Exhibit 10.5
Great American Minerals, Inc.
Donald James McDowell
9051 South 1075 West, Ste. B-301 West Jordan, UT 84088
Ph: (801) 231-0658 E-MAIL: McDreamerl@AOL.COM
Gary Nordin & Wendy Matheson May 5, 2004
Gale Peak Resources Group
Ph: (604 629-1929 Cell: (604) 789-2175
RE: "Modoc Mine Property": Claim Lease & Option to Purchase -
Letter of Intent Offer DF#4, 6, 8, 10, 12, 21, 23, 25, 27, 28,
29 & 30 - Totaling 12 Claims.
Greetings,
Great American Minerals, Inc. (GAM) would still like to finalize the
mutually acceptable terms previously discussed regarding Gale Peak Resource's
2/3 ownership in the 12 mining claims listed in this document.
As previously discussed, the entire initial payment will be made to
Gale Peak Resources and all subsequent payments will be made 2/3 to Gale Peak
Resources & 1/3 to Great American Minerals (Owner of McDowell's 1/3 Interest).
It is our intent to expedite $100,000 in work in the immediate 90 days following
execution of this letter agreement.
As such, Great American Minerals, Inc. (Referred to as GAM) wishes to
enter into a mining lease with option to purchase ("Mining Lease") with you for
the above-referenced "Property", which is more particularly described below.
The Principal Proposed terms of the agreement are as follows:
GREAT AMERICAN MINERALS, Inc.
Short Term Lease/Option to Purchase Proposal/Agreement Summary
PROPERTY NAME: Gale Peak Resources Lease & Option to Purchase
County/State: Lander County, Nevada
Mining District: Battle Mountain
T31N, R43E, Within Sections 30
Claim Name(s): DF#4, 6, 8, 10, 12, 21, 23, 25, 27, 28, 29 & 30 -
Totaling 12 Claims.
2/3 OWNERS:
Gale Peak Resources Group
6121 LAKESIDE DRIVE, SUITE 260
RENO, NEVADA USA 89511
(Please Supply Appropriate Address)
1/3 Owner & LEASE HOLDER: Great American Minerals, Inc.
9051 South 1075 West Ste. B-301
West Jordan, Utah 84088
Contact: Donald McDowell, EVP
1
LEASE TERMS:
Effective Date of Agreement: Upon completion of Signatures & Initial
Payment. Payment on execution of agreement: US$5,000.00 Note: 100% of
initial payment will be payable to Gale Peak Resources & all subsequent
payments will be payable 2/3 to Gale Peak Resources & 1/3 to GAM, Inc.
(Owner of McDowell's interest) as agreed.
Payments during term of agreement:
DATE ADVANCE ROYALTY PAYMENT US$
- --------------------------------------------------------------------------------
Initial Payment 100% to Gale Peak $5,000.00
Resources on Signing:
- --------------------------------------------------------------------------------
On or before March 31, 2005 $15,000.00
- --------------------------------------------------------------------------------
On or before March 31 , 2006 $30,000.00
- --------------------------------------------------------------------------------
On or before March 31, 2007 $50,000.00
- --------------------------------------------------------------------------------
On or before March 31, 2008 $75,000.00
- --------------------------------------------------------------------------------
Annual Thereafter $100,000.00
- --------------------------------------------------------------------------------
Work Commitments: As part of the work commitment expenditures, It is understood
that one (1) +/-1500' Drill Hole will be completed within the first two years on
the target proposed by Gale Peak in their report supplied to GAM, approximately
located on the SE side of the Modoc intrusion at the intersection of the
North/South & North/West structural intersection targeting the down dropped
Modoc Intrusive and associated "Mag Low" at the structural intersection.
WORK COMMITMENT (US$) PERIOD WITHIN WHICH WORK IS TO BE PERFORMED
- --------------------------------------------------------------------------------
$100,000.00 Before March 31,2005
- --------------------------------------------------------------------------------
$100,000.00 Before September 1, 2006
- --------------------------------------------------------------------------------
$300,000.00 Before September 1, 2007
- --------------------------------------------------------------------------------
$500,000.00 Before September 1, 2008
- --------------------------------------------------------------------------------
$500,000.00 Before September 1, 2009
- --------------------------------------------------------------------------------
2% NSR Royalty Interests: The property will be subject to a 2% NSR on
production.
$3,000,000 Option to Purchase Property & 1% NSR: At any time during term of this
agreement, all of the claim ownership and 1% NSR, may be purchased for a
purchase price of US$3,000,000.00 payable 2/3 to Gale Peak Resources & 1/3 to
GAM, Inc. (Owner of McDowell's interest) as agreed, leaving a residual 1% NSR
payable 2/3 to Gale Peak and 1/3 to GAM. All cash payments paid to owner prior
to the exercise of the option shall be credited against the purchase price.
Annual Claim Maintenance Payments: Great American agrees to pay all claim fees.
Assignment: Either party may assign its interest upon written notice fifteen
(30) days prior to transfer.
Report and Data: Upon request by owner, must provide an annual report of
expenditures and activities with copies of non-interpretive data.
2
Termination of Agreement: Great American Minerals may terminate agreement at any
time by 30-Day written notice to owner.
Therefore, by signing below you acknowledge the terms of this agreement are both
agreeable and binding, upon completion of the agreement by GAME and receipt of
the initial payment.
IN WITNESS WHEREOF, the parties have agreed to the above referenced Lease with
Option to Purchase Agreement.
GALE PEAK RESOURCES GROUP, a Nevada Corporation
By: /s/ Gary Nordin
-------------------------------------
Gary Nordin,
PROVINCE OF BRITISH COLUMBIA )
) ss.
COUNTY OF VANCOUVER )
On this 6th day of May, 2004, personally appeared before me, a Notary Public,
GARY NORDIN, a duly qualified and acting officer of GALE PEAK RESOURCES GROUP, a
Nevada Corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and who acknowledged that he executed the within and foregoing "Lease
with Option to Purchase Agreement" as Referenced, and acknowledged that he
signed the same as his free and voluntary act and deed, for the uses and
purposes therein mentioned and acknowledged to me that he executed the above
instrument on behalf of said corporation.
/s/ Lawrence W. Talbot
- -----------------------------
Notary Public in and for the Province of B.C.
My Commission does not expire
GREAT AMERICAN MINERALS, INC., a Nevada Corporation
By: /s/ Donald James McDowell
-----------------------------
Donald James McDowell, EVP
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE CITY )
On this 10 day of May, 2004, personally appeared before me, a Notary Public,
DONALD JAMES McDOWELL, a duly qualified and acting officer of GREAT AMERICAN
MINERALS, Inc., a Nevada Corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and who acknowledged that he executed the within and
foregoing "Agreement To Extend" the "Option Agreement" previously executed as
Referenced, and acknowledged that he signed the same as his free and voluntary
act and deed, for the uses and purposes therein mentioned and acknowledged to me
that he executed the above instrument on behalf of said corporation..
/s/ Cynthia Flink
- -------------------------------------------
Notary Public in and for the State of UTAH
My Commission Expires 10-10-2007
3
Modoc Property
EXHIBIT "A"
Those certain One Hundred Ten (110) ELM unpatented mining claims, known as the
DF-1 thru DF-36, Sadie-23 thru Sadie-36, Sadie-41 thru Sadie-54, Sadie-63 thru
Sadie-72 and Sadie-100 thru Sadie-135, located in Lander County, Nevada,
described below:
DF-1 thru DF-36: Located in Lander County, Nevada.
Township 31 North, Range 43 East, MDB&M - Section 30
Summary of Great American Minerals, Inc. Ownership
DF#l-3,5,7,9,ll,13-18,19,20,22,24,26,31-36 Totaling 24 Claims
Filed April 3, 2003: NMC#225561 through NMC#225584
Summary of Gale Peak Resources Ownership
Great American Minerals. Inc. holds 1/3 Ownership
DF#4,6,8,10,12,21,23,25,27,28,29 & 30 Totaling 12 Claims
Lander County
Claim Name Book/Page BLM Serial Number
DF#4 NMC-692139
DF#6 NMC-692141
DF#8 NMC-692143
DF#10 NMC-692145
DF#12 NMC-692147
DF#21 NMC-692156
DF#23 NMC-692158
DF#25 NMC-692160
DF#27 NMC-692162
DF#28 NMC-692163
DF#29 NMC-692164
DF#30 NMC-692165
Lease Terms (Pending): Proposed by Gale Peak Resources (GAM, Inc. 1/3 Owners)
"Sadie" Claims: 100% Owned by GAM, Inc. - Total of 74 Claims
Sadie-23 thru Sadie-36: Located September 15, 2003 in Lander County,
Nevada. Township 31 North, Range 42 East, MDB&M - Section 24 NMC 857621
thru NMC 857634
Sadie-41 thru Sadie-54: Located in Lander County, Nevada. NMC 857635
thru NMC 857648
Sadie-63 thru Sadie-72: Located in Lander County, Nevada. NMC 863351
-NMC 863360 Township 31 North, Range 43 East, MDB&M - Section 36
Sadie-100 thru Sadie-135: Located in Lander County, Nevada. Township 30
North, Range 43 East, MDB&M - Section 6 NMC - Pending
Summary of GAM, Inc. Ownership/Quitclaim History - Total of 38 Claims
March 31. 2003 Quitclaim: DF#1-5,7,9,11,13-18,19-22,24,26,31-36; Totaling 26
Claims from Donald McDowell to Great American Minerals, Inc.
March 31, 2003 Quitclaim: DF#4,6,8,10,12,21,23,25,27,28,29 & 30 Totaling 12
Claims from Donald McDowell to Great American Minerals, Inc.