EXHIBIT 10.19
MAVERICK SPRINGS
EXPLORATION AND DEVELOPMENT AGREEMENT
THIS AGREEMENT is made as of the 9th day of June 2003,
AMONG:
VISTA GOLD CORPORATION, a company continued under the laws of the
Yukon Territory and having its head office located at 7961 Shaffer
Parkway, Suite 5, Littleton, CO 80127
("VISTA")
AND:
VISTA NEVADA CORP., a corporation incorporated under the laws of the
State of Nevada and having its head office located at 7961 Shaffer
Parkway, Suite 5, Littleton, CO 80127
("VNC")
AND:
MAVERICK SILVER INC., a corporation incorporated under the laws of the
State of Nevada and having an office located at Suite 1180, 999 West
Hastings Street, Vancouver, BC V6C 2W2
("MSI")
WHEREAS:
A. under a mining lease (the "Artemis Lease") dated October 1, 2001, as
amended August 26, 2002, August 29, 2002 and September 25, 2002, between
Newmont Mining Corporation ("Newmont") and Artemis Exploration Company
("Artemis"), Newmont acquired, among other things, all of Artemis' rights
to certain property known as the Maverick Springs Property, located in Elko
and White Pine Counties, Nevada, and the exclusive right to explore,
develop and mine the Maverick Springs Property;
B. in consideration of the rights granted to Newmont under the Artemis Lease,
Newmont is required to, among other things: (a) pay advance royalties of US
$10,000 on signing the Artemis Lease, US $15,000 on October 1, 2002, US
$50,000 on October 1, 2003 and US $100,000 on each October 1st thereafter;
(b) pay a net
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smelter returns royalty ranging from 1.9% for gold and silver prices that
are less than US $250 and US $4.50 per ounce, respectively, to 5.9% for
gold and silver prices that are greater than US $550 and US $8.50 per
ounce, respectively, and a net smelter returns royalty of 2.9% for all
metals other than gold and silver; and (c) complete a minimum of 6,400 feet
of exploration drilling in each of the first three years of the Artemis
Lease;
C. under the Vista Agreement (as defined in this Agreement), Newmont and
Newmont Capital Limited ("NCL") assigned all of their respective interests
in the Maverick Springs Property and the Artemis Lease to VNC in
consideration of:
(a) the payment at closing of US $250,000 in cash;
(b) the reimbursement at closing of 2003 federal maintenance fees in the
amount of US $37,300;
(c) the issuance at closing of 141,243 shares of Vista and 141,243
warrants of Vista (with each warrant exercisable for one share of
Vista for a period of two years at US $4.43 per share);
(d) the issuance, on the first anniversary of closing, of the number of
shares of Vista determined by dividing US $500,000 by the weighted
average closing price of the shares of Vista on the American Stock
Exchange averaged over the 10-day trading period ending on the day
before the first anniversary of the closing (the "Weighted Average
Price") and an equal number of share purchase warrants (with each
warrant exercisable for a period of two years from the closing at a
price equal to 125% of the Weighted Average Price);
(e) the grant to Newmont of a 1 1/2% net smelter returns royalty on
production from the Maverick Springs Property;
D. the Vista Agreement also provides that following the fourth anniversary of
the closing of the Vista Agreement, Newmont may, on payment of 200% of
expenditures, acquire a 51% interest in the Maverick Springs Property with
expenditures by Vista, following the backin by Newmont, capped at US
$2,000,000 until completion of a feasibility study; and
E. Vista and VNC have agreed to grant MSI, an indirect wholly owned subsidiary
of Silver Standard Resources Inc., an option to acquire a 55% interest in
the Maverick Springs Property, which is proportionate to the property's
silver resources at the date of this Agreement, on the terms contained in
this Agreement;
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained and subject to the terms and
conditions hereinafter set forth, the parties hereto agree as follows:
1. INTERPRETATION
1.1 In this Agreement:
(a) "ARTEMIS ROYALTY" means the advance royalties and net smelter returns
royalties on production from the Property payable to Artemis under the
Artemis Lease;
(b) "BACKIN RIGHT" means the right of Newmont to acquire a 51% interest in
the Property under the Vista Agreement after October 7, 2006;
(c) "COMMERCIAL PRODUCTION" means the operation of the Property or any
part thereof as a mine but does not include milling for the purpose of
testing or milling by a pilot plant. Commercial Production shall be
deemed to have commenced on the first day of the month following the
first 45 consecutive days during which gold and silver have been
produced from the Property at an average rate not less than 70% of the
initial rated capacity of the mine as provided in the Feasibility
Study;
(d) "DEVELOPMENT" has the meaning set out in Exhibit D to the Rocky
Mountain Mineral Law Foundation Form 5A, Exploration, Development and
Mine Operating Agreement;
(e) "ENCUMBRANCE" means any lien, claim, charge, pledge, hypothecation,
security interest, mortgage, title retention agreement, option,
royalty interest or encumbrance of any nature or kind whatsoever;
(f) "EXPENDITURES" means all cash outlays, expenses, obligations and
liabilities of whatever kind or nature, but without duplication, spent
or incurred or deemed incurred hereunder in connection with the
exploration and development of the Property;
(g) "FEASIBILITY STUDY" means any feasibility study prepared in respect of
the Property which becomes the basis for the decision to place the
Property into commercial production;
(h) "GOLD RESOURCES" means, at any time, the measured, indicated and
inferred resources of gold, in ounces, determined in accordance with
NI 43-101 at that time;
(i) "INTEREST" means a 55% interest in the Artemis Lease and the Property;
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(j) "MANAGEMENT COMMITTEE" means the management committee to be
established under Article 5;
(k) "NEWMONT ROYALTY" means the net smelter returns royalty on production
from the Property payable to Newmont under the Vista Agreement;
(l) "NI 43-101" means National Instrument 43-101 of the Canadian
Securities Administrators;
(m) "OPTION" has the meaning set out in section 2.1;
(n) "OPERATOR" means the party appointed as the Operator in accordance
with Article 4;
(o) "PARTICIPATING INTEREST" has the meaning set out in Exhibit D to the
Rocky Mountain Mineral Law Foundation Form 5A, Exploration,
Development and Mine Operating Agreement;
(p) "PROGRAMS" the work plans and budgets for exploration and development
activities conducted on the Property during the term of this Agreement
and adopted pursuant to section 6.1;
(q) "PROPERTY" means the Maverick Springs Property as described in the
Vista Agreement;
(r) "SILVER RESOURCES" means, at any time, the measured, indicated and
inferred resources of silver, in ounces, determined in accordance with
NI 43-101 at that time;
(s) "SIMPLE MAJORITY" means a decision made by the Management Committee by
more than 50% of the votes represented and entitled to be cast at a
meeting thereof;
(t) "SPECIAL MAJORITY" means a decision made by the Management Committee
by more than 65% of the votes represented and entitled to be cast at a
meeting thereof;
(u) "UNDERLYING ROYALTIES" means the Newmont Royalty and the Artemis
Royalty;
(v) "VISTA AGREEMENT" means the agreement dated October 7, 2002 among
Newmont, NCL, Vista and VNC, a copy of which is attached as Schedule
A; and
(w) "VNC/MSI JOINT VENTURE" has the meaning set out in section 3.2.
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1.2 For the purposes of this Agreement, except as otherwise expressly provided
herein:
(a) "this Agreement" means this Agreement, including the Schedule hereto,
as it may from time to time be supplemented or amended;
(b) all references in this Agreement to a designated Article, section,
subsection, paragraph, or other subdivision, or to a Schedule, is to
the designated Article, section, subsection, paragraph or other
subdivision of or Schedule to this Agreement unless otherwise
specifically stated;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, clause, subclause or other subdivision or
Schedule;
(d) the singular of any term includes the plural and vice versa and the
use of any term is equally applicable to any gender and where
applicable to a body corporate;
(e) the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language such as "without
limitation" or "but not limited to" or other words of similar import
are used with reference thereto);
(f) except as otherwise provided, any reference to a statute includes and
is a reference to such statute and to the regulations made pursuant
thereto with all amendments made thereto and in force from time to
time, and to any statute or regulations that may be passed which have
the effect of supplementing or superseding such statute or such
regulations;
(g) the headings to the Articles and clauses of this Agreement are
inserted for convenience only and do not form a part of this Agreement
and are not intended to interpret, define or limit the scope, extent
or intent of this Agreement or any provision hereof;
(h) all amounts of money which are referred to in this Agreement are
expressed in lawful money of the United States of America;
(i) any reference to a corporate entity includes and is also a reference
to any corporate entity that is a successor to such entity;
(j) the parties acknowledge that this Agreement is the product of arm's
length negotiation between the parties, each having obtained its own
independent legal advice, and that this Agreement shall be construed
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neither strictly for, nor strictly against, any party irrespective of
which party was responsible for drafting this Agreement; and
(k) the representations, warranties, covenants and obligations of Vista
and VNC in this Agreement shall be and be deemed to be made or
incurred jointly and severally by each of them.
1.3 The following schedule is incorporated into this Agreement by reference:
SCHEDULE DESCRIPTION
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Schedule A Vista Agreement
2. GRANT AND MAINTENANCE OF OPTION
2.1 VNC hereby grants to MSI the exclusive and irrevocable right and option
(the "Option") to acquire the Interest free and clear of all
Encumbrances, other than the Backin Right, Underlying Royalties and
other rights retained by Newmont in the Vista Agreement.
2.2 In order to keep the right and Option granted to MSI in respect of the
Property in good standing and in force and effect MSI shall be obligated
to:
(a) pay US $300,000 to VNC forthwith following acceptance for filing of
this Agreement by The Toronto Stock Exchange and, if required, by the
TSX Venture Exchange; and
(b) fund all Expenditures on the Maverick Springs property up to US
$1,200,000 over a period of four years commencing from October 7,
2002.
2.3 If MSI fails to make the required option payments and contribute the
required Expenditures in accordance with section 2.2 within the time
periods specified in section 2.2, subject to section 12.2, then MSI shall
lose its Option and this Agreement and the Option shall terminate.
2.4 This Agreement represents an option and any further performance hereunder
by MSI is expressly at the election of MSI.
2.5 This Agreement is subject to the terms and conditions of the Vista
Agreement and the Artemis Lease.
2.6 The parties acknowledge and agree that it is the intent of this Agreement
that MSI will own and control the Silver Resources of the Property and VNC
will own and control the Gold Resources of the Property.
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3. EXERCISE OF OPTION
3.1 At such time as MSI has made the required option payment and funded
Expenditures in accordance with section 2.2 within the time periods
specified in section 2.2, then the Option shall be deemed to have been
exercised by MSI without any further act.
3.2 On exercise of the Option, VNC and MSI shall form a joint venture (the
"VNC/MSI Joint Venture") and enter into a joint venture agreement (the
"Joint Venture Agreement") in the form of the Rocky Mountain Mineral Law
Foundation Form 5A, Exploration, Development and Mine Operating Agreement,
which shall provide for:
(a) any major decisions (including, without limitation, exploration
expenditures on any one program in excess of US $100,000, capital
expenditures in excess of US $2,000,000, Development decision,
suspension of production and closure) requiring a Special Majority
vote, dilution provisions, an area of interest provision and a right
of first refusal in respect of each other's interest in the Property;
(b) the Participating Interests of MSI and VNC in the VNC/MSI Joint
Venture to be equal to a 55% Participating Interest for MSI and a 45%
Participating Interest for VNC;
(c) following the formation of the VNC/MSI Joint Venture each of MSI and
VNC may elect to reduce their Participating Interest in the VNC/MSI
Joint Venture by giving written notice of such election to the other
party. The president of each of MSI and VNC shall meet with each other
at a place to be agreed upon by them or by telephone, within 15 days
after the date of the later of any election notice delivered by MSI or
VNC, to agree upon the respective Participating Interests of VNC and
MSI in the VNC/MSI Joint Venture. In the event such persons fail to
meet in such 15 day period or fail to agree upon their respective
Participating Interests, MSI will be deemed to have a 55%
Participating Interest in the VNC/MSI Joint Venture and VNC will be
deemed to have a 45% Participating Interest in the VNC/MSI Joint
Venture;
(d) the Feasibility Study to calculate gold and silver reserves in
accordance with NI 43-101;
(e) MSI to own and control the Silver Resources of the Property (including
any silver resources included in any tailings or waste rock as a
result of commercial production on the Property) and for VNC to own
and control the Gold Resources of the Property (including any gold
resources
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included in any tailings or waste rock as a result of commercial
production on the Property);
(f) in the event a decision is made for the Development of the Property,
MSI to elect, at its sole discretion, by delivering written notice to
VNC within 30 days after the decision by the management committee of
the VNC/MSI Joint Venture for the Development of the Property, to
increase its Participating Interest up to a maximum of 55%, by
specifying in percent the amount by which it is increasing its
interest (the "MSI Differential") and the aggregate amount of such
increased interest in such notice, and paying to VNC an amount equal
to 200 percent of the expenditures incurred by the VNC/MSI Joint
Venture from the date of formation of the joint venture to the date
the decision was made by the management committee of the VNC/MSI Joint
Venture for the Development of the Property multiplied by the MSI
Differential;
(g) in the event a decision is made for the Development of the Property,
VNC to elect, at its sole discretion, by delivering written notice to
MSI within 30 days after the decision by the management committee of
the VNC/MSI Joint Venture for the Development of the Property, to
increase its Participating Interest up to a maximum of 45%, by
specifying in percent the amount by which it is increasing its
interest (the "VNC Differential") and the aggregate amount of such
increased interest in such notice, and paying to MSI an amount equal
to 200 percent of the expenditures incurred by the VNC/MSI Joint
Venture from the date of formation of the joint venture to the date
the decision was made by the management committee of the VNC/MSI Joint
Venture for the Development of the Property multiplied by the VNC
Differential;
(h) VNC to elect, by delivering written notice to MSI within 30 days after
the commencement of Commercial Production, to take in kind the gold
production from the Property;
(i) MSI to elect, by delivering written notice to VNC within 30 days after
the commencement of Commercial Production, to take in kind the silver
production from the Property;
(j) the governing law of the agreement to be the law of the State of
Nevada.
3.3 In the event Newmont exercises its Back-In Right:
(a) the VNC/MSI Joint Venture will enter into a joint venture agreement
with Newmont in accordance with section 3.5 of the Vista Agreement;
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(b) any payments made by Newmont in exercising the Back-In Right with
respect to Maverick Springs shall be made to VNC or the VNC/MSI
Joint Venture and will be distributed to the VNC/MSI Joint Venture
participants on the basis of their actual contributions;
(c) VNC may elect, by delivering written notice to the VNC/MSI Joint
Venture within 30 days after the commencement of Commercial
Production, to take in kind the VNC/MSI Joint Venture's share of
gold production from the Property and upon receipt of such notice
the VNC/MSI Joint Venture shall elect under its joint venture
agreement with Newmont to take its share of production in kind;
(d) MSI may elect, by delivering written notice to the VNC/MSI Joint
Venture within 30 days after the commencement of Commercial
Production, to take in kind the VNC/MSI Joint Venture's share of
silver production from the Property and upon receipt of such notice
the VNC/MSI Joint Venture shall elect under its joint venture
agreement with Newmont to take its share of production in kind; and
(e) the maximum US$ 2.00 million contribution, required for the
completion of a bankable feasibility study under paragraph
3.5(b)(iii) of the Vista Agreement will be contributed by MSI and
VNC on the basis of their Participating Interests in the VNC/MSI
Joint Venture at the time the cash requests are made by Newmont.
4. OPERATOR
4.1 VNC will be the Operator until the earlier to occur of the following
events:
(a) Exercise of the Option by MSI and completion of the Joint Venture
Agreement; and
(b) VNC resigns as the Operator.
4.2 The Operator shall perform its duties hereunder in accordance with the
Programs under the direction of the Management Committee and in accordance
with this Agreement.
4.3 As Operator, VNC will not charge a management fee or any other fee for
carrying out its duties. VNC will charge the actual time spent by VNC and
Vista personnel on the Property at cost. All agreements entered into to by
VNC as Operator with third parties will be charged to the project at cost.
4.4 As Operator, VNC shall:
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(a) propose at least, such Expenditures as are necessary to maintain the
Vista Agreement and the Property in good standing;
(b) propose Programs that enhance both the gold and the silver areas of
the Property on an equal basis; and
(c) propose during the term of the Option preliminary metallurgical test
work to determine silver and gold recoveries for the various forms of
mineralization encountered on the Property.
5. MANAGEMENT COMMITTEE
5.1 A Management Committee shall be established on or forthwith after the
execution of this Agreement. Except as herein otherwise provided, the
Management Committee shall make all decisions in respect of all work or
other activities carried out on the Property.
5.2 Each of VNC and MSI shall forthwith appoint one representative and one
alternate representative to the Management Committee. The alternate
representative may act for a party's representative in his absence.
5.3 During the term of this Agreement, the Operator shall call a Management
Committee meeting at least once every quarter and, in any event, within
seven days of being requested to do so by any representative.
5.4 The Operator shall give notice, specifying the time and place of, and the
agenda for, the meeting to all representatives at least seven days before
the time appointed for the meeting. Unless otherwise agreed to by the
Management Committee, meetings of the Management Committee shall alternate
between Vancouver, British Columbia and Denver, Colorado. Any or all
representatives on the Management Committee may attend and vote at a
meeting of the Management Committee by telephone conference call in which
each representative may hear, and be heard by, the other representatives.
5.5 Notice of a meeting shall not be required if representatives of all of the
parties are present and unanimously agree upon the agenda.
5.6 A quorum for any Management Committee meeting shall be present if a
representative of each of VNC and MSI is present. If a quorum is present at
the meeting, the Management Committee shall be competent to exercise all of
the authorities, powers and discretions set out in this Agreement. The
Management Committee shall not transact any business at a meeting unless a
quorum is present at the commencement of the meeting. If a quorum is not
present within 30 minutes following the time appointed for the commencement
of the Management Committee meeting, the meeting shall be automatically
re-scheduled for the same time of day and
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at the same place five business days later, and the Operator shall be under
no obligation to give any party notice thereof. A quorum shall be deemed to
be present at such re-scheduled meeting for all purposes under this
Agreement if at least one representative is present.
5.7 The Management Committee shall decide every question submitted to it by a
vote with each representative being entitled to cast that number of votes
which is equal to its party's percentage interest in the Property. For the
purpose of the Management Committee and voting at meetings thereof, VNC
will be deemed to have a 45% interest in the Property and MSI will be
deemed to have a 55% interest in the Property. Other than as is expressly
set out in this Agreement to the contrary, the Management Committee shall
make decisions by Simple Majority. In the event of a tied vote, the
chairman shall not have a second or casting vote, provided that either
party shall be entitled to refer the matter to arbitration under
Article 17.
5.8 During the term of this Agreement, the representative, and in his absence
the alternate representative, of MSI shall be the Chairman of each
Management Committee meeting and the representative, and in his absence the
alternate representative, of VNC shall be the Secretary of each Management
Committee meeting.
5.9 The secretary of the Management Committee shall take minutes of each
meeting and use his or her reasonable best efforts to circulate copies
thereof to each representative within 14 days time following the
termination of the meeting, and in any event no later than the time of
delivery of the notice of the next following meeting of the Management
Committee. Each agenda for a meeting shall include the consideration and
approval of the minutes of the immediately preceding meeting of the
Management Committee.
5.10 The Management Committee may make decisions by obtaining the consent in
writing of the representatives of all VNC and MSI. Any decision so made
shall be as valid as a decision made at a duly called and held meeting of
the Management Committee.
5.11 Management Committee decisions made in accordance with this Agreement shall
be binding upon all of the parties.
5.12 During the term of this Agreement, each party shall bear the expenses
incurred by its representative and alternate representative in attending
meetings of the Management Committee.
5.13 The Management Committee may, by agreement of the representatives of all
the parties, establish such other rules of procedure, not inconsistent with
this Agreement, as the Management Committee deems fit.
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5.14 Notwithstanding the provisions of section 5.7, a decision as to the
approval of any Program shall require the approval of the Management
Committee by a Special Majority.
5.15 The Management Committee shall not approve the preparation of a feasibility
study or report until Newmont elects not to exercise the Backin Right or
the Backin Right expires without exercise.
6. PROGRAMS
6.1 Following the date of this Agreement, Expenditures shall only be incurred
under and pursuant to Programs prepared by the Operator and approved by the
Management Committee as provided in this Article. The Operator shall not
propose the preparation of a feasibility study or report until Newmont
elects not to exercise the Backin Right or the Backin Right expires without
exercise.
6.2 The Operator shall prepare draft Programs for consideration by the
Management Committee. The initial Program shall be for the period ending
December 31, 2003, a draft of which shall be provided to the Management
Committee within 6o days following the execution of this Agreement. Unless
otherwise agreed to by a Special Majority, each subsequent Program shall
cover a calendar year and a draft of which shall be delivered to the
Management Committee by no later than 30 days prior to the period to which
the draft Program relates. Each draft Program shall contain a statement in
reasonable detail of the proposed operations, estimates of all Expenditures
to be incurred and an estimate of the time when they will be incurred and
shall be accompanied by such reports and data as are reasonably necessary
for each party to evaluate and assess the results from the Program for the
then current year and, to the extent not previously delivered, from earlier
Programs. Expenditures for each Program shall be sufficient to maintain the
Vista Agreement and Property in good standing.
MSI acknowledges that VNC commenced and completed a Program prior to the
date of this Agreement to maintain the Vista Agreement in good standing and
that the Expenditures incurred in respect of the Program shall be paid for
by MSI, within 30 days after the date of execution of this Agreement, out
of the funds to be contributed to Expenditures by MSI under subsection
2.2(b) of this Agreement.
6.3 Within 30 days of delivery of a proposed Program to the Management
Committee hereunder, a meeting of the Management Committee shall be
convened to review and approve such Program. If the Management Committee
fails to approve any such Program, the Management Committee and the
Operator shall meet to discuss and agree upon a Program. If the Management
Committee and the Operator fail to agree upon a Program, the Management
Committee or the Operator may refer the proposed Program to arbitration in
accordance with Article 17. The arbitrator shall review and modify the
proposed Program so that (a) the minimum Expenditures (but not more
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than the minimum Expenditures) required to maintain the Vista Agreement
in good standing are to incurred under the Program and (b) the
Expenditures to be incurred under the proposed Program enhance both the
gold and the silver areas of the Property on an equal basis.
6.4 If it appears to the Operator that Expenditures will exceed those estimated
under a Program, the Operator shall immediately give written notice to the
Management Committee outlining the nature and extent of the additional
costs and expenses (herein called "Program Overruns") and the reasons
therefor. If Program Overruns are estimated to exceed by 10% those approved
under the Program (herein called "Excess Program Overruns"), the notice of
the Operator shall contain a notice of a meeting of the Management
Committee, to be held no sooner than seven days after the date of delivery
of the notice, for the purpose of considering, and if deemed advisable,
approving the Excess Program Overruns. If such Excess Program Overruns are
not approved by the Management Committee, the Operator shall curtail or
abandon such Program.
6.5 Unitil such time as MSI has exercised the Option, MSI shall reimburse VNC
for all Expenditures incurred in respect of each Program approved in
accordance with section 6.3 and all Excess Program Overruns approved in
accordance with section 6.4 within 30 days after receipt by MSI of a
detailed invoice from VNC.
7. TITLE
7.1 Upon the request of MSI, VNC shall assist, when required, MSI to record
this Agreement with the appropriate mining recorder or other governmental
authority and, upon Property interest earning, shall provide MSI with such
reasonable transfers as MSI and its counsel shall require to record its due
interest.
8. RIGHT OF ENTRY
8.1 During the currency of this Agreement and prior to the exercise of the
Option, MSI, its directors, officers, employees and agents and any persons
duly authorized by MSI, shall have the right of access to and from the
Property at all reasonable times, provided that MSI, its directors,
officers, employees and agents and any persons duly authorized by MSI shall
not interfere with VNC's activities on the Property and shall be at their
own risk and that Vista and VNC shall not be liable for any loss, damage or
injury incurred by MSI, its directors, officers, employees and agents and
any persons duly authorized by MSI arising from their inspection of the
Property, however caused.
9. REPRESENTATIONS AND WARRANTIES
9.1 Vista and VNC hereby represent and warrant to MSI that:
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(a) each of Vista and VNC is duly incorporated and is a valid and
subsisting company under the laws of its jurisdiction of
incorporation;
(b) the execution, delivery and performance of this Agreement and the
agreements and transactions contemplated herein are within the
corporate power and authority of each of Vista and VNC and have been
duly authorized by all necessary corporate action and this Agreement
constitutes a valid and binding obligation of each of Vista and VNC,
enforceable in accordance with its terms, subject only to the
following qualifications:
(i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy; and
(ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar
laws generally affecting the enforceability of creditors' rights;
(c) the entering into of this Agreement does not conflict with any
applicable law nor does it conflict with or result in a breach of or
accelerate the performance required by any contract or other
commitment to which either is a party or by which either is bound;
(d) VNC is the legal and beneficial owner a 100% interest in the Artemis
Lease, subject to the Backin Right, Underlying Royalties and other
rights retained by Newmont in the Vista Agreement, and has the
exclusive right to explore, develop and mine the Property;
(e) VNC has the right to enter into this Agreement and all necessary
authority to grant the Option to MSI and, on exercise of the Option,
to assign to MSI the Interest in accordance with the terms and
conditions of this Agreement;
(f) Newmont and NCL have consented, under subsection 3.4(b) of the Vista
Agreement, to the grant of the Option and the execution and delivery
of this Agreement by Vista and VNC;
(g) VNC has the exclusive right to receive 100% of the proceeds from the
sale of minerals, metals, ores or concentrates removed from the
Property, subject to the Backin Right and the Underlying Royalties and
no person, firm or corporation is entitled to any royalty or other
payment in the nature of rent or royalty on such materials removed
from the Property, or is entitled to take such materials in kind,
other than in accordance with the Backin Right and the Underlying
Royalties;
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(h) other than as disclosed in this Agreement, the Property is free and
clear of all Encumbrances;
(i) Vista and VNC have advised MSI of all of the material information
relating to the mineral potential of the Property of which they have
knowledge.
9.2 The representations and warranties hereinbefore set out are conditions upon
which MSI has relied on entering into this Agreement and shall survive the
exercise of the option granted hereby, and Vista and VNC hereby indemnify
and save MSI harmless from all loss, damage, costs, actions and suits
arising out of or in connection with any breach of any representation or
warranty made by it and contained in this Agreement.
10. REPRESENTATIONS AND WARRANTIES OF MSI
10.1 MSI represents and warrants to Vista and VNC that:
(a) MSI is duly incorporated and is a valid and subsisting company under
the laws of its jurisdiction of incorporation;
(b) the execution, delivery and performance of this Agreement and the
agreements and transactions contemplated herein are within the
corporate power and authority of MSI and have been duly authorized by
all necessary corporate action and this Agreement constitutes a valid
and binding obligation of MSI, enforceable in accordance with its
terms, subject only to the following qualifications:
(i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy; and
(ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar
laws generally affecting the enforceability of creditors' rights;
(c) the entering into of this Agreement does not conflict with any
applicable laws or with its charter documents, nor does it conflict
with, or result in a breach of, or accelerate the performance required
by any contract or other commitment to which it is a party or by which
it is bound; and
(d) it is eligible to acquire and hold an interest in the Property.
10.2 The representations and warranties hereinbefore set out are conditions upon
which Vista and VNC have relied in entering into this Agreement and shall
survive
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the exercise of the option herein granted, and MSI hereby indemnifies and
saves Vista and VNC harmless from all loss, damage, costs, actions and
suits arising out of or in connection with any breach of any representation
or warranty made by it and contained in this Agreement.
11. COVENANTS OF VISTA AND VNC
11.1 Vista and VNC covenant and agree with MSI that until the option granted
hereunder is exercised or otherwise terminates:
(a) VNC shall fully and faithfully perform all obligations, carry out all
work and do all things as may be required to maintain the Vista
Agreement in good standing;
(b) Vista and VNC, as operator, shall indemnify and hold MSI harmless from
any and all liabilities, costs, damages or charges arising from the
failure of Vista and VNC to comply with the covenants contained in
this Agreement or the Vista Agreement or otherwise arising from
operations on the Property by VNC, its servants or agents, including
any environmental clean-up required or ordered pursuant to applicable
laws;
(c) VNC shall allow MSI access at all reasonable times and intervals to
all factual maps, reports, assay results and other factual technical
data prepared or obtained by VNC in connection with its operations on
the Property;
(d) VNC shall provide MSI with written quarterly factual progress reports
and a written annual factual progress report with respect to its
operations on the Property, and shall provide MSI with copies of any
and all other documents prepared by VNC for filing with regulatory
authorities or otherwise;
(e) Vista and VNC, as operator, shall save MSI harmless from and against
any loss, liability, claim, demand, damage, expense, injury or death
arising out of or in connection with the operations or activities
which were carried out on the Property prior to the date of this
Agreement;
(f) until such time as the Option is exercised or otherwise terminates,
VNC will not deal, or attempt to deal, with its right, title and
interest in and to the Vista Agreement, Artemis Lease and the Property
in any way that would or might affect the right of MSI to become
absolutely vested in a the Interest, free and clear of Encumbrances,
other than the Backin Right, Underlying Royalties and other rights
retained by Newmont in the Vista Agreement;
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(g) if prior to earn-in by MSI under this Agreement, Vista and VNC
determine to terminate the Vista Agreement or the Artemis Lease, or
any portion thereof, Vista and VNC shall as soon as possible
thereafter advise MSI of their decision and assign their rights under
the Vista Agreement or the Artemis Lease, as the case may be, to MSI,
if so elected by MSI;
(h) Vista and VNC shall not assign their interest in the Vista Agreement
or the Artemis Lease to any party, other than MSI, without the prior
written consent of MSI; and
(i) VNC shall carry on all operations on the Property in a good and
miner-like manner and in compliance with all applicable governmental
regulations and restrictions.
12. TERMINATION
12.1 This Agreement shall terminate upon MSI, not being at the time in default
under any provision of this Agreement, giving five (5) days written notice
to Vista and VNC of termination.
12.2 Notwithstanding paragraph 12.1, if MSI fails to make any payment or fails
to do anything on or before the last day provided for such payment or
performance under this Agreement, Vista and VNC may terminate this
Agreement, but only if:
(a) they shall have first given to MSI written notice of the failure
containing particulars of the payment which MSI has not made or the
act which MSI has not performed; and
(b) MSI has not, within 30 days following delivery of such notice, cured
such failure or commenced proceedings to cure such failure by
appropriate payment or performance (MSI hereby agreeing that should it
so commence to cure any failure it will prosecute the same to
completion without undue delay).
Should MSI fail to comply with the provisions of subparagraph 12.2(b),
Vista and VNC may thereafter terminate this Agreement by notice in
writing to MSI.
12.3 Upon termination of this Agreement, MSI forfeits any and all interest in
the Property hereunder and shall cease to be liable to Vista and VNC in
debt, damages or otherwise save for the performance of those of its
obligations which theretofore should have been performed.
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13. INDEPENDENT ACTIVITIES
13.1 Except as expressly provided herein, each party shall have the free and
unrestricted right to independently engage in and receive the full benefit
of any and all business endeavours of any sort whatsoever, whether or not
competitive with the endeavours contemplated herein without consulting the
other or inviting or allowing the other to participate therein. No party
shall be under any fiduciary or other duty to the other which will prevent
it from engaging in or enjoying the benefits of competing endeavours within
the general scope of the endeavours contemplated herein. The legal
doctrines of "corporate opportunity" sometimes applied to persons engaged
in a joint venture or having fiduciary status shall not apply in the case
of any party as to:
(a) any opportunity to acquire, explore and develop any mining property,
interest or right presently owned by it or offered to it outside of
the Property at any time; and
(b) the erection of any mining plant, mill, smelter or refinery, whether
or not such mining plant, mill, smelter or refinery treats ores or
concentrates from the Property.
14. CONFIDENTIALITY OF INFORMATION
14.1 The parties hereto shall treat all data, reports, records and other
information relating to this Agreement and the Property as confidential.
While this Agreement is in effect, neither party hereto shall, subject to
section 14.2, without the express written consent of the other, disclose to
any third party any information concerning the results of the operations
hereunder nor issue any press releases concerning this Agreement or its
exploration operations except:
(a) where such disclosure is mandatory under the law or is deemed
necessary by a party's counsel for the satisfaction by such party of
its obligations to applicable securities regulatory bodies;
(b) where a party is seeking the participation of a third party in the
exploration, development or production of the Property, and such
information is divulged under confidential circumstances.
14.2 All news releases concerning the operations to be carried out under this
Agreement shall be jointly planned and co-ordinated and no party shall act
unilaterally in this regard without the prior approval of the other, such
approval not to be unreasonably withheld, provided that nothing herein will
be taken to limit or otherwise prohibit compliance by a party with any
continuous disclosure obligations it may have by law or pursuant to the
rules and regulations of any stock exchange.
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15. ASSIGNMENT
15.1 None of the parties to this Agreement shall assign their interest in this
Agreement, without the prior written consent of the other parties.
16. UNAVOIDABLE DELAYS
16.1 If any party should be delayed in or prevented from performing any of the
terms, covenants or conditions of this Agreement by reason of a cause
beyond the control of such party, including fires, floods, earthquakes,
subsidence, ground collapse or landslides, interruptions or delays in
transportation or power supplies, strikes, lockouts, wars, acts of God,
government regulation or interference, including but without restricting
the generality of the foregoing, forest or highway closures or any other
cause beyond such party's control, then any such failure on the part of
such party to so perform shall not be deemed to be a breach of this
Agreement, and the time within which such party is obliged to comply with
any such term, covenant or condition of this Agreement shall be extended by
the total period of all such delays. In order that the provision of this
article may become operative, such party shall give notice in writing to
the other party, forthwith and for each new cause of delay or prevention
and shall set out in such notice particulars of the cause thereof and the
day upon which the same arose, and shall give like notice forthwith
following the date that such cause ceased to subsist.
17. ARBITRATION
17.1 If there is any disagreement, dispute or controversy (hereinafter
collectively called a "Dispute") between the parties with respect to any
matter arising under this Agreement or the construction hereof; then the
Dispute shall be determined by arbitration in accordance with the following
procedures:
(a) the party on one side of the Dispute shall inform the other party by
notice of the names of three impartial and independent persons who are
recognized experts in the area which is the subject matter of the
Dispute; and
(b) the other party shall, within seven (7) days of receipt of the notice,
inform the party on the other side of the Dispute the name of the one
person that it wishes to act as the sole arbitrator.
The arbitration shall be conducted in accordance with the Commercial
Arbitration Act (British Columbia) and the decision of the arbitrator
shall be made within 30 days following his being named, shall be based
exclusively on the advancement of exploration work on the Property and
not on the financial circumstances of the parties. The costs of
arbitration shall be borne equally by the parties to the Dispute unless
otherwise determined by the arbitrator in the award.
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18. NOTICES
18.1 Any notice, election, consent or other writing required or permitted to be
given hereunder shall be deemed to be sufficiently given if delivered or
faxed, addressed as follows:
(a) In the case of Vista:
Vista Gold Corporation
7961 Shaffer Parkway, Suite 5
Littleton, CO 80127
Facsimile: (720) 981 1186
Attention: President
(b) In the case of VNC:
Vista Nevada Corp.
7961 Shaffer Parkway, Suite 5
Littleton, CO 80127
Facsimile: (720) 981 1186
Attention: President
(c) In the case of MSI:
Maverick Silver Inc.
Suite 1180, 999 West Hastings Street
Vancouver, B.C. V6C 2W2
Facsimile: (604) 689-3847
Attention: President
With a copy to:
Silver Standard Resources Inc.
Suite 1180, 999 West Hastings Street
Vancouver, B.C. V6C 2W2
Facsimile: (604) 689-3847
Attention: President
and any such notice given aforesaid shall be deemed to have been given to
the parties hereto if delivered, when delivered, or if faxed, on the
next succeeding day following the faxing thereof. Any party may from
time to time by notice in writing change its address for the purpose of
this section.
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19. GENERAL TERMS AND CONDITIONS
19.1 The parties hereto hereby covenant and agree that they will execute such
further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out
the intent of this Agreement.
19.2 This Agreement shall represent the entire understanding between the parties
with respect to the Property and the Vista Agreement and supersedes all
prior agreements and understandings, oral or written, by and between any of
the parties with respect to the subject matter hereof, including, without
limitation, the letter agreement dated November 7, 2002 among Vista, VNC
and Silver Standard Resources Inc. No representations or inducements have
been made save as herein set forth. No changes, alterations or
modifications of this Agreement shall be binding upon either party until
and unless a memorandum in writing to such effect shall have been signed by
all parties hereto.
19.3 This Agreement shall be governed by and interpreted in accordance with the
laws in effect in British Columbia and the parties hereto attorn to the
courts of British Columbia for the resolution of any disputes arising out
of this Agreement.
19.4 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the day and year first above written.
VISTA GOLD CORP. VISTA NEVADA CORP.
Per: Per:
/s/ Ronald J. McGregor /s/ Ronald J. McGregor
------------------------- -------------------------
Ronald J. McGregor Ronald J. McGregor
President President
MAVERICK SILVER INC.
Per:
/s/ Robert Quartermain
-------------------------
Robert Quartermain
President
SCHEDULE "A"
VISTA AGREEMENT
FILED SEPARATELY
AS EXHIBIT "10.17"