AGREEMENT TO ASSIGN INTEREST - BUFFALO GULCH CLAIMS
This agreement is dated as of the 11th day of December, 1995
and is made between:
IDAHO GOLD CORPORATION
OF THE FIRST PART AND:
IDAHO CONSOLIDATED METALS CORP.
OF THE SECOND PART
Whereas:
A. Idaho Gold Corporation ("Idaho Gold") has the right to acquire
certain mining interests known as the Buffalo Gulch Claims as more
particularly described in Schedule "A" hereto (the "Mining
Properties");
B. Idaho Consolidated Metals Corp. ("ICMC") wishes to acquire Idaho
Gold's interest in the Mining Properties together with all
geological information (including core or drill cutting),
metallurgical lab and field test results, mine design and reserve
calculations and pre-feasibility and feasibility studies relating
to the Mining Interests and in the possession or under the control
of Idaho Gold (the "Data");
NOW THEREFORE this Agreement witnesses that in consideration of the
mutual covenants and agreements herein contained and subject to the
terms and conditions hereafter set out, the parties hereto agree as
follows:
1. "CLOSING DATE" and "CLOSING" - The term "Closing Date" as used
throughout this Agreement shall mean July 19, 1996 or such other
date as is agreed to by the parties. The term "Closing" as used
throughout this Agreement shall mean the completion of the
transactions herein contemplated which shall occur at 10:00 a.m.
Vancouver time on the Closing Date or such other time on the
Closing Date as agreed to by the parties.
2. PURCHASE AND SALE OF ASSIGNED INTERESTS - Upon the subject to the
terms and conditions set forth in this Agreement, Idaho Gold
agrees to sell, assign and transfer to ICMC, and ICMC agrees to
purchase from Idaho Gold, on the Closing Date all interest of
Idaho Gold in and to the Mining Properties and the Data
(collectively, the "Assigned Interests"), subject to the
reservation by Idaho Gold of a net smelter return royalty (the
"Royalty") on the Mining Properties on the terms specified in
Schedule "B" hereto.
3. CONSIDERATION FOR ASSIGNED INTERESTS - As consideration for the
transfer of the Assigned Interests, ICMC:
a) will issue to Idaho Gold 120,000 common shares in the capital
of ICMC, 60,000 of which shares will be issued to Idaho Gold
on the Closing Date and the balance of which will be issued to
Idaho Gold one year after the Closing Date.
b) will incur expenditures (as defined in clause 3(f)(ii) below)
of not less than US$310,000 in the aggregate on or before the
fifth anniversary of the Closing Date of the exploration and
development of the Mining Properties, with the following
amounts being incurred by the dates indicated below:
i) US$30,000 on or before the first anniversary of the
Closing Date;
ii) an aggregate of US$70,000 on or before the second
anniversary of the Closing Date;
iii) an aggregate of US$150,000 on or before the third
anniversary of the Closing Date; and
iv) an aggregate of US$230,000 on or before the fourth
anniversary of the Closing Date;
c) will replace all bonds relating to the Mining Properties
currently lodged by or on behalf of Idaho Gold with any
regulatory authorities;
d) will be solely responsible for all costs of environmental
compliance associated with its exploration and mining
operations on the Mining Properties or with the termination
thereof, and all costs incurred in connection with
environmental compliance, reclamation and long-term care and
monitoring of the Mining Properties arising out of activities
at any time by any person and its predecessors in ownership of
the Mining Properties;
e) will consent to the reservation by Idaho Gold of the Royalty;
and
f) subject to paragraph 4, will grant to Idaho Gold an option
(the "Option") to acquire a 49% working interest in the Mining
Properties upon the following terms:
i) the term of the Option will be five years from the
Closing Date;
ii) Idaho Gold may exercise the Option by delivering a
notice (the "Option Notice") to ICMC to that effect
and, within 30 days after delivery of the Option
Notice, a payment to ICMC equal to 115% of ICMC's
expenditures on the Mining Properties from January 1,
1996 to the date of delivery of such payment.
"Expenditures" shall mean all cash, expenses,
obligations and liabilities, other than for personal
injury or property damage, of whatever kind or nature
spent or incurred directly or indirectly in connection
with the exploration, development or equipping of the
Mining Properties for commercial production including
an overhead fee not to exceed 8% of all expenditures
(other than the overhead fees);
iii) if Idaho Gold exercises the Option, ICMC and Idaho Gold
will enter into a joint venture agreement which will
provide that (A) each party will fund its proportionate
share of ongoing expenditures on the Mining Properties
or have its interest diluted; (B) a management
committee will approve all operations and activities of
the joint venture and will consist of two members from
each of ICMC and Idaho Gold, with ICMC to hold the
casting vote so long as it retains not less than a 51%
interest in the joint venture; (C) ICMC will have the
right to be operator of the joint venture so long as it
retains not less than a 51% interest in the joint
venture;
iv) during the term of the Option, ICMC shall keep the
Mining Properties free and clear of all liens and
encumbrances arising from its operations and in good
standing by the doing and filing, or payment in lieu
thereof, of all necessary assessment work and payment
of all taxes and other charges required to be paid and
by the doing of all other acts and things and the
making of all other payments required to be made;
v) ICMC will, as of January 1, 1996 and during the term of
the Option, assume, observe and perform each and every
covenant and agreement made or given by Idaho Gold or
its predecessor in title to be observed and performed
under those contracts and agreements listed in Schedule
"C" hereto, including the making of all cash and share
payments and the performance of all work commitments on
the Mining Properties. ICMC may re-negotiate any of
the contracts and agreements listed in Schedule "C" to
decrease or eliminate the payment obligations
thereunder;
vi) if, during the term of the Option, ICMC elects to
relinquish one or more of the Mining Properties, it
will so notify Idaho Gold and, if, within 60 days of
receipt of such notice, Idaho Gold provides a notice to
ICMC to the effect that Idaho Gold wants the particular
Mining Property re-transferred to it, ICMC will assign
that Mining Property, in good standing, to Idaho Gold
upon receipt from Idaho Gold of US$1.00. Notwith-
standing the foregoing ICMC may not elect to relinquish
any part of the Mining Properties during the first year
of the term of the Option;
vii) if ICMC should fail to make any of the payments or
carry out any of the obligations referred to in clauses
(iv) or (v) above, it shall be deemed to have made an
election to relinquish the Mining Property(ies)
involved;
viii) an election or deemed election to relinquish one or
more of the Mining Properties will not relieve ICMC of
its obligations pursuant to paragraph 3(d); and
ix) if Idaho Gold exercises the Option, the Royalty will be
terminated.
4. RIGHT TO ACQUIRE OPTION - ICMC will have the right to acquire
Idaho Gold's right to the Option by payment to Idaho Gold of Cdn.
$300,000 at any time up to 21 days after receipt by ICMC of the
Option Notice from Idaho Gold.
5. ASSIGNMENTS BY ICMC - ICMC agrees that it will not transfer or
assign any part of its interest in the Assigned Interests without
the prior written consent of Idaho Gold. It shall be a condition
precedent to any assignment that the assignee of the interest
being transferred agrees in writing to be bound by the terms of
this Agreement, the Option and the Royalty.
6. CLOSING - On the Closing Date, the parties will table the
following documents and instruments and take the following steps:
a) ICMC will table for delivery to Idaho Gold a share certificate
for 60,000 common shares in the capital of ICMC registered in
the name of Idaho Gold;
b) ICMC will table for delivery to Idaho Gold evidence
satisfactory to Idaho Gold that the bonds referred to in
paragraph 3 (c) have been replaced by ICMC;
c) Idaho Gold will table for delivery to ICMC duly executed
transfers, as prepared by ICMC's solicitors, sufficient to
convey to ICMC the Assigned Interests to ICMC;
d) each party will execute and table for delivery to the other
Option agreement;
e) ICMC will execute and table for delivery to Idaho Gold an
agreement reserving the Royalty to Idaho Gold; and
f) each party will execute and table for delivery to the other
party all such other documents and instruments reasonably
required to effectively consummate the transactions
contemplated herein.
"Closing" will occur upon all documents set out above being
tabled as required and the closing conditions being satisfied
or waived by the parties.
7. JOINT CONDITION PRECEDENT TO CLOSING - The respective obligations
of each of the parties hereto to complete the Closing shall be
subject to receipt of all governmental and third party approvals
and consents required for the completion of the purchase and sale
transaction. This condition may be waived by ICMC and Idaho Gold
acting together. ICMC hereby acknowledges that Arctic Fox Ltd.
and Gray Estates Company have not consented to the transfer
contemplated herein and that such consent may not be received by
Closing, if at all. Idaho Gold and ICMC hereby waive the receipt
of the consent by Arctic Fox Ltd. and Gray Estates Company as a
condition precedent to the completion of the purchase and sale
transaction contemplated herein.
8. TIME OF ESSENCE - Time is and will be of the essence of each and
every provision of this Agreement.
9. ENTIRE AGREEMENT - This Agreement contains the whole agreement
between Idaho Gold and ICMC in respect of the subject matter
hereof and supersedes and replaces the letter of understanding
dated December 11, 1995 and all prior negotiations, communications
and correspondence. There are no warranties, representations,
terms, conditions or collateral agreements, express or implied,
statutory or otherwise, other than as expressly set out in this
Agreement.
10. ENUREMENT - This Agreement will enure to the benefit of and be
binding upon Idaho Gold and ICMC and their respective successors,
liquidators and permitted assigns.
11. GOVERNING LAW - This Agreement shall be construed and interpreted
in accordance with the laws of Idaho.
12. NOTICES - All notices, payments and other required communications
("Notices") to the parties shall be in writing and shall be
addressed respectively as follows:
If to Idaho Gold:
c/o Bema Gold Corporation
1400 - 510 Burrard Street
Vancouver, B.C. V6C 3A8
Fax No.: 604-681-6209
Attention: Mr. Roger Richer
If to ICMC:
ICMC
P.O. Box 1124
Lewiston, Idaho 83501
Fax No.: 208-746-6678
Attention: Mr. Wilf Struck
All Notices shall be given:
i) by personal delivery to the party by leaving a copy at the
place specified for notice with a receptionist or an
apparently responsible individual, or
ii) by electronic facsimile communication.
All Notices shall be effective and shall be deemed delivered:
iii) if by personal delivery on the date of delivery if
delivered during normal business hours, and if not
delivered during normal business hours, on the next
business day following delivery, and
iv) if by electronic communication, on the next business day
following receipt of the electronic communication,
provided that a positive transmission report is generated
by the sender's facsimile machine.
13. REGULATORY APPROVAL - The obligations of the parties hereto is
subject to the acceptance for filing of this Agreement by the
Vancouver Stock Exchange.
14. COUNTERPARTS - This Agreement may be executed in counterparts with
the same effect as if both parties had signed the same document,
and both such counterparts will be construed together and will
constitute one and the same instruments. The execution of this
Agreement will not become effective until counterparts hereof have
been executed by both parties hereto and executed copy delivered
to each party hereto. Such delivery may be made by facsimile
transmission of the execution page or pages hereof to the other
party by the party signing the particular counterpart, provided
that forthwith after such facsimile transmission, an originally
executed execution page or pages is forwarded by prepaid express
courier to the other party by the party signing the particular
counterpart.
IN WITNESS WHEREOF the parties have executed and delivered this
Agreement as of the day and year first above written.
IDAHO GOLD CORPORATION
Per: /s/ Roger Richer
-------------------------
IDAHO CONSOLIDATED METALS CORP.
Per: /s/ Wilf Struck
-------------------------
Vice President
SCHEDULE "A"
BUFFALO GULCH CLAIMS
Claim Name BLM# IMC#
---------- ---- -----
A 46 95056
A 48 95058
A 49 95059
A 50 95060
A 53 95063
A 54 95064
A 55 95065
A 56 95066
A 58 95068
A 65 95075
A 66 95076
A 67 95077
A 68 95078
A 69 95079
A 70 95080
A 71 95081
A 72 95082
A 73 95083
A 74 95084
A 75 95085
A 80 95090
A 81 95091
A 82 95092
A 83 95093
A 84 95094
A 85 95095
A 86 95096
A 87 95097
A 88 95098
A 89 95099
A 90 95100
A 91 95101
A 92 95102
A 93 95103
A 94 95104
A 95 95105
A 96 95106
A 97 95107
A 98 95108
A 99 95109
Claim Name BLM# IMC#
---------- ---- -----
Black Bear 1 72588 297158
Black Bear 2 72589 297159
Black Bear 3 72590 297160
Black Bear 4 72591 297161
Black Bear 5 72592 297162
Black Bear 6 72593 297163
EC 1 85868
EC 2 85869
EC 3 85870
EC 4 85871
EC 5 85872
EC 6 85873
EC 7 85874
EC 8 85875
EC 9 85876
EC 10 85877
EC 12 85879
EC 14 85881
EC 16 85883
EC 18 85885
EC 20 85887
EC 22 85889
EC 24 85891
EC 57 85892
EC 58 85893
EC 120 85894
EC 121 85895
EC 125 85897
EC 126 85898
Whiskey Jack 1 121621
Whiskey Jack 2 121622
Whiskey Jack 3 121623
Whiskey Jack 4 121624
SCHEDULE "B" - BUFFALO GULCH CLAIMS
NET SMELTER RETURNS
1. The royalty which may be payable to Idaho Gold Corporation
(hereinafter called the "Payee") pursuant to paragraph 3(d) of the
Assignment of Interests Agreement by Idaho Consolidated Metals
Corp. (hereinafter called the "Payor") will be 3% of 100% of the
Net Smelter Revenue (as hereinafter defined) and will be
calculated and paid to the Payee in accordance with the terms of
this Schedule "B". Terms having defined meanings in the Agreement
and used herein will have the same meaning in this Schedule as
assigned to them in the Assignment of Interests Agreement unless
otherwise specified or the context otherwise requires.
2. The Net Smelter Revenue will be calculated on a calendar quarterly
basis and will, subject to paragraph 7 of this Schedule "B", be
equal to Gross Revenue less Permissible Deductions for such
quarter.
3. The following words will have the following meanings:
(a) "Gross Revenue" means the aggregate of the following amounts
received in each quarterly period following the commencement
of commercial production from the Mining Properties:
(i) the revenue received by the Payor from arm's length
purchasers of all Product;
(ii) the fair market value of all Products sold by the Payor
in such period to persons not dealing at arm's length
with the Payor; and
(iii) any proceeds of insurance on Product;
(b) "ORE" means all materials from the Mining Properties, the
nature and composition of which justifies either:
(i) mining or removing from place and shipping and selling
such material, or delivering such material to a
processing plant for physical or chemical treatment; or
(ii) leaching such material in place;
(c) "PERMISSIBLE DEDUCTIONS" means the aggregate of the following
charges (to the extent that they are not deducted by any
purchaser in computing payment) that are paid in each
quarterly period:
(i) sales charges levied by any sales agent on the sale of
Product;
(ii) transportation costs for Product from the Mining
Properties to the place of beneficiation, processing or
treatment and thence to the place of delivery of
Product to a purchaser thereof, including shipping,
freight, handling and forwarding expenses;
(iii) all costs, expenses and charges of any nature
whatsoever which are either paid or incurred by the
Payor in connection with refinement or beneficiation of
Product after leaving the Property, including all
weighing, sampling, assaying and representation costs,
metal losses, any umpire charges and any penalties
charged by the processor, refinery or smelter; and
(iv) all insurance costs on Product, and any government
royalties, production taxes, severance taxes and sales
and other taxes levied on Ore, Product or on the
production or value thereof (other than any Federal or
Provincial taxes levied on the income or profit of the
Payor);
(d) "Product" means:
(i) all Ore shipped and sold prior to treatment; and
(ii) all concentrates, precipitates and products produced
from Ore.
4. The payment on account of the royalty for each calendar quarter
will be calculated and paid within 60 days after the end of each
calendar quarter. Smelter settlement sheets, if any, and a
statement setting forth calculations in sufficient detail to show
the payment's derivation (the "Statement") must be submitted with
the payment.
5. In the event that final amounts required for the calculation of
the payment on account of the royalty are not available within the
time period referred to in section 4 of the Schedule "B", then
provisional amounts will be estimated and such payment will be
paid on the basis of this provisional calculation. Positive or
negative adjustments will be made to the payment on account of the
royalty for the succeeding quarter.
6. All payments on account of the royalty will be considered final
and in full satisfaction of all obligations of the Payor with
respect thereto, unless the Payee delivers to the Payor a written
notice (the "Objection Notice") describing and setting forth a
specific objection to the calculation thereof within 60 days after
receipt by the Payee of the Statement. If the Payee objects to a
particular Statement as herein provided, the Payee will, for a
period of 60 days after the Payor's receipt of such Objection
Notice, have the right, upon reasonable notice and at reasonable
times, to have the Payor's accounts and records relating to the
calculation of the payment in question audited by the auditors of
the Payee. If such audit determines that there has been a
deficiency or an excess in the payment made to the Payee, such
deficiency or excess will be resolved by adjusting the next
quarterly payment due hereunder. The payee will pay all the costs
and expenses of such audit unless a deficiency of 5% or more of
the amount due is determined to exist. The Payor will pay the
costs and expenses of such audit if a deficiency of 5% or more of
the amount due is determined to exist. Failure on the part of the
Payee to make a claim against the Payor for adjustment in such 60
day period by delivery of an Objection Notice will conclusively
establish the correctness and sufficiency of the Statement and
payment on account of the royalty for such quarter.
7. All profits and losses resulting from the Payor engaging in any
commodity futures trading, option trading, metals trading, gold
loans or any combination thereof, and any other hedging
transactions with respect to Product which is a precious metal
(collectively, "Hedging Transactions") are specifically excluded
from calculations of the payments on account of the royalty
pursuant to this Schedule "B" (it being the intent of the parties
that the Payor will have the unrestricted right to market and sell
Product to third parties in any manner it chooses and that the
Payee will not have any right to participate in such marketing
activities or to share in any profits or losses therefrom. All
Hedging Transactions by the Payor and all profits or losses
associated therewith, if any, will be solely for the Payor's
account. The amount of Net Smelter Revenue derived from all
Product subject to Hedging Transactions by the Payor will be
determined pursuant to the provision of this paragraph 7 and not
paragraph 2. As to precious metals subject to Hedging
Transactions by the Payor, Net Smelter Revenue will be determined
without reference to Hedging Transactions and will be determined
by using, for gold, the quarterly average price of gold, which
will be calculated by dividing the sum of all London Bullion
Market Association P.M. Gold Fix prices reported for the calendar
quarter in question by the number of days for which such prices
were quoted. Any Product subject to Hedging Transactions will be
deemed to be sold, and revenues received therefrom, only on the
date of the final settlement of the amount of refined Product
allocated to the account of the Payor by a third party refinery in
respect of such transactions. Furthermore, the Payor will have no
obligation to fulfill any futures contracts, forward sales, gold
loans or other Hedging Transactions which the Payor may hold with
Product.
8. If the royalty becomes payable to two or more parties, those
parties will appoint, and will deliver to the Payor a document
executed by all of those parties appointing, a single agent or
trustee of all such parties to whom the Payor will make all
payments on accounts of the royalty. The Payor will have no
responsibility as to the division of the royalty payments amount
such parties, and if the Payor makes a payment or payments on
account of the royalty in accordance with the provisions of this
paragraph 8, it will be conclusively deemed that such payment or
payments have been received by the Payee. All charges of the
agent or trustee will be borne solely by the parties received
payments on account of the royalty.
9. Notwithstanding the foregoing, the royalty payable shall be
limited to US$3,000,000.