10.07
[▇▇▇▇▇▇ METALS, INC. LETTERHEAD]
PURCHASE/REFINING AGREEMENT
April 10, 1997
Alta Gold Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter will confirm our agreement pursuant to which Alta
Gold Co., a Nevada corporation ("Alta"), shall deliver and sell
to ▇▇▇▇▇▇ Metals, Inc., a Delaware corporation ("▇▇▇▇▇▇''), the
gold and silver contained in the Dore ("Dore") produced by Alta
in accordance with the following terms:
1. MATERIAL/REFINER/QUANTITY
(a) The Dore covered by this agreement is Dore bullion (the
"Dore") assaying approximately as follows:
Gold: Per Addendum
Silver: Per Addendum
No deleterious elements above levels acceptable to
refiner shall be contained in the Dore.
(b) The Payable Gold and Payable Silver (as defined in
Paragraph 5 hereof) contained in the Dore to be
purchased by ▇▇▇▇▇▇ hereunder shall be recovered for
its account by ▇▇▇▇▇▇▇ Matthey, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ("Refiner" or "Refinery"),
and Alta consents to the refining of the Dore at the
Refinery.
(c) The annual quantity under this agreement is 100% of the
gold and silver Dore produced by Alta.
2. DELIVERY
Delivery shall be made to Gerald's account at the Refinery.
Upon receipt, ▇▇▇▇▇▇ shall take full responsibility for risk
of loss or damage to the Dore.
Alta Gold Co.
April 10, 1997
Page 2
3. WEIGHING AND SAMPLING
Weighing and sampling shall be accomplished at the Refinery
using industry accepted practices. Alta, at its expense,
shall have the right to have its representative at the
weighing and sampling. If Alta is not represented at the
weighing and sampling, and the weights are at variance by
more than .2%, then each lot will be held pending agreement
of weights by Alta. In the event that the weights between
Alta and the Refiner vary by less than .2 percent, Refinery
weights shall govern. Sampling shall always be determined
in accordance with the Refiner standard procedures. Refiner
shall take four (4) representative samples from each sample
lot. The samples will be obtained by melting the dore in an
induction furnace and vacuum dip tube sampling when the lot
is fully molten and turbulent. Each sample will be marked
Umpire/Alta/Refiner as taken and the weights recorded. All
samples except those labeled "Refiner" shall be sealed. Two
samples shall remain with the Refiner, the Alta sample will
be sent to Alta's designated location by the following day
and the umpire sample shall be held in reserve. The
refiner, reserve, and umpire samples, if not used, shall be
included in the settlement weight.
Immediately upon signature of the weighing report (except as
provided above when Alta is not represented), the Refiner
may treat the Dore. A dedicated crucible will be used for
all melting, and slag will be retained for Alta's account.
4. ASSAYS AND SPLITTING LIMITS
Assays shall be made independently by each party by
corrected fire assay techniques. The results of such assays
shall be exchanged within fifteen (15) business days from
the date of sampling by letters crossing simultaneously by
mail on a date to be agreed upon in advance. Should the
difference between the results of the parties be not more
than:
Gold: Per Addendum
Silver: Per Addendum
Alta Gold Co.
April 10, 1997
Page 3
then the exact mean of the two results shall be taken as the
Agreed Assay for all purposes and the assay shall be deemed
finally determined not later than seven (7) days subsequent
to the mailing of the assays. In the event of a greater
difference, an umpire assay shall be made. The party's
assay closer to the umpire assay will be the Agreed Assay.
Should the umpire assay be the exact mean of the parties'
assay, then the umpire assay shall be the Agreed Assay. The
cost of the umpire assay shall be borne by the party whose
result is further from the umpire's. The cost of the umpire
assay shall be borne equally by the parties in the event the
umpire assay shall be the exact mean of the exchanged
assays. In the event an umpire assay should be required,
the assay shall be deemed finally determined not later than
seven (7) days subsequent to the mailing of the assay by the
umpire (or other written transmission to the parties). For
the purposes of this agreement, the umpire shall be one of
the following:
(1) ▇▇▇▇ ▇▇▇▇▇▇▇ ASSAYERS, LTD.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(2) INSPECTORATE ▇▇▇▇▇▇▇▇ USA, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(3) ▇▇▇▇▇▇ & COMPANY
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The employment of a firm as a representative or to perform
the initial assay shall automatically disqualify that firm
for umpire work for that lot.
5. SALE OF PAYABLE GOLD AND PAYABLE SILVER
Alta hereby agrees to sell to ▇▇▇▇▇▇ and ▇▇▇▇▇▇ hereby
agrees to purchase from Alta the Payable Gold and Payable
Silver contained in the Dore under the terms and conditions
set forth herein.
"Payable Gold" shall be defined as (per Addendum)
Alta Gold Co.
April 10, 1997
Page 4
of the gold content of the Dore as determined by the
Agreed Assay.
"Payable Silver" shall be defined as (per Addendum) of
the silver content of the Dore as determined by the
Agreed Assay.
6. TERM
Subject to Paragraph 13 hereof, this agreement shall be for
the term of two (2) years. All obligations of the parties
existing at the expiration of this agreement shall be
governed by the terms hereof.
7. PRICING
For all gold and silver not sold under Forward and Option
Contracts shall be sold to ▇▇▇▇▇▇ as follows:
A. Spot Pricing
At spot market bid price for gold and silver, or gold
and silver contained in Dore at any time during normal
business hours in New York. In addition, ▇▇▇▇▇▇ will
accept firm offers at specific prices and maturity
dates to work on behalf of Alta during our business
hours in New York or overnight in Gerald's European or
Far East offices.
B. Forward Pricing
▇▇▇▇▇▇ ▇▇▇ provide Alta with a forward pricing
facility, subject to forward term, quantity and margin
facility.
C. Options
▇▇▇▇▇▇ ▇▇▇ provide Alta with physical bullion options
for both puts and calls for gold and silver. Alta will
have the ability to buy or write such option
instruments at its strike price and for any odd day
maturity for an agreed upon term. In the case where
Alta is a seller of an option instrument, a mutually
agreed margin facility will be required. ▇▇▇▇▇▇ ▇▇▇
make: available to Alta a strategy whereby Alta will be
able to simultaneously buy puts and write calls in
order to establish a minimum and maximum price band on
production or portions thereof, without any cash flow
effect.
Alta Gold Co.
April 10, 1997
Page 5
8. CHARGES
Treatment Charges: (Per Addendum)
Transportation Charges: (Per Addendum)
9. REJECTION OF MATERIAL
The Dore shall be free of any elements above levels deemed
by the Refiner to impair the Refiner's ability to refine the
Dore. If a shipment of the Dore contains any elements that
the Refiner deems to impair its ability to refine the Dore,
the Refiner shall have the right to reject such shipment,
and shall have no liability for such rejection, provided the
Refiner clearly determines the reason(s) for rejecting such
shipment. However, ▇▇▇▇▇▇ shall use its best efforts to
have such rejected Dore treated elsewhere.
If the Refiner rejects any shipment of ▇▇▇▇, ▇▇▇▇▇▇ shall
have the right to liquidate the forward contracts for priced
estimated Payable Gold and Payable Silver with respect to
such shipment by selling back such estimated Payable Gold
and Payable Silver to Alta at a price per ▇▇▇▇ ounce equal
to the next available London P.M. Gold Fixing and London
Silver Fixing after notice from ▇▇▇▇▇▇ of its intent to sell
back such gold and silver to Alta. The net amount due one
party to the other as a result of such liquidation shall be
paid within two (2) business days after such liquidation and
thereafter Alta shall remove such Dore at its risk and
expense from the Refinery.
10. SETTLEMENT DIFFERENCES
In the event the quantity of priced estimated Payable Gold
and estimated Payable Silver in the shipment does not
exactly equal the quantity of the Payable Gold and Payable
Silver in such shipment, Alta and ▇▇▇▇▇▇ shall settle the
difference by ▇▇▇▇▇▇ purchasing any amount by which Payable
Gold and Payable Silver exceeds such quantity of priced
estimated Payable Gold and/or estimated Payable Silver or by
Alta repurchasing any amount by which priced estimated
Payable Gold and/or estimated Payable Silver exceeds Payable
Gold and/or Payable Silver.
In either case, pricing shall be at the open market bid or
Alta Gold Co.
April 10, 1997
Page 6
offer price as appropriate for gold and for silver
subsequent to the day ▇▇▇▇▇▇ receives the final assays of
such shipment or when such differences become known.
Alternatively, in the event the priced estimated Payable
Gold and/or estimated Payable Silver is greater than the
Payable Gold or Payable Silver, Alta, at its option, may
settle the differences by delivering the shortfall of
Payable Gold and/or Payable Silver in the next shipment. In
the event the priced estimated Payable Gold and/or estimated
Payable Silver is less than the Payable Gold or Payable
Silver, Alta can settle the differences by selling the
Payable Gold or Payable Silver as described above or by
accumulating such gold and/or silver to be priced at a later
date.
In the event that the provisional payment for a shipment is
in excess of the final payment, Alta will promptly return
such excess to ▇▇▇▇▇▇ by wire transfer of funds to Gerald's
designated bank account.
11. PAYMENT
(a) Provisional Payment
One hundred percent (100%) provisional payment for the
priced estimated Payable Gold based upon mine weights
and assays less estimated charges will be made on the
second business day after pricing and shipment. The
provisional payment will incur interest at the Gold
Loan rate from the date of the advance until the date
of outturn. Outturn is estimated to be (See Addendum)
working days after delivery to the Refinery. The
provisional payment interest rate is subject to change
at any time to reflect current gold borrowing rates,
calculated as is customary in the industry. Payment
shall be made in U.S. dollars by electronic transfer in
same day funds to Alta's designated bank account.
(b) Final Payment
On the second business day following finalization of
assays and agreement of settlement details, ▇▇▇▇▇▇
shall make a final payment to Alta for the Payable Gold
and Payable Silver, if priced, in such shipment of Dore
in an amount equal to:
Alta Gold Co.
April 10, 1997
Page 7
(i) the value of the estimated Payable Gold and
Payable Silver, if priced, of the shipment as
determined pursuant to Paragraph 7 hereof,
ADJUSTED BY
(ii) the settlement of differences determined in
accordance with Paragraph 10 hereof; LESS
(iii)the charges set forth in Paragraph 8 hereof
with respect to such shipment; less
(iv) the provisional payment made pursuant to paragraph
11(a).
(c) All payments shall be made by electronic transfer of
funds in U.S. dollars to Alta's designated bank
account.
(d) In the event that Alta elects to price the Payable
Silver subsequent to payment for Payable Gold, in
accordance with this paragraph 11, then payment for
such priced silver shall be made on the second business
day following such pricing.
12. TITLE
Title to all shipments of Dore and the gold and silver
therein contained, free and clear of any lien or
encumbrance, shall pass to ▇▇▇▇▇▇ upon delivery of the Dore
to ▇▇▇▇▇▇ in accordance with Paragraph 2 hereof.
13. FORCE MAJEURE
Notwithstanding anything to the contrary herein contained,
any delay or failure in the production and/or refining of
the Dore or the release of the gold and silver contained
therein to ▇▇▇▇▇▇ caused by any factors outside the
reasonable control of Alta, the Refiner or ▇▇▇▇▇▇ shall be
deemed to be an event of force majeure and shall permit the
delay of performance hereunder for the duration of the force
majeure. In the event force majeure is declared, upon
Gerald's direction, (a) no further shipments shall be made
by Alta during the force majeure period, (b) the term of
this
Alta Gold Co.
April 10, 1997
Page 8
agreement shall be extended for a period equal to the force
majeure period and (c) ▇▇▇▇▇▇ and ▇▇▇▇ shall agree on an
alternate refinery within five (5) business days.
Notwithstanding the foregoing, if a shipment of Dore fails
to be delivered to ▇▇▇▇▇▇ pursuant to paragraph 2 for any
reason on or before the 60th day after the scheduled
delivery of the gold or silver estimated to be contained
therein, ▇▇▇▇▇▇ shall have the right to cancel such shipment
and liquidate the forward contracts for priced gold or
silver estimated to be contained in such shipment by selling
back such gold and silver to Alta at a price equal to the
next available London P.M. Gold Fixing and the London Silver
Fixing. The net amount due one party to the other party as
a result of such liquidation shall be made within two (2)
business days thereafter.
14. EVENTS OF DEFAULT
Alta shall be in default under this agreement upon the
occurrence of any one or more of the following events (each
such event is herein referred to as an "Event of Default"):
A. failure of Alta to pay (i) any amount of principal or
interest under the Notes (as hereinafter defined) or
(ii) any other indebtedness, obligations or liabilities
of Alta to Lenders (as hereinafter defined), when the
same shall become due and Payable, whether at the due
date thereof or at a date fixed for prepayment or by
acceleration or otherwise which is not cured within two
days;
B. failure of Alta to perform, comply with or observe any
other term, covenant or agreement applicable to Alta
pursuant to this agreement, a certain loan agreement of
even date herewith between Alta and BHF Bank
Aktiengesellshaft, New York Branch and ▇▇▇▇▇▇ Metals,
Inc. (▇▇▇▇▇▇ and BHF each a "Lender" and collectively
the "Lenders") and hereinafter referred to as the "Loan
Agreement", each promissory note of Debtor issued
pursuant to such Loan Agreement (collectively, the
"Notes") or any other agreements between Alta and the
Lenders;
C. any representation or warranty made by or on behalf of
Alta pursuant to this agreement, the Notes, the Loan
Agreement or any other agreement, document, instrument
Alta Gold Co.
April 10, 1997
Page 9
or certificate executed by Alta in favor of the Lenders
shall be untrue or misleading in any material respect
as of the date such representation or warranty was made
or is deemed to have been made;
D. Alta shall (i) discontinue or abandon operation of its
businesses (ii) apply for or consent to or suffer the
appointment of a receiver, trustee, custodian or
liquidator of it or any of its property, (iii) admit in
writing its inability to pay its debts as they mature,
(iv) make a general assignment for the benefit of
creditors, (v) file, or have filed against it, a
petition for relief under Title 11 of the United States
Code, (vi) file, or have filed against it, a petition
in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in
any proceeding under any such law, or if corporate
action shall be taken for the purpose of effecting any
of the foregoing, (vii) become insolvent, (viii) fail
to generally pay its debts as they mature or (ix) have
liabilities which exceed the fair value of its assets;
15. REMEDIES UPON EVENT OF DEFAULT
Upon or at any time after the occurrence of any Event of
Default, Lenders may (i) terminate performance of any or all
of its obligations to Lenders, (ii) treat as immediately due
and payable any or all of Alta's obligations to Lenders,
(iii) sell any or all collateral in such manner as Lender
determines to be commercially reasonable, (iv) exercise any
or all of the remedies set forth in Section 8 of the
Security Agreement of even date herewith between Alta and
Lender, as the same may be amended or modified from time to
time, and (v) close out in whole or in part the priced
quantities of gold and/or silver which have not been
delivered at market prices therefor as determined in good
faith by ▇▇▇▇▇▇ (upon any close out, either party shall pay
to the other the net amount due hereunder, within two (2)
business days).
Alta Gold Co.
April 10, 1997
Page 10
16. GOVERNING LAW
This agreement shall be governed by and construed in
accordance with the laws of the State of New York without
giving effect to principles of conflict of laws. Each party
hereto consents to the exclusive jurisdiction of the courts
of the State of New York and/or of any U.S. Federal Court
located in the Borough of Manhattan in the City of New York
over any disputes arising in connection with the transaction
contemplated hereby. Final judgment in any action shall be
binding upon the parties hereto and may be enforced in such
courts or in the courts of any country to which jurisdiction
the party against whom the action is brought is subject.
ALTA AND ▇▇▇▇▇▇ EACH WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM
AGAINST THE OTHER ON ANY MATTER WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT,
ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN).
17. NOTICES
All notices hereunder shall be in writing and shall be sent
by telex, telecopy transmission or by certified mail to the
attention of the respective parties at the addresses set
forth below:
Alta Gold Co. ▇▇▇▇▇▇ Metals, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇ Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
CC: Treasurer
Notices shall be deemed to have been given when received at
the respective party's address set forth above unless sent
by telefax, in which case the same shall be deemed given
when sent to the telefax address of the respective party set
forth above and confirmed as being received by the
respective party.
Alta Gold Co.
April 10, 1997
Page 11
18. MISCELLANEOUS
This agreement constitutes the entire agreement between the
parties relating to the subject matter hereof, superseding
all prior agreements and understandings with respect thereto
(either oral or written) and may not be amended except by
writing signed by both parties.
This agreement may not be assigned by either party without
the written consent of the other parties (such consent not
to be unreasonably withheld), except that ▇▇▇▇▇▇ ▇▇▇ assign
it's rights hereunder for financing purposes.
To signify your agreement to these terms, will you kindly sign
the attached copy of this letter and return it to the undersigned
for our records.
ALTA GOLD CO. ▇▇▇▇▇▇ METALS, INC.
By: By:
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President/ Vice President
Chief Financial Officer
Date:
[▇▇▇▇▇▇ METALS, INC. LETTERHEAD]
April 10, 1997
Alta Gold Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
ADDENDUM 1 TO PURCHASE/REFINING AGREEMENT DATED APRIL 10, 1997
RE: ▇▇▇▇▇▇▇ MINE
1. MATERIAL/REFINER/QUANTITY
(a) The Dore covered by this agreement is Dore bullion
produced by the ▇▇▇▇▇▇▇ mine (the "Dore") assaying
approximately as follows:
Gold: 80%
Silver: 20%
4. ASSAY AND SPLITTING LIMITS
Gold: 1.0 parts per thousand
Silver: 2.5 parts per thousand
5. SALE OF PAYABLE GOLD AND PAYABLE SILVER
"Payable Gold" shall be defined as 99.875% of the gold
content of the Dore as determined by the Agreed Assay.
"Payable Silver" shall be defined as 98.00% of the
silver content of the Dore as determined by the Agreed
Assay.
▇▇▇▇▇▇ METALS, INC.
-2-
8. CHARGES
Treatment Charges:
U.S. $0.65 per ▇▇▇▇ ounce of Dore received.
Minimum charge $350.00 per lot.
Transportation Charges: None.
11. OUTTURN
Outturn is fifteen (15) working days after delivery to
the Refinery.
To signify your agreement to these terms, will you kindly sign
below and return it to the undersigned for our records.
ALTA GOLD CO. ▇▇▇▇▇▇ METALS, INC.
By: By:
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President/ Vice President
Chief Financial Officer
Date:
