THE PROPERTY OPTION AGREEMENT DORIAN LESLIE AND RAM EXPLORATION LTD. AND FRC EXPLORATION LTD. SNIPPAKER MINERAL PROPERTIES PROVINCE OF BRITISH COLUMBIA
THE
PROPERTY OPTION AGREEMENT
XXXXXX
XXXXXX
AND
RAM
EXPLORATION LTD.
AND
FRC
EXPLORATION LTD.
SNIPPAKER
MINERAL
PROPERTIES
PROVINCE
OF BRITISH COLUMBIA
TABLE
OF CONTENTS
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2
THIS
AGREEMENT made
effective as of the 24 day of May, 2006.
BETWEEN:
XXXXXX
XXXXXX,
an
individual having a residence at 000 - 000 Xxxxx Xxxxxx, Xxxxxxxxx ,the Province
of British Xxxxxxxx ,X0X 0X0, Xxxxxx.
(hereafter
“Xxxxxx”)
AND:
RAM
EXPLORATION LTD.,
a body
corporate, incorporated under the laws of British Columbia and having offices
located at 1124 - 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx in the Province of British
Xxxxxxxx, X0X 0X0, Xxxxxx
(hereafter
“Ram”)
AND:
FRC
EXPLORATION LTD..,
a body
corporate, incorporated under the laws of British Columbia and having offices
located at 305 - 3495 Cambie Street, Vancouver, in the Xxxxxxxx xx Xxxxxxx
Xxxxxxxx, X0X 0X0, Xxxxxx
(hereafter
“FRC”)
WHEREAS:
X.
Xxxxxx
is
the holder of all Property Rights related to the Property; and
X.
Xxxxxx
has agreed to grant an Option to FRC to acquire an interest in and to the
Property Rights and the Property, on the terms and conditions hereinafter set
forth;
NOW
THEREFORE THIS AGREEMENT WITNESSETH that
in
consideration of the sum of $1.00 now paid by FRC to Xxxxxx and the sum of
$1.00
now paid by FRC to Ram (the receipt and sufficiency of which Xxxxxx and Ram
hereby acknowledges), the parties agree as follows:
1.1
For
the
purposes of this Agreement the following words and phrases shall have the
following meanings, namely:
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a)
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“Agreement”
means this agreement and any amendments thereto from time to
time;
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b)
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“Commencement
Date” means the date of this
Agreement;
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3
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c)
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“Completion
Date” means the date on which FRC fulfills all of its obligations with
respect to proper exercise of the Option as contemplated in Article
4
hereof;
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d)
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“Exploration
Expenditures” means the sum of
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| (i) |
all
costs of acquisition and maintenance of the Property, all exploration
and
development expenditures and all other costs and expenses of whatsoever
kind or nature including those of a capital nature, incurred or chargeable
by Ram with respect to the exploration and development of the Property
and
the placing of the Property into Commercial Production and
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| (ii) |
any
compensation for general overhead expenses which Ram , as Operator,
will
charge to FRC, an amount equal to 5% of all amounts included in
subparagraph (i) involving aggregate payments by it in excess of
$10,000,
and 7.5% of all other amounts included in subparagraph (i) involving
aggregate payments by it less than
$10,000
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e)
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“Feasibility
Report” means a detailed written report of the results of a comprehensive
study on the economic feasibility of placing the Property or a portion
thereof into Commercial Production and shall include a reasonable
assessment of the mineral ore reserves and their amenability to
metallurgical treatment, a description of the work, equipment and
supplies
required to bring the Property or a portion thereof into Commercial
Production and the estimated cost thereof, a description of the mining
methods to be employed and a financial appraisal of the proposed
operations supported by an explanation of the data used
therein;
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f)
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“FRC”
means FRC Exploration Ltd.;
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g)
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“Joint
Venture Agreement” means the agreement substantially in the form as
attached hereto as Schedule “B”;
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h)
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“Xxxxxx”
means Xxxxxx Xxxxxx
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i)
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“Mine”
means the workings established and assets acquired, including, without
limiting the generality of the foregoing, development headings, plant
and
concentrator installations, infrastructure, housing, airport and
other
facilities in order to bring the Property into Commercial
Production;
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j)
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“Mineral
Products” means the end products derived from operating the Property as a
Mine;
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k)
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“Mining
Operations” means every kind of work
done:
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i)
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on
or in respect of the Property in accordance with a Feasibility Report;
or
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ii)
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if
not provided for in a Feasibility Report, unilaterally and in good
faith
to maintain the Property in good standing, to prevent waste or to
otherwise discharge any obligation which is imposed upon it pursuant
to
this Agreement;
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including,
without limiting the generality of the foregoing, investigating, prospecting,
exploring, developing, property maintenance, preparing reports, estimates and
studies, designing, equipping, improving, surveying, construction and mining,
milling, concentrating, rehabilitation, reclamation, and environmental
protection;
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l)
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“Option”
means the irrevocable option for FRC to earn in and acquire a net
undivided interest in and to the Property as provided in this
Agreement;
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m)
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“Option
Period” means the period commencing on the Commencement Date to and
including December 31, 2009;
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4
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n)
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“Property”
means the exploration properties and lands located in the Province
of
British Columbia, all as more particularly described in Schedule
“A”
hereto;
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| o) |
“Property
Rights” means all applications for permits for general reconnaissance,
permit for general reconnaissance, interim approvals, applications
for
contracts of work, contracts of work, licenses, permits, easements,
rights-of-way, certificates and other approvals obtained by either
of the
parties either before or after the date of this Agreement and necessary
for the exploration and development of the Property, or for the purpose
of
placing the Property into production or continuing production therefrom,
and;
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| p) |
“Ram”
means Ram Explorations Ltd., a British Columbia
corporation.
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2.1
Xxxxxx
hereby acknowledges and confirms that it holds the Property Rights related
to an
undivided one hundred (100%) percent interest in the Property as at the date
hereof.
2.2
Xxxxxx represents and warrants to RFC that:
| a) |
Xxxxxx
is lawfully authorized to hold his interest in the Property
and will
remain so entitled until 85% of the interests of Xxxxxx in
the Property
have been duly transferred to FRC as contemplated by the terms
hereof;
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| b) |
Xxxxxx
is
an individual, has attained the age of majority and is
legally competent
to execute this agreement and to take all actions required
pursuant
thereto and that upon the execution and delivery, this
agreement, will
constitute a legal, valid and binding contract of Xxxxxx
enforceable
against Xxxxxx in accordance with its
terms;
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| c) |
as
at the date hereof and at the time of transfer
to FRC of an interest in
the mineral claims and/or exploration licenses
comprising the Property
Xxxxxx is and will be the beneficial owner of its
interest in the Property
free and clear of all liens, charges, claims, royalties
or net profit
interests of whatsoever nature, and no taxes or
rentals will be due in
respect of any thereof;
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| d) |
Xxxxxx
has the right and capacity to deal with the
Property and the right to
enter into this Agreement and to dispose
of his right, title and interest
in the Property as herein
contemplated;
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| e) |
there
is no adverse claim or challenge against
or to Leslie’s interest in the
Property, nor to the knowledge of Xxxxxx
is there any basis therefor, and
there are no outstanding agreements
or options to acquire or purchase such
interest in the Property or any portion
thereof other than this
Agreement;
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| f) |
no
person has any royalty, net profit
interests or other interest whatsoever
in the Property;
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| g) |
Xxxxxx
is duly authorized to execute
this Agreement and for
the performance of
this Agreement by him,
and the consummation of
the transactions herein
contemplated will not conflict
with or result in any breach
of any
covenants or agreements
contained in, or constitute
a default under, or
result in the creation
of any encumbrance under
the provisions of its
articles or constating
documents or any indenture,
agreement or other
instrument whatsoever to
which Xxxxxx is a party
or by which he is bound
or to which he or the Property
may be
subject;
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| h) |
no
proceedings are pending
for, and it is unaware
of any basis for
the
institution of any
proceedings leading
to, the placing of
Xxxxxx in
bankruptcy or subject
to any other laws
governing the affairs
of and
insolvent person;
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| i) |
there
are no claims,
proceedings,
actions or
lawsuits in
existence and
to the
best of Leslie’s information
and belief
none are contemplated
or
threatened
against or
with respect
to the right,
title, estate
and
interest of
Xxxxxx in the
Property;
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| j) |
to
the best
of his
information
and belief,
all laws,
regulations
and orders
of all
governmental
agencies
having
jurisdiction
over
the Property
have
been
complied
with
by Xxxxxx;
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5
| k) |
to
the best of his information and belief Xxxxxx is in good standing
under
all agreements and instruments affecting the Property to which
he is a
party or is bound.
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2.3
The
representations and warranties contained in this section are provided for the
exclusive benefit of FRC, and a breach of any one or more thereof may be waived
by FRC in whole or in part at any time without prejudice to its rights in
respect of any other breach of the same or any other representation or warranty,
and the representations and warranties contained in this section shall survive
the execution hereof.
2.4
The
representations and warranties contained in this section shall be deemed to
apply to all assignments, transfers, conveyances or other documents transferring
to FRC the interest to be acquired hereunder and there shall not be any merger
of any covenant, representation or warranty in such assignments, transfers,
conveyance or documents, any rule or law, in equity or statute to the contrary
notwithstanding.
3.1
FRC
represents and warrants to Xxxxxx that:
| a) |
it
has been duly incorporated and validly exists as a corporation in
good
standing under the laws of its jurisdiction of
incorporation;
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| b) |
it
is or will be prior to acquiring any undivided interest in the Property
hereunder, lawfully authorized to hold mineral claims and real property
under the laws of the jurisdiction in which the Property is
situate;
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| c) |
it
has duly obtained all corporate authorizations for the execution
of this
Agreement and for the performance of this Agreement by it, and the
consummation of the transaction herein contemplated by it will not
conflict with or result in any breach of any covenants or agreements
contained in, or constitute a default under, or result in the creation
of
any encumbrance under the provisions of the articles or the constating
documents of it or any shareholders' or directors' resolution, indenture,
agreement or other instrument whatsoever to which it is a party or
by
which they are bound or to which it or the Property may be subject;
and,
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| d) |
no
proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, the dissolution or winding
up
of FRC or the placing of FRC in bankruptcy or subject to any other
laws
governing the affairs of insolvent corporations.
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3.2
The
representations and warranties contained in this section are provided for the
exclusive benefit of Xxxxxx and a breach of any one or more thereof may be
waived by Xxxxxx in whole or in part at any time without prejudice to its rights
in respect of any other breach of the same or any other representation or
warranty, and the representations and warranties contained in this section
shall
survive the execution hereof.
3.3
The
representations and warranties contained in this section shall be deemed to
apply to all assignments, transfers, conveyances or other documents transferring
to Xxxxxx the interest to be acquired hereunder and there shall not be any
merger of any covenant, representation or warranty in such assignments,
transfers, conveyance or documents, any rule or law, in equity or statute to
the
contrary notwithstanding.
4.1
Xxxxxx hereby irrevocably grants to FRC the sole and exclusive right and Option
to acquire up to and including a eighthly five percent (85%) right, title,
estate and interest of Leslie’s one hundred (100%)
6
percent
net undivided interest) in and to the Property Rights and Property, free and
clear of all charges, encumbrances, claims, royalties and net profit interests
of whatsoever nature.
4.2
If at
any time after the date hereof determines in its sole discretion to commission
a
Feasibility Report recommending the Construction of a Mine, FRC shall give
written notice thereof to Xxxxxx.
4.3
The
Option may be exercised at any time (subject to the terms as stated herein)
by
FRC:
a)
paying
Xxxxxx two thousand and five hundred ($2,500) dollars upon the execution of
this
agreement;
b)
paying
Xxxxxx two thousand and five hundred ($2,500) dollars on or before June 30,
2007;
c)
paying
Xxxxxx forty thousand ($40,000) dollars on or before June 30, 2008.
d)
paying
Xxxxxx fifty five thousand ($55,000) dollars on or before June 30,
2009.
e)
incurring Exploration Expenditures on the Property as follows:
i)
aggregate Exploration Expenditures of not less than twelve thousand dollars
($12,000) on or before June 30, 2007;
ii)
aggregate Exploration Expenditures (including Exploration Expenditures as
described in paragraph
4.3(c)(i)
above) of not less than twenty four thousand dollars ($24,000) on or before
June
30, 2008;
iii)
aggregate Exploration Expenditures (including Exploration Expenditures as
contemplated in paragraph 4.3(c)(i) and (ii) above) of not less than one hundred
and sixty thousand ($160,000) dollars on or before June 30, 2009;
and
iv)
aggregate Exploration Expenditures (including Exploration Expenditures as
contemplated in paragraph 4.3(c)(i), (ii) and (iii) above) of not less than
four
hundred and fifty thousand dollars ($450,000) on or before June 30,
2010.
4.4
Prior
to the exercise of the Option as herein provided, Ram is hereby appointed as
operator of the
Property
and shall carry out exploration and development programs on the Property on
the
following terms:
a)
Ram
shall have the same powers, duties and obligations in carrying out such programs
asset out in Article 7 of the Joint Venture Agreement attached hereto as
Schedule “B”, excepting thereout Section 7.5 and 7.6 thereof;
b)
For
income tax purposes, all Exploration Expenditures incurred by Ram pursuant
to
such programs shall be incurred for the benefit of FRC; and
c)
Until
such time as the Option is exercised in accordance with the terms hereof, FRC
shall have no interest of whatsoever nature in the Property Rights or the
Property, and;
d)
indemnify and save FRC harmless in respect of any and all costs, claims,
liabilities and expenses arising out of Ram’s activities on the
Property.
4.5
If
and when the Option has been exercised in accordance with Section 4.3 and
commencing on the
Completion
Date:
a)
The
undivided right, title and interest of the parties in the Property shall be
as
follows:
| Before Completion Date (net) | After Completion Date (net) |
| Xxxxxx 100% | Xxxxxx 15% |
| FRC 0% | FRC 85% |
| Total 100% | Total 100% |
b)
the
undivided right, title and interest in and to the Property Rights and the
Property acquired by upon the Completion Date shall vest in FRC free and clear
of all charges, encumbrances, claims, royalties or net profit interests of
whatsoever nature other than as set forth and described in the Joint Venture
Agreement substantially in the form attached hereto as Schedule
“B”;
d)
for
the purposes of the Joint Venture Agreement:
i)
Xxxxxx
will be deemed to have contributed sixty seven thousand and five hundred dollars
($67,500)and FRC will be deemed to have contributed three hundred and eighty
two
thousand and five hundred ($382,500) dollars of Costs to the Joint Venture
for
purposes thereof;
7
ii)
Ram
will be the initial operator of the Joint Venture and will have the option
to
remain as operator of the Joint Venture for so long as Xxxxxx holds a
participating interest of fifteen (15%) percent or greater in the Joint
Venture;
iii)
Ram
will be entitled on a calendar year basis to a fee equal to:
A.
5% of
the value of Costs in excess of ten thousand ($10,000) dollars; and
B.
7.5%
of the value of Costs less than ten thousand ($10,000) dollars;
iv)
any
royalties on production from the Property payable to third parties will be
payable pro rata in accordance with each party's participating interest in
the
Joint Venture.
4.6
Within 30 days after the Completion Date, Xxxxxx shall deliver to FRC's counsel
such number of duly executed transfers which in the aggregate convey Leslie's
interest to be acquired hereunder in the Property in favour of FRC. In the
event
that Xxxxxx shall deliver notice to FRC's counsel that it has exercised the
Option pursuant to the terms hereof, FRC shall be entitled to receive and to
record such of the transfers contemplated hereby at its own cost with the
appropriate governmental office to effect legal transfer of such interest in
the
Property into the name of FRC.
4.7
If,
during the Option Period, Ram:
a)
makes
a voluntary or involuntary assignment into bankruptcy or takes advantage of
any
legislation for the winding-up or liquidation of the affairs of insolvent or
bankrupt companies or has a bankruptcy petition filed against it; or
b)
fails
to perform in a manner that is consistent with good mining practice or fails
to
perform in a manner consistent with its duties and responsibilities under this
Agreement and does not remedy such default within 30 days of receipt of written
notice from FRC specifying such default;
FRC
shall
have the right, upon thirty (30) days written notice to Ram, to terminate Ram
as
the Operator of the Property.
5.1
During the term of this Agreement, the directors and officers of Ram and their
servants, agents and independent contractors, shall have the sole and exclusive
right in respect of the Property to:
a)
enter
thereon at their sole risk and expense;
b)
do
such prospecting, exploration, development and other mining work thereon and
thereunder as Ram, as operator and under the direction of FRC, in its sole
discretion may determine advisable;
c)
bring
upon and erect upon the Property such buildings, plant, machinery and equipment
as Ram may deem advisable and for a period of six months following the
termination of this Agreement, to remove such buildings, plant, machinery and
equipment; and
d)
remove
therefrom and dispose of reasonable quantities of ores, minerals and metals
for
the purposes of obtaining assays or making other tests.
6.1
During the term of this Agreement, Xxxxxx shall:
a)
maintain in good standing those mineral claims and/or exploration licenses
comprised in the Property by the doing and filing of assessment work or the
making of payments in lieu thereof, and the performance of all other actions
which may be necessary in that regard and in order to keep such mineral claims
free and clear of all liens and other charges arising from Ram’s activities
thereon except those at the time contested in good faith by FRC;
b)
permit
the directors, officers, employees and designated consultants of FRC, at their
own risk and expense, access to the Property at all reasonable times, and FRC
agrees to indemnify Xxxxxx against and to save it harmless from all costs,
claims, liabilities and expenses that FRC may incur or suffer as a result of
any
injury (including injury causing death) to any director, officer, employee
or
designated consultant of FRC while on the Property;
8
c)
permit
FRC, at its own expense, reasonable access to the results of the work done
on
the Property during the last completed calendar year;
d)
do all
work on the Property in a good and workmanlike fashion and in accordance with
all applicable laws, regulations, orders and ordinances of any governmental
authority;
e)
indemnify and save FRC harmless in respect of any and all costs, claims,
liabilities and expenses arising out of Leslie’s activities on the
Property;
7.1
Provided that FRC is not in default pursuant to the provisions hereof, FRC
shall
have the right at any time during the term of this Agreement to terminate the
Option by providing not less than forty five (45) days written notice to Ram
and
to Xxxxxx.
7.2
Notwithstanding the termination of the Option, FRC shall have the right, within
a period of one hundred and eighty (180) days following the end of the Option
Period, to remove from the Property all buildings, plant, equipment, machinery,
tools, appliances and supplies which have been brought upon the Property by
or
on behalf of FRC, and any such property not removed within such 180 day period
shall thereafter become the property of Xxxxxx.
8.1
If
Xxxxxx (the “Proposed Seller”) should receive a bona fide offer from an
independent third party (the “Proposed Purchaser”) dealing at arm's length with
the Proposed Seller to purchase all or a part of its interest in the Property,
which offer the Proposed Seller desires to accept, or if the Proposed Seller
intends to sell all or a part of its interest in the Property:
a)
The
Proposed Seller shall first offer (the “Offer”) such interest in writing to FRC
upon terms no less favourable than those offered by the Proposed Purchaser
or
intended to be offered by the Proposed Seller, as the case may be;
b)
The
Offer shall specify the price, terms and conditions of such sale, the name
of
the Proposed Purchaser and shall, in the case of an intended offer by the
Proposed Seller, disclose the person or persons to whom Xxxxxx intends to offer
its interest and, if the offer received by the Proposed Seller from the Proposed
Purchaser provides for any consideration payable to the Proposed Seller
otherwise than in cash, the Offer shall include the Proposed Seller's good
faith
estimate of the cash equivalent of the non-cash consideration;
c)
If
within a period of sixty (60) days of the receipt of the Offer and FRC notifies
the Proposed Seller in writing that it will accept the Offer, the Proposed
Seller shall be bound to sell such interest to FRC on the terms and conditions
of the Offer. If the Offer so accepted by FRC contains the Proposed Seller's
good faith estimate of the cash equivalent of the non-cash consideration as
aforesaid, and if FRC disagrees with the Proposed Seller's best estimate, FRC
shall so notify Xxxxxx at the time of acceptance and FRC shall, in such notice,
specify what it considers, in good faith, the fair cash equivalent to be and
the
resulting total purchase price. If FRC so notifies the Proposed Seller, the
acceptance by FRC shall be effective and binding upon FRC, and the cash
equivalent of any such non-cash consideration shall be determined by binding
arbitration and shall be payable by FRC, subject to prepayment as hereinafter
provided, within 60 days following its determination by arbitration. FRC shall
in such case pay to the Proposed Seller, against receipt of an absolute transfer
of clear and unencumbered title to the interest of the Proposed Seller being
sold, the total purchase price which is specified in its notice to the Proposed
Seller and such amount shall be credited to the amount determined following
arbitration of the cash equivalent of any non-cash consideration;
d)
If FRC
fails to notify the Proposed Seller before the expiration of the time limited
therefor that it will purchase the interest offered, the Proposed Seller may
sell and transfer such interest to the Proposed Purchaser at the price and
on
the terms and conditions specified in the Offer for a period of sixty (60)
days,
but the terms of this paragraph shall again apply to such interest if the sale
to the Proposed Purchaser is not completed within such sixty (60)
days;
9
e)
Any
sale hereunder shall be conditional upon the Proposed Purchaser delivering
to
the nonselling party, its agreement related to this Agreement and to the
Property, containing:
i)
a
covenant by the Proposed Purchaser to perform all the obligations of the
Proposed Seller to be performed under this Agreement in respect of the interest
to be acquired by it from the Proposed Seller to the same extent as if this
Agreement had been originally executed by the Proposed Purchaser;
and
ii)
a
provision subjecting any further sale, transfer or other disposition of such
interest
in
the
Property and this Agreement or any portion thereof to the restrictions contained
in this paragraph (e).
8.2
The
provision of Section 8.1 shall apply to a proposed sale by FRC of its interest
in the Property
mutatis
mutandis such
that
Xxxxxx shall have a right of first refusal to acquire such interest in
proportion to the then current interest.
8.3
No
assignment by a party of any interest less than its entire interest in this
Agreement and in the
Property
shall discharge it from any of its obligations hereunder, but upon the transfer
by a party of the entire interest at the time held by it in this Agreement,
whether to one or more transferees and whether in one or in a number of
successive transfers, the party shall be deemed to be discharged from all
obligations hereunder save and except for fulfilment of contractual commitments
accrued due prior to the date on which the party shall have no further interest
in this Agreement.
9.1
If
Ram is at any time either during the term of this Agreement or thereafter
prevented or delayed in complying with any provisions of this Agreement by
reason of strikes, lock-outs, labour shortages, power shortages, fuel shortages,
fires, wars, acts of God, governmental regulations restricting normal
operations, shipping delays or any other reason or reasons, other than lack
of
funds, beyond the control of Ram, the time limits for the performance by FRC
of
its obligations hereunder shall be extended by a period of time equal in length
to the period of each such prevention or delay, but nothing herein shall
discharge Ram from its obligations hereunder to maintain the Property in good
standing.
9.2
Ram
shall give prompt notice to FRC and to Xxxxxx of each event of force majeure
under Section 9.1 and upon cessation of such event shall furnish to FRC and
to
Xxxxxx with notice to that effect together with particulars of the number of
days by which the obligations of FRC and to Xxxxxx hereunder have been extended
by virtue of such event of force majeure and all preceding events of force
majeure.
10.1
The
parties to this Agreement shall keep confidential all books, records, files
and
other information supplied by any party to one of the other parties or to their
employees, agents or representative in connection with this Agreement or in
respect of the activities carried out on the Property by a party, or related
to
the sale of minerals, or other products derived from the Property, including
all
analyses, reports, studies or other documents prepared by a party or its
employees, agents or representatives, which contain information from, or
otherwise reflects such books, records, files or other information. The parties
shall not and shall ensure that their employees, agents or representatives
do
not disclose, divulge, publish, transcribe, or transfer such information, all
or
in part, without the prior written consent of the other parties, which may
not
be arbitrarily withheld and which shall not apply to such information or any
part thereof to the extent that:
a)
prior
to its receipt by a party such information was already in the possession of
such
party or its employees, agents or representatives; or
b)
in
respect of such information required to be publicly disclosed pursuant to
applicable securities or corporate laws.
11.1
Xxxxxx and FRC agree that all questions or matters in dispute with respect
to
any dispute shall be settled by arbitration and shall be submitted to
arbitration pursuant to the terms hereof.
10
11.2
It
shall be a condition precedent to the right of Xxxxxx and FRC, to submit any
matter to arbitration pursuant to the provisions hereof, that any party
intending to refer any matter to arbitration shall have given not less than
ten
(10) days' prior notice of its intention to do so to the other party, together
with particulars of the matter in dispute. On the expiration of such ten (10)
days, the party who gave such notice may proceed to refer the dispute to
arbitration as provided in 11.3.
11.3
The
party desiring arbitration shall appoint one arbitrator, and shall notify the
other party of such appointment, and such other party shall, within fifteen
(15)
days after receiving such notice, either consent to the appointment of such
arbitrator which shall then carry out the arbitration or appoint an arbitrator,
and the two arbitrators so named, before proceeding to act, shall, within thirty
(30) days of the appointment of the last appointed arbitrator, unanimously
agree
on the appointment of a third arbitrator to act with them and be chairman of
the
arbitration herein provided for. If the other parties shall fail to appoint
an
arbitrator within fifteen (15) days after receiving notice of the appointment
of
the first arbitrator, the first arbitrator shall be the only arbitrator, and
if
the two arbitrators appointed by the party shall be unable to agree on the
appointment of the chairman, the chairman shall be appointed under the
provisions of the Arbitration
Act of
British Columbia. Except as specifically otherwise provided in this section,
the
arbitration herein provided for shall be conducted in accordance with such
Act.
The chairman, or in the case where only one arbitrator is appointed, the single
arbitrator, shall fix a time and place in Vancouver, British Columbia, for
the
purpose of hearing the evidence and representations of the parties, and he
shall
preside over the arbitration and determine all questions of procedure not
provided for under such Act or this section. After hearing any evidence and
representations that the parties may submit, the single arbitrator, or the
arbitrators, as the case may be, shall make an award and reduce the same to
writing, and deliver one copy thereof to each of the parties. The expense of
the
arbitration shall be paid as specified in the award
11.4
The
arbitrating parties agree that the award of a majority of the arbitrators,
or in
the case of a single arbitrator, of such arbitrator, shall be final and binding
upon each of them.
12.1
If
at any time during the term of this Agreement FRC fails to perform any
obligation required to be performed by it hereunder or is in breach of a
warranty given by it hereunder, which failure or breach materially interferes
with the implementation of this Agreement, Xxxxxx xxx terminate this Agreement
but only if:
a)
it
shall have first given to the defaulting FRC a notice of default containing
particulars of the obligation which the defaulting FRC has not performed, or
the
warranty breached; and
b)
the
defaulting FRC has not, within forty-five (45) days following delivery of such
notice of default, cured such default or commenced proceedings to cure such
default by appropriate payment or performance, the defaulting FRC hereby
agreeing that should it so commence to cure any default it will prosecute the
same to completion without undue delay, provided however, that this paragraph
shall not be extended to a default by FRC to exercise an Option pursuant to
Article 4 thereof.
12.2
Notwithstanding Section 12.1 hereof, if at any time FRC fails to perform a
condition precedent to the exercise of the Option, Xxxxxx shall be entitled
to
forthwith terminate this Agreement.
13.1
Each
notice, demand or other communication required or permitted to be given under
this Agreement shall be in writing and shall be sent by prepaid registered
mail
deposited in a Post Office in Canada addressed to the party entitled to receive
the same, or delivered, telexed, telegraphed or telecopied to such party at
the
address for such party specified on the face page hereof. The date of receipt
of
such notice, demand or other communication shall be the date of delivery thereof
if delivered, telexed, telegraphed or telecopied, or, if given by registered
mail as aforesaid, shall be deemed conclusively to be the third business day
after the same shall have been so mailed except in the case of interruption
of
postal services for any reason whatever, in which case the date of receipt
shall
be the date on which the notice, demand or other communication is actually
received by the addressee.
11
13.2
Either party may at any time and from time to time notify the other party in
writing of a change or address and the new address to which notice shall be
given to it thereafter until further change.
14.1
This
Agreement shall supersede and replace any other agreement or arrangement,
whether oral or written, heretofore existing between the parties in respect
of
the subject matter of this Agreement.
14.2
No
consent or waiver expressed or implied by any party in respect of any breach
or
default by any other party in the performance by such other of its obligations
hereunder shall be deemed or construed to be a consent to or a waiver of any
other breach of default.
14.3
The
parties shall promptly execute or cause to be executed all documents, deeds,
conveyances and other instruments of further assurance and do such further
and
other acts which may be reasonably necessary or advisable to carry out fully
and
effectively the intent and purpose of this Agreement or to record wherever
appropriate the respective interest from time to time of the parties in the
Property.
14.4
This
Agreement shall enure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns.
14.5
This
Agreement shall, (i) be governed by and construed in accordance with the laws
of
British Columbia and the parties hereby irrevocably attorn to the jurisdiction
of the said province and (ii) be subject to the approval of all securities
regulatory authorities having jurisdiction, such approvals to be sought in
a
timely and diligent manner.
14.6
Time
shall be of the essence in this Agreement.
14.7
Wherever the neuter and singular is used in this Agreement it shall be deemed
to
include the plural, masculine and feminine, as the case may be.
14.8
The
rights and obligations of each party shall be in every case several and not
joint or joint and several.
IN
WITNESS WHEREOF the
parties hereto have executed this Agreement as of the day and year first above
written.
| XXXXXX XXXXXX | |
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/s/ Xxxxxx Xxxxxx
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/s/ Xxxx xxx Xxxxxxxxx
witness
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Xxxx xxx Xxxxxxxxx
name of witness
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| RAM EXPLORATION LTD. | |
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/s/ Xxxx xxx Xxxxxxxxx
Xxxx xxx Xxxxxxxxx,
Pres.
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| FRC EXPLORATION LTD. | |
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/s/ Xxxx Xxxxx
Xxxx X. Xxxxx, Pres. &
CE0
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THE
OPTION AGREEMENT
DESCRIPTION
OF PROPERTY RIGHTS AND PROPERTY
dated
May
24, 2006
The
Snippaker mineral claims are located within the Eskay Creek Area, Northwestern
British Columbia.
130’
55”
00 West / 56’ 35” 00 North
UTM
6272650N / 382400E
|
Tenure
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Name
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Owner
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Map
Number
|
Expiry
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Status
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Cells
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Area
(Hectares)
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525504
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Snippaker
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202528
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104B056
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Jan.
14, 2007
|
GOOD
|
356.365
|
|
|
525505
|
“
|
202528
|
104B056
|
Jan
14, 2007
|
GOOD
|
455.650
|
|
|
529951
|
“
|
202528
|
104B056
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Mar
13, 2007
|
GOOD
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124.828
|
|
|
529952
|
“
|
202528
|
104B056
|
Mar
13, 2007
|
GOOD
|
124.847
|
|
|
Totals
|
50
full & 9 fractional
|
1,051.690
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TO
THE
PROPERTY OPTION AGREEMENT
JOINT
VENTURE AGREEMENT
between
LESCO
(a corporation to be formed)
and
FRC
EXPLORATION LTD.
TABLE
OF CONTENTS
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2
3
JOINT
VENTURE AGREEMENT
THIS
AGREEMENT made
as
of the ___ day of ___________, 20__.
BETWEEN:
LESCO,
a
corporation to be formed having offices at 401 - 345 Water Street, in the City
of Vancouver, in the Province of British Columbia, (hereafter referred to as
“Lesco”);
OF
THE
FIRST PART
AND:
FRC
EXPLORATION LTD.,,
a body
corporate, incorporated under the laws of British Columbia and having offices
located at 305 - 0000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0,
Xxxxxx (hereafter
referred to as “FRC”);
OF
THE
SECOND PART
WHEREAS:
X.
Xxxxx
owns a 15 % and FRC owns a 85% undivided right, title and interest in and to
the
Property;
B.
The
parties wish to create a joint venture to carry out the continued operation
of
the Property on the terms and subject to the conditions hereinafter set
forth.
NOW
THEREFORE THIS AGREEMENT WITNESSETH that
in
consideration of the premises, and of the mutual covenants and agreements herein
contained, the parties hereto have agreed and do hereby agree as
follows:
1.1
In
this Agreement, including the Recitals and Schedules hereto the following words
and expressions shall have the following meanings:
| a) |
“Accounting
Procedure” means the accounting procedure attached to this Agreement as
Schedule “C”;
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| b) |
“Affiliate”
shall have the same meaning as under the Business
Corporations Act (Alberta)
as at the date hereof;
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| c) |
“Agreement”
means this Joint Venture Agreement as amended from time to time;
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| d) |
“Commercial
Production” means the operation of the Property as a producing mine and
the production of Mineral Products therefrom (excluding bulk sampling,
pilot plant or test
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| e) |
operations);
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| f) |
“Completion
Date” means the date on which it is demonstrated to the satisfaction of
the Management Committee that the preparing and equipping of a Mine
for
Commercial Production is complete;
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| g) |
“Construction”
means every kind of work carried out during the Construction Period
by the
Operator in accordance with a Feasibility Report approved by the
Management Committee;
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| h) |
“Construction
Period” means the period beginning on the date of a Feasibility Report and
ending on the Completion Date;
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| i) |
“Costs”
means all items of outlay and expense whatsoever, direct or indirect,
with
respect to Mining Operations in accordance with this Agreement, without
limiting the generality of the foregoing, the following categories
of
Costs shall have the following
meanings
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4
| j) |
“Feasibility
Report” means a detailed written report of the results of a comprehensive
study on the economic feasibility of placing the Property or a portion
thereof into Commercial Production and shall include a reasonable
assessment of the mineral ore reserves and their amenability to
metallurgical treatment, a description of the work, equipment and
supplies
required to bring the Property or a portion thereof into Commercial
Production and the estimated cost thereof, a description of the mining
methods to be employed and a financial appraisal of the proposed
operations supported by an explanation of the data used
therein;
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| k) |
”FRC”
means FRC Exploration Ltd.
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| l) |
“Interest”
means the undivided beneficial percentage interest from time to time
of a
party in the Joint Venture and the Property, and Mineral Products,
as set
out hereunder;
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| m) |
“Joint
Venture” means the joint venture created pursuant to this Agreement;
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| n) |
“Lesco”
means a company to be formed by Xxxxxx
Xxxxxx.
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| o) |
“Management
Committee” means the management committee constituted in
accordance
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with
the
provisions of Article 5 hereof to manage or supervise the management of the
business and affairs of the Joint Venture;
| p) |
“Mine”
means the workings established and assets acquired, including, without
limiting the generality of the foregoing, development headings, plant
and
concentrator installations, infrastructure, housing, airport and
other
facilities in order to bring the Property into Commercial
Production;
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| q) |
“Mine
Construction Costs” means those Costs incurred during the Construction
Period;
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| r) |
“Mine
Costs” means Mine Construction Costs and Operating Costs;
and
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| s) |
“Mineral
Products” means the end products derived from operating the Property as a
Mine;
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| t) |
“Mining
Operations” means every kind of work done by the Operator:
i)on
or in respect of the Property in accordance with a Feasibility
Report;
or
ii)
if not provided for in a Feasibility Report, unilaterally and in
good
faith to maintain the Property in good standing, to prevent waste
or to
otherwise discharge any obligation which is imposed upon it pursuant
to
this Agreement and in respect of which the Management Committee
has not
given it directions; including, without limiting the generality
of the
foregoing, investigating, prospecting, exploring, developing, property
maintenance, preparing reports, estimates and studies, designing,
equipping, improving, surveying, Construction and mining, milling,
concentrating, rehabilitation, reclamation, and environmental
protection.
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| u) |
“Net
Profits” shall mean net profits calculated in accordance with Schedule “B”
hereto;
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| v) |
“Operator”
means the operator appointed pursuant to Article
6;
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| w) |
“Operating
Costs” means those Costs incurred subsequent to the Completion
Date;
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| x) |
“Operating
Year” shall mean a twelve-month period, the first Operating Year to
commence on the Completion Date and each succeeding Operating Year
commencing at the expiration of the preceding Operating
Year.
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| y) |
“Operating
Plan” shall mean a plan in accordance with Section
11.2.;
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| z) |
“Option
Agreement” means the option agreement, made as of the 6th
day of April, 2006. between Xxxxxx Xxxxxx, Ram Exploration Ltd. and
FRC;
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| aa) |
“Other
Tenements” means (i) all surface rights of and to any lands within or
outside the Property including surface held in fee or under lease,
licence, easement, right of way or other rights of any kind (and
all
renewals, extensions and amendments thereof or substitutions therefor)
acquired by or on behalf of the parties with respect to the Property,
(ii)
all information obtained from Mining Operations, and (iii) those
rights
and benefits appurtenant to the Property that are acquired for the
purpose
of conducting Mining Operations;
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| bb) |
“party”
or “parties” means the parties to this Agreement and their respective
successors and permitted assigns which become parties to this
Agreement;
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| cc) |
“Program”
means a plan, including budgets, for the Project or any part thereof
as
approved by the Management Committee pursuant to this
Agreement;
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| dd) |
“Project”
means the exploration and development of the Property, preparation
and
delivery of a Feasibility Report and the Construction and operation
of
facilities to put the Property into CommFRCial
Production;
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5
| ee) |
“Property”
means those certain mining claims and related rights and interests
set out
and more particularly described in Schedule “A” hereto and Other Tenements
and shall include any renewal thereof and any form of substitute
or
successor title thereto;
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| ff) |
“Royalty”
means a royalty on the Net Profits calculated in accordance with
Schedule
“B” hereto;
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| gg) |
“Simple
Majority” means a decision made by the parties hereof or the Management
Committee by greater than 50% of the votes entitled to be cast.
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2.1
Each
of the parties represents each to the other that
:a)
it is
the legal and beneficial owner of the Interest as set forth and described in
the
recitals hereto free and clear of all liens, charges and encumbrances except
as
set forth in Schedule “A” attached hereto and the Option Agreement;
and
b)
save
and except as set out herein, there is no adverse claim or challenge against
or
to the ownership of or title to its Interest or any portion thereof, nor is
there any basis therefor, and there are no outstanding agreements or options
to
acquire or purchase its Interest or any portion thereof.
2.2
Each
of the parties represents each to the other that:
a)
it is
a company duly incorporated, organized and validly subsisting under the laws
of
its incorporating jurisdiction;
b)
it has
full power and authority to carry on its business and enter into this Agreement
and any agreement or instrument referred to or contemplated by this Agreement
and to carry out and perform all of its obligations hereunder; and
c)
it has
duly obtained all corporate authorizations for the execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in any breach of any covenants
or
agreements contained in, or constitute a default under, or result in the
creation of any encumbrance, lien or charge under the provisions of its
constating documents or any indenture, agreement or other instrument whatsoever
to which it is a party or by which it is bound or to which it may be subject
and
will not contravene any applicable laws.
2.3
The
representations and warranties hereinbefore set out are conditions on which
the
parties have relied in entering into this Agreement, are to be construed as
both
conditions and warranties and shall, regardless of any investigation which
may
have been made by or on behalf of any party as to the accuracy of such
representations and warranties, survive the closing of the transactions
contemplated hereby 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 or warranty contained in this
Agreement and each party shall be entitled, in addition to any other remedy
to
which it may be entitled, to set off any such loss, damage or costs suffered
by
it as a result of any such breach against any payment required to be made by
it
to the other party hereunder.
3.1
The
parties agree each with the other to use their best efforts to develop and
operate the Property with the goal of eventually putting the Property into
Commercial Production should a Feasibility Report recommending Commercial
Production be obtained and a decision to commence Commercial Production be
made,
and for this purpose the parties hereby agree to associate and participate
in a
single purpose joint venture to carry out all such acts which are necessary
or
appropriate, directly or indirectly, to carry out the Project.
3.2
The
parties have not created a partnership and nothing contained in this Agreement
shall in any manner whatsoever constitute a party the partner, agent or legal
representative of any other party or create any fiduciary relationship between
them for any purpose whatsoever. No party shall have any authority to act for
or
to assume any obligations or responsibility on behalf of any other party except
as may be, from time to time, agreed upon in writing between the parties or
as
otherwise expressly provided.
6
3.3
The
rights and obligations of each party shall be in every case several and not
joint or joint and several.
3.4
Beneficial ownership of the Property shall remain in each party in proportion
to
its respective Interest and any legal title to the Property held by any party
shall be subject to this Agreement. All property held, acquired or contributed
by or on behalf of the parties under or pursuant to this Agreement shall be
beneficially owned by the parties as tenants in common in proportion to their
respective Interests.
3.5
Each
party shall make available its Interest for the purposes of the Project and,
in
particular, each party agrees to grant a mortgage, charge, lien, encumbrance
on,
or a security Interest in, its Interest to and in favour of any lender or party
hereto to facilitate financing of the Project or any portion
thereof.
3.6
The
rights and obligations of the parties created under this Agreement shall be
strictly limited to the Property and shall not be extended by implication or
otherwise, except with the unanimous written consent of the
parties.
3.7
Except as may be otherwise expressly provided in this Agreement, nothing herein
shall restrict in any way the freedom of any party, except with respect to
its
Interest, to conduct as it sees fit any business or activity whatsoever,
including the development or application of any process, and the exploration
for, development, mining, extraction, production, handling, processing or any
treatment, transportation or marketing of any ore, mineral or other product
for
any other purpose, without any accountability to any other party.
3.8
Each
party shall do all things and execute all documents necessary in order to
maintain the Property and the Property Rights in good standing.
3.9
Except as may be otherwise expressly specified in this Agreement, each party,
in
proportion to its Interest, shall indemnify and hold harmless each other party
and each director, officer, employee, agent and representative of each other
party, from and against any claim of or liability to any third person asserted
on the ground that action taken under this Agreement has resulted in or will
result in any loss or damage to such third person to the extent, but only to
the
extent that such claim or liability is paid by such other party in the amount
in
excess of that amount payable by reason of such other party's Interest, but
the
foregoing shall not prejudice any claim of any party against the
Operator.
3.10
Each
party covenants and agrees with the others:
| (a) |
to
perform or cause to be performed its obligations and commitments
under
this Agreement and, without limiting the generality of the foregoing,
to
pay Costs in proportion to its Interest except as may be otherwise
provided in Article 4 and Article 9 hereof;
and
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| (b) |
not
to engage either alone or in association with others in any activity
in
respect of the Property or the Project except as provided or authorized
by
this Agreement.
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3.11
For
administrative convenience, and without, altering or affecting the rights,
titles and interests created hereby, the parties agree that the Operator may
hold the Property, in trust, for the use and benefit of the parties in
accordance with the terms and provisions of this Agreement and in proportion
to
their respective Interests as adjusted from time to time, until such times
as
the Management Committee shall determine that it is appropriate or advisable
for
the Property to be held or registered in the name of the parties, another
trustee or nominee which the Management Committee may select. Such holding
of
the Property in trust shall not prevent the vesting of the legal and beneficial
title hereto in the parties in the manner and at the times as otherwise herein
provided.
7
4.1
Upon
formation of the Joint Venture, Lesco
will be deemed to have contributed sixty seven thoursand and five hundred
dollars ($65,500)and FRC will be deemed to have contributed three hundred and
eighty two thousand and five hundred dollars ($382,500) of Costs to the Joint
Venture for purposes thereof
4.2
The
respective Interests of the parties shall be subject to variation from time
to
time in the event: a) of failure by a party to pay its proportionate share
of
Costs;
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a)
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subject
to Section 4.5 and Section 8.7 hereof, of the election by a party
not to
participate in a Program, or;
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b)
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subject
to Section 4.5 and Section 8.7 hereof, of the election by a party
to pay
less than its proportionate share of Costs in respect of a Program
adopted
by the Management Committee.
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4.3
Upon
the happening of any of the events set forth in subsection 4.2(a)-(b), inclusive
hereof, each party's Interest shall be varied to equal the product obtained
by
multiplying 100% by a fraction of which the numerator shall be the amount of
Costs paid by such party and of which and the denominator shall be the total
amount of Costs paid by all parties. For the purposes of this section, the
amount of Costs paid by a party shall include the amount of Costs deemed to
have
been paid by that party as set forth in Section 4.1.
4.4
In
the event that a party's Interest is reduced to five (5%) percent or less by
the
operation of Section 4.3 hereof, such party shall forthwith relinquish its
Interest and shall transfer such Interest to the other parties hereto in
proportionate shares and shall receive as consideration therefor a Royalty
equal
to two and one-half (2.5%) percent of Net Profits. In the event of such
relinquishment, such party shall have no further right to participate in any
Programs and shall have no further Interest in the Property, except the
Royalty.
4.5
A
party which forfeits or reduces its Interest in the Property pursuant to Section
4.2 shall have the rights to redeem its position if the actual Costs expended
is
less costly by at least 25% than the budget as set out in the Program to which
the party had not agreed, otherwise the forfeiture is final. The Operator shall
not later than thirty (30) days after completion of a Program, provide a
complete statement of expenditures incurred to date and an estimate of
expenditures to be incurred to completion of the Operating Year (such
expenditures to be verified by audit within six (6) months if the forfeiting
party request and agrees to pay for same) to all parties including the
forfeiting party. Within twenty (20) days of receipt of the foregoing statement,
the forfeiting party shall inform the Operator of its wish to redeem its
Interest or to require an audit. A party redeeming its Interest shall pay the
Costs it would have paid had it participated in the Program, plus interest
thereon at a rate per annum of prime plus one percent thereon from the date
of
the Operator's invoices to the date of payment to the Operator. Payment shall
be
made by the redeeming party to the Operator within thirty (30) days of providing
notice of such redemption. The Operator shall pay the proceeds to the other
parties in proportion to the manner in which their Interests related to the
participation in the subject Program.
5.1
A
Management Committee, consisting of one representative of each party, and one
or
more alternate representatives, shall be constituted and appointed within
fourteen (14) days after the formation of the Joint Venture. The Management
Committee shall manage, or supervise the management of, the business and affairs
of the Joint Venture and shall exercise all such powers and do all such acts
as
the Joint Venture may exercise and do. The Management Committee shall meet
within fifteen (15) days of its constitution (at which time a chairman shall
be
elected from among their number) and may otherwise meet at such places as it
thinks fit for the dispatch of business, adjourn and otherwise regulate its
meetings and proceedings as the members thereof deem fit. Unless otherwise
provided herein, questions arising at any meeting of the Management Committee
shall be decided by a Simple Majority of votes with each party's representatives
being entitled to cast that number of votes which is equal to that party's
Interest. Unless agreed to in writing by the parties hereto, all meetings of
the
Management Committee
8
shall
be
held in Vancouver, British Columbia or such other place as the parties may
agree. Any meetings may, if the parties so consent, be held by conference
telephone.
5.2
Management Committee Quorum:
| a) |
A
quorum for any meeting of the Management Committee shall consist
of a
representative or representatives of a party or parties whose Interests
aggregate one hundred (100%) percent. No business other than the
election
of a chairman, if any, and the adjournment or termination of the
meeting
shall be dealt with if a quorum is not present at the commencement
of the
meeting but the quorum need not be present throughout the
meeting;
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| b) |
If
a quorum is not present at the opening of a meeting, the parties
present
or represented shall adjourn the meeting for a period of seven (7)
days
from the date of the adjourned meeting, but shall not transact any
other
business. A quorum for any such adjourned meeting shall consist of
a
representative or representatives of a party or parties who attend
such
reconvened meeting.
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5.3
A
meeting of the Management Committee at which a quorum is present shall be
competent to exercise all or any of the authorities, powers and discretion
bestowed upon the Management Committee in this Agreement.
5.4
No
questions submitted to the Management Committee need be seconded and the
chairman, if any, of the meeting shall be entitled to submit the questions
to a
vote during the meeting.
5.5
The
decision on any question by consent in writing of the representatives of all
parties shall be as valid as if it had been decided at a duly called and held
meeting of the Management Committee. Each decision may be in counterparts each
consented to in writing by one or more representatives which together shall
be
deemed to constitute one decision.
5.6
At
the time of any decision by the Management Committee to adopt a Program, the
parties shall pay, subject to the provisions of Article 8 hereof, their
proportionate share of the estimated Costs of such Program by depositing the
same into the interest bearing bank account opened and maintained pursuant
to
Section 5.7 hereof.
5.7
The
Management Committee shall open and maintain an interest bearing bank account
with a Canadian Chartered bank in the name of the Joint Venture and shall use
the funds on deposit therein for the purposes of the Joint Venture. The
Management Committee shall appoint signing officers on the said account as
shall
be required and shall advise the parties of the particulars of the said
account.
5.8
Each
of the parties hereby agrees that:
| a) |
any
interest earned on any sums deposited in the bank account opened
and
maintained pursuant to Section 5.7 hereof shall be shared in proportion
to
their respective Interests; and
|
| b) |
each
shall, following formation of the Joint Venture, deposit in such
account
in proportion to their Interests any of the actual Costs in excess
of the
estimated Costs when requested to do so by the Management
Committee.
|
5.9
Any
party (the “Paying Party”) may pay any reasonable Costs due to maintain the
Property or the Project in good standing and the other parties shall, in
proportion to their Interest and within fifteen (15) days of being given notice
of such payment, reimburse the Paying Party for such payment, failing such
reimbursement the parties not paying shall, for purposes of Section 4.2 hereof,
be deemed to have elected not to participate in a Program in accordance with
Section 8.3 hereof, and the provisions of Article 4 hereof shall
apply.
5.10
In
the event that the Operator or the consultant appointed pursuant to Section
7.4
recommends that further work be conducted on the Property, then the Management
Committee shall prepare or cause to be prepared a Program.
9
5.11
At
any time during the currency of this Agreement the Management Committee may
cause a Feasibility Report to be prepared by a substantial and well recognized
engineering firm in such form as the Management Committee may require. The
Management Committee shall, forthwith upon receipt of a Feasibility Report,
provide each of the parties with a copy thereof. Upon request of any party
and
at reasonable intervals and times the parties shall meet in order to discuss
such a report.
6.1
The
initial Operator shall be Services co. An Operator shall continue as Operator
until changed pursuant to the terms hereof or by a decision of the Management
Committee with parties representing a Simple Majority voting in favour if the
Operator has failed to perform in a manner that is consistent with good mining
practice or has failed to perform in a manner consistent with its duties and
responsibilities under this Agreement, and the Management Committee has given
to
the Operator written notice setting forth particulars of the Operator's default
and the Operator has not within 30 days of receipt of such notice commenced
to
remedy the default and thereafter to proceed continuously and diligently to
complete all required remedial action.
6.2
The
Operator may at any time on sixty (60) days notice to the Management Committee
resign as Operator, in which event the Management Committee shall select another
party or person to be Operator (hereinafter called the “new Operator”) upon the
thirtieth (30th) day after receipt of the Operator's notice of resignation
or
such sooner date as the Management Committee may establish and give notice
of to
the resigning Operator. The resigning Operator shall thereupon be released
and
discharged from all its duties and obligations as Operator upon the appointment
of the new Operator except those duties and obligations that it theretofore
should have performed.
6.3
Upon
the Operator making a voluntary or involuntary assignment into bankruptcy or
taking advantage of any legislation for the winding-up or liquidation of the
affairs of insolvent or bankrupt companies the Operator shall automatically
be
terminated as operator and the other party or its nominee appointed as
Operator.
6.4
The
new Operator shall assume all of the rights, duties, obligations and status
of
the Operator as provided in this Agreement, other than the previous Operator's
Interest, if any, without obligation to retain or hire any of the employees
of
the former Operator or to indemnify the former Operator for any costs or
expenses which the previous Operator will incur as a result of the termination
of employment of any of its employees resulting from this change of Operator,
and shall continue to act as Operator until its replacement or
resignation.
6.5
Upon
the effective time of a resignation, removal or cessation, the departing
Operator shall within sixty (60) days of such resignation, removal or cessation,
turn over to its successor, or if no successor has been designated, to the
Management Committee, control and possession of the Property together with
(i)
all documents, books, records and accounts (or copies thereof) pertaining to
the
performance of its functions as Operator and (ii) all monies held by it in
its
capacity as the Operator. Upon transfer and delivery thereof, the departing
Operator shall be released and discharged from, and the successor Operator
shall
assume, all duties and obligations of Operator except the unsatisfied duties
and
obligations of the departing Operator accrued prior to the effective date of
the
change of Operator and for which the departing Operator shall, notwithstanding
its release or discharge, continue to remain liable, it being understood and
agreed that the departing and successor Operators respectively shall co-operate
in finalizing all outstanding matters and completing the transition. If the
title to any real or personal property included in the Property is held in
the
name of the departing Operator, it shall transfer such property to the successor
Operator in trust for the parties hereto unless otherwise directed by the
Management Committee.
10
6.6
Within sixty (60) days of the effective time of an Operator's resignation,
removal or cessation as Operator, the Management Committee may cause an audit
to
be made of the records maintained by the departing Operator and the cost of
such
audit shall be for the joint account of the parties hereto. 6.7 Except as
authorized by the Management Committee or as otherwise herein provided, the
Operator shall not assign its operating rights or obligations under this
Agreement.
7.1
Subject to the control and direction of the Management Committee, the Operator
shall have full right, power and authority to do everything necessary or
desirable to carry out a Program and the Project and to determine the manner
of
exploration and development of the Property and, without limiting the generality
of the foregoing, the right, power and authority to:
| a) |
regulate
access to the Property subject only to the right of representatives
of the
parties to have access to the Property at all reasonable times for
the
purpose of inspecting work being done thereon but at their own risk
and
expense;
|
| b) |
employ
and engage such employees, agents and independent contractors as
it may
consider necessary or advisable to carry out its duties and obligations
hereunder and in this connection to delegate any of its powers and
rights
to perform its duties and obligations hereunder, but the Operator
shall
not enter into contractual relationships with another person except
on
terms which are commercially
competitive;
|
| c) |
execute
all documents, deeds and instruments, do or cause to be done all
such acts
and
|
| d) |
things
and give all such assurances as may be necessary to maintain good
and
valid title to the Property. Each party hereby irrevocably constitutes
the
Operator its true and lawful attorney to give effect to the foregoing
and
hereby agrees to indemnify and save the Operator harmless from any
and all
costs, loss or damage sustained or incurred without gross negligence
or
bad faith by the Operator directly or indirectly as a result of its
exercise of its powers pursuant to this subsection;
and
|
| e) |
conduct
such title examination and cure such title defects as may be advisable
in
the reasonable judgment of the
Operator.
|
7.2
The
Operator shall have the following duties and obligations during the term
hereof:
| a) |
to
diligently manage, direct and control all exploration, development
and
producing operations in and under the Property in a prudent and
workmanlike manner and in compliance with all applicable laws, rules,
orders and regulations;
|
| b) |
to
prepare and deliver to each of the parties during the periods of
active
field work, monthly progress and expense reports of the work in progress,
on or before the day which is forty-five (45) days following each
calendar
month with respect to work done in such month and on or before the
first
day of every calendar year, comprehensive annual reports covering
the
activities and expenses hereunder and such report shall include the
results obtained during the twelve (12) month period ending on !
immediately preceding;
|
| c) |
to
provide and deliver to each of the parties, together with the reports
referred to in subparagraph (b), copies of all assays, maps and drill
logs;
|
| d) |
subject
to the terms and conditions of this Agreement, to keep the Property
in
good standing, free and clear of all liens, charges and encumbrances
of
every character arising from operations (except for those which are
in
effect on the date of this Agreement or are created pursuant to this
Agreement, liens for taxes not yet due, other inchoate liens and
liens
contested in good faith by the Operator) and to proceed with all
diligence
to contest or discharge any lien that is filed by reason of the Operator's
failure to perform its obligations
hereunder;
|
| e) |
to
maintain true and correct books, accounts and records of operations
hereunder in accordance with the Accounting Procedure, separate and
apart
from any other books, accounts and records maintained by the Operator,
provided that the judgment of the Operator as to matters related
to
accounting, for which provision is not made in the Accounting Procedure
shall govern if the Operator's accounting practices are in accordance
with
accounting principles generally accepted in the mining industry in
Canada;
|
11
| f) |
to
permit one representative of the parties appointed in writing at
all
reasonable times and at their expense to inspect, audit and copy
the
Operator's accounts and records relating to the accounting for production
or to the determination of the proceeds from the sale thereof for
any
fiscal year of the Operator within 9 months following the end of
such
fiscal year. The Operator shall maintain its accounts and records
for a
period of at least two (2) years or such longer period as required
by the
laws of Canada or its Provinces. The parties shall be entitled to
inspect,
audit and copy the accounts and records upon giving the Operator
ten (10)
days notice of their intention to do
so;
|
| g) |
to
obtain and maintain or cause any contractor engaged hereunder to
obtain
and maintain during any period in which active work is carried out
hereunder such insurance coverage as the Management Committee deems
advisable;
|
| h) |
to
permit the parties or their representatives appointed in writing,
at all
reasonable times, at their own expense and risk, reasonable access
to the
Property and all data derived from carrying out work
thereon;
|
| i) |
to
open and maintain on behalf of the Joint Venture such bank account
or bank
accounts as the Management Committee may direct with a Canadian chartered
bank;
|
| j) |
to
prosecute and defend, but not to initiate without the consent of
the
Management Committee, all litigation or administrative proceedings
arising
out of the Property, or Project;
|
| k) |
to
transact, undertake and perform all transactions, contracts, employments,
purchases, operations, negotiations with third parties and any other
matter or thing undertaken by or on behalf of the Joint Venture hereunder
in the Operator's name and to pay all expenditures incurred in connection
therewith promptly when due;
|
| l) |
to
transact, undertake and perform all transactions, contracts, employments,
purchases, operations, negotiations with third parties and any other
matter or thing undertaken on behalf of the parties in the Operators
name;
m) to maintain in good standing those mineral claims comprised in
the
Property by the doing and filing of all assessment work or the making
of
payments in lieu thereof and by the payment of all taxes and other
like
charges;
|
| m) |
to
take all proper and reasonable steps for the protection of rights
of
surface owners against damage occasioned by operations to be conducted
hereunder and pay such damages as may lawfully be determined as resulting
from such operations.
|
7.3
Subject to any specific provisions of this Agreement, the Operator, in carrying
out its duties and obligations hereunder, shall at all times be subject to
the
direction and control of the Management Committee and shall perform its duties
hereunder in accordance with the instructions and directions as from time to
time communicated to it by the Management Committee and shall make all reports
to the Management Committee except where otherwise specifically provided
herein.
7.4
The
Operator shall commence and diligently complete the Project and without limiting
the generality of the foregoing, may retain an independent consulting geologist
acceptable to the Management Committee to prepare a report in respect of the
Project, the results thereof, the conclusions derived therefrom and the
recommendation as to whether or not further work should be conducted on the
Property.
7.5
Subject to Section 7.3, the Operator may charge the following sums in return
for
its head office overhead functions which are not charged directly as provided
in
the Accounting Procedure: a) with respect to Mine Construction, an amount equal
to 5.0% of all Construction Costs; and b) subsequent to the Completion Date,
an
amount equal to 2.5% of all Operating Costs.
7.6
Notwithstanding Section 7.5, if a party gives notice in writing to the
Management Committee that the party holds a bona fide belief that the sums
charged under Section 7.5 are either excessive or insufficient then the
Management Committee shall call a meeting to be held within ninety (90) days
of
receipt of such notice for the purpose of amending or ratifying the amounts
charged under Section 7.5 hereof.
12
8.1
Expenditures shall only be incurred under and pursuant to Programs prepared
by
the Operator and approved by the Management Committee. Any Feasibility Report
shall be prepared pursuant to a separate Program.
8.2
The
Operator shall prepare and submit to the Management Committee a Program within
90 days of the completion of the previous Program. If the Operator does not
prepare a Program within the time limited, then the other parties shall have
the
right to prepare a Program for submission to the Management Committee at which
time the party submitting the Program shall become the Operator.
8.3
Within sixty (60) days of the approval by the Management Committee of a Program,
each party shall give written notice to the Operator stating whether or not
it
elects to contribute its respective Costs of such Program or requesting the
Operator to revise this Program provided that each party may only make such
requests once in respect of each Program. Subject to Section 8.7, failure by
any
of the parties to give notice pursuant to this subsection within such sixty
(60)
day period shall be deemed an election by that party not to contribute to such
Program.
8.4
If
the party elects or is deemed to have elected not to contribute its Costs of
a
Program, the other parties may give notice in writing to the Operator stating
that it or they will contribute all expenditures under or pursuant to such
Program and the Operator will proceed with such Program and thereafter the
interests of the parties shall be adjusted in accordance with Article 4. The
Operator will not proceed with any Program which is not fully
subscribed.
8.5
If
the parties elect or contribute their respective Costs of a Program, the
Operator will proceed with the Program.
8.6
If
any party requests the Operator to revise a Program in accordance with Section
8.3, the Operator will revise such Program at once and resubmit the revised
Program to the parties on the same terms and conditions as any other Program,
except that the parties shall not have the right to request any further
revisions.
8.7
If
any party elects or is deemed to have elected not to contribute to a Program
its
Interest will not be subject to adjustment if, within sixty (60) days of such
election or deemed election it elects to pay to the contributing party or
parties one hundred and fifty (150%) percent of what would otherwise have been
its contribution to such Program, but any amount so paid in excess of what
would
otherwise have been its contribution to such Program shall be deemed not to
be a
contribution to Costs by the party making it.
8.8
An
election by a party to contribute to a Program shall make that party liable
to
pay its proportionate share of Costs actually incurred under or pursuant to
the
Program including Program Overruns, as herein after defined, of up to but not
exceeding ten (10%) percent.
8.9
After
having elected to contribute to a Program which is proceeded with, a party
shall, within 30 days after being invoiced therefor by the Operator, pay such
portion of its share of Costs as the Operator may require but the Operator
shall
not require payment of any funds more than one month in advance.
8.10
If
it appears that Costs will exceed by greater than ten (10%) percent those
estimated under a program the Operator shall immediately give written notice
to
the party or parties contributing to that program outlining the nature and
extent of the additional costs and expenses (hereinafter called “Program
overruns”). If Program Overruns are approved by the party or parties
contributing to that Program, then within thirty (30) days after the receipt
of
a written request from the Operator, the party or parties contributing to that
Program shall provide the Operator with their respective shares of such Program
overruns. If Program Overruns are not approved by the party or parties
contributing to that Program, the Operator shall have a right to curtail or
abandon such Program. Any costs incurred by the Operator due to
13
a
curtailment or abandonment of the Program shall be paid by the parties pursuant
to their respective Interests in the Program.
8.11
If
any party at any time fails to pay its share of Costs in accordance with
Sections 8.9 or 8.10, the Operator may give written notice to that party
demanding payment, and if the party has not paid such amount within fifteen
(15)
days of the receipt of such notice, that party shall be deemed to:
| (a) |
be
in default under Section 8.9 or 8.10 as applicable;
and
|
| (b) |
have
elected not to contribute to that Program for the purpose of Article
4 and
the Interest of the parties shall be adjusted in accordance with
Article 4
and the Operator shall have the right to curtail or abandon the Program
and that party shall not be entitled to contribute to any subsequent
Programs.
|
9.1
The
parties hereto shall be responsible for providing or arranging the financing
of
a Mine. In providing or arranging the financing for a Mine, the Property and
Mine may be pledged, hypothecated, mortgaged, charged, or otherwise encumbered
in order to secure monies borrowed and used for the sole purpose of enabling
the
Mine to be financed. Subject to this Article any party may pledge, mortgage,
hypothecate, charge or otherwise encumber its interest in order to secure by
way
of floating charge as a part of the general corporate assets of that party's
money borrowed for its general corporate purposes, provided that the pledgee,
mortgagee, holder of the charge or encumbrance (in this paragraph referred
to as
a “Chargee”) shall hold the same subject to the provisions of this Agreement and
that if the Chargee realizes upon any of its security it will comply with this
Agreement. The agreement between the party, as borrower, and the Chargee shall
contain specific provisions to the same effect as the provisions of this
Article.
10.1
Upon
approval by the Management Committee of the Feasibility Report recommending
the
Construction of a Mine, the Management Committee shall cause the Operator to,
and the Operator shall, proceed with Construction with all reasonable dispatch.
Construction shall be substantially in accordance with the Feasibility Report
subject to any variations agreed upon by the parties and subject also to the
right of the Management Committee to cause such other reasonable variations in
Construction to be made as the Management Committee deems
advisable.
11.1
Commencing with the Completion Date, all Mining Operations shall be planned
and
conducted and all estimates, reports and statements shall be prepared and made
on the basis of an Operating Year.
11.2
With
the exception of the first Operating Year, an Operating Plan for each Operating
Year shall be submitted by the Operator to the parties not later than ninety
(90) days prior to the end of the year immediately preceding the Operating
Year
to which the Operating Plan relates. Each Operating Plan shall contain the
following:
| a) |
a
plan for the proposed Mining
Operations;
|
| b) |
a
detailed estimate of all Mine Costs plus a reasonable allowance for
contingencies;
|
| c) |
an
estimate of the quantity and quality of the ore to be mined and the
concentrates or metals to be produced; and such other facts as may
be
necessary to reasonably illustrate the results intended to be achieved
by
the Operating Plan; and upon request of any party the Operator shall
meet
with that party to discuss the Operating Plan and shall provide such
additional or supplemental information as that party may reasonably
require with respect thereto.
|
11.3
The
Management Committee shall adopt each Operating Plan, with such changes as
it
deems necessary, on or prior to ninety (90) days prior to the end of the year
immediately preceding the Operating Year to which the Operating Plan relates;
provided, however, that the Management Committee may from time to time and
at
any time amend any Operating Plan.
14
11.4
The
Operator shall be entitled to include in the estimate of Mine Costs referred
to
in Section 11.2 hereof the reasonably estimated costs of satisfying continuing
obligations that may remain after this Agreement terminates, in excess of
amounts actually expended. Such continuing obligations are or will be incurred
as a result of the Joint Venture and shall include such things as monitoring,
stabilization, reclamation or restoration obligations, severance and other
employee benefit costs and all other obligations incurred or imposed as a result
of the Joint Venture which continue or arise after termination of this Agreement
and settlement of all accounts. The amount accrued from time to time for the
satisfaction of such continuing obligations shall be classified as Costs
hereunder but shall be segregated into a separate account.
12.1
The
parties hereto shall, from time to time, pay for all Mine Construction Costs
incurred to the date of invoice, or at the beginning of each month for an
advance equal to the estimated cash disbursements to be made during the month.
Each party shall pay the Mine Construction Costs or the estimated cash
disbursements within thirty (30) days after receipt of the invoice.
12.2
The
Operator may invoice the parties, from time to time, for Operating Costs
incurred to the date of the invoice, or at the beginning of each month for
an
advance equal to the estimated cash disbursements to be made during the month.
The parties shall pay the Operating Costs or the estimated cash disbursements
aforesaid to the Operator within thirty (30) days after receipt of the invoice.
If the payment or advance requested is not so made, the amount of the payment
or
advance shall bear interest calculated monthly not in advance from the 30th
day
after the date of receipt of the invoice thereof by the parties at a rate
equivalent to the weighted average prime rate for the month plus two percent
until paid. The Operator shall have a lien on a party or parties' aggregate
Interest in order to secure any payment or advance required hereunder together
with interest which has accrued thereon. 12.4 If a party or parties fail (i)
to
pay an invoice contemplated in Section 9.3 within the time period herein
provided, or (ii) to pay an invoice contemplated in Section 12.3 within the
thirty (30) day period aforesaid, the Operator may, by notice, demand payment.
If no payment is made within fifteen (15) days of the Operator's demand notice,
the Operator may, without limiting its other rights at law, enforce the lien
created by Section 12.3 by taking possession of all or any part of the parties'
aggregate Interest. The Operator may sell and dispose of the Interest which
it
has so taken into its possession by:
| a) |
first
offering that Interest to the other parties, if more than one then
in
proportion to the respective Interests of the parties which wish
to accept
that offer, for that price which is the fair market value stated
in the
lower of two appraisals obtained by the Operator from independent,
well
recognized appraisers competent in the appraisal of mining properties;
and
|
| b) |
if
the parties have not purchased all or part of that Interest as aforesaid,
then by selling the balance, if any, either in whole or in part or
in
separate parcels at public auction or by private tender (the parties
being
entitled to bid) at a time and on whatever terms the Operator shall
arrange, having first given notice to the parties of the time and
place of
the sale. As a condition of the sale as contemplated in Article 12.4(b),
the purchaser shall agree to be bound by this Agreement and, prior
to
acquiring the Interest, shall deliver notice to that effect to the
parties, in form acceptable to the Operator. The proceeds of the
sale
shall be applied by the Operator in payment of the amount due from
the
parties and interest as aforesaid, and the balance remaining, if
any,
shall be paid to the parties after deducting reasonable costs of
the sale.
Any sale or disposal made as aforesaid shall be a perpetual bar both
at
law and in equity by the parties and its successors and assigns against
all other parties and the Operator.
|
13.1
It
is expressly intended that, upon approval of a Feasibility Report recommending
the Construction of a Mine, the association of the parties shall be limited
to
the efficient production of Mineral Products from the Property and that each
of
the parties shall be entitled to use, dispose of or otherwise deal with its
proportionate share of Mineral Products as it sees fit. Each party shall take
in
kind the Mineral Products
15
produced
from the Mine, f.o.b. truck or railcar on the Property, and separately dispose
of its proportionate share of the Mineral Product. Extra costs and expenses
incurred by reason of the parties taking in kind and making separate
dispositions shall be paid by each party directly and not through the Operator
or Management Committee.
13.2
Each
party shall construct, operate and maintain, all at its own cost and expense,
any and all facilities which may be necessary to receive and store and dispose
of its proportionate share of the Mineral Product at the rate the same are
produced.
13.3
If a
party has not made the necessary arrangements to take in kind and store its
share of production as aforesaid the Operator shall, at the sole cost and risk
of that party store, in any location where it will not interfere with Mining
Operations, the production owned by that party. The Operator and the other
parties shall be under no responsibility with respect thereto. All of the Costs
involved in arranging and providing storage shall be billed directly to, and
be
the sole responsibility of the party whose share of production is so stored.
The
Operator's charges for such assistance and any other related matters shall
be
billed directly to and be the sole responsibility of the party. All such
xxxxxxxx shall be subject mutatis mutandis to the provisions of Paragraphs
12.3.
14.1
Any
party may, at any time upon notice, surrender its entire Interest to the other
parties by giving those parties notice of surrender. The notice of surrender
shall:
| a) |
indicate
a date for surrender not less than three months after the date on
which
the notice is given; and
|
| b) |
contain
an undertaking that the surrendering party
will:
|
| i) |
satisfy
its proportionate share, based on its then Interest, of all obligations
and liabilities which arose at any time prior to the date of
surrender;
|
| ii) |
if
the Operator has not included in Mine Costs the costs of continuing
obligations as set out in Section 11.4 hereof, pay its reasonably
estimated proportionate share, based on the surrendering party's
then
Interest, of the Costs of rehabilitating the Mine site and of reclamation
as at the date of surrender; and
|
| iii) |
will
hold in confidence, for a period of two years from the date of surrender,
all information and data which it acquired pursuant to this
Agreement.
|
14.2
Upon
the surrender of its entire Interest as contemplated herein and upon delivery
of
a release in writing, in form acceptable to counsel for the Operator, releasing
the other parties from all claims and demands hereunder, the surrendering party
shall be relieved of all obligations or liabilities hereunder except for those
which arose or accrued or were accruing due on or before the date of the
surrender.
14.3
A
party to whom a notice of surrender has been given as contemplated herein may
elect, by notice within ninety (90) days to the party which first gave the
notice, to accept the surrender, in which case Article 11.4 and 14.2 shall
apply, or to join in the surrender.
15.1
The
Operator may, at any time subsequent to the Completion Date, on at least thirty
(30) days notice to all parties, recommend that the Management Committee approve
the suspension of Mining Operations. The Operator's recommendation shall include
a plan and budget (in this Article 15 called the “Mine Maintenance Plan”) in
reasonable detail of the activities to be performed to maintain the Property
during the period of suspension and the Costs to be incurred. The Management
Committee may, at any time subsequent to the Completion Date, cause the Operator
to suspend Mining Operations in accordance with the Operator's recommendation
with such changes to the Mine Maintenance Plan as the Management Committee
deems
necessary. The parties shall be committed to contribute their proportionate
share of the Costs incurred in connection with the Mine Maintenance Plan. The
Management Committee may cause Mining Operations to be resumed at any
time.
16
15.2
The
Operator may, at any time following a period of at least ninety (90) days during
which Mining Operations have been suspended, upon at least thirty (30) days
notice to all parties, or in the events described herein, recommend that the
Management Committee approve the permanent termination of Mining Operations.
The
Operator's recommendation shall include a plan and budget (in this Article
15
called the “Mine Closure Plan”) in reasonable detail of the activities to be
performed to close the Mine and reclaim the Property. The Management Committee
may, by unanimous approval of the representatives of all parties, approve the
Operator's recommendation with such changes to the Mine Closure Plan as the
Management Committee deems necessary.
15.3
If
the Management Committee approves the Operator's recommendation as aforesaid,
it
shall cause the Operator to:
| a) |
implement
the Mine Closure Plan whereupon the parties shall be committed to
pay, in
proportion to their respective Interests, such Costs as may be required
to
implement that Mine Closure Plan;
|
| b) |
remove,
sell and dispose of such assets as may reasonably be removed and
disposed
of profitably and such other assets as the Operator may be required
to
remove pursuant to applicable environmental and mining laws; and
sell,
abandon or otherwise dispose of the Property. The disposal price
for the
Property shall be the best price obtainable and the net revenues,
if any,
from the removal and sale shall be credited to the parties in proportion
to their respective Interests.
|
15.4
If
the Management Committee does not approve the Operator's recommendation
contemplated herein, the Operator shall maintain Mining Operations in accordance
with the Mine Maintenance Plan pursuant to this Article 1
16.1
At
all times during the subsistence of this Agreement the duly authorized
representatives of each party shall have access to the Property and the Project
at its and their sole risk and expense and at reasonable intervals and times,
and shall further have access at all reasonable time to all technical records
and other factual engineering data and information relating to the Property
and
the Project in the possession of the Management Committee or the Operator.
In
exercising the right of access to the Property or the Project the
representatives of a party shall abide by the rules and regulations laid down
by
the Management Committee and by the Operator relating to matters of safety
and
efficiency. If any representative of a party is not an employee, the party
shall
so advise the Operator so that the Operator may require the representative,
before giving him access to the Property or the Project or to data or
information relating thereto, to sign and undertaking in favour of the Joint
Venture, in form and substance satisfactory to the Operator, to maintain
confidentiality to the same extent as each party is required to do under Section
16.2 hereof.
16.2
All
records, reports, accounts and other documents referred to herein with respect
to the Property and the Project and all information and data concerning or
derived from the Property and the Project shall be kept confidential and each
party shall take or cause to be taken such reasonable precautions as may be
necessary to prevent the disclosure thereof to any person other than each party,
the Operator, an Affiliate and any financial institution or other person having
made, making or negotiating loans to one or more of the foregoing or any trustee
for any such person, or as may be required by laws, by regulation or policy
of
any governmental agency, securities commission or stock exchange, or in
connection with the filing of a prospectus or statement of material facts by
a
party, an Affiliate or the Operator or to a prospective assignee as permitted
hereunder, or as may be required in the performance of obligations under this
Agreement without prior consent of all parties, which consent shall not be
unreasonably withheld.
17.1
No
party shall, during the term of this Agreement, exercise any right to apply
for
any partition of the Property or for sale thereof in lieu of
partition.
17
18.1
Each
party on whose behalf any Costs have been incurred shall be entitled to claim
all tax benefits, write-offs and deductions with respect thereto.
19.1
Save
and except as provided in Section 3.5 and Article 4 hereof, the parties shall
not transfer, convey, assign, mortgage or grant an option in respect of or
grant
a right to purchase or in any manner transfer or alienate all or any portion
of
its Interest or rights under this Agreement otherwise in accordance with this
Article.
19.2
Nothing in this Article shall prevent a sale by a party of all of its Interest
or an assignment of all its rights under this Agreement to an Affiliate provided
that such Affiliate first complies with the provisions of Section.
19.10
and
agrees with the other party in writing to retransfer such interest to the
originally assigning party before ceasing to be an Affiliate of such
party;
| a) |
a
variation pursuant to Section 4.3;
or
|
| b) |
a
disposition pursuant to an amalgamation or corporate reorganization
which
will have the effect in law of the amalgamating or surviving company
possessing all the property, rights and interests and being subject
to all
the debts, liabilities and obligations of each amalgamating or predecessor
company.
|
19.3
Should a party (the “transferring party”) intend to dispose of all or any
portion of its Interest or rights under this Agreement it shall first give
notice in writing to the parties (the “other parties”) of such intention
together with the terms and conditions on which the transferring party intends
to dispose of its Interest or a portion thereof or rights under this
Agreement.
19.4
If a
party (the “transferring party”) receives any offer to dispose of all or any
portion of its Interest or rights under this Agreement which it intends to
accept, the transferring party shall not accept the same unless and until it
has
first offered to sell such Interest or rights to the parties (the “other
parties”) on the same terms and conditions as in the offer received and the same
has not been accepted by the other parties in accordance with Section
19.6.
19.5
Any
communication of an intention to sell pursuant to Section 19.3 and 19.4 (the
“Offer”) for the purpose of this Article only shall be in writing delivered in
accordance with Article 21 and shall:
| a) |
set
out in reasonable detail all of the terms and conditions of any intended
sale;
|
| b) |
if
it is made pursuant to Section 19.3, include a photocopy of the Offer;
and
|
| c) |
if
it is made pursuant to Section 19.4, clearly identify the offering
party
and include such information as is known by the transferring party
about
such offering party; and such communication will be deemed to constitute
an Offer by the transferring party to the other parties to sell the
transferring party's Interest or its rights (or a portion thereof
as the
case may be) under this Agreement to the other parties on the terms
and
conditions set out in such Offer. For greater certainty it is agreed
and
understood that any Offer hereunder shall deal only with the disposition
of the Interest or rights of the transferring party hereunder and
not with
any other interest, right or property of the transferring party and
such
disposition shall be made solely for a monetary
consideration.
|
19.6
Any
Offer made as contemplated in Section 19.5 shall be open for acceptance by
the
other parties in accordance with their respective Interests for a period of
sixty (60) days from the date of receipt of the Offer by the transferring
party.
18
19.7
If
the other parties accept the Offer within the period provided for in Section
19.6, such acceptance shall constitute a binding agreement of purchase and
sale
between the transferring party and the other parties for the Interest or its
rights (or a portion thereof as the case may be) under this Agreement on the
terms and conditions set out in such Offer.
19.8
If
the other parties do not accept the Offer within the period provided for in
Section 19.6 or do accept but fail to close the transaction contemplated thereby
within ninety (90) days following receipt of such Offer, the transferring party
may complete a sale and purchase of its Interest or a portion thereof on terms
and conditions not less favourable to the transferring party than those set
out
in the Offer and, in the case of an Offer under Section 19.4, only to the party
making the original offer to the transferring party and in any event such sale
and purchase shall be completed within nine months from the expiration of the
right of the other party to accept such Offer of the transferring party must
again comply with the provisions of this Article.
19.9
While any Offer is outstanding no other Offer may be made until the first
mentioned Offer is disposed of and any sale resulting therefrom completed or
abandoned in accordance with the provisions of this Article.
19.10
Before the completion of any sale by the transferring party of its Interest
or
rights or any portion thereof under this Agreement, the purchasing party shall
enter into an agreement with the parties agreeing not to sell except on the
same
terms and conditions as set out in this Agreement.
20.1
No
party will be liable for its failure to perform any of its obligations under
this Agreement due to a cause beyond its reasonable control (except those caused
by its own lack of funds) including, but not limited to acts of God, fire,
flood, explosion, strikes, lockouts or other industrial disturbances, laws,
rules and regulations or orders of any duly constituted governmental authority
or non-availability of materials or transportation (each an “Intervening
Event”).
20.2
All
time limits imposed by this Agreement, excepting those set out in Article 15,
will be extended by a period equivalent to the period of delay resulting from
an
Intervening Event. 20.3 A party relying on the provisions of Section 20.1 will
take all reasonable steps to eliminate any Intervening Event and, if possible,
will perform its obligations under this Agreement as far as practical, but
nothing herein will require such party to settle or adjust any labour dispute
or
to question or to test the validity of any law, rule, regulation or order of
any
duly constituted governmental authority or to complete its obligations under
this Agreement if an Intervening Event renders completion
impossible.
21.1
Any
notice, direction, cheque or other instrument required or permitted to be given
under this Agreement shall be in writing and may be given by the delivery of
the
same or by mailing the same by prepaid registered or certified mail or by
sending the same by telegram, telex, telecommunication or other similar form
of
communication, in each case addressed to the intended recipient at the address
of the respective party set out on the front page hereof.
21.2
Any
notice, direction, cheque or other instrument aforesaid will, if delivered,
be
deemed to have been given and received on the day it was delivered, and if
mailed, be deemed to have been given and received on the third business day
following the day of mailing, except in the event of disruption of the postal
service in which event notice will be deemed to be received only when actually
received and, if sent by telegram, telex, telecommunication or other similar
form of communication, be deemed to have been given or received on the day
it
was so sent.
19
21.3
Any
party may at any time give to the other notice in writing of any change of
address of the party giving such notice and from and after the giving of such
notice the address or addresses therein specified will be deemed to be the
address of such party for the purposes of giving notice hereunder.
22.1
If
any provision of this Agreement shall fail to be strictly enforced or any party
shall consent to any action by any other party or shall waive any provision
as
set out herein, such action by such party shall not be construed as a waiver
thereof other than at the specific time that such waiver or failure to enforce
takes place and shall at no time be construed as a consent, waiver or excuse
for
any failure to perform and act in accordance with this Agreement at any past
or
future occasion.
23.1
Each
of the parties hereto shall form 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. For greater certainty, this section shall not be construed as
imposing any obligation on any party to provide guarantees.
24.1
No
party shall, except when required by this Agreement or by any law, by-law,
ordinance, rule, order or regulation, use, suffer or permit to be used, directly
or indirectly, the name of any other party for any purpose related to the
Property or the Project.
25.1
This
Agreement embodies the entire agreement and understanding among the parties
hereto and supersedes all prior agreements and undertakings, whether oral or
written, relative to the subject matter hereof.
26.1
This
Agreement may not be changed orally but only by an agreement in writing, by
the
party or parties against which enforcement, waiver, change, modification or
discharge is sought.
27.1
If
any question, difference or dispute shall arise between the parties or any
of
them in respect of any matter arising under this Agreement or in relation to
the
construction hereof the same shall be determined by the award of three
arbitrators to be named as follows:
| a) |
the
party or parties sharing one side of this dispute shall name an arbitrator
and give notice thereof to the party or parties sharing the other
side of
the dispute;
|
| b) |
the
party or parties sharing the other side of the dispute shall, within
14
days of receipt of the notice, name an arbitrator;
and
|
| c) |
the
two arbitrators so named shall, within 15 days of the naming of the
latter
of them, select a third arbitrator. The decision of the majority
of these
arbitrators shall be made within 30 days after the selection of the
latter
of them. The expense of the arbitration shall be borne equally by
the
parties to the dispute. If the parties on either side of the dispute
fail
to name their arbitrator within the time limited or proceed with the
arbitration, the arbitrator named may decide the question. The arbitration
shall be conducted in accordance with the provisions of the Arbitration
Act of
British Columbia and the decision of the arbitrator or amajority
of the
arbitrators, as the case may be, shall be conclusive and binding
upon all
the parties.
|
28.1
Any
party acquiring a Royalty pursuant to this Agreement shall have the right to
audit at its expense the books and records in respect of such Royalty of the
Operator or the other parties, if it is not the Operator in respect of such
Royalty.
20
29.1
Unless earlier terminated by agreement of all parties or as a result of one
party acquiring a 100% Interest, the Joint Venture and this Agreement shall
remain in full force and effect for so long as any part of the Property or
Project is held in accordance with this Agreement. Termination of the Agreement
shall not, however, relieve any party from any obligations theretofore accrued
but unsatisfied.
30.1
If
any right, power or interest of any party in any Property under this Agreement
would violate the rule against perpetuities, then such right, power or interest
shall terminate at the expiration of 20 years after the death of the survivor
of
all the lineal descendants of her late Majesty, Queen Xxxxxxxxx XX of the United
Kingdom, living on the date of execution of this Agreement.
31.1
Prior to the distribution of the Property or the Project or the net revenues
received on the disposal thereof on termination of this Agreement, the
Management Committee shall meet any may approve a procedure for the retention,
maintenance and disposal of documents maintained by the Management Committee
(the “Documents”) and shall appoint such party as may consent thereto to ensure
that all proper steps are taken to implement and maintain that procedure. If
a
quorum is not present at the meeting or if he Management Committee fails to
approve a procedure as aforesaid, the Operator, if a party, otherwise the party
holding the largest Interest as at the day immediately preceding the date the
Management Committee was called to meet, shall retain, maintain and dispose
of
the Documents according to such procedure, in compliance with all applicable
laws, as it deems fit. The party entrusted with the retention, and expenses
incidental thereto and shall be entitled to receive payment of those costs
and
expenses prior to any distribution being made of the Property and Project or
the
net revenues received on the disposal thereof.
32.1
This
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
33.1
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the Province of British Columbia and the parties irrevocably attorn to the
jurisdiction of the said province.
34.1
If
any one or more of the provisions contained herein should be invalid, illegal
or
unenforceable in any respect in any jurisdiction, the validity, legality and
enforceability of such provision shall not in any way be affected or impaired
thereby in any other jurisdiction and the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be affected
or
impaired thereby.
35.1
Words used herein importing the singular number only shall include the plural,
and vice versa, and words importing the masculine gender shall include the
feminine and neuter genders, and vice versa, and words importing persons shall
include firms and corporations.
36.1
The
division of this Agreement into articles and sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
37.1
Time
shall be of the essence in the performance of this Agreement.
21
IN
WITNESS WHEREOF the
parties hereto have executed this Agreement as of the day, month and year first
above written.
LESCO
per______________________________________
Xxxxxx
Xxxxxx, Pres. & CEO
FRC
EXPLORATION LTD.
per______________________________________
Xxxx
X.
Xxxxx, Pres. & CE0
22
THE
JOINT VENTURE AGREEMENT
DESCRIPTION
OF PROPERTY RIGHTS AND PROPERTY
dated
May
24, 2006
The
Snippaker mineral claims are located within the Eskay Creek Area, Northwestern
British Columbia.
130’
55”
00 West / 56’ 35” 00 North
UTM
6272650N / 382400E
|
Tenure
|
Name
|
Owner
|
Map
Number
|
Expiry
|
Status
|
Cells
|
Area
(Hectares)
|
|
525504
|
Snippaker
|
202528
|
104B056
|
Jan.
14, 2007
|
GOOD
|
356.365
|
|
|
525505
|
“
|
202528
|
104B056
|
Jan
14, 2007
|
GOOD
|
455.650
|
|
|
529951
|
“
|
202528
|
104B056
|
Mar
13, 2007
|
GOOD
|
124.828
|
|
|
529952
|
“
|
202528
|
104B056
|
Mar
13, 2007
|
GOOD
|
124.847
|
|
|
Totals
|
50
full & 9 fractional
|
1,051.690
|
TO
THE
JOINT
VENTURE AGREEMENT
DEFINITION
OF NET PROFITS
1.
“Net
Profits” means the aggregate of:
| (a) |
all
revenues from the sale or other disposition of ores, metals or minerals
mined or extracted from the Property or any portion thereof and any
concentrates produced therefrom;
and
|
| b) |
all
revenues from the operation, sale or other disposition of any Facilities
the cost of which is included in the definition of “Operating Expenses”,
“Capital Expenses” or “Exploration Expenses”, less (without duplication)
Working Capital, Operating Expenses, Capital Expenses and Exploration
Expenses.
|
2.
“Working Capital” means the amount reasonably necessary to provide for the
operation of the mining operation on the Property and for the operation and
maintenance of the Facilities for a period of six months.
3.
“Operating Expenses” means all costs, expenses, obligations, liabilities and
charges of whatsoever nature or kind incurred or chargeable directly or
indirectly in connection with Commercial Production from the Property and in
connection with the maintenance and operation of the Facilities, all in
accordance with generally accepted accounting principles, consistently applied,
including, without limiting the generality of the foregoing, all amounts payable
in connection with mining, handling, processing, refining, transporting and
marketing of ore, concentrates, metals, minerals and other products produced
from the Property, all amounts payable for the operation and maintenance of
the
Facilities including the replacement of items which by their nature require
periodic replacement, all taxes (other than income taxes), royalties and other
imposts and all amounts payable or chargeable in respect of reasonable overhead
and administrative services.
4.
“Capital Expenses” means all expenses, obligations and liabilities of whatsoever
kind (being of a capital nature in accordance with generally accepted accounting
principles) incurred or chargeable, directly or indirectly, with respect to
the
development, acquisition, redevelopment, modernization and expansion of the
Property and the Facilities, including, without limiting the generality of
the
foregoing, interest thereon from the time so incurred or chargeable at a rate
per annum from time to time equal to “prime rate” of the Royal Bank of Canada
plus two (2%) percent per annum, but does not include Operating Expenses nor
Exploration Expenses.
5.
“Exploration Expenses” means all costs, expenses, obligations, liabilities and
charges of whatsoever nature or kind incurred or chargeable, directly or
indirectly, in connection with the exploration and development of the Property
including, without limiting the generality of the foregoing, all costs
reasonably attributable, in accordance with generally accepted accounting
principles, to the design, planning, testing, financing, administration,
marketing, engineering, legal, accounting, transportation and other incidental
functions associated with the exploration and mining operation contemplated
by
this Agreement and with the Facilities, but does not include Operating Expenses
nor Capital Expenses.
6.
“Facilities” means all plant, equipment, structures, roads, rail lines, storage
and transport facilities, housing and service structures, real property or
interest therein, whether on the Property or not, acquired or constructed
exclusively for the mining operation on the Property contemplated by this
Agreement (all commonly referred to as “infrastructure”).
TO
THE
JOINT
VENTURE AGREEMENT
ACCOUNTING
PROCEDURES
TABLE
OF CONTENTS
In
this
Schedule the following words, phrases and expressions shall have the following
meanings:
| a) |
“Agreement”
means the Agreement to which this Accounting Procedure is attached
as
Schedule “C”.
|
| b) |
“Count”
means a physical inventory count.
|
| c) |
“Employee”
means those employees of the Operator who are assigned to and directly
engaged in the conduct of Mining Operations, whether on a full-time
or
part-time basis.
|
| d) |
“Employee
Benefits” means the Operator's cost of holiday, vacation, sickness,
disability benefits, field bonuses, paid to Employees and the Operator's
costs of established plans for employee's group life insurance,
hospitalization, pension, retirement and other customary plans maintained
for the benefit of Employees and Personnel, as the case may be, which
costs may be charged as a percentage assessment on the salaries and
wages
of Employees or Personnel, as the case may be, on a basis consistent
with
the Operator's cost experience.
|
| e) |
“Field
Offices” means the necessary sub-office or suboffices in each place where
a Program or Construction is being conducted or a Mine is being
operated.
|
| f) |
“Government
Contributions” means the cost or contributions made by the Operator
pursuant to assessments imposed by governmental authority which are
applicable to the salaries or wages of Employees or Personnel, as
the case
may be.
|
| g) |
“Joint
Account” means the books of account maintained by the Operator to record
all costs, expenses, credits and other transactions arising out of
or in
connection with the Mining
Operations.
|
| h) |
“Material”
means the personal property, equipment and supplies acquired or held,
at
the direction or with the approval of the Management Committee, for
use in
the Mining Operations and, without limiting the generality, more
particularly “Controllable Material” means such Material which is
ordinarily classified as Controllable Material, as that classification
is
determined or approved by the Management Committee, and controlled
in
mining operations.
|
| i) |
“Personnel”
means those management, supervisory, administrative, clerical or
other
personnel of the Operator normally associated with the Supervision
Offices
whose salaries and wages are charged directly to the Supervision
Office in
question.
|
| j) |
“Reasonable
Expenses” means the reasonable expenses of Employee or Personnel, as the
case may be, for which those Employees or Personnel may be reimbursed
under the Operator's usual expense account practice; including without
limiting the generality of the foregoing, any relocation expenses
necessarily incurred in order to properly staff the Mining Operations
if
the relocation is approved by the Management
Committee.
|
1
| k) |
“Supervision
Office” means the Operator's offices or department within the Operator's
offices from which the Mining Operations are generally
supervised.
|
2.1
The
Operator shall, by invoice, charge each party with its proportionate share
of
Exploration Costs and Mine Costs in the manner provided in the
Agreement.
2.2
The
Operator shall deliver, with each invoice rendered for Costs incurred a
statement indicating:
a)
all
charges or credits to the Joint Account relating to Controllable Material in
detail; and
b)
all
other charges and credits to the Joint Account summarized by appropriate
classification indicative of the nature of the charges and credits.
2.3
The
Operator shall deliver with each invoice for an advance of Costs a statement
indicating:
| a) |
the
estimated Exploration Costs or, in the case of Mine Costs, the estimated
cash disbursements, to be made during the next succeeding
month;
|
| b) |
the
addition thereto or subtraction therefrom, as the case may be, made
in
respect of Exploration Costs or Mine Costs actually having been incurred
in an amount greater or lesser than the advance which was made by
each
party for the penultimate month preceding the month of the invoice;
and
|
| c) |
the
advances made by each party to date and are Exploration Costs or
Mine
Costs incurred to the end of the penultimate month preceding the
month of
the invoice.
|
3.1
The
Operator shall charge the Joint Account with the following items:
| a) |
Contractor's
Charges:
|
All
proper costs relative to the Mining Operations incurred under contracts entered
into by the Operator with third parties.
| b) |
Labour
Charges:
|
| i) |
The
salaries and wages of Employees in an amount calculated by taking
the full
salary or wage of each Employee multiplied by that fraction which
has as
its numerator the total time for the month that the Employees were
directly engaged in the conduct of Mining Operations and as its
denominator the total normal working time for the month of the
Employee;
|
| ii) |
The
Reasonable Expenses of the Employees;
and
|
| iii) |
Employee
Benefits and Government Contributions in respect of the Employees
in an
amount proportionate to the charge made to the Joint Account in respect
to
their salaries and wages.
|
| c) |
Office
Maintenance:
|
| i) |
The
cost or a pro rata portion of the costs, as the case may be, of
maintaining and operating the Offices. The basis for charging the
Joint
Account for Office maintenance costs shall be as
follows:
|
the
expense of maintaining and operating Field Offices, less any revenue therefrom;
and
that
portion of maintaining and operating the Supervision Offices which is equal
to
the anticipated total operating expenses of the Supervision Offices divided
by
the anticipated total staff man days for the Employees whether in connection
with the Mining Operations or not; multiplied by the actual total time spent
on
the Mining Operations by the Employee expressed in man days.
ii)
Without limiting generality of the foregoing, the anticipated total operating
expenses of the Supervision Offices shall include:
A.
the
salaries and wages of the Operator's Personnel which have been directly charged
to those Offices;
B.
the
Reasonable Expenses of the Personnel; and
C.
Employee Benefits
iii)
The
Operator shall make an adjustment in respect of the Office Maintenance cost
forthwith after the end of each Operating Year upon having determined the actual
operating expenses and actual total staff man days referred to in Clause
3.1(c)(2)(b) of this Schedule “C”.
| d) |
Material:
Material
purchased or furnished by the Operator for use on the Property as
provided
under Section 4 of this Schedule
“C”.
|
2
| e) |
Transportation
Charges:
The
cost of transporting Employees and Material necessary for the Mining
Operations.
|
| f) |
Service
Charges:
|
| i) |
The
cost of services and utilities procured from outside sources other
than
services covered by Paragraph 3.1 h). The cost of consultant services
shall not be charged to the Joint Account unless the retaining of
the
consultant is approved in advance by the Management Committee but
if not
so charged the cost of such services shall be included as Costs of
the
party retaining such consultant;
and
|
| ii) |
Use
and service of equipment and facilities furnished by the Operator
as
provided in Subsection 4.5 of this Schedule
“C”.
|
| g) |
Damages
and Losses to Joint
Property:
|
All
costs
necessary for the repair or replacement of Assets made necessary because of
damages or losses by fire, flood, storms, theft, accident or other cause. The
Operator shall furnish each party with written particulars of the damages or
losses incurred as soon as practicable after the damage or loss has been
discovered. The proceeds, if any, received on claims against any policies of
insurance in respect of those damages or losses shall be credited to the Joint
Account.
| h) |
Legal
Expense:
|
All
costs
of handling, investigating and settling litigation or recovering the assets,
including, without limiting generality, attorney's fees, court costs, costs
of
investigation or procuring evidence and amounts paid in settlement or
satisfaction of any litigation or claims; provided, however, that, unless
otherwise approved in advance by the Management Committee, no charge shall
be
made for the services of the Operator's legal staff or the fees and expenses
of
outside solicitors.
i)
Taxes:
All
taxes, duties or assessments of every kind and nature (except income taxes)
assessed or levied upon or in connection with a Property, the Mining Operations
thereon, or the production therefrom, which have been paid by the Operator
for
the benefit of the parties.
j)
Insurance:
Net
premiums paid for
| i) |
such
policies of insurance on or in Operations as may be required to be
carried
by law; and
|
| ii) |
such
other policies of insurance as the Operator may carry in accordance
with
the Agreement; and
|
| iii) |
the
applicable deductibles in event of an insured
loss.
|
k)
Rentals:
Fees,
rentals and other similar charges required to be paid for acquiring, recording
and maintaining permits, mineral claims and mining leases and rentals and of
the
Mining Operations.
l)
Permits:
Permit
costs, fees and other similar charges which are assessed by various governmental
agencies.
m)
Other
Expenditures:
Such
other costs and expenses which are not covered or dealt with in the foregoing
provisions of this Subsection 3.1 of this Schedule “C” as are incurred with the
approval of the Management Committee for Mining Operations or as may be
contemplated in the Agreement.
4.1
Subject to Subsection 4.4 of this Schedule “C” the Operator shall purchase all
Materials for Mining Operations.
4.2
Materials purchased and services procured by the Operator directly for the
Mining Operations shall be charged to the Joint Account at the price paid by
the
Operator less all discounts actually received.
4.3
So
far as it is reasonably practical and consistent with efficient and economical
operations, the Operator shall purchase, furnish or otherwise acquire only
such
Material and the Operator shall attempt to minimize the accumulation of surplus
stocks of Material.
4.4
Any
party may sell Material or services required in the Mining Operations to the
Operator for such price and upon such terms and conditions as the Management
Committee may approve.
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4.5
Notwithstanding the foregoing provisions of this Section 4, the Operator shall
be entitled to supply for use in connection with the Mining Operations equipment
and facilities which are owned by the Operator and to charge the Joint Account
with such reasonable costs as are commensurate with the ownership and use
thereof.
5.1
The
Operator, with the approval of the Management Committee may, from time to time,
sell any Material which has become surplus to the reasonably foreseeable needs
of the Mining Operations for such price and upon such terms and conditions
as
are available.
5.2
Any
party may purchase from the Operator any Material which may from time to time
become surplus to the reasonably foreseeable need of the Mining Operations
for
such price and upon such terms and conditions as the Management Committee may
approve.
5.3
Upon
termination of the Agreement, the Management Committee may approve the division
of any Material held by the Operator at that date may be taken by the parties
in
kind or be taken by a party in lieu of a portion of its Proportionate Share
of
the net revenues received from the disposal of the Property. If such a division
to a party be in lieu of a portion of its proportionate share, it shall be
for
such price and on such terms and conditions as the Management Committee may
approve.
5.4
The
net revenues received from the sale of any Material to third parties or to
a
party shall be credited to the Joint Account.
6.1
The
Operator shall maintain records of Material in reasonable detail and records
of
Controllable Material in detail.
6.2
The
Operator shall perform Counts from time to time at reasonable intervals and
in
connection therewith shall give notice of its intention to perform a Count
to
each party at least 30 days in advance of the date set for performing of the
Count. Each party shall be entitled to be represented at the performing of
a
Count upon giving notice thereof to the Operator within 20 days of the
Operator's notice. A party who is not represented at the performing of the
Count
shall be deemed to have approved the Count as taken.
6.3
Forthwith after performing a Count, the Operator shall reconcile the inventory
with the Joint Account and provide each party with a statement listing the
overages and shortages of inventory except such shortages as may have arisen
due
to a lack of diligence on the part of the Operator.
7.1
Payment of any invoice by a party shall not prejudice the right of that party
to
protest the correctness of the statement supporting the payment; provided,
however, that all invoices and statements presented to each party by the
Operator during any Operating Year shall conclusively be presumed to be true
and
correct upon the expiration of 12 months following the end of the Operating
Year
to which the invoice or statement relates, unless within that 12 month period
that party gives notice to the Operator making claim on the Operator for an
adjustment to the invoice or statement.
7.2
The
Operator shall not adjust any invoice or statement in favour of itself after
the
expiration of 12 months following the end of the Operating Year to which the
invoice or statement relates.
7.3
Notwithstanding Subsections 7.1 and 7.2 of this Schedule “C”, the Operator may
make adjustments to an invoice or statement which arise out of a physical
inventory of Material or Assets.
7.4
A
party shall be entitled upon notice to the Operator to request that the
independent external auditor of the Operator provide that party with its opinion
that any invoice or statement delivered pursuant to the
4
Agreement
in respect of the period referred to in Subsection 7.1 of this Schedule “C” has
been prepared in accordance with this Agreement.
7.5
The
time for giving the audit opinion contemplated in Subsection 7.4 of this
Schedule “C” shall not extend the time for the taking of exception to and making
claims on the Operator for adjustment as provided in Subsection 7.1 of this
Schedule “C”.
7.6
The
cost of the auditor's opinion referred to in Subsection 7.4 of this Schedule
“C”
shall be solely for the account of the party requesting the auditor's opinion,
unless the audit disclosed a material error adverse to that party, in which
case
the cost shall be solely for the account of the Operator.
