office of the Bureau of
Land Management pursuant to 43 U.S.C. Section 1744 (a), as required, for
each assessment year to and including the assessment year ending
September 1, 1992.
22. ASSESSMENT WORK.
(a) Owners warrant that the annual assessment work required to hold
the Property has been performed for each assessment year to and including
the assessment year ending September 1, 1992, and that the rental fee
required by the Department of the Interior was paid for the assessment year
ending September 1, 1993. For every assessment year thereafter in which
St. Mary continues this Agreement beyond the 1st day of August of any
year, St. Mary shall perform assessment work or pay any rental fee required
by the Department of the Interior. If any court or governmental agency
decides that the work performed by St. Mary does not constitute the kind of
work required by federal or state law, St. Mary shall nevertheless be
deemed to have complied with the terms of this Agreement if the work done
by St. Mary is the kind generally accepted in the mining industry as
assessment work under existing law.
(b) St. Mary shall be relieved of its obligation to perform assessment
work for any period in which assessment work is not required or is
suspended, and St. Mary shall have the benefit of subsequent laws enacted
which relate to assessment work, including any laws extending the time
within which to perform assessment work. For each year in which St. Mary
performs assessment work, it will record in the office where the location
notice or location certificate is recorded, and in any other proper office
in the county (or recording district) in which the claims are located, and
in the proper office of the Bureau of Land Management, an affidavit of
assessment work or other documents complying with the requirements of state
law and the Federal Land Policy and Management Act of 1976 and the
regulations implementing and supplementing the Act.
10
(c) Owners represent that the Property is one contiguous group of
mining claims, and agree that work on any one or more of the claims will be
for the benefit of all of the claims.
(d) Owners represent that no report of geological, geophysical, and
geochemical work (30 U.S.C. Section 28-l and 28-2) on the Property has
been applied as labor for more than two consecutive years or for more than
a total of five years on any one mining claim.
23. NOTICES. All notices and other communications to either party shall be
in writing and shall be sufficiently given if delivered in person or sent
by certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as
of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Mr. Boyce Cook
9845 West llth Avenue
Lakewood, Colorado 80215
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
24. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall be accomplished in such a manner
that St. Mary shall be required to make payments and to give notices to but
one person, firm, or corporation, and upon breach of this covenant,
11
St. Mary may retain all monies otherwise due to Owners until the breach has
been cured. No change or division in ownership shall be binding on St.
Mary until thirty days after Owners have given St. Mary a certified copy of
the recorded instrument evidencing the change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If 0wners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the Property
or in this Agreement, Owners shall first offer the interest to St. Mary
stating the interest proposed to be sold or otherwise disposed of, the
offering price from such third party and other terms and conditions of
sale. St. Mary may accept the offer on the same terms and conditions as
such third party offer by notice to Owners given within sixty days
following the effective date Owners' offer. If St. Mary does not accept
Owners' offer, Owners may sell or otherwise dispose of the interest
offered to St. Mary at a price and upon terms and conditions equal to or
less favorable to the third party than those offered to St. Mary provided
that the sale or other disposition is effectuated within 120 days from the
effective date of Owners' offer. Any sale or other disposition shall be
subject to the terms of this Agreement, including this subsection (d), all
of which shall survive the closing of any such sale in full force and
effect. If Owners do not sell or otherwise dispose of the interest offered
within 120 days, the provisions of this subsection (d) shall apply to any
subsequent third party offer received by Owners.
25. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall (a)
sell, transfer, assign or convey any interest in the Property without St.
Mary's prior written consent or otherwise in accordance with the provisions
of Section 21(d) hereof; (b) do or fail to do
12
any act or thing which would cause or permit any part of the Property to
be pledged, collateralized or stand as security for any matter whatsoever;
or (c) enter into any leases or other agreements concerning the Property or
any part thereof.
26. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended
for an additional period equal to the duration of the Force Majeure. Upon
the occurrence and upon the termination of any Force Majeure, St. Mary
shall promptly notify Owners. St. Mary shall use reasonable diligence to
remedy a Force Majeure, but shall not be required against its better
judgment to settle any labor dispute or contest the validity of any law or
regulation or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather; mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent effort to obtain workmen or material; delay in transportation;
acts of God; unavailability of a suitable market for the ores, minerals,
concentrates, or other products from the Property; and excessive costs of
mining, milling, processing or marketing, or insufficient prices available
for the ores, minerals, concentrates, or other products produced from the
Property, which render St. Mary's operations uneconomic.
27. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
13
28. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
29. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
30. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
31. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warranties, or
understandings, written or oral.
32. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
33. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
34. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
35. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday,
14
Sunday, or legal holiday. Any performance or payment which must be taken
or made under this Agreement must be taken or made prior to 5:00 p.m.
(Denver, Colorado time) of the last day of the applicable period provided
hereunder for such action, unless another time is expressly specified. All
references to time shall be Denver, Colorado time. If a date for
performance, or payment falls on a holiday or weekend, the time for
performance or payment shall be extended to the next business day, and if
performance or payment has occurred on such weekend or holiday, it shall be
deemed to have occurred on the next business day.
36. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
37. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
38. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to the title to or description of the Property,
Owners and St. Mary shall execute amendments of this Agreement and the
Short Form of Agreement, and any other documents which may be necessary
to reflect such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Boyce Cook
- ------------------------------
Boyce Cook
and
15
/s/ Margaret Cook
- ------------------------------
Margaret Cook
- ------------------------------
Josephine Hill
and
- ------------------------------
Donald Charles Giaccarni
ST. MARY MINERALS INC.
By: /s/ Gregory A. Hahn
--------------------------------
Gregory A. Hahn, Vice President
16
STATE OF COLORADO )
)ss.
COUNTY OF JEFFERSON )
On this 27th day of July, 1994 before me the undersigned, a notary
public, personally appeared Boyce Cook known to me (or proved to me on the oath
Boyce Cook (to be the person whose name is subscribed to the within
instrument, and acknowledged that he executed the same.
My Commission Expires:
4/6/1996
10403 West Colfax Avenue
Lakewood, CO 80215 /S/ [Illegible]
- ------------------------------ ---------------------------------
Notary Public
STATE OF COLORADO )
)ss.
COUNTY OF JEFFERSON )
On this 27th day of July, 1994 before me the undersigned, a notary
public, personally appeared Margaret Cook known to me (or proved to me on the
oath Margaret Cook (to be the person whose name is subscribed to the within
instrument, and acknowledged that she executed the same.
My Commission Expires:
4/6/1996
10403 West Colfax Avenue
Lakewood, CO 80215 /S/ [Illegible]
- ------------------------------ ---------------------------------
Notary Public
STATE OF )
)ss.
COUNTY OF )
On this ____ day of ____________, 19___ before me the undersigned, a
notary public, personally appeared Boyce Cook known to me (or proved to me on
the oath of _______________________ (to be the persons whose names are
subscribed to the within instrument, and acknowledged that she executed
the same.
My Commission Expires:
- ------------------------------ ---------------------------------
Notary Public
17
STATE OF )
)ss.
COUNTY OF )
On this ____ day of ____________, 19___ before me the undersigned, a
notary public, personally appeared Donald Charles Giaccarni known to me (or
proved to me on the oath of _______________________ (to be the persons whose
names are subscribed to the within instrument, and acknowledged that he executed
the same.
My Commission Expires:
- ------------------------------ ---------------------------------
Notary Public
STATE OF COLORADO )
CITY AND ) ss.
COUNTY 0F DENVER )
The foregoing instrument was acknowledged before me this 25th day of
July, 1994, by Gregory A. Hahn, the Vice President of St. Mary Minerals Inc., a
Colorado corporation, on behalf of the corporation.
My Commission Expires:
February 14, 1997 /s/ James C. Robertson
- ------------------------- ---------------------------------
Notary Public JAMES C. ROBERTSON
18
EXHIBIT A
OWNERS
Name and Address % Interest in Property
- ---------------- ---------------------
Boyce Cook and 66.666%
Margaret Cook, Husband and Wife
9845 W. 11th Avenue
Lakewood, Colorado 80215
Josephine Hill and 16.667% each
Donald Charles Giaccarni
20 Hidalgo Terrace
San Francisco, CA 94103
EXHIBIT B
PROPERTIES
100% interest in and to the following unpatented mining claims located in
the Picuris and Copper Mountain Mining District, Taos County, New Mexico:
Recorded Amended BLM
Claim Name Book Page Book Page NMMC Number
---------- ----------- ----------- -----------
Blue Jay S 30 46 S 37 439 68901
Chipmunk S 30 47 S 37 443 68902
Mustang S 30 498 S 37 444 68903
Shiner S 30 499 S 37 448 68904
Lizzie S 37 4 S 37 441 68905
Magpie S 37 5-6 S 37 442 68906
M 95 109
Daisy S 37 3 S 37 440 68907
Schedule "C" to the Acquisition Agreement dated for reference
November 16, 1994
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the 1st day
of August, 1994, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners") and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
(hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain patented mining claims and
millsites situate in Taos County, New Mexico, herein referred to as "the
Property," and more particularly described on EXHIBIT B attached hereto and made
a part hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire
an option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct
by St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
to Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement the
sole and exclusive option (the "Option") to purchase the Property, together
with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all
liens and encumbrances, for a total purchase price of Five Hundred
Thousand Dollars ($500,000.00). St. Mary shall be entitled to a credit
against the purchase price for all amounts paid under the provisions of
Section 6. hereof and for all costs and expenses incurred under the
provisions of Section 4 hereof. If the Property is
placed in commercial production at any time during the term of this
Agreement, St. Mary shall exercise the option by providing written notice
of exercise to Owners. Within three (3) years after such notice, but no
later than August 1, 2015, St. Mary shall deliver the balance of the
purchase price to Owners. "Commercial production" shall mean the
processing and sale of ores, concentrates, metals and other mineral
products which have been mined on the Property but which shall not include
processing for the purpose of testing or milling by a pilot plant.
2. ESCROW. Contemporaneously with the execution of this Agreement,
Owners shall execute, acknowledge, and deliver to the Escrow Agent one or
more general warranty deeds conveying the Property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and
incorporated herein.
Owners and St. Mary hereby appoint CB&S Nominee Corporation, 1800 One
Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203 as
their Escrow Agent to receive and distribute all payments and to hold the
deed and deliver it to the party entitled hereunder to receive the same.
The parties hereto agree that the Escrow Agent shall act pursuant to Escrow
Instructions executed contemporaneously herewith.
3. EXCLUSIVE POSSESION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable. Owners further
warrant to St. Mary the quiet enjoyment of the Property and the right to
explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
2
(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Property or the ground covered thereby. If
Owners fail or refuse to take any such action, St. Mary may take any such
action in Owners' name. Owners agree to cooperate with St. Mary in
any such action taken. If the United States or any third person attacks
the validity of any of the patented mining claims included in the Property
for any reason, St. Mary shall have no obligation to defend the validity of
the claim.
(d) St. Mary shall not be estopped to deny the validity of Owners'
title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Property is less than one hundred percent, the interest
claimed by such Owner is set forth in Exhibit A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in Exhibit A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $5,000, receipt
of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further annual option payments on or
before the dates and the amounts as follows:
August 1, 1995 $ 5,000
August 1, 1996 10,000
August 1, 1997 10,000
August 1, 1998 10,000
August 1, 1999 10,000
August 1, 2000 15,000
August 1, 2001 15,000
August 1, 2002 15,000
August 1, 2003 15,000
August 1, 2004 15,000
August 1, 2005 20,000
August 1, 2006 20,000
August 1, 2007 20,000
August 1, 2008 20,000
3
August 1, 2009 20,000
August 1, 2010 20,000
August 1, 2011 20,000
August 1, 2012 20,000
August 1, 2013 20,000
August 1, 2014 20,000
August 1, 2015 175,000
--------
$500,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to and shall be made payable to and shall be transmitted to the Escrow
Agent. The Escrow Instructions to be executed contemporaneously herewith
will instruct the Escrow Agent how the payments shall be disbursed. Upon
making the payments to the Escrow Agent, St. Mary shall be deemed to have
made the payments to Owners, their heirs, representatives, successors, and
assigns, and thereupon St. Mary shall be discharged to the extent thereof
as if the payments had been made directly to Owners, or to any person, firm
or corporation entitled thereto, and St. Mary shall not be liable for the
ultimate distribution or receipt of any payment or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have
free and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
4
(b) STANDARDS OF OPERATION. St. Mary shall conduct all
operations on the Property in a good and workmanlike manner and in
accordance with accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall
endeavor in good faith to comply with applicable provisions of federal,
state and local laws and regulations, as required by the operating
permits issued to St. Mary by these agencies under which St. Mary shall
conduct its operations. If this Agreement is terminated, St. Mary shall
reclaim only those portions of the Property disturbed by its operations,
and in compliance with all applicable governmental laws, regulations and
orders. St. Mary shall have the right, without payment of any additional
consideration to Owners, to enter upon the Property subsequent to
termination of this Agreement for purposes of performing such
reclamation work.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations
on or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement subject to the provisions of
Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
5
11. TAXES. Owners shall pay all taxes levied against the Property prior
to the date of this Agreement. St. Mary shall pay or reimburse Owners for
all taxes levied against the Property during the term of this Agreement.
In the case of taxes for the calendar year in which this Agreement
commences, and for the calendar year in which this Agreement ends, there
shall be an apportionment between the parties, St. Mary to bear the
proportion of taxes upon the Property applicable to the part of the
calendar year included hereunder, and Owners to bear the balance of the
taxes. St. Mary shall pay all taxes levied during the term of this
Agreement against all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements placed upon the Property by St. Mary,
and all taxes levied against St. Mary as an employer of labor. All taxes
shall be paid when due and before delinquent, but St. Mary shall be under
no obligation to pay any tax so long as the tax is being contested in good
faith and by appropriate legal proceedings and the nonpayment thereof does
not adversely affect any right, title, or interest of Owners in or to the
Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if
it qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence of
Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
6
14. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying, and sampling, and similar
data concerning the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a result
of its exploration work under this Agreement and which are then in St.
Mary's possession or control. Upon Owners' request made within ninety (90)
days after termination of this Agreement, St. Mary shall at Owners' expense
provide Owners with the drill core or cuttings designated by Owners and
with copies of any portion of the factual geological and geophysical data
and maps (not including interpretive data), logs of drill holes, and
results of assaying and sampling designated by Owners. St. Mary makes no
representation or warranty as to the accuracy or completeness of any such
data or information, and shall not be liable on account of any use by
Owners or any other person of any such data or information. St. Mary shall
not be liable for the loss or destruction of any drill core or cuttings.
15. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
16. TERM, TERMINATION AND SURRENDER.
7
(a) The term of this Agreement shall be for a period of twenty-one
(21) years from the date hereof unless sooner surrendered or otherwise
terminated, or until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date therefor as provided in Section 6(b)
hereof shall constitute a termination of this Agreement effective upon the
expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 17 and 18 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof) shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to Owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to
the appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due prior to
the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six months after the termination
of this Agreement St. Mary shall have the right (but not the obligation
except to the extent set forth in Section 8(c) hereof) to remove from the
Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or placed
on or in the Property by St. Mary, except mine timbers in place. St. Mary
may keep one or more watchmen on the Property during the six-month period.
18. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
8
19. EASEMENTS. If requested by St. Mary during the term of this Agreement
or following the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over, or through the Property or upon, over, or through other property
owned by Owners, for the construction, maintenance, use, and removal of
pipe lines, telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels, and other
facilities necessary or convenient for St. Mary's operations on the
Property or on other property.
20. NOTICES. All notices and other communications to either party shall
be in writing and shall be sufficiently given if delivered in person or
sent by certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as
of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Mr. Boyce Cook
9845 West llth Avenue
Lakewood, Colorado 80215
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
21. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall
9
be accomplished in such a manner that St. Mary shall be required to
make payments and to give notices to but one person, firm, or corporation,
and upon breach of this covenant, St. Mary may retain all monies otherwise
due to Owners until the breach has been cured. No change or division in
ownership shall be binding on St. Mary until thirty days after Owners have
given St. Mary a certified copy of the recorded instrument evidencing the
change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability, for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If Owners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the
Property or in this Agreement, Owners shall first offer the interest to
St. Mary stating the interest proposed to be sold or otherwise disposed
of, the offering price from such third party and other terms and
conditions of sale. St. Mary may accept the offer on the same terms and
conditions as such third party offer by notice to Owners given within
sixty days following the effective date Owners' offer. If St. Mary does
not accept Owners' offer, Owners may sell or otherwise dispose of the
interest offered to St. Mary at a price and upon terms and conditions
equal to or less favorable to the third party than those offered to St.
Mary provided that the sale or other disposition is effectuated within
120 days from the effective date of Owners' offer. Any sale or other
disposition shall be subject to the terms of this Agreement, including
this subsection (d), all of which shall survive the closing of any such
sale in full force and effect. If Owners do not sell or otherwise
dispose of the interest offered within 120 days, the provisions of this
subsection (d) shall apply to any subsequent third party offer received
by Owners.
22. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall
(a) sell, transfer, assign
10
or convey any interest in the Property without St. Mary's prior
written consent or otherwise in accordance with the provisions of Section
21(d) hereof; (b) do or fail to do any act or thing which would cause or
permit any part of the Property to be pledged, collateralized or stand as
security for any matter whatsoever; or (c) enter into any leases or other
agreements concerning the Property or any part thereof.
23. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended for
an additional period equal to the duration of the Force Majeure. Upon the
occurrence and upon the termination of any Force Majeure, St. Mary shall
promptly notify Owners. St. Mary shall use reasonable diligence to remedy
a Force Majeure, but shall not be required against its better judgment to
settle any labor dispute or contest the validity of any law or regulation
or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather; mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent effort to obtain workmen or material; delay in transportation;
acts of God; unavailability of a suitable market for the ores, minerals,
concentrates, or other products from the Property; and excessive costs of
mining, milling, processing or marketing, or insufficient prices available
for the ores, minerals, concentrates, or other products produced from the
Property, which render St. Mary's operations uneconomic.
24. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
11
25. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
26. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
27. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
28. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warrantees, or
understandings, written or oral.
29. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
30. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
31. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
32. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday,
12
Sunday, or legal holiday. Any performance or payment which must be
taken or made under this Agreement must be taken or made prior to 5:00 p.m.
(Denver, Colorado time) of the last day of the applicable period provided
hereunder for such action, unless another time is expressly specified. All
references to time shall be Denver, Colorado time. If a date for
performance or payment falls on a holiday or weekend, the time for
performance or payment shall be extended to the next business day, and if
performance or payment has occurred on such weekend or holiday, it shall be
deemed to have occurred on the next business day.
33. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
35. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to the title or description of the Property, Owners
and St. Mary shall execute amendments of this Agreement and the Short Form
of Agreement, and any other documents which may be necessary to reflect
such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
- -----------------------------------
Josephine Hill
and
13
- -----------------------------------
Donald Charles Giaccarni
- -----------------------------------
Ruby E. Neill
and
- -----------------------------------
Bruce Neill, Joint Tenants
/s/ Vivian I. Rutherford
- -----------------------------------
Vivian I. Rutherford
ST. MARY MINERALS INC.
By: /s/ Gregory A. Hahn
-------------------------------------
Gregory A. Hahn, Vice President
14
STATE OF )
)SS.
COUNTY OF )
On this day of ____ day of ________________, 19___ before me the
undersigned, a notary public, personally appeared Josephine Hill known to me (or
proved to me on the oath of ______________________________ (to be the persons
whose names are subscribed to the within instrument, and acknowledged that she
executed the same.
My Commission Expires:
- --------------------------------- ----------------------------------------
Notary Public
STATE OF )
)SS.
COUNTY OF )
On this _______ day of ______________, 19___ before me the
undersigned, a notary public, personally appeared Donald Charles Giaccarni known
to me (or proved to me on the oath of ______________________ (to be the persons
whose names are subscribed to the within instrument, and acknowledged that he
executed the same.
My Commission Expires:
- --------------------------------- ----------------------------------------
Notary Public
STATE OF )
)SS.
COUNTY OF )
On this ______ day of _____________________, 19____ before me the
undersigned, a notary public, personally appeared Ruby E. Neill known to me (or
proved to me on the oath of _____________________________ (to be the person
whose name is subscribed to the within instrument, and acknowledged that
she executed the same.
My Commission Expires
- --------------------------------- ----------------------------------------
Notary Public
15
STATE OF )
)SS.
COUNTY OF )
On this ______ day of _____________________, 19____ before me the
undersigned, a notary public, personally appeared Bruce Neill known to me (or
proved to me on the oath of _____________________________ (to be the person
whose name is subscribed to the within instrument, and acknowledged that
she executed the same.
My Commission Expires
- --------------------------------- ----------------------------------------
Notary Public
STATE OF )
)SS.
COUNTY OF )
On this 2nd day of August, 1994 before me the undersigned, a notary
public, personally appeared Vivian I. Rutherford known to me (or proved to me on
the oath of _____________________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires
March 9, 1996 /s/ Catherine S. Guy
- --------------------------------- ----------------------------------------
Notary Public
STATE OF COLORADO )
CITY AND )SS.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 25th day of
July, 1994, by Gregory A. Hahn, the Vice President of St. Mary Minerals Inc.,
Colorado corporation, on behalf of the corporation.
My Commission Expires:
February 14, 1997 /s/ James C. Robertson
- ----------------------------------- -----------------------------------
Notary Public James C. Robertson
16
EXHIBIT A
OWNERS
Name and Address % Interest in Property
- ---------------- ----------------------
Josephine Hill and 16.667% each
Donald Charles Giaccarni
20 Hidalgo Terrace
San Francisco, CA 94103
Ruby E. Neill and 33.333%
Bruce Neill, Joint Tenants
724 E. Pueblo
Espanola, New Mexico 87532
Vivian I. Rutherford 33.333%
P.O. Box 8467
Albuquerque, New Mexico 87198
EXHIBIT B
PROPERTIES
100% interest in and to the following patented mining claims and millsites
located in the Picuris and Copper Mountain Mining District, Taos County, New
Mexico:
Jumbo Lode, Mineral Survey No. 1049, BLM Book A-50, Pages 338-340
Aztec Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Sunset Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Oxide King Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Champion Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Aztec Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Sunset Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Oxide King Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Champion Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
APPLIED GEOLOGIC STUDIES, INC.
2875 West Oxford
Suite #3
Englewood, Colorado 80110
(303) 761-5624
(303) 761-5625 (Fax)
Schedule "D" to the
Acquisition Agreement
dated for reference
November 16, 1994
May 20, 1994
Mr. Greg Hahn, VP, Minerals Exploration
St. Mary Minerals, Inc.
1776 Lincoln Street, Suite 110
Denver, CO 80203-5400
Dear Greg:
As per our recent phone call, I am herein describing terms of an Agreement,
which if affirmed by your signature, will result in our passing onto you and
your company information on an interesting "copper-oxide" prospect (prospect),
located on claimed land in New Mexico.
The prospect was encountered during a comprehensive review of leachable
copper reserves in the Southwestern U.S. The prospect was explored during
the porphyry copper era by a couple of majors, however, was not in itself big
enough for their further interest. We estimate that there may be upward to
20-25 million tons of low-grade exotic copper with a possible core area of
0.5% or better. According to a call made to the owner last year, the
prospect was open for option negotiations.
Agreement to the following terms would make this prospect and our in-house
date available to you.
l. St. Mary Minerals, Inc. (St. Mary) would have 60 days from date of
disclosure of prospect data to accept or reject the prospect. If rejected, St.
Mary shall submit in writing this rejection and agrees that it and any of its
officers, employees, agents, representatives or consultants for a period of
three (3) years from the date of rejection letter, shall not acquire or attempt
to acquire any interest in the prospect or any property within a mile limit
outside the boundaries of the prospect (Area to be defined on map with data).
Furthermore, St. Mary shall keep all data on the prospect strictly confidential
for the 3-year period.
2. If the prospect is accepted, St Mary agrees to pay Applied Geologic Studies,
Inc. (AGS) a discovery bonus amounting to $100,000. The bonus shall be paid as
follows:
a. $5,000 at time of land acquisition in prospect area, or in any area
within a mile limit outside the prospect's boundaries.
b. Five percent (5%) of total direct exploration expenditures made for
benefit of the prospect, exclusive of land costs. Expenditures would include
geologic work, geochemistry, geophysics, assay, drilling and costs related to
mine feasibility studies or mine development. These payments would be made
annually.
c. Any balance (not to exceed $100,000), shall be paid at time of
decision to put the prospect into mine production.
3. In the event that St. Mary conveys its interest in the prospect to another
party, it will require such party to expressly assume in writing St. Mary's
obligation to make the above payments; whereupon, St. Mary's further obligations
under this Agreement shall cease. If St. Mary surrenders its interest in the
prospect, or if St. Mary's rights in the property expire or terminate in any
other way, it's obligations to make further payments under this Agreement shall
immediately cease.
If you are in agreement with the terms set forth above, please indicate by
executing both copies of the Agreement and returning one signed copy to me.
Sincerely,
/s/ William A. Rehrig
- ---------------------
Dr. William A. Rehrig
President, AGS Inc.
- -------------------------------------------------------------------------
Accepted by me this the 23rd day of May, 1994
/s/ Gregory A. Hahn
- -------------------------------------------------------
Signature of Company Representative
SCHEDULE "E"
TO THAT CERTAIN AGREEMENT (THE "AGREEMENT")
MADE AS OF THE 16TH DAY OF NOVEMBER, 1994 BETWEEN
SUMMO MINERALS CORPORATION OF THE FIRST PART
AND SUMMO USA CORPORATION OF THE SECOND PART
(COLLECTIVELY, THE "PAYOR") AND ST. MARY
MINERALS INC. OF THE THIRD PART (THE "PAYEE")
NET SMELTER RETURNS ROYALTY
1. In this Agreement, the term "NET SMELTER RETURNS" shall mean the gross
revenue from the sale by the Payor of all ore, concentrate and metal produced
from the Property, after deduction of the following:
(a) all smelting and refining costs (excluding the cost of SX-EW
processing), treatment charges and penalties including but not limited
to metal losses, penalties for impurities and charges for refining,
selling and handling by the smelter, refinery or other purchaser;
(b) costs of marketing, handling, transporting and insuring such ore,
concentrate or metal from the Property or from a concentrator, whether
situated on or off the Property, to a smelter, refinery or other place
of treatment or to the purchaser thereof.
2. Payments of Net Smelter Returns shall be made within 30 days after
the end of each fiscal quarter in which Net Smelter Returns, as determined on
the basis of final adjusted invoices, are received by the Payor. All such
payments shall be made in U.S. dollars.
3. For the purposes of determining Net Smelter Returns, all receipts and
disbursements in currency other that U.S. dollars shall be converted into U.S.
currency on the day of receipt or disbursement, as the case may be.
4. Each payment of Net Smelter Returns shall be accompanied by a
statement indicating the calculation of Net Smelter Returns paid. The Payee
shall be entitled to audit, during normal business hours, such books and records
as are necessary to determine the correctness of the payments, provided however,
that such audit shall be made only on an annual basis and within 12 months of
the end of the fiscal period in respect of which such audit is made.
5. Payment of Net Smelter Returns shall be made to the Payee at such
place or places in the United States as they shall advise the Payor from time to
time.
6. The determination of the Net Smelter Returns hereunder is based on the
premise that production will be developed solely on the Property. If other
properties are incorporated with the Property in a single mining project and
ores pertaining to each cannot be readily
segregated on a practical or equitable basis, the Payor shall have the right
to commingle with ore from the Property ore produced from other properties
owned or controlled by the Payor provided that the Payor will adopt and
employ generally accepted practices and procedures for weighing, sampling and
assaying in order to determine the amount of metals or concentrate derived
from the Property. The Payee, or the representative of the Payee authorized
in writing, will be permitted to examine at all reasonable times the Payor's
records pertaining to commingling of ores.
7. If metal, concentrates or ore shipped from the Property are lost or
destroyed under circumstances in which the Payor receives payment under an
insurance policy, such payments will be deemed Net Smelter Returns.
8. The Payor shall not sell, assign, transfer or in any other manner deal
with the Property or any interest therein without the purchaser, transferee or
assignee acquiring the Property or such interest therein first agreeing with the
Payor in writing to be bound by the terms of this agreement. The Payor's
covenant to pay a 1.5% Net Smelter Return Royalty to the Payee hereunder shall
be a covenant running with the Property.
9. No error in accounting or in interpretation of this Agreement shall be
the basis for a claim of breach of fiduciary duty, or the like, or give rise to
a claim for exemplary or punitive damages or for termination or rescission of
the Agreement or the estate and rights acquired and held by the Payor under the
terms of the Agreement.
ASSIGNMENT AND QUITCLAIM DEED
This Assignment and Quitclaim Deed, made effective November 16, 1994, is
between ST. MARY MINERALS INC., a Colorado corporation, ("Assignor"), whose
address is 1776 Lincoln St., Suite 1100, Denver, CO 80203, and SUMMO USA
CORPORATION, a Colorado corporation ("Assignee"), whose address is 1776 Lincoln
St., Suite 1100, Denver, CO 80203.
IN CONSIDERATION of Ten Dollars ($10.00) and other valuable consideration
in hand paid by Assignee, the receipt and sufficiency of which are hereby
acknowledged, and further in consideration of the mutual covenants and
conditions contained in this Assignment, the parties agree as follows:
1. ASSIGNMENT. Assignor assigns to Assignee, its successors and assigns,
those certain agreements more particularly described in Exhibit A attached
hereto and incorporated by reference herein (the "Agreements").
2. QUITCLAIM. Assignor quitclaims to Assignee, its successors and assigns,
all those certain patented and unpatented mining claims and mill sites in Taos
County, New Mexico, more particularly described in Exhibits A and B attached
hereto and incorporated by reference herein (the "Claims"), the Agreements and
the Claims being herein referred to as the "Property".
3. RESERVATION OF ROYALTY. Assignor reserves, and Assignee Agrees to pay to
Assignor, a royalty equal to One and One-Half Percent (1 1/2%) of Net Smelter
Returns of all ore, concentrates, and metal produced from the Property as
provided in Exhibit C attached hereto and incorporated by reference herein.
4. ADDITIONAL TERMS. Additional terms and conditions are contained in an
Acquisition Agreement dated Nov. 16, 1994 among St. Mary Minerals Inc., Summo
Minerals Corporation, and Summo USA Corporation. This Assignment and Quit
Claim Deed shall not merge, limit, decrease, increase, or in any manner affect
any of the terms of the Acquisition Agreement or any rights, interests, or
oblilgations of the parties thereunder.
IN WITNESS WHEREOF, Assignor has executed this Assignment and Quitclaim
Deed effective the date first above written.
ST. MARY MINERALS INC.
By: /s/ H.J. Matheson
--------------------------------
[Name:] HUGH J. MATHESON
----------------------------
[Title:] PRESIDENT
---------------------------
-1-
SUMMO USA CORPORATION
By: /s/ Gregory A. Hahn
--------------------------------
[Name:] GREGORY A. HAHN
----------------------------
[Title:] VICE PRESIDENT
---------------------------
-2-
STATE OF COLORADO )
) ss:
City and County of Denver)
The foregoing instrument was acknowledged before me this 28th day of April,
1995, by Hugh J. Matheson, as the President of St. Mary Minerals Inc., a
Colorado corporation, the corporation named in and that executed the foregoing
instrument, on behalf of the corporation.
/s/ James C Robertson
---------------------
Notary Public
[SEAL]
STATE OF COLORADO )
) ss:
City and County of Denver)
The foregoing instrument was acknowledged before me this 28th day of April,
1995, by Gregory A. Hahn, as the Vice President of Summo USA Corporation, a
Colorado corporation, the corporation named in and that executed the foregoing
instrument, on behalf of the corporation.
/s/ James C. Robertson
---------------------
Notary Public
[SEAL]
-3-
EXHIBIT A
1. Exploration and Purchase Option Agreement dated for reference August 1,
1994, recorded October 17, 1994 in the Taos County records at Book M-170, Pages
821-830, between Boyce Cook, Margaret Cook, Josephine Hill, and Donald Charles
Giaccarni, as Owners, and St. Mary Minerals Inc., covering the following
unpatented mining claims located in the Picuris and Copper Mountain Mining
District, Taos County, New Mexico:
Recorded Amended BLM Serial
Claim Name Book Page Book Page No. - NMMC
---------- --------- --------- ----------
Blue Jay S30 46 S37 439 68901
Chipmunk S30 47 S37 443 68902
Mustang S30 498 S37 444 68903
Shiner S30 499 S37 448 68904
Lizzie S37 4 S37 441 68905
Magpie S37 5-6 S37 442 68906
M95 109
Daisy S37 3 S37 440 68907
2. Exploration and Purchase Option Agreement dated for reference August 1,
1994, recorded October 17, 1994 in the Taos County records at Book M-170, Pages
831-841, between Josephine Hill, Donald Charles Giaccarni, Ruby E. Neill, Bruce
Neill, and Vivid Rutherford, as Owners, and St. Mary Minerals Inc., covering the
following patented mining claims located in the Picuris and Coppar Mountain
Mining District, Taos County, New Mexico:
Claim Name M.S. No. Recorded
----------- -------- ---------
Jumbo Lode 1049 BLM Book A-50, Pages 338-340
Aztec Lode 1049A BLM Book A-50, Pages 338-340
Sunset Lode 1049A BLM Book A-50, Pages 338-340
Oxide Lode 1049A BLM Book A-50, Pages 338-340
Champion Lode 1049A BLM Book A-50, Pages 338-340
Aztec Millsite 1049B BLM Book A-50, Pages 338-340
Sunset Millsite 1049B BLM Book A-50, Pages 338-340
Oxide Millsite 1049B BLM Book A-50, Pages 338-340
Champion Millsite 1049B BLM Book A-50, Pages 338-340
A-1
EXHIBIT B
Unpatented mining claims located in Township 23 North, Range 11 East, Taos
County, New Mexico:
Recorded Amended BLM Serial
Claim Name Book Page Book Page No. - NMMC
---------- --------- --------- -----------
CH 1 M172 280 163015
CH 2 M172 283 163016
CH 3 M172 284 163017
CH 4 M172 285 163018
CH 5 M172 286 163019
CH 6 M172 287 163020
CH 7 M172 288 163021
CH 8 M172 289 163022
CH 9 M172 290 163023
CH 10 M172 291 163024
CH 11 M172 292 163025
CH 12 M172 293 163026
CH 13 M172 294 163027
CH 14 M172 295 163028
CH 15 M172 296 163029
CH 16 M172 297 163030
CH 17 M172 298 163031
CH 18 M172 299 163032
CH 19 M172 300 163033
CH 20 M172 301 163034
CH 21 M173 300 163152
CH 22 M173 303 163153
CH 23 M173 304 163154
CH 24 M173 305 163155
CH 25 M173 306 163156
CH 26 M173 307 163157
CH 27 M173 308 163158
CH 28 M173 309 163159
CH 29 M173 310 163160
CH 30 M173 311 163161
CH 31 M173 312 163162
CH 32 M173 313 163163
CH 33 M173 314 163164
CH 34 M173 315 163165
CH 35 M173 316 163166
CH 36 M173 352 163167
CH 37 M173 353 163168
CH 38 M173 354 163169
CH 39 M173 355 163170
CH 40 M173 356 163171
CH 41 M173 357 163172
CH 42 M173 358 163173
CH 43 M173 359 163174
CH 44 M173 360 163175
B-1
CH 45 M173 361 163176
CH 46 M173 362 163177
CH 47 M173 363 163178
CH 48 M173 364 163179
CH 49 M173 370 163180
CH 50 M173 371 163181
CH 51 M173 372 163182
CH 52 M173 373 163183
CH 53 M173 374 163184
CH 54 M173 375 163185
CH 55 M173 376 163186
CH 56 M173 377 163187
CH 57 M173 378 163188
CH 58 M173 379 163189
CH 59 M173 380 163190
CH 60 M173 381 163191
CH 61 M173 382 163192
CH 62 M173 383 163193
CH 63 M173 384 163194
CH 64 M173 385 163195
B-2
EXHIBIT C
NET SMELTER RETURNS ROYALTY
1. The term "Net Smelter Returns" means the gross revenue from the sale
by Assignee, its successors and assigns (hereinafter, "Payor") , of all ore,
concentrate, and metal produced from the property, after deduction of the
following:
(a) all smelting and refining costs (excluding the cost of SX-EW
processing), treatment charges and penalties including but not limited to
metal losses, penalties for impurities and charges for refining, selling,
and handling by the smelter, refinery, or other purchaser, and
(b) costs of marketing, handling, transporting, and insuring such
ore, concentrate, or metal from the Property or from a concentrator,
whether situated on or off the Property, to a smelter, refinery, or other
place of treatment or to the purchaser thereof.
2. Payments of Net Smelter Returns shall be made within thirty (30) days
after the end of each fiscal quarter in which Net Smelter Returns, as
determined on the basis of final adjusted invoices, are received by Payor. All
such payments shall be made in U.S. dollars.
3. For the purposes of determining Net Smelter Returns, all receipts and
disbursements in currency other than U.S. dollars shall be converted into U.S.
currency on the day of receipt or disbursement, as the case may be.
4. Each payment of Net Smelter Returns shall be accompanied by a
statement indicating the calculation of Net Smelter Returns paid. The payee
shall be entitled to audit, during normal business hours, such books and
records as are necessary to determine the correctness of the payments, provided
however, that such audit shall be made only on an annual basis and within twelve
(12) months of the end of the fiscal period in respect of which such audit is
made.
5. Payment of Net Smelter Returns shall be made to the payee at such
place or places in the United States as payee shall advise Payor from time to
time.
6. The determination of the Net Smelter Returns hereunder is based on the
premise that production will be developed solely on the Property. If other
properties are incorporated with the Property in a single mining project and
ores pertaining to each cannot be readily segregated on a practical or
equitable basis, the Payor shall have the right to commingle with ore from the
C-1
Property ore produced from other properties owned or controlled by the Payor
provided that the Payor will adopt and employ generally accepted practices and
procedures for weighing, sampling, and assaying in order to determine the amount
of metals or concentrate derived from the Property. The payee, or the
representative of the payee authorized in writing, will be permitted to
examine at all reasonable times the Payor's records pertaining to commingling
of ores.
7. If metal, concentrates, or ore shipped from the Property are lost or
destroyed under circumstances in which Payor receives payment under an insurance
policy, such payments will be deemed Net Smelter Returns.
8. The Payor shall not sell, assign, transfer, or in any other manner
deal with the Property or any interest therein without the purchaser,
transferee, or assignee acquiring the Property or such interest therein first
agreeing with the Payor in writing to be bound by the terms hereof. The
Payor's covenant to pay a One and One-Half Percent (1 1/2%) Net Smelter
Return Royalty hereunder shall be a covenant running with the Property.
9. No error in accounting or in interpretation hereof shall be the basis
for a claim of breach of fiduciary duty, or the like, or give rise to a
claim for exemplary or punitive damages or for termination or rescission
hereof or the estate and rights acquired and held by the Payor under the terms
hereof.
C-2