Exhibit 10.4
PROPERTY OPTION AGREEMENT
THIS made and entered into as of the ___ day of __________, 2010.
BETWEEN:
JOHN AND MARIE BRADY, 1227 Holland Road, Sudbury, Ontario, P3A 3R1
(the "Bradys") and DAVID BEILHARTZ, 49 Airport Road, Whitefish,
Ontario, P0M 3E0 ("Beilhartz");
(the Bradys and Beilhartz herein together "Optionors")
OF THE FIRST PART
AND:
WIDESCOPE RESOURCES INC., a company having an office at Suite 208-828
Harbourside Drive, North Vancouver, British Columbia, V7P 3R9
(herein "Optionee")
OF THE SECOND PART
WHEREAS the Optionors have represented that collectively they are the sole
beneficial owners in and to those mineral claims in Ontario (the "Claims") as
more particularly described in Schedule "A" attached hereto and collectively
referred to as the Woods Creek Property as to 50% by the Bradys and 50% by
Beilhartz;
AND WHEREAS the Optionors, subject to the Net Smelter Royalty reserved to the
Optionors and the obligations under section 10(g) hereof, now wishes to grant to
the Optionee the exclusive right and option to acquire an undivided 100% right,
title and interest in and to the Claims on the terms and conditions hereinafter
set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises,
the mutual covenants herein set forth and the sum of One Dollar ($1.00) of
lawful money of Canada now paid by the Optionee to the Optionors (the receipt
whereof is hereby acknowledged), the Parties hereto do hereby mutually covenant
and agree as follows:
1. Definitions
The following words, phrases and expressions shall have the following meanings:
(a) "After Acquired Properties" means any and all mineral interests
staked, located, granted or acquired by or on behalf of either of the
parties hereto during the currency of this Agreement which are
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located, in whole or in part, within five kilometres of the perimeter
of the Claims;
(b) "Expenditures" includes all direct or indirect expenses [net of
government incentives and net of payments to the Optionors pursuant to
Section 4 hereof] of or incidental to Mining Operations provided that
such expenses must relate to work on the Claims as is acceptable to
the MNDM for the purposes of keeping the Claims in good standing. The
certificate of the Controller or other financial officer of the
Optionee, together with a statement of Expenditures in reasonable
detail shall be prima facie evidence of such Expenditures;
(c) "Facilities" means all mines and plants, including without limitation,
all pits, shafts, adits, haulageways, raises and other underground
workings, and all buildings, plants, facilities, and other structures,
fixtures, and improvements, and all other property, whether fixed or
moveable, as the same may exist at any time in, or on the Claims and
relating to the operator of the Claims as a mine or outside the Claims
if for the exclusive benefit of the Claims only;
(d) "Force Majeure" means an event beyond the reasonable control of the
Optionee that prevents or delays it from conducting the activities
contemplated by this Agreement other than the making of payments
referred to in Section 0 herein. Such events shall include but not be
limited to acts of God, war, insurrection, action or inaction of
governmental agencies, inability to obtain any environmental,
operating or other permits or approvals, authorizations or consents
and inclement weather conditions;
(e) "Mineral Products" means the commercial end products derived from
operating the Claims as a mine;
(f) "Mineral Rights" means the right to all minerals on, in or under the
Claims;
(g) "Mining Operations" includes:
(i) every kind of work done on or with respect to the Claims or the
mineral products derived therefrom by or under the direction of
the Optionee; and
(ii) without limiting the generality of the foregoing, includes the
work of assessment, geophysical, geochemical and geological
surveys, studies and mapping, investigating, drilling, designing,
examining equipping, improving, surveying, shaft sinking,
raising, cross-cutting and drifting, searching for, digging,
trucking, sampling, working and procuring minerals, ores and
metals, in surveying and bringing any mineral claims to lease or
patent, in doing all other work usually considered to be
prospecting, exploration, development, a feasibility study,
mining work, milling, concentration, bonification or ores and
concentrates, as well as the separation and extraction of Mineral
Products;
(h) "MNDM" means the Ontario Ministry of Northern Development and Mines;
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(i) "Net Smelter Royalty" means that net smelter royalty as defined in
Section 0 hereof;
(j) "Option" means the option granted by the Optionors to the Optionee to
acquire, subject to the Net Smelter Royalty reserved to the Optionors
and the obligations under section 10(g) hereof, an undivided 100%
right, title and interest in and to the Claims;
(k) "Option Period" means the period from the date hereof to the date at
which the Optionee has performed its obligations to acquire its 100%
interest in the Claims as set out in Section 0 hereof subject to the
Net Smelter Royalty reserved to the Optionors and the obligations
under section 10(g) hereof; and
(l) "Claims" means the mineral claims described in Schedule "A" together
with such further claims contiguous to the claims described in
Schedule "A" as the parties hereto have mutually agreed to be staked
so as to become subject to the Option.
2. Headings
Any heading, caption or index hereto shall not be used in any way in construing
or interpreting any provision hereof.
3. Singular, Plural
Whenever the singular or masculine or neuter is used in this Agreement, the same
shall be construed as meaning plural or feminine or body politic or corporate or
vice versa, as the context so requires.
4. Option
The Optionors hereby grant to the Optionee the sole and exclusive right and
option (the "Option") to earn a 100% interest in the Claims, subject to the Net
Smelter Royalty reserved to the Optionors and the obligations under section
10(g) hereof, exercisable as follows (it being acknowledged that all cash
payments and share issuances provided for herein are to be made as to 50% to the
Bradys and 50% to Beilhartz):
(a) the Optionee paying the sum of $7,500 to the Optionors by way of cash
and issuing 150,000 common shares of the Optionee to the Optionors
forthwith upon execution of this Agreement (the "Execution Date");
(b) on or before that date which is 12 months following the Execution Date
the Optionee incurring $24,000 of Expenditures, paying a further
$15,000 to the Optionors and issuing to the Optionors a further
150,000 common shares of the Optionee;
(c) on or before that date which is 24 months following the Execution Date
the Optionee, incurring a further $24,000 of Expenditures and paying a
further $20,000 to the Optionors;
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(d) on or before that date which is 36 months following the Execution Date
the Optionee incurring a further $24,000 of Expenditures and paying a
further $45,000 to the Optionors; and
upon the Optionee having satisfied the obligations set forth above, the Optionee
shall be deemed to have exercised the Option (the "Exercise Date") and shall be
entitled to an undivided 100% right, title and interest in and to the Claims
with the full right and authority to equip the Claims for production and operate
the Claims as a mine subject to the rights of the Optionors to the Net Smelter
Royalty and subject to the obligations under section 10(g) hereof. Always
provided that if any of the obligations set forth above are not satisfied on or
before the date stipulated, the Optionee shall without losing any rights under
this Agreement have a further thirty (30) days to satisfy any such obligation.
In connection with the incurring of the Expenditures and as a condition thereof,
the Optionee agrees to file with the MNDM all eligible work performed on the
Claims within 90 days of the completion of each phase of work.
5. Net Smelter Royalty
The transfer of the Mineral Rights by the Optionors is subject to the Optionors
retaining a 2.5% Net Smelter Royalty (with a 50% undivided interest being held
by each of the Bradys and Beilhartz) with respect to the production from the
Claims having the following attributes:
(a) the terms and conditions of the Net Smelter Royalty shall be as set
forth in schedule B hereto;
(b) the Optionee shall have the right to repurchase sixty percent of the
Net Smelter Royalty (1.5%) for $1,500,000 at any time prior to the
first anniversary date of the commencement of commercial production on
the Claims; and
(c) the Optionee shall be obligated to pay advances on the Net Smelter
Royalty of $5,000 per annum, payable as to $2,500 on August 1 and
February 1 of each year commencing August 1, 2013 which amounts, for
greater certainty shall serve to reduce any amounts otherwise payable
on account of the Net Smelter Royalty.
6. Transfer of Title
Upon execution of this Agreement, the Optionors will deliver or cause to be
delivered to the Optionee, a duly executed transfer of the Claims in favour of
the Optionee (the "Optionee Transfer") to be held in trust by said solicitors
subject to the terms and conditions of this Agreement. The Optionee shall be
entitled to record the Optionee Transfer with the appropriate government offices
to effect transfer of legal title of the Claims into its own name at any time
following the Exercise Date provided that in the event the Optionee Transfer is
recorded the Optionors shall be entitled to record notice of their interest in
the Net Smelter Royalty.
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7. Assignment
During the Option Term, no party shall sell, transfer, assign, mortgage, pledge
or otherwise encumber its interest in this Agreement or its right or interest in
the Claims without the consent of the other parties, such consent to be not
unreasonably withheld, provided that any party shall be permitted to assign this
Agreement to an "affiliate" or "associate" as those terms are defined in THE
BUSINESS CORPORATIONS ACT (British Columbia). It will be a condition of any
assignment under this Agreement that such assignee shall agree in writing to be
bound by the terms of this Agreement applicable to the assignor.
The Optionee shall have the right at any time during the term of this Agreement
to relinquish its rights to earn an interest in one or more of the Claims or to
reduce the size of one or more of the Claims, in accordance with the laws of
Ontario, by providing written notice to the Optionors. Pursuant to any such
relinquishment the Claims relinquished shall be returned to the Optionor with
sufficient work applied to them such that they are in good standing for a period
of twelve (12) months from the date of relinquishment. Following any such
relinquishment or reduction in size, the Optionee will have no obligation to
incur any further exploration and development expenditures on the portion of the
Property relinquished or, in the case of a claims that has been reduced in size,
on the portion of such claim that has been dropped.
8. Termination
This Agreement shall forthwith terminate in circumstances where:
(a) the Optionee fails to make the payments for or carry out the
Expenditures required in Sections 0 of this Agreement on or before the
dates set out herein provided that, in circumstances where the
Optionee is prevented from carrying out any of the Expenditures
contemplated in Sections 0 prior to the dates set out therein due to
Force Majeure, then the Optionee shall forthwith give the Optionors
written notice of the commencement and termination of the said Force
Majeure and thereafter such dates shall be deemed to have been
extended by the period of time during which the Force Majeure remains
in effect;
(b) the Optionee gives 3 months notice of termination to the Optionors
which it shall be at liberty to do at any time after the execution of
this Agreement and the payment of the amount set forth in clause 0
hereof;
(c) this Agreement is terminated in accordance with the provisions of
section 0 herein; or
(d) the parties mutually agree in writing; and
in circumstances where this Agreement terminates prior to the Exercise Date the
Optionee shall execute all such documents and do all such things as necessary to
transfer legal title to the Claims back to the Optionors.
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9. Representations, Warranties and Covenants of the Optionors
The Optionors jointly represent, warrant and covenant to and with the Optionee
as follows:
(a) neither the execution and delivery of this Agreement, nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby contemplated conflict with,
result in the breach of or accelerate the performance required by, any
agreement to which they are a party;
(b) the Claims are accurately described in Schedule "A", are in good
standing under the laws of the jurisdiction in which it is located and
are free and clear of all liens, charges and encumbrances other than
those of which the Optionee has been advised in writing;
(c) the Claims have been operated substantially in accordance with all
applicable and environmental laws and, to the knowledge of the
Optionors there are no environmental conditions existing on the Claims
to which any material remedial action is required or any material
liability has or may be imposed under applicable environmental law;
(d) the Optionors are the sole beneficial owners of the Claims and have
the exclusive right to enter into this Agreement and all necessary
authority to transfer their interest in the Claims in accordance with
the terms of this Agreement;
(e) no person, firm or corporation has any proprietary or possessory
interest in the Claims other than the Optionors, and no person, firm
or corporation is entitled to any royalty or other payment in the
nature of rent or royalty on any minerals, ores, metals or
concentrates or any other such products removed from the Claims;
(f) upon request by the Optionee, and at the sole cost of the Optionee,
the Optionors shall deliver or cause to be delivered to the Optionee
copies of all available maps and other documents and data in their
possession respecting the Claims; and
(g) during the currency of this Agreement, the Optionors will:
(i) not do any act or thing which would or might in any way adversely
affect the rights of the Optionee hereunder;
(ii) not relinquish or abandon all or any part of their interest in
the Claims;
(iii)not mortgage, pledge or encumber the Claims after the Effective
Date without the Optionee's prior written consent; and
(iv) give the Optionee such access to the Property, at all times at
its own risk and expense, as the Optionee shall determine, acting
reasonably, is necessary to enable it to carry out the terms of
this Agreement.
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10. Representations, Warranties and Covenants of the Optionee
The Optionee represents, warrants and covenants to and with the Optionors that:
(a) the Optionee is a company duly organized validly existing and in good
standing under the laws of the Province of British Columbia;
(b) the Optionee has full power and authority to carry on its business and
to enter into this Agreement and any agreement or instrument referred
to or contemplated by this Agreement;
(c) neither the execution and delivery of this Agreement, nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby contemplated conflict with,
result in the breach of or accelerate the performance required by, any
agreement to which it is a party;
(d) the execution and delivery of this Agreement and the agreements
contemplated hereby will not violate or result in the breach of the
laws of any jurisdiction applicable or pertaining thereto or of its
constating documents;
(e) this Agreement constitutes a legal, valid and binding obligation of
the Optionee;
(f) the Optionee shall use its reasonable best efforts to limit the resale
restrictions to which the common shares of the Optionee issuable to
the Optionors pursuant to Section 0 hereof would be subject to the
minimum restrictions provided for under applicable securities laws;
(g) both during and after the Option Period, the Optionee will keep the
Claims in good standing, free and clear of all liens, charges and
encumbrances and in connection therewith shall make all such payments,
including, but not limited to taxes and filing fees as shall be
necessary and including meeting all of the MNDM minimum yearly
assessment work requirements and qualified expenditures thereof in
order to keep the Claims in good standing, failing which the Optionee
shall take all such steps as shall be necessary to reconvey the Claims
to the Optionors; and
(h) the Optionee will carry out all Mining Operations on the Claims in a
miner-like fashion and will obtain all licenses and permits as shall
be necessary to enable it to carry out the terms of this Agreement.
11. Indemnity and Survival of Representations
The representations and warranties hereinbefore set out are conditions on which
the parties have relied in entering into this Agreement and shall survive the
acquisition of any interest in the Claims by the Optionee and each of the
parties will indemnify and save the other harmless from all loss, damage, costs,
actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by them and
contained in this Agreement.
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The Optionee agrees to indemnify and save harmless the Optionors from any
liability to which it may be subject arising from any Mining Operations carried
out by the Optionee or at is direction on the Claims.
12. Confidentiality
The parties hereto agree to hold in confidence all information obtained in
confidence in respect of the Claims or otherwise in connection with this
Agreement other than in circumstances where a party has an obligation to
disclose such information in accordance with applicable securities legislation,
in which case such disclosure shall only be made after consultation with the
other party.
13. Notice
All notices, consents, demands and requests (in this Section 0 called the
"Communication") required or permitted to be given under this Agreement shall be
in writing and may be delivered personally sent by telegram, by telex or
telecopier or other electronic means or may be forwarded by first class prepaid
registered mail to the parties at their addresses first above written. Any
Communication delivered personally or sent by telegram, telex or telecopier or
other electronic means shall be deemed to have been given and received on the
second business day next following the date of sending. Any Communication mailed
as aforesaid shall be deemed to have been given and received on the fifth
business day following the date it is posted, addressed to the parties at their
addresses first above written or to such other address or addresses as either
party may from time to time specify by notice to the other; provided, however,
that if there shall be a mail strike, slowdown or other labour dispute which
might affect delivery of the Communication by mail, then the Communication shall
be effective only if actually delivered.
14. Further Assurances
Each of the parties to this Agreement shall from time to time and at all times
do all such further acts and execute and deliver all further deeds and documents
as shall be reasonably required in order fully to perform and carry out the
terms of this Agreement.
15. Entire Agreement
The parties hereto acknowledge that they have expressed herein the entire
understanding and obligation of this Agreement and it is expressly understood
and agreed that no implied covenant, condition, term or reservation, shall be
read into this Agreement relating to or concerning any matter or operation
provided for herein.
16. Proper Law and Arbitration
This Agreement will be governed by and construed in accordance with the laws of
the Province of British Columbia and the laws of Canada applicable therein. The
parties hereto hereby irrevocably attorn to the jurisdiction of the Courts of
British Columbia. All disputes arising out of or in connection with this
Agreement, or in respect of any defined legal relationship associated therewith
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or derived therefrom, shall be referred to and finally resolved by a sole
arbitrator by arbitration under the rules of THE ARBITRATION ACT of British
Columbia.
17. Enurement
This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
18. After Acquired Properties
The parties covenant and agree, each with the other, that any and all After
Acquired Properties shall be subject to the terms and conditions of this
Agreement and shall, subject to the provisions hereof, be added to and deemed,
for the purposes hereof, to be included in the Claims. In this regard any costs
incurred by the Optionee in staking, locating, recording or otherwise acquiring
any "After Acquired Properties" will be borne by the Optionee. In circumstances
where the Optionors stake, locate, record or otherwise acquire any "After
Acquired Properties" they shall so notify the Optionee and, provided that the
Optionee reimburses the Optionors for all actual costs related thereto, as set
forth by the Optionors in writing, such After Acquired Properties shall be added
to and deemed, for the purposes hereof, to be included in the Claims.
19. Excess Work Credits
It is acknowledged that there may be excess work credits (the "Excess Credits")
on file with MNDM in relation to the Claims as at the date hereof and in such
case it is acknowledged and agreed that the Optionors retain title to such
Excess Credits and may remove or use them as they in their sole discretion may
decide; provided that in removing or using such Excess Credits the Optionors
shall always ensure that sufficient Excess Credits remain in place to ensure
that the Claims remain in good standing for a period of 12 months from the date
of such removal or use.
20. Default
Notwithstanding anything in this Agreement to the contrary if any party (a
"Defaulting Party") is in default of any requirement herein set forth the party
affected by such default shall give written notice to the Defaulting Party
specifying the default and the Defaulting Party shall not lose any rights under
this Agreement, unless thirty (30) days after the giving of notice of default by
the affected party the Defaulting Party has failed to take reasonable steps to
cure the default by the appropriate performance and if the Defaulting Party
fails within such period to take reasonable steps to cure any such default, the
affected party shall be entitled to seek any remedy it may have on account of
such default including, without limiting, termination of this Agreement.
21. Technical Data
In circumstances where this Agreement is terminated prior to the Exercise Date,
the Optionee shall deliver over to the Optionors all technical data and other
documents and information then in its possession respecting the Claims and the
Mineral Rights.
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22. Payment
All references to monies hereunder shall be in Canadian funds.
23. Option Only
This is an option only and except as herein specifically provided otherwise,
nothing herein contained shall be construed as obligating the Optionee to do any
acts or make any payments hereunder, and any act or acts or payment or payments
as shall be made hereunder shall not be construed as obligating the Optionee to
do any further act or make any further payment or payments.
24. Supersedes Previous Agreements
This Agreement supersedes and replaces all previous oral or written agreements,
memoranda, correspondence or other communications between the parties hereto
relating to the subject matter hereof.
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IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement
effective as of the ____ day of _______________, 2010.
WIDESCOPE RESOURCES INC.
Per:
-------------------------------------------
Authorized Signatory
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JOHN BRADY
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MARIE BRADY
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DAVID BEILHARTZ
SCHEDULE "A"
CLAIMS LIST FOR WOODS CREEK PROPERTY
Claim Number Recording Date Good To Date Work Amt Due Work Filed Other
- ------------ -------------- ------------ ------------ ---------- -----
1242388 2001-Jan-12 2013-Jan-12 $3,354 $67,046
1242389 2001-Jan-12 2012-Jan-12 $4,800 $43,200
1242390 2001-Jan-12 2011-Jan-12 $6,000 $48,000
1242391 2001-Jan-12 2012-Jan-12 $2,400 $21,600
1242392 2001-Jan-12 2010-Jan-12 $6,400 $44,800
SCHEDULE "B"
TO THAT OPTION AGREEMENT BETWEEN JOHN AND MARIE BRADY, DAVID
BEILHARTZ AND WIDESCOPE RESOURCES INC. DATED
____________ ____, 2010
(THE "OPTION AGREEMENT")
NET SMELTER ROYALTY
TERMS AND CONDITIONS
1. The Net Smelter Royalty shall be equal to 2.5% Net Smelter Returns (as
hereinafter defined) (subject to adjustment in accordance with section 5 of the
Option Agreement) from any mine in production or put into production as a result
of commencing commercial production on The Claims.
2. "Net Smelter Returns" means:
(a) the actual proceeds received by the Optionee from any mint, smelter,
refinery or other purchaser from the sale of ores, minerals, mineral
substances, metals (including bullion) or concentrates (collectively
"Product") produced from the Claims and sold or proceeds received from
an insurer in respect of Product, after deducting from such proceeds
the following charges to the extent that they were not deducted by the
purchaser in computing payments:
(i) smelting and refining charges;
(ii) penalties, smelter assay costs and umpire assay costs;
(iii)cost of freight and handling of ores, metals or concentrates
from the Claims to any mint, smelter, refinery, or other
purchaser;
(iv) marketing costs;
(v) costs of insurance in respect of Product;
(vi) customs duties, severance tax, royalties, ad valorem or mineral
taxes or the like and export and import taxes or tariffs payable
in respect of the Product; and
(b) if the Optionee is not the operator but holds a net smelter return
royalty, the same as the net smelter return royalty held by the
Optionee.
3. The Net Smelter Royalty will be:
(a) calculated and paid on a quarterly basis within 45 days after the end
of each quarter of the fiscal year for the mine (an "Operating Year"),
based on the Net Smelter Returns for such quarter;
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(b) each payment of Net Smelter Royalty will be accompanied by an
unaudited statement indicating the calculation of the Royalty
hereunder in reasonable detail and the Holder will receive, within
three months of the end of each Operating Year, an annual summary
unaudited statement (an "Annual Statement") showing in reasonable
detail the calculation of the Royalty for the last completed Operating
Year and showing all credits and deductions added to or deducted from
the amount due to the Holder;
(c) the holder (the "Holder") of the Net Smelter Royalty will have 45 days
from the time of receipt of the Annual Statement to question the
accuracy thereof in writing and, failing such objection, the Annual
Statement will be deemed to be correct and unimpeachable thereafter;
(d) if the Annual Statement is questioned by the Holder, and if such
questions cannot be resolved between the Optionee and the Holder, the
Holder will have 12 months from the time of receipt of the Annual
Statement to have such audited, which will initially be at the expense
of the Holder;
(e) the audited Annual Statement will be final and determinative of the
calculation of the Royalty for the audited period and will be binding
on the parties and any overpayment of Royalty will be deducted by the
Optionee from the next payment of Royalty and any underpayment of
Royalty will be paid forthwith by the Optionee;
(f) the costs of the audit will be borne by the Holder if the Annual
Statement was accurate within 1% or overstated the Royalty payable by
greater than 1% and will be borne by the Optionee if such statement
understated the Royalty payable by greater than 1%. If the Optionee is
obligated to pay for the audit it will forthwith reimburse the Holder
for any of the audit costs which it had paid;
(g) the Holder will be entitled to examine, on reasonable notice and
during normal business hours, such books and records as are reasonably
necessary to verify the payment of the Royalty to it from time to
time, provided however that such examination shall not unreasonably
interfere with or hinder the Optionee's operations or procedures; and
(h) if the Optionee's interest in the Claims is a Net Smelter Return
royalty, the Optionee's accounting and reporting obligations to the
Holder under this paragraph 3 will be limited to the delivery of such
documentation as the Optionee receives from the operator of the Claims
in respect of the payment by such operator of Net Smelter Returns to
the Optionee.
4. Notwithstanding the provisions of section 3 hereof, the Optionee shall pay
advances on account of the Net Smelter Royalty in the amount of $5,000 per
annum, payable semi-annually on August 1 and February 1 of each year, commencing
as of August 1, 2013, which amounts when paid shall serve to reduce any amounts
otherwise payable under section 3 hereof.
5. The determination of the Royalty hereunder is based on the premise that
production will be developed solely from the Claims. If the Claims and one or
more other properties are incorporated in a single mining project and metals,
ores or concentrates pertaining to each are not readily segregated on a
practical or equitable basis, the allocation of actual proceeds received and
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deductions therefrom will be negotiated between the parties and, if the parties
fail to agree on such allocation, such will be referred to arbitration pursuant
to paragraph 5 of this Agreement. In such arbitration the arbitrator will make
reference to this Agreement and to practices used in mining operations that are
of a similar nature. The arbitrator will be entitled to retain such independent
mining consultants as he considers necessary. The decision of the arbitrator
will be final and binding on the parties.
6. Any matters in this Agreement which are to be settled by arbitration will be
subject to the following:
(a) any matter required or permitted to be referred to arbitration
pursuant to this Agreement will be determined by a single arbitrator
to be appointed by the parties hereto;
(b) any party may refer any such matter to arbitration by written notice
to the other and, within 10 days after receipt of such notice, the
parties will agree on the appointment of an arbitrator. No person will
be appointed as an arbitrator hereunder unless such person agrees in
writing to act;
(c) if the parties cannot agree on a single arbitrator as provided in
subparagraph (b), either party may submit the matter to arbitration
(before a single arbitrator) in accordance with the ARBITRATION ACT of
the Province of British Columbia (the "Act"); and
(d) except as specifically provided in this paragraph, an arbitration
hereunder will be conducted in accordance with the Act. The arbitrator
will fix a time and place in Vancouver, British Columbia for the
purpose of hearing the evidence and representations of the parties and
he will preside over the arbitration and determine all questions of
procedure not provided for under such Act or this paragraph. After
hearing any evidence and representations that the parties may submit,
the arbitrator will make an award and reduce the same to writing and
deliver one copy thereof to each of the parties. The decision of the
arbitrator will be made within 45 days after his appointment, subject
to any reasonable delay due to unforeseen circumstances. The expense
of the arbitration will be paid as specified in the award. The parties
agree that the award of the single arbitrator will be final and
binding upon each of them and will not be subject to appeal.
7. The holding of the Royalty will not confer upon the holder thereof any legal
or beneficial interest in the Claims. The right to receive a percentage of Net
Smelter Returns as and when due is and will be deemed to be a contractual right
only. The right to receive a percentage of Net Smelter Returns as and when due
will not be deemed to constitute the Holder the partner, agent or legal
representative of the Optionee.
8. The Optionee may, if it is the operator of the Claims, but will not be under
any duty to, engage in price protection (hedging) or speculative transactions
such as futures contracts and commodity options in its sole discretion covering
all or part of production from the Claims and, except in the case where Products
are actually delivered and a sale is actually consumed under such price
protection or speculative transactions, none of the revenues, costs, profits or
losses from such transaction will be taken into account in calculating Net
Smelter Returns or any interest therein; provided however, that if the Optionee
delivers Product under a price protection or speculative program where the
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proceeds derived therefrom are less than those that would have been received had
the Product been sold at the spot price in effect at the time of sale, the
Royalty payable to the Holder will be based on such spot price.
9. The Optionee shall have a Right of First Refusal on the proposed sale by the
Holder of all or part of the Royalty as follows:
(a) if the Holder (in this paragraph called the "Offeror") intends to sell
all or part of the Royalty (in this paragraph the "Interest") it will
first give notice in writing to the Optionee (in this paragraph called
the "Offeree") of such intention together with the terms and
conditions on which the Offeror intends to sell the Interest;
(b) any communication of an intention to sell pursuant to this paragraph
will be in writing delivered in accordance with paragraph 13 hereof
and will set out fully and clearly all of the terms and conditions of
any intended sale and such communication will be deemed to constitute
an offer (the "Offer") by the Offeror to the Offeree to sell the
Interest to the Offeree on the terms and conditions set out in such
Offer;
(c) any Offer made as contemplated in this paragraph will be open for
acceptance by the Offeree for a period of 60 days from the date of
receipt of the Offer by the Offeree;
(d) if the Offeree accepts the Offer within the time provided in
subparagraph (c), such acceptance will constitute a binding agreement
of purchase and sale between the Offeror and the Offeree for the
Interest on the terms and conditions set out in the Offer; and
(e) if the Offeree does not accept the Offer within the time prescribed,
the Offeror may complete the sale of the Interest on the terms and
conditions set out in the Offer or on terms and conditions
substantially similar to, but no more favourable than, the terms and
conditions set out in the Offer, within 90 days from the expiration of
the right of the Offeree to accept such Offer or the Offeror must
again comply with the provisions of this paragraph.
10. The operator of the Claims, whether or not it is the Optionee, will be
entitled to:
(a) make all operational decisions with respect to the methods and extent
of mining and processing of ore, concentrate, dore, metal and products
produced from the Claims;
(b) make all decisions relating to sales of such concentrate, dore, metal
and products produced; and
(c) make all decisions concerning temporary or long-term cessation of
operations.
11. All capitalized terms not otherwise defined herein shall have the meaning
given to them in the Option Agreement to which these Terms and Conditions form
Schedule "B".