Cooperative Agreement Between The Hanzhong Geological Brigade of
Bureau of Geology & Mineral Exploration of Shaanxi Province, China,
And Dragon Gold Resources Inc.
Party A: The Hanzhong Geological Brigade, Bureau of Geology & Mineral
Exploration of Shaanxi Province, China,
Party B: Dragon Gold Resources Inc.
Through friendly negotiation both parties agree on the following principle terms
regarding the matters of gold and other minerals exploration and development in
Hanzhong, Shaanxi Province.
1. Party A and Party B will form a Sino-Foreign cooperative joint venture
company (the "JV Company") to carry out exploration and development in
the exploration permit area owned by Party A (the "Cooperative Area",
see Appendix "The Name, Area, and Permit Number of Exploration Area").
Upon the JV Company discovering and proving commercially viable
deposit(s), the JV Company will proceed to develop the deposits.
2. Investment in the JV Company will be carried out in two stages. The
first stage is the exploration phase. The second stage shall be
entering development phase.
3. The Parties' respective contributions to and ownerships in the JV
Company are as follows: During the first phase, Party A will, as its
cooperative condition, contribute to the JV Company the Exploration
Permits owned by Party A and its exploration findings (to be valued);
and Party B will make cash contributions to the JV Company.
4. During the second phase, Party B will contribute further development
capitals to the JV Company to increase its interest in the JV Company
and Party A's ownership in the JV Company shall be reduced accordingly.
Total capitals for the development will be determined by the
Feasibility Study Report.
5. Immediately after signing this document, Party B will send its
geologist and other professionals to Hanzhong to review and analyses
the geological data provided by Party A. Party A should provide to
Party B the data and other information related to the properties, so as
to enable Party B to conduct its due diligent study. Party B shall keep
confidential all received geological information and shall be fully
responsible for the damage caused by leaking the information. If
necessary, Party A will help Party B to conduct field investigation,
and Party B will bear all the cost.
6. After both Parties identified the Cooperative areas for geological
exploration, a Sino-Foreign Joint Venture Company will be formed by
both Parties to conduct the explorations and development.
7. Both parties will jointly select an exploration permits valuation agent
to appraise the value of the data, information and the Exploration
Permits owned by Party A or to be owned by Party A and then to file
with Ministry of Land and Resources for confirmation. The value will be
the input for Party A to the JV Company, therefore to become Party A's
portion of equity interest in the JV Company.
8. Board Directors of Joint Venture Company: (1) The Board of Directors of
JV Company will have 7 Directors, Four appointed by Party B and three
appointed by Party A. The Chairman is appointed by Party B and Vice
Chairman by Party A. (2) The General Manager nominated by Party B and
Deputy-General Manager nominated by Party A will be appointed by the
Board of Directors and will be responsible for the daily operation of
the JV Company.
9. Right of First Refusal: Should either Party (a "vending Party") choose
to sell, transfer, or otherwise dispose of all or any portion of its
interests in the JV Company, it must first offer such interest (the
"Offered Interest") to the other Party ("Other Party"). The Other Party
must reply to the Vending Party within 30 days after receipt of the
offer. If the Other Party does not intend to increase its interest in
the JV Company, the Bending Party may transfer its Offered Interest
within 90 days to a third party but terms and conditions shall not be
more favorable than the offer to the Other Party. Should the Vending
Party be unable to transfer its Offered Interest in the JV Company
within 90 days and alters terms and conditions of transferring, the
Vending Party must again comply with above provision and offer it again
to the Other Party.
10. The term of the cooperation is 30 years.
11. Final Contract: The Parties acknowledge that this agreement contains
only the principle terms and conditions of the final contract. Other
matters and issues shall be determined in the final contract. The final
joint venture contract shall cover the general terms and conditions of
a commercial contract.
12. Dragon Gold Resources Inc. has the right to transfer its duties and
rights in this agreement to a third party.
13. After 60 days since signing this agreement, if Party B does not fulfill
the terms in this agreement, Part A has the right to select other
investment partners.
This agreement has become effective since March 15, 2005, and shall be fulfilled
by both Parties.
This agreement is duly signed by both parties' representatives on the date of
March 15, 2005.
Party A The Hanzhong Geological Party B Dragon Gold Resources Inc.
Brigade of the Bureau of
Geology & Mineral Exploration
of Shaanxi
Representative Representative
Date 2005-3-15 Date: 2005-3-15
Appendix: The Name, Area and Exploration Permit Number
--------- ------------------------------------------------------------------------ -------- -----------------
No. Name of Cooperative Area Area Permit #
(km2)
--------- ------------------------------------------------------------------------ -------- -----------------
1 Diping Gold Deposit Exploration, Mian County 44.5
--------- ------------------------------------------------------------------------ -------- -----------------
--------- ------------------------------------------------------------------------ -------- -----------------
2 Yanfanggou - Fuyeba Gold Deposit Exploration, Mian County 44.89
--------- ------------------------------------------------------------------------ -------- -----------------
--------- ------------------------------------------------------------------------ -------- -----------------
3 Donggou - Zhakoushi Silver-Stibium Deposit Exploration, Liuba County 21.62 6100000420362
--------- ------------------------------------------------------------------------ -------- -----------------
--------- ------------------------------------------------------------------------ -------- -----------------
4 Hongshigou Copper-Gold Exploration, Ningqiang Conuty 17.61 6100000430034
--------- ------------------------------------------------------------------------ -------- -----------------
--------- ------------------------------------------------------------------------ -------- -----------------
5 Ningqiang Xingchang Copper-Gold Exploration, Ningqiang County 27.01 6100000430031
--------- ------------------------------------------------------------------------ -------- -----------------
--------- ------------------------------------------------------------------------ -------- -----------------
6 Detailed Exploration of the Mingyagou Block of the Tiehe Graphite 3.76 6100000420380
Deposit, Yangxian County
--------- ------------------------------------------------------------------------ -------- -----------------
--------- ------------------------------------------------------------------------ -------- -----------------
7 Detailed Exploration of the Daangou Block of the Tiehe Graphite 5.37 6100000420381
Deposit, Yangxian County
--------- ------------------------------------------------------------------------ -------- -----------------
