AGREEMENT DATED AUGUST 4, 2003 BETWEEN THE COMPANY AND EASTFIELD RESOURCES LTD. REGARDING THE OK COPPER PROPERTY.
EXHIBIT 23.12
AGREEMENT DATED AUGUST 4, 2003 BETWEEN THE COMPANY AND
EASTFIELD RESOURCES LTD. REGARDING THE OK COPPER PROPERTY.
April 24, 2003
Messrs. X.X. Xxxxxx or Xxxx Xxxxxxx
Eastfield Resources Ltd.
Suite 110 – 000 Xxxx Xxxxxx
Xxxxxxxxx, XX
X0X 0X0
Dear Xxxx or Xxxx:
Re: OK Property Purchase Agreement
This letter agreement (“Letter Agreement”) outlines the terms and conditions of an option (“Option”) between Eastfield Resources Ltd. (“Eastfield”) and Lumina Copper Corp. (“Lumina”) for the exploration, development and mining of mineral resources within certain mining concessions located near Xxxxxx River, British Columbia known as the OK Copper Property (the “Property”) and more specifically described in Exhibit “A” hereto. This Letter Agreement, when signed by each of Eastfield and Lumina, shall constitute a legally binding agreement between the parties.
TERMS OF OPTION
| 1. |
Lumina Option to Earn
an 80% Interest. To earn an 80% interest in the Property Lumina shall,
subject to the terms hereof, make a total of $330,000 in cash payments
to Eastfield and incur a total of $600,000 in exploration expenditures
on the Property as follows: |
|
| (a) | $10,000 in cash on signing this Letter Agreement; | |
| (b) | incur not less than $35,000 in exploration expenditures on the Property on or before September 10, 2003; | |
| (c) | $20,000 in cash on the first anniversary date of this Letter Agreement; | |
1550 - 000 XXXX XXXXXX
, XXXXXXXXX , X.X.
XXXXXX X0X 0X0 TEL.
604.687-0407 FAX .
000.000.0000
| (d) | incur not less than $70,000 in cumulative
exploration expenditures before the first anniversary date of this Letter
Agreement; |
|
| (e) | $20,000 cash on the second anniversary date of this Letter Agreement; | |
| (f) | incur not less than $95,000 in cumulative
exploration expenditures before the second anniversary date of this Letter
Agreement; |
|
| (g) | $40,000 in cash on the third anniversary date of this Letter Agreement; | |
| (h) | incur not less than $195,000 in cumulative
exploration expenditures before the third anniversary dates of this Letter
Agreement; |
|
| (i) | $60,000 in cash on the fourth anniversary date of this Letter Agreement; | |
| (j) | $90,000 in cash on the fifth anniversary date of this Letter Agreement; | |
| (k) | $90,000 in cash on the sixth anniversary date of this Letter Agreement; | |
| (l) | incur not less than $600,000 in cumulative
exploration expenditures before the sixth anniversary date of this Letter
Agreement; |
|
and on that date (the “Effective
Date”) which is on or after the sixth anniversary date of this Letter
Agreement, subject to sections 3 and 18 hereof so long as the payments
referred to above and the expenditures referred to above have been made,
Lumina shall be deemed to have earned and be entitled to an 80% interest
in the Property subject only to the liens, claims, encumbrances interests,
titles, burdens and security interests set out in Exhibit “B”
hereto. |
||
| 2. | Stock in Lieu of Cash.
Eastfield may in its sole election take any cash payment referred to above
in shares (bearing a four month hold legend) of Lumina such shares to
be issued at a price equal to the price of Lumina shares on The Toronto
Stock Exchange on the date the cash payment which Eastfield has elected
to take in shares become due. |
|
| 3. | Cash in Lieu of Exploration.
In lieu of any exploration expenditure commitment herein (other than that
set out in section 1(b)) Lumina may pay an amount equal to one-half of
the amount of the exploration expenditure commitment to Eastfield provided
it makes such payment within 30 days after the exploration expenditure
commitment deadline. |
|
| 4. | Right to Purchase Remaining
20%. Provided Lumina shall have earned and vested the 80% interest
herein optioned, Lumina may, on or before the seventh anniversary date
of this Letter Agreement, purchase the remaining 20% interest of Eastfield
in the Property for $1,000,000. |
|
| 5. | Underlying Payments and
Xxxxxx Royalty. Eastfield agrees to make all payments and meet all
obligations to all third parties in connection with the ownership or holding
of |
|
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the Property other than the 2.5% NSR Royalty granted in favour of Xxxxxx X. Xxxxxx (the “Xxxxxx Royalty”) for which Lumina shall be responsible for 80% unless Lumina buys Eastfield’s remaining 20% interest in which event it shall be responsible for 100% of the payments in respect thereof or 100% of the cost to acquire the Xxxxxx Royalty. Subject to compliance with this Letter Agreement by Lumina, Eastfield hereby assigns its rights to purchase the Xxxxxx Royalty to Lumina. |
|
| 6. | Management Fee. Lumina shall
pay a management fee to Eastfield of $10,000 annually, payable on signing
of this Letter Agreement and on each anniversary date thereafter for so
long as this Letter Agreement is in good standing and until the sixth
anniversary date of this Letter Agreement. |
| 7. | Assessment Work. Lumina shall
maintain the assessment work filing requirements described in Section
2 of the underlying property acquisition letter agreement between Eastfield
and Xxxxxx X. Xxxxxx (the “Xxxxxx Letter”), a copy of which
is attached as Exhibit “C”. |
| 8. | Xxxxxx Repurchase Clause. In
the event Lumina has not extinguished the right of repurchase (“Xxxxxx
Right”) contained in the Xxxxxx Letter on or before the eighth anniversary
date of this Letter Agreement, Lumina shall in its sole discretion: (i)
provide its covenant within 90 days of the eighth anniversary to so extinguish
such right; or (ii) grant to Eastfield the right to extinguish the Xxxxxx
Right and earn a further interest in the Property based on the following
formula: |
| Total Eastfield Exploration Expenditures | |||
| Made After the Eighth Anniversary | Percentage | ||
| X .80 = | Earned | ||
| |
|||
| Total Lumina Exploration Expenditures |
| provided to earn such interest or any part thereof Eastfield must extinguish the Xxxxxx Right. |
JOINT VENTURE
| 9. | Upon satisfaction of the terms of the Option by Lumina,
Eastfield and Lumina hereby agree to negotiate diligently and in good
faith and proceed in the preparation and execution of a definitive joint
venture agreement with respect to 100% of the Property to replace this
Letter Agreement (the execution of such definitive joint venture agreement
to occur no later than that date which is 90 days after the Effective
Date). The joint venture agreement shall, except as otherwise provided
in this Letter Agreement, be similar in form and substance to the Rocky
Mountain Mineral Law |
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Foundation, Model Form Exploration, Development and
Mining Operations Agreement, Form 5A (the “Model Form Agreement”)
modified as necessary to: (i) comply with the laws of Canada; (ii) limit,
to the maximum extent possible, any tax exigible in respect of the Joint
Venture; (iii) reflect the activities of the Joint Venture; (iv) provide
that Lumina shall be the Operator of the Joint Venture for as long as
its interest is 50% or more and shall have the right to prepare annual
work programs and budgets, which shall be approved by the Joint Venture
with the Operator having the casting vote in the event of a tie; (v) allow
the non-Operator of the Joint Venture to propose an annual exploration
budget in any year that the operator fails to propose a budget which exceeds
$300,000; (vi) include a dilution clause that will provide dilution of
a non-performing party to a 0.5% Net Smelter Royalty when it s participating
interest in the Joint Venture is diluted to 5% or less. The Net Smelter
Royalty so specified may be extinguished at any time by payment to the
non-performing party of $250,000. The dilution formula will deem an 80/20
Lumina/Eastfield interest in the Joint Venture and initial expenditures
of $800,000 for Lumina and $200,000 for Eastfield; (vii) provide that
if either party acquires mineral claims or titles within the Area of Influence
after the formation of the Joint Venture, that party must offer the other
party a thirty day option to acquire an interest in those claims or titles
that is proportionate to its participating interest in the Joint Venture
at the time by repaying its proportionate share of the acquisition costs
and accepting its proportionate share of obligations. If such acquisition
is made the claims or titles will become part of the Joint Venture Agreement;
and (viii) incorporate the terms and intent set forth in this Letter Agreement.
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REPRESENTATIONS, WARRANTIES AND COVENANTS
| 10. | Capacity. Each of
the parties represents, covenants and warrants to the other that it has
the capacity to enter into and perform its obligations under this Letter
Agreement. The parties make no express or implied representations, covenants
or warranties of any type, including any representations, covenants or
warranties with respect to title to or rights under the Property, except
as specifically set forth herein. |
|
| 11. | Title. Eastfield
represents, covenants and warrants, as of the date hereof, which representations,
covenants, and warranties shall be true on the Effective Date: |
|
| (a) | the letter agreement with Xxxxxx X.
Xxxxxx (“Xxxxxx Letter”) is in good standing and Eastfield is
in full compliance with all terms thereof; |
|
| (b) | Xxxxxx is the sole owner of the Property and Eastfield’s option is valid, binding and enforceable; | |
| (c) | neither it nor, to the best of its knowledge,
any of its predecessors in interest or title have done anything whereby
the Property may become encumbered; and |
|
| (d) | it has no knowledge of anything in relation
to the usage or ownership of the Property prior to the date hereof which
could in any way give rise to a claim by any other person to any interest
whatsoever in the Property, except as described in Exhibit "B" hereto. |
|
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| 12. | Title Subject to this Agreement.
Eastfield covenants that it will (i) hold the Xxxxxx Letter and all other
rights which it holds in the Property subject to the terms of this Letter
Agreement; (ii) complete the terms of the Xxxxxx Letter; and (iii) upon
completion of the terms of the Xxxxxx Letter transfer forthwith the Property
to Lumina for Lumina to hold subject to the terms of this Letter Agreement. |
| 13. | Breach. Prior to the Effective
Date, all costs and losses arising: (i) out of or resulting from breach
of the representations and warranties of Eastfield or Lumina herein; or
(ii) any other action for which such party may be responsible, shall be
charged to Eastfield or Lumina, as the case may be, and each of the parties
hereto, to the extent responsible, hereby agrees to use its commercially
reasonable efforts to rectify any defects in title to the Property and
to otherwise defend title to the Property. |
| 14. |
Minerlike Manner. Lumina shall
conduct all exploration in a careful and minerlike manner and shall conform
in all respects to all applicable laws and regulations of all governmental
authorities having jurisdiction over the Property. |
| 15. |
No Encumbrances. Prior to the
Effective Date neither Eastfield nor Lumina will, by any action or inaction,
cause any lien, charge or encumbrance to be placed upon or against the
Property, other than liens for taxes and other than encumbrances which
prior to determination thereof, are contested in good faith by either
Eastfield or Lumina in connection with work performed on the Property. |
| 16. | Indemnity. Lumina shall indemnify
and save harmless Eastfield as to any liability for or on the account
of any injury or loss to persons or property which results from any act
or omission of Lumina respecting the Property. Eastfield shall indemnify
and save harmless Lumina as to any liability for or on the account of
any injury or loss to persons or property which results from any act or
omission of Eastfield respecting the Property. |
GENERAL PROVISIONS
| 17. | Area of Influence. Any mineral
claims acquired by either party to this Letter Agreement which fully or
partially lie within a one kilometre line drawn parallel to the Property
boundaries as they exist at the date of this Letter Agreement shall be
added to and thereafter included in the definition of the Property for
the purposes of this Letter Agreement. |
| 18. | Operator. Lumina shall be the
operator for the preparation and oversight of exploration activities on
the Property. |
| 19. | Project Manager. Eastfield shall
be project manager to conduct exploration programs on the Property until
Lumina has been vested with an 80% interest. |
| 20. | Cumulative Exploration Expenditures.
Exploration expenditure requirements herein contained are cumulative with
over expenditure in any year credited toward the |
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exploration requirements for the subsequent
year or years. Lumina has the right to accelerate the schedule of exploration
work expenditures and(or) cash payments outlined herein. |
|
| 21. |
Relationship of the Parties.
The rights, duties, and obligations of the parties hereunder shall be
several and not joint or collective. Each party shall be responsible only
for its share of the costs and expenses as provided herein. It is expressly
agreed that it is not the purpose or intent of this Letter Agreement,
nor shall the same be construed as creating any mining, commercial or
other partnership nor the constitution of a company. Each party shall
remain a separate and independent company with its own legal personality.
The Joint Venture does not create a new legal personality. This Letter
Agreement shall not be construed to provide for any joint marketing of
ores, concentrates, or other substances produced from the Property nor
to create any fiduciary relationship between the parties. |
| 22. |
Recording. As soon as possible
after execution hereof or the Effective Date, as the case may be, the
parties agree to execute, deliver and record where necessary to comply
with all other proper formalities of the Mining Recording in British Columbia,
a public deed evidencing the agreements between the parties pursuant to
this Letter Agreement. |
| 23. |
Confidentiality/Release. All
data and information coming into the possession of the parties by virtue
of this Letter Agreement shall be deemed confidential and shall be kept
strictly confidential by the parties and except as required by law or
regulation, no party shall make any public announcement or disclosure
related to the Joint Venture, the Property or this Letter Agreement without
the prior written consent of the other party, which consent shall not
be unreasonably withheld |
| 24. |
Data. During the term of this
Letter Agreement, all data and information obtained by or in the possession
of any party with respect to the Property shall be made available to the
other parties upon their request. |
| 25. |
Dispute Resolution and Governing
Law. In the event of a dispute under or related to this Letter Agreement,
the parties agree to negotiate diligently and in good faith the satisfactory
resolution of such dispute. Failing resolution, the dispute shall be resolved
by binding arbitration by a single arbitrator agreed to by the parties
in accordance with International Arbitration Rules in British Columbia.
If the parties hereto cannot agree upon the selection of an arbitrator
within thirty days after arbitration is initiated by the giving of notice
demanding for arbitration, the selection of the arbitrator shall be made
by the International Arbitration Centre in British Columbia upon application
by either party hereto. The decision rendered by the arbitrator may be
entered into any court. Fees and expenses of the arbitration and costs
and attorneys fees of the prevailing party shall be borne by the party
against whom the arbitrated issue is decided. This Letter Agreement and
all terms and provisions hereof shall be construed and interpreted in
accordance with the laws of British Columbia. |
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| 26. | Specific Performance. Each party
shall have the remedy of specific performance of the obligations set forth
herein. |
| 27. |
Notice. Any notices or communications required or permitted hereunder shall be in writing and shall be effective when delivered by hand or facsimile as follows: Lumina at: Xxxxx 0000, 000 Xxxx Xxxxxx Attention: President Eastfield at: Xxxxx 000, 000 Xxxx Xxxxxx Attention: President |
| 28. | Currency. All references to dollars in this Letter Agreement shall mean lawful currency of Canada. |
| 29. |
Force Majeure. If any
party is hindered or prevented from performance of the terms or provisions
of this Letter Agreement, other than the payment of monies, by reason
of any force majeure or act of God beyond the control of the party, whether
foreseeable or not, including without limitation law or regulation, inability
or delay in obtaining any license, permit, or other authorization that
may be required to conduct operations, weather, war, civil insurrection,
labour disputes, acts of government, surface owner disputes, injunction
prohibiting access to the Property or like causes not subject to the party’s
control, whether created by statute or otherwise, the time for the performance
thereof of all obligations, except for governmental obligations required
to maintain the concession, shall be extended for a period equal to the
period of the force majeure, provided such party gives notice of the force
majeure and diligently seeks to eliminate the force majeure and resume
performance as soon as feasible thereafter. |
| 30. | Inurement. This Letter Agreement
shall inure to and be binding on the successors and assigns of the parties
and shall run with the Property and be binding on any person or entity
holding title to the Property. |
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| 31. | Entire Agreement. This Letter
Agreement constitutes the entire agreement between the parties with respect
to the Property and it supersedes and replaces all prior written or oral
understandings between the parties relating to the Property, including
all prior negotiations, correspondence letters of intent or agreements. |
| 32. | Further Assurances, Severance and
Wholly-Owned Subsidiaries. The parties intend that this Letter Agreement
shall be a binding and enforceable agreement, but they further understand
that it may be necessary to enter into further agreements to memorialize
or otherwise give legal effect to the terms and conditions of this Letter
Agreement and agree to promptly execute and deliver such further agreements
upon request of any party. If any provision of this Letter Agreement is
in violation of any applicable law or regulation, such invalidity shall
not effect the remainder of this Letter Agreement and such remaining portions
of this Letter Agreement shall be interpreted to give the maximum possible
effect to the intention of the parties as permitted by law. To the extent
desired by either party hereto, the foregoing obligations may be undertaken
by any wholly-owned subsidiary or affiliate provided that the parties
hereto shall remain liable, to cause compliance with, or for any breach
of the terms hereof. |
Please indicate your acknowledgement and acceptance of the terms and conditions of this Letter Agreement by executing both of the enclosed copies in the space provided and returning both copies to the attention of the undersigned at the letterhead address shown above. Upon execution, a fully executed original will be returned to you.
Yours truly,
/s/ Xxxxxx Xxxxxx
Vice President
AGREED AND ACCEPTED this 24 day of April, 2003:
EASTFIELD RESOURCES LTD.
/s/ X.X. Xxxxxx
Authorized Signatory
Attachments:
Exhibit “A” - Property
Exhibit “B” – Encumbrances
Exhibit “C” – Xxxxxx Agreement
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EXHIBIT “A”
PROPERTY
| Claim Name | Record No. |
| OK A | 258171 |
| OK B | 258172 |
| OK C | 258173 |
| OK D | 258174 |
| OK E | 258175 |
| OK F | 258176 |
| OK G | 258177 |
(all claims are located in the Vancouver Mining Division, British Columbia)
EXHIBIT “B”
ENCUMBRANCES
| Holder | Nature of Encumbrance |
| Xxxxxx X. Xxxxxx | NSR and Repurchase Right |
EXHIBIT “C”
XXXXXX AGREEMENT
(Attached)
