PROPERTY OPTION AGREEMENT
THIS AGREEMENT made and entered into as of the 14th day of July, 2006
BETWEEN: Xxxxx Xxxxxxx, an individual having a mailing address at
X.X. Xxx 0000, Xxxx Xxxxx, Xxxxxxxx,00000
(Herein called the "Optionor")
OF THE FIRST PART
AND: American Goldrush Corp., a company having an office at 708-1155 Xxxx
Xxxxxx Xxxxxx, Xxxxxxxxx, X.X., X0X 0X0
(Herein called the "Optionee")
OF THE SECOND PART
WHEREAS the Optionor has represented that he is the sole recorded and beneficial
owner of the 39 unpatented Federal mining claims located in the Oro Xxxxxx
Mining District of Santa Xxxx County, Arizona covering approximately 640 acres
(the "Property) described in Schedule "A" attached hereto;
AND WHEREAS the Optionor now wishes to grant to the Optionee the exclusive right
and option to acquire an undivided 100% right, title and interest in the
Property 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 United States currency now paid by the Optionee to the Optionor
(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 located,
in the whole or in part, within the Area of Interest;
(b) "Area of Interest" shall be any mining lands wholly or partly
located within five miles of the Property, as the Property boundary
exists as at the date of this Agreement;
(c) "Expenditures" includes all direct or indirect expenses [net of
government incentives and not including payments to the Optionor
pursuant to section 4, paragraphs (a), (b)(ii), (c)(ii), (d)(ii),
(e)(i), (f)(i), and (g)(i) hereof] of or incidental to Mining
Operations. An Affidavit of Expenditures from 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; the parties hereto agree that Property payments and
Property expenditures are separate payments as outlined in paragraph 4;
(d) "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
Property and relating to the operator of the Property as a mine or
outside the Property if for the exclusive benefit of the Property only;
(e) "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 4 herein. Such events shall include but not be
limited to acts of God, war, insurrection, action of governmental
agencies reflecting an instability in government procedures, or delay
in permitting unacceptable to both Optionor and Optionee;
(f) "Mineral Products" means the commercial end products derived from
operating the Property as a mine:
(g) "Mining Operations" includes:
(i) Every kind of work done on or with respect to the
Property by or under the direction of the Optionee
during the Option Period or pursuant to an approved
Work Program; and
(ii) Without limiting the generality of the foregoing,
including all work capable of receiving assessment
credits pursuant to the laws, rules, and regulations
of the state of Arizona and 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,
beneficiation or ores and concentrates, as well as
the separation and extraction of Mineral Products and
all reclamation, restoration and permitting
activities;
(h) "Net Smelter Royalty" means that Net Smelter Royalty as
defined in Schedule "B" attached hereto ("NSR");
(i) "Option" means the option granted by the Optionor to the Optionee
to acquire, subject to the NSR reserved to the Optionor, an undivided
100% right, title and interest in and to the Property as more
particularly set forth in Section 4;
(j) "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 Property as set out in Section 4 hereof;
(k) "Property" means the Arizona state land described in Schedule "A";
(l) "Work Program" means a program of work reasonably acceptable to
both parties in respect of a particular Property, contained in a
written document setting out in reasonable detail;
(i) An outline of the Mining Operations proposed to be
undertaken and conducted on the Property,
specifically stating the period of time during which
the work contemplated by the proposed program is to
be done and performed
(ii) The estimated cost of such Mining Operations
including a proposed budget providing for estimated
monthly cash requirements in advance and giving
reasonable details; and
(iii) The identity and credentials of the person or persons
undertaking the Mining Operations so proposed if not
the Optionor, then a person reasonably acceptable to
both parties hereto.
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 Optionor hereby grants to the Optionee the sole and
exclusive right and option (the "Option") to earn a 100% interest in the
Property exercisable as follows:
(a) The Optionee paying the sum of USD $35,000 to the Optionor by way of cash;
(b) On or before May 31st, 2007
(i) The Optionee incurring Expenditures of USD $75,000 on the
Property;
(ii) The Optionee paying USD $50,000 to the Optionor;
(c) On or before May 31st, 2008
(i) Optionee incurring Expenditures of USD $300,000 on the
Property in addition to the expenditures referred to in clause (b)(i);
(ii) The Optionee paying USD $100,000 to the Optionor;
(d) On or before May 31st, 2009
(i) The Optionee incurring Expenditures of USD $300,000
on the Property in addition to the expenditures
referred to in clauses (b)(i) and (c)(i) hereof; and
(ii) The Optionee paying USD $125,000 to the Optionor;
(e) On or before May 31st, 2010
(i) The Optionee paying USD $150,000 to the Optionor; and
(f) On or before May 31st, 2011
(i) The Optionee paying USD $200,000 to the Optionor; and
(g) On or before May 31st, 2012
(i) The Optionee paying USD $200,000 to the Optionor.
Following which 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 Property with the full right and authority to equip the
Property for production and operate the Property as a mine subject to the rights
of the Optionor to receive the NSR.
The Optionee has the one time right exercisable for 90 days following completion
of a bankable feasibility study to buy the Optionor's NSR for USD $500,000 per
1% increment (i.e. an amount equal to USD $1,000,000 for the Optionor's entire
2% NSR interest). The Optionee may purchase either none, one-half, or all of the
Optionor's 2% NSR interest. The right to purchase the said NSR interest shall be
exercised by the Optionee providing the Optionor with notice of the purchase
accompanied by payment in the amount of USD $500,000 per each 1% purchased.
The Optionor and Optionee understand and confirm that all Expenditures incurred
in a particular period, including any excess in the amount of Expenditures
required to be incurred to maintain the Option during such period, shall be
carried over and included in the aggregate amount of Expenditures for the
subsequent period.
Notwithstanding paragraphs (b)(i), (c)(i), and (d)(i) if the Optionee has not
incurred the requisite Expenditures to maintain its option in good standing
prior to May 31st of any given year, the Optionee may pay to the Optionor within
60 days following the expiry of such period, the amount of the deficiency and
such amount shall thereupon be deemed to have been Expenditures incurred by the
Optionee during such period.
(f) The Optionor agrees that the Optionee can engage anyone of its choosing
as the primary contractor for all exploration activities undertaken on
the Property;
(g) Company assumes future carrying costs (annual claim filing fees) of the
property estimated at USD $4,900 per year thereafter. This figure
applies to the property at its current size. Any fees paid to the
government for recording assessment work shall not constitute
exploration expenditures.
(h) All figures are United States Funds.
(i) The doing of any act or the incurrence of any cash payments by the
Optionee shall not obligate the Optionee to do any further acts or make
any further payments
5. TRANSFER OF TITLE
Upon Optionee's completion of all requirements to earn a 100 percent
interest in the Property, the Optionor will deliver or cause to be delivered to
the Optionee's solicitors a duly executed transfer of Property in favor of the
Optionee (the "Optionee Transfer"). The Optionee shall be entitled to record the
Optionee transfer with the appropriate government offices to effect transfer of
legal title of the Property into its own name upon the full and complete
exercise of the Option by the Optionee. In the event the Optionee Transfer is
recorded, the Optionor shall be entitled to record notice of its NSR interest.
6. MINING OPERATIONS DURING OPTION
The Optionee has the exclusive right to determine what Expenditures and
Mining Operations it will perform and when they will be performed. Upon the
completion of any technical reports, copies of all reports along with copies of
all available data relating to exploration activities undertaken by the Opionee
shall be provided to the Optionor on a timely basis.
During the currency of this Agreement, the Optionee, its servants,
agents and workmen and any persons duly authorized by the Optionee, shall have
the right of access to and from and to enter upon and take possession of and
prospect, explore and develop the Property in such manner as the Optionee in its
sole discretion may deem advisable and shall have the right to remove and ship
therefrom ores, minerals, metals, or other products recovered in any manner
therefrom.
7. ASSIGNMENT
During the Option Term, both parties shall have the right to sell,
transfer, assign, mortgage, or pledge its interest in this Agreement or its
right or interest in the Property. 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. In the event the
Optionee completes all obligations to acquire a 100% interest in the Property
the Optionor will have the right to transfer, assign or sell the NSR on the open
market.
8. TERMINATION
This Agreement shall forthwith terminate in circumstances where:
(a) The Optionee shall fail to comply with any of its obligations
hereunder, subject to Force Majeure, and within 30 days of
receipt by the Optionee of written notice from the Optionor of
such default, the Optionee has not:
(i) Cured such default, or commenced proceedings
to cure such default and prosecuted same to
completion without undue delay; or
(ii) Given the Optionor notice that it denies
that such default has occurred.
In the event that the Optionee gives notice that it denies that a default has
occurred, the Optionee shall not be deemed to be in default until the matter
shall have been determined finally through such means of dispute resolution as
such matter has been subjected to by either party; or
(b) The Optionee gives 30 days written notice of termination to
the Optionor, which it shall be at liberty to do at any time
after the execution of this Agreement with the exception that
the Optionee shall not terminate the agreement within 90 days
prior to August 31 of any given year. If and when the Optionee
elects to terminate this Agreement, or terminate one of the
projects comprising the Property, at such time the Property or
the specific project will be returned to the Optionor.
Upon the termination of this Agreement under this Section 8, the Optionee shall
cease to be liable to the Optionor in debt, damages, annual rental fees, or
otherwise. Upon termination of this Agreement under this Section 8, the Optionee
shall vacate the Property within a reasonable time after such termination, but
shall have the right of access to the Property for a period of six months
thereafter for the purpose of removing its chattels, machinery, equipment and
fixtures. Upon termination of this Agreement, the Optionee shall ensure that
copies of all data, results and reports are provided to the Optionor.
9. REPRESENTATIONS, OPTIONIES, AND COVENANTS OF THE OPTIONOR
The Optionor represents, Options and covenants to and with the Optionee
as follows:
(a) The Optionor is an individual residing in the United States;
(b) The Optionor has full power and authority to carry on his
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
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) The Agreement constitutes a legal, valid and binding
obligation of the Optionor;
(f) The Property is accurately described in Schedule "A", is in
good standing under the laws of the jurisdiction in which it
is located and is free and clear of all liens, charges and
encumbrances;
(g) The Optionor is the sole recorded and beneficial owner of the
Property and has the exclusive right to enter into this
Agreement and all necessary authority to transfer its interest
in the Property in accordance with the terms of this
Agreement;
(h) No Person, firm or corporation has any proprietary or
possessory interest in the Property other than the Optionor,
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 Property other than the government
of the state of Arizona pursuant to statute; notwithstanding
any Federal or State royalties or net proceeds tax derived
from mining operations.
(i) Upon request by the Optionee, and at the sole cost of the
Optionee, the Optionor shall deliver or cause to be delivered
to the Optionee copies of all available maps and other
documents and data in its possession respecting the Property.
Nothing will be withheld, hidden, or kept from the Optionee,
whether the data or information is held or not by the
Optionor; and
(j) Subject to performance by the Optionee of its obligations
under Section 4, during the Option Period, the Optionor will
keep the Property in good standing, free and clear of all
liens, charges and encumbrances, will carry out all Mining
Operations on the Property in a miner-like fashion if the
Optionee elects to use the mining expertise and consulting
services of the Optionor, will obtain all necessary licenses
and permits as shall be necessary and will file all applicable
work up to the legal limits as assessment work under the laws
of the state of Arizona.
10. REPRESENTATIONS, OPTIONIES AND COVENANTS OF THE OPTIONEE
The Optionee represents, Options and covenants to and with the Optionor that:
(a) The Optionee is a company duly organized validly existing and
in good standing under the laws of Canada;
(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; and
(e) This Agreement constitutes a legal, valid and binding
obligation of the Optionee.
11. INDEMNITY AND SURVIVAL OF REPRESENTATION
The representation and Optionies 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 Property 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, Option, covenant, agreement or condition made by them and
contained in this Agreement.
The Optionor agrees to indemnify and save harmless the Optionee from
any liability to which it may be subject arising from any Mining Operations
carried out by the Optionor or at its direction on the Property. The Optionee
agrees to indemnify and save harmless the Optionor from any liability to which
it may be subject arising from any Mining Operations carried out by the Optionee
or at its direction on the Property.
The Optionor agrees to indemnify and save harmless the Optionee from
any liability arising form any and every kind of work done on or with respect to
the Property prior to the signing of this Agreement (the "Prior Operations").
Without limiting the generality of the foregoing, Prior Operations includes all
work capable of receiving assessment credits pursuant to the state of Arizona
and 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,
beneficiation of ores and concentrates, as well as the separation and extraction
of Mineral Products and all reclamation, restoration and permitting activities.
12. CONFIDENTIALITY
The parties hereto agree to hold in confidence all information obtained
in confidence in respect of the Property 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 13 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 including email 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 effect delivery of the Communication by mail, then
the Communication shall be effective only if actually delivered. For purposes of
this agreement and as a definition of address the Optionor's email shall be
defined as xxxxxxxxx000@xxxxx.xxx. The Optionee's email shall be defined as
xxxxxxxxxxx@xxxx.xx and the Optionee's telecopier number is 000-000-0000. Notice
will be provided to each party should their respective email address change.
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 to fully 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 Arizona and the United States. The parties hereto hereby irrevocably attorn
to the jurisdiction of the Courts of Arizona. All disputes arising out of or in
connection with this Agreement, or in respect of any defined legal relationship
associated therewith or derived therefrom, shall be referred to and finally
resolved by a sole arbitrator by arbitration under the rules of Arizona.
17. ENUREMENT
This Agreement will ensure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
18. AFTER ACQUIRED PROPERTIES
(i) Any and all rights, titles, interests and estates acquired by
either party within five miles from the existing perimeter of
the Property boundaries during the term of this Agreement
shall become part of the Property subject to this Agreement,
and all lands within any such rights, titles, interests and
estates shall become part of the Property subject to this
Agreement, without any additional consideration, as if such
rights, titles, interests and estates were originally subject
hereto, except that no such right, title, interest or estate
shall cause the Area of Interest to be expanded. The acquiring
party shall notify the other party of such acquisition within
10 days after such acquisition. The other party shall then
have 60 days after delivery of such notice in which to notify
the acquiring party that the other party, in its sole
discretion, elects not to have such right, title, interest or
estate become subject to this Agreement. Any costs incurred by
the Optionor in staking, locating, recording or otherwise
acquiring any "After Acquired Properties" will be deemed to be
Mining Operations for which the Optionor will be entitled to
reimbursements as part of the Expenditures payable by the
Optionee hereunder.
(ii) Any additional claims agreed by the Optionee to be staked by
the Optionor within five miles from the existing perimeter of
the Property boundaries shall form party of this Agreement.
The Optionee will reimburse the Optionor for the costs of
staking the additional claims, unless the Optionee does not
elect to have the additional claims subject to this Agreement.
19. 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.
20. PAYMENT
All references to monies herein shall be in United States currency
unless otherwise specified. The Optionee shall make payments for the
Expenditures incurred by the Optionor no later than 15 days after the receipt of
invoices delivered by the Optionee to do any acts or make any payments
hereunder, and any act 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.
21. 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.
IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement
effective as of the 14th day of July, 2006
Xxxxx Xxxxxxx
Per:____/s/_______________________
Xxxxx Xxxxxxx
American Goldrush Corp.
Per:_____/s/______________________
Xxxxxx Xxxxxxx, President
SCHEDULE "A"
LIST OF XXXXXXXXX GOLD PROPERTY UNPATENTED CLAIMS
XXXXXXXXX GOLD PROPERTY CLAIMS, ORO XXXXXX MINING DISTRICT, SANTA XXXX COUNTY,
ARIZONA,
CLAIM NAME BLM SERIAL NUMBER
ORO 1 348014
ORO 2 348015
ORO 3 348016
ORO 4 348017
ORO 5 348018
ORO 6 348019
ORO 7 348020
ORO 8 348021
ORO 9 348022
ORO 10 348023
ORO 11 348329
ORO 12 348330
ORO 13 348331
ORO 14 348332
ORO 15 348333
ORO 16 348334
ORO 17 356140
ORO 18 356141
ORO 19 356142
ORO 20 356143
ORO 21 356144
ORO 22 356145
ORO 23 356146
ORO 24 356147
ORO 25 356148
ORO 26 356149
ORO 27 356150
ORO 28 356151
ORO 29 356152
ORO 30 356153
ORO 31 356154
ORO 32 356155
ORO 33 356156
ORO 34 356157
ORO 35 356158
ORO 36 356159
ORO 37 356160
ORO 38 356161
ORO 39 356162
SCHEDULE "B"
"Net Smelter Return" shall mean the aggregate proceeds received by the Optionee
from time to time from any smelter or other purchaser from the sale of any ores,
concentrates, metals or any other material of commercial value produced by and
from the Property after deducting from such proceeds the following charges only
to the extent that they are not deducted by the smelter or other purchaser in
computing the proceeds:
(a) The cost of transportation of the ores, concentrates or metals from the
Property to such smelter or other purchaser, including related
insurance;
(b) Smelting and refining charges including penalties; and
The Optionee shall reserve and pay to the Optionor a NSR equal to two (2%)
percent of Net Smelter Return.
Payment of NSR payable to the Optionor hereunder shall be made quarterly within
thirty (30) days after the end of each calendar quarter during which the
Optionee receives Net Smelter Returns in USD dollars or in kind bullion at the
discretion of the Optionor. Within (60) days after the end of each calendar
quarter for which the NSR for such year shall be audited by the Optionee and any
adjustments in the payments of NSR to the Optionor shall be made forthwith after
completion of the audit. All payments of NSR to the Optionor for a calendar year
shall be deemed final and in full satisfaction of all obligations of the
Optionee in respect thereof, if such payments or the calculations thereof are
not disputed by the Optionor of the same audited statement. The Optionee shall
maintain accurate records relevant to the determination of the NSR and the
Optionor or its authorized agent, shall be permitted the right to examine such
records at all reasonable times.
