EXHIBIT 4.127
METEOR LAKE PROPERTY
This Agreement is dated for reference the 1st day of March 2007.
BETWEEN:
CJP EXPLORATION INC. (as to 50%)
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ MINES LIMITED (as to 50%)
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(the above hereinafter referred to as the "Optionors")
BOTH OF THE FIRST PART
AND:
KLONDIKE GOLD CORP. (as to 20%)
#▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
GOLDEN CHALICE RESOURCES INC. (as to 20%)
#▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ GOLD CORP. (as to 20%)
#▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
HASTINGS MANAGEMENT CORP. (as to 40%)
#▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(the above hereinafter collectively referred to as the "Optionee")
COLLECTIVELY OF THE SECOND PART
WITNESSES THAT WHEREAS Optionors are the recorded and beneficial owners of a
100% legal and beneficial interest in and to certain mining claims situated in
Ontario, more particularly described in Schedule "A" attached hereto
(collectively the "Property");
AND WHEREAS the Optionors desire to grant and the Optionee is desirous of
obtaining an option to acquire a 100% undivided interest in and to the Property
upon terms and subject to the conditions herein contained.
NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements herein contained, the parties agree as follows:
1. GRANT OF OPTION
The Optionors grant to the Optionee the sole, exclusive and irrevocable right
and option (the "Option") to acquire an undivided 100% right, title and interest
in and to the Property, in accordance with the terms of this Agreement.
2. OPTION ONLY
This is an option only and except as specifically provided otherwise, nothing
herein contained shall be construed as obligating the Optionee to do any acts or
make any payments hereunder and any act or acts, or payment or payments as shall
be made hereunder shall not be construed as obligating the Optionee to do any
further act or make any further payment. If the Option is terminated before the
Option is exercised, the Optionee shall not be bound thereafter in debt, damages
or otherwise under this Agreement, except as provided for in this Agreement, and
all payments theretofore paid by the Optionee shall be retained by the Optionors
for their own use absolutely.
3. TERMS OF THE OPTION
In order to maintain the Option in good standing and earn a 100% right, title
and undivided interest in and to the Property, the Optionee, subject to
paragraph 2, shall:
(a) pay to the Optionors $20,000 upon receipt of regulatory
approval;
(b) issue to the Optionors 100,000 common shares of Klondike Gold
Corp. upon receipt of regulatory approval; and
(c) issue to the Optionors a further 100,000 common shares of
Klondike Gold Corp. 12 months from the date of regulatory
approval.
4. EXERCISE OF THE OPTION
If the Optionee has paid $20,000 and issued 200,000 common shares of Klondike
Gold Corp. to the Optionors, the Optionee shall be deemed to have exercised the
Option and will have acquired an undivided 100% right, title and interest in and
to the Property.
5. OPERATOR
During the term of the Option, Hastings Management Corp. shall be the operators
for purposes of developing and executing exploration programs.
6. ROYALTY INTEREST
The Optionors shall be entitled to receive and the Optionee shall pay to the
Optionors a royalty equal to 1% of the net smelter returns (the "Royalty
Interest") calculated and payable from the Property in accordance with the
provisions of Schedule "B" attached hereto.
The Optionee may at any time purchase half of the Royalty Interest from the
Optionors for $250,000, thereby leaving the Optionors with a 0.5% Royalty
Interest.
7. RIGHT OF ENTRY
During the currency of the Option the Optionee and its employees, agents and any
person duly authorized by the Optionors shall have the sole and exclusive right
to:
(a) enter in, under and upon the Property;
(b) have exclusive and quiet possession thereof subject to the
rights of the Optionor hereunder;
(c) do such prospecting, exploration, development or other mining
work thereon and thereunder as the Optionee in its sole
discretion may consider desirable;
(d) bring upon and erect upon the Property such mining facilities
as the Optionee may consider advisable; and
(e) remove from the Property and dispose of reasonable quantities
of ores, minerals and metals for the purposes of sampling,
obtaining assays or making other tests.
8. NOTICE OF DEFAULT AND TERMINATION BY OPTIONORS
If the Optionee should be in default in making any payments or performing any
other of its obligations hereunder, the Optionors may give written notice to the
Optionee specifying the default. The Optionee shall not lose any rights granted
under this Agreement so long as, within thirty (30) days after the giving of
such notice of default by the Optionors, the Optionee shall cure the specified
default. If the Optionee fails to cure the default within the thirty (30) day
period, this Agreement shall terminate. Upon termination of this Agreement by
the Optionors, the provisions of the paragraph in this Agreement entitled
"Termination Prior to Acquisition of Interest" shall apply.
9. NO PRODUCTION OBLIGATION
The Optionee shall be under no obligation whatsoever to place the Property into
production.
10. EXCLUSION OF PROPERTY
The Optionee shall have the right at any time and from time to time to elect to
exclude from this Agreement any portion of the Property by not less than thirty
(30) days prior written notice to the Optionors of this election; provided that
any portion of the Property so excluded shall be in good standing, free and
clear of all liens, charges and encumbrances, and provided further that the
Optionee, if requested by the Optionors in writing, shall deliver to the
Optionors recorded transfers of any mineral claims and other property interests
which are included in the portion of the Property so excluded in favour of the
Optionors. Upon termination of a portion of the
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Property, the terminated portion of the Property shall be subject to the
provisions of the paragraph in this Agreement entitled "Termination Prior to
Acquisition of Interest".
11. COVENANTS OF THE OPTIONEE
During the currency of this Agreement, the Optionee shall:
(a) keep the Property in good standing by doing and filing of all
assessment work or by making payments in lieu thereof, and by
the doing all other acts and things and making all other
payments which may be necessary in that regard;
(b) permit the Optionors, or their representative, duly authorized
by it in writing, at their own risk and expense, access to the
Property at all reasonable times and to all records prepared
by the Optionee in connection with work done or with respect
to the Property, provided the Optionors shall not, without the
prior written consent of the Optionee, such consent not to be
unreasonably withheld, disclose any information obtained by it
or communicated to it, to any third party except as may be
required by regulatory bodies having jurisdiction over it; and
(c) conduct all work on or with respect to the Property in a
careful and workmanlike manner and in compliance with the
applicable laws of the jurisdiction in which the Property is
located and indemnify and save the Optionors harmless from any
and all claims, suits or actions made or brought against the
Optionors as a result of work done by the Optionee on or with
respect to the Property.
12. COVENANTS OF THE OPTIONORS
During the currency of this Agreement, the Optionors covenant and agree with the
Optionee to:
(a) not do or permit or suffer to be done any act or thing which
would or might in any way adversely affect the rights of the
Optionee hereunder;
(b) make available to the Optionee and its representatives all
records and files relating to the Property in its possession
and permit the Optionee and its representatives to take
abstracts therefrom and make copies thereof;
(c) co-operate with the Optionee in obtaining any water
appropriation license, surface licenses and any other rights
or licenses on or related to the Property, the Optionee deems
necessary or desirable; and
(d) promptly provide the Optionee with any and all notices and
correspondence from government or regulatory agencies in
respect of the Property.
13. REPRESENTATIONS AND WARRANTIES OF THE OPTIONORS
The Optionors hereby represent and warrant to the Optionee that:
(a) the Optionors are the legal and beneficial owner of the
Property;
(b) the Property consists of those mining claims more particularly
described in Schedule "A", all of which were duly and validly
located and recorded in accordance with the applicable laws of
Ontario and are valid and subsisting as of the date of
execution and delivery of this Agreement;
(c) the Property is in good standing, free and clear of all liens,
charges and encumbrances;
(d) there are no pending or threatened actions, suits, claims or
proceedings regarding the Property; and
(e) the Optionors have the exclusive right and authority to enter
into this Agreement and to dispose of the Property in
accordance with the terms hereof, and that no other person,
firm or corporation has any proprietary or other interest in
the same.
The representations and warranties of the Optionors herein before set out, form
a part of this Agreement and are conditions upon which the Optionee has relied
on in entering into this Agreement and shall survive the exercise of the Option
by the Optionee. The Optionors shall indemnify and save the Optionee harmless
from all loss, damage, costs, actions and suits arising out of or in connection
with any breach of any representation, warranty, covenant, agreement or
condition contained in this Agreement. The Optionors acknowledge and agree that
the Optionee has entered into this Agreement relying on the warranties and
representations and other terms and conditions of this Agreement and that no
information which is now known or which may hereafter become known to the
Optionee or its officers, directors or professional advisors shall limit or
extinguish the right to indemnity hereunder. The Optionee may deduct the amount
of any such loss or damage from any amounts payable by it to the Optionors
hereunder.
3
14. TERMINATION PRIOR TO ACQUISITION OF INTEREST
If the Option is terminated, or if this Agreement is terminated prior to the
exercise of the Option by the Optionee, the Optionee shall return to the
Optionors forthwith exclusive and quiet possession of the Property, in good
standing, and free and clear of all liens, charges and encumbrances for a period
of one year.
15. ADDITIONAL TERMINATION
In addition to any other termination provisions contained in this Agreement, the
Optionee shall at any time have the right to terminate its rights and future
obligations under this Agreement by giving notice in writing of such termination
to the Optionors, and in the event of such termination, the Optionee shall not
earn any interest in the Property, and this Agreement, save and except for the
provisions of the paragraph in this Agreement entitled "Termination Prior to
Acquisition of Interest" hereof, shall be of no further force and effect.
16. FORCE MAJEURE
If the Optionee is prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lockouts, labour shortages, power shortages,
fires, wars, acts of God, governmental regulations restricting normal operations
or any other reason or reasons beyond the control of the Optionee, the time
limited for the performance of the various provisions of this Agreement as set
out above shall be extended by a period of time equal in length to the period of
such prevention and delay. The Optionee, insofar as is possible, shall promptly
give written notice to the Optionors of the particulars of the reasons for any
prevention or delay under this paragraph, and shall take all reasonable steps to
remove the cause of such prevention or delay and shall give written notice to
the Optionors as soon as such cause ceases to subsist.
17. NOTICE
Any notice required to be given under this Agreement shall be deemed to be well
and sufficiently given if delivered or if mailed by registered mail in Canada,
(save and except during the period of any interruption in the normal postal
service within Canada) or sent by facsimile transfer to either party at the
addresses first set out above and any notice given as aforesaid shall be deemed
to have been given, if delivered or sent by facsimile transfer, when delivered
or faxed, or if by mail, on the third business day after the date sent by mail .
Either party may from time to time by notice in writing change its address for
the purpose of this paragraph.
18. FURTHER ASSURANCES
The parties hereto agree to execute all such further or other assurances and
documents and to do or cause to be done all acts necessary to implement and
carry into effect the provisions and intent of this Agreement.
19. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
20. TITLES
The titles to the respective paragraphs hereof shall not be deemed to form part
of this Agreement but shall be regarded as having been used for convenience of
reference only.
21. SCHEDULES
The Schedules to this Agreement shall be construed with and as an integral part
of this Agreement to the same extent as if they were contained in the body
hereof.
22. VOID OR INVALID PROVISION
If any term, provision, covenant or condition of this Agreement, or any
application thereof, should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all provisions, covenants and conditions of this
Agreement, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and in no way be affected, impaired or
invalidated thereby.
23. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors, assigns, heirs, executors or
administrators as the case may be.
24. APPROVALS
The Optionee and the Optionors hereby acknowledge that this Agreement shall be
subject to all necessary regulatory approvals.
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25. ARBITRATION
If any question, difference or dispute shall arise between the parties or any of
them in respect of any matter arising under or in connection with the subject
matter of this Agreement, or in relation to the construction hereof, the same
shall be determined by the award of a single arbitrator under the Commercial
Arbitration Act of the Province of Ontario, and the decision of the arbitrator
shall in all respects be conclusive and binding upon all the parties.
26. ASSIGNMENT
This Agreement may be assigned by the Optionee at its sole discretion provided
any transferee agrees to be bound by the terms hereof.
27. AFTER-ACQUIRED PROPERTY
The area which is included within one kilometer of the outer-most boundary of
the Property shall be deemed to be an area of interest ("Area of Interest").
During the term of this Agreement, commencing on the date hereof, any mineral
claim, lease or other mineral right or interest acquired by or on behalf of the
Optionee, the Optionors or their assigns, by staking within the Area of Interest
shall be deemed to have been acquired on behalf of and for the benefit of the
parties pursuant to the terms of this Agreement. This Agreement shall not extend
beyond the Area of Interest and shall not affect mineral properties which the
parties now hold or hereafter stake adjacent to the Area of Interest.
28. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Ontario.
29. PRIOR AGREEMENTS
This Agreement contains the entire agreement between the parties in respect of
the Property and supersedes all prior agreements between the parties hereto with
respect to the Property, which said prior agreements shall be deemed to be null
and void upon the execution hereof.
30. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts with the same
effect as if all parties had signed the same document.
IN WITNESS WHEREOF the parties hereto have executed these presents as of the day
and year first above written.
CJP EXPLORATION INC. )
)
)
Per: BY: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ )
---------------------------------- )
▇▇▇▇▇ ▇▇▇▇▇▇▇ )
▇▇▇▇▇▇ ▇▇▇▇ MINES LIMITED )
)
)
Per: BY: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
---------------------------------- )
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President )
5
KLONDIKE GOLD CORP. )
)
)
Per: BY: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
---------------------------------- )
Authorized Signatory )
)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
----------------------------------------- )
Name )
)
PRESIDENT )
----------------------------------------- )
Title )
GOLDEN CHALICE RESOURCES INC. )
)
)
Per: BY: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
---------------------------------- )
Authorized Signatory )
)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
----------------------------------------- )
Name )
)
CHAIRMAN )
----------------------------------------- )
Title )
▇▇▇▇▇▇ GOLD CORP. )
)
)
Per: BY: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
---------------------------------- )
Authorized Signatory )
)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
----------------------------------------- )
Name )
)
PRESIDENT )
----------------------------------------- )
Title )
HASTINGS MANAGEMENT CORP. )
)
)
Per: BY: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
---------------------------------- )
Authorized Signatory )
)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
----------------------------------------- )
Name )
)
PRESIDENT )
----------------------------------------- )
Title )
6
SCHEDULE "A"
REFERRED TO IN THE AGRT DATED FOR REFERENCE THE 1st DAY OF MARCH 2007 BETWEEN
CJP EXPLORATION INC., ▇▇▇▇▇▇ ▇▇▇▇ MINES LIMITED, KLONDIKE GOLD CORP., GOLDEN
CHALICE RESOURCES INC., ▇▇▇▇▇▇ GOLD CORP. AND HASTINGS MANAGEMENT CORP.
--------------------------------------------------------------------------------
The Property consists of the following claims in the Larder Lake and Sudbury
Mining Divisions, Ontario. The following are the townships, claim numbers,
number of units, the recording dates and the expiry dates:
------------- -------------- -------------- ----------------- ------------------
TOWNSHIP CLAIM NUMBER # OF UNITS RECORDING DATE EXPIRY DATE
------------- -------------- -------------- ----------------- ------------------
Moffat L-3013247 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217036 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217037 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217038 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217039 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217040 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217042 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217043 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇▇ S-4217044 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇▇ S-4217045 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇▇ S-4217046 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇▇ S-4217047 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217048 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217049 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217050 2 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217236 15 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217237 15 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217238 9 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217239 10 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217240 16 February 20, 2007 February 20, 2009
--------------------------------------------------------------------------------
Moffat L-4217241 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217242 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217243 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217244 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217245 16 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217246 12 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217247 8 February 21, 2007 February 21, 2009
------------- -------------- -------------- ----------------- ------------------
▇▇▇▇▇▇ S-4217248 12 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217250 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217251 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217252 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217253 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217254 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
Moffat L-4217255 16 February 20, 2007 February 20, 2009
------------- -------------- -------------- ----------------- ------------------
TOTAL UNITS 499
------------- -------------- -------------- ----------------- ------------------
7
APPENDIX "B"
REFERRED TO IN THE AGREEMENT DATED FOR REFERENCE THE 1st DAY OF MARCH 2007
BETWEEN CJP EXPLORATION INC., ▇▇▇▇▇▇ ▇▇▇▇ MINES LIMITED, KLONDIKE GOLD CORP.,
GOLDEN CHALICE RESOURCES INC., ▇▇▇▇▇▇ GOLD CORP. AND HASTINGS MANAGEMENT CORP.
--------------------------------------------------------------------------------
NET SMELTER RETURNS
1. For all diamonds, gems and other precious and semi-precious stones
("Stone Products") mined or produced from the Property, the Optionee
shall pay to the Vendor a Royalty equal to a percentage of the net
sales returns ("NSAR") realized from the sale or disposition of the
Stone Products.
2. For all metals, bullion or concentrates ("Other Products") mined or
produced from the Property, the Optionee shall pay to the Vendor a
Royalty equal to a percentage of the net smelter returns ("NSMR")
realized or deemed to be realized as hereinafter provided, from the
sale or disposition of the Other Products.
3. The aforementioned percentage of the NSAR and percentage of the NSMR
shall be that determined in accordance with the provisions of Section 4
of the Agreement to which this Schedule B forms a part; and in the
calculation of the Royalty, such percentage is applied to 100% of the
NSAR or NSMR, as the case may be, regardless of dilution of the
Optionee's working interest or entitlement with respect to the
Agreement, the Property or the Products.
4. For the purposes of this Schedule B, the term "Products" shall be
interpreted as a collective reference to Stone Products and Other
Products and the term "Royalty" shall be interpreted as a collective
reference to the NSAR Royalty and the NSMR Royalty.
5. Net Sales Returns Royalty - Stone Products
a. Net sales returns means the gross proceeds from the sale or
disposition of Stone Products to an independent purchaser,
after deducting therefrom the cost of Valuation, Sorting,
Shipping and Insurance in connection with the Stone Products
as well as any sales, excise, production, export and other
duties, levies, assessments and taxes (except income taxes)
payable on the production or sale of Stone Products (but not
income taxes), and for the purposes hereof:
i. "Valuation" means the establishing of a value for
each lot or group of sorted Stone Products for
purposes of reference when negotiating with a
potential purchaser of the same;
ii. "Sorting" means separation of Stone Products from
waste materials and dividing them into groups
according to quality, size, or other characteristics,
and then the division of such groups into appropriate
lots or groups for valuing and/or sale, it being
acknowledged that in the case of gem quality Stone
Products, a group or lot may be a single stone;
iii. "Shipping" means all methods of transportation or
places of storage of Stone Products from the moment
they leave the Property until the passing of title
thereto or risks therefore (whichever is the later)
to an independent purchaser, including, without
limitation, any cost that may be incurred by reason
of such methods or places used or any sorting or
valuation facilities being situated off the Property;
and
iv. "Insurance" means all insurance that the Optionee
considers advisable to protect all or part of the
Stone Products in the possession or control of the
Optionee (including, without limitation, during
shipping) until the passing of title thereto or risks
therefore (whichever is the later) and including,
without limitation, the insurance or bonding of any
person who does or may come into contact with any
such Stone Products at any point during the
operations of the Optionee whether such person is an
employee of the Optionee or otherwise.
b. If Stone Products are sold to any entity with which the
Optionee does not deal at arm's length, the Stone Products
shall for the purposes hereof be deemed to have been sold at
prices determined by an independent valuator chosen by the
Vendor.
8
c. the Optionee shall not have the right to commingle Stone
Products produced from the Property with similar products
produced from other properties.
6. Net Smelter Returns Royalty - Other Products
a. Net smelter returns means the gross proceeds from the sale or
disposition of Other Products removed from the Property after
deducting the costs of treatment, tolling, smelting, refining
and minting of such products and all costs associated
therewith such as transporting, insuring, handling, weighing,
sampling, assaying and marketing, as well as all penalties,
representation charges, referee's fees and expenses, import
taxes and export taxes; and the term "smelter" shall mean
conventional smelters as well as any other type of production
plant used in lieu of a conventional smelter to reduce
concentrates.
b. If smelting, refining, treatment, assay or sampling of Other
Products is performed by facilities owned or controlled by the
Optionee or any of its affiliates, all charges, costs and
penalties therefore to be deducted pursuant to the foregoing
paragraph shall be equal to and not exceed actual costs
incurred by the Optionee in carrying out such processes and
shall not exceed such amounts which the Optionee would have
incurred if such operations were conducted at facilities
operating at arm's length to the Optionee, and which were then
offering comparable services for comparable quantities and
quality of Other Products.
c. The Optionee shall have the right to commingle Other Products
produced from the Property with metals, bullion or
concentrates produced from other properties. Before
commingling, Other Products from the Property shall be
weighed, sampled, assayed, measured or gauged by the Optionee
in accordance with sound mining and metallurgical practices
for moisture, penalty substances and payable content. Records
shall be kept by the Optionee for a reasonable time showing
weights, moisture and assays of payable content. Prior to
commingling, the Optionee shall give thirty (30) days notice
to the Vendor specifying its decision to commingle and
outlining the procedures it proposes to follow.
7. General
a. Royalties shall accrue at the time of sale or deemed sale, as
applicable, and they shall become due and payable in cash on a
calendar quarter basis, on the twentieth (20th) day of the
month next following the calendar quarter in which they
accrue.
b. At the time of making each Royalty payment to the Vendor, the
Optionee shall provide the Vendor with a certificate of a
senior officer of the Optionee certifying as to the accuracy
of the calculations of the Royalty payment and setting out the
method of the calculation thereof to which shall be attached a
true copy of the related smelter or sales receipt or receipts.
c. Net sales returns and net smelter returns upon the respective
Products shall be calculated exclusively as provided herein,
and the Royalty computed thereon shall be determined without
regard to any "hedging", "forward", "futures" or comparable
sales (collectively referred to as "future trading") of such
Products by or on behalf of the Optionee. The Vendor shall not
be entitled to any benefit of or be subject to any loss
attributable to such future trading by the Optionee.
d. The Optionee shall cause to be kept proper books of account,
records and supporting materials covering all matters relevant
to the calculation of Royalties payable to the Vendor, and the
reasonable verification thereof; and the Vendor shall have,
from time to time, the unfettered right, during regular
business hours and on rea sonable notice, to carry out at its
sole cost and expense an audit by established independent
professionals chosen by the Vendor, of the methodology and
manner of calculating all Royalty payments hereunder and the
Optionee shall provide, during regular business hours and on
reasonable notice, unrestricted access to its books, accounts,
records, vouchers, smelter settlements, sales receipts and
related documentation for this purpose. Should there be any
difference in the amount of the Royalty payment or payments
which are ultimately determined by the process to be in the
Vendor's favour, which exceed three (3%) percent of the amount
of the Royalty paid to the Vendor, then the cost of said
audit, to the extent reasonable, shall be reimbursed to the
Vendor by the Optionee.
e. Any dispute relating to the quantum or methodology of
calculating all Royalties payable hereunder shall be settled
by arbitration pursuant to the provisions of the Agreement.
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