EXHIBIT 10.2
DRAGON MINE LEASE PURCHASE AGREEMENT
This Lease Purchase Agreement (hereinafter "Agreement") is made this
10th day of July, 2001, by and between Conjecture Silver Mines, Inc., an Idaho
corporation, (hereinafter "CSM") with an address of 905 North Pines Road, Suite
A, Spokane, WA 99208, and Atlas Mining Company, an Idaho corporation,
(hereinafter "Atlas") with an address of P. O. Box 968, 1221 W. Yellowstone
Ave., Osburn, ID 83849.
WHEREAS, CSM owns the Dragon Mine in Juab County, Utah, which consists
of real property listed in Exhibit "A" attached hereto and any improvements
located thereon; and
WHEREAS, Atlas desires to lease and to operate and possibly purchase
said mine; and WHEREAS, CSM is willing to lease and sell said mine to
Atlas.
WHEREFORE, in consideration for the mutual convenants, terms and
conditions set forth below, the parties agree as follows:
1. GRANT: CSM does hereby lease, let and demise to Atlas and its
successors and assigns, for the consideration stated below the property listed
in Exhibit "A" attached hereto.
1.1 The purposes for which Atlas may use the premises under this
Agreement are for surveying, sampling, investigating, exploring for, prospecting
for drilling for, developing, mining by any method (whether or not now known and
including, but not limited to, open pit, strip, underground and solution
methods), producing, saving, milling, treating, storing, stockpiling, handling
and marketing all minerals or any valuable products of any nature whatsoever in,
on or under the property including, but not limited to, ore, minerals,
concentrates, refined materials and any other product of any process whether or
not now known and regardless of the stage of milling, refining, upgrading or
other processing title passes to Buyer, together with all Lessor's rights,
privileges, water rights, and easements useful for the Lessee's operations
hereunder on the Dragon Mine, including, but not limited to, the rights to look
for, test, work, mine, excavate, raise, clean, stockpile, store, leased
substances, to excavate pits, sink shafts, make, use and occupy openings, adits,
tunnels, raises, rooms, stopes, slopes, winzes, and underground passages now
existing or hereafter opened, strip seams, lodes, veins and beds, and erect, use
and maintain on the property, such buildings, tipples, headframes, machinery,
devises, wall, wells, presently appurtenant (if any) or newly established water
rights, roadways, housing, railroad tracks, shops, ditches, dams ponds,
reservoirs, pipes, power and communication lines, and without limitation, all
other necessary structures and facilities, and from time to time to relocate on
the Dragon Mine all or any part of said improvements as lessee may deem
desirable or necessary in its operations.
2. TITLE: It is acknowledged that the recorded deeds of the Dragon Mine
are set forth in Exhibit "B" attached to this Agreement. CSM guarantees the
title as CSM may now hold or hereafter acquire and will protect Atlas from any
conflicts that may result in the title as disclosed herein. Atlas retains the
right to acquire a title insurance policy or to perform a search of the records
as recorded in the county of Juab, Utah, at Atlas' expense.
3. PAYMENTS AND ROYALTY: In consideration for CSM's grant above and in
consideration of the other terms and conditions of this Agreement, Atlas agrees
to make the payment and to pay the following consideration:
3.1 At the execution of this Agreement Atlas will issue 400,000 shares
of Atlas Mining Company common stock in favor of CSM. Said stock will be
restricted in nature, and subject to the rules of section 144 of the Securities
Exchange Commission.
3.2 If the Agreement remains in effect, on or before the yearly
anniversary of the date herein, and on every anniversary thereafter, Atlas will
issue 100,000 shares of Atlas Mining Company common stock to the favor of CSM
for a one year extension of the Agreement.
3.3 If Atlas sells any product from the Dragon Mine during the period
of the Agreement, then Atlas will pay to CSM a 3% royalty of the gross sales.
All sales royalties are payable in cash and will be paid within thirty (30) days
after receipt of payment to Atlas. Any royalties not timely paid, shall bear
interest at the Bank of America prime rate then in effect plus 2%.
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3.4 If Atlas sales of any product from the Dragon Mine should reach One
Million Dollars ($1,000,000.00) during any one year period of this Agreement,
then Atlas may purchase the Dragon Mine from CSM for Five hundred Thousand
Dollars ($500,000.00).
4. TERM: The term of this Agreement is one year from the date first
above written subject to Atlas' right to terminate earlier. Atlas shall have the
sole option to renew this Agreement for additional one (1) year periods by
giving CSM written notice at least twenty (20) days prior to the anniversary
date of this Agreement, and satisfaction of paragraph 3.2 above.
5. POSSESSION: Atlas shall during the term of this Agreement have the
right to possession and control of the Dragon Mine for the purposes stated
herein.
6. MANNER OF WORK AND CONFORMITY WITH THE LAWS: Atlas agrees in all of
its possession, control, and operations under this Agreement, that it shall
conduct the same in a miner-like fashion and shall comply with all local, state,
and federal laws and regulations.
7. LIENS: Atlas shall suffer no liens to attach to the property. Should
such liens attach, Atlas shall immediately provide CSM with notice of the same
and shall undertake and diligently pursue the release of said liens. Atlas shall
within thirty (30) days after the filling of such liens against the property
obtain the release of same or post a bond or other means as provided by the law.
In no case shall Atlas fail to pay a lien and jeopardize loss of CSM's title.
However, if Atlas should at any time have fully performed its duties under
section 3. above, then with the prior written consent of CSM, which consent
shall not be unreasonably withheld, Atlas may be allowed liens attach to the
property, but only for the purposes of securing financing.
8. REMEDIATION: All disturbance caused by Atlas will be reclaimed in
the manner specified in any permits required for the operation or any pertinent
laws currently in force or put into force in the future.
9. INSURANCE: Atlas shall continuously maintain in effect a
comprehensive general liability insurance policy in an amount no less than one
million dollars ($1,000,000.00). Said policy shall provide converges acceptable
to the general risks related to or expected under the control and operation of
the Dragon Mine. A copy of the policy shall be issued for the benefit of CSM
within 14 days of the date herein.
10. TAXES: All real-estate taxes that may be assessed on the property
shall become the responsibility of Atlas during the term of the Agreement. Taxes
due for the year 2001 will be split between Atlas and CSM on a pro-rata basis.
Any other taxes that may be assessed due to the operations of and or maintenance
of the property will be born by Atlas. This shall not be construed to require
Atlas to pay CSM's proportionate share of any net profits tax on the productions
royalty, or CSM's income tax obligations.
11. INSPECTION: CSM shall have the right to enter and to inspect the
property at all reasonable times, so long as such inspection does not
unreasonably interfere with Atlas's operations.
12. INDEMNIFICATION: Atlas agrees to indemnify and hold CSM harmless
from any and all liability and claims, including reasonable attorney fees, which
may arise out of Atlas's possession, operations and activities under this
Agreement.
13. FORCE MAJEURE: If Atlas shall be prevented from performing any of
the Agreement hereunder, by any act or neglect of CSM or by strikes, lockouts,
fire, unusual delay in transportation, orders of the Government, or any duly
constituted instrumentality thereof, unavoidable causalities, or any causes
beyond the control of Atlas , such delay shall not be deemed a breach of this
Agreement or a default on the part of Atlas constituting a cause for
termination. Depressed prices shall constitute a force majeure when the minerals
produced are salable only at abnormally low prices.
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It is expressly stipulated and agreed that Atlas shall promptly notify
CSM in writing of the commencement of or termination of any claimed force
majeure, and the term of this Agreement shall be extended for a term equal to
the period thereof.
14. DEFAULT: Either party shall have the duty to provide the other with
written notice specifying any claimed default. Upon receipt of notice of default
the recipient of a notice of default shall have thirty (30) days to undertake
and diligently prosecute the cure of any such default. If the recipient
disagrees as to the existence of any default, it shall immediately provide the
other party with written notice of each and every reason it claims it is not in
default.
In the case the parties are unable to amicably resolve any dispute with
respect to a default, either party may seek a judicial determination of the
respective rights of the parties, including termination. Attorney fees of each
party are the each party's responsibility.
15. TERMINATION AND SURRENDER OF THE PROPERTY: Upon termination of this
Agreement, Atlas shall have one hundred twenty (120) days to remove any
equipment and fixtures it placed on the property. Fixtures may be removed only
if their removal can be accomplished without damage to the premises. Any
equipment and fixtures not removed shall be deemed to be the property of CSM.
16. NOTICE: Any notice required to be given under this Agreement shall
be sufficiently given upon deposit of said notice, postage paid, return receipt
requested, to the address of the parties listed below or such other address as
they may provide to the other party:
Conjecture Mines, Inc. Atlas Mining Company
905 Pines Road, Suite A P. O. Box 968
Spokane, WA 99206 Osburn, ID 83849
17. INUREMENT: This Agreement shall inure to the benefit of and be
binding upon the successors and assignees of the parties. Atlas shall not assign
its rights hereunder without the prior written consent of CSM. Such consent
shall not be unreasonably withheld.
18. GOVERNING LAW: The Agreement shall be governed by the laws of the
state of Idaho.
19. TITLES OF ARTICLES: The titles to the Articles hereof have been
inserted for convenience only. Such titles are not to be considered as limiting
or expanding or modifying in any other fashion the language of the Article
following the same.
20. NO WAIVER: No waiver by either party of any right herein shall be
construed a waiver of any such right in the future or any other right in this
Agreement.
21. MEMORANDUM: Lessee and Lessor shall execute a Memorandum of this
Agreement in a recordable form under the laws of the State of Utah to give
notice to third parties of the rights granted hereunder. Either party may record
such Memorandum. Neither of the parties hereto shall or may record this
Agreement.
22. OBLIGATIONS OF GOOD FAITH: All obligations and convenants set forth
in this Agreement shall be subject to an obligation of good faith in the
performance or enforcement hereof. "Good Faith" means honesty in fact in the
conduct or transaction concerned.
23. SOLE AGREEMENT: This Agreement constitutes the sole understanding
of the parties with respect to the subject matter hereof and all prior written
or oral agreements or understandings between the parties hereto, are
incorporated in and superseded by this Agreement. No modifications or
alterations of the terms of this Agreement shall be binding unless in writing
and executed subsequent to the date hereof by both parties. In the case of any
modifications hereunder an Amended Memorandum of this Agreement may be executed
on a form sufficient under the laws of the state of Utah and recorded in Juab
county. Time is of the essence of this Agreement.
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In witness whereof, the parties hereto have duly executed the Agreement
as of the day and Year first above written.
Conjecture Silver Mines, Inc. Atlas Mining Company
By: ______________________ By:_______________________
President President
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