EXHIBIT 4.133
XXXXXX PROPERTY
This Agreement is dated for reference the 16th day of October 2007
BETWEEN:
XXXXX XXXXXXX (as to 50%)
X.X. Xxx 0000
Xxxxx Xxxxxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
XXXXXXXXXXX XXXX (as to 50%)
00 Xxxxxx Xxxxx, X.X. Xxx 00
Xxxxxx Xxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000 0000
(hereinafter referred to collectively as the "Optionors")
OF THE FIRST PART
AND:
XXXXXX GOLD CORP.
#000 - 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(hereinafter referred to as the "Optionee")
OF THE SECOND PART
WITNESSES THAT WHEREAS Optionors are the recorded and beneficial owners of a
100% legal and beneficial interest in and to certain mining claims situated in
Ontario, more particularly described in Schedule "A" attached hereto
(collectively the "Property");
AND WHEREAS the Optionors desire to grant and the Optionee is desirous of
obtaining an option to acquire a 100% undivided interest in and to the Property
upon terms and subject to the conditions herein contained.
NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements herein contained, the parties agree as follows:
1. GRANT OF OPTION
The Optionors grant to the Optionee the sole, exclusive and irrevocable right
and option (the "Option") to acquire an undivided 100% right, title and interest
in and to the Property, in accordance with the terms of this Agreement.
2. OPTION ONLY
This is an option only and except as 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. If the Option is terminated before the
Option is exercised, the Optionee shall not be bound thereafter in debt, damages
or otherwise under this Agreement, except as provided for in this Agreement, and
all payments theretofore paid by the Optionee shall be retained by the Optionors
for their own use absolutely.
3. TERMS OF THE OPTION
In order to maintain the Option in good standing and earn a 100% right, title
and undivided interest in and to the Property, the Optionee, subject to
paragraph 2, shall:
(a) pay to the Optionors $18,000 upon receipt of Regulatory
Approval;
(b) pay to the Optionors a further $20,000 on or before the date
which is 12 months from the date of regulatory approval;
(c) pay to the Optionors a further $30,000 on or before the date
which is 24 months from the date of regulatory approval;
(d) issue to the Optionors 100,000 common shares of the Optionee
upon receipt of regulatory approval;
Page 2
(e) issue to the Optionors a further 100,000 common shares of the
Optionee 12 months from the date of regulatory approval; and
(f) issue to the Optionors a further 100,000 common shares of the
Optionee 24 months from the date of regulatory approval.
4. EXERCISE OF THE OPTION
If the Optionee has paid $68,000 and issued 300,000 common shares to the
Optionors, the Optionee shall be deemed to have exercised the Option and will
have acquired an undivided 100% right, title and interest in and to the
Property, subject only to the Royalty Interest, as outlined herein.
5. OPERATOR
During the term of the Option, the Optionee shall be the operator for purposes
of developing and executing exploration programs.
6. ROYALTY INTEREST
The Optionors shall be entitled to receive and the Optionee shall pay to the
Optionors a royalty equal to 2.5% of the net smelter returns (the "Royalty
Interest") calculated and payable from the Property in accordance with the
provisions of Schedule "B" attached hereto.
The Optionee may at any time purchase 1.0% of the Royalty Interest from the
Optionors for $500,000 and a further 0.5% for an additional $500,000, leaving
the Optionors with a 1.0% interest.
7. RIGHT OF ENTRY
During the currency of the Option the Optionee and its employees, agents and any
person duly authorized by the Optionors shall have the sole and exclusive right
to:
(a) enter in, under and upon the Property;
(b) have exclusive and quiet possession thereof subject to the
rights of the Optionor hereunder;
(c) do such prospecting, exploration, development or other mining
work thereon and thereunder as the Optionee in its sole
discretion may consider desirable;
(d) bring upon and erect upon the Property such mining facilities
as the Optionee may consider advisable; and
(e) remove from the Property and dispose of reasonable quantities
of ores, minerals and metals for the purposes of sampling,
obtaining assays or making other tests.
8. NOTICE OF DEFAULT AND TERMINATION BY OPTIONORS
If the Optionee should be in default in making any payments or performing any
other of its obligations hereunder, the Optionors may give written notice to the
Optionee specifying the default. The Optionee shall not lose any rights granted
under this Agreement so long as, within thirty (30) days after the giving of
such notice of default by the Optionors, the Optionee shall cure the specified
default. If the Optionee fails to cure the default within the thirty (30) day
period, this Agreement shall terminate. Upon termination of this Agreement by
the Optionors, the provisions of the paragraph in this Agreement entitled
"Termination Prior to Acquisition of Interest" shall apply.
9. NO PRODUCTION OBLIGATION
The Optionee shall be under no obligation whatsoever to place the Property into
production.
10. TRANSFER OF PROPERTY
The Property will be transferred when the provisions in paragraph 3 have been
met.
11. EXCLUSION OF PROPERTY
The Optionee shall have the right at any time and from time to time to elect to
exclude from this Agreement any portion of the Property by not less than thirty
(30) days prior written notice to the Optionors of this election; provided that
any portion of the Property so excluded shall be in good standing, free and
clear of all liens, charges and encumbrances, and provided further that the
Optionee, if requested by the Optionors in writing, shall deliver to the
Optionors recorded transfers of any mineral claims and other property interests
which are included in the portion of the Property so excluded in favour of the
Optionors. Upon termination of a portion of the Property, the terminated portion
of the Property shall be subject to the provisions of the paragraph in this
Agreement entitled "Termination Prior to Acquisition of Interest".
Page 3
12. COVENANTS OF THE OPTIONEE
During the currency of this Agreement, the Optionee shall:
(a) keep the Property in good standing by doing and filing of all
assessment work or by making payments in lieu thereof, and by
the doing all other acts and things and making all other
payments which may be necessary in that regard;
(b) permit the Optionors, or their representative, duly authorized
by it in writing, at its own risk and expense, access to the
Property at all reasonable times and to all records prepared
by the Optionee in connection with work done or with respect
to the Property, provided the Optionors shall not, without the
prior written consent of the Optionee, such consent not to be
unreasonably withheld, disclose any information obtained by it
or communicated to it, to any third party except as may be
required by regulatory bodies having jurisdiction over it; and
(c) conduct all work on or with respect to the Property in a
careful and workmanlike manner and in compliance with the
applicable laws of the jurisdiction in which the Property is
located and indemnify and save the Optionors harmless from any
and all claims, suits or actions made or brought against the
Optionors as a result of work done by the Optionee on or with
respect to the Property.
13. COVENANTS OF THE OPTIONORS
During the currency of this Agreement, the Optionors covenant and agree with the
Optionee to:
(a) not do or permit or suffer to be done any act or thing which
would or might in any way adversely affect the rights of the
Optionee hereunder;
(b) make available to the Optionee and its representatives all
records and files relating to the Property in its possession
and permit the Optionee and its representatives to take
abstracts therefrom and make copies thereof;
(c) co-operate with the Optionee in obtaining any water
appropriation license, surface licenses and any other rights
or licenses on or related to the Property, the Optionee deems
necessary or desirable; and
(d) promptly provide the Optionee with any and all notices and
correspondence from government or regulatory agencies in
respect of the Property.
14. REPRESENTATIONS AND WARRANTIES OF THE OPTIONORS
The Optionors hereby represent and warrant to the Optionee that:
(a) the Optionors are the legal and beneficial owner of the Property;
(b) the Property consists of those mining claims more particularly
described in Schedule "A", all of which were duly and validly located
and recorded in accordance with the applicable laws of Ontario and are
valid and subsisting as of the date of execution and delivery of this
Agreement;
(c) the Property is in good standing, free and clear of all liens, charges
and encumbrances;
(d) there are no pending or threatened actions, suits, claims or
proceedings regarding the Property; and
(e) the Optionors have the exclusive right and authority to enter into this
Agreement and to dispose of the Property in accordance with the terms
hereof, and that no other person, firm or corporation has any
proprietary or other interest in the same.
The representations and warranties of the Optionors herein before set out, form
a part of this Agreement and are conditions upon which the Optionee has relied
on in entering into this Agreement and shall survive the exercise of the Option
by the Optionee. The Optionors shall indemnify and save the Optionee 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 contained in this Agreement. The Optionors acknowledge and agree that
the Optionee has entered into this Agreement relying on the warranties and
representations and other terms and conditions of this Agreement and that no
information which is now known or which may hereafter become known to the
Optionee or its officers, directors or professional advisors shall limit or
extinguish the right to indemnity hereunder. The Optionee may deduct the amount
of any such loss or damage from any amounts payable by it to the Optionors
hereunder.
Page 4
15. TERMINATION PRIOR TO ACQUISITION OF INTEREST
If the Option is terminated, or if this Agreement is terminated prior to the
exercise of the Option by the Optionee, the Optionee shall return to the
Optionors forthwith exclusive and quiet possession of the Property, in good
standing, and free and clear of all liens, charges and encumbrances for a period
of one year.
16. ADDITIONAL TERMINATION
In addition to any other termination provisions contained in this Agreement, the
Optionee shall at any time have the right to terminate its rights and future
obligations under this Agreement by giving notice in writing of such termination
to the Optionors, and in the event of such termination, the Optionee shall not
earn any interest in the Property, and this Agreement, save and except for the
provisions of the paragraph in this Agreement entitled "Termination Prior to
Acquisition of Interest" hereof, shall be of no further force and effect.
17. FORCE MAJEURE
If the Optionee is prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lockouts, labour shortages, power shortages,
fires, wars, acts of God, governmental regulations restricting normal operations
or any other reason or reasons beyond the control of the Optionee, the time
limited for the performance of the various provisions of this Agreement as set
out above shall be extended by a period of time equal in length to the period of
such prevention and delay. The Optionee, insofar as is possible, shall promptly
give written notice to the Optionors of the particulars of the reasons for any
prevention or delay under this paragraph, and shall take all reasonable steps to
remove the cause of such prevention or delay and shall give written notice to
the Optionors as soon as such cause ceases to subsist.
18. NOTICE
Any notice required to be given under this Agreement shall be deemed to be well
and sufficiently given if delivered or if mailed by registered mail in Canada,
(save and except during the period of any interruption in the normal postal
service within Canada) or sent by facsimile transfer to either party at the
addresses first set out above and any notice given as aforesaid shall be deemed
to have been given, if delivered or sent by facsimile transfer, when delivered
or faxed, or if by mail, on the third business day after the date sent by mail .
Either party may from time to time by notice in writing change its address for
the purpose of this paragraph.
19. FURTHER ASSURANCES
The parties hereto agree to execute all such further or other assurances and
documents and to do or cause to be done all acts necessary to implement and
carry into effect the provisions and intent of this Agreement.
20. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
21. TITLES
The titles to the respective paragraphs hereof shall not be deemed to form part
of this Agreement but shall be regarded as having been used for convenience of
reference only.
22. SCHEDULES
The Schedules to this Agreement shall be construed with and as an integral part
of this Agreement to the same extent as if they were contained in the body
hereof.
23. VOID OR INVALID PROVISION
If any term, provision, covenant or condition of this Agreement, or any
application thereof, should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all provisions, covenants and conditions of this
Agreement, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and in no way be affected, impaired or
invalidated thereby.
24. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors, assigns, heirs, executors or
administrators as the case may be.
25. APPROVALS
The Optionee and the Optionors hereby acknowledge that this Agreement shall be
subject to all necessary regulatory approvals.
Page 5
26. ARBITRATION
If any question, difference or dispute shall arise between the parties or any of
them in respect of any matter arising under or in connection with the subject
matter of this Agreement, or in relation to the construction hereof, the same
shall be determined by the award of a single arbitrator under the Commercial
Arbitration Act of the Province of Ontario, and the decision of the arbitrator
shall in all respects be conclusive and binding upon all the parties.
27. ASSIGNMENT
The Optionee may at any time during the term of the Option sell, transfer or
otherwise dispose of all or any portion of its interest in or its rights under
this Agreement; provided that any purchaser, grantee or transferee of any such
interest or rights delivers to the Optionors their agreement related to this
Agreement and to the Property, containing:
(a) a covenant by such transferee to perform all the obligations
of the Optionee to be performed under this Agreement in
respect of the interest or rights to be acquired by it from
the Optionee to the same extent as if this Agreement had been
originally executed by such transferee as principal obligant;
and
(b) a provision subjecting any further sale, transfer or other
disposition of such interest or rights or any portion thereof
to the restrictions contained in this section;
and further provided that any shares delivered to the Optionors in connection
with the exercise of the Option must be shares of the Optionee, unless otherwise
agreed in writing by the Optionors.
28. USE OF PERSONAL INFORMATION
The Optionors (on their own behalf and, if applicable, on behalf of any person
for whose benefit the Optionors may be acting for) acknowledge and consent to
the fact the Optionee is collecting the Optionors' (and any beneficial
optionor's) personal information for the purpose of completing this Agreement.
The Optionors (on their own behalf and, if applicable, on behalf of any person
for whose benefit the Optionors may be acting for) acknowledge and consent to
the Optionee retaining the personal information for as long as permitted or
required by applicable law or business practices. The Optionors (on their own
behalf and, if applicable, on behalf of any person for whose benefit the
Optionors may be acting for) further acknowledge and consent to the fact the
Optionee may be required by applicable securities laws, stock exchange rules,
and Investment Dealers Association rules to provide regulatory authorities any
personal information provided by the Optionors respecting itself (and any
beneficial party interested in the transaction). The Optionors represent and
warrant that they have the authority to provide the consents and
acknowledgements set out in this paragraph on behalf of all beneficial parties.
The Optionors hereby acknowledge and consent to: (i) the disclosure by the
Optionors and the Optionee of Personal Information (defined below) concerning
the Optionors to the Commissions or other regulatory authority, or to the TSX
Venture Exchange (the "Exchange") and its affiliates, authorized agent,
subsidiaries and divisions; and (ii) the collection, use and disclosure of
Personal Information by the Exchange for the following purposes (or as otherwise
identified by the Exchange, from time to time):
(a) to conduct background checks;
(b) to verify the Personal Information that has been provided
about the Optionors;
(c) to consider the suitability of the Optionors as a holder of
securities of the Optionee;
(d) to consider the eligibility of the Optinonee to continue to
list on the Exchange;
(e) to provide disclosure to market participants as the security
holdings of the Optionee's shareholders, and their involvement
with any other reporting issuers, issuers subject to a cease
trade order or bankruptcy, and information respecting
penalties, sanctions or personal bankruptcies, and possible
conflicts of interest with the Issuer;
(f) to detect and prevent fraud;
(g) to conduct enforcement proceedings; and
(h) to perform other investigations as required by and to ensure
compliance with all applicable rules, policies, rulings and
regulations of the Exchange, securities legislation and other
legal and regulatory requirements governing the conduct and
protection of the public markets in Canada.
Page 6
The Optionors also acknowledge that: (i) the Exchange also collects additional
Personal Information from other sources, including securities regulatory
authorities in Canada or elsewhere, investigative law enforcement or
self-regulatory organizations, and regulations service providers to ensure that
the purposes set forth above can be accomplished; (ii) the Personal Information
the Exchange collects may also be disclosed to the agencies and organizations
referred to above or as otherwise permitted or required by law, and they may use
it in their own investigations for the purposes described above; (iii) the
Personal Information may be disclosed on the Exchange's website or through
printed materials published by or pursuant to the direction of the Exchange; and
(iv) the Exchange may from time to time use third parties to process information
and provide other administrative services, and may share the information with
such providers.
If the Optionors are resident in Ontario, the public official who can answer
questions about the Ontario Securities Commission's indirect collection of
Personal Information is the Administrative Assistant to the Director of
Corporate Finance, Ontario Securities Commission, Xxxxx 0000, Xxx 00, 00 Xxxxx
Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx, X0X 0X0, Telephone 000-000-0000.
Herein, "Personal Information" means any information about the Optionors
required to be disclosed to the Commission or the Exchange, whether pursuant to
a Commission or Exchange form or a request made by a Commission or the Exchange.
29. AFTER-ACQUIRED PROPERTY
The area which is included within one kilometer of the outer-most boundary of
the Property shall be deemed to be an area of interest ("Area of Interest").
During the term of this Agreement, commencing on the date hereof, any mineral
claim, lease or other mineral right or interest acquired by or on behalf of the
Optionee, the Optionors or their assigns, by staking within the Area of Interest
shall be deemed to have been acquired on behalf of and for the benefit of the
parties pursuant to the terms of this Agreement. This Agreement shall not extend
beyond the Area of Interest and shall not affect mineral properties which the
parties now hold or hereafter stake or acquire adjacent to the Area of Interest.
30. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Ontario.
31. PRIOR AGREEMENTS
This Agreement contains the entire agreement between the parties in respect of
the Property and supersedes all prior agreements between the parties hereto with
respect to the Property, which said prior agreements shall be deemed to be null
and void upon the execution hereof.
32. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts with the same
effect as if all parties had signed the same document.
IN WITNESS WHEREOF the parties hereto have executed these presents as of the day
and year first above written.
SIGNED, SEALED and DELIVERED by )
XXXX XXXXXXX in the presence of: )
)
BY: /S/ XXXXXX XX-XXXXXXX )
------------------------------------
Name (printed) )
)
P.O. BOX 1064, S. PORCUPINE )
Address ) BY: /S/ XXXX XXXXXXX
---------------------------------
) XXXX XXXXXXX
XXXXXXX, X0X 0X0 )
------------------------------------
Page 7
SIGNED, SEALED and DELIVERED by )
XXXXXXXXXXX XXXX in the presence of: )
)
BY: /S/ XXXXXX XXXXXX )
------------------------------------
Name (printed) )
)
00 XXX XXXXXX )
------------------------------------
Address ) BY: /S/ XXXXXXXXXXX XXXX
----------------------------------
) XXXXXXXXXXX XXXX
ONTARIO )
------------------------------------
XXXXXX GOLD CORP. )
)
)
Per: BY: /S/ XXXX XXXXXXXX )
-------------------------------
Authorized Signatory )
)
XXXX XXXXXXXX, DIRECTOR )
------------------------------------
Name & Title
Page 8
SCHEDULE "A"
REFERRED TO IN THE AGREEMENT DATED FOR REFERENCE THE 16TH DAY OF OCTOBER 2007
BETWEEN XXXX XXXXXXX, XXXXXXXXXXX XXXX AND XXXXXX GOLD CORP.
--------------------------------------------------------------------------------
The Property consists of the following claims in the Jessop, Murphy and Xxxxxxxx
Townships, Porcupine Mining District, Ontario:
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
TOWNSHIP CLAIM NUMBER # OF UNITS RECORDING DATE EXPIRY DATE
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015768 4 September 12, 2007 September 12, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015769 4 September 12, 2007 September 12, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015770 3 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015771 4 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015772 13 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015773 16 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxxxx P-3015774 12 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015775 14 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
Xxxxxx P-3015776 9 September 4, 2007 September 4, 2009
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
TOTAL CLAIM UNITS 79
--------------------------------- --------------------- ------------------ ------------------------- -----------------------
*************************************************************************
Page 9
SCHEDULE "B"
REFERRED TO IN THE AGREEMENT DATED FOR REFERENCE THE 16TH DAY OF OCTOBER 2007
BETWEEN XXXX XXXXXXX, XXXXXXXXXXX XXXX AND XXXXXX GOLD CORP.
--------------------------------------------------------------------------------
NET SMELTER RETURNS
1. For all diamonds, gems and other precious and semi-precious stones
("Stone Products") mined or produced from the Property, the Optionee
shall pay to the Vendor a Royalty equal to a percentage of the net
sales returns ("NSAR") realized from the sale or disposition of the
Stone Products.
2. For all metals, bullion or concentrates ("Other Products") mined or
produced from the Property, the Optionee shall pay to the Vendor a
Royalty equal to a percentage of the net smelter returns ("NSMR")
realized or deemed to be realized as hereinafter provided, from the
sale or disposition of the Other Products.
3. The aforementioned percentage of the NSAR and percentage of the NSMR
shall be that determined in accordance with the provisions of Section 4
of the Agreement to which this Schedule B forms a part; and in the
calculation of the Royalty, such percentage is applied to 100% of the
NSAR or NSMR, as the case may be, regardless of dilution of the
Optionee's working interest or entitlement with respect to the
Agreement, the Property or the Products.
4. For the purposes of this Schedule B, the term "Products" shall be
interpreted as a collective reference to Stone Products and Other
Products and the term "Royalty" shall be interpreted as a collective
reference to the NSAR Royalty and the NSMR Royalty.
5. Net Sales Returns Royalty - Stone Products
a. Net sales returns means the gross proceeds from the sale or
disposition of Stone Products to an independent purchaser,
after deducting therefrom the cost of Valuation, Sorting,
Shipping and Insurance in connection with the Stone Products
as well as any sales, excise, production, export and other
duties, levies, assessments and taxes (except income taxes)
payable on the production or sale of Stone Products (but not
income taxes), and for the purposes hereof:
i. "Valuation" means the establishing of a value for
each lot or group of sorted Stone Products for
purposes of reference when negotiating with a
potential purchaser of the same;
ii. "Sorting" means separation of Stone Products from
waste materials and dividing them into groups
according to quality, size, or other characteristics,
and then the division of such groups into appropriate
lots or groups for valuing and/or sale, it being
acknowledged that in the case of gem quality Stone
Products, a group or lot may be a single stone;
iii. "Shipping" means all methods of transportation or
places of storage of Stone Products from the moment
they leave the Property until the passing of title
thereto or risks therefore (whichever is the later)
to an independent purchaser, including, without
limitation, any cost that may be incurred by reason
of such methods or places used or any sorting or
valuation facilities being situated off the Property;
and
iv. "Insurance" means all insurance that the Optionee
considers advisable to protect all or part of the
Stone Products in the possession or control of the
Optionee (including, without limitation, during
shipping) until the passing of title thereto or risks
therefore (whichever is the later) and including,
without limitation, the insurance or bonding of any
person who does or may come into contact with any
such Stone Products at any point during the
operations of the Optionee whether such person is an
employee of the Optionee or otherwise.
b. If Stone Products are sold to any entity with which the
Optionee does not deal at arm's length, the Stone Products
shall for the purposes hereof be deemed to have been sold at
prices determined by an independent valuator chosen by the
Vendor.
c. the Optionee shall not have the right to commingle Stone
Products produced from the Property with similar products
produced from other properties.
Page 10
6. Net Smelter Returns Royalty - Other Products
a. Net smelter returns means the gross proceeds from the sale or
disposition of Other Products removed from the Property after
deducting the costs of treatment (meaning any process incurred
after the milling and beneficiation of ore and /or rocks),
tolling, smelting, refining and minting of such products and
all costs associated therewith such as transporting, insuring,
handling, weighing, sampling, assaying and marketing, as well
as all penalties, representation charges, referee's fees and
expenses, import taxes and export taxes; and the term
"smelter" shall mean conventional smelters as well as any
other type of production plant used in lieu of a conventional
smelter to reduce concentrates.
b. If smelting, refining, treatment, assay or sampling of Other
Products is performed by facilities owned or controlled by the
Optionee or any of its affiliates, all charges, costs and
penalties therefore to be deducted pursuant to the foregoing
paragraph shall be equal to and not exceed actual costs
incurred by the Optionee in carrying out such processes and
shall not exceed such amounts which the Optionee would have
incurred if such operations were conducted at facilities
operating at arm's length to the Optionee, and which were then
offering comparable services for comparable quantities and
quality of Other Products.
c. The Optionee shall have the right to commingle Other Products
produced from the Property with metals, bullion or
concentrates produced from other properties. Before
commingling, Other Products from the Property shall be
weighed, sampled, assayed, measured or gauged by the Optionee
in accordance with sound mining and metallurgical practices
for moisture, penalty substances and payable content. Records
shall be kept by the Optionee for a reasonable time showing
weights, moisture and assays of payable content. Prior to
commingling, the Optionee shall give thirty (30) days notice
to the Vendor specifying its decision to commingle and
outlining the procedures it proposes to follow.
7. General
a. Royalties shall accrue at the time of sale or deemed sale, as
applicable, and they shall become due and payable in cash on a
calendar quarter basis, on the twentieth (20th) day of the
month next following the calendar quarter in which they
accrue.
b. At the time of making each Royalty payment to the Vendor, the
Optionee shall provide the Vendor with a certificate of a
senior officer of the Optionee certifying as to the accuracy
of the calculations of the Royalty payment and setting out the
method of the calculation thereof to which shall be attached a
true copy of the related smelter or sales receipt or receipts.
c. Net sales returns and net smelter returns upon the respective
Products shall be calculated exclusively as provided herein,
and the Royalty computed thereon shall be determined without
regard to any "hedging", "forward", "futures" or comparable
sales (collectively referred to as "future trading") of such
Products by or on behalf of the Optionee. The Vendor shall not
be entitled to any benefit of or be subject to any loss
attributable to such future trading by the Optionee.
d. The Optionee shall cause to be kept proper books of account,
records and supporting materials covering all matters relevant
to the calculation of Royalties payable to the Vendor, and the
reasonable verification thereof; and the Vendor shall have,
from time to time, the unfettered right, during regular
business hours and on reasonable notice, to carry out at its
sole cost and expense an audit by established independent
professionals chosen by the Vendor, of the methodology and
manner of calculating all Royalty payments hereunder and the
Optionee shall provide, during regular business hours and on
reasonable notice, unrestricted access to its books, accounts,
records, vouchers, smelter settlements, sales receipts and
related documentation for this purpose. Should there be any
difference in the amount of the Royalty payment or payments
which are ultimately determined by the process to be in the
Vendor's favour, which exceed three (3%) percent of the amount
of the Royalty paid to the Vendor, then the cost of said
audit, to the extent reasonable, shall be reimbursed to the
Vendor by the Optionee.
e. Any dispute relating to the quantum or methodology of
calculating all Royalties payable hereunder shall be settled
by arbitration pursuant to the provisions of the Agreement.
***************************************
