EXHIBIT 99.1
GOLDEN PHOENIX/SCHNACK AGREEMENT
For Advance On Sales Of Molybdenum Concentrates
WHEREAS, Golden Phoenix Minerals, Inc. is a publicly traded mining company
headquartered in Sparks, Nevada, (hereinafter "Recipient"), and William D. and
Candida Schnack are a married couple residing in Sacramento, California,
(hereinafter "Advancer"); and
WHEREAS Recipient is the manager/operator of the Ashdown molybdenum mine
located near Denio, Nevada; and
WHEREAS the Advancers are in a position to financially assist the
Recipient in the development of the Ashdown mine;
NOW THEREFORE, the parties agree that Advancer shall advance to Recipient
ONE MILLION DOLLARS ($1,000,000) on its production and sale of molybdenum
concentrates form Ashdown mine. Funds from the advance will allow Recipient to
bring into production the Ashdown mine. The advance will be restricted to
funding the reopening of the Sylvia Vein molybdenum deposit, including but not
limited to permitting, bonding and all related costs of driving drift to the ore
face. Funds will be disbursed in accordance with a pre-approved milestone
schedule as follows:
Disbursement Point Amount Allocated To:
------------------ ------ -------------
Initial Advance $280,000 Reclamation Bond Permitting
Engineering/Consulting
Power Service Deposit
Dewatering Sylvia Decline
Start of Portal Timbering
Milestone 1 $240,000 Driving Drift
Portal Timbering
Engineering/Consulting
Milestone 2 $215,000 Driving Drift
Mining
Engineering/Consulting
Milestone 3 $215,000 Driving Drift
Mining
Engineering/Consulting
Total $950,000
The balance of FIFTY THOUSAND DOLLARS ($50,000) will be allocated in whole
or party to any or all of the individual milestone payments, as solely deemed
necessary by the Recipients' Project Manager. Any portion of the $50,000
remaining to be disbursed after Milestone 2 will be automatically added to the
Milestone 3 disbursement.
Lender will receive the following consideration for advance of the
$1,000,000:
a) Repayment of the one million dollar advance;
b) A premium of TWO MILLION DOLLARS ($2,000,000); and
c) ONE MILLION (1,000,000) GPXM.OB warrants.
The advance amount ($1,000,000) and premium payment ($2,000,000) will be
paid in monthly installments as follows:
a) 15% of gross molybdenum concentrate sales produced from the Ashdown
Mine on the first of every month starting when production begins.
b) Beginning October 1, 2005, a minimum payment of $500,000 or 15% of the
gross, which ever is greater is due and payable on the first of every month
thereafter until both the advance and premium are retired in full.
c) The final payment will be due and payable February 1, 2006.
99.1-1
At the time that the Initial Advance of $280,000 is paid to Recipient,
Advancer will be issued one million (1,000,000) GPXM.OB warrants exercisable at
a price of fourteen cents ($0.14) per warrant, bearing a two-year expiration
period from the date of this Agreement.
It is further agreed that during this two year period, if there is any
dilution of stock in the Company, the number of the stock warrants will be
increased to reflect this dilution.
It is further agreed that William D. Schnack will have full access to the
Ashdown Company accounting.
It is further agreed that copies of all invoices related to the Ashdown
project will be furnished to William D. Schnack on the first day of each month
throughout the payment period.
Neither party is deemed drafter of this Agreement.
The parties have read, understood and agree to the terms of this
Agreement.
GOLDEN PHOENIX MINERALS, INC.
/s/ Kenneth S. Ripley /s/ 5-10-05
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Kenneth S. Ripley, CEO Date
WILLIAM D. SCHNACK
/s/ William D. Schnack /s/ 5/6/05
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Date
CANDIDA SCHNACK
/s/ Candida Schnack /s/ 5-6-05
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Date
99.1-2