EXHIBIT 4.16
LETTER AGREEMENT DATED AUGUST 24, 2004
BETWEEN THE COMPANY AND ARCTURUS VENTURES INC.
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AMERA
August 24, 2004
Arcturus Ventures Inc.
0000 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X 0X0
ATTENTION: XX. XXX X. XXXXXXX, P.XXX., VICE PRESIDENT - EXPLORATION & Director
Dear Xx. Xxxxxxx:
RE: LETTER OF INTENT (THE "LETTER OF INTENT") IN RESPECT OF THE GRANT OF AN
OPTION BY ARCTURUS VENTURES INC. ("ARCTURUS") TO AMERA RESOURCES
CORPORATION ("AMERA") TO PURCHASE UP TO A 80% UNDIVIDED INTEREST IN THE
GROUP OF MINERAL RIGHTS KNOWN AS THE XXXXXXXXX PROPERTY LOCATED IN
NORTHERN AREQUIPA, PERU, AS MORE PARTICULARLY DESCRIBED IN SCHEDULE "A"
APPENDED HERETO (THE "PROPERTY")
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This Letter of Intent evidences the grant by Arcturus to Amera of an exclusive
and irrevocable option (the "Option") to earn up to a 80% undivided interest in
the Xxxxxxxxx Property (the "Property"), located in Northern Arequipa, Peru, on
the following material terms and conditions:
This Letter of Intent is subject to confirmation that title to the Property is
legally and beneficially held by Arcturus, free and clear of any encumbrances,
claims, liens or other charges and consists of an area of 3,000 hectares. In the
event that during the term of the Option, any party hereto acquires any mineral
properties or rights thereto, located within two (2) kilometers of the
boundaries of the Property, as more particularly described in Schedule "A"
hereto, such mineral properties or rights thereto shall be included in and form
part of the Property herein and the cost of acquiring and maintaining such
mineral properties or rights thereto shall be included in the Minimum
Expenditures to be incurred by Amera hereunder.
Amera will be the operator of the Property during the period covered by this
Letter of Intent.
Amera may contract Arcturus' services to conduct the work on the Property, under
Amera's direction and management. This would include, but not be limited to, the
use of Arcturus' Peruvian associates. In particular, Arcturus is pleased to
provide the services of Xx. Xxxxx Xxxxxx to help with the logistics of the
program including the community relations, under Amera's direction and
management. Xx. Xxxxxx would also be made available to work as a
geologist/prospector within the Property as well as the area of mutual interest.
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
To earn an initial 55% undivided interest in the Property, Amera must make the
cash payments, issue the common shares and incur the Minimum Expenditures, all
as set out in the table below:
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CASH NUMBER OF MINIMUM EXPLORATION AND
DATE FOR PAYMENTS TO BE COMMON SHARES DEVELOPMENT EXPENDITURES TO
COMPLETION MADE TO BE ISSUED BE INCURRED
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TSX Venture Exchange C$40,000 25,000 --
Approval Date
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By the 1st anniversary of
Approval Date -- 50,000 C$150,000
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By the 2nd anniversary of
Approval Date -- 75,000 C$250,000
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By the 3rd anniversary of
Approval Date -- 100,000 C$350,000
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TOTAL C$40,000 250,000 C$750,000
=============================================================================================================
Any Expenditures incurred in excess of the Minimum Expenditures required to be
incurred for any period, as set out above, will be credited against the
requirements of the next succeeding period.
Further, Amera shall have the sole right and option to elect to earn an
additional 25% undivided interest in the Property, for a total undivided
interest of 80%, by delivering to Arcturus (a) a written notice of election and,
(b) a one time payment of 260,000 of its common shares. Thereafter, Amera must
incur additional exploration expenditures on the Property to take it up to the
bankable feasibility stage (the "BSF Expenditures") within a period of three
years from delivery of such written notice of election.
Upon the completion of the cash payments, issuances of common shares and the
Minimum Expenditures by the 3rd anniversary of the Approval Date (by which date
Amera will have earned a 55% undivided interest in the Property), Arcturus shall
retain a 45% carried interest in the Property until Amera earns the additional
25% undivided interest in the Property, at which time a joint venture shall be
deemed to have been formed and, thereafter, each party shall be responsible for
its proportionate share of the expenses of the further exploration and
development of the Property.
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
Upon Amera exercising the Option to earn its full 80% interest in the Property,
Amera and Arcturus agree to associate on a joint venture basis for the further
exploration and development of the Property, sharing the costs of such
exploration and development in accordance with their respective interest in the
Property, and agree to negotiate, in good faith, a formal joint venture
agreement substantially based on the Rocky Mountain Mineral Law Foundation Form
5a LLC containing the essential terms described in Schedule "B" appended hereto
(the "JV Agreement").
The parties shall use commercially reasonable efforts to negotiate and enter
into a definite option agreement (the "Option Agreement") on or before the 1st
anniversary of the Approval Date (the "Deadline"). If such Option Agreement is
not entered into before the Deadline, this Letter of Intent shall continue to
bind the parties and remain in full force and effect (unless terminated or
abandoned pursuant to the provisions hereof).
In the event that this Letter of Intent is terminated or abandoned, Amera will:
(a) leave the Property in good standing as at the effective date of
termination, free and clear of all liens, charges, and encumbrances
arising from operations by or on behalf of the Amera, and in a safe
and orderly condition and in a condition which is in compliance with
all applicable laws including, without limitation, with respect to
reclamation and rehabilitation and including the clean-up and
removal of any hazardous waste from the Property;
(b) deliver to Arcturus a full report on all work carried out by or on
behalf of Amera on the Property and all results relating thereto and
any interpretations, models, or assessments in respect thereof,
copies of all reports, studies, and assessments prepared by or on
behalf of Amera with respect to work on or for the benefit of the
Property not already provided to Arcturus, copies of all drill logs,
assay results, maps, field notes, sections, and other technical or
interpretive data generated or compiled by or on behalf of the Amera
with respect to the Property and work thereon hereunder, and will
make available for delivery to Arcturus, at the place of storage,
all available samples, drill chips, core and cuttings, sample
rejects and pulps, and any other physical material removed by or for
Amera from the Property;
(c) comply with all obligations and make all payments accrued (including
any taxes or similar payments) as of the date of termination with
respect to the Property; and
(d) unless otherwise specified by Arcturus, remove from the Property,
within three (3) months of the effective date of termination, all
machinery, equipment, supplies and facilities erected, installed, or
brought upon the Property by or at the instance of Amera.
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
This Letter of Intent provides for an option only and, nothing herein will be
construed as obligating Amera to do any acts or make any payments hereunder and
any acts or payments as are made hereunder will not be construed as obligating
Amera to do any further act or make any further payment. In the event that the
option is terminated or abandoned, Amera will have no further right or interest
in the Property and will have no further obligations hereunder, save and except
that the Property will be left in good standing with respect to the filing of
annual assessment work and the payment of rental fees for a period of at least
sixty (60) days from the effective date of such termination or abandonment.
This Letter of Intent is subject to the prior acceptance for filing by the TSX
Venture Exchange on behalf of Amera (the date of such acceptance being referred
to as the "Approval Date").
If the foregoing terms and conditions, and the attached schedules which form a
part of this Letter of Intent, accurately set out our mutual understandings,
please indicate your acceptance by signing this letter where indicated below and
returning to us the enclosed copy duly signed.
Sincerely,
Per:
AMERA RESOURCES CORPORATION
/s/ Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx, M.I.M.
President & CEO
TERMS AND CONDITIONS ACCEPTED THIS 24 DAY OF AUGUST, 2004.
ARCTURUS VENTURES INC.
Per: /s/ Xxx Xxxxxxx
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Xxx Xxxxxxx, P.Xxx.
Vice President - Exploration
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
THIS IS SCHEDULE "A" TO THE LETTER OF INTENT DATED AUGUST 24, 2004
MADE BETWEEN AMERA RESOURCES CORPORATION, AND ARCTURUS VENTURES INC.
DESCRIPTION AND MAP OF PROPERTY
[MAP OF THE XXXXXXXXX PROPERTY AND SHOWING THE AREA OF
MUTUAL INTEREST AND NEIGHBORING PROPERTIES DATED JULY 2004]
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
THIS IS SCHEDULE "B" TO THE LETTER OF INTENT AUGUST 24, 2004
MADE BETWEEN AMERA RESOURCES CORPORATION AND ARCTURUS VENTURES INC.
MATERIAL TERMS OF JOINT VENTURE AGREEMENT
Arcturus and Amera and/or its assigns agree to execute and deliver a joint
venture agreement substantially in the form of the Rocky Mountain Mineral Law
Foundation Form 5a LLC for the future exploration and development of the
Property on a joint venture basis on the following material terms:
1. The initial interest of the parties in and to the Property and all other
assets, liabilities, benefits or losses (the "Project") will be as follows:
Amera as to a 80% undivided interest, and Arcturus as to a 20% undivided
interest, subject to variation as in section 6 below.
2. The parties will form a management committee consisting of one member
appointed by each party (the "Management Committee"). The Management Committee
will have the power and authority to make binding decisions on behalf of the
parties with respect to the exploration and development of the Property and the
Project, and all matters incidental thereto, including the approval of annual
work programs and budgets for all exploration and development work. All
decisions of the Management Committee will be made by a simple majority of
votes, each party having one vote for each one percent (1%) of interest held in
the Project. In the event of a tie vote, the Operator will have a casting or
deciding vote.
3. The Management Committee will appoint a person or company to act as the
daily manager and administrator of the exploration and development work on the
Property (the "Operator"), and the first Operator will be Amera until its
resignation or removal by the Management Committee.
4. The Operator will prepare and submit for the consideration of the
Management Committee annual work programs and budgets for the exploration and
development work on the Property (collectively the "Programs" and individually a
"Program"). If the Operator has not submitted a Program within sixty (60) days
of any calendar year end, the non-Operator will be entitled to prepare and
submit a Program to the Management Committee for its consideration.
5. Within sixty (60) days following the Management Committee's approval of
a Program, the parties will elect by notice in writing to the Management
Committee to either not participate in the Program, participate in the Program
to the full extent of their cost share, or participate in the Program for an
amount less than their cost share. A party's cost share will be equal to its
proportionate share of cost of a Program based upon its interest held in the
Project. If a party elects to not participate or elects to participate for an
amount less than its cost share, that party will suffer dilution of its interest
in the Property and the Project in accordance with the provisions below.
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
6. Notwithstanding the adoption of a Program and budget, a party to the Joint
Venture (a "Participant") may elect to participate in the approved Program and
budget:
a) in proportion to its respective interest;
b) in some lesser amount than its respective interest; or
c) not at all.
In the event that a Participant elects to participate in some lesser amount
than its respective interest or not at all in a Program and budget, such
Participant's beneficial interest in the Property shall be recalculated as
provided herein, with dilution effective as of the first day of the subject
Program and budget.
If a Participant fails to so notify the other Participant of the extent to
which it elects to participate, such Participant shall be deemed to have
elected to contribute to such Program and budget in proportion to its
respective interest as of the beginning of the Program period.
If a Participant elects to contribute to a Program and budget for some
lesser amount than in proportion to its respective interest, or not at all,
and the other Participant elects to fund all or any portion of the
deficiency, the decreased or non-participating Participant's interest in
the joint venture shall be diluted, and the interest of the other
Participant in the joint venture will be correspondingly increased, so that
at any time the interest of a party in Newco will be equal to:
Actual Contributions of Participant + Deemed Contributions
of such Participant
_________________________________________________________________________ x 100%
Sum of Total Actual Contributions of all Participants + Total
Deemed Contributions of all Participants
with the percentage rounded to the nearest 2 decimal places.
The deemed contributions of the Participants will be:
(a) for Amera it shall be CDN$750,000 plus the BFS Expenditures (the
"Amera Contribution").
(b) for Arcturus, it shall be 25% of the Amera Contribution.
If any party's interest is reduced below five percent (5%) by the operation of
this paragraph, such party will transfer its remaining interest in the Project
to the other party, and will receive as consideration therefor a 2.5% net
smelter returns royalty. "Net smelter returns" will be calculated from the gross
receipts received by the contributing party from any smelter or refinery, less
smelter treatment charges, production taxes or royalties, and transportation
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
expenses to the smelter or other purchaser. Each one percent of such Net smelter
returns royalty shall be capped at C$1,000,000 (for the first 2%); the remaining
0.5% shall not be capped.
Nothing contained in this Letter Of Intent shall be deemed to constitute either
party the partner of the other, or, except as otherwise herein expressly
provided, to constitute either party the agent of the other, or to create any
fiduciary relationship between them. The parties hereto do not intend to create,
and this Letter of Intent shall not be construed to create, any mining,
commercial or other partnership. Neither party, nor any of its agents, shall act
for or assume any obligation or responsibility on behalf of the other party,
except as otherwise expressly provided herein. The rights, duties, obligations
and liabilities of the parties hereto shall be several and not joint or
collective.
7. The parties electing to contribute to a Program will have thirty (30) days
from receipt of the Operator's invoice to pay their cost share in proportion to
their interest in the Project. If a party fails to pay its cost share within
such time, the defaulting party's interest will suffer dilution in accordance
with the provisions of paragraph 6 above, but at one and one-half (1 1/2) times
the normal rate. The Operator will be entitled to render invoices for costs of a
Program in advance, provided that such a request for an advance does not exceed
the estimated cost for the next one (1) month's operations.
8. The Operator will be entitled to charge the parties a management fee equal
to fifteen percent (15%) of any Program's budget.
9. The non-Operator will be entitled to enter upon the Property after 24
hours advance notice to the Operator, at the non-Operator's own risk, provided
that such access is not disruptive to the exploration or mining activities of
the Operator.
10. The following provisions shall be incorporated into the JV Agreement and
the parties specifically agree that such provisions shall apply to the Letter of
Intent to which this schedule is attached and forms a part thereof wherein the
term "this Agreement" shall be read as "this Letter of Intent".
(a) Each of the parties hereby covenants and agrees that at any
time upon the request of the other party, do, execute,
acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and
assurances as may be required for the better carrying out and
performance of all the terms of this Agreement.
(b) The representations, warranties and covenants in this
Agreement will survive any closing or advance of funds and,
notwithstanding such closing or advances, will continue in
full force and effect.
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
(c) Any notice required or permitted to be given or delivery
required to be made to any party may be effectively given or
delivered if it is delivered personally or by telecopy at the
addresses or telephone numbers set out above or to such other
address or telephone number as the party entitled to or
receiving such notice may notify the other party as provided
for herein. Delivery shall be deemed to have been received:
(i) the same day if given by personal service or if
transmitted by fax; and
(ii) the fifth business day next following the day of
posting if sent by regular post.
(d) This Agreement will be governed by and be construed in
accordance with the laws of British Columbia.
(e) All disputes arising out of or in connection with this
Agreement, or in respect of any defined legal relationship
associated therewith or derived therefrom, shall be referred
to and finally resolved by arbitration under the rules of the
British Columbia International Commercial Arbitration Centre.
The appointing authority shall be the British Columbia
International Commercial Arbitration Centre and the case shall
be administered by the British Columbia International
Commercial Arbitration Centre in accordance with its
"PROCEDURES FOR CASES UNDER THE BCICAC RULES" at Vancouver,
British Columbia. Any arbitral award or determination rendered
thereunder shall be binding upon the parties and their
respective heirs, executors, administrators and assigns.
(f) This Agreement will be binding upon and enure to the benefit
of the parties hereto and their respective heirs and executors
and successors and assigns as the case may be.
(g) This Agreement constitutes the entire agreement between the
parties and supersedes all prior letters of intent,
agreements, representations, warranties, statements, promises,
information, arrangements and understandings, whether oral or
written, express or implied. The recitals and any schedules
form a part of and are incorporated by reference into this
Agreement.
(h) No modification or amendment to this Agreement may be made
unless agreed to by the parties thereto in writing.
(i) In the event any provision of this Agreement will be deemed
invalid or void, in whole or in part, by any court of
competent jurisdiction, the remaining terms and provisions
will remain in full force and effect.
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
[LOGO]
AMERA
(j) Time is of the essence
(k) This Agreement may be executed in any number of counterparts
with the same effect as if all parties to this Agreement had
signed the same document and all counterparts will be
construed together and will constitute one and the same
instrument and any facsimile signature shall be taken as an
original
AMERA RESOURCES CORPORATION
709 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0
* telephone: 000.000.0000 * facsimile: 604 687.1858
