MINING OPTION AGREEMENT OF CHIQUERITOS, MEXICO
THIS AGREEMENT dated for reference the 12th day of March, 2005
AMONG:
Chiqueritos, Mining Inc.a company duly incorporated pursuant
to the laws of the State of Wyoming, and having a mailing
address of 612 110th Ave North, Naples, Florida 34108.
(hereinafter referred to as "CMI")
OF THE FIRST PART
AND:
Minera Holmex S.A. de C.V., a company duly incorporated
pursuant to the laws of the State of
Sinaloa, Republic of Mexico, and having office at Ave. Hidalgo
373 Oriente #4-1, Colonia
Central, Culiacan, Sinoloa, CP 8000, Mexico.
(hereinafter referred to as "Minera Holmex")
AND:
International American Resources Inc., a company incorporated
in Colorado having its address at 6373 S. Yates Court,
Littleton, Colorado 80123.
OF THE SECOND PART
WHEREAS:
(A) The Optionees hold a valid agreement to acquire a one hundred percent
(100%) undivided interest in the Chiqueritos gold project situated in
the Tamazula District near the village of Chiqueritos, Mexico. The
Optionees' respective legal description and location of these mining
claims (hereinafter referred to as the "Property") are more
particularly described in Exhibit "A" attached hereto; and,
(The Optionees have agreed to grant to CMI an exclusive option to acquire all
of the Optionees' right, title and interest in and to the Property,
subject to the terms and conditions hereafter set out;
NOW THEREFORE, THIS AGREEMENT WITNESSES that for and in consideration of such
good and valuable consideration now paid by CMI to the Optionees, the receipt
and sufficiency whereof is hereby acknowledged by the Optionees, the parties
agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 Interpretation
In this Agreement, unless otherwise provided:
(a) "Business Day" means a day, other than a Saturday or a Sunday, on which
the main branch of the US Bank in Denver, Colorado is open to the
public for the transaction of business;
(b) "Option" means the option to acquire all right, title and interest of
the Optionees in and to the
Property as provided in ARTICLE 3; and,
(c) "Property" means the mining claims described in Exhibit "A" hereto, and
shall include any renewal thereof and any other form of successor or
substitute title therefor and shall also include all data, reports and
geological information in the possession of the Optionees; and,
(d) "Royalty Interest" means payments to be made to Sr. Modesto Rivas
Beltran as described in ARTICLE 3 and
Exhibit B attached hereto
1.2 Currency
All dollar amounts expressed herein shall be currency of the United States of
America.
1.3 Schedules
Exhibit Description
A Description of Property (plus claim location map) B 3% Net
Smelter Returns Royalty.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
2.1 Mutual Representations and Warranties
Each of CMI and Optionees represents and warrants to one another and the other
parties hereto that:
(a) it is a body corporate duly incorporated or continued, organized and
validly subsisting under the laws
of its incorporating or continued jurisdiction; and,
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any
agreement or instrument referred to or contemplated by this Agreement;
and,
(c) all corporate authorizations have been obtained for the execution of
this Agreement and for the
performance of its obligations hereunder; and,
(d) no proceedings are pending for and it is unaware of any basis
for the institution of any
proceedings leading to its dissolution or winding-up.
2.2 Optionees' Representations and Warranties
The Optionees represent and warrant to CMI that:
(a) to the best of the Optionees' knowledge, information and belief the
mining claims comprising the Property are accurately described in
Exhibit A, have been properly and legally staked, recorded and tagged,
are presently in good standing under the laws of the jurisdiction in
which they are located, and are free and clear of all liens, charges
and encumbrances except the mineral property taxes in arrears since
2000;
(b) the Optionee has the exclusive right to enter into this Agreement and
to dispose of an interest in the
Property in accordance with the terms of this Agreement;
(c) the Optionees are the legal and beneficial Optionees of the Property
described in Exhibit A;
(d) there is no adverse claim or challenge against or to the ownership of
or title to any of the mining claims comprising the Property, nor to
the knowledge of the Optionees is there any basis therefor or interest
therein, and there are no outstanding agreements or options to acquire
or purchase the Property or any portion thereof, and no person other
than CMI, pursuant to the provisions hereof, has any royalty or other
interest whatsoever in production from any of the mining claims
comprising the Property;
(e) no proceedings are pending for and the Optionees are unaware of any
basis for the institution of any proceedings leading to the placing of
the Optionees into bankruptcy or subject to any other laws governing
the affairs of insolvent persons;
(f) to the best of the Optionees' knowledge, the Property and its existing
and prior uses comply and have at all times complied with, and the
Optionees are not in violation of, and has not violated, in connection
with the Optioneeship, use, maintenance or operation of the Property,
any applicable federal, provincial, municipal or local laws,
regulations, orders or approvals relating to its operations on the
Property and environmental or similar matters;
(g) there are no orders or directions relating to environmental or similar
matters requiring any work, repairs, construction or capital
expenditures with respect to the Property and the conduct of the
business related thereto, nor have the Optionees received any notice of
such;
(h) no hazardous or toxic materials, substances, pollutants, contaminants
or wastes have been released into the environment, or deposited,
discharged, placed or disposed of at, on or near the Property as a
result of the Optionees' operations carried out on the Property, nor,
to the best of the Optionees' knowledge, have any of the above occurred
nor has the Property been used at any time by any person as a person as
a landfill or waste disposal site;
(i) to the best of the Optionees' knowledge
(i) no notices of any violation or apparent violation of any of
the matters referred to in
subparagraphs (g) and (h) relating to the Property or its use have been
received by the Optionees; and,
(ii) there are no writs, injunctions, orders or judgments
outstanding, no law suits, claims proceedings or
investigations pending or threatened, relating to the use,
maintenance or operation of the Property, whether related to
environmental or similar matters, or otherwise, nor, to the
knowledge of the Optionees, is there any basis for such law
suits, claims, proceedings or investigations being instituted
or filed.
2.3 Survival of Representations and Warranties
The representations and warranties contained in this ARTICLE are conditions on
which the parties have relied in entering into this Agreement and shall survive
the execution hereof and the acquisition of any interest in the Property by CMI
hereunder and each party will indemnify and save the other harmless from all
loss, damage, costs, actions and suits arising out of or in connection with any
breach of any representation, warranty, covenant, agreement or condition made by
them and contained in this Agreement. A party may waive any of such
representations, warranties, covenants, agreements or conditions in whole or in
part at any time without prejudice of its right in respect of any other breach
of the same or any other representation, warranty, covenant, agreement or
condition.
ARTICLE 3 - OPTION TO ACQUIRE THE PROPERTY
3.1 Grant of Option
Subject as hereinafter provided, the Optionees hereby grant to CMI the sole and
exclusive right and option to acquire an undivided 100% right, title and
interest in and to the Property free and clear of all charges, encumbrances and
claims, save for the NSR royalty interest (more fully described in Exhibit B).
3.2 Initial Payment
At the signing of acceptance of this Agreement, in consideration of the Option,
CMI shall pay to the Optionee, via certified check, bank draft or wire transfer,
the sum of one thousand dollars (US$10,000), followed by another payment of
$5,000 within 30 days to International American Resources Inc (" the initial
payment").
Upon receipt of the Initial Payment, Minera Holmex shall deliver to CMI a copy
of all geologic reports, technical data and maps specific to the Property
(collectively, the "Data") in the possession of the Optionees.
Failure to make the Initial Payment or provide a copy of the Data shall
constitute an irrevocable breach of this Agreement and render the provisions
thereof null and void; except that CMI shall be bound by any outstanding
obligations provided for herein.
3.3 Remaining Property Payments
In order to keep the Option in good standing and complete its purchase of a 100%
undivided interest in the Property, CMI shall make cash payments to
International American Resources or Minera Holmex according to the following
schedule:
Payment Due Date Cash
-----------------------------------
November 1, 2005 US$25,000
February 10, 2006 US$25,000
August 10, 2006 US$30,000
February 10, 2007 US$30,000
August 10, 2007 US$40,000
February 10, 2008 US$40,000
August 10, 2008 US$50,000
February 10, 2009 US$50,000
August 10, 2009 US$60,000
February 10, 2010 US$60,000
Auguat 10, 2010 US$65,000
The total would be US$500,000
A final payment of three hundred five thousand dollars ($305,000) shall be due
and payable on the 10th of February, 2011, to be paid in cash. There is a grace
period of 5 working days after which this agreement is automatically terminated.
CMI shall have the right, but not the obligation to accelerate the payment
schedule outlined herein.
3.4 Interest in Property & Royalty Interest
So long as CMI makes the payments as described in ARTICLE 3, Sections 3.2, 3.3,
and keeps the Property in good standing as provided in Section 3.7, and fulfills
all other obligations provided for by this Agreement; CMI shall have a 100%
right, title and interest in and to the Property (subject to the 3% NSR) free
and clear of all charges, encumbrances and claims.
Upon completion of the payments as detailed in Section 3.3, CMI shall have
earned a 100% undivided interest in the Property (subject to the 3% NSR), at
which point, the Optionees shall immediately arrange for transfer of title to
the Property into the name of CMI (or its designee / assignee) pursuant to
Section 3.6 herein.
3.5 Right of Entry During the Option
Throughout the term of the Agreement, the Directors and Officers of CMI and its
agents and contractors, shall have the sole and exclusive right in respect of
the Property to:
(a) enter thereon;
(b) have exclusive and quiet possession thereof;
(c) do such prospecting, exploration, development, drilling and/or other
mining work thereon and thereunder as CMI in its sole discretion may
determine advisable and including, without limitation the removal of
ores, minerals and metals from the Property but only for the purpose of
testing; and with a minimum expenditure of $70,000 per year starting
one month after signing this agreement;
(d) bring upon and erect upon the Property buildings, plant, machinery and
equipment as CMI may deem advisable, so long as such improvements are
in compliance with applicable County, State, and Federal regulations.
3.6 Transfer of Property
Upon CMI fulfilling all of its obligations under this Agreement, the Optionees
Representative shall deliver to CMI (or its associated Mexican company) duly
executed transfers of the Property in favor of CMI's Mexican Associates'
Company, which CMI may record at its cost with the appropriate government office
to effect legal transfer of the Property into the name of its associated Mexican
company, it being understood that the transfer of legal title is contingent upon
and subject to CMI fulfilling all of its obligations under this Agreement.
Additionally, subsequent to signing, the parties understand that CMI will assign
its rights, interests, duties, responsibilities and obligations (related to the
Property and this Agreement) to a Mexican subsidiary which is in the formation /
registration stages. All parties to this Agreement pledge to execute any and all
such documentation as may be necessary to facilitate the transfer of this
Agreement to CMI's Mexican subsidiary.
3.7 Obligations of InterAmerican Resources and Minera Holmex During the
Option Period
During the term of this Option Agreement, the Optionees shall:
(a) maintain in good standing the mining claims comprised in the Property
by the payment of annual assessment fees, taxes and rentals, and the
performance of all other actions which may be necessary in that regard
and in order to keep such mining claims free and clear of all liens and
other charges arising from CMI's activities thereon, save and except
for liens in respect of taxes not yet due, other inchoate liens and
liens contested in good faith by International American and Minera
Holmex and on behalf of and for cost of CMI stake at 1 Km perimeter
area around the Gavilanes claim, near the hamlet of Chiqueritos
immediately after signing this agreement;
(b) permit the directors, officers, employees and designated consultants of
the Optionees, at their own risk, access to the Property at all
reasonable times, provided that the Optionees shall indemnify CMI
against and save it harmless from all costs, claims, liabilities and
expenses that CMI may incur or suffer as a result of any injury
(including injury causing death) to any director, officer, employee or
designated consultant of the Optionees while on the Property provided
however that CMI will not be indemnified nor held harmless for any
costs, claims, liabilities or expenses resulting from CMI's negligence,
gross negligence or misconduct;
(c) deliver to the Optionees, on a regular basis, copies of all technical
work carried out on the property (limited to factual matters only),
including, but not limited to, up-to-date geological, sampling and
drill hole location maps, drill logs, assays, copies of all permitting
documents and other factual technical data describing the results of
work done by CMI on the Property in the last completed option year;
(d) do all work on the Property, including any reclamation work, in a
careful and miner-like manner and in compliance with all applicable
laws, rules, regulations, orders and ordinances of any governmental
authority and will promptly carry out, at its own expense,
environmental clean-up required by any state or federal regulatory body
as a consequence of its exploration or mining activities carried out on
the Property; and,
(e) Indemnify and hold the Optionees harmless from any claims, demands,
liabilities or laborer's, mechanic's or other liens arising out of
CMI's activities on the Property.
3.8 The Operator
During the term of the Option, CMI or its permitted assigns shall act as the
operator of operations on the Property, and will conduct its operation on the
Property at its sole discretion.
3.9 Termination of Option
Notwithstanding any other provisions contained in this Agreement, the parties
hereto acknowledge that this Agreement is an option only and that CMI may
terminate this Agreement at any time, so long as it is not in default of any of
its obligations under this Agreement, by giving thirty (30) days notice to that
effect to the Optionees, and, thirty (30) days after receipt of such notice by
the Optionees, this Agreement shall be of no further force or effect, and CMI
shall have no interest in the Property and shall have no further obligations
hereunder, save and except that it shall:
(a) deliver to the Optionees within sixty (60) days of termination of this
Agreement, a comprehensive report on all work carried out by CMI on the
Property (limited to factual matters only) together with all drill
core, assay pulps, copies of all maps, drilling logs, assay results,
copies of all permitting documents and other factual technical data
compiled by CMI with respect to the Property and not before furnished
to the Optionees;
(b) with CMI's obligations fulfilled under this Agreement, have the right,
within a period of one hundred (100) days following such termination,
to remove from the Property all temporary structures, plant, equipment,
machinery, tools, appliances and supplies erected, installed or brought
upon the Property by or on behalf of CMI, and any such property not
removed within such 100-day period shall thereafter become the property
of the Optionees; and,
(d) deliver to the Optionees within thirty (30) days of termination of this
Agreement, an acknowledgment of abandonment and release of any interest
in any additional mining claims acquired or staked by CMI within the
Area of Influence (as defined hereing), together with a quitclaim, bill
of sale or other such legal instrument whereby a 100% right, title and
interest in and to such mining claims is transferred to the Optionees
or their nominee or nominees, free and clear of all liens or charges
arising from CMI's activities on said claims.,
ARTICLE 4 - RIGHT TO PURCHASE ROYALTY INTEREST
4.1 Right to Purchase Royalty Interest
The Royalty Interest may not be purchased from Sr. Modesto Rivas Beltran by CMI,
unless negotiated at a later date.
4.2 Assignment Of Agreement In The Event Of Adverse Judgments Against CMI
Notwithstanding any other provisions contained in this Agreement, the parties
hereto acknowledge and agree that, as a publicly-traded corporation, that CMI
could potentially be subject to adverse legal, regulatory and / or financial
judgments or actions, including, but limited to: Chapter 13, 11 or 7 bankruptcy
filings, cease-trade orders, liens placed against the assets of CMI, adverse
civil judgments related to activities of the prior management of the public
company, and that the occurrence of any one (or more) of these events would be
considered a "Qualifying Event", the occurrence of which would have a negative
and lasting impact development of the Project's development and CMI's ability to
fulfill the terms of this Agreement.
ARTICLE 5 - ASSIGNMENT
5.1 Assignment
(a) The Optionees will not, except in accordance with the provisions of
Section 4.1 of this Agreement, and provided that such assignees agree
to be bound by the terms hereof, assign this Agreement during the term
of the Option;
(b) CMI may:
(i) assign this Agreement or any portion of its interest in the
Property to an Associated Company or a third party provided
that such Associated Company or third party first assumes and
agrees to be bound by the terms of this Agreement;
(ii) with the Optionees' prior approval, which shall not be
withheld without factual data demonstrating the assignee to be
unqualified to fulfill CMI's obligations under this Agreement
or under felony indictment, assign this Agreement or any
portion of its interest in the Property to a party other than
an Associated Company or third party, provided that such
assignee first assumes and agrees to be bound by the terms of
this Agreement;
whereupon the Optionees agree that CMI shall be released and discharged from
their obligations and liabilities under this Agreement, provided that CMI has
fulfilled all such obligations and liabilities which have arisen during and as a
result of their activities under this Agreement; prior to making such
assignment, CMI shall first fulfill all obligations and commitments pursuant to
Section 3.9.
ARTICLE 6 - FORCE MAJEURE
6.1 Events
No party will be liable for its failure to perform any of its obligations under
this Agreement due to a cause beyond its control (except those caused by its own
lack of funds) including, but not limited to: acts of God, fire, flood,
explosion, strikes, lockouts or other industrial disturbances; laws, rules and
regulations or orders of any duly constituted court or governmental authority;
or non-availability of materials or transportation (each an "Intervening
Event").
ARTICLE 7 - CONFIDENTIAL INFORMATION
7.1 Confidential Information
Except as specifically otherwise provided for herein, all information obtained
hereunder shall be the exclusive property of CMI and when delivered by CMI to
the Optionees shall not be publicly disclosed or used by the Optionees other
than for the activities contemplated hereunder, as required by law or by the
rules and regulations of any regulatory authority having jurisdiction, or with
the written consent of CMI, such consent not to be unreasonably withheld.
7.2 Consent to Disclosure
Consent to disclosure of information pursuant to Section 7.1 shall not be
unreasonably withheld where the Optionees wish to disclose any such information
to a third party for the purpose of selling its interest in the Property,
provided that such third party gives its written undertaking to CMI that any
such information not theretofore publicly disclosed shall be kept confidential
and not disclosed to others.
7.3 Fraudulent or Negligent Disclosure
The Optionees shall not be liable to CMI for the fraudulent or negligent
disclosure of information by any of its employees, servants or agents, provided
that the Optionees have taken reasonable steps to ensure the preservation of the
confidential nature of such information.
7.4 Information in Public Domain
The provisions of this ARTICLE 7 do not apply to information that is or becomes
part of the public domain other than through a breach of the terms hereof.
7.5 Request to Disclose
Where a request is made for permission to disclose confidential information
hereunder, CMI shall reply thereto within three (3) Business Days after receipt
of such request, failing which CMI shall be deemed to have consented to such
disclosure in the limited circumstances specified in such request.
ARTICLE 8 - JURISDICTION & ARBITRATION
8.1 Choice of Law
All matters arising out of this Agreement shall be determined and decided under
the laws, regulations and rules of the United States of Mexico in the State of
Sinaloa.
8.2 Single Arbitrator
Any matter required or permitted to be referred to arbitration hereunder or in
Exhibit B will be determined by a single arbitrator to be appointed by the
parties hereto.
8.3 Prior Notice
Any party may refer any such matter to arbitration by written notice to the
other party and, within ten (10) days after receipt of such notice, the parties
will agree on the appointment of an arbitrator. No person will be appointed as
an arbitrator hereunder unless such person agrees in writing to act.
8.4 No Agreement on the Arbitration
If the parties cannot agree on a single arbitrator as provided in Section 8.2,
or if the person appointed is unwilling or unable to act, either party may
submit the matter to arbitration before a single arbitrator in accordance with
the laws governing arbitration within the State of Sinaloa, United States of
Mexico, more specifically, the rules and regulations of the Mexican Arbitration
Association.
8.5 Conduct of Arbitration
Except as specifically provided in this ARTICLE 8, an arbitration hereunder
shall be conducted in accordance with the rules and regulations of the Mexican
Arbitration Association.
The arbitrator shall fix a time and place within the jurisdiction in which the
Property is located for the purpose of hearing the evidence and representations
of the parties and he shall preside over the arbitration and determine all
questions of procedure not provided for under such Act or this ARTICLE 8.
After hearing any evidence and representations that the parties may submit, the
arbitrator shall make an award and reduce the same to writing and deliver one
copy thereof to each of the parties. The decision of the arbitrator will be made
within forty-five (45) days after his appointment, subject to any reasonable
delay due to unforeseen circumstances. The expense of the arbitration shall be
paid as specified in the award.
The award of the single arbitrator shall be final and binding upon each of the
parties.
ARTICLE 9 - DEFAULT AND TERMINATION
9.1 Default
If at any time during the term of the Agreement, CMI fails to perform any
obligation required to be performed hereunder or is in breach of a warranty
given herein, the Optionees may terminate this Agreement, but only if:
(a) the Optionees shall have first given to CMI a notice of default
containing particulars of the obligation which CMI has not performed,
or the warranty breached; and,
(b) CMI has not, within thirty (30) days following delivery of such
notice of default, cured such default or, if it is not reasonably
possible to cure the default within such thirty (30) days, commenced
proceedings to cure such default by appropriate payment or
performance (CMI hereby agreeing that should it so commence to cure
any default it will prosecute the same to completion without undue
delay).
Should CMI fail to comply with the provisions of sub-Section (b) above, the
Optionees may thereafter terminate this Agreement, and the Optionees shall hold
CMI liable for any obligations remaining as a result of this Agreement pursuant
to Section 3.9.
ARTICLE 10 - AREA OF INTEREST
10.1 Interest in Surrounding Lands
The parties hereto will have an interest in any property or minerals acquired by
the other parties in the area of a radius of two (2) km surrounding the external
boundaries of the Property, and such properties will be deemed to form part of
the Property and will be governed by the terms and conditions of this Agreement.
If such property or minerals are acquired by the Optionees, then CMI will be
entitled to acquire the same for the out-of-pocket costs paid for such property
or minerals and for no additional consideration.
ARTICLE 11 - GENERAL
11.1 Time of the Essence
Time shall be of the essence of this Agreement.
11.2 Further Acts
Subject to the other Sections of this Agreement, each party shall make
reasonable efforts in good faith, at the request of any other party, and at the
expense of the requesting party, to execute and deliver any further documents
and do all acts and things as that party may reasonably require in order to
carry out the true intent and meaning of this Agreement.
11.3 No Partnership
Nothing in this Agreement or in the relationship of the parties hereto shall be
construed as in any sense creating a partnership among the parties or as giving
to any party any of the rights or subjecting any party to any of the creditors
of the other parties.
11.4 Parties of Interest
This Agreement shall inure to the benefit of and be binding upon the parties and
their respective personal representatives, administrators, heirs, successors and
permitted assigns.
11.5 Governing Law
This Agreement shall be construed and governed exclusively by the regulations
and rules of the United States of Mexico in the jurisdiction in which the
Property is located, except where matters are expressed herein to be subject to
arbitration, the laws of the United States of Mexico applicable therein, and the
Federal courts of the United States of Mexico shall have exclusive jurisdiction
to hear and determine all disputes arising hereunder.
Each of the parties hereto irrevocably attorneys to the jurisdiction of said
courts and consents to the commencement of proceedings in such courts. This
Section shall not be construed to affect the rights of a party to enforce a
judgement or award outside the United States of Mexico, including the right to
record and enforce a judgement or award in any other jurisdiction or the
jurisdiction in which the Property is situated.
11.6 Survival
Each party hereby agrees that all representations, warranties and other
provisions contained in this Agreement shall forever survive the execution and
delivery of this Agreement.
11.7 Severability
The invalidity or unenforceability of any provision in this Agreement shall not
affect the validity or enforceability of any other provision or part of this
Agreement, and the parties hereby undertake to re-negotiate in good faith any
such invalid or unenforceable provision, with a view to concluding valid and
enforceable arrangements as nearly as possible the same as those contained in
this Agreement.
11.8 Entire Agreement
The provisions contained in this Agreement constitute the entire agreement
between the parties with respect to the subject matter and supersede all prior
communications, proposals, representations and agreements, whether oral or
written, with respect to the subject matter of this Agreement.
11.9 Notices
All notices, demands and payments under this Agreement must be in writing and
sent by certified mail, or may be delivered personally or by facsimile
transmission to the addresses as first written above, or such other addresses as
may from time to time be notified in writing by the parties followed by the
mailing of such notice by certified mail.
11.10 Independent Legal Advice
The other parties to this Agreement acknowledge and agree that CMI and its legal
counsel have given them the opportunity to seek, and have recommended that such
parties obtain, independent legal advice with respect to the subject matter of
this Agreement and that CMI's legal counsel is not protecting the other parties'
interests and, further, each of the other parties hereby represent and warrant
to CMI and CMI's legal counsel that such other party has sought independent
legal advice or waives such advice.
11.11 Waiver
Failure by any party hereto to insist in any instance upon the strict
performance of any one of the covenants contained herein shall not be construed
as a waiver or relinquishment of such covenant. No waiver by any party hereto of
any such covenant shall be deemed to have been made unless expressed in writing
and signed by the waiving party.
11.12 Amendments
No term or provision hereof may be amended except by an instrument in writing
signed by all of the parties to this Agreement.
11.13 Counterparts
This Agreement may be executed in several counterparts (including by fax), each
of which when so executed shall be deemed to be an original and shall have the
same force and effect as an original and such counterparts together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the corporate seals of the Optionees and CMI have been
hereunto affixed in the presence of its duly authorized officers in that behalf;
Chiqueritos Mining Inc
/s/ Daniel J. Enright
Daniel J. Enright
Authorized Officer
STATE OF FLORIDA )
) ss.
COUNTY OF ___________ )
On this ___ day of March, 2005, personally appeared before me, a notary
public, Daniel J. Enright, who acknowledged that he had executed the above
instrument.
--------------------------------
Notary Public in and for said state
( S E A L )
Agreed to and accepted by the undersigned on this ____ day of March, 2005:
Minera Holmex S.A. de C.V.
/s/ Fred W. Warnaars
Fred W. Warnaars
President
STATE OF COLORADO )
) ss.
COUNTY OF ___________ )
On this ___ day of March, 2005, personally appeared before me, a notary
public, Fred W. Warnaars, who acknowledged that she had executed the above
instrument.
--------------------------------
Notary Public in and for said state
( S E A L )
Agreed to and accepted by the undersigned on this ____ day of March, 2005:
International American Resources, Inc.
- --------------------------------
Fred W. Warnaars
President
STATE OF COLORADO )
) ss.
COUNTY OF ___________ )
On this ___ day of March, 2005, personally appeared before me, a notary
public, Fred W. Warnaars, who acknowledged that she had executed the above
instrument.
--------------------------------
Notary Public in and for said state
( S E A L )
EXHIBIT A
Toan Agreement dated the 12th day of March, 2005
between Capital Hill Gold Company, Minera Holmex
S.A. de C.V.
and International American Resources, Inc.
DESCRIPTION OF PROPERTY
The 100-hectare Los Gavilanes mining concession, located in the Tamazula
District, Durango, is held by Sr. Modesto Rivas Beltran of Culiacan, Sinaloa,
Mexico.
Title was issued on December 14, 1989.
A copy of the surveyed land position is attached to this Agreement.
Title number 185397, expediente 321.1/24569. Granted by the Direcion General de
Minas and inscribed with number 577, on page 145 of Volume number 251 of the
General Book of Mining Concessions of the Public Mines Register in Mexico City,
D.F.
EXHIBIT B
Toan Agreement dated the ____ day of March, 2005
between Capital Hill Gold Company, Minera Holmex
S.A. de C.V.
and International American Resources, Inc.
NET SMELTER RETURNS (NSR) ROYALTY
1. Interpretation
Where used herein:
(a) "Agreement" shall mean the above-referenced agreement, including any
amendments thereto or renewals or
extensions thereof;
(b) "Property" shall mean the Property as defined in the Agreement;
(c) "Fiscal Period" shall mean each calendar year or other period of
twelve consecutive months adopted for tax purposes by CMI during the
term of the Agreement;
(d)
"Royalty Interest" shall mean two percent (3%) of Net Smelter Returns; and
(e) All other defined terms used in this Exhibit B which are not defined
herein have the meanings ascribed thereto in the Agreement.
2. Net Smelter Returns
"Net Smelter Returns" shall mean the actual proceeds received from any mint,
smelter, refinery or other purchaser for the sale of ores, metals (including
bullion) or concentrates produced from the Property (collectively "Product") and
sold or proceeds received from an insurer in respect of such ores, metals or
concentrates, after deducting from such proceeds the following charges to the
extent that they were not deducted by the purchaser in computing payments:
(a) smelting and refining charges;
(b) penalties, smelter assay costs and umpire assay costs;
(c) cost of freight and handling of ores, metals or concentrates from
the Property to any mint, smelter,
refinery, or other purchaser;
(d) marketing costs;
(e) costs of insurance on all such ores, metals or concentrates; and,
(f) customs duties, severance tax, royalties, ad valorem or mineral
taxes or the like and export and import taxes or tariffs payable in
respect of said ores, metals or concentrates.
3. Payment
The Royalty Interest shall be:
(a) calculated and paid to Sr. Modesto Rivas Beltran on a quarterly basis
within forty-five (45) days after
the end of each fiscal quarter in respect of the actual proceeds
received in such fiscal quarter; and,
(b) each payment to Sr. Modesto Rivas Beltran hereunder shall be
accompanied by an unaudited statement indicating the calculation of the
Royalty Interest hereunder and Sr. Modesto Rivas Beltran shall receive,
within three (3) months of the end of each Fiscal Period, a summary
unaudited statement of the calculation of the Royalty Interest for the
last completed Fiscal Period.
Sr. Modesto Rivas Beltran shall have forty-five (45) days from the time
of receipt of the summary statement to question the accuracy thereof in
writing and, failing such objection, the summary statement shall be
deemed to be correct and unimpeachable thereafter. If the summary
statement is questioned by Sr. Modesto Rivas Beltran. Sr. Modesto Rivas
Beltran will have twelve (12) months from the time of receipt of the
summary statement to have such audited. The audited results will be
final and determinative of the calculation of the Royalty Interest for
the audited period and will be binding on CMI, and Sr. Modesto Rivas
Beltran shall be entitled to examine, on reasonable notice and during
normal business hours, such books and records as are reasonably
necessary to verify the payment of the Royalty Interest to it from time
to time.
4. Purchase of Royalty Interest
The Royalty Interest may not be purchased from Sr. Modesto Rivas Beltran byCMI,
unless negotiated at a later date.
5. Segregation of Property
The determination of the Royalty Interest hereunder is based on the premise that
production will be developed solely on the Property. If other properties are
incorporated in a single mining project and metals, ores or concentrates
pertaining to each are not readily segregated on a practical or equitable basis,
the allocation of actual proceeds received and deductions therefrom shall be
negotiated between the parties and, if the parties fail to agree on such
allocation, shall be referred to arbitration pursuant to ARTICLE 8 of the
Agreement.
The arbitrator shall have reference first to the Agreement and this Exhibit B,
and then, if necessary, to practices used in mining operations that are of a
similar nature. The arbitrator shall be entitled to retain such independent
mining consultants as he considers necessary. The decision of the arbitrator
shall be final and binding on the parties hereto.
6. Non-Arm's Length Sale of Product
For the purposes of calculating the amount of Royalty Interest payable to Sr.
Modesto Rivas Beltran hereunder, if, after the date of commencement of
Commercial Production, CMI sells any Product to a subsidiary or affiliate and if
the sale price of such product is not negotiated on an arm's length basis, CMI
shall, for the purposes of calculating the Royalty Interest and notwithstanding
the actual amount of such sale price, add to the proceeds from the sale of such
Product an amount, if any, which would be sufficient to make such sale price
represent a reasonable net sale price for such Product as if negotiated at arm's
length and after taking into account all pertinent circumstances (including,
without limitation, the then current market conditions relating to ore,
concentrates or other materials or products similar to the Product). CMI shall
notify Sr. Modesto Rivas Beltran of the quantum of such reasonable net sale
price and if Sr. Modesto Rivas Beltran does not object thereto within sixty (60)
days after receipt of such notice, such quantum shall be final and binding for
the purposes of this Exhibit. If Sr. Modesto Rivas Beltran objects to such
stated reasonable net sale price, the matter will be referred to arbitration
pursuant to ARTICLE 8 of the Agreement.