Exhibit 10.8
PLACER DOME U.S. INC. 240 South Rock Blvd., Suite 117
Reno, Nevada 89502
(775) 856-2552
Bill Howald (775)856-2552 Fax (775)856-3091
October 20, 2004
Mr. Don McDowell
Great American Minerals, Inc.
9051 South 1075 West Suite B-301
West Jordan, Utah 84088
Re: Binding Letter Agreement for Exploration and Development and Mining
Joint Venture on the UNR Project, Eureka County, Nevada.
Dear Don:
Pursuant to the discussions we have had over the past few weeks, this
letter will confirm the agreement we have reached and set forth the terms and
conditions of an Exploration and Development Agreement between Placer Dome U.S.
Inc. ("PDUS") and Great American Minerals, Inc. ("GAM"), covering GAM's UNR
Project located in Eureka County, Nevada (the "Property"), as more particularly
described in Part 1 of Exhibit A attached hereto and incorporated herein by
reference. Pursuant to this letter agreement, PDUS will have the right to
conduct exploration and development activities on the Property and, if PDUS
elects to fulfill certain payment and expenditure requirements, PDUS will earn
an interest in the Property and the parties will enter into a Joint Venture
Agreement covering future activities on the Property. PDUS and GAM will be
collectively referred to hereinafter as the "Parties," and individually as a
"Party."
I. INITIAL AGREEMENTS
A. Within five business days after the date of execution of this letter
agreement by GAM (the "Effective Date"), PDUS shall make an initial payment to
GAM of $250,000 (the "Initial Payment").
B. Upon execution of this letter agreement, GAM shall make available to
PDUS all records, information and data in its possession or reasonably available
to it relating to title to the Property or environmental conditions at or
pertaining to the Property, and all maps, assays, surveys, technical reports,
drill logs, samples, mine, mill, processing and smelter records, and
metallurgical, geological, geophysical, geochemical, and engineering data, and
interpretive reports derived therefrom, concerning the Property, and PDUS, at
its expense, may copy any such records, information and data that PDUS desires.
GAM makes no representation or warranty as
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 2
to the accuracy, reliability or completeness of any such records, information or
data, and PDUS shall rely on the same at its sole risk. If at any time on or
before 5:00 p.m. Pacific Standard Time on the date that is 60 days after the
Effective Date of this letter agreement (the "Due Diligence Period"), PDUS
notifies GAM of a defect in title to all or any portion of the Claims that is
unacceptable to PDUS in its sole discretion, or of environmental conditions
associated with the Property that are unacceptable to PDUS in its sole
discretion, PDUS may terminate this letter agreement with respect to all or a
portion of the Property. In the event of such termination as to the entire
Property, PDUS shall have no further obligation or liability to GAM whatsoever
under this letter agreement, except that the Confidentiality Agreement between
PDUS and GAM dated April 20, 2004 (the "Confidentiality Agreement") shall remain
binding on PDUS and GAM for a period of one year following the effective date of
such termination. If PDUS notifies GAM that PDUS is terminating this letter
agreement as to the entire Property due to a material title defect, GAM shall
promptly return the full amount of the Initial Payment to PDUS. Otherwise, if
PDUS terminates this letter agreement pursuant to this paragraph I.B, GAM shall
be entitled to retain the Initial Payment.
C. Unless this letter agreement is terminated as to the entire Property
pursuant to paragraph I.B, not later than the last day of the Due Diligence
Period, PDUS shall notify GAM whether or not PDUS wishes to proceed under this
letter agreement (the date of such notice referred to hereinafter as the "Notice
Date"), and each of GAM and PDUS shall designate two representatives to serve on
a technical committee (the "Technical Committee"), which will meet at least once
each calendar quarter (beginning with the first calendar quarter after the
Notice Date), either in person or by telephone. The Technical Committee shall
discuss proposed exploration and development activities for the Property during
the Earn-In Period. Ultimately, PDUS shall have the final authority to make
decisions on the nature and extent of the exploration and development
activities, if any, that will be carried out on or on behalf of the Property,
and PDUS will either conduct or hire third parties to conduct all such
activities.
D. GAM hereby grants to PDUS, effective as of the Notice Date, the
exclusive right to enter upon the Property for purposes of performing
Exploration, Development and Related Work (as defined in the attached Exhibit
B). and the right to earn an undivided 60% interest in the Property by incurring
certain Work Expenditures (as defined in the attached Exhibit C) as set forth
below (the "Acquisition Right"). PDUS shall have the additional right to conduct
on the Property exploration and development activities related to exploration
and development activities of PDUS on properties adjacent to or nearby the
Property. PDUS's rights shall also include all other rights necessary or
incident to or for the performance of its activities hereunder, including, but
not limited to the authority to apply for all necessary permits, licenses and
other approvals from the United States of America, the State of Nevada or any
other governmental or other entity having regulatory authority over any part of
the Property.
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 3
GAM agrees to cooperate with PDUS in good faith as necessary for PDUS to obtain
such licenses, permits or approvals.
II. EXPLORATION PERIOD
A. GAM and PDUS agree that during a five-year Earn-In Period commencing
effective as of October 21, 2004 and terminating on October 21, 2009, PDUS may
exercise the Acquisition Right (if it has incurred the required amount of Work
Expenditures) at any time during that Earn-In Period. Upon exercise of the
Acquisition Right, PDUS shall have earned an undivided 60% interest in the
Property, and GAM shall promptly convey to PDUS an undivided 60% interest in the
Property, by special warranty deed or other appropriate instrument of conveyance
acceptable to PDUS, by which GAM conveys an undivided 60% interest in the
Property to PDUS free and clear of all liens, claims, defects, encumbrances and
other burdens on production arising by, through or under GAM.
B. In order to keep this letter agreement in full force and effect and
retain its Acquisition Right, in addition to the Initial Payment, PDUS must make
cash payments to GAM ("Periodic Payments") in accordance with the following
schedule:
Due Date Amount
-------- ------
First Anniversary Date $ 50,000
Second Anniversary Date $ 50,000
Third Anniversary Date $150,000
Fourth Anniversary Date $200,000
For purposes of this letter agreement, the term "Anniversary Date" shall mean
the date one or more years following the Effective Date of this letter
agreement. Under no circumstances shall the obligation to make any Periodic
Payment under this paragraph II.B be deemed to have accrued prior to the date
such payment is due.
C. In order to keep this letter agreement in full force and effect and
retain its Acquisition Right, PDUS must also incur minimum Work Expenditures of
$5.0 million during the Earn-In Period, in order to earn a vested 60% interest
in the Property. Other than the obligation to incur at least $150,000 in Work
Expenditures during the first annual period beginning on October 21, 2004 and
ending on October 21, 2005, which is a firm commitment of PDUS, PDUS shall have
no obligation to incur any Work Expenditures and, at its sole discretion, shall
have the right to terminate this letter agreement (and its right to earn an
interest in the Property) at any time during the Earn- In Period. Such
termination shall be effective immediately upon receipt of written notice of the
same by GAM. In the event of such termination, PDUS shall have no obligation to
make any additional Periodic Payments or to incur any additional Work
Expenditures
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 4
and no further obligations or liability to GAM whatsoever, other than (i) the
obligation to reclaim the surface of the Property in accordance with paragraph
II.I (for which GAM agrees to grant PDUS such access following termination as is
reasonably necessary), and (ii) the obligations set forth in paragraph II.K and
paragraph II.P.6(b). In the event of such termination by PDUS, GAM shall retain
its obligations set forth in paragraphs II.D.2, II.K and II.P.6(b). In the event
of such termination, GAM expressly agrees that PDUS shall not be liable for any
actual, incidental or consequential damages, or lost profits, incurred by GAM as
a result of PDUS's election not to or failure to (i) incur all or any part of
the required amount of Work Expenditures or (ii) exercise the Acquisition Right.
If PDUS terminates this letter agreement at any time during the first Annual
Period (as defined below), and as of the effective date of such termination PDUS
has incurred less than $150,000 in Work Expenditures, then PDUS shall be
obligated to pay to GAM an amount equal to the difference between the amount of
Work Expenditures actually incurred by PDUS and $150,000. All of the
Exploration, Development and Related Work which may be performed by PDUS shall
be performed in accordance with good mining practices, but the timing, nature,
manner and extent of any exploration, development or any other operations or
activities hereunder shall be in the sole discretion of PDUS, and there shall be
no implied covenant to begin or continue any such operations or activities.
1. The amounts of Work Expenditures required to be made on or
for the benefit of the Property in order for PDUS to keep this letter agreement
in full force and effect and retain the Acquisition Right are set forth in the
following schedule (all amounts set forth below and elsewhere in this letter
agreement are in U.S. dollars):
(a) $250,000 ($150,000 of which is a firm commitment, as
set forth above) during the period from October 21,
2004 through October 21, 2005;
(b) $500,000 (optional) during the period from October
21, 2005 through October 21, 2006;
(c) $1,000,000 (optional) during the period from October
21, 2006 through October 21, 2007;
(d) $1,500,000 (optional) during the period from October
21, 2007 through October 21, 2008; and
(e) $1,750,000 (optional) during the period from October
21, 2008 through October 21, 2009.
2. PDUS shall provide GAM with a report of its Work
Expenditures, certified by PDUS as being accurate and complete, not later than
60 days after the end
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 5
of each of the periods referred to in paragraph II.C.1 (a)-(e) above (an
"Annual Period") during the Earn-In Period, which will include such information
as is reasonably necessary for GAM to confirm that PDUS has incurred the
required minimum amount of Work Expenditures during the Annual Period in
question. If PDUS elects not to incur the required amount of Work Expenditures
during any Annual Period but desires to keep this letter agreement in full
force and effect, or if for any reason it is determined that the entire amount
of required Work Expenditures is not completed during any Annual Period, then,
in order to maintain its interest in this letter agreement, PDUS shall be
required to pay the amount of any agreed-upon deficiency to GAM, within 30 days
after the Parties reach agreement as to the amount of the deficiency. If PDUS
is precluded from timely completion during any Annual Period of any or all of
the required Work Expenditures set forth above, due to any event of force
majeure, the time periods for incurring all of the Work Expenditures shall be
extended for a period of time equal to that of the delay(s), provided that
under no circumstances shall the Earn-In Period extend beyond October 21, 2014.
The term "force majeure," as employed herein, shall mean acts of God, strikes,
lockouts or other industrial disturbances, unavoidable accidents,
uncontrollable delays in transportation, inability to obtain necessary
materials in the open market, any state or federal laws, regulations or
requirements (expressly including inability to timely obtain, after diligent
efforts, necessary governmental approvals, licenses and permits on terms
reasonably acceptable to PDUS or the imposition of material new requirements
for approvals, licenses or permits that did not exist on the Effective Date),
or other matters beyond the reasonable control of PDUS, whether similar to
matters specifically enumerated above or not; provided, however, that
performance shall be resumed within a reasonable period of time after such
cause has been removed; and provided further that PDUS shall not be required
against its will to adjust any labor dispute or to question the validity of or
to refrain from judicially testing the validity of any state or federal order,
regulation or law. Work Expenditures in excess of the amount required during
any Annual Period may be carried forward as a credit for any subsequent Annual
Period. PDUS may in its sole discretion accelerate the schedule for completion
of the required Work Expenditures (and making the required Periodic Payments)
in order to exercise its Acquisition Right at any time during the Earn-In
Period.
3. So long as it desires to keep the letter agreement in full
force and effect and retain its Acquisition Right, PDUS will, subject to the
provisions of paragraph II.J below, timely pay all federal claim maintenance
fees required to maintain the unpatented mining claims within the Property (the
"Claims"). So long as it timely pays the claim maintenance fees as required
under this paragraph II.C.3, PDUS shall have the right if it so elects, but no
duty, to defend the Claims from, and no liability whatsoever to GAM as the
result of a loss of any of the Claims due to, a challenge by any third party or
any U.S. government agency.
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 6
D. 1. During the Earn-In Period, PDUS shall provide to the Technical
Committee (1) monthly progress reports, and (2) a comprehensive summary report
twice during each Annual Period. The bi-annual comprehensive report, which shall
be delivered by PDUS to the Technical Committee not later than 60 days after the
end of each six-month period during every Annual Period, shall include
information relating to title to the Property, environmental conditions at or
pertaining to the Property, and all maps, assays, surveys, drill logs, samples,
and non-interpretive metallurgical, geological, geophysical, geochemical and
engineering data (but not interpretive reports derived therefrom), developed by
PDUS during the immediately previous six-month period; provided, however, that
PDUS shall have no obligation to make any data or reports developed by it or on
its behalf available to GAM if such data or reports constitute trade secrets or
are derived from techniques that are proprietary to or constitute trade secrets
of PDUS (or any third-party consultant that compiled or created them). PDUS
makes no representation or warranty as to the accuracy, reliability or
completeness of any data and information provided to the other Parties pursuant
to this paragraph II.D, and GAM shall rely on the same at its sole risk.
2. During the Earn-In Period, GAM and its authorized agents,
at GAM's sole risk and expense, shall have the right, exercisable during regular
business hours, at a mutually convenient time, in compliance with PDUS's safety
rules and regulations (which may or may not include written confirmation of
their waiver of claims against PDUS), and in a reasonable manner so as not to
interfere with PDUS's operations, to go upon the Property for the purpose of
confirming that PDUS is conducting its operations in the manner required by this
letter agreement. GAM shall defend, indemnify and hold PDUS harmless from and
against all claims for Losses (as defined in paragraph II.K) arising out of any
death, personal injury or property damage sustained by GAM, its agents or
employees, while in or upon the Property pursuant to this paragraph II.D.2,
unless such death, injury or damage is due to PDUS's gross negligence or willful
misconduct.
E. 1. With respect to the Claims, GAM represents and warrants to the
best of its knowledge (a) that GAM owns the Claims free and clear of all liens,
claims, defects, encumbrances or other burdens on production arising by, through
or under GAM; (b) that as to each of the Claims, GAM is in exclusive possession
thereof, and that, subject to the paramount title of the United States of
America: (i) the Claims were properly located and monumented, and constitute a
compact group of contiguous claims free and clear of any interior gaps or
conflicting claims of which GAM is aware, other than the fee lands depicted on
the map of the Claims GAM has provided to PDUS (although all of the location
monuments for the Claims are on ground open to appropriation by mineral location
and there are no gaps between the Claims and any such fee lands); (ii) location
notices and certificates and required maps were properly posted and recorded for
each of the Claims; (iii) all filings and recordings required to
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page7
maintain the Claims in good standing through the Effective Date of this letter
agreement, including evidence of proper performance of annual assessment work or
payment of required claim maintenance fees, have been timely and properly made
in the appropriate governmental offices; (iv) assessment work, performed
reasonably and in good faith in accordance with accepted industry practice,
which to the best of knowledge of GAM was sufficient to satisfy the requirements
for maintaining the Claims, was performed through the assessment year ending
September 1, 1992; (v) all required annual claim maintenance fees and other
payments necessary to maintain the Claims through the assessment year ending
September 1, 2005, have been timely and properly made; and (vi) each of the
Claims has been remonumented as necessary, and evidence of such remonumentation
has been timely and properly recorded, all in compliance with the provisions of
Nevada Revised Statutes ss. 517.030. However, GAM makes no representation or
warranty that there exists a discovery of valuable minerals on any of the
Claims.
2. GAM further represents and warrants (a) that GAM has
conducted all operations on the Property in compliance with applicable federal,
state and local laws, rules, and regulations, including Environmental Laws, and
that there are no outstanding reclamation, restoration or clean-up obligations
or liabilities pertaining to the Property; (b) that there is no pending or
threatened litigation or administrative action or proceeding affecting the
Property and it has received no notices of violation or consent orders with
respect to the Property or any operations thereon; (c) that to the best of its
knowledge there is no condition or activity at the Property which constitutes a
nuisance or which could result in a violation of or liability under any
applicable Environmental Laws (as defined in Exhibit B). and that there have
been no releases of Hazardous Materials (as defined in Exhibit B). from or
affecting the Property other than in accordance with such laws; (d) that by
entering into this letter agreement it will not be in violation of or cause a
default under any oral or written agreement to which it is a party, and that it
has obtained any consents required under any such agreements in order for it to
enter into this letter agreement; (e) that there are no royalties encumbering
the Property; and (f) that the Property does not constitute all or substantially
all of its assets.
F. Each of PDUS, on the one hand, and GAM, on the other hand,
represents and warrants to the other that:
1. It is a corporation duly organized, validly existing, and
in good standing under the laws of its state of incorporation, and is qualified
to do business and in good standing under the laws of the State of Nevada.
2. It has the requisite power and authority (a) to enter into
this letter agreement and all other agreements contemplated hereby, and (b) to
carry out and perform its obligations under the terms and provisions of this
letter agreement and all agreements contemplated hereby. 1.
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 8
3. All requisite corporate action on its part, and on the part
of its officers, directors, and shareholders, necessary for the execution,
delivery, and performance by it of this letter agreement and all other
agreements contemplated hereby, have been taken. This letter agreement and all
agreements and instruments contemplated hereby are, and when executed and
delivered by it (assuming valid execution and delivery by the other Party), will
be, legal, valid, and binding obligations of it enforceable against it in
accordance with their respective terms. The execution, delivery and performance
by it of this letter agreement will not violate any provision of law; any order
of any court or other agency of government; or any provision of any indenture,
agreement or other instrument to which it is a party or by which its properties
or assets are bound; or be in conflict with, result in a breach of or constitute
(with due notice and lapse of time) a default under any such indenture,
agreement or other instrument. There is no law, rule or regulation, nor is there
any judgment, decree or order of any court or governmental authority binding on
it which would be contravened by the execution, delivery, performance, or
enforcement of this letter agreement or any instrument or agreement required
hereunder. Notwithstanding the foregoing, no representation is made as to (a)
the remedy of specific performance or other equitable remedies for the
enforcement of this letter agreement or any other agreement contemplated hereby
or (b) rights to indemnity under this letter agreement for securities law
liability. Additionally, this representation is limited by applicable
bankruptcy, insolvency, moratorium, and other similar laws affecting generally
the rights and remedies of creditors and secured parties.
G. [intentionally omitted]
H. [intentionally omitted]
I. PDUS agrees to be responsible for and perform all reclamation
required by federal, state and local laws, rules and regulations in connection
with any activities or operations conducted by it or on its behalf on the
Property during the Earn-In Period. If PDUS exercises the Acquisition Right,
PDUS's reclamation obligations under this paragraph II.I will become obligations
of the Venture.
J. The Parties agree that, in addition to its right to terminate this
letter agreement in its entirety at any time, with respect to the Claims, at any
time during the term of this letter agreement, PDUS may in its sole discretion
elect to terminate its interest under this letter agreement in any portion of
the Claims, and all of PDUS's interest in those Claims shall revert back to GAM,
thereby removing those Claims from the scope of this letter agreement, in which
case those Claims will no longer be deemed to comprise a portion of the Property
for any purposes under this letter agreement, and with respect to which PDUS
shall have no further liabilities or obligations (other than those that have
accrued hereunder prior to the effective date of such termination). An election
by PDUS to terminate its interest in some (but less than all) of the Claims
shall
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 9
be effective upon PDUS providing written notice of such election to GAM;
provided, however, that if PDUS re-acquires any interest in any ground covered
by those Claims within one year after having made such a termination election,
that ground shall be deemed to be included in the Property for all intents and
purposes under this letter agreement. In addition, if PDUS provides notice to
GAM of PDUS's election to terminate its interest in any of the Claims later than
June 30th of any year, PDUS shall be obligated to pay the claim maintenance fees
for those Claims for the following assessment year despite such termination.
K. 1. PDUS agrees to indemnify, defend and hold GAM, its officers,
directors, successors and assigns, harmless from and against any and all claims,
actions, suits, losses, liabilities, damages, assessments, judgments, costs and
expenses, including reasonable attorneys' fees and other costs of defending the
same (collectively, "Losses") arising from or related to (a) any breach by PDUS
of any of its covenants or representations and warranties set forth in this
letter agreement, or (b) any activities conducted by on or behalf of PDUS on the
Property. GAM agrees to indemnify, defend and hold PDUS, its officers,
directors, successors and assigns, harmless from and against any and all Losses
arising from or related to (a) any breach by GAM of any of its covenants or
representations and warranties set forth in this letter agreement, or (b) any
activities conducted by or on behalf of GAM on the Property. The indemnification
obligations set forth in this paragraph II.K and elsewhere in this letter
agreement shall survive the termination of this letter agreement. For purposes
of this paragraph II.K, the Parties agree that PDUS will be obligated to
indemnify GAM for Losses arising out of or related to activities undertaken by
PDUS during the Earn-In Period only to the extent those activities constitute
gross negligence or willful misconduct on the part of PDUS.
2. The Parties hereto, within five (5) days after the service
of process upon either of them in a lawsuit, including any notices of any court
action or administrative action (or any other type of action or proceeding), or
promptly after either of them, to its respective knowledge, shall become subject
to, or possess actual knowledge of, any damage, liability, loss, cost, expense,
or claim to which any of the indemnification provisions set forth in this letter
agreement relate, shall give written notice to the other party setting forth the
facts relating to the claim, damage, or loss, if available, and the estimated
amount of the same. "Promptly" for purposes of this paragraph II.K.2 shall mean
giving notice within ten (10) days, provided that the failure to promptly notify
the indemnifying party shall not operate to waive, reduce or extinguish the
indemnified party's rights hereunder unless such failure materially prejudices
the indemnifying party. Upon receipt of such notice relating to a lawsuit, the
indemnifying party shall be entitled to (i) participate at its own expense in
the defense or investigation of any claim or lawsuit or (ii) assume the defense
thereof, in which event the indemnifying party shall not be liable to the
indemnified party for legal or attorney fees
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 10
thereafter incurred by such indemnified party in defense of such action or
claim; provided, that if the indemnified party may have any unindemnified
liability out of such claim, such party shall have the right to approve the
counsel selected by the indemnifying party, which approval shall not be withheld
unreasonably. If the indemnifying party assumes the defense of any claim or
lawsuit, all costs of defense of such claim or lawsuit shall thereafter be borne
by such party and such party shall have the authority to compromise and settle
such claim or lawsuit, or to appeal any adverse judgment or ruling with the cost
of such appeal to be paid by such party; provided, however, if the indemnified
party may have any unindemnified liability arising out of such claim or lawsuit
the indemnifying party shall have the authority to compromise and settle each
such claim or lawsuit only with the written consent of the indemnified party,
which shall not be withheld unreasonably. The indemnified party may continue to
participate in any litigation at its expense after the indemnifying party
assumes the defense of such action. In the event the indemnifying party does not
elect to assume the defense of a claim or lawsuit, the indemnified party shall
have authority to compromise and settle such claim or lawsuit only with the
written consent of the indemnifying party, which consent shall not be
unreasonably withheld, or to appeal any adverse judgment or ruling, with all
costs, fees, and expenses indemnifiable under this letter agreement to be paid
by the indemnifying party. Upon the indemnified party's furnishing to the
indemnifying party an estimate of any loss, damage, liability, or expense to
which the indemnification provisions of this letter agreement relate, the
indemnifying party shall pay to the indemnified party the amount of such
estimate within ten (10) days of receipt of such estimate, unless the
indemnifying party in good faith disputes its liability with respect to any such
claim.
L. Neither Party may assign its interest in this letter agreement to
any third party without the prior written consent of the other Party, such
consent not to be unreasonably withheld; provided, however, that no such consent
will be necessary in connection with (i) assignments to affiliates or
subsidiaries, (ii) a pledge for financing purposes, (iii) corporate merger or
reorganization, or (iv) a sale of all or substantially all of the assigning
Party's assets. Any assignee of any Party or assignee or transferee of any
interest in the Property shall agree in writing to be bound by all of the terms
and conditions of this letter agreement. This letter agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
assigns. Upon an assignment by PDUS to which GAM consents, PDUS shall have no
further obligations or liabilities under this letter agreement.
M. Following completion of the minimum amount of Work Expenditures,
PDUS will have earned a 60% interest in the Property and will be entitled to
exercise the Acquisition Right. If PDUS exercises the Acquisition Right, GAM
will immediately convey to PDUS (by a special warranty deed acceptable to PDUS)
an undivided 60% interest in the Property, and PDUS and GAM will enter into a
joint venture agreement
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 11
(the "Joint Venture Agreement") covering further activities at the Property. The
formal Joint Venture Agreement will generally follow the form of the Rocky
Mountain Mineral Law Foundation Forms 5 and 5A model joint venture agreements,
and will contain the terms and provisions set forth in Section III below and
such other terms and conditions as are mutually agreeable (subject to an
obligation on the part of each Party to negotiate such other terms and
conditions in good faith) to the Parties. Until the Joint Venture Agreement is
executed and delivered the Parties agree that they will be legally bound by the
provisions of this paragraph II.M and the provisions of Section III.
N. PDUS and GAM agree that their relationship shall constitute a tax
partnership within the meaning of Section 761 (a) of the United States Internal
Revenue Code of 1986, as amended (the "Code"), and that, to the extent
permissible under applicable law, their relationship shall be treated for state
income tax purposes in the same manner as it is for federal income tax purposes.
Except for the tax partnership referred to in the preceding sentence and
established pursuant to the provisions of Exhibit D attached hereto and
incorporated herein by reference, nothing contained in this letter agreement
shall be deemed to constitute either party the partner of the other, nor, except
as otherwise herein expressly provided, to constitute either party the agent
or legal representative of the other, nor to create any fiduciary relationship
between them. It is not the intention of the parties to create, nor shall this
letter agreement be construed to create, any mining, commercial, or other
partnership, other than the tax partnership as set forth in Exhibit D. Neither
party shall have any authority to act for or to assume any obligation or
responsibility on behalf of the other party, except as otherwise expressly
provided herein.
O. Simultaneous with the execution of this letter agreement, the
parties agree to execute for recording purposes a written Short Form of
Agreement, in the form attached hereto as Exhibit E. setting forth the basic
terms and conditions of this letter agreement as necessitated by Nevada law.
That Short Form may be recorded by PDUS in the official records of Eureka,
Lander and White Pine Counties. Neither of the Parties shall be entitled to
record this letter agreement.
P. Where any Party hereto or any affiliate (collectively, the
"Discloser") is required by Canadian National Instrument 43-101 Standards of
Disclosure for Mineral Projects, as amended from time to time ("Nl 43-101"), to
file a Technical Report (as defined in Nl 43-101) with respect to the Property:
1. neither the non-disclosing Parties nor their respective
affiliates shall have any obligation to the Discloser to prepare or provide the
Technical Report or any part thereof, or to provide or make available a
Qualified Person (as defined in Nl 43-101) to the Discloser;
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 12
2. the Discloser shall not designate either of the other
Parties or any associate, affiliate or employee of or retained by either of the
other Parties, or any Qualified Person of the other Parties, as the Qualified
Person of the Discloser, without the prior written consent of the other Parties;
3. the Discloser shall be responsible for the cost of
preparing or providing the Technical Report;
4. the Discloser's designation of a third party Qualified
Person shall be subject to the other Parties' prior written consent, such
consent not to be unreasonably withheld;
5. the non-disclosing Parties shall be entitled to access to
all pertinent information related to that portion of the Technical Report
pertaining to the Property and shall be afforded a reasonable opportunity to
review and the opportunity (but not the obligation) to require reasonable
changes to that portion of the Technical Report prior to the filing of the
Technical Report with applicable regulatory authorities;
6. where GAM is the Discloser, GAM may request and PDUS may
elect (but shall have no obligation) to prepare and provide the Technical Report
and to designate the Qualified Person to prepare or supervise the preparation of
such Technical Report, all at the expense of GAM. In the event that PDUS
prepares or provides the Technical Report pursuant to this paragraph II.P.6,
then GAM shall:
(a) use such Technical Report only for the
purpose of compliance with Nl 43-101 and for
no other purpose; and
(b) defend, indemnify and hold PDUS and its
directors, officers, employees, agents,
representatives and subcontractors (the
"PDUS Indemnified Parties") harmless from
and against any and all Losses, whether
direct or indirect, which at any time or
from time to time are directly or indirectly
incurred or suffered by any of the PDUS
Indemnified Parties or their respective
successors or assigns in connection with, as
a result of or arising out of the
preparation or provision of the Technical
Report and the dissemination of same. For
greater certainty, no termination of this
letter agreement shall prevent any of the
PDUS Indemnified Parties or their respective
successors or assigns from obtaining
indemnification from GAM pursuant to this
paragraph II.P.6(b); and
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 13
7. where GAM is the Discloser and PDUS obtains information
subsequent to the filing of the Technical Report which renders the Technical
Report inaccurate, GAM shall at PDUS's request disseminate such information in a
manner which satisfies GAM's obligations under applicable securities laws, and
if GAM fails to do so then PDUS shall have the right (but not the obligation) to
do so on GAM's behalf.
Q. The Parties agree that the terms and conditions of this letter
agreement will apply and extend to any right, title or interest in real property
hereafter acquired during the Earn-In Period, without payment of additional
consideration, by (i) GAM in or to the Property or within the Area of Interest,
or (ii) PDUS within the Area of Interest. To the extent that any contractual
interest in real property within the Area of Interest is acquired by PDUS during
the Earn-In Period, if PDUS does not exercise its Acquisition Right, PDUS agrees
that it will assign such contractual interest to GAM following the termination
of this Agreement, if PDUS is contractually entitled to do so, or PDUS will
request that the other party to any such contract consent to such an assignment
(if consent is contractually required); provided, however, PDUS shall have no
affirmative obligation to GAM to obtain such consent or make such an assignment
if the required consent is not obtained. Notwithstanding the foregoing, PDUS
shall have no obligation to assign any such contractual interest in real
property to GAM unless the other party to any such contract agrees in writing
that PDUS shall have no further obligations or liabilities under that contract
from and after the date of assignment to GAM.
R. The Parties agree that this letter agreement shall be governed by
Nevada law, other than its rules as to conflicts of law. The parties hereby
agree and consent to the non-exclusive jurisdiction of the United States
District Court for the District of Nevada with respect to any disputes arising
under or concerning the interpretation of this letter agreement.
S. The Parties agree that this letter agreement shall be construed to
benefit the parties hereto and their respective permitted successors and assigns
only, and, except as set forth in paragraph II.K, shall not be construed to
create any third party beneficiary rights in any other party or in any
governmental organization or agency.
T. The use of the term "including" anywhere in this letter agreement
shall be deemed to mean "including without limitation." Representations and
warranties in this letter agreement made to the best of a Party's knowledge
shall mean the party making the representation and warranty has made a prudent
and reasonable investigation of the underlying facts that form the basis of the
representation and warranty.
U. In the event of a material default hereunder on the part of PDUS,
GAM shall give to PDUS written notice specifying the particular default or
defaults asserted, and, in the case of a default other than with respect to the
payment of money, PDUS shall have thirty days after the receipt of said notice
(or in the event PDUS disputes the
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 14
existence of such a material default, thirty days after the entry by a court of
competent jurisdiction of a final judgment finding such a default) within which
either to cure such specified defaults, or to undertake diligent efforts to cure
the same. In the event of such a cure (or the commencement of diligent efforts
to cure) by PDUS, this letter agreement shall continue in full force and effect
as though no default had occurred. In the event such curative action is not so
completed or diligent efforts to cure such defaults are not undertaken within
the applicable 30-day period and thereafter diligently pursued to completion,
GAM may elect to terminate this letter agreement by notice to PDUS as provided
in paragraph II. V. In the case of a default by PDUS relating to the payment of
any funds to GAM, or any third party as required hereunder, PDUS shall have ten
business days after receipt of notice of such default to rectify or dispute the
same (in accordance with the same procedures as apply to non-monetary defaults
as set forth above in this paragraph II. U), failing which GAM may elect to
terminate this letter agreement by written notice to PDUS as provided in
paragraph II.V. Upon termination of this letter agreement pursuant to this
paragraph II.U, PDUS shall have no further liability or obligations hereunder or
with respect to the Property (including no liability for lost profits,
consequential or other damages), except with respect to the obligations set
forth in paragraphs II. I and II. K, and GAM shall have no further liability or
obligations hereunder, except with respect to the obligations set forth in
paragraphs II.D.2, II. K and II.P.6(b).
V. All notices given in connection herewith shall be in writing, and
all such notices and deliveries to be made pursuant hereto shall be given or
made in person, by certified or registered mail, by reputable overnight courier,
or by facsimile acknowledged upon receipt. Such notices and deliveries shall be
deemed to have been duly given and received when actually delivered in person or
sent by facsimile (during normal business hours), on the next business day
following the date they are sent by courier, or three business days after
registered or certified mailing when deposited in a receptacle for United States
mail, postage prepaid, and addressed as follows:
1. If to PDUS:
Placer Dome U.S. Inc.
1125 17th Street, Suite 2310
Denver, Colorado 80202
Attention: General Counsel
Telephone No.: (303) 675-0055
Facsimile No.: (303) 675-0707
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 15
with a copy to:
Placer Dome U.S. Inc.
240 South Rock Blvd., Suite 117
Reno, Nevada 89502
Attention: William C. Howald
Telephone No.: (775) 856-2552
Facsimile No.: (775) 856-7509
and
Placer Dome U.S. Inc.
HC 66 Box 1250
Crescent Valley, Nevada 89821
Attention: Brian Iverson
Telephone No.: (775) 468-4433
Facsimile No.: (775) 468-4496
2. If to GAM:
Great American Minerals, Inc.
9051 South 1075 West Suite B-301
West Jordan, Utah 84088
Attention: Don McDowell
Telephone No.: (801) 231-0658
Facsimile No.: (801) 254-7510
W. If at any time during the Earn-In Period GAM intends to convey,
assign, option or otherwise transfer (collectively, "Transfer") to any third
party all or any part of its interest in either the GQ or the Monte Cristo
Properties (as described in Parts 3 and 4 of the Exhibit A. respectively), GAM
shall notify PDUS of those intentions. The notice shall state the price and all
other pertinent terms and conditions of the intended Transfer, and if such
intended Transfer is the result of an offer from a third party, shall be
accompanied by a copy of the offer or contract for sale. If the intended
Transfer is based upon a third party offer and if the consideration for the
Transfer is, in whole or in part, other than monetary, the notice shall describe
such consideration and its monetary equivalent (based upon the fair market value
of the non-monetary consideration and stated in terms of cash or currency). PDUS
shall have 30 days from the date such notice is delivered to notify GAM whether
it elects to acquire the offered interest at the same price and on the same
terms and conditions as set forth in the notice offer. If it does so elect, the
Transfer shall be consummated promptly after notice of such election
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 16
is delivered to GAM. If PDUS fails to so elect within the 30-day period, GAM
shall have 60 days following the expiration of such period to consummate the
Transfer to a third party at a price and on terms no less favorable than those
offered by GAM to PDUS in the notice. If GAM fails to consummate the Transfer to
a third party within that 60-day period, PDUS's right of first refusal in such
offered interest shall be deemed to be revived. Any subsequent proposal to
Transfer such interest shall be conducted in accordance with all of the
procedures set forth in this paragraph II.W.
X. This letter agreement is the complete expression of all agreements,
contracts, covenants, and promises between the Parties (except for the
Confidentiality Agreement, which the Parties acknowledge shall be binding upon
them only in the limited circumstances set forth in paragraph I.B), and all
negotiations, understandings, and agreements between the Parties are set forth
in this letter agreement, which solely and completely expresses their
understanding, and shall be construed without reference to any such
negotiations, understandings and agreements. No implied term, covenant,
condition or provision of any kind whatsoever shall affect any of the Parties'
respective rights and obligations hereunder, including, without limitation,
rights and obligations with respect to exploration, development, mining,
processing and marketing of minerals, and the only terms, covenants, conditions
or provisions which shall in any way affect any of their respective rights and
obligations shall be those expressly set forth in this letter agreement. This
letter agreement may not be amended or modified, nor may any obligation
hereunder be waived, except by writing duly executed on behalf of all Parties,
and unless otherwise specifically provided in such writing, any amendment,
modification, or waiver shall be effective only in the specific instance and for
the purpose it is given.
Y. In the event that any one or more of the provisions contained in
this letter agreement or in any other instrument or agreement contemplated
hereby shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this letter agreement or any such other instrument
or agreement. In the event of any controversy, claim, or dispute between the
Parties hereto, arising out of or relating to this letter agreement or the
breach thereof, the prevailing Party shall be entitled to recover from the
losing Party reasonable expenses, attorneys' fees, and costs. At the request of
either Party, the Parties shall execute and deliver any further instruments,
agreements, documents or other papers reasonably requested by either Party to
effect the purposes of this letter agreement and the transactions contemplated
hereby.
Z. The Parties hereby agree that any dispute arising under this letter
agreement shall be subject to the informal dispute resolution procedure set
forth in this paragraph II.Z. The Party asserting the existence of a dispute as
to the interpretation of any provision of this letter agreement or the
performance by the other Party of any of its obligations hereunder shall notify
the other Party of the nature of the asserted dispute.
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 17
Within seven business days after receipt of such notice, William Howald (for
PDUS) and Don McDowell (for GAM), or their designated successors, shall arrange
for a personal or telephone conference in which they use good faith efforts to
resolve such dispute. If those individuals are unable to resolve the dispute,
either Party may proceed with any legal remedy available to it; provided,
however, that the Parties agree that any statement made as to the subject matter
of the dispute in any of the conferences referred to in this paragraph II.Z
shall not be used in any legal proceeding against the Party that made such
statement.
III. DEVELOPMENT PERIOD
A. PDUS shall be the Manager of the business relationship between the
parties (the "Venture") under the Joint Venture Agreement. Within 60 days after
exercise by PDUS of the Acquisition Right, GAM shall notify PDUS in writing
whether or not GAM desires to participate in funding of Operations (in
accordance with a Program and Budget to be prepared by PDUS and forwarded to GAM
not later than 30 days after the date PDUS exercises the Acquisition Right), in
proportion to its 40% Participating Interest. If GAM timely elects not to
participate, then, if PDUS desires to earn an additional 10% interest in the
Property and the Venture (the "Additional Interest"), PDUS must (i) complete or
arrange for the completion of a Feasibility Study (as defined in the attached
Exhibit G) at any time during a four year period (subject to extension for
reasons of force majeure) after the date of GAM's decision not to participate,
and (ii) upon completion of the Feasibility Study, use reasonable efforts to
assist GAM in obtaining its share of financing (30%) for Operations going
forward or, in the alternative (at PDUS' election), use reasonable efforts to
arrange for project financing for the construction and development of a mine at
the Property, rather than GAM being required to directly finance or fund its
share of the costs of such construction and development. PDUS shall have no
obligation to arrange for any project financing that PDUS's Board of Directors,
acting in its normal course, is unwilling to approve. If PDUS uses reasonable
efforts but is unable to arrange for either (i) separate financing for GAM or
(ii) project financing, PDUS shall notify GAM, and the Participating Interests
shall nonetheless be PDUS-70% / GAM-30%. If PDUS arranges for project financing,
it shall be entitled to recover GAM's share (30%) of (i) the amount borrowed,
(ii) all costs associated with such financing (including without limitation
attorney's fees, consultant's fees, and fees payable to the lender and the
lender's attorneys and consultants), and (iii) interest on the foregoing amount
at a rate to be determined by a mutually agreeable independent third party
(collectively, the "Carried Amount"), from GAM's share of net cash flow from
operations from the Property, beginning on the date of commencement of
commercial production from the Property. To secure repayment of the Carried
Amount, GAM shall grant to PDUS, simultaneous with the execution of the Joint
Venture Agreement, a first priority security interest (subordinate only to the
lender with whom PDUS arranges the project financing) in GAM's Participating
Interest in the Joint
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 18
Venture Agreement, and execute and deliver to PDUS a mortgage or deed of trust,
U.C.C. Financing Statements, and such other documents as PDUS may deem
reasonably necessary to perfect that security interest. That security interest
will remain in place until PDUS has fully recovered the Carried Amount. PDUS's
security interest described above will be in addition to the security interests
the Parties grant to each other to secure the performance of their respective
obligations under the Joint Venture Agreement. PDUS may extend the time by which
it must have completed the Feasibility Study for one additional year by payment
to GAM of $100,000, and for another additional year by payment to GAM of
$100,000. During the period when it is preparing a Feasibility Study, PDUS shall
provide monthly progress reports to GAM, which shall include all data and
information being used by PDUS or its consultants in the preparation of the
Feasibility Study. All such data and information shall be kept strictly
confidential and shall not be disclosed to any third party; provided, however,
that GAM shall be allowed to disclose such information to a third party willing
to finance GAM's share of development costs, in whole or in part, provided that
the third party first enters into a confidentiality agreement with PDUS and GAM
with respect to such information that is mutually agreeable to PDUS and GAM. In
addition, none of such data and information, or any portion of any monthly
progress report, shall be included in any press release or other public
announcement issued by GAM. PDUS shall have right to decide and notify GAM at
any time that it no longer wishes to acquire the Additional Interest. If GAM
elects not to participate in the funding of Operations as set forth in this
paragraph III.A, PDUS will fund all Venture operations through completion of the
Feasibility Study or until PDUS determines it no longer desires to earn the
Additional Interest.
B. Upon completion of a Feasibility Study, PDUS shall have earned the
Additional Interest, and each Participant shall, subject to the provisions of
paragraph III.A, fund project development according to its Participating
Interest percentage (30% GAM, 70% PDUS).
C. PDUS shall be the Manager under the Joint Venture Agreement and will
be compensated with a management fee calculated as set forth in the Joint
Venture Agreement.
D. If GAM elects to participate in Programs and Budgets pursuant to
paragraph III.A, or if PDUS fails or elects not to timely complete the
Feasibility Study, then the participating interest percentages of the parties
shall remain PDUS - 60%, GAM - 40%, and PDUS shall remain the Manager under the
Joint Venture Agreement.
E. PDUS's Initial Contribution to the Venture will be deemed to be
equal to the actual amount of PDUS's Work Expenditures incurred during the
Earn-In Period plus additional expenditures for Operations incurred by PDUS
through the point of completion of a Feasibility Study (or either (i) an
election by GAM to participate in
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 19
funding Venture Operations at a 40% level or (ii) an election by PDUS not to
complete the Feasibility Study), and the amount of GAM's Initial Contribution
will be determined based on the following formula (where GAM's contribution
equals x):
[Amount of PDUS's Work Expenditures
60% = and additional expenditures]
----- ----------------------------------------
40% x
The fraction set forth above shall be 70%/30% (for Equity Account purposes) if
PDUS earns the Additional Interest, and the Participants will take such actions
as are reasonably necessary to make the Capital Account balances reflect PDUS's
additional expenditures made to earn the Additional Interest.
F. If either Participant elects to participate less than fully or not
at all in a proposed Program and Budget, the standard dilution formula set forth
in Section 6.3 of Form 5A will apply. Once any Participant's Participating
Interest is voluntarily reduced to less than 5%, that Participant's
Participating Interest shall automatically be converted to an interest in 1 % of
Net Returns. If a Participant defaults in contributing to an approved Program
and Budget, then, among the remedies available to it, the non-defaulting
Participant may choose to have the defaulting Participant's Participating
Interest reduced in accordance with the standard dilution formula plus a penalty
of 50% (if the default occurs with respect to an approved Program and Budget
which covers primarily exploration activities), or to have the defaulting
Participant forfeit its entire interest in the Venture (if the default occurs
with respect to an approved Program and Budget which covers primarily
development and/or mining activities), in which case the defaulting Participant
shall have the right to recover from the applicable percentage of Net Returns
set forth above an amount equal to the positive balance in the defaulting
Participant's Equity Account.
G. If GAM elects not to participate in funding Venture Operations at a
40% level pursuant to paragraph III.A, then during the period prior to which it
completes the Feasibility Study, unless it elects not to acquire the Additional
Interest, PDUS shall have no obligation to prepare or provide GAM with the
opportunity to comment on Programs and Budgets, until it has earned the
Additional Interest. Until it has earned the Additional Interest, however (or
until it has elected not to acquire that Additional Interest), PDUS shall be
obligated to conduct operations generally in accordance with the standards
applicable to the Manager under the Joint Venture Agreement (provided that until
that time, PDUS shall not be obligated to refer any matters to the Management
Committee or to seek Management Committee approval for any decisions with
respect to operations on the Property).
H. The Parties agree that each of them shall be responsible for their
share of liabilities and obligations of the Venture (including without
limitation environmental
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 20
liabilities and obligations), equivalent to their Participating Interests in the
Venture at the time such obligations or liabilities are incurred or accrued,
notwithstanding any subsequent reduction or conversion of their Participating
Interests.
I. Each of the Parties to the Joint Venture Agreement shall have a
right of first refusal to acquire the other Party's Participating Interest or
its interest in Net Returns if the other Party desires to sell all or any
portion of its Participating Interest or its interest in Net Returns.
J. All capitalized terms used in this Section III and not defined
herein will have the meaning ascribed to them in Forms 5 and 5A.
IV. PUBLICITY AND INFORMATION
A. Each Party, except to the extent required by law or stock exchange
rule and then only after providing the other Party with not less than three
business days to review and comment on any proposed release or announcement, is
prohibited from issuing any press releases or other public announcements
concerning this letter agreement or any information generated pursuant hereto
without the prior written approval of the other Party. GAM acknowledges that,
based upon (a) information made available by it to PDUS and PDUS's examination
of the Property with the permission of GAM and (b) exploration data from work on
property which PDUS controls in the vicinity of the Property, PDUS has conducted
its own evaluation of the Property and has developed its own theories and
interpretations regarding the Property that are regarded by PDUS as confidential
and/or proprietary to PDUS and which have not been disclosed to GAM. GAM agrees
that in entering into this letter agreement, it is not relying on PDUS to
disclose any such theories, interpretations or evaluations.
B. Except as set forth in paragraph IV.A, the Parties agree to treat
all data, reports, records and other information developed or made available to
them by the other Party under this letter agreement and applicable to the
Property as confidential, and unless either Party is required by any law, rule,
regulation, or order to disclose any of such information, information shall not
be disclosed to any person without the prior written consent of the
non-disclosing Party, which consent shall not be unreasonably withheld.
C. This letter agreement is, and the rights and obligations of the
parties are, strictly limited to the Property and the Area of Interest. Except
as expressly provided herein, the Parties shall have the free and unrestricted
right to independently engage in, and receive the full benefits of, any and all
business ventures of any sort whatever, whether or not competitive with the
Property and the activities undertaken pursuant to the letter agreement, without
consulting the others or inviting or allowing the others to participate therein.
Neither of the Parties shall be under any fiduciary or other duty to
Mr. Don McDowell
Great American Minerals, Inc.
October 20, 2004
Page 21
the other which will prevent it from engaging in or enjoying the benefits of,
any competing venture or ventures outside the Property (other than the Area of
Interest). The legal doctrines of "corporate opportunity" or "business
opportunity" as developed or applied by any court or authority of any
jurisdiction and sometimes applied to persons or legal entities occupying a
joint venture or other fiduciary status shall not be applied to any other
activity, venture, or operation of any of the Parties, whether such opportunity
is derived from or based on information received or activities conducted under
this letter agreement or otherwise.
If GAM is in agreement with the foregoing, please indicate the same by
signing in the space indicated below, and returning to me a copy of this letter
on or before October 22, 2004. Upon PDUS's receipt of a signed copy of this
letter it will be understood and agreed to by the Parties that this letter
agreement, for and in consideration of the mutual covenants and promises
contained herein, the receipt and sufficiency of which are hereby acknowledged
and confirmed, is intended to and does constitute a binding agreement.
Sincerely,
PLACER DOME U.S. INC.
/s/ William Howald
William Howald
Regional Exploration Manager
Accepted and agreed to this 22 day of October, 2004 by
Great American Minerals, Inc.
By: /s/ Dennis J. McDowell
Name: Dennis J. McDowell
Title: President
Exhibit A
Part 1. The Claims
The following unpatented mining claims located in Sections 2, 3, 4, 5,
8, 11, 15, 16, 21 and 9,10, 22, Township 23 North, Range 48 East, and Sections
3, 10, and 28, Township 24 North, Range 48 East, 15,27 Eureka County, Nevada:
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-1 NMC 861835 373 116 184742
UNR-2 NMC 861836 373 117 184743
UNR-3 NMC 861837 373 118 184744
UNR-4 NMC 861838 373 119 184745
UNR-5 NMC 861839 373 120 184746
UNR-6 NMC 861840 373 121 184747
UNR-7 NMC 861841 373 122 184748
UNR-8 NMC 861842 373 123 184749
UNR-9 NMC 858729 373 124 184750
UNR-10 NMC 858730 373 125 184751
UNR-11 NMC 858731 373 126 184752
UNR-12 NMC 858732 373 127 184753
UNR-13 NMC 858733 373 128 184754
UNR-14 NMC 858734 373 129 184755
UNR-15 NMC 858735 373 130 184756
UNR-16 NMC 858736 373 131 184757
UNR-17 NMC 858737 373 132 184758
UNR-18 NMC 858738 373 133 184759
UNR-19 NMC 858739 373 134 184760
UNR-20 NMC 858740 373 135 184761
UNR-21 NMC 858741 373 136 184762
UNR-22 NMC 858742 373 137 184763
UNR-23 NMC 861843 373 138 184764
UNR-24 NMC 861844 373 139 184765
UNR-25 NMC 861845 373 140 184766
UNR-26 NMC 861846 373 141 184767
UNR-27 NMC 861847 373 142 184768
UNR-28 NMC 861848 373 143 184769
UNR-29 NMC 861849 373 144 184770
UNR-30 NMC 861850 373 145 184771
Exh. A-1
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-31 NMC 861851 373 146 184772
UNR-32 NMC 861852 373 147 184773
UNR-33 NMC 861853 373 148 184774
UNR-34 NMC 861854 373 149 184775
UNR-35 NMC 861855 373 150 184776
UNR-36 NMC 861856 373 151 184777
UNR-37 NMC 861857 373 152 184778
UNR-38 NMC 861858 373 153 184779
UNR-39 NMC 861859 373 154 184780
UNR-40 NMC 861860 373 155 184781
UNR-41 NMC 861861 373 156 184782
UNR-42 NMC 861862 373 157 184783
UNR-43 NMC 861863 373 158 184784
UNR-44 NMC 861864 373 159 184785
UNR-45 NMC 861865 373 160 184786
UNR-46 NMC 861866 373 161 184787
UNR-47 NMC 861867 373 162 184788
UNR-48 NMC 861868 373 163 184789
UNR-19 NMC 875010 384 078 188421
UNR-20 NMC 875011 384 079 188422
UNR-21 NMC 875012 384 080 188423
UNR-22 NMC 875013 384 081 188424
UNR-73 NMC 875014 384 082 188425
UNR-74 NMC 875015 384 083 188426
UNR-75 NMC 875016 384 084 188427
UNR-76 NMC 875017 384 085 188428
UNR-77 NMC 875018 384 086 188429
UNR-78 NMC 875019 384 087 188430
UNR-79 NMC 875020 384 088 188431
UNR-80 NMC 875021 384 089 188432
UNR-81 NMC 875022 384 090 188433
UNR-82 NMC 875023 384 091 188434
UNR-83 NMC 875024 384 092 188435
UNR-84 NMC 875025 384 093 188436
UNR-85 NMC 875026 384 094 188437
UNR-86 NMC 875027 384 095 188438
UNR-87 NMC 875028 384 096 188439
UNR-88 NMC 875029 384 097 188440
UNR-89 NMC 875030 384 098 188441
UNR-90 NMC 875031 384 099 188442
UNR-91 NMC 875032 384 100 188443
UNR-92 NMC 875033 384 101 188444
UNR-93 NMC 875034 384 102 188445
UNR-94 NMC 875035 384 103 188446
UNR-95 NMC 875036 384 104 188447
Exh. A-2
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-96 NMC 875037 384 105 188448
UNR-97 NMC 875038 384 106 188449
UNR-98 NMC 875039 384 107 188450
UNR-99 NMC 875040 384 108 188451
UNR-100 NMC 875041 384 109 188452
UNR-101 NMC 875042 384 110 188453
UNR-102 NMC 875043 384 111 188454
UNR-103 NMC 875044 384 112 188455
UNR-104 NMC 875045 384 113 188456
UNR-105 NMC 875046 384 114 188457
UNR-106 NMC 875047 384 115 188458
UNR-107 NMC 875048 384 116 188459
UNR-108 NMC 875049 384 117 188460
UNR-109 NMC 875050 384 118 188461
UNR-110 NMC 875051 384 119 188462
UNR-111 NMC 875052 384 120 188463
UNR-112 NMC 875053 384 121 188464
UNR-113 NMC 875054 384 122 188465
UNR-114 NMC 875055 384 123 188466
UNR-115 NMC 875056 384 124 188467
UNR-116 NMC 875057 384 125 188468
UNR-117 NMC 875058 384 126 188469
UNR-118 NMC 875059 384 127 188470
UNR-119 NMC 875060 384 128 188471
UNR-120 NMC 875061 384 129 188472
UNR-121 NMC 875062 384 130 188473
UNR-122 NMC 875063 384 131 188474
UNR-123 NMC 875064 384 132 188475
UNR-124 NMC 875065 384 133 188476
UNR-125 NMC 875066 384 134 188477
UNR-126 NMC 875067 384 135 188478
UNR-127 NMC 875068 384 136 188479
UNR-128 NMC 875069 384 137 188480
UNR-129 NMC 875070 384 138 188481
UNR-130 NMC 875071 384 139 188482
UNR-131 NMC 875072 384 140 188483
UNR-132 NMC 875073 384 141 188484
UNR-133 NMC 875074 384 142 188485
UNR-134 NMC 875075 384 143 188486
UNR-135 NMC 875076 384 144 188487
UNR-136 NMC 875077 384 145 188488
UNR-137 NMC 875078 384 146 188489
UNR-138 NMC 875079 384 147 188490
UNR-139 NMC 875080 384 148 188491
UNR-140 NMC 875081 384 149 188492
UNR-141 NMC 875082 384 150 188493
UNR-142 NMC 875083 384 151 188494
Exh. A-3
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-143 NMC 875084 384 152 188495
UNR-144 NMC 875085 384 153 188496
UNR-145 NMC 875086 384 154 188497
UNR-146 NMC 875087 384 155 188498
UNR-147 NMC 875088 384 156 188499
UNR-148 NMC 875089 384 157 188500
UNR-149 NMC 875090 384 158 188501
UNR-150 NMC 875091 384 159 188502
UNR-151 NMC 875092 384 160 188503
UNR-152 NMC 875093 384 161 188504
UNR-153 NMC 875094 384 162 188505
UNR-154 NMC 875095 384 163 188506
UNR-155 NMC 875096 384 164 188507
UNR-156 NMC 875097 384 165 188508
UNR-157 NMC 875098 384 166 188509
UNR-158 NMC 875099 384 167 188510
UNR-159 NMC 875100 384 168 188511
UNR-160 NMC 875101 384 169 188512
UNR-161 NMC 875102 384 170 188513
UNR-172 NMC 875103 384 171 188514
UNR-173 NMC 875104 384 172 188515
UNR-174 NMC 875105 384 173 188516
UNR-175 NMC 875106 384 174 188517
UNR-176 NMC 875107 384 175 188518
UNR-177 NMC 875108 384 176 188519
UNR-178 NMC 875109 384 177 188520
UNR-179 NMC 875110 384 178 188521
UNR-180 NMC 875111 384 179 188522
UNR-181 NMC 875112 384 180 188523
UNR-196 NMC 875539 391 227 191381
UNR-197 NMC 875540 391 228 191382
UNR-198 NMC 875541 391 229 191383
UNR-199 NMC 875542 391 230 191384
UNR-200 NMC 875543 391 231 191385
UNR-201 NMC 875544 391 232 191386
UNR-202 NMC 875545 391 233 191387
UNR-203 NMC 875546 391 234 191388
UNR-216 NMC 875547 391 235 191389
UNR-217 NMC 875548 391 236 191390
UNR-218 NMC 875549 391 237 191391
UNR-219 NMC 875550 391 238 191392
UNR-220 NMC 875551 391 239 191393
UNR-221 NMC 875552 391 240 191394
UNR-222 NMC 875553 391 241 191395
UNR-223 NMC 875554 391 242 191396
UNR-236 NMC 875555 391 243 191397
Exh. A-4
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-237 NMC 875556 391 244 191398
UNR-238 NMC 875557 391 245 191399
UNR-239 NMC 875558 391 246 191400
UNR-240 NMC 875559 391 247 191401
UNR-241 NMC 875560 391 248 191402
UNR-242 NMC 875561 391 249 191403
UNR-243 NMC 875562 391 250 191404
UNR-245 NMC 875563 391 251 191405
UNR-247 NMC 875564 391 252 191406
UNR-249 NMC 875565 391 253 191407
UNR-256 NMC 875566 391 254 191408
UNR-257 NMC 875567 391 255 191409
UNR-258 NMC 875568 391 256 191410
UNR-259 NMC 875569 391 257 191411
UNR-260 NMC 875570 391 258 191412
UNR-261 NMC 875571 391 259 191413
UNR-262 NMC 875572 391 260 191414
UNR-263 NMC 875573 391 261 191415
UNR-264 NMC 875574 391 262 191416
UNR/GAP-1 NMC 872221 383 327 188221
UNR/GAP-2 NMC 872222 383 328 188222
UNR/GAP-3 NMC 872223 383 329 188223
UNR/GAP-4 NMC 872224 383 330 188224
UNR/GAP-5 NMC 872225 383 331 188225
UNR/GAP-6 NMC 872226 383 332 188226
UNR/GAP-7 NMC 872227 383 333 188227
UNR/GAP-8 NMC 872228 383 334 188228
UNR/GAP-9 NMC 872229 383 335 188229
UNR/GAP-10 NMC 872230 383 336 188230
UNR/GAP-11 NMC 872231 383 337 188231
UNR/GAP-12 NMC 872232 383 338 188232
UNR/GAP-13 NMC 872233 383 339 188233
UNR/GAP-14 NMC 872234 383 340 188234
UNR/GAP-15 NMC 872235 383 341 188235
UNR/GAP-16 NMC 872236 383 342 188236
UNR/GAP-17 NMC 872237 383 343 188237
UNR/GAP-18 NMC 872238 383 344 188238
UNR/GAP-19 NMC 872239 383 345 188239
UNR/GAP-20 NMC 872240 383 346 188240
UNR/GAP-21 NMC 872241 383 347 188241
UNR/GAP-22 NMC 872242 383 348 188242
UNR/GAP-23 NMC 872243 383 349 188243
UNR/GAP-24 NMC 872244 383 350 188244
UNR/GAP-25 NMC 872245 383 351 188245
UNR/GAP-26 NMC 872246 383 352 188246
UNR/GAP-27 NMC 872247 383 353 188247
Exh. A-5
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR/GAP-28 NMC 872248 383 354 188248
UNR/GAP-29 NMC 872249 383 355 188249
UNR/GAP-30 NMC 872250 383 356 188250
UNR/GAP-31 NMC 875113 384 064 188406
UNR/GAP-32 NMC 875114 384 065 188407
UNR/GAP-33 NMC 875115 384 066 188408
UNR/GAP-34 NMC 875116 384 067 188409
UNR/GAP-35 NMC 875117 384 068 188410
UNR/GAP-36 NMC 875118 384 069 188411
UNR/GAP-37 NMC 875119 384 070 188412
UNR/GAP-38 NMC 875120 384 071 188413
UNR/GAP-39 NMC 875121 384 072 188414
UNR/GAP-40 NMC 875122 384 073 188415
UNR/GAP-41 NMC 875123 384 074 188416
UNR/GAP-42 NMC 875124 384 075 188417
UNR/GAP-43 NMC 875125 384 076 188418
UNR/GAP-44 NMC 875126 384 077 188419
Part 2. Area of Interest
A. UNR Fee Lands
[SEE ATTACHED MAPS - UNR FEE LANDS ARE MARKED WITH *]
B. Gund Ranch Fee Lands
[SEE ATTACHED MAPS - GUND RANCH FEE LANDS ARE MARKED WITH **1
Exh. A-6
Part 3. The GQ Property
The following unpatented mining claims located in Sections 26 and 36,
Township 33 North, Range 50 East, Eureka County, Nevada:
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
EP1 NMC 871262 383 148 188135
EP2 NMC 871263 383 149 188136
EP3 NMC 871264 383 150 188137
EP4 NMC 871265 383 151 188138
EPS NMC 871266 383 152 188139
EP6 NMC 871267 383 153 188140
EP7 NMC 871268 383 154 188141
EP8 NMC 871269 383 155 188142
EP9 NMC 871270 383 156 188143
EP10 NMC 871271 383 157 188144
EP25 NMC 871272 383 158 188145
EP26 NMC 871273 383 159 188146
EP27 NMC 871274 383 160 188147
EP28 NMC 871275 383 161 188148
EP29 NMC 871276 383 162 188149
EP30 NMC 871277 383 163 188150
EP31 NMC 871278 383 164 188151
EP32 NMC 871279 383 165 188152
EP41 NMC 871280 383 166 188153
EP42 NMC 871281 383 167 188154
EP43 NMC 871282 383 168 188155
EP44 NMC 871283 383 169 188156
EP45 NMC 871284 383 170 188157
EP46 NMC 871285 383 171 188158
Exh. A-7
Part 4. The Monte Cristo Property
The following unpatented mining claims located in Sections 16, 20, 21,
28 and 29, Township 16 North, Range 57 East, White Pine County, Nevada:
White Pine County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
Monte #1 NMC 875127 390 464 321744
Monte #2 NMC 875128 390 465 321745
Monte #3 NMC 875129 390 466 321746
Monte #4 NMC 875130 390 467 321747
Monte #5 NMC 875131 390 468 321748
Monte #6 NMC 875132 390 469 321749
Monte #11 NMC 875133 390 470 321750
Monte #12 NMC 875134 390 471 321751
Monte #13 NMC 875135 390 472 321752
Monte #14 NMC 875136 390 473 321753
Monte #15 NMC 875137 390 474 321754
Monte #16 NMC 875138 390 475 321755
Monte #17 NMC 875139 390 476 321756
Monte #36 NMC 875140 390 477 321757
Monte #37 NMC 875141 390 478 321758
Monte #38 NMC 875142 390 479 321759
Monte #39 NMC 875143 390 480 321760
Monte #40 NMC 875144 390 481 321761
Monte #41 NMC 875145 390 482 321762
Monte #42 NMC 875146 390 483 321763
Monte #43 NMC 875147 390 484 321764
Monte #44 NMC 875148 390 485 321765
Monte #45 NMC 875149 390 486 321766
Monte #46 NMC 875150 390 487 321767
Monte #47 NMC 875151 390 488 321768
Monte #48 NMC 875152 390 489 321769
Monte #49 NMC 875153 390 490 321770
Monte #50 NMC 875154 390 491 321771
Monte #51 NMC 875155 390 492 321772
Exh. A-8
Exhibit B
"Exploration. Development and Related Work" shall mean and include all
operations and activities of PDUS (or performed at the request of PDUS) on or
relating to the Property for purposes of determining ore reserves and
mineralization, and for purposes of exploration for and development of valuable
minerals from the Property including, without limitation, the right to enter
upon the Property for purposes of surveying, exploring, testing, sampling,
trenching, bulk sampling, prospecting and drilling for valuable minerals, and to
construct and use buildings, roads, power and communication lines, and to use so
much of the surface of the Property in such manner as PDUS deems necessary for
the enjoyment of any rights and privileges to PDUS hereunder or otherwise
necessary to effect the purposes of this letter agreement, and any reclamation
and other clean-up required in connection with any of the foregoing.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, the Clean Air Act, the Clean Water Act, the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, the Federal
Water Pollution Control Act, the Superfund Amendments and Reauthorization Act of
1986, the Safe Drinking Water Act, the Endangered Species Act, the National
Environmental Policy Act, the Mine Safety and Health Act of 1977, the Federal
Land Policy and Management Act of 1976, and the National Historic Preservation
Act, each as amended, and any state law counterparts, together with all other
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state and local
governments (and all agencies thereof) concerning pollution or protection of the
environment, reclamation, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the existence, manufacture, processing,
distribution, use, treatment, storage, disposal, recycling, transport, or
handling or reporting or notification to any governmental authority in the
collection, storage, use, treatment or disposal of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"Environmental Liabilities" shall mean any liability arising out of,
based on or resulting from (A) the presence, release, threatened release,
discharge or emission into the environment of any Hazardous Materials or
substances existing or arising on, beneath or above such property and/or
emanating or migrating and/or threatening to emanate or migrate from such
property to other properties; (B) disposal or treatment of or the arrangement
for the disposal or treatment of Hazardous Materials originating or transported
from such property to an off-site treatment, storage or disposal facility, (C)
physical disturbance of the environment on or from such property; or (D) the
violation or alleged violation of any Environmental Laws relating to such
property.
"Hazardous Materials" means any substance: (A) the presence of which
requires reporting, investigation, removal or remediation under any
Environmental Law; (B) that is defined as a "hazardous waste," "hazardous
substance," "extremely hazardous substance"
Exh. B-1
or "pollutant" or "contaminant" under any Environmental Law; (C) that is toxic,
explosive, corrosive, flammable, ignitable, infectious, radioactive, reactive,
carcinogenic, mutagenicor otherwise hazardous and is regulated under any
Environmental Law; (D) the presence of which on a property causes or threatens
to cause a nuisance upon the property or to adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons on or about the
property; (E) that contains gasoline, diesel fuel or other petroleum
hydrocarbons; or (F) that contains PCBs, asbestos or urea formaldehyde foam
insulation; in each case subject to exceptions provided in applicable
Environmental Laws.
Exh. B-2
Exhibit C
"Work Expenditures" shall mean and include all costs or fees, expenses,
liabilities and charges paid or incurred by PDUS which are related to
Exploration, Development and Related Work conducted during the Earn-In Period
(specifically excluding the Initial Payment and any Periodic Payments),
including without limitation:
(a) All costs and expenses incurred in conducting exploration
and prospecting activities on or in connection with the Property, including,
without limitation, the preparation of feasibility studies, the active pursuit
of required federal, state or local authorizations or permits and the
performance of required environmental protection or reclamation obligations, the
building, maintenance and repair of roads, drill site preparation, drilling,
tracking, sampling, trenching, digging test pits, shaft sinking, acquiring,
diverting and/or transporting water necessary for exploration, logging of drill
holes and drill core, completion and evaluation of geological, geophysical,
geochemical or other exploration data and preparation of interpretive reports,
and surveying and laboratory costs and charges (including assays or
metallurgical analyses and tests);
(b) All expenses incurred in conducting development activities
on or in connection with the Property, the active pursuit of required federal,
state or local authorization or permits and the performance of required
environmental protection or reclamation obligations, pre-stripping and
stripping, the construction and installation of a mill, leach pads or other
beneficiation facilities for valuable minerals, and other activities, operations
or work performed in preparation for the removal of valuable minerals from the
Property;
(c) All costs incurred by PDUS in acquiring interests in real
property wholly or partially within the Area of Interest depicted and described
in Part 2 of Exhibit A (the "Area of Interest"), including costs and expenses
incurred by PDUS in conducting negotiations and due diligence, attorneys' fees,
and all moneys paid by PDUS in acquiring and holding such property interests;
(d) All costs incurred in performing any reclamation or other
restoration or clean-up work required by any federal, state or local agency or
authority, and all costs of insurance obtained or in force to cover activities
undertaken by or on PDUS's behalf on the Property;
(e) Salaries, wages, expenses and benefits of PDUS's employees
or consultants engaged in operations directly relating to the Property,
including salaries and fringe benefits of those who are temporarily assigned to
and directly employed on work relating to the Property for the periods of time
such employees are engaged in such activities and reasonable transportation
expenses for all such employees to and from their regular place of work to the
Property;
(f) All costs incurred in connection with the preparation of
pre- feasibility studies or a Feasibility Study and economic and technical
analyses pertaining
Exh. C-1
to the Property, whether carried out by PDUS or by third parties under contract
with PDUS;
(g) Taxes and assessments, other than income taxes, assessed
or levied upon or against the Property or any improvements thereon situated
thereon for which PDUS is responsible or for which PDUS reimburses GAM;
(h) Costs of material, equipment and supplies acquired, leased
or hired, for use in conducting exploration or development operations relating
to the Property; provided, however, that equipment owned and supplied by PDUS
shall be chargeable at rates no greater than comparable market rental rates
available in the area of the Property;
(i) Costs and expenses of establishing and maintaining field
offices, camps and housing facilities;
(j) Costs incurred by PDUS in examining and curing title to
any part of the Property or any interest in real property within the Area of
Interest (including amending or relocating any of the Claims or abandoning any
of the Claims and relocating the same as millsites, although no such amendments
or relocations may be made without the prior written consent of GAM, such
consent not to be unreasonably withheld), in maintaining the Property or any
interest in real property within the Area of Interest whether through the
performance of assessment work, the payment of claim maintenance fees or
otherwise, in satisfying surface use or damage obligations to landowners, or in
conducting any analyses of the environmental conditions at the Property; and
(k) An additional 10% as overhead on all costs and expenses
described in (a) through (j) above (except for (i) equipment owned and supplied
by PDUS, and (ii) expenditures related to mine development and construction, for
which a 3% overhead charge will apply).
Exh. C-2
Exhibit D
U.S. TAX MATTERS
Article I
Effect of this Exhibit
This Exhibit shall govern the relationship of the parties with respect
to U.S. tax matters and the other matters addressed herein. Except as otherwise
indicated, capitalized terms used in this Exhibit shall have the meanings given
to them in the letter agreement between Great American Minerals, Inc. and Placer
Dome U.S. Inc. (the "Agreement") to which this Exhibit is attached. In the event
of a conflict between this Exhibit and the other provisions of the Agreement,
the terms of this Exhibit shall control.
Article II
Tax Matters Partner
2.1 Designation of Tax Matters Partner. PDUS is hereby designated tax
matters partner (hereinafter "TMP") as defined in Section 6231 (a)(7) of the
Internal Revenue Code of 1986, as amended ("the Code"), and shall be responsible
for, make elections for, and prepare and file any federal and state tax returns
or other required tax forms. The TMP and GAM shall use reasonable best efforts
to comply with the responsibilities outlined in this Article II and in Sections
6221 through 6233 of the Code (including any Treasury regulations promulgated
thereunder) and in doing so shall incur no liability to any other party.
2.2 Notice. GAM shall furnish the TMP with such information (including
information specified in Section 6230(e) of the Code) as the TMP may reasonably
request to permit it to provide the Internal Revenue Service with sufficient
information to allow proper notice to the parties in accordance with Section
6223 of the Code. The TMP shall keep GAM informed of all administrative and
judicial proceedings for the adjustment at the partnership level of partnership
items in accordance with Section 6223(g) of the Code.
2.3 Inconsistent Treatment of Partnership Item. If an administrative
proceeding contemplated under Section 6223 of the Code has begun, and the TMP so
requests, each of PDUS and GAM shall notify the TMP of its treatment of any
partnership item on its federal income tax return that is inconsistent with the
treatment of that item on the partnership return.
2.4 Extensions of Limitation Periods. The TMP shall not enter into any
extension of the period of limitations as provided under Section 6229 of the
Code without first giving reasonable advance notice to GAM of such intended
action.
2.5 Requests for Administrative Adjustments. Neither PDUS nor GAM shall
file, pursuant to Section 6227 of the Code, a request for an administrative
adjustment of partnership items for any partnership taxable year without first
notifying the other party. If the other party agrees with the requested
adjustment, the TMP shall file the request for administrative adjustment on
behalf of the partnership. If unanimous consent is not
Exh. D-1
obtained within 30 days after notice from the proposing party, or within the
period required to timely file the request for administrative adjustment, if
shorter, either party, including the IMP, may file that request for
administrative adjustment on its own behalf.
2.6 Judicial Proceedings. Any party intending to file a petition under
Section 6226, 6228 or other sections of the Code with respect to any partnership
item, or other tax matters involving the partnership, shall notify the other
party of such intention and the nature of the contemplated proceeding. If the
TMP is the party intending to file such petition, such notice shall be given
within a reasonable time to allow the other party to participate in the choosing
of the forum in which such petition will be filed. If the parties do not agree
on the appropriate forum, then the appropriate forum shall be decided by PDUS.
If either party intends to seek review of any court decision rendered as a
result of a proceeding instituted under the preceding part of this Section 2.6,
that party shall notify the other party of such intended action.
2.7 Settlements. The TMP shall not bind the other party to a settlement
agreement without first obtaining the written concurrence of that party. Any
party who enters into a settlement agreement with respect to any partnership
items, as defined by Section 6231 (a)(3) of the Code, shall notify the other
party of such settlement agreement and its terms within 90 days after the date
of settlement.
2.8 Fees and Expenses. Either party may engage legal counsel, certified
public accountants, or others in its own behalf and at its sole cost and
expense.
2.9 Survival. The provisions of this Article II shall survive the
termination of the partnership or the termination of either party's interest in
the partnership and shall remain binding on the parties for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the
partnership for the applicable tax year(s).
Article III
Tax Elections and Allocations
3.1 Tax Partnership Election. It is understood and agreed that the
parties intend to create a partnership for United States federal and state
income tax purposes, and, unless otherwise agreed to hereafter by the parties,
no party shall make an election to be, or have the arrangement evidenced hereby,
excluded from the application of any provisions of Subchapter K of the Code, or
any equivalent state income tax provision. It is understood and agreed that the
parties intend to create a partnership for federal and state income tax purposes
only (a "tax partnership") and agree that, if necessary, an election to be so
treated shall be filed pursuant to Treasury Regulation Section 301.7701-3. The
TMP shall file with the appropriate office of the Internal Revenue Service a
partnership income tax return covering operations on the Property. The parties
recognize that this Agreement may be subject to state income tax statutes. The
TMP shall file with the appropriate offices of the state agencies any required
partnership state income tax returns. Not later than March 15th of each calendar
year, GAM agrees to furnish to the TMP any information it may have relating to
operations on the Property during the previous calendar year as shall be
required
Exh. D-2
for proper preparation of such returns. The TMP shall furnish to GAM for its
review a copy of each proposed income tax return at least two weeks prior to the
date the return is filed.
3.2 Tax Elections. The tax partnership shall make the following
elections for purposes of all partnership income tax returns:
(a) To use the accrual method of accounting;
(b) Pursuant to the provisions at Section 706(b)(1) of the
Code, to use as its taxable year, unless otherwise required by law, a year
ending December 31st. In this respect the parties represent that their taxable
years are as follows:
GAM: December 31;
PDUS: December 31;
(c) To deduct currently all development expenses to the extent
possible under Section 616 of the Code, or, at the election of the TMP, to elect
under Section 616(b) of the Code to treat such expenses as deferred expenses;
(d) Unless the parties unanimously agree otherwise, to compute
the allowance for depreciation in respect of all depreciable assets using the
maximum accelerated tax depreciation table and the shortest life permissible,
or, at the election of the TMP, using the units of production method of
depreciation;
(e) To treat advance royalties as deductions from gross income
for the year paid or accrued to the extent permitted by law;
(f) To adjust the basis of tax partnership property under
Section 754 of the Code at the request of either party (provided that all costs
and consequences of such election shall be for the account of the party making
the request);
(g) To amortize over the shortest permissible period all
organizational expenditures and business start-up expenses under Sections 195
and 709 of the Code;
Any other election required or permitted under the Code or any state
tax law shall be made as determined by the TMP.
Each party shall elect (or has previously elected) under Section 617(a)
of the Code to deduct currently all exploration expenses.
Each party reserves the right to capitalize its share of development
and/or exploration expenses of the tax partnership in accordance with Section
59(e) of the Code, provided that a party's election to capitalize all or any
portion of such expenses shall not affect the party's Capital Account.
3.3 Allocations to Parties. Allocations for Capital Account purposes
shall be in accordance with the following:
Exh. D-3
(a) Exploration and development cost deductions shall be
allocated between the parties in accordance with their respective contributions
to such costs.
(b) Depreciation and loss deductions with respect to any
depreciable asset shall be allocated between the parties in accordance with
their respective contributions to the adjusted basis of the asset which gives
rise to the depreciation or loss deduction.
(c) Production and operating cost deductions, if any, shall be
allocated between the parties in accordance with their respective contributions
to such costs.
(d) Deductions for depletion (to the extent of the amount of
such deductions that would have been determined for Capital Account purposes if
only cost depletion were allowable for federal income tax purposes) shall be
allocated to the parties in accordance with their respective contributions to
the adjusted basis of the depletable property. Any remaining depletion
deductions shall be allocated to the parties so that, to the extent possible,
the parties receive the same total amounts of percentage depletion as they would
have received if percentage depletion were allocated to the parties in
proportion to their respective shares of the gross income used as the basis for
calculating the federal income tax deduction for percentage depletion.
(e) Subject to Section 3.3(g) below, gross income, if any, on
the sale of production shall be allocated in accordance with the parties' rights
to share in the proceeds of such sale.
(f) Except as provided in Section 3.3(g) below, gain or loss
on the sale of a depreciable or depletable asset shall be allocated so that, to
the extent possible, the net amount reflected in the parties' Capital Accounts
with respect to such property (taking into account the cost of such property,
depreciation, amortization, depletion or other cost recovery deductions and gain
or loss) most closely reflects the parties' interest in the Property as set
forth in the Agreement (determined without regard to this Exhibit).
(g) Gains and losses on the sale of all or substantially all
the assets of the tax partnership shall be allocated so that, to the extent
possible, the parties' resulting Capital Account balances are in the same ratio
as their interests in the Property as set forth in the Agreement (determined
without regard to this Exhibit) at the time of such sale.
(h) All deductions and losses that are not otherwise allocated
in this Section 3.3 shall be allocated among the parties in accordance with
their respective contributions to the costs producing each such deduction or to
the adjusted basis of the asset producing each such loss.
(i) Any recapture of exploration expenses under Section
617(b)(1 )(A) of the Code, and any disallowance of depletion under Section
617(b)(1 )(B) of the Code, shall be borne by the parties in the same manner as
the related exploration expenses were allocated to, or claimed by, them.
Exh. D-4
(j) "Nonrecourse deductions," as defined by Treasury
Regulation Section 1.704-2(b)(1) shall be allocated between the parties in
proportion to their interests in the Property as set forth in the Agreement
(determined without regard to this Exhibit) except as otherwise required by
Treasury Regulation Section 1.704-2.
(k) All other items of income and gain, if any, shall be
allocated to the parties in accordance with their interests in the Property as
set forth in the Agreement (determined without regard to this Exhibit).
(l) If the parties' interests in the tax partnership change
during any taxable year of the tax partnership, the distributive share of items
of income, gain, loss and deduction of each party shall be determined in any
manner (1) permitted by Section 706 of the Code, and (2) agreed on by both
parties. If the parties cannot agree on a method, the method shall be determined
by the TMP in consultation with its tax advisers, with preference given to the
interim closing of the books method except where application of that method
would result in undue administrative expense in relationship to the amount of
the items to be allocated.
3.4 Regulatory Allocations. Notwithstanding the provisions of Section
3.3 to the contrary, the following special allocations shall be given effect for
purposes of maintaining the parties' Capital Accounts.
(a) If either party unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704- 1 (b)(2)(ii)(d)(5) or 1.704-1 (b)(2)(ii)(d)(6),
which result in a deficit Capital Account balance, items of income and gain
shall be specially allocated to each such party in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations, the
Capital Account deficit of such party as quickly as possible. For the purposes
of this Section 3.4(a), each party's Capital Account balance shall be increased
by the sum of (i) the amount that party is obligated to restore pursuant to any
provision of the Agreement, and (ii) the amount that party is deemed to be
obligated to restore pursuant to the penultimate sentences of Treasury
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5).
(b) The "minimum gain chargeback" and "partner minimum gain
chargeback" provisions of Treasury Regulation Sections 1.704-2(f) and
1.704-2(i)(4), respectively, are incorporated herein by reference and shall be
given effect. In accordance with Treasury Regulation Section 1.704-2(i)(1),
deductions attributable to a "partner nonrecourse liability" shall be allocated
to the party that bears the economic risk of loss for such liability.
(c) If the allocation of deductions to either party would
cause such party to have a deficit Capital Account balance at the end of any
taxable year of the tax partnership (after all other allocations provided for in
this Article III have been made and after giving effect to the adjustments
described in subparagraph (a) of Section 3.4), such deductions shall instead be
allocated to the other party.
Exh. D-5
3.5 Curative Allocations. The allocations set forth in Section 3.4 (the
"Regulatory Allocations") are intended to comply with certain requirements of
the Treasury Regulations. It is the intent of the parties that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of income,
gain, loss or deduction pursuant to this Section 3.5. Therefore, notwithstanding
any other provisions of this Article III (other than the Regulatory
Allocations), the TMP shall make such offsetting special allocations of income,
gain, loss or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each party's Capital Account balance
is, to the extent possible, equal to the Capital Account balance such party
would have had if the Regulatory Allocations were not part of this Agreement and
all items were allocated pursuant to Section 3.3 without regard to Section 3.4.
3.6 Tax Allocations. Except as otherwise provided in this Section 3.6,
items of taxable income, credit, deduction, gain and loss shall be allocated in
the same manner as the corresponding item is allocated for book purposes under
Sections 3.3, 3.4 and 3.5 of the corresponding item determined for Capital
Account purposes.
(a) Recapture of tax deductions arising out of a disposition
of property shall, to the extent consistent with the allocations for tax
purposes of the gain or amount realized giving rise to such recapture, be
allocated to the parties in the same proportions as the recaptured deductions
were originally allocated or claimed.
(b) To the extent required by Section 704(c) of the Code,
income, gain, loss, and deduction with respect to property contributed to the
tax partnership by a party shall be shared among both parties so as to take
account of the variation between the basis of the property to the tax
partnership and its fair market value at the time of contribution. The parties
intend that Section 704(c) shall effect no allocations of tax items that are
different from the allocations under Sections 3.3,3.4 and 3.5 of the
corresponding items for Capital Account purposes; provided that gain or loss on
the sale of property contributed to the tax partnership shall be allocated to
the contributing party to the extent of built-in gain or loss, respectively, as
determined under Treasury Regulation Section 1704-3(a). However, to the extent
that allocations of tax items other than built-in gain and built-in loss are
required pursuant to Section 704(c) of the Code to be made other than in
accordance with the allocations under Sections 3.3, 3.4 and 3.5 of the
corresponding items for Capital Account purposes, Section 704(c) shall be
applied in accordance with the available allocation method that most closely
approximates the intended allocation of tax items under this tax partnership
agreement.
(c) The parties understand the allocations of tax items set
forth in this Section 3.6, and agree to report consistently with such
allocations for federal and state tax purposes.
Article IV
Capital Accounts: Liquidation
4.1 Capital Accounts.
Exh. D-6
(a) A separate capital account shall be established and
maintained by the TMP for each party (a "Capital Account"). Such Capital Account
shall be increased by (i) the amount of money contributed by the party to the
tax partnership, (ii) the fair market value of property contributed by the party
to the tax partnership (net of liabilities securing such contributed property
that the tax partnership is considered to assume or take subject to under Code
Section 752) and (iii) allocations to the party under Sections 3.3, 3.4 and 3.5
of expenditures of the tax partnership income and gain (or items thereof),
including income and gain exempt from tax; and shall be decreased by (iv) the
amount of money distributed to the party by the tax partnership, (v) the fair
market value of property distributed to the party by the tax partnership (net of
liabilities securing such distributed property and that the party is considered
to assume or take subject to under Code Section 752), (vi) allocations to the
party under Sections 3.3, 3.4 and 3.5 of expenditures of the tax partnership not
deductible in computing its taxable income and not properly chargeable to a
Capital Account, and (vii) allocations of tax partnership loss and deduction (or
items thereof), excluding items described in (vi) above and percentage depletion
to the extent it exceeds the adjusted tax basis of the depletable property to
which it is attributable. The parties agree that the net fair market value of
the Property contributed to the tax partnership by GAM is U.S.$3,667,000.
(b) In the event that the Capital Accounts of the parties are
computed with reference to the book value (as reasonably determined by the TMP)
of any asset which differs from the adjusted tax basis of such asset, then the
Capital Accounts shall be adjusted for depreciation, depletion, amortization and
gain or loss as computed for book purposes with respect to such asset in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(c) In the event any interest in the tax partnership is
transferred in accordance with the terms of the Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest, except as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(1).
(d) In the event property, other than money, is distributed to
a party, the Capital Accounts of the parties shall be adjusted to reflect the
manner in which the unrealized income, gain, loss and deduction in herein in
such property (that has not been reflected in the Capital Accounts previously)
would be allocated among the parties if there was a taxable disposition of such
property for the fair market value of such property (taking Section 7701 (g) of
the Code into account) on the date of distribution. For this purpose the fair
market value of the property shall be determined as set forth in Section 4.2(a)
below.
(e) For purposes of maintaining the Capital Accounts, the tax
partnership's deductions with respect to contributed property in each year for
(i) depletion, (ii) deferred development expenditures under Code Section 616(b)
attributable to pre-contribution expenditures, (iii) amortization under Code
Section 291 (b) attributable to pre-contribution expenditures, and (iv)
amortization under Code Section 59(e) attributable to pre-contribution
expenditures shall be the amount of the corresponding item determined for tax
purposes pursuant to Section 3.6(c) multiplied by the ratio of (A) the book
value (as reasonably
Exh. D-7
determined by the TMP) at which the contributed property is recorded in the
Capital Accounts to (B) the adjusted tax basis of the contributed property
(including basis resulting from capitalization of pre-contribution development
expenditures under Code Sections 616(b),291(b),and59(e)).
(f) The foregoing provisions, and the other provisions of the
Agreement relating to the maintenance of Capital Accounts and the allocations of
income, gain, loss, deduction and credit, are intended to comply with Treasury
Regulation Section 1.704-1 (b), and shall be interpreted and applied in a manner
consistent with such Regulation. In the event the TMP shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed in order to comply with such Regulation, the TMP
may make such modification, provided that it is not likely to have a material
effect on the amount distributable to any party upon liquidation of the tax
partnership pursuant to Section 4.2 below.
(g) If the parties so agree, upon the occurrence of an event
described in Treasury Regulation Section 1.704-1 (b)(2)(iv)(f)(5), the Capital
Accounts shall be restated in accordance with Treasury Regulation Section
1.704-1 (b)(2)(iv)(f) to reflect the manner in which unrealized income, gain,
loss or deduction in herein the assets of the tax partnership (that has not been
reflected in the Capital Accounts previously) would be allocated among the
parties if there were a taxable disposition of such assets for their fair market
values, as determined in accordance with Section 4.2(a). For purposes of Section
3.3, a party shall be treated as contributing the portion of the book value of
any property that is credited to the party's Capital Account pursuant to the
preceding sentence. Following a revaluation pursuant to this subparagraph (g) of
Section 4.1, the parties' shares of depreciation, depletion, amortization and
gain or loss, as computed for tax purposes, with respect to property that has
been revalued pursuant to this subparagraph (g) of Section 4.1 shall be
determined in accordance with the principles of Code Section 704(c) as applied
pursuant to the final sentence of Section 3.6(b).
4.2 Liquidation. In the event the partnership is "liquidated" within
the meaning of Treasury Regulation Section 1.704-1 (b)(2)(ii)(g) then,
notwithstanding any other provision of the Agreement to the contrary, the
following steps shall be taken:
(a) The Capital Accounts of the parties shall be adjusted to
reflect any gain or loss which would be realized by the tax partnership and
allocated to the parties pursuant to the provisions of Article III of this
Exhibit D if the assets had been sold at their fair market value at the time of
liquidation. The fair market value of the assets shall be determined by the
parties; provided, however, that in the event that the parties fail to agree on
the fair market value of any asset, its fair market value shall be determined by
a nationally recognized independent engineering firm or other qualified
independent party approved by both parties.
(b) After making the foregoing adjustments and/or
contributions, all remaining assets shall be distributed to the parties in
accordance with the balances in their Capital Accounts (after taking into
account all allocations of Article III, including without limitation
subparagraph (h) of Section 3.3). Unless otherwise expressly agreed by both
Exh. D-8
parties, each party shall receive an undivided interest in each and every asset
determined by the ratio of the amount in each party's Capital Account to the
total of both of the parties' Capital Accounts. Assets distributed to the
parties shall be deemed to have a fair market value equal to the value assigned
to them pursuant to Section 4.2(a) above.
(c) All distributions to the parties in respect of their
Capital Accounts shall be made in accordance with the time requirements of
Treasury Regulation Sections 1.704-1(b)(2)(ii)(b)(2) and (3).
4.3 Deemed Terminations. Notwithstanding the provisions of Section 4.2,
if the "liquidation" of the tax partnership results from a deemed termination
under Section 708(b)(1 )(B) of the Code, then (i) subparagraphs (a) and (b) of
Section 4.2 shall not apply, (ii) the tax partnership shall be deemed to have
contributed its assets to a new tax partnership and then to have distributed
interests in the new tax partnership to the parties, (iii) the parties shall be
deemed to have received interests in the new tax partnership equivalent to the
interests held by them in the tax partnership deemed terminated, and (iv) the
new tax partnership shall continue pursuant to the terms of the Agreement and
this Exhibit.
4.4 Continuation. The parties agree that their tax partnership will
survive the termination of the Agreement and continue until terminated pursuant
to the provisions of Section 4.2 or 4.3, unless PDUS exercises its Acquisition
Right and the parties enter into the Joint Venture Agreement, in which case the
provisions of Exhibit C to the Joint Venture Agreement shall apply.
4.5 Assignment. The provisions of this Exhibit D shall be binding upon
and inure to the benefit of the Parties and their respective successors and
assigns. The provisions of this Exhibit D shall be deemed to be a covenant
running with the land and shall be binding upon any third party who acquires any
interest in the Agreement or the Property.
Exh. D-9
Exhibit E
SHORT FORM OF EXPLORATION AND DEVELOPMENT AGREEMENT
THIS SHORT FORM OF EXPLORATION AND DEVELOPMENT AGREEMENT (the "Short
Form") is made and entered into effective as of October 21, 2004 by and between
GREAT AMERICAN MINERALS, INC., a Nevada corporation, whose address is 9051 South
1075 West, Suite B-301, West Jordan, Utah 84088 ("GAM"), and Placer Dome U.S.
Inc., a California corporation, whose address for purposes hereof is 112517th
Street, Suite 2310, Denver, Colorado U.S.A. 80202 ("PDUS").
RECITALS
A. GAM is the owner of certain unpatented mining claims in Eureka
County, Nevada, as more particularly described in Part 1 of Exhibit A attached
hereto and incorporated by reference (the "Claims"). GAM's interest in the
Claims, together with all water and water rights, easements and rights-of-way,
and other appurtenances attached thereto or associated therewith, are
collectively referred to hereinafter as the "Property."
B. GAM and PDUS entered into a letter agreement dated effective October
21, 2004 (the "Agreement"), wherein GAM granted to PDUS the right to explore and
develop the Property and, if PDUS so desires, the right for PDUS to earn a 60%
interest in the Property and to enter into a joint venture agreement covering
the Property.
C. GAM and PDUS desire to enter into this Short Form of Agreement for
purposes of placing of record a notice of the Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Grant of Exploration. Development and Related Rights. GAM has
granted and hereby grants to PDUS, for the term of the Agreement, the exclusive
right to enter upon and use all or any part of the Property during the Earn-In
Period (as defined in the Agreement) for the purposes of determining ore
reserves and mineralization, and for purposes of development of valuable
minerals from the Property, including the right to enter upon the Property for
purposes of surveying, exploring, testing, sampling, trenching, bulk sampling,
prospecting and drilling for valuable minerals, and to use and construct
buildings, roads, power and communication lines, and to use so much of the
surface of the Property in such manner as is necessary to the enjoyment of any
of the rights or privileges of PDUS hereunder or otherwise reasonably necessary
to effect the purposes of the Agreement.
Exh. E-1
2. Grant of Right to Acquire an Interest in the Property. GAM has
granted and hereby grants to PDUS, during the Earn-In Period, the exclusive
right to acquire an undivided 60% interest in the Property upon the completion
of certain obligations set forth in the Agreement.
3. Grant of Right to Enter into Joint Venture Agreement. In addition to
the rights granted in the Agreement as described in paragraph 2 above, GAM and
PDUS have agreed and do hereby agree that, subject to the terms and conditions
set forth in the Agreement, upon PDUS's acquisition of an undivided 60% interest
in the Property they will enter into a Joint Venture Agreement (as described in
the Agreement) governing operations at the Property.
4. Term. Unless sooner terminated as provided in the Agreement, the
term of the Agreement (the "Earn-In Period") shall run until such time as PDUS
timely incurs required minimum amounts of Work Expenditures (as defined in the
Agreement) and the parties execute the Joint Venture Agreement, or until sooner
terminated as set forth in the Agreement, but in any event not later than
October 21, 2014.
5. Title to After-Acquired and Additional Interests. The Agreement
applies and extends to any further or additional right, title, interest or
estate heretofore or hereafter acquired by GAM or PDUS during the Earn-In Period
in or to (i) the Property or any part thereof, or (ii) any lands or mineral
interests (other than royalty interests) wholly or partially within an Area of
Interest described in the Agreement.
6. Right of First Refusal. Pursuant to the Agreement, GAM has granted
and hereby grants to PDUS a right of first refusal during the Earn-In Period to
acquire an undivided interest in GAM's GQ Property (as described in Part 2 of
Exhibit A) and its Monte Cristo Property (as described in Part 3 of Exhibit A).
7. Successors and Assigns. Subject to the provisions of paragraph 8
below, all of the terms, provisions and conditions of the Agreement and this
Short Form are, and shall be, binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
8. Assignability. None of the parties shall have the right to assign
its interest in the Agreement, other than (i) to an affiliate or a subsidiary,
(ii) in connection with a pledge of assets for financing purposes, or (iii) in
connection with a corporate merger or reorganization or a sale of all or
substantially all of either party's assets, without the prior written consent of
the non-assigning parties, which consent shall not be unreasonably withheld. Any
third party to whom any interest in the Agreement or the Property is assigned or
conveyed shall agree in writing to be bound by all of the terms and conditions
contained in the Agreement, including without limitation the tax partnership
applicable thereto.
9. Additional Terms. The Agreement contains additional clauses and
various other provisions, and reference is made to the Agreement for such other
terms and conditions as govern the Agreement, which terms and conditions are by
reference made a part hereof. Nothing in this Short Form shall limit or affect
the rights and duties of the
Exh. E-2
parties under the Agreement. Requests for information regarding the Agreement
should be made to the parties at the addresses set forth above.
10. Counterparts. This Short Form may be extended in multiple
counterparts, and all such counterparts taken together shall be deemed to
constitute a single document.
IN WITNESS WHEREOF, the parties have executed this Short Form of
Agreement effective as of October 21, 2004.
GREAT AMERICAN MINERALS, INC.,
a Nevada corporation
By:___________________________
Name:_________________________
Its:__________________________
PLACER DOME U.S. INC.,
a California corporation
By:___________________________
Name:_________________________
Its:__________________________
Exh. E-3
STATE OF______________________ )
)ss.
COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this_______________
day of October, 2004, by_____________________________________,
as_________________________________of Great American Minerals, Inc., a Nevada
corporation.
Witness my hand and official seal.
My commission expires:_____________ _______________________________
Notary Public
STATE OF______________________ )
)ss.
COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this ______________
day of October, 2004, by_______________________________________,
as___________________________________of Placer Dome U.S. Inc., a California
corporation.
Witness my hand and official seal.
My commission expires:_____________ _______________________________
Notary Public
Exh. E-4
Exhibit A
Part 1. The Claims
The following unpatented mining claims located in Sections 2, 3, 4, 11,
15, 16, 21 and 5,8,9,10, 22, Township 23 North, Range 48 East, and Sections 3
and 28, Township 24 North, Range 48 East, 10,15,27 Eureka County, Nevada:
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-1 NMC 861835 373 116 184742
UNR-2 NMC 861836 373 117 184743
UNR-3 NMC 861837 373 118 184744
UNR-4 NMC 861838 373 119 184745
UNR-5 NMC 861839 373 120 184746
UNR-6 NMC 861840 373 121 184747
UNR-7 NMC 861841 373 122 184748
UNR-8 NMC 861842 373 123 184749
UNR-9 NMC 858729 373 124 184750
UNR-10 NMC 858730 373 125 184751
UNR-11 NMC 858731 373 126 184752
UNR-12 NMC 858732 373 127 184753
UNR-13 NMC 858733 373 128 184754
UNR-14 NMC 858734 373 129 184755
UNR-15 NMC 858735 373 130 184756
UNR-16 NMC 858736 373 131 184757
UNR-17 NMC 858737 373 132 184758
UNR-18 NMC 858738 373 133 184759
UNR-19 NMC 858739 373 134 184760
UNR-20 NMC 858740 373 135 184761
UNR-21 NMC 858741 373 136 184762
UNR-22 NMC 858742 373 137 184763
UNR-23 NMC 861843 373 138 184764
UNR-24 NMC 861844 373 139 184765
UNR-25 NMC 861845 373 140 184766
UNR-26 NMC 861846 373 141 184767
UNR-27 NMC 861847 373 142 184768
UNR-28 NMC 861848 373 143 184769
UNR-29 NMC 861849 373 144 184770
UNR-30 NMC 861850 373 145 184771
Exh. A-1
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-31 NMC 861851 373 146 184772
UNR-32 NMC 861852 373 147 184773
UNR-33 NMC 861853 373 148 184774
UNR-34 NMC 861854 373 149 184775
UNR-35 NMC 861855 373 150 184776
UNR-36 NMC 861856 373 151 184777
UNR-37 NMC 861857 373 152 184778
UNR-38 NMC 861858 373 153 184779
UNR-39 NMC 861859 373 154 184780
UNR-40 NMC 861860 373 155 184781
UNR-41 NMC 861861 373 156 184782
UNR-42 NMC 861862 373 157 184783
UNR-43 NMC 861863 373 158 184784
UNR-44 NMC 861864 373 159 184785
UNR-45 NMC 861865 373 160 184786
UNR-46 NMC 861866 373 161 184787
UNR-47 NMC 861867 373 162 184788
UNR-48 NMC 861868 373 163 184789
UNR-19 NMC 875010 384 078 188421
UNR-20 NMC 875011 384 079 188422
UNR-21 NMC 875012 384 080 188423
UNR-22 NMC 875013 384 081 188424
UNR-73 NMC 875014 384 082 188425
UNR-74 NMC 875015 384 083 188426
UNR-75 NMC 875016 384 084 188427
UNR-76 NMC 875017 384 085 188428
UNR-77 NMC 875018 384 086 188429
UNR-78 NMC 875019 384 087 188430
UNR-79 NMC 875020 384 088 188431
UNR-80 NMC 875021 384 089 188432
UNR-81 NMC 875022 384 090 188433
UNR-82 NMC 875023 384 091 188434
UNR-83 NMC 875024 384 092 188435
UNR-84 NMC 875025 384 093 188436
UNR-85 NMC 875026 384 094 188437
UNR-86 NMC 875027 384 095 188438
UNR-87 NMC 875028 384 096 188439
UNR-88 NMC 875029 384 097 188440
UNR-89 NMC 875030 384 098 188441
UNR-90 NMC 875031 384 099 188442
UNR-91 NMC 875032 384 100 188443
UNR-92 NMC 875033 384 101 188444
UNR-93 NMC 875034 384 102 188445
UNR-94 NMC 875035 384 103 188446
UNR-95 NMC 875036 384 104 188447
Exh. A-2
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-96 NMC 875037 384 105 188448
UNR-97 NMC 875038 384 106 188449
UNR-98 NMC 875039 384 107 188450
UNR-99 NMC 875040 384 108 188451
UNR-100 NMC 875041 384 109 188452
UNR-101 NMC 875042 384 110 188453
UNR-102 NMC 875043 384 111 188454
UNR-103 NMC 875044 384 112 188455
UNR-104 NMC 875045 384 113 188456
UNR-105 NMC 875046 384 114 188457
UNR-106 NMC 875047 384 115 188458
UNR-107 NMC 875048 384 116 188459
UNR-108 NMC 875049 384 117 188460
UNR-109 NMC 875050 384 118 188461
UNR-110 NMC 875051 384 119 188462
UNR-111 NMC 875052 384 120 188463
UNR-112 NMC 875053 384 121 188464
UNR-113 NMC 875054 384 122 188465
UNR-114 NMC 875055 384 123 188466
UNR-115 NMC 875056 384 124 188467
UNR-116 NMC 875057 384 125 188468
UNR-117 NMC 875058 384 126 188469
UNR-118 NMC 875059 384 127 188470
UNR-119 NMC 875060 384 128 188471
UNR-120 NMC 875061 384 129 188472
UNR-121 NMC 875062 384 130 188473
UNR-122 NMC 875063 384 131 188474
UNR-123 NMC 875064 384 132 188475
UNR-124 NMC 875065 384 133 188476
UNR-125 NMC 875066 384 134 188477
UNR-126 NMC 875067 384 135 188478
UNR-127 NMC 875068 384 136 188479
UNR-128 NMC 875069 384 137 188480
UNR-129 NMC 875070 384 138 188481
UNR-130 NMC 875071 384 139 188482
UNR-131 NMC 875072 384 140 188483
UNR-132 NMC 875073 384 141 188484
UNR-133 NMC 875074 384 142 188485
UNR-134 NMC 875075 384 143 188486
UNR-135 NMC 875076 384 144 188487
UNR-136 NMC 875077 384 145 188488
UNR-137 NMC 875078 384 146 188489
UNR-138 NMC 875079 384 147 188490
UNR-139 NMC 875080 384 148 188491
UNR-140 NMC 875081 384 149 188492
UNR-141 NMC 875082 384 150 188493
UNR-142 NMC 875083 384 151 188494
Exh. A-3
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-143 NMC 875084 384 152 188495
UNR-144 NMC 875085 384 153 188496
UNR-145 NMC 875086 384 154 188497
UNR-146 NMC 875087 384 155 188498
UNR-147 NMC 875088 384 156 188499
UNR-148 NMC 875089 384 157 188500
UNR-149 NMC 875090 384 158 188501
UNR-150 NMC 875091 384 159 188502
UNR-151 NMC 875092 384 160 188503
UNR-152 NMC 875093 384 161 188504
UNR-153 NMC 875094 384 162 188505
UNR-154 NMC 875095 384 163 188506
UNR-155 NMC 875096 384 164 188507
UNR-156 NMC 875097 384 165 188508
UNR-157 NMC 875098 384 166 188509
UNR-158 NMC 875099 384 167 188510
UNR-159 NMC 875100 384 168 188511
UNR-160 NMC 875101 384 169 188512
UNR-161 NMC 875102 384 170 188513
UNR-172 NMC 875103 384 171 188514
UNR-173 NMC 875104 384 172 188515
UNR-174 NMC 875105 384 173 188516
UNR-175 NMC 875106 384 174 188517
UNR-176 NMC 875107 384 175 188518
UNR-177 NMC 875108 384 176 188519
UNR-178 NMC 875109 384 177 188520
UNR-179 NMC 875110 384 178 188521
UNR-180 NMC 875111 384 179 188522
UNR-181 NMC 875112 384 180 188523
UNR-196 NMC 875539 391 227 191381
UNR-197 NMC 875540 391 228 191382
UNR-198 NMC 875541 391 229 191383
UNR-199 NMC 875542 391 230 191384
UNR-200 NMC 875543 391 231 191385
UNR-201 NMC 875544 391 232 191386
UNR-202 NMC 875545 391 233 191387
UNR-203 NMC 875546 391 234 191388
UNR-216 NMC 875547 391 235 191389
UNR-217 NMC 875548 391 236 191390
UNR-218 NMC 875549 391 237 191391
UNR-219 NMC 875550 391 238 191392
UNR-220 NMC 875551 391 239 191393
UNR-221 NMC 875552 391 240 191394
UNR-222 NMC 875553 391 241 191395
UNR-223 NMC 875554 391 242 191396
UNR-236 NMC 875555 391 243 191397
Exh. A-4
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-237 NMC 875556 391 244 191398
UNR-238 NMC 875557 391 245 191399
UNR-239 NMC 875558 391 246 191400
UNR-240 NMC 875559 391 247 191401
UNR-241 NMC 875560 391 248 191402
UNR-242 NMC 875561 391 249 191403
UNR-243 NMC 875562 391 250 191404
UNR-245 NMC 875563 391 251 191405
UNR-247 NMC 875564 391 252 191406
UNR-249 NMC 875565 391 253 191407
UNR-256 NMC 875566 391 254 191408
UNR-257 NMC 875567 391 255 191409
UNR-258 NMC 875568 391 256 191410
UNR-259 NMC 875569 391 257 191411
UNR-260 NMC 875570 391 258 191412
UNR-261 NMC 875571 391 259 191413
UNR-262 NMC 875572 391 260 191414
UNR-263 NMC 875573 391 261 191415
UNR-264 NMC 875574 391 262 191416
UNR/GAP-1 NMC 872221 383 327 188221
UNR/GAP-2 NMC 872222 383 328 188222
UNR/GAP-3 NMC 872223 383 329 188223
UNR/GAP-4 NMC 872224 383 330 188224
UNR/GAP-5 NMC 872225 383 331 188225
UNR/GAP-6 NMC 872226 383 332 188226
UNR/GAP-7 NMC 872227 383 333 188227
UNR/GAP-8 NMC 872228 383 334 188228
UNR/GAP-9 NMC 872229 383 335 188229
UNR/GAP-10 NMC 872230 383 336 188230
UNR/GAP-11 NMC 872231 383 337 188231
UNR/GAP-12 NMC 872232 383 338 188232
UNR/GAP-13 NMC 872233 383 339 188233
UNR/GAP-14 NMC 872234 383 340 188234
UNR/GAP-15 NMC 872235 383 341 188235
UNR/GAP-16 NMC 872236 383 342 188236
UNR/GAP-17 NMC 872237 383 343 188237
UNR/GAP-18 NMC 872238 383 344 188238
UNR/GAP-19 NMC 872239 383 345 188239
UNR/GAP-20 NMC 872240 383 346 188240
UNR/GAP-21 NMC 872241 383 347 188241
UNR/GAP-22 NMC 872242 383 348 188242
UNR/GAP-23 NMC 872243 383 349 188243
UNR/GAP-24 NMC 872244 383 350 188244
UNR/GAP-25 NMC 872245 383 351 188245
UNR/GAP-26 NMC 872246 383 352 188246
UNR/GAP-27 NMC 872247 383 353 188247
Exh. A-5
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR/GAP-28 NMC 872248 383 354 188248
UNR/GAP-29 NMC 872249 383 355 188249
UNR/GAP-30 NMC 872250 383 356 188250
UNR/GAP-31 NMC 875113 384 064 188406
UNR/GAP-32 NMC 875114 384 065 188407
UNR/GAP-33 NMC 875115 384 066 188408
UNR/GAP-34 NMC 875116 384 067 188409
UNR/GAP-35 NMC 875117 384 068 188410
UNR/GAP-36 NMC 875118 384 069 188411
UNR/GAP-37 NMC 875119 384 070 188412
UNR/GAP-38 NMC 875120 384 071 188413
UNR/GAP-39 NMC 875121 384 072 188414
UNR/GAP-40 NMC 875122 384 073 188415
UNR/GAP-41 NMC 875123 384 074 188416
UNR/GAP-42 NMC 875124 384 075 188417
UNR/GAP-43 NMC 875125 384 076 188418
UNR/GAP-44 NMC 875126 384 077 188419
Exh. A-6
Part 2. The GQ Property
The following unpatented mining claims located in Sections 26 and 36,
Township 33 North, Range 50 East, Eureka County, Nevada:
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
EP1 NMC 871262 383 148 188135
EP2 NMC 871263 383 149 188136
EP3 NMC 871264 383 150 188137
EP4 NMC 871265 383 151 188138
EPS NMC 871266 383 152 188139
EP6 NMC 871267 383 153 188140
EP7 NMC 871268 383 154 188141
EP8 NMC 871269 383 155 188142
EP9 NMC 871270 383 156 188143
EP10 NMC 871271 383 157 188144
EP25 NMC 871272 383 158 188145
EP26 NMC 871273 383 159 188146
EP27 NMC 871274 383 160 188147
EP28 NMC 871275 383 161 188148
EP29 NMC 871276 383 162 188149
EP30 NMC 871277 383 163 188150
EP31 NMC 871278 383 164 188151
EP32 NMC 871279 383 165 188152
EP41 NMC 871280 383 166 188153
EP42 NMC 871281 383 167 188154
EP43 NMC 871282 383 168 188155
EP44 NMC 871283 383 169 188156
EP45 NMC 871284 383 170 188157
EP46 NMC 871285 383 171 188158
Exh. A-7
Part 3. The Monte Cristo Property
The following unpatented mining claims located in Sections 16, 20, 21,
28 and 29, Township 16 North, Range 57 East, White Pine County, Nevada:
White Pine County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
Monte #1 NMC 875127 390 464 321744
Monte #2 NMC 875128 390 465 321745
Monte #3 NMC 875129 390 466 321746
Monte #4 NMC 875130 390 467 321747
Monte #5 NMC 875131 390 468 321748
Monte #6 NMC 875132 390 469 321749
Monte #11 NMC 875133 390 470 321750
Monte #12 NMC 875134 390 471 321751
Monte #13 NMC 875135 390 472 321752
Monte #14 NMC 875136 390 473 321753
Monte #15 NMC 875137 390 474 321754
Monte #16 NMC 875138 390 475 321755
Monte #17 NMC 875139 390 476 321756
Monte #36 NMC 875140 390 477 321757
Monte #37 NMC 875141 390 478 321758
Monte #38 NMC 875142 390 479 321759
Monte #39 NMC 875143 390 480 321760
Monte #40 NMC 875144 390 481 321761
Monte #41 NMC 875145 390 482 321762
Monte #42 NMC 875146 390 483 321763
Monte #43 NMC 875147 390 484 321764
Monte #44 NMC 875148 390 485 321765
Monte #45 NMC 875149 390 486 321766
Monte #46 NMC 875150 390 487 321767
Monte #47 NMC 875151 390 488 321768
Monte #48 NMC 875152 390 489 321769
Monte #49 NMC 875153 390 490 321770
Monte #50 NMC 875154 390 491 321771
Monte #51 NMC 875155 390 492 321772
Exh. A-8
Exhibit F
"Feasibility Study" shall mean a report, prepared either internally by
PDUS or by an independent third party, to ascertain whether valuable minerals
from the Property can profitably be extracted, treated and sold in circumstances
that would provide reasonable long term returns, and shall include, without
limiting the generality of the foregoing, (a) reasonable assessments of the size
and quality of the minable reserves of minerals; (b) reasonable assessments of
the amenability of the minerals to metallurgical treatment; (c) a mine plan and
reasonable descriptions of the work, equipment and supplies required to bring
the prospective ore body or deposit of minerals into production, including
beneficiation, environmental baseline, health and permitting requirements, and
the estimated costs thereof; (d) a marketing plan for marketing products, and
the assumed terms of sale and prices to be received; (e) conclusions and
recommendations regarding the economic feasibility and timing for bringing the
prospective ore body or deposit of minerals into commercial production, taking
into account items (a) through (d) above; and (f) such other information in such
form and level of detail as may be appropriate and necessary to allow a bank or
other lending institution familiar with the mining industry to make a decision
as to whether to loan funds for such operations
Exh. F-1
Exhibit G
If either Party's interest in the Property is converted to an interest
in Net Returns, it will be entitled to receive as a nonparticipating,
non-executive production royalty (the "Production Royalty"), the applicable
percentage of Net Returns from the sale of any valuable minerals extracted,
produced and sold from the Claims.
1. The Production Royalty.
(a) As used herein, "Payor" means the Party obligated to pay
the Production Royalty (and its successors and assigns), and "Payee" means the
Party entitled to receive the Production Royalty (and its successors and
assigns).
(b) As used herein, "Net Returns" means the Gross Returns from
any and all ores, metals, minerals and materials of every kind and character
found in, on or under the Claims ("Valuable Minerals"), extracted, produced and
sold or deemed to have been sold from the Claims, less all Allowable Deductions.
(c) As used herein, "Gross Returns" has the following meanings
for the following categories of Valuable Minerals:
(i) If Payor causes refined gold that meets or exceeds the
generally accepted commercial standards for refined gold to be produced
by an independent third-party refinery from ores mined from the Claims,
for purposes of determining the Production Royalty, the refined gold
shall be deemed to have been sold in the calendar month in which it was
produced at the Monthly Average Gold Price for that month. The Gross
Returns from such deemed sales shall be determined by multiplying Gold
Production during the month by the Monthly Average Gold Price. As used
herein, "Gold Production" means the quantity of refined gold that is
outturned to Payer's account by the refinery during the calendar month
on either a provisional or final settlement basis. If outturn of
refined gold is made by the refinery on a provisional basis, the Gross
Returns shall be based upon the amount of such provisional settlement,
but shall be adjusted in subsequent statements to account for the
amount of refined metal established by final settlement by the
refinery. As used herein, "Monthly Average Gold Price" means the
average London Bullion Market Association P.M. Gold Fix, calculated by
dividing the sum of all such prices reported for the month by the
number of days for which such prices were reported. If the London
Bullion Market Association P.M. Gold Fix ceases to be published, the
Monthly Average Gold Price shall be determined by reference to prices
for refined gold for immediate delivery in the most nearly comparable
established market selected by Payor as such prices are published in
"Metals Week" or a similar publication.
(ii) If Payor causes refined silver that meets or exceeds the
generally accepted commercial standards for refined silver to be
produced by an independent third-party refinery from ore mined from the
Claims, for purposes of
Exh. G-1
determining the Production Royalty, the refined silver shall be deemed
to have been sold in the calendar month in which it was produced at the
Monthly Average Silver Price for that month. The Gross Returns from
such deemed sales shall be determined by multiplying Silver Production
during the calendar month by the Monthly Average Silver Price. As used
herein, "Silver Production" shall mean the quantity of refined silver
that is outturned to Payor's account by the refinery during the
calendar month on either a provisional or final settlement basis. If
outturn of refined silver is made by the refinery on a provisional
basis, the Gross Returns shall be based upon the amount of such
provisional settlement, but shall be adjusted in subsequent statements
to account for the amount of refined metal established by final
settlement by the refinery. As used herein, "Monthly Average Silver
Price" shall mean the average New York Silver Price as published daily
by Handy & Harman, calculated by dividing the sum of all such prices
reported for the calendar month by the number of days for which such
prices were reported. If the Handy & Harman quotation ceases to be
published, the Monthly Average Silver Price shall be determined by
reference to prices for refined silver for immediate delivery in the
most nearly comparable established market selected by Payor as
published in "Metals Week" or a similar publication.
(iii) If Payor sells refined metals (other than refined gold
and refined silver), dore or concentrates produced from Valuable
Minerals from the Claims, the Gross Returns for such refined metals
shall be the proceeds actually received by Payor from their sale. If
such sales are to an affiliated party, the refined metals, dore, or
concentrates shall be deemed, solely for the purpose of computing Gross
Returns, to have been sold at prices and on terms no less favorable to
Payor than those which would have been received under similar
circumstances from an unaffiliated third party.
(d) As used herein, "Allowable Deductions" means the following
costs, charges, and expenses incurred or accrued by Payor:
(i) If Payor sells or is deemed to have sold refined gold or
refined silver:
(A) all costs, charges and expenses for smelting and
refining dore or concentrates to produce the refined gold or
refined silver (including handling, processing, and
provisional settlement fees, sampling, assaying and
representation costs, penalties, and other processor
deductions);
(B) all costs, charges, and expenses for weighing,
sampling, determining moisture content and packaging Valuable
Minerals and for loading and transportation of the dore or
concentrates from the Claims to the refinery or smelter and
then to the place of sale (including freight, insurance,
security, transaction taxes, handling, port, demurrage, delay,
and forwarding expenses incurred by reason of or in the course
of such transportation); and
(C) an allowance for reasonable sales and brokerage
costs.
Exh. G-2
(ii) If Payor sells refined metals (other than
refined gold or refined silver), dore, concentrate or ores:
(A) all costs, charges, and expenses for (I)
beneficiation, processing or treatment of such materials at
any plant or facility and (II) smelting or refining to produce
a refined metal (including handling, processing, and
provisional settlement fees, sampling, assaying and
representation costs, penalties, and other processor
deductions);
(B) all costs, charges, and expenses for weighing,
sampling, determining moisture content and packaging Valuable
Minerals and for loading and transportation of ores, minerals,
dore, concentrates or other products from the Claims (I) to
the place of sale, or (II) if such ores or other materials are
beneficiated, processed, treated, smelted or refined at any
plant or facility more than five (5) miles from the exterior
boundary of the Claims, to such plant of facility and then to
the place of sale (including freight, insurance, security,
transaction taxes, handling, port, demurrage, delay, and
forwarding expenses incurred by reason of or in the course of
such transportation); and
(C) actual sales and brokerage costs.
(iii) All royalties payable to any governmental agency and all
sales, use, severance, Nevada net proceeds of mines and ad valorem
taxes and any other tax or governmental levy or fee on or measured by
mineral production from the Claims (other than taxes based on income).
(e) Payor shall have the right to market and sell or refrain
from selling refined gold, refined silver and other mineral products from the
Claims in any manner it may elect, including the right to engage in forward
sales, future trading or commodity options trading, and other price hedging,
price protection, and speculative arrangements ("Trading Activities") which may
involve the possible delivery of gold, silver or other mineral products from the
Claims. With respect to Production Royalty payable on refined gold and refined
silver and any other Valuable Minerals, Payee shall not be entitled to
participate in the proceeds or be obligated to share in any losses generated by
Payor's actual marketing or sales practices or by its Trading Activities and no
such profits or losses shall be included in Gross Returns.
2. Manner of Payment. Production Royalty payments shall be paid by
Payor to Payee (or notice of a credit against Production Royalties as provided
above shall be given to Payee) on or before thirty (30) days following the
calendar quarter during which Payor shall have received payment for Valuable
Minerals sold by Payor. Production Royalties shall accrue to Payee's account
upon final payment or upon being credited to the account of Payor by the
smelter, refinery or other ore buyer to Payor for the Valuable Minerals sold and
for which the Production Royalty is payable. All Production Royalty payments
shall be made at Payor's election by Payor's check or by wire transfer. All
Production Royalty payments shall be accompanied by a statement and settlement
sheet showing the quantities and grades of Valuable Minerals mined and sold from
the Claims, the proceeds
Exh. G-3
of sales, cost, assays and analyses, and other pertinent information in
reasonably sufficient detail to explain the calculation of the Production
Royalty payment.
3. Payments: Where Made. All payments hereunder shall be sent by
certified U.S. mail to Payee at its address as set forth above, or by wire
transfer to an account designated by and in accordance with written instructions
from Payee. The date of placing such payment in the United States mail by Payor,
or the date the wire transfer process is initiated, shall be the date of such
payment. Payments by Payor in accordance herewith shall fully discharge Payor's
obligation with respect to such payment, and Payor shall have no duty to
otherwise apportion or allocate any payment due to Payee or its successors or
assigns.
4. Audits: Objections to Payments. Payee, at its sole election and
expense, shall have the right to perform, not more frequently than once annually
following the close of each calendar year, an audit of Payor's accounts relating
to payment of the Production Royalty hereunder by any authorized representative
of Payee. Any such inspection shall be for a reasonable length of time during
regular business hours, at a mutually convenient time, upon at least five (5)
business days prior written notice by Payee. All royalty payments made in any
calendar year shall be considered final and in full accord and satisfaction of
all obligations of Payor with respect thereto, unless Payee gives written notice
describing and setting forth a specific objection to the calculation thereof
within six (6) months following the close of the annual audit for that calendar
year. Payor shall account for any agreed upon deficit or excess in Production
Royalty payments made to Payee by adjusting the next quarterly statement and
payment following completion of such audit to account for such excess.
5. Conduct of Operations. Payor shall have the sole and exclusive
control of all operations on or for the benefit of the Claims, and of any and
all equipment, supplies, machinery, and other assets purchased or otherwise
acquired or under its control in connection with such operations. Payor may
carry out such operations on the Claims as it may, in its sole discretion,
determine to be warranted, so long as such operations are conducted in
accordance with procedures acceptable in the mining and metallurgical industry.
The timing, nature, manner and extent of any exploration, development, mining or
processing operations carried out or in connection with the Claims shall be
within the sole discretion of Payor, and there shall be no implied covenant
whatsoever to begin or continue any such operations. If Payor at any time, and
from time to time after commencing operations, desires to shut down, suspend or
cease operations for any reason, it shall have the right to do so. Payor may use
and employ such methods of mining as it may desire or find most profitable.
Payor shall not be required to mine, preserve, or protect in its mining
operations any ores, leachates, precipitates, concentrates or other products
containing Valuable Minerals which cannot be mined or shipped at a reasonable
profit to Payor. Any decision as to the time, manner and form, if any, in which
ores or other products containing Valuable Minerals are to be sold shall be made
by Payor in its sole discretion.
6. Ore Processing. All determinations with respect to: (a) whether ore
from the Claims will be beneficiated, processed or milled by Payor or sold in a
raw state; (b) the
Exh. G-4
methods of beneficiating, processing or milling any such ore; (c) the
constituents to be recovered therefrom, and (d) the purchasers to whom any ore,
minerals or mineral substances derived from the Claims may be sold, shall be
made by Payor in its sole and absolute discretion.
7. Ore Samples. The mineral content of all ore mined and removed from
the Claims (but excluding ore leached in place) and the quantities of
constituents recovered by Payor shall be determined by Payor, or with respect to
such ore which is sold, by the mill or smelter to which the ore is sold, in
accordance with standard sampling and analysis procedures, and shall be weighted
average based on the total amount of ore from the Claims crushed and sampled, or
the constituents recovered, during an entire calendar quarter. Upon reasonable
advance written notice to Payor, Payee shall have the right to have
representatives present at the time samples are taken for the purpose of
confirming that the sampling and analysis procedure is standard and acceptable
according to accepted industry practices.
8. Commingling of Ores. Payor shall have the right to mix or commingle,
either underground, at the surface, or at processing plants or other treatment
facilities, any material containing Valuable Minerals mined or extracted from
the Claims with ores or material derived from other lands or properties owned,
leased or controlled by Payor; provided, however, that before commingling, Payor
shall calculate from representative samples the average grade of the ore from
the Claims and shall either weigh or volumetrically calculate the number of tons
of ore from the Claims to be commingled. As products are produced from the
commingled ores, Payor shall calculate from representative samples the average
percentage recovery of products produced from the commingled ores during each
month. In obtaining representative samples, calculating the average grade of
commingled ores and average percentage of recovery, Payor may use any procedures
acceptable in the mining and metallurgical industry which Payor believes to be
accurate and cost-effective for the type of mining and processing activity being
conducted, and Payor's choice of such procedures shall be final and binding upon
Payee. In addition, comparable procedures may be used by Payor to apportion
among the commingled ores any penalty charges imposed by the smelter or refiner
on commingled ores or concentrates. The records relating to commingled ores
shall be available for inspection by Payee, at Payee's sole expense, at all
reasonable times, and shall be retained by Payor for a period of two (2) years.
9. Waste Rock. Spoil and Tailings. Any ore, mine waters, leachates,
pregnant liquors, pregnant slurries, and other products or compounds or metals
or minerals mined from the Claims shall be the Claims of Payor, subject to the
Production Royalty as provided for in Section 1. The Production Royalty shall be
payable only on metals, ores, or minerals recovered prior to the time waste
rock, spoil, tailings, or other mine waste and residue are first disposed of as
such, and Payor shall be free to use or dispose of such waste and residue in
whatever manner it sees fit in its sole discretion. Payor shall have the sole
right to dump, deposit, sell, dispose of, or reprocess such waste rock, spoil,
tailings, or other mine wastes and residues, and Payee shall have no claim or
interest therein other than for
Exh. G-5
the payment of the Production Royalty to the extent any Valuable Minerals are
produced and sold therefrom.
10. No Covenants. The parties agree that in no event shall Payor have
any duty or obligation, express or implied, to explore for, develop, mine or
produce ores, minerals or mineral substances from the Claims, and the timing,
manner, method and amounts of such exploration, development, mining or
production, if any, shall be in the sole discretion of Payor. Payee acknowledges
that the expenditures made by Payor to advance activities on the Claims and the
right to the Production Royalty are sufficient consideration for the conversion
of its Participating Interest. None of the provisions of this Section 10 or any
other provision of this Exhibit G shall be deemed to limit or restrict Payor's
ability to sell or otherwise convey or transfer to any third party all or any
portion of Payor's interest in the Claims.
11. Nature of Payee's Interest. Payee shall have only a royalty
interest in the Claims (but no other properties adjacent to or in the vicinity
of the Claims) and rights and incidents of ownership of a non-executive royalty
owner. Payee shall not have any possessory or working interest in the Claims nor
any of the incidents of such interest. By way of example but not by way of
limitation, Payee shall not have (a) the right to participate in the execution
of applications for authorities, permits or licenses, mining leases, option,
farm-outs or other conveyances, (b) the right to share in bonus payments or
rental payments received as the consideration for the execution of such leases,
options, farm- outs, or other conveyances, or (c) the right to enter upon the
Claims and prospect for, mine, drill for, or remove ores, minerals or mineral
products therefrom.
Exh. G-6
SHORT FORM OF EXPLORATION AND DEVELOPMENT AGREEMENT
THIS SHORT FORM OF EXPLORATION AND DEVELOPMENT AGREEMENT (the "Short
Form") is made and entered into effective as of October 21, 2004 by and between
GREAT AMERICAN MINERALS, INC., a Nevada corporation, whose address is 9051 South
1075 West, Suite B-301, West Jordan, Utah 84088 ("GAM"), and Placer Dome U.S.
Inc., a California corporation, whose address for purposes hereof is 112517th
Street, Suite 2310, Denver, Colorado U.S.A. 80202 ("PDUS").
RECITALS
A. GAM is the owner of certain unpatented mining claims in Eureka
County, Nevada, as more particularly described in Part 1 of Exhibit A attached
hereto and incorporated by reference (the "Claims"). GAM's interest in the
Claims, together with all water and water rights, easements and rights-of-way,
and other appurtenances attached thereto or associated therewith, are
collectively referred to hereinafter as the "Property."
B. GAM and PDUS entered into a letter agreement dated effective October
21, 2004 (the "Agreement"), wherein GAM granted to PDUS the right to explore and
develop the Property and, if PDUS so desires, the right for PDUS to earn a 60%
interest in the Property and to enter into a joint venture agreement covering
the Property.
C. GAM and PDUS desire to enter into this Short Form of Agreement for
purposes of placing of record a notice of the Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Grant of Exploration. Development and Related Rights. GAM has
granted and hereby grants to PDUS, for the term of the Agreement, the exclusive
right to enter upon and use all or any part of the Property during the Earn-In
Period (as defined in the Agreement) for the purposes of determining ore
reserves and mineralization, and for purposes of development of valuable
minerals from the Property, including the right to enter upon the Property for
purposes of surveying, exploring, testing, sampling, trenching, bulk sampling,
prospecting and drilling for valuable minerals, and to use and construct
buildings, roads, power and communication lines, and to use so much of the
surface of the Property in such manner as is necessary to the enjoyment of any
of the rights or privileges of PDUS hereunder or otherwise reasonably necessary
to effect the purposes of the Agreement.
2. Grant of Right to Acquire an Interest in the Property. GAM has
granted and hereby grants to PDUS, during the Earn-In Period, the exclusive
right to acquire an undivided 60% interest in the Property upon the completion
of certain obligations set forth in the Agreement.
3. Grant of Right to Enter into Joint Venture Agreement. In addition to
the rights granted in the Agreement as described in paragraph 2 above, GAM and
PDUS have agreed and do hereby agree that, subject to the terms and conditions
set forth in the Agreement, upon PDUS's acquisition of an undivided 60% interest
in the Property they will enter into a Joint Venture Agreement (as described in
the Agreement) governing operations at the Property.
4. Term. Unless sooner terminated as provided in the Agreement, the
term of the Agreement (the "Earn-In Period") shall run until such time as PDUS
timely incurs required minimum amounts of Work Expenditures (as defined in the
Agreement) and the parties execute the Joint Venture Agreement, or until sooner
terminated as set forth in the Agreement, but in any event not later than
October 21, 2014.
5. Title to After-Acquired and Additional Interests. The Agreement
applies and extends to any further or additional right, title, interest or
estate heretofore or hereafter acquired by GAM or PDUS during the Earn-In Period
in or to (i) the Property or any part thereof, or (ii) any lands or mineral
interests (other than royalty interests) wholly or partially within an Area of
Interest described in the Agreement.
6. Right of First Refusal. Pursuant to the Agreement, GAM has granted
and hereby grants to PDUS a right of first refusal during the Earn-In Period to
acquire an undivided interest in GAM's GQ Property (as described in Part 2 of
Exhibit A) and its Monte Cristo Property (as described in Part 3 of Exhibit A).
7. Successors and Assigns. Subject to the provisions of paragraph 8
below, all of the terms, provisions and conditions of the Agreement and this
Short Form are, and shall be, binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
8. Assignability. None of the parties shall have the right to assign
its interest in the Agreement, other than (i) to an affiliate or a subsidiary,
(ii) in connection with a pledge of assets for financing purposes, or (iii) in
connection with a corporate merger or reorganization or a sale of all or
substantially all of either party's assets, without the prior written consent of
the non-assigning parties, which consent shall not be unreasonably withheld. Any
third party to whom any interest in the Agreement or the Property is assigned or
conveyed shall agree in writing to be bound by all of the terms and conditions
contained in the Agreement, including without limitation the tax partnership
applicable thereto.
9. Additional Terms. The Agreement contains additional clauses and
various other provisions, and reference is made to the Agreement for such other
terms and conditions as govern the Agreement, which terms and conditions are by
reference made a part hereof. Nothing in this Short Form shall limit or affect
the rights and duties of the
2
parties under the Agreement. Requests for information regarding the Agreement
should be made to the parties at the addresses set forth above.
10. Counterparts. This Short Form may be extended in multiple
counterparts, and all such counterparts taken together shall be deemed to
constitute a single document.
IN WITNESS WHEREOF, the parties have executed this Short Form of
Agreement effective as of October 21, 2004.
GREAT AMERICAN MINERALS, INC.,
a Nevada corporation
By: /s/ Dennis J. McDowell
Name: Dennis J. McDowell
Its: President
PLACER DOME U.S. INC.,
a California corporation
By: /s/ William C. Howald
Name: William C. Howald
Its: Regional Exploration Manager
3
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this 22nd day of
October, 2004, by Dennis McDowell, as President of Great American Minerals,
Inc., a Nevada corporation.
Witness my hand and official seal.
My commission expires: 6/20/07 /s/ Jennifer C. Shelton
---------------------------------
Notary Public
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
The foregoing instrument was acknowledged before me this 2Oth day of
October, 2004, by William C. Howald, as Regional Explor Mgr of Placer Dome U.S.
Inc., a California corporation.
Witness my hand and official seal.
My commission expires: 6/11/08 /s/ Cheri R. Reimann
---------------------------------
Notary Public
4
Exhibit A
Part 1. The Claims
The following unpatented mining claims located in Sections 2, 3, 4, 11,
15, 16, 21 and 5,8,9,10, 22, Township 23 North, Range 48 East, and Sections 3
and 28, Township 24 North, Range 48 East, 10,15,27 Eureka County, Nevada:
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-1 NMC 861835 373 116 184742
UNR-2 NMC 861836 373 117 184743
UNR-3 NMC 861837 373 118 184744
UNR-4 NMC 861838 373 119 184745
UNR-5 NMC 861839 373 120 184746
UNR-6 NMC 861840 373 121 184747
UNR-7 NMC 861841 373 122 184748
UNR-8 NMC 861842 373 123 184749
UNR-9 NMC 858729 373 124 184750
UNR-10 NMC 858730 373 125 184751
UNR-11 NMC 858731 373 126 184752
UNR-12 NMC 858732 373 127 184753
UNR-13 NMC 858733 373 128 184754
UNR-14 NMC 858734 373 129 184755
UNR-15 NMC 858735 373 130 184756
UNR-16 NMC 858736 373 131 184757
UNR-17 NMC 858737 373 132 184758
UNR-18 NMC 858738 373 133 184759
UNR-19 NMC 858739 373 134 184760
UNR-20 NMC 858740 373 135 184761
UNR-21 NMC 858741 373 136 184762
UNR-22 NMC 858742 373 137 184763
UNR-23 NMC 861843 373 138 184764
UNR-24 NMC 861844 373 139 184765
UNR-25 NMC 861845 373 140 184766
UNR-26 NMC 861846 373 141 184767
UNR-27 NMC 861847 373 142 184768
UNR-28 NMC 861848 373 143 184769
UNR-29 NMC 861849 373 144 184770
UNR-30 NMC 861850 373 145 184771
Exh. A-1
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-31 NMC 861851 373 146 184772
UNR-32 NMC 861852 373 147 184773
UNR-33 NMC 861853 373 148 184774
UNR-34 NMC 861854 373 149 184775
UNR-35 NMC 861855 373 150 184776
UNR-36 NMC 861856 373 151 184777
UNR-37 NMC 861857 373 152 184778
UNR-38 NMC 861858 373 153 184779
UNR-39 NMC 861859 373 154 184780
UNR-40 NMC 861860 373 155 184781
UNR-41 NMC 861861 373 156 184782
UNR-42 NMC 861862 373 157 184783
UNR-43 NMC 861863 373 158 184784
UNR-44 NMC 861864 373 159 184785
UNR-45 NMC 861865 373 160 184786
UNR-46 NMC 861866 373 161 184787
UNR-47 NMC 861867 373 162 184788
UNR-48 NMC 861868 373 163 184789
UNR-19 NMC 875010 384 078 188421
UNR-20 NMC 875011 384 079 188422
UNR-21 NMC 875012 384 080 188423
UNR-22 NMC 875013 384 081 188424
UNR-73 NMC 875014 384 082 188425
UNR-74 NMC 875015 384 083 188426
UNR-75 NMC 875016 384 084 188427
UNR-76 NMC 875017 384 085 188428
UNR-77 NMC 875018 384 086 188429
UNR-78 NMC 875019 384 087 188430
UNR-79 NMC 875020 384 088 188431
UNR-80 NMC 875021 384 089 188432
UNR-81 NMC 875022 384 090 188433
UNR-82 NMC 875023 384 091 188434
UNR-83 NMC 875024 384 092 188435
UNR-84 NMC 875025 384 093 188436
UNR-85 NMC 875026 384 094 188437
UNR-86 NMC 875027 384 095 188438
UNR-87 NMC 875028 384 096 188439
UNR-88 NMC 875029 384 097 188440
UNR-89 NMC 875030 384 098 188441
UNR-90 NMC 875031 384 099 188442
UNR-91 NMC 875032 384 100 188443
UNR-92 NMC 875033 384 101 188444
UNR-93 NMC 875034 384 102 188445
UNR-94 NMC 875035 384 103 188446
UNR-95 NMC 875036 384 104 188447
Exh. A-2
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-96 NMC 875037 384 105 188448
UNR-97 NMC 875038 384 106 188449
UNR-98 NMC 875039 384 107 188450
UNR-99 NMC 875040 384 108 188451
UNR-100 NMC 875041 384 109 188452
UNR-101 NMC 875042 384 110 188453
UNR-102 NMC 875043 384 111 188454
UNR-103 NMC 875044 384 112 188455
UNR-104 NMC 875045 384 113 188456
UNR-105 NMC 875046 384 114 188457
UNR-106 NMC 875047 384 115 188458
UNR-107 NMC 875048 384 116 188459
UNR-108 NMC 875049 384 117 188460
UNR-109 NMC 875050 384 118 188461
UNR-110 NMC 875051 384 119 188462
UNR-111 NMC 875052 384 120 188463
UNR-112 NMC 875053 384 121 188464
UNR-113 NMC 875054 384 122 188465
UNR-114 NMC 875055 384 123 188466
UNR-115 NMC 875056 384 124 188467
UNR-116 NMC 875057 384 125 188468
UNR-117 NMC 875058 384 126 188469
UNR-118 NMC 875059 384 127 188470
UNR-119 NMC 875060 384 128 188471
UNR-120 NMC 875061 384 129 188472
UNR-121 NMC 875062 384 130 188473
UNR-122 NMC 875063 384 131 188474
UNR-123 NMC 875064 384 132 188475
UNR-124 NMC 875065 384 133 188476
UNR-125 NMC 875066 384 134 188477
UNR-126 NMC 875067 384 135 188478
UNR-127 NMC 875068 384 136 188479
UNR-128 NMC 875069 384 137 188480
UNR-129 NMC 875070 384 138 188481
UNR-130 NMC 875071 384 139 188482
UNR-131 NMC 875072 384 140 188483
UNR-132 NMC 875073 384 141 188484
UNR-133 NMC 875074 384 142 188485
UNR-134 NMC 875075 384 143 188486
UNR-135 NMC 875076 384 144 188487
UNR-136 NMC 875077 384 145 188488
UNR-137 NMC 875078 384 146 188489
UNR-138 NMC 875079 384 147 188490
UNR-139 NMC 875080 384 148 188491
UNR-140 NMC 875081 384 149 188492
UNR-141 NMC 875082 384 150 188493
UNR-142 NMC 875083 384 151 188494
Exh. A-3
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-143 NMC 875084 384 152 188495
UNR-144 NMC 875085 384 153 188496
UNR-145 NMC 875086 384 154 188497
UNR-146 NMC 875087 384 155 188498
UNR-147 NMC 875088 384 156 188499
UNR-148 NMC 875089 384 157 188500
UNR-149 NMC 875090 384 158 188501
UNR-150 NMC 875091 384 159 188502
UNR-151 NMC 875092 384 160 188503
UNR-152 NMC 875093 384 161 188504
UNR-153 NMC 875094 384 162 188505
UNR-154 NMC 875095 384 163 188506
UNR-155 NMC 875096 384 164 188507
UNR-156 NMC 875097 384 165 188508
UNR-157 NMC 875098 384 166 188509
UNR-158 NMC 875099 384 167 188510
UNR-159 NMC 875100 384 168 188511
UNR-160 NMC 875101 384 169 188512
UNR-161 NMC 875102 384 170 188513
UNR-172 NMC 875103 384 171 188514
UNR-173 NMC 875104 384 172 188515
UNR-174 NMC 875105 384 173 188516
UNR-175 NMC 875106 384 174 188517
UNR-176 NMC 875107 384 175 188518
UNR-177 NMC 875108 384 176 188519
UNR-178 NMC 875109 384 177 188520
UNR-179 NMC 875110 384 178 188521
UNR-180 NMC 875111 384 179 188522
UNR-181 NMC 875112 384 180 188523
UNR-196 NMC 875539 391 227 191381
UNR-197 NMC 875540 391 228 191382
UNR-198 NMC 875541 391 229 191383
UNR-199 NMC 875542 391 230 191384
UNR-200 NMC 875543 391 231 191385
UNR-201 NMC 875544 391 232 191386
UNR-202 NMC 875545 391 233 191387
UNR-203 NMC 875546 391 234 191388
UNR-216 NMC 875547 391 235 191389
UNR-217 NMC 875548 391 236 191390
UNR-218 NMC 875549 391 237 191391
UNR-219 NMC 875550 391 238 191392
UNR-220 NMC 875551 391 239 191393
UNR-221 NMC 875552 391 240 191394
UNR-222 NMC 875553 391 241 191395
UNR-223 NMC 875554 391 242 191396
UNR-236 NMC 875555 391 243 191397
Exh. A-4
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR-237 NMC 875556 391 244 191398
UNR-238 NMC 875557 391 245 191399
UNR-239 NMC 875558 391 246 191400
UNR-240 NMC 875559 391 247 191401
UNR-241 NMC 875560 391 248 191402
UNR-242 NMC 875561 391 249 191403
UNR-243 NMC 875562 391 250 191404
UNR-245 NMC 875563 391 251 191405
UNR-247 NMC 875564 391 252 191406
UNR-249 NMC 875565 391 253 191407
UNR-256 NMC 875566 391 254 191408
UNR-257 NMC 875567 391 255 191409
UNR-258 NMC 875568 391 256 191410
UNR-259 NMC 875569 391 257 191411
UNR-260 NMC 875570 391 258 191412
UNR-261 NMC 875571 391 259 191413
UNR-262 NMC 875572 391 260 191414
UNR-263 NMC 875573 391 261 191415
UNR-264 NMC 875574 391 262 191416
UNR/GAP-1 NMC 872221 383 327 188221
UNR/GAP-2 NMC 872222 383 328 188222
UNR/GAP-3 NMC 872223 383 329 188223
UNR/GAP-4 NMC 872224 383 330 188224
UNR/GAP-5 NMC 872225 383 331 188225
UNR/GAP-6 NMC 872226 383 332 188226
UNR/GAP-7 NMC 872227 383 333 188227
UNR/GAP-8 NMC 872228 383 334 188228
UNR/GAP-9 NMC 872229 383 335 188229
UNR/GAP-10 NMC 872230 383 336 188230
UNR/GAP-11 NMC 872231 383 337 188231
UNR/GAP-12 NMC 872232 383 338 188232
UNR/GAP-13 NMC 872233 383 339 188233
UNR/GAP-14 NMC 872234 383 340 188234
UNR/GAP-15 NMC 872235 383 341 188235
UNR/GAP-16 NMC 872236 383 342 188236
UNR/GAP-17 NMC 872237 383 343 188237
UNR/GAP-18 NMC 872238 383 344 188238
UNR/GAP-19 NMC 872239 383 345 188239
UNR/GAP-20 NMC 872240 383 346 188240
UNR/GAP-21 NMC 872241 383 347 188241
UNR/GAP-22 NMC 872242 383 348 188242
UNR/GAP-23 NMC 872243 383 349 188243
UNR/GAP-24 NMC 872244 383 350 188244
UNR/GAP-25 NMC 872245 383 351 188245
UNR/GAP-26 NMC 872246 383 352 188246
UNR/GAP-27 NMC 872247 383 353 188247
Exh. A-5
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
UNR/GAP-28 NMC 872248 383 354 188248
UNR/GAP-29 NMC 872249 383 355 188249
UNR/GAP-30 NMC 872250 383 356 188250
UNR/GAP-31 NMC 875113 384 064 188406
UNR/GAP-32 NMC 875114 384 065 188407
UNR/GAP-33 NMC 875115 384 066 188408
UNR/GAP-34 NMC 875116 384 067 188409
UNR/GAP-35 NMC 875117 384 068 188410
UNR/GAP-36 NMC 875118 384 069 188411
UNR/GAP-37 NMC 875119 384 070 188412
UNR/GAP-38 NMC 875120 384 071 188413
UNR/GAP-39 NMC 875121 384 072 188414
UNR/GAP-40 NMC 875122 384 073 188415
UNR/GAP-41 NMC 875123 384 074 188416
UNR/GAP-42 NMC 875124 384 075 188417
UNR/GAP-43 NMC 875125 384 076 188418
UNR/GAP-44 NMC 875126 384 077 188419
Exh. A-6
Part 2. The GQ Property
The following unpatented mining claims located in Sections 26 and 36,
Township 33 North, Range 50 East, Eureka County, Nevada:
Eureka County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
EP1 NMC 871262 383 148 188135
EP2 NMC 871263 383 149 188136
EP3 NMC 871264 383 150 188137
EP4 NMC 871265 383 151 188138
EPS NMC 871266 383 152 188139
EP6 NMC 871267 383 153 188140
EP7 NMC 871268 383 154 188141
EP8 NMC 871269 383 155 188142
EP9 NMC 871270 383 156 188143
EP10 NMC 871271 383 157 188144
EP25 NMC 871272 383 158 188145
EP26 NMC 871273 383 159 188146
EP27 NMC 871274 383 160 188147
EP28 NMC 871275 383 161 188148
EP29 NMC 871276 383 162 188149
EP30 NMC 871277 383 163 188150
EP31 NMC 871278 383 164 188151
EP32 NMC 871279 383 165 188152
EP41 NMC 871280 383 166 188153
EP42 NMC 871281 383 167 188154
EP43 NMC 871282 383 168 188155
EP44 NMC 871283 383 169 188156
EP45 NMC 871284 383 170 188157
EP46 NMC 871285 383 171 188158
Exh. A-7
Part 3. The Monte Cristo Property
The following unpatented mining claims located in Sections 16, 20, 21,
28 and 29, Township 16 North, Range 57 East, White Pine County, Nevada:
White Pine County
Recording Information
-----------------------------------------------------
Claim Name BLM Serial No. Book Page File No.
- ----------------------------------------------------------------------------------------------------------
Monte #1 NMC 875127 390 464 321744
Monte #2 NMC 875128 390 465 321745
Monte #3 NMC 875129 390 466 321746
Monte #4 NMC 875130 390 467 321747
Monte #5 NMC 875131 390 468 321748
Monte #6 NMC 875132 390 469 321749
Monte #11 NMC 875133 390 470 321750
Monte #12 NMC 875134 390 471 321751
Monte #13 NMC 875135 390 472 321752
Monte #14 NMC 875136 390 473 321753
Monte #15 NMC 875137 390 474 321754
Monte #16 NMC 875138 390 475 321755
Monte #17 NMC 875139 390 476 321756
Monte #36 NMC 875140 390 477 321757
Monte #37 NMC 875141 390 478 321758
Monte #38 NMC 875142 390 479 321759
Monte #39 NMC 875143 390 480 321760
Monte #40 NMC 875144 390 481 321761
Monte #41 NMC 875145 390 482 321762
Monte #42 NMC 875146 390 483 321763
Monte #43 NMC 875147 390 484 321764
Monte #44 NMC 875148 390 485 321765
Monte #45 NMC 875149 390 486 321766
Monte #46 NMC 875150 390 487 321767
Monte #47 NMC 875151 390 488 321768
Monte #48 NMC 875152 390 489 321769
Monte #49 NMC 875153 390 490 321770
Monte #50 NMC 875154 390 491 321771
Monte #51 NMC 875155 390 492 321772
Exh. A-8
MINING LEASE AND OPTION TO PURCHASE
THIS MINING LEASE AND OPTION TO PURCHASE (the "Lease") is made and
entered into effective as of_________________________, 2004 (the "Effective
Date") by and between The University of Nevada Reno School of Agriculture, whose
address is __________________________________________________, Reno,
Nevada________________ ("Lessor"), and Placer Dome U.S. Inc, a California
corporation, whose address for purposes hereof is 1125 17th Street, Suite 2310,
Denver, Colorado 80202 ("PDUS").
RECITALS
A. Lessor owns the entire surface and mineral estate in certain fee
lands situated in ______________County, Nevada, as more particularly described
in Exhibit A attached hereto and incorporated herein by reference (the
"Property").
B. PDUS wishes to obtain and Lessor is willing to grant to PDUS a
mining lease covering the Property, and an option to purchase the Property, in
accordance with the terms and conditions of this Lease.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby confessed and acknowledged, the
parties hereto agree as follows:
ARTICLE I GRANT OF LEASE AND OPTION TO PURCHASE
1.1 Grant of Rights.
(a) Lessor hereby grants, leases, lets and demises unto PDUS,
its successors and assigns, all of the right, title and interest in and to the
Property, together with (i) all of the other rights, privileges, and easements
thereto incident or appurtenant (including, without limitation, any water,
stockwatering and reservoir rights associated with the Property and all
easements and rights-of-way appurtenant thereto), and (ii) any additional rights
to the Property to which Lessor may become entitled during the Term hereof, for
the purpose and with the sole and exclusive right and privilege, during the Term
of this Lease, of exploring for, developing, mining, treating, processing,
shipping, selling, marketing and otherwise exploiting and disposing of any and
all ores, metals, minerals and materials of every kind or character found in,
on, or under the Property (hereinafter "Valuable Minerals").
(b) Lessor further grants to PDUS the sole and exclusive right
and privilege to do any and all things which PDUS may deem necessary or
desirable to accomplish any and all of the purposes and rights set forth in or
contemplated by this Lease, including, without limitation, the sole and
exclusive right and privilege:
(i) to enter upon the Property for purposes of
surveying, exploring for, prospecting for, sampling, drilling,
developing, mining (which may be conducted by any method
whatsoever, whether by underground, surface, strip, open pit,
solution mining or other methods, whether now known or
subsequently developed), stockpiling, removing, shipping,
transporting, processing, marketing or otherwise disposing of
either Valuable Minerals or mineral-bearing ores and materials
from the Property and from lands other than the Property;
(ii) to construct, use, maintain, repair, replace and
relocate buildings, roads, tunnels, railroad corridors and
loadout facilities, ore conveyors, leach pads, leachate
collection systems, tailings ponds, waste dumps, ditches,
pipelines, power and communication lines, structures, mills,
processing facilities, utilities and other improvements and
facilities required by PDUS for the full enjoyment of the
Property for the purposes set forth in this Section 1.1 and
otherwise set forth in this Lease;
(iii) to construct and use tunnels, adits or workings
now or hereafter located in, on or under the Property as may
be reasonably necessary, suitable or convenient for or
incidental to any of the rights or privileges of PDUS
hereunder;
(iv) to use, pit, cave and destroy so much of the
Property and the surface and subsurface thereof as PDUS may
consider necessary, convenient or suitable for any such
purposes, including, without limitation, the deposit, storage,
stockpiling and/or permanent disposal of ore, broken rock,
mine or other wastes, overburden, residues, tailings or other
byproducts of development, mining, production or other
operations contemplated by this Lease;
(v) to use in any manner whatsoever so much of the
surface and subsurface of the Property (without any obligation
to preserve any portion of the same) as may be necessary,
convenient, suitable for or incidental to any of the rights
and privileges of PDUS hereunder or otherwise reasonably
necessary or convenient for the purposes set forth in this
Lease (Lessor hereby waiving all rights, statutory and
otherwise, to subjacent support);
(vi) to use all easements and rights-of-way for
ingress and egress to and from the Property to which Lessor
may be entitled;
(vii) to appropriate and use, consistent with
applicable laws of the State of Nevada, any surface and
underground water or water rights now existing or subsequently
discovered or developed on or appurtenant to the Property;
(viii) to exercise all other rights, including
without limitation applying for necessary governmental permits
and approvals and conducting required reclamation
-2-
and clean-up activities, which are incidental to any or all of
the rights specified, mentioned, or referred to herein.
(c) The rights granted to PDUS in this Lease to use the
surface of the Property and to construct and use buildings, roads, power and
communication lines, tailings ponds, tunnels, adits, workings and other
improvements located in, on or under the Property, including water rights and
other appurtenances thereto, may be exercised by PDUS in connection with
exploration, development, mining and processing activities on lands in the
general vicinity of the Property which are acquired by or leased to PDUS (or any
affiliate or subsidiary of PDUS) from third parties, or which are otherwise
controlled by PDUS (or any affiliate or subsidiary of PDUS).
(d) Lessor hereby waives any right to prohibit PDUS from
mining within any minimum distance of any boundary of the Property and
contiguous or adjacent lands and hereby grants to PDUS the authority to enter
agreements with the owners of contiguous or adjacent lands to allow mining of
ores and minerals located on or under the Property or such other lands.
1.2 Option to Purchase Property. Lessor hereby grants to PDUS the
exclusive and irrevocable option, exercisable by PDUS in its sole discretion at
any time during the Option Period (as defined below), to purchase the Property
(the "Option") for a purchase price of $1,000,000 (the "Purchase Price"). The
Purchase Price shall be reduced by an amount equal to the amount of any Advance
Minimum Royalties and Production Royalties paid by PDUS to Lessor prior to the
exercise of the Option.
1.3 Option Period. The Option shall expire at 5:00 p.m. Pacific Time,
on _ , 2024 (the "Expiration Date"), and the period commencing on the third
anniversary of the Effective Date and ending at 5:00 p.m. Pacific Time on the
Expiration Date shall be referred to hereinafter as the "Option Period." The
Option may be exercised by PDUS at any time during the Option Period by delivery
to Lessor of a notice of election to exercise the Option (the date such notice
is effective being referred to hereinafter as the "Exercise Date"). If PDUS
fails or elects not to exercise the Option at or before the end of the Option
Period, the Lease shall continue in full force and effect, in accordance with
the provisions of Section 5.1, subject to PDUS's rights under Section 5.3.
1.4 The Closing. If PDUS timely exercises the Option, the Closing of
the sale of the Property (the "Closing") shall take place within thirty (30)
days after the notice of election to exercise the Option is delivered by PDUS to
Lessor, at a time and place mutually agreeable to PDUS and Lessor. At the
Closing, PDUS shall tender to the Lessor the Purchase Price (less the amount of
all Advance Minimum Royalties and Production Royalties previously paid), payable
by wire transfer pursuant to written instructions provided by Lessor to PDUS at
least five business days prior to the Closing, and Lessor shall deliver to PDUS
(a) a fully executed and acknowledged good and sufficient warranty deed
substantially in the form of Exhibit B attached hereto and by this reference
incorporated herein (the "Deed"), conveying the Property to PDUS free and clear
of all liens, claims, defects, and encumbrances; and (b) a certificate of
non-foreign status for U.S. federal tax purposes. In addition, each of the
parties will deliver such other closing certificates and documents as are
reasonably requested by the other party. Closing costs, including real property
transfer taxes, recording costs and any escrow fees will be paid by PDUS.
-3-
Any ad valorem real property taxes on the Property will be split between PDUS
and Lessor on a pro rata basis as of the date of the Closing.
ARTICLE II PDUS'S OPERATIONS
2.1 Conduct of Operations. PDUS shall have the sole and exclusive
control of all operations on or for the benefit of the Property, and of any and
all equipment, supplies, machinery, and other assets purchased or otherwise
acquired or under its control in connection with such operations. PDUS may carry
out such operations on the Property as it may, in its sole discretion, determine
to be warranted, so long as such operations are conducted in accordance with
procedures acceptable in the mining and metallurgical industry. The timing,
nature, manner and extent of any exploration, development, mining or processing
operations carried out or in connection with the Property shall be within the
sole discretion of PDUS, and there shall be no implied covenant whatsoever to
begin or continue any such operations. If PDUS at any time, and from time to
time after commencing operations, desires to shut down, suspend or cease
operations for any reason, it shall have the right to do so. PDUS may use and
employ such methods of mining as it may desire or find most profitable. PDUS
shall not be required to mine, preserve, or protect in its mining operations any
ores, leachates, precipitates, concentrates or other products containing
Valuable Minerals which cannot be mined or shipped at a reasonable profit to
PDUS, as determined by PDUS in its sole discretion. Any decision as to the time,
manner and form, if any, in which ores or other products containing Valuable
Minerals are to be sold shall be made by PDUS in its sole discretion. Any
activities or operations performed by PDUS under this Article II or otherwise
under the Lease may be performed on behalf of PDUS by affiliates, subsidiaries,
consultants or independent contractors.
2.2 Ore Processing. All determinations with respect to: (a) whether ore
from the Property will be beneficiated, processed or milled by PDUS or sold in a
raw state; (b) the methods of beneficiating, processing or milling any such ore;
(c) the constituents to be recovered therefrom, and (d) the purchasers to whom
any ore, minerals or mineral substances derived from the Property may be sold,
shall be made by PDUS in its sole and absolute discretion.
2.3 Ore Samples. The mineral content of all ore mined and removed from
the Property (but excluding ore leached in place), and the quantities of
constituents recovered by PDUS, shall be determined by PDUS, or with respect to
such ore which is sold, by the mill or smelter to which the ore is sold, in
accordance with standard sampling and analysis procedures, and shall be weighted
average based on the total amount of ore from the Property crushed and sampled,
or the constituents recovered, during an entire calendar quarter.
2.4 Commingling of Ores. PDUS shall have the right to mix or commingle,
either underground, at the surface, or at processing plants or other treatment
facilities, any material containing Valuable Minerals mined or extracted from
the Property with ores or material derived from other lands or properties owned,
leased or controlled by PDUS; provided, however, that before commingling, PDUS
shall calculate from representative samples the average grade of the ore from
the Property and shall either weigh or volumetrically calculate the number of
tons of ore from the Property to be commingled. As products are produced from
the commingled ores, PDUS shall calculate from representative samples the
average percentage recovery of products
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produced from the commingled ores during each month. In obtaining representative
samples, calculating the average grade of commingled ores and average percentage
of recovery, PDUS may use any procedures acceptable in the mining and
metallurgical industry which PDUS believes to be accurate and cost-effective for
the type of mining and processing activity being conducted, and PDUS's choice of
such procedures shall be final and binding upon Lessor. In addition, comparable
procedures may be used by PDUS to apportion among the commingled ores any
penalty charges imposed by the smelter or refiner on commingled ores or
concentrates. The records relating to commingled ores shall be available for
inspection by Lessor, at Lessor's sole expense, at all reasonable times, and
shall be retained by PDUS for a period of two (2) years.
2.5 Waste Rock, Spoil and Tailings. Any ore, mine waters, leachates,
pregnant liquors, pregnant slurries, and other products or compounds or metals
or minerals mined from the Property shall be the property of PDUS, subject to
the Production Royalty as provided for in Section 3.1. The Production Royalty
shall be payable only on metals, ores, or minerals recovered prior to the time
waste rock, spoil, tailings, or other mine waste and residue are first disposed
of as such, and such waste and residue shall be the sole property of PDUS;
provided that if any such waste or residue remains on the Property after the
Lease is terminated, then all such waste or residue shall be the sole and
exclusive property of Lessor. During the Term of the Lease, PDUS shall have the
sole right to dump, deposit, sell, dispose of, or reprocess such waste rock,
spoil, tailings, or other mine wastes and residues, and Lessor shall have no
claim or interest therein other than for the payment of the Production Royalty
to the extent any Valuable Minerals are produced and sold therefrom.
2.6 Taxes. During the Term of this Lease, PDUS shall pay when due all
general ad valorem taxes and assessments assessed against the Property, all
severance taxes and other assessments on the production of Valuable Minerals,
and all other lawful taxes and assessments, whether general, specific or
otherwise, assessed and levied upon or against the Property, provided that each
party shall be responsible for paying its own share of Nevada net proceeds of
mines taxes, and provided further that PDUS shall be relieved of such
responsibility if Lessor receives notice of such taxes or assessments coming due
but fails to promptly forward notice of the same to PDUS. PDUS shall
specifically not be responsible for any income taxes and taxes imposed upon
Lessor by reason of receipt of any Advance Minimum Royalty or Production Royalty
payments hereunder. Notwithstanding any of the other provisions of this Section
2.6, PDUS shall have the right (but not the obligation) to contest in the courts
or otherwise the validity or amount of any taxes or assessments levied or
assessed upon or against PDUS, the Property or Valuable Minerals hereunder if
PDUS deems the same to be unlawful, unjust, unequal or excessive, or to take
such other steps or proceedings as it may deem necessary to secure a
cancellation, reduction, readjustment, or equalization before PDUS shall be
required to pay the same. Neither Lessor nor, during the Term of the Lease, PDUS
shall permit or suffer the Property or any part thereof, or any Valuable
Minerals mined thereon, to be sold at any time for such taxes or assessments.
2.7 Geological and Other Data, Reports. Upon execution of the Lease,
Lessor shall deliver to PDUS copies of all metallurgical, geological,
geophysical, geochemical, milling data, survey notes or maps, title and
environmental information, and reports concerning the Property which Lessor
possesses or to which it has access. Lessor agrees that it will, at all times
during
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the Term of the Lease, make available to PDUS, at such time and place as may be
reasonably convenient, any survey maps, drill hole logs, assay reports, and
other geological data relating to the Property which Lessor possesses or has
access to or acquires in the future. Lessor shall also make available to PDUS
for inspection, sampling, and testing any drill cuttings and core samples
derived from the Property which it possesses or to which it has access. During
the Term of the Lease, within sixty (60) days after the end of each calendar
year, PDUS shall provide to the Lessor a written report summarizing the
activities (if any) carried out by PDUS on the Property during that calendar
year including any survey maps, drill hole logs, assay reports, and other
non-interpretive geological data relating to the Property; provided, however,
that PDUS shall not be required to provide copies of survey maps, drill hole
logs, assay reports or other non-interpretive data pertaining to work that was
not performed on the Property even if it was performed for the benefit of the
Property, and provided further that PDUS shall not be required to provide any
such information and data to the extent the same is proprietary to, or derived
from techniques that are proprietary to, PDUS or any third-party consultant
engaged by PDUS. In addition, during the Term of the Lease, within thirty (30)
days after the end of each calendar quarter, PDUS shall provide to the Lessor a
brief summary of activities undertaken on or for the benefit of the Property
during that calendar quarter.
2.8 Insurance. During the Term of the Lease, PDUS agrees to carry
insurance covering its activities on the Property in accordance with acceptable
industry standards, including insurance covering all persons working in or on
the Property for PDUS, as will fully comply with the requirements of the
statutes of the State of Nevada pertaining to worker's compensation and
occupational disease and disabilities as are now in force (or as may be
hereafter amended or enacted).
2.9 Compliance with Laws. PDUS agrees to conduct and perform all of its
operations hereunder in material compliance with all valid and applicable
federal, state or local laws, rules and regulations, including without
limitation, such laws, rules and regulations pertaining to environmental
protection, social security, unemployment compensation, wages and hours and
conditions of labor, and PDUS shall defend, indemnify and hold Lessor harmless
from payment of any damages, including reasonable attorney's fees incurred by
Lessor, occasioned by PDUS's failure to so comply with said laws.
2.10 Inspection. Lessor and its authorized agents who are experienced
in mining operations, at Lessor's sole risk and expense, shall have the right,
exercisable during regular business hours, at a mutually convenient time, and in
a reasonable manner conforming to PDUS's safety rules and regulations and so as
not to interfere with PDUS's operations, to go upon the Property for the purpose
of confirming that PDUS is conducting its operations in the manner required by
this Lease. Lessor shall furnish PDUS with prior written notice of the time and
place of any inspection by Lessor pursuant to this Section 2.10. Lessor shall
defend, indemnify and hold PDUS harmless from and against all costs incurred
(including reasonable attorneys' fees and the costs of defending any such
claims) based on claims for damages, including injury or damage to other persons
or property, arising out of any death, personal injury or property damage
sustained by Lessor, its agents or employees, while in or upon the Property,
whether or not Lessor, its agents or employees are in or upon the Property
pursuant to this Section 2.10, unless such death, injury or damage results from
PDUS's gross negligence or
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willful misconduct. If requested by PDUS, Lessor, its agents and employees will
confirm in writing their waiver of claims against PDUS.
2.11 Liens and Encumbrances. PDUS shall keep the title to the Property
free and clear of all liens and encumbrances resulting from its operations under
this Lease; provided, however, that PDUS may refuse to pay claims asserted
against it which it disputes in good faith. At its sole cost and expense, PDUS
may contest any suit, demand or action commenced to enforce such a claim. 2.12
Reclamation and Related Activities. PDUS shall reclaim the Property to the
extent disturbed by its operations under the Lease in accordance with applicable
federal, state and local laws, rules and regulations. In addition, PDUS shall
(a) before it conducts any significant surface disturbing activities on any
portion of the Property, engage contract archeologists to document the existence
of any cultural artifacts on that portion of the Property, and provide copies of
any reports generated by those contract archeologists to Lessor (such reports to
be prepared in accordance with the current standards of the state or federal
agency with jurisdiction), and (b) plug all drillholes created by or on behalf
of PDUS on the Property in accordance with current Bureau of Land Management
standards.
ARTICLE III
ROYALTIES AND OTHER AGREEMENTS
3.1 Production Royalty.
(a) During the Term of the Lease, PDUS agrees to pay to
Lessor, as a landowner's non-executive, nonparticipating production royalty (the
"Production Royalty"), a sliding scale percentage of the Net Returns (as defined
below) from Valuable Minerals extracted, produced and sold or deemed to have
been sold from the Property, based on the Monthly Average Gold Price, as set
forth below:
Monthly Average Gold Price Percentage
-------------------------- ----------
Less than or equal to $250 per ounce 0.5%
Greater than $250 but less than or equal to $350 per ounce 1.0%
Greater than $350 per ounce 2.0%
(b) As used in this Section 3.1, "Payor" means the person or
entity obligated to pay the Production Royalty to the Royalty Holder, which
initially shall be PDUS, and shall include all of Payor's successors-in-interest
who acquire an ownership interest in the Property or to whom Payor assigns the
obligation to pay the Production Royalty.
(c) As used in this Section 3.1, "Royalty Holder" means the
person or entity entitled to receive the Production Royalty, which initially
shall be Lessor, and shall include all of Royalty Holder's
successors-in-interest.
(d) As used herein, "Net Returns" means the Gross Returns from
such ores, minerals, metals or materials, less all Allowable Deductions. (b)
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(e) As used herein, "Gross Returns" has the following meanings
for the following categories of Valuable Minerals:
(i) If Payor causes refined gold that meets or
exceeds the generally accepted commercial standards for
refined gold to be produced by an independent third-party
refinery from ores mined from the Property, for purposes of
determining the Production Royalty, the refined gold shall be
deemed to have been sold in the calendar month in which it was
produced at the Monthly Average Gold Price for that month. The
Gross Returns from such deemed sales shall be determined by
multiplying Gold Production during the month by the Monthly
Average Gold Price. As used herein, "Gold Production" means
the quantity of refined gold that is outturned to Payor's
account by the refinery during the calendar month on either a
provisional or final settlement basis. If outturn of refined
gold is made by the refinery on a provisional basis, the Gross
Returns shall be based upon the amount of such provisional
settlement, but shall be adjusted in subsequent statements to
account for the amount of refined metal established by final
settlement by the refinery. As used herein, "Monthly Average
Gold Price" means the average London Bullion Market
Association P.M. Gold Fix, calculated by dividing the sum of
all such prices reported for the month by the number of days
for which such prices were reported. If the London Bullion
Market Association P.M. Gold Fix ceases to be published, the
Monthly Average Gold Price shall be determined by reference to
prices for refined gold for immediate delivery in the most
nearly comparable established market selected by Payor as such
prices are published in "Metals Week" or a similar
publication.
(ii) If Payor causes refined silver that meets or
exceeds the generally accepted commercial standards for
refined silver to be produced by an independent third-party
refinery from ore mined from the Property, for purposes of
determining the Production Royalty, the refined silver shall
be deemed to have been sold in the calendar month in which it
was produced at the Monthly Average Silver Price for that
month. The Gross Returns from such deemed sales shall be
determined by multiplying Silver Production during the
calendar month by the Monthly Average Silver Price. As used
herein, "Silver Production" shall mean the quantity of refined
silver that is outturned to Payor's account by the refinery
during the calendar month on either a provisional or final
settlement basis. If outturn of refined silver is made by the
refinery on a provisional basis, the Gross Returns shall be
based upon the amount of such provisional settlement, but
shall be adjusted in subsequent statements to account for the
amount of refined metal established by final settlement by the
refinery. As used herein, "Monthly Average Silver Price" shall
mean the average New York Silver Price as published daily by
Handy & Harman, calculated by dividing the sum of all such
prices reported for the calendar month by the number of days
for which such prices were reported. If the Handy & Harman
quotation ceases to be published, the Monthly Average Silver
Price shall be determined by reference to prices for refined
silver for immediate delivery in the most nearly comparable
established market selected by Payor as published in "Metals
Week" or a similar publication.
(iii) If Payor sells refined metals (other than
refined gold and refined silver), dore or concentrates
produced from Valuable Minerals from the Property, the Gross
Returns for such refined metals shall be the proceeds actually
received by Payor
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from their sale. If such sales are to an affiliated party, the
refined metals, dore, or concentrates shall be deemed, solely
for the purpose of computing Gross Returns, to have been sold
at prices and on terms no less favorable to Payor than those
which would have been received under similar circumstances
from an unaffiliated third party.
(f) As used herein, "Allowable Deductions" means the following
costs, charges, and expenses incurred or accrued by Payor:
(i) If Payor sells or is deemed to have sold refined gold or
refined silver:
(A) all costs, charges and expenses for smelting and
refining dore or concentrates to produce the refined gold or
refined silver (including handling, processing, and
provisional settlement fees, sampling, assaying and
representation costs, penalties, and other processor
deductions);
(B) all costs, charges, and expenses for weighing,
sampling, determining moisture content and packaging Valuable
Minerals, and for transportation of the dore or concentrates
from the mine mouth or the pit to the processing facilities,
and then from the Property to the refinery or smelter and then
to the place of sale (including freight, insurance, security,
transaction taxes, handling, port, demurrage, delay, and
forwarding expenses incurred by reason of or in the course of
such transportation); and
(C) an allowance for reasonable sales and brokerage
costs.
(ii) If Payor sells refined metals (other than refined gold or
refined silver), dore, concentrate or ores:
(A) all costs, charges, and expenses for (I)
beneficiation, processing or treatment of such materials at
any plant or facility more than five (5) miles from the
exterior boundaries of the Property and (II) smelting or
refining to produce a refined metal (including handling,
processing, and provisional settlement fees, sampling,
assaying and representation costs, penalties, and other
processor deductions);
(B) all costs, charges, and expenses for weighing,
sampling, determining moisture content and packaging Valuable
Minerals, and for transportation of ores, minerals, dore,
concentrates or other products from the Property (I) to the
place of sale, and (II) if such ores, materials are
beneficiated, processed, treated, smelted or refined at any
plant or facility more than five (5) miles from the exterior
boundaries of the Property, to such plant or facility and then
to the place of sale (including freight, insurance, security,
transaction taxes, handling, port, demurrage, delay, and
forwarding
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expenses incurred by reason of or in the course of such
transportation); and
(C) actual sales and brokerage costs.
(iii) All sales, use, severance, Nevada net proceeds and ad
valorem taxes and any other tax or governmental levy or fee on or
measured by mineral production from the Property (other than taxes
based on income), whether now in existence or as amended, adopted or
created in the future; and
(iv) Any royalty, severance tax or other payment based on
mineral production payable to the United States of America or any other
governmental entity with respect to production from the Property,
whether now in existence or as amended, adopted or created in the
future.
(g) Payor shall have the right to market and sell or refrain
from selling refined gold, refined silver and other mineral products from the
Property in any manner it may elect, including the right to engage in forward
sales, future trading or commodity options trading, and other price hedging,
price protection, and speculative arrangements ("Trading Activities") which may
involve the possible delivery of gold, silver or other mineral products from the
Property. With respect to the Production Royalty payable to Lessor, Lessor shall
not be entitled to participate in the proceeds or be obligated to share in any
losses generated by Payor's actual marketing or sales practices or by its
Trading Activities and no such profits or losses shall be included in Gross
Returns.
3.2 Advance Minimum Royalties. During the Term of the Lease, unless
PDUS shall terminate the Lease on or before any given Anniversary Date (as
defined below) hereof, and except as otherwise set forth in this Section 3.2,
PDUS shall pay to Lessor the following payments, each such payment being
referred to hereinafter as "Advance Minimum Royalty" or "Advance Minimum
Royalties", on or before each Anniversary Date:
Advance Minimum Royalty Date
----------------------- ----
$ 20,000 Execution of Lease
$ 40,000 First Anniversary Date
$ 60,000 Second Anniversary Date and each
Anniversary Date thereafter
The "Anniversary Date" shall mean the date one or more years following the
Effective Date of this Lease. Under no circumstances shall the obligation to
make any payment under this Section 3.2 be deemed to have accrued prior to the
date such payment is due. If at any time during the Term of this Lease
"Commercial Production" is achieved, then PDUS's obligation to pay the Advance
Minimum Royalty payment next due, and all subsequent Advance Minimum Royalties,
shall be terminated. In addition, if PDUS exercises the Option, then PDUS's
obligation to pay the Advance Minimum Royalty payment next due, and all
subsequent Advance Minimum Royalties, shall terminate. However, unless it
exercises the Option, PDUS shall remain obligated to pay the Production Royalty.
"Commercial Production" shall mean the first day of the month following the
calendar quarter during which Valuable Minerals wholly or
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partially from the Property are first sold or deemed to have been sold (other
than in connection with pilot plant or other test operations).
3.3 Recovery of Advance Minimum Royalties. All sums paid to Lessor as
Advance Minimum Royalties shall be recoverable as a credit against the
Production Royalty payable to Lessor, whether such Production Royalty accrues in
the same or subsequent years as the year of payment of the Advance Minimum
Royalties, and shall be recovered from the Production Royalty payable on the
production and sale of Valuable Minerals from the Property by withholding
Production Royalty payments as the same become due and payable until such time
as said sums paid as Advance Minimum Royalties are recovered in full.
3.4 Manner of Payment. Production Royalty payments shall be paid by
PDUS to Lessor (or notice of a credit against Production Royalties as provided
above shall be given to Lessor) on or before thirty (30) days following the
calendar quarter during which PDUS shall have received payment for Valuable
Minerals sold by PDUS. Production Royalties shall accrue to Lessor's account
upon final payment or upon being credited to the account of PDUS by the smelter,
refinery or other ore buyer to PDUS for the Valuable Minerals sold and for which
the Production Royalty is payable. All Advance Minimum Royalty and Production
Royalty payments shall be made at PDUS's election by PDUS's check or by wire
transfer. All Production Royalty payments shall be accompanied by a statement
and settlement sheet showing the quantities and grades of Valuable Minerals
mined and sold from the Property, the proceeds of sales, cost, assays and
analyses, and other pertinent information in reasonably sufficient detail to
explain the calculation of the Production Royalty payment.
3.5 Payments; Where Made. All payments hereunder shall be sent by
certified U.S. mail to Lessor at its address as set forth in Section 7.6, or by
wire transfer to an account designated by and in accordance with written
instructions from Lessor. Checks to the Lessor shall be made payable
to___________________________________. The date of placing such payment in the
United States mail by PDUS, or the date the wire transfer process is initiated,
shall be the date of such payment. Payments by PDUS in accordance herewith shall
fully discharge PDUS's obligation with respect to such payment, and PDUS shall
have no duty to otherwise apportion or allocate any payment due to Lessor or its
successors or assigns.
3.6 Audits; Objections to Payments. Lessor, at its sole election and
expense, shall have the right to perform, not more frequently than once annually
following the close of each calendar year, an audit of PDUS's accounts relating
to payment of the Production Royalty hereunder by any authorized representative
of Lessor. Any such inspection shall be for a reasonable length of time during
regular business hours, at a mutually convenient time, upon at least fifteen
(15) business days prior written notice by Lessor. All Production Royalty
payments made in any calendar year shall be considered final and in full accord
and satisfaction of all obligations of PDUS with respect thereto, unless Lessor
gives written notice describing and setting forth a specific objection to the
calculation thereof within six (6) months following the close of the calendar
year. PDUS shall account for any agreed upon deficit or excess in Production
Royalty payments made to Lessor by adjusting the next quarterly statement and
payment following completion of such audit to account for such deficit or
excess.
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ARTICLE IV
DEFAULT
4.1 Default. If either party fails in the performance of any obligation
under this Lease (for purposes of this Article IV called the "Defaulting
Party"), including (a) the payment of Advance Minimum Royalties or Production
Royalties or (b) the conduct of activities on a continuous basis under Section
5.1, the other party shall serve upon the Defaulting Party written notice of
default, describing the default with specificity. The Defaulting Party shall,
within thirty (30) days after receipt of such notice, cure any material default
with respect to failure to pay sums of money due hereunder, or, with respect to
material defaults other than failure to pay sums of money due hereunder, cure or
diligently commence to cure the alleged material default; provided, however,
that if the Defaulting Party in good faith disputes the existence of such
alleged material default, the Defaulting Party shall not be obligated to cure,
or, with respect to material defaults other than failure to pay sums of money
due hereunder, to commence and thereafter proceed to diligently cure, any such
material default until sixty (60) days after final judgment of a court of
competent jurisdiction finding a material default. If the Defaulting Party fails
to cure or commence to cure any material default within the time frames set
forth above, the Defaulting Party shall be deemed to be in default. During the
pendency of any dispute as to the existence of a default, this Lease shall
continue in full force and effect.
4.2 Consequences of Default. Without limiting the provisions of Section
6.7, in the event either party is deemed to be in material default under Section
4.1 above, the non-defaulting party shall have the right to terminate the Lease
pursuant to Sections 5.3 or 5.4 hereof. If, after notice and opportunity to cure
as provided for in Section 4.1, PDUS would otherwise be deemed to be in default
under Section 4.1 for failure to make any Advance Minimum Royalty payment in
accordance with Section 3.2, then such non-payment shall not constitute a
default, but shall instead be deemed a termination of the Lease by PDUS,
pursuant to Section 5.3 below, effective as of the scheduled due date of such
payment, and PDUS shall not be obligated to make the or Advance Minimum Royalty
payment in question.
ARTICLE V
TERM AND TERMINATION
5.1 Term of Agreement. This Lease shall remain in effect for twenty
(20) years, and so long thereafter as any exploration, development, mining,
processing or marketing operations are carried out on or with respect to the
Property in good faith on a continuous basis (the "Term"). This Lease may
earlier terminate pursuant to Sections 5.3 or 5.4. For purposes of this Section
5.1, operations and activities shall be deemed to have been carried out on a
"continuous basis" so long as they do not cease for a period of more than 365
consecutive days. In addition, after the initial twenty (20) years of the Term,
this Lease will terminate for PDUS's failure to comply with the provisions of
this Section 5.1 only after receipt by PDUS of a notice of default from the
Lessor and an opportunity for PDUS to cure in accordance with the provisions of
Article IV.
5.2 Access for Reclamation. Upon the expiration or sooner termination
of the Lease, PDUS shall have, for a period of one year after such expiration or
termination, and so long thereafter as may be required by any governmental
authority or as may be deemed necessary by
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PDUS, the cost-free, non-exclusive right of ingress and egress to and from and
across the Property for the purposes of reclaiming any disturbances of the
Property and other lands in the vicinity of the Property caused by PDUS's
operations thereon, in accordance with the provisions of Section 2.12.
Notwithstanding any provisions of this Lease to the contrary, PDUS assumes no
responsibility or obligation to reclaim or otherwise cure disturbances of the
Property made before the Effective Date of the Lease. PDUS shall have no
obligations to pay any Advance Minimum Royalties if the only activities it is
conducting on the Property at the time any Advance Minimum Royalty payment is
due are reclamation activities.
5.3 Termination by PDUS. PDUS shall have the right in its sole
discretion to terminate, surrender and relinquish this Lease, either in its
entirety, or in part as to a portion of the Property, at any time by giving
Lessor written notice of its intention, specifying the portion of the Property
as to which it desires to terminate the Lease, and the Lease shall terminate as
to the portion of the Property specified in the notice, effective as of the date
of such notice. In the event PDUS terminates the Lease in whole or in part by
written notice to Lessor as provided above, upon such termination all rights and
interests of PDUS under the Lease shall terminate as to the portion of the
Property to which such termination applies, and subject to Sections 2.12, 5.2
and 5.5 of the Lease, and subject to the obligation to make any payments then
currently due and owing to Lessor pursuant to Section 3.1 of the Lease, PDUS
shall not be required to perform any further obligations and shall have no
further liabilities to Lessor under this Lease with respect to that portion of
the Property. In the event PDUS terminates this Lease in part, the Lease shall
remain in full force and effect except with respect to that portion of the
Property as to which the Lease is terminated, provided that such partial
termination shall not reduce any Advance Minimum Royalty payable under Section
3.2.
5.4 Termination by Lessor. Should PDUS be in default of any of its
material obligations under the Lease, determined as provided in Section 4.1
hereof, or if the Lessor desires and is entitled to terminate the Lease pursuant
to Section 5.1, then Lessor may, subject to the notice requirements and PDUS's
right to cure as set forth in Sections 4.1 and 5.1, at its election, terminate
the Lease by giving written notice of such intention to PDUS, and, upon PDUS's
receipt of such notice, the Lease shall be conclusively deemed terminated, and,
subject to Sections 2.12, 5.2 and 5.5 of this Lease, and subject to the
obligation to make any payments then currently due and owing to Lessor pursuant
to Section 3.1 of the Lease, PDUS shall not be required to perform any further
obligations and shall have no further liabilities to Lessor under the Lease.
5.5 Rights and Duties Following Termination. Within sixty (60) days
after termination of this Lease in whole or in part PDUS shall execute and
deliver to Lessor a recordable release or deed quitclaiming the portion of the
Property to which such termination applies to Lessor. For a period of one year
after the effective date of termination, PDUS shall have the right to remove its
buildings, structures, machinery, tools, equipment, and other Property (the
"Equipment") erected or placed within or upon the portion or portions of the
Property to which such termination applies, excepting only track, timber, chutes
and ladders in place for underground support and entry, if any. The parties
expressly agree that a default by PDUS under the Lease shall not result in the
automatic forfeiture of the Equipment to Lessor. If PDUS is delayed by
snowdrifts, washouts, inclement weather, or other climatic condition from
completing removal of the Equipment within such one-year period, then the time
shall be
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extended by a reasonable period as required by PDUS. All Equipment not removed
prior to the expiration of such period shall at Lessor's sole discretion (by
written notice to PDUS) become and remain the sole property of Lessor. Within
sixty (60) days after termination of the Lease in whole or in part, PDUS shall
return to Lessor copies of all metallurgical, geological, geophysical,
geochemical, milling data, survey notes or maps, reports and other data
furnished to PDUS by Lessor concerning the portion of the Property as to which
the Lease is terminated. Within such sixty (60) day period, upon receipt of
written notice from Lessor, PDUS shall deliver to Lessor copies of all
non-interpretive, geological information (other than information derived from
techniques that are proprietary to or constitute trade secrets of PDUS) as PDUS
may then have available concerning the Property. PDUS expressly disclaims any
and all representations and warranties whatsoever with respect to the accuracy,
reliability, completeness or suitability of such information for any purpose,
and Lessor shall comply with the provisions of Section 7.2(b) below with respect
to such information as may be provided under this Section 5.5, if such
termination applies to less than all of the Property then remaining subject to
the Lease.
ARTICLE VI
TITLE TO THE PROPERTY AND OTHER REPRESENTATIONS AND
WARRANTIES
6.1 Lessor's Title Representations and Warranties.
(a) Lessor represents and warrants that it owns good and
marketable title to the Property free and clear of all liens, claims,
encumbrances or burdens on production, that it is in actual possession of the
Property; and that it has not assigned or encumbered its interest in the
Property. Lessor also represents and warrants that it has the full and
unrestricted right to enter into and perform the Lease without obtaining the
consent or participation of any other party. Lessor further represents and
warrants that it has not entered into any presently binding contract, agreement,
or commitment with respect to the Property which would interfere with the rights
herein granted to PDUS.
(b) If during the Term of this Lease there are any liens,
encumbrances or other burdens on production affecting the Property and arising
by, through or under Lessor, Lessor shall discharge said liens, encumbrances or
other burdens on production, and Lessor shall defend, indemnify and hold PDUS
harmless from any and all damages and costs (including reasonable attorneys'
fees and court costs and costs of defense) arising from the same.
6.2 Examination of Title. Upon execution and delivery of the Lease by
Lessor, Lessor shall deliver to PDUS all title information concerning the
Property which it possesses or to which it has access, including, but not
limited to, any abstracts of title and title reports or opinions covering the
Property. PDUS may order an abstract of title, or may have any existing abstract
of title brought current, and examine the same, all at its expense. PDUS shall
have one hundred eighty (180) days after the Effective Date hereof to examine
title to the Property.
6.3 Defect in Title; Right to Cure. If PDUS, in its sole discretion,
determines at any time within the one hundred eighty (180) day period provided
for in Section 6.2 that Lessor's title to the Property is materially defective
or uncertain, PDUS may terminate the Lease upon written notice to Lessor of such
defect or uncertainty and, upon receipt of such notice by Lessor, 6.2
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the Lease shall be deemed terminated, and Lessor shall promptly refund to PDUS
the initial Advance Minimum Royalty payment made to Lessor upon execution of
this Lease. Without prejudice to its rights of termination hereunder, at any
time while the Lease is in effect, PDUS shall have the right (but not the
obligation), at its expense, to initiate and prosecute any such action as may be
necessary or desirable in the opinion of PDUS to cure, remove, or correct any or
all title defects pertaining to the Property, or other circumstances which
render Lessor's title to the Property, in the reasonable judgment of the PDUS,
either not good or not safe for mining purposes, or which would prevent or
hinder the leasing of Lessor's rights in the Property to PDUS. Such action may
include, but shall not be limited to, initiating proceedings to obtain
possession of, or to quiet title (in Lessor's name) to, the Property, or any
portion thereof. Lessor shall cooperate with PDUS and shall execute all
documents and take such actions as PDUS may reasonably request in connection
with such action. PDUS, at its option, may pay and discharge any taxes,
mortgages or other liens existing, levied or assessed on or against the
Property, or may be subrogated to the right of any holder or holders thereof. In
the event PDUS takes any of the actions referred to in this Section 6.3, then
all expenses and costs incurred by PDUS in initiating and prosecuting any such
actions shall be credited against Advance Minimum Royalty or Production Royalty
payments becoming due to Lessor or by enforcement of subrogated rights against
Lessor in any court of competent jurisdiction.
6.4 Lesser Interest; Governmental Royalties and Fees; Right of Offset;
Third Party Property.
(a) PDUS's obligation to pay the Advance Minimum Royalty
payments and the Production Royalty payments provided for in this Lease is based
upon Lessor's ownership of the full undivided interest in the Property. In the
event it is determined that Lessor owns less than the full undivided interest
therein, the amounts of the Advance Minimum Royalty and Production Royalty
payments payable to Lessor hereunder shall be adjusted to bear the same
proportion to 100% as its total interest bears to the full undivided whole.
(b) If Lessor fails to satisfy and discharge any mortgage,
lien, tax levy or encumbrance (an "Encumbrance") chargeable solely or in part to
Lessor on the Property, or suffers or permits any Encumbrance to be imposed upon
the Property, PDUS at its option may, but shall not be obligated to, pay for and
discharge any Encumbrance and set off any such payment by withholding and
retaining from Advance Minimum Royalty and Production Royalty payments due
Lessor any amounts so paid by PDUS, without prejudice to any right of PDUS to
recover from Lessor or against the Property the amount of such payment in any
manner or by any remedy whatsoever, and PDUS shall have all of the rights and
remedies against Lessor which the mortgagor, lien or creditor had immediately
prior to the time of such payment. Upon the request of PDUS, Lessor shall
promptly make, execute, acknowledge and deliver to PDUS any and all instruments
(in form and substance satisfactory to PDUS) that PDUS in its sole judgment may
deem necessary or desirable to fully effectuate the provisions of this Section
6.4(c).
(c) If it appears that any person or entity not a party hereto
may have a claim of ownership in the Property, or a claim to a share in the
production of Valuable Minerals produced from the Property (an "Adverse Claim"),
PDUS, at its sole discretion, after written notice to Lessor, may suspend its
obligation to make Advance Minimum Royalty and Production
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Royalty payments as provided herein, and in lieu thereof, may deposit in an
interest-bearing account payments equivalent to payments which may otherwise
become due Lessor. Such deposit or deposits shall remain in such
interest-bearing account until the claim or controversy is resolved or settled
by final court decision, by arbitration, negotiation or otherwise. In the event
PDUS is required or elects to make any payments to such persons or entities not
a party hereto as a result of, or in settlement of, any such Adverse Claim,
either by way of contract, settlement, compromise, final court judgment, or
otherwise, Lessor shall be obligated to reimburse PDUS for all such damages and
reimbursements which PDUS is required to pay to such third-party claimants for
Valuable Minerals produced and sold from the disputed area. In the event Lessor
fails to timely reimburse PDUS within thirty (30) days after receipt of notice
from PDUS that PDUS has made any payment to any such third-party claimants, PDUS
may recover from, or credit against, any payments thereafter becoming due Lessor
under this Lease, the amount of such payments and all other costs and expenses
(including reasonable attorneys' fees) paid or incurred by PDUS as a result of
any such Adverse Claim, plus interest at the rate of ten percent (10%) per
annum, accruing from the date that PDUS made any payment to a third party.
(d) Notwithstanding any provisions to the contrary in this
Lease, if a title dispute (not related to any failure by PDUS to comply with any
of its obligations under this Lease) arises or develops with respect to all or
any portion of the Property, PDUS shall have the right, at its sole option, to
terminate this Lease in whole or in part. In the event of a complete
termination, the provisions of Section 5.3 shall apply. In the event of a
partial termination, the Advance Minimum Royalties set forth in Section 3.2
shall be reduced on a proportionate basis to reflect the reduced average of
Property covered by the Lease.
(e) This Section 6.4 and the remedies set forth herein shall
be deemed cumulative and in addition to, and not in lieu of, any other remedy
provided by law or in equity or otherwise provided in the Lease.
6.5 After-Acquired and Additional Interests. This Lease shall apply and
extend to any further or additional right, title, interest or estate heretofore
or hereafter acquired by Lessor in or to the Property during the initial twenty
(20) year Term of this Lease. In the event Lessor acquires any such right,
title, interest or estate, Lessor will lease the same to PDUS pursuant to this
Lease, without payment of additional consideration by PDUS.
6.6 Other Representations and Warranties. The parties make the
following additional representations, warranties and covenants:
(a) Each of Lessor and PDUS warrants and represents for itself
and covenants with the other party that:
(i) It has the full right, title, power and authority to enter
into this Lease and to perform its obligations hereunder in accordance
with the terms hereof.
(ii) It has not utilized the services of a broker or a finder
in the negotiation and/or execution of this Lease, and that it has not
incurred any obligation to pay a broker's commission or finder's fee
upon the execution and consummation of this Lease.
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(iii) It shall pay all costs and expenses incurred or to be
incurred by it in performing its obligations under and the transactions
contemplated by this Lease.
(iv) It will not do or permit to be done during the term of
the Lease any act which would or might hinder or impair the rights of
the other party granted under this Lease.
(b) PDUS warrants and represents and covenants with the Lessor
that:
(i) it is a corporation duly organized, validly existing, and
in good standing under the laws of its state of incorporation.
(ii) it is duly qualified and in good standing to conduct
business in the State of Nevada.
(iii) it has the requisite corporate power and authority (i)
to enter into this Lease and all other agreements contemplated hereby,
and (ii) to carry out and perform its obligations under the terms and
provisions of this Lease and all agreements contemplated hereby.
(iv) all requisite corporate action on its part, and on the
part of its officers, directors, and shareholders, necessary for the
execution, delivery, and performance of this Lease and all other
agreements contemplated hereby, have been taken. This Lease and all
agreements and instruments contemplated hereby are, and when executed
and delivered by it (assuming valid execution and delivery by Lessor),
will be, legal, valid, and binding obligations enforceable against it
in accordance with their respective terms. The execution, delivery and
performance of this Lease will not violate any provision of its
articles of incorporation or by-laws or of any law; any order of any
court or other agency of government; or any provision of any indenture,
agreement or other instrument to which it is a party or by which its
properties or assets are bound; or be in conflict with, result in a
breach of or constitute (with due notice and lapse of time) a default
under any such indenture, agreement or other instrument. There is no
law, rule or regulation, nor is there any judgment, decree or order of
any court or governmental authority binding on it which would be
contravened by the execution, delivery, performance, or enforcement of
this Lease or any instrument or agreement required hereunder.
Notwithstanding the foregoing, no representation is made as to (A) the
remedy of specific performance or other equitable remedies for the
enforcement of this Lease or any other agreement contemplated hereby or
(B) rights to indemnity under this Lease for securities law liability.
Additionally, this representation is limited by applicable bankruptcy,
insolvency, moratorium, and other similar laws affecting generally the
rights and remedies of creditors and secured parties.
(c) Lessor warrants and represents and covenants with PDUS
that this Lease and all agreements and instruments contemplated hereby are, and
when executed and delivered by it (assuming valid execution and delivery by
PDUS), will be, legal, valid, and binding obligations enforceable against it in
accordance with their respective terms. The execution, delivery and performance
of this Lease will not violate any provision of any law; any order of
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any court or other agency of government; or any provision of any indenture,
agreement or other instrument to which it is a party or by which its properties
or assets are bound; or be in conflict with, result in a breach of or constitute
(with due notice and lapse of time) a default under any such indenture,
agreement or other instrument. There is no law, rule or regulation, nor is there
any judgment, decree or order of any court or governmental authority binding on
it which would be contravened by the execution, delivery, performance, or
enforcement of this Lease or any instrument or agreement required hereunder.
Notwithstanding the foregoing, no representation is made as to (A) the remedy of
specific performance or other equitable remedies for the enforcement of this
Lease or any other agreement contemplated hereby or (B) rights to indemnity
under this Lease for securities law liability. Additionally, this representation
is limited by applicable bankruptcy, insolvency, moratorium, and other similar
laws affecting generally the rights and remedies of creditors and secured
parties.
(d) Each of the parties represents and warrants to the other
that the consummation of this Lease will not result in or constitute a default
or an event that, with notice or lapse of time or both, would be a default,
breach or violation of any lease, license, promissory note, conditional sales
contract, commitment, or any other agreement, instrument or arrangement to which
it is a party, or by which it is bound.
(e) Lessor represents and warrants that to the best of its
knowledge, there is no condition or activity at the Property which constitutes a
nuisance or which could result in a violation of or liability under any
applicable Environmental Laws (as defined in Section 6.7). Lessor has not
received any notice of violation or any consent order issued under applicable
federal, state or local laws, orders, regulations, directives or restrictions
concerning protection of the environment and health and safety to which the
Property or any operations thereon are now subject or may become subject. There
are no pending or, to Lessor's knowledge, threatened proceedings by or before
any court or other governmental authority with respect to operations on or the
ownership of the Property alleged to be, or to have been, in violation of, or to
be the basis of liability under, any applicable Environmental Laws, and Lessor
is not aware of any "release" (as defined in the U.S. Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended) of
any Hazardous Materials at, from or affecting the Property.
(f) Lessor represents and warrants that to the best of its
knowledge it has conducted all of its activities and operations on or with
respect to the Property in full compliance with applicable federal, state and
local laws, rules and regulations, and Lessor has received no notices from any
governmental agency of any failure to so comply.
(g) Lessor represents and warrants that there are no royalties
or other burdens on production affecting the Property other than those granted
to Lessor herein.
(h) Lessor represents and warrants that it has obtained all
permits, licenses, approvals, authorizations and qualifications of all federal,
state and local authorities required for it to carry on its activities at or on
the Property. To the best of its knowledge, Lessor is not in violation of and
has no liability under any statute, rule or regulation of any governmental
authority applicable to the Property.
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(i) Lessor represents and warrants that it has performed all
material obligations required to be performed by it under any contracts and
commitments affecting the Property to which it is a party, and is not in
default, and will not be in default as a result of the consummation of the
transactions contemplated by this Lease, under any contract, agreement,
commitment, mortgage, indenture, loan agreement, lease, license, or other
instrument to which it is a party. True and correct copies of all such
agreements and commitments, as amended, have been provided to PDUS, and are
listed on Exhibit C attached hereto and incorporated herein by reference.
(j) Lessor represents and warrants that with respect to its
activities on the Property, to the best of its knowledge, Lessor is not in
material violation of any law, rule, ordinance, or other governmental
regulation, including, without limitation, those relating to zoning,
condemnation, mining, reclamation, environmental matters, equal employment, and
federal, state, or local health and safety laws, rules, and regulations, the
lack of compliance with which could materially adversely affect the Property.
(k) Lessor represents and warrants that there are no actions,
suits or proceedings pending or, to the best of Lessor's knowledge, threatened
against or affecting the Property, including any actions, suits, or proceedings
being prosecuted by any federal, state or local department, commission, board,
bureau, agency, or instrumentality. To the best of Lessor's knowledge, it is not
subject to any order, writ, injunction, judgment or decree of any court or any
federal, state or local department, commission, board, bureau, agency, or
instrumentality which relates to the Property.
(1) Lessor represents and warrants that all federal, state and
local excise, property and other taxes and assessments pertaining to or assessed
against the Property have been timely and properly paid.
(m) So long as PDUS is not in default under this Lease, on
written request from PDUS, Lessor shall execute and deliver to PDUS a
certificate, in form acceptable to PDUS, confirming that the Lease is in full
force and effect and that there are no defaults by PDUS under the Lease.
6.7 Indemnification.
(a) Lessor hereby agrees to indemnify, defend and hold PDUS,
its officers, directors, employees, successors and assigns, harmless from and
against any and all liabilities, claims, damages, losses, or expenses (including
interest and penalties, reasonable attorneys' fees, and other reasonable
expenses of defending any actions relating thereto) incurred or sustained by
PDUS in or as a result of or arising out of or attributable to: (i) all
conditions and liabilities (including without limitation Environmental
Liabilities) arising out of activities engaged in by Lessor (or by its agents,
servants or contractors on its behalf) and conducted on or in connection with
the Property prior to, on or after the Effective Date, and (ii) any breach of
the specific representations, warranties and covenants made by Lessor in this
Lease.
(b) Except as to damages sustained or caused by Lessor, its
agents or employees while on the Property pursuant to Section 2.10, PDUS hereby
agrees to indemnify,
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defend and hold Lessor, its successors and assigns, harmless from and against
any and all liabilities, claims, damages, losses, or expenses (including
interest and penalties, reasonable attorneys' fees and other reasonable expenses
of defending any actions relating thereto) incurred or sustained by Lessor in or
as a result of or arising out of or attributable to: (i) all conditions and
liabilities (including without limitation Environmental Liabilities) arising out
of activities engaged in by PDUS (or by PDUS's agents, servants or contractors
on behalf of PDUS) on or in connection with the Property from and after the
Effective Date, and (ii) any breach of the specific representations and
warranties made by PDUS in this Lease.
(c) For purposes of this Lease, the following terms shall have
the following meanings:
(i) "Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, the Clean Air Act, the
Clean Water Act, the Hazardous Materials Transportation Act, the Toxic
Substances Control Act, the Federal Water Pollution Control Act, the
Superfund Amendments and Reauthorization Act of 1986, the Safe Drinking
Water Act, the Endangered Species Act, the National Environmental
Policy Act, the Mine Safety and Health Act of 1977, the Federal Land
Policy and Management Act of 1976, and the National Historic
Preservation Act, each as amended, and any state law counterparts,
together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state and local governments (and all agencies
thereof) concerning pollution or protection of the environment,
reclamation, public health and safety, or employee health and safety,
including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the
existence, manufacture, processing, distribution, use, treatment,
storage, disposal, recycling, transport, or handling or reporting or
notification to any governmental authority in the collection, storage,
use, treatment or disposal of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
(ii) "Environmental Liabilities" shall mean any liability
arising out of, based on or resulting from (A) the presence, release,
threatened release, discharge or emission into the environment of any
Hazardous Materials or substances existing or arising on, beneath or
above such property and/or emanating or migrating and/or threatening to
emanate or migrate from such property to other properties; (B) disposal
or treatment of or the arrangement for the disposal or treatment of
Hazardous Materials originating or transported from such property to an
off-site treatment, storage or disposal facility, (C) physical
disturbance of the environment on or from such property; or (D) the
violation or alleged violation of any Environmental Laws relating to
such property.
(iii) "Hazardous Materials" means any substance: (A) the
presence of which requires reporting, investigation, removal or
remediation under any Environmental Law; (B) that is defined as a
"hazardous waste," "hazardous substance," "extremely hazardous
substance" or "pollutant" or "contaminant" under any Environmental Law;
(C) that is toxic, explosive, corrosive, flammable, ignitable,
infectious, radioactive,
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reactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated under any Environmental Law; (D) the presence of which on a
property causes or threatens to cause a nuisance upon the property or
to adjacent properties or poses or threatens to pose a hazard to the
health or safety of persons on or about the property; (E) that contains
gasoline, diesel fuel or other petroleum hydrocarbons; or (F) that
contains PCBs, asbestos or urea formaldehyde foam insulation; in each
case subject to exceptions provided in applicable Environmental Laws.
(d) The parties hereto, within five (5) days after the service
of process upon either of them in a lawsuit, including any notices of any court
action or administrative action (or any other type of action or proceeding), or
promptly after either of them, to its respective knowledge, shall become subject
to, or possess actual knowledge of, any damage, liability, loss, cost, expense,
or claim to which any of the indemnification provisions set forth in this Lease
relate, shall give written notice to the other party setting forth the facts
relating to the claim, damage, or loss, if available, and the estimated amount
of the same. "Promptly" for purposes of this Section 6.8(d) shall mean giving
notice within ten (10) days, provided that the failure promptly notify the
indemnifying party shall not operate to waive, reduce or extinguish the
indemnified party's rights hereunder unless such failure materially prejudices
the indemnifying party. Upon receipt of such notice relating to a lawsuit, the
indemnifying party shall be entitled to (i) participate at its own expense in
the defense or investigation of any claim or lawsuit or (ii) assume the defense
thereof, in which event the indemnifying party shall not be liable to the
indemnified party for legal or attorney fees thereafter incurred by such
indemnified party in defense of such action or claim; provided, that if the
indemnified party may have any unindemnified liability out of such claim, such
party shall have the right to approve the counsel selected by the indemnifying
party, which approval shall not be withheld unreasonably. If the indemnifying
party assumes the defense of any claim or lawsuit, all costs of defense of such
claim or lawsuit shall thereafter be borne by such party and such party shall
have the authority to compromise and settle such claim or lawsuit, or to appeal
any adverse judgment or ruling with the cost of such appeal to be paid by such
party; provided, however, if the indemnified party may have any unindemnified
liability arising out of such claim or lawsuit the indemnifying party shall have
the authority to compromise and settle each such claim or lawsuit only with the
written consent of the indemnified party, which shall not be withheld
unreasonably. The indemnified party may continue to participate in any
litigation at its expense after the indemnifying party assumes the defense of
such action. In the event the indemnifying party does not elect to assume the
defense of a claim or lawsuit, the indemnified party shall have authority to
compromise and settle such claim or lawsuit only with the written consent of the
indemnifying party, which consent shall not be unreasonably withheld, or to
appeal any adverse judgment or ruling, with all costs, fees, and expenses
indemnifiable under this Lease to be paid by the indemnifying party. Upon the
indemnified party's furnishing to the indemnifying party an estimate of any
loss, damage, liability, or expense to which the indemnification provisions of
this Lease relate, the indemnifying party shall pay to the indemnified party the
amount of such estimate within ten (10) days of receipt of such estimate, unless
the indemnifying party in good faith disputes its liability with respect to any
such claim.
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ARTICLE VII
GENERAL PROVISIONS
7.1 Other Business Opportunities. This Lease is, and the rights and
obligations of the parties are, strictly limited to the Property. Except as
expressly provided herein, the parties shall have the free and unrestricted
right to independently engage in, and receive the full benefits of, any and all
business ventures of any sort whatever, whether or not competitive with the
Property and the activities undertaken pursuant to the Lease, without consulting
the other or inviting or allowing the other to participate therein. Neither of
the parties shall be under any fiduciary or other duty to the other which will
prevent it from engaging in or enjoying the benefits of, any competing venture
or ventures outside the Property. The legal doctrines of "corporate opportunity"
or "business opportunity" as developed or applied by any court or authority of
any jurisdiction and sometimes applied to persons or legal entities occupying a
joint venture or other fiduciary status shall not be applied to any other
activity, venture, or operation of either party, whether adjacent to, nearby, or
removed from the Property, and neither party shall have any obligation to the
other with respect to any opportunity to acquire any interest in any property
outside the Property at any time, or within the exterior boundaries of the
Property after termination of this Lease, regardless of whether the incentive or
opportunity of a party to acquire any such property interest may be based, in
whole or in part, upon information learned during the course of conducting
operations or activities under this Lease.
7.2 Confidentiality.
(a) For the Term of the Lease, Lessor agrees to treat the
Lease, and the terms and conditions hereof, and all data received or obtained
under the Lease, including reports, records and other information (the
"Information") relating to the Lease or the Property, as confidential, and such
Information shall not be disclosed to any other person or entity, without the
prior written agreement of PDUS. In the event that Lessor is required by any
law, rule, regulation, or order to disclose to the public any Information, it
shall immediately notify PDUS of such requirement and the terms thereof,
together with a copy of such release of Information as may be contemplated,
prior to such disclosure. PDUS shall then have the right to comment on such
disclosure or to request, prior to disclosure, confidential treatment of any of
the Information on such terms as it shall, in its sole discretion, determine.
(b) Following expiration or termination of the Lease, Lessor
may not disclose to third parties Information provided to Lessor hereunder,
unless such disclosure shall be accompanied by a disclaimer of any
representations as to the accuracy, reliability or completeness of such
Information for any purpose.
(c) Lessor acknowledges that, based upon information made
available by Lessor to PDUS and PDUS's examination of the Property with the
permission of Lessor and data from work on property which PDUS controls in the
vicinity of the Property, PDUS has conducted its own evaluation of the Property
and has developed its own theories and interpretations regarding the Property
that are regarded by PDUS as confidential and/or proprietary to PDUS and which
have not been disclosed to Lessor. Lessor agrees that in entering into this
Lease, it is not relying on PDUS to disclose any such theories, interpretations
or evaluations.
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7.3 Assignabilitv.
(a) PDUS shall have the right to assign the Lease freely in
whole or in part or to sublease all or portions of the Property at any time
during the Term hereof with the prior written consent of Lessor, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, however, PDUS
shall not be required to obtain Lessor's consent to any assignments or subleases
to affiliates or subsidiaries of PDUS (which shall include, for purposes of this
Lease, any person, partnership, company, corporation, joint venture or other
form of enterprise which directly or indirectly controls, is controlled by, or
is under common control with PDUS, or pursuant to which PDUS is the Manager,
"control" meaning possession, directly or indirectly, of the power to direct or
cause direction of management and policies through ownership of voting
securities, contract, voting trust or otherwise). In addition, no such consent
shall be required in connection with a corporate reorganization, merger or other
consolidation involving PDUS (or a sale of all or substantially all of PDUS's
assets), or in connection with the granting of a security interest in PDUS's
interest in this Lease. PDUS shall notify Lessor promptly upon the consummation
of an assignment or sublease for which Lessor's consent is not required. Upon an
assignment by PDUS of its interest in this Lease to which the Lessor has
consented, PDUS shall have no further obligation or liability to Lessor with
respect to this Lease (other than such liabilities or obligations that have
accrued prior to such assignment). Any assignment by either party or sublease by
PDUS of any interest in this Lease or any conveyance by either party of any
interest in the Property shall be expressly made subject to, and the assignee or
transferee shall agree in writing to be bound by, all the terms, conditions and
covenants of the Lease.
(b) If at any time during the period commencing on the
Effective Date of this Lease and running through the twentieth Anniversary Date,
the Lessor desires to sell any interest in the Property or the Production
Royalty, or receives and is willing to accept a bona fide offer from a third
party interested in purchasing or otherwise acquiring all or any part of
Lessor's interest in the Property or the Production Royalty, it will notify PDUS
of its intent or its receipt of that offer. The notice shall state the price and
all other pertinent terms and conditions of transfer that Lessor would be
willing to accept, or of any offer received, and shall be accompanied by a copy
of the offer or contract for sale. If the consideration for the proposed
transfer is, in whole or in part, other than monetary, the notice shall describe
such consideration and its monetary equivalent (based upon the fair market value
of the nonmonetary consideration and stated in terms of cash or currency). PDUS
will then have ninety (90) days from the date such notice is delivered to notify
Lessor whether PDUS elects to acquire the offered interest at the same price and
on the same terms and conditions as set forth in the notice. If PDUS does so
elect, the transfer will be consummated promptly after Lessor's receipt of such
notice from PDUS. If PDUS fails to make an election within the 90-day period,
the Lessor shall have sixty (60) days following the expiration of such period to
consummate the transfer of the interest in the Property or the Production
Royalty to a third party at a price and on terms no less favorable than those
set forth in the notice. In the event of such a transfer by the Lessor, that
transfer will be effective only upon written notice to PDUS. If the Lessor fails
to consummate the transfer to a third party within that 60-day period, PDUS's
right of first refusal in such offered interest shall be deemed to be revived.
PDUS's failure to exercise its rights under this Section 7.3(b) at any time
shall not be deemed to be a waiver of its right to purchase the Property
pursuant to Section 1.2.
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7.4 Memorandum for Recording. This Lease shall not be recorded. The
parties agree to execute a written short form or memorandum of the Lease of even
date herewith sufficient to be entitled to be recorded under the laws of the
State of Nevada and which shall recite that all of their right, title, and
interest in and to the Property is held subject to the Lease, and PDUS shall be
entitled to record that short form in _____________________County.
7.5 Laws and Regulations; Severability; and Force Majeure.
(a) This Lease shall be governed by the laws of the State of
Nevada (other than its rules as to conflicts of law) and shall be subject to all
applicable state and federal laws and rules and regulations of public bodies
exercising jurisdiction over the Lease or the development or operation of any of
the Property subject hereto. In the event any provision of the Lease is, or the
operations contemplated hereby are, found to be inconsistent with, or contrary
to, any such laws, rules, or regulations, the latter shall be deemed to control;
and the Lease shall be regarded as modified accordingly and, as so modified,
shall continue in full force and effect.
(b) Except for the obligation to make Advance Minimum Royalty
and Production Royalty payments when due hereunder, the obligations of PDUS
under the Lease shall be suspended, and PDUS shall not be deemed in default or
liable for damages or subject to other remedies while it is prevented from
complying with any of its obligations hereunder by acts of God, the elements,
riots, acts or failures to act on the part of federal or state agencies;
inability to obtain in a timely manner necessary governmental approvals,
licenses or permits on terms reasonably acceptable to PDUS; inability to secure
materials or to obtain access to the Property; strikes; lockouts; damage to,
destruction or unavoidable shutdown of, necessary facilities; lack of reasonable
market for those Valuable Minerals developed by PDUS on the Property (including,
by way of example, a market where PDUS cannot expect to make a reasonable profit
on the sales of Valuable Minerals); or any other matters (whether or not similar
to those above-mentioned) beyond PDUS's reasonable control, whether or not
foreseeable; provided, however, that settlement of strikes or lockouts shall be
entirely within PDUS's discretion; and provided, further, that PDUS shall
promptly notify Lessor of any such events when PDUS becomes aware of the same
and shall exercise diligence in an effort to remove or overcome the cause of
such inability to comply. The Term of the Lease shall be extended for a period
of time equivalent to the duration of an event of force majeure under this
Section 7.5(b).
7.6 Notice. Any notice, election, report or other correspondence
required or permitted hereunder shall be in writing and (i) delivered
personally; or (ii) sent by registered or certified United States mail, postage
prepaid, return receipt requested; or (iii) sent by reputable overnight courier;
or (iv) sent by facsimile, confirmation of delivery requested. All such notices
shall be addressed to the party to whom directed as follows:
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If to Lessor:
_______________________________
_______________________________
Facsimile: (775)_____ - _______
Telephone: (775)_____ - _______
If to PDUS:
Placer Dome U.S. Inc.
1125 17th Street, Suite 2310
Denver, Colorado 80202
Attention: General Counsel
Facsimile: (303) 675-0707
Telephone: (303) 675-0055
and to:
Placer Dome U.S. Inc.
HC 66 Box 1250
Crescent Valley, Nevada 89821
Attention: Brian Iverson
Facsimile: (775)468-4496
Telephone: (775) 468-4433
Either party may, from time to time, change its address for future notices
hereunder by notice in accordance with this Section 7.6. Notices, all other
documents, and payments shall be complete and deemed to have been given or made
when mailed or deposited with a reputable overnight courier service, or upon
personal delivery when delivered personally, or when sent by facsimile (assuming
confirmation of receipt is received).
7.7 No Implied Covenants. Lessor understands, and expressly
acknowledges and agrees, that no implied covenants, warranties or conditions
whatsoever shall be read into or implied by the Lease relating to the
exploration, development, prospecting, mining, processing, production, or
marketing of Valuable Minerals, or the time therefore, or to any obligation of
PDUS hereunder, or to the measure of diligence thereof, and Lessor expressly
acknowledges that the Advance Minimum Royalty payments set forth herein, and the
Purchase Price, if PDUS exercises the Option, are sufficient consideration for
all of the rights granted to PDUS under this Lease.
7.8 Entire Agreement; Waiver. This Lease contains all of the
representations and agreements between the parties with respect to the Property
and the subject matter hereof. No modifications or waiver of the terms and
conditions of the Lease shall be binding upon either party unless in writing,
dated subsequent to the Effective Date of the Lease, and executed by an
authorized representative of each party. No waiver by any party of a breach of
any of the
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provisions of the Lease shall be construed as a waiver of any subsequent breach,
whether of the same or a different character.
7.9 Relationship of Parties. The relationship of the parties hereto is
contractual only. PDUS owns, and may hereafter acquire, substantial interests in
lands and minerals and contemplates undertaking exploration, development and
mining operations in the vicinity of the Property. Nothing contained in the
Lease shall give Lessor any interest in such lands, minerals or operations.
7.10 Further Instruments. The parties hereto agree that they will
execute any and all other instruments that may be necessary or required to carry
out and effectuate any and all of the provisions of the Lease.
7.11 Binding Effect. Subject to the provisions of Section 7.3 above,
the Lease shall be binding upon, and shall inure to, the benefit of the parties
hereto, their heirs, administrators, legal representatives, successors and
assigns.
7.12 Interpretation. The use of the term "including" anywhere in this
Lease shall be deemed to mean "including without limitation." Representations
and warranties in Lease made to the best of a party's knowledge shall mean the
party making the representation and warranty has made a prudent and reasonable
investigation of the underlying facts that form the basis of the representation
and warranty.
7.13 Counterparts. This Lease may be executed in several counterparts,
any one of which may contain the execution of Lessor or PDUS, which together
shall constitute a single original agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease effective as of the day and year first written above.
LESSOR
_____________________________________
[Name]
PLACER DOME U.S. INC.,
a California corporation
By:__________________________________
Name:________________________________
Title:_______________________________
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ACKNOWLEDGMENTS
STATE OF ________________ )
) ss.
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me on _____________
____, 2004, __________________, as _________ of ______________________________.
Witness my hand and official seal.
My commission expires: _____________
---------------------------------
Notary Public
STATE OF NEVADA )
) ss.
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me on ________________
___, 2004, by _________________, as ____________________ of Placer Dome U.S.
Inc., a California corporation.
Witness my hand and official seal.
My commission expires: ___________
---------------------------------
Notary Public
EXHIBIT A
The Property
Exh. A-l