EXHIBIT 10.6
EXPLORATION LICENSE, MINERAL PURCHASE OPTION AND LEASE AGREEMENT
THIS EXPLORATION LICENSE, MINERAL PURCHASE OPTION AND LEASE AGREEMENT
is made this 7th day of OCTOBER, 1999 by and between Xxxxxxx X. Xxxxx Equity
Trust and Xxxxx X. Xxxxx ("Owners"); and Delta International Mining and
Exploration, Inc. ("Delta").
A. Owners own and possesses Township 16 North, Range 24 East Section
19: NE1/4; NE1/4SW1/4; NW1/4SE1/4; containing 240 acres situated in Petroleum
County, Montana. All ores, minerals, mineral rights, and the right to explore
for, mine, remove the same and so much of the water rights as will be required
or with the right to drill a water well, with ingress and egress over adjoining
lands now owned by Owners shall be referred to collectively as "Mineral
Property" and the remainder of the surface, water rights and improvements,
easements, licenses, rights-of-way and other interests appurtenant thereto,
shall be referred to collectively as the "Surface".
B. The parties now wish to enter into an agreement giving Delta an
exclusive license to explore the Mineral Property and the exclusive option to
purchase the Mineral Property.
THEREFORE, the parties have agreed as follows.
SECTION ONE
EXPLORATION LICENSE
1.1 GRANT OF EXPLORATION LICENSE. Owners hereby grant to Delta the
exclusive right and option to enter upon and explore the Mineral Property. The
Exploration License shall have a term of three (3) years commencing on execution
of this agreement by both parties (the "Effective Date"). During the term of the
license, Delta shall have the right to undertake geological, geophysical, and
geochemical examinations of the Mineral Property; to sample the Mineral Property
by means of pits, trenches, and drilling by any means; and to take bulk samples
from the Mineral Property for the purpose of conducting mineralogical tests,
etc. However, Delta shall not commence mining activities on the Mineral Property
unless it exercises its option to purchase set forth in Section 2 below.
1.2 PAYMENTS FOR EXPLORATION LICENSE. In consideration of this License,
Delta shall pay Owners the sum of Three Thousand Dollars ($3,000.00) upon
execution of this agreement.
1.3 DELIVERY OF DATA. Following execution of this Agreement, Owners
shall allow Delta to review and copy (at Delta's cost) all data and reports, if
any, in the possession of Owners.
1.4 TERMINATION OF EXPLORATION LICENSE. This exploration license shall
terminate three (3) years from the Effective date, unless extended by mutual
agreement of the parties. Delta shall have the right to terminate the License at
any time and shall, upon delivery of a termination notice to Owners, be relieved
of all further obligations after termination date.
1.5 WORK COMMITMENT. The payment set forth in Section 1.2 above shall
be in lieu of any work commitment on the Mineral Property, and Delta shall have
no obligation, express or implied, to explore, develop, or mine the Mineral
Property.
1.6 ENVIRONMENTAL LIABILITIES. Owners shall remain solely liable and
responsible for all environmental conditions and reclamation responsibilities
which arose prior to the execution of this Agreement. Delta shall have
responsibility for all environmental conditions and reclamation responsibilities
arising from Delta's activities on the Surface after execution of this
Agreement.
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SECTION TWO
OPTION TO LEASE
2.1 GRANT OF OPTION. In consideration of the payment made in Section
1.2, Owner hereby grants to Delta the exclusive right and option to Purchase
Owners' ownership interest, in and to all mineral interests, as defined in "A"
above, and Lease so much of the Surface as needed and/or required for the sum of
One Hundred Fifty Thousand Dollars ($150,000.00) The option shall have a term of
five (5) years unless sooner terminated or canceled as hereinafter provided, and
the Surface Lease shall run for 5 years or so long after the end of such term as
there is production from the Mineral Property. The Lease shall commence on the
date Delta gives Owners' notice of execution of Option to Purchase and makes a
payment of Five Thousand Dollars ($5,000.00). In order to maintain the option in
effect, Delta shall make the following annual option payments to owners:
Anniversary of Option Date Option Payment
-------------------------- --------------
1 $ 10,000.00
2 $ 15,000.00
3 $ 25,000.00
4 $ 35,000.00
5 $ 60,000.00
2.2 EXERCISE OF OPTION. Delta shall elect (a) to terminate this
Agreement and relinquish the Mineral Property and Surface to Owners in
accordance with Section 6.1 below, or (b) to exercise its option and purchase
the Mineral Property for the price set forth in Section 2.1 and Lease so much of
the Surface as is needed and/or required. During the term of the 5 year Option,
if Delta elects to purchase the Mineral Property, the parties shall open an
escrow account and proceed to complete the sales transaction within sixty (60)
days following Delta's election. Owners shall deposit a Warranty Deed into the
escrow account conveying the Mineral Property to Delta, and Delta shall deposit
the purchase price in to escrow. Upon deposit of both the deed and purchase
payment, the deed shall be released and recorded, and the initial payment shall
be delivered to owners. Delta shall bear all of the costs of escrow.
The parties acknowledge that Delta shall have the right to terminate
the option at any time in accordance with Section 6 below.
SECTION THREE
CONDUCT OF OPERATIONS
3.1 RIGHT TO EXPLORE. Following the execution of this Agreement, Delta
shall have the right to make geological investigations and surveys, to drill on
the Surface by any means, and to have all the rights and privileges incident to
Owner's ownership of the Mineral Property. However, Delta shall not commence
development or mining operations on the Mineral Property unless it has executed
the option to purchase the Mineral Property in accordance with Section 2 above.
3.2 CONDUCT OF WORK. Delta shall perform its activities on the Mineral
Property in accordance with good mining practices, shall comply with the
applicable laws and regulations relating to the performance of exploration
operations on the Mineral Property, and shall comply with the applicable
worker's compensation laws of the State of Montana.
3.3 LIABILITY. During the term of the Agreement, Delta shall indemnify
and hold Owner harmless from any claims, demands, liabilities or liens arising
out of Delta's activities on the Mineral Property.
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3.4 LIENS. Delta shall keep the Mineral Property free and clear from
any and all mechanics' or laborers' liens arising from labor performed on or
material furnished to the Mineral Property at Delta's request.
3.5 INSTALLATION OF EQUIPMENT. Delta may install, maintain, replace,
and remove during the term of this Agreement any and all machinery, equipment,
tools, and facilities which it may desire to use in connection with its
exploration activities on the Mineral Property. Upon termination of this
Agreement for any reason, Delta shall have a period of ninety (90) days
following such termination during which it may remove all or part of the above
items at its sole cost and expense. Any equipment remaining on the Mineral
Property after ninety (90) days shall become property of Owners.
3.6 ACQUISITION OF PERMITS. Delta shall acquire all federal, state and
county permits required for its operations. In the event that Delta is required
to post a reclamation bond, the bond will revert to Delta upon satisfactory
completion of the reclamation program.
SECTION FOUR
INSPECTION BY OWNER
During the term of this Agreement, Owner, or their authorized agents or
representatives, shall be permitted to enter upon the Mineral Property for the
purpose of inspection. Owners shall enter upon the Mineral Property at their own
risk and so not to hinder unreasonably the operations of Delta. Owners shall
indemnify and hold Delta harmless from any damage, claim, or demand by reason of
injury to Owners or their agents or representatives on the Mineral Property or
the approaches thereto.
SECTION FIVE
TAXES
Delta shall pay all taxes levied or assessed upon any improvements
placed on the Mineral Property by Delta. Upon termination of this Agreement for
any reason, taxes shall be paid by Delta for the remaining portion of the
calender year. However, Owner shall not be liable for taxes on any tools,
equipment, machinery, facilities, or improvements placed upon the Surface unless
Delta fails to remove them within the time provided by this Agreement.
SECTION SIX
TERMINATION AND DEFAULT
6.1 TERMINATION. Delta shall have the right to terminate this Agreement
at its sole discretion at any time upon written notice to Owners. Upon
termination, Owners shall retain all payments previously made as liquidated
damages and this Agreement shall cease and terminate. Delta will also deliver a
Quitclaim Deed to Owners.
6.2 DEFAULT. If Delta fails to perform its obligations under this
Agreement and in particular fails to make any payment due to Owners hereunder,
Owners may declare Delta in default by giving Delta written notice of default
which specifies the obligation(s) which Delta has failed to perform. If Delta
fails to remedy or satisfactorily respond to a notice of default within sixty
(60) days, Owners may terminate this Agreement and Delta shall peaceably
surrender possession of the Mineral Property to Owners. Notice of termination
shall be in writing and served in accordance with this Agreement.
6.3 OBLIGATIONS FOLLOWING TERMINATION. In the event of voluntary or
involuntary termination, Delta shall surrender possession of the Mineral
Property to the Owners and shall have no further liability or obligation under
this Agreement except for its obligation (1) to pay its apportioned share of
taxes, as provided for in Section Five, (2) to pay the cost of removal of all
equipment, (3) to fulfill its reclamation responsibility, and (4) to satisfy any
accrued obligations or liabilities, and (5) to satisfy any other obligation
imposed by this agreement or by law.
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F. Upon termination of this Agreement, except
termination upon Delta's exercise of the Option,
Delta will provide a copy of all drilling logs,
assays, maps and other factual data which Delta has
prepared in connection with its exploration and
development of the Mineral Property under this
Agreement.
SECTION SEVEN
NOTICES AND PAYMENTS
7.1 NOTICES. All notices to Delta or Owners shall be in writing and
shall be sent certified or registered mail, return receipt requested, to the
addresses below. Notice of any change in address shall be given in the same
manner.
TO Owners: Xxxxxxx & Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxxx Xx.
Xxxxxxxx, XX 00000
TO Delta: Xxxxx X. Xxxxxxxxx, Director
Delta International Mining and Exploration, Inc.
X.X. Xxx 0000
Xxxxxxxx, XX 00000
7.2 PAYMENTS. All payments shall be in U.S. currency payable to Owners
at the address above.
SECTION EIGHT
ASSIGNMENT
Delta may assign this Agreement at any time, in whole or in part, upon
the prior notification to Owners. Owners, prior to conveying their interest
under this Agreement to any other party, shall first offer Delta a 60-day
opportunity to acquire Owners' interests on the same terms and conditions
offered by a third party
SECTION NINE
WARRANTY OF TITLE
9.1 WARRANTY. Owner warrants and represents that they are the owners of
the Mineral Property and Surface as described; that Owners have created no Liens
or encumbrances affecting the Mineral Property; and that Owners have and will
continue to have the right to commit the Mineral Property and Surface to this
Agreement.
9.2 EXAMINATION OF TITLE DOCUMENTS. Promptly after execution of the
Option to Purchase section of this Agreement, Owners shall deliver to Delta
available copies of all documents bearing upon Owners' title, interest, and
ownership in the Mineral Property. Delta may then undertake such further
investigation of the title and status as Delta shall deem necessary. If that
investigation should reveal defects in the title, Delta agrees to proceed
forthwith to cure the title defects to their own satisfaction.
9.3 ADDITIONAL INTEREST. If Owners acquire an interest in the mineral
estate, which is greater than the estate therein at the signing of this
Agreement, Delta shall proportionately increase the terms of this agreement,
upon receipt of documents officially indicating such increase in ownership of
the mineral estate, including but not limited to, any and all mineral royalties.
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SECTION TEN
MISCELLANEOUS PROVISIONS
10.1 BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto, their respective heirs, executors,
administrators, successors, and assigns.
10.2 APPLICABLE LAW. The terms and provisions of this Agreement shall
be interpreted in accordance with the laws of the State of Montana.
10.3 ENTIRE AGREEMENT. This Agreement terminates and replaces all prior
agreements, either written, oral or implied, between the parties hereto, and
constitutes the entire agreement between the parties.
10.4 RECORDING MEMORANDUM OF AGREEMENT. The parties hereto agree to
execute a Memorandum of this Agreement (short form) for the purpose of recording
same in the records of Petroleum County, Montana so as to give public notice,
pursuant to the laws of the State of Montana, of the existence of this
Agreement.
10.5 VOID OR INVALID PROVISIONS. 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
there of not held invalid, void or unenforceable, shall continue in full force
and effect and shall in no way be affected, impaired, or invalidated thereby.
10.6 TIME OF THE ESSENCE. Time is of the essence of this Agreement and
each and every part thereof.
10.7 CONFIDENTIALITY. All reports and data provided by Delta to Owners
shall be held in strictest confidence, and Owners shall not disclose such
information without Delta's prior written consent.
SECTION ELEVEN
SURFACE OWNER
11.1 SURFACE OWNER. The Surface Owner now wishes to enter into this
agreement giving Delta the exclusive right to Lease so much of the surface as is
needed and/or required to explore for, mine, produce and remove the Mineral
Property, as defined above in A. In consideration for the right to use so much
of the surface as is needed and/or required, Delta will pay Surface Owners
$20.00 per acre per year for grazing land and $50.00 per acre per year for crop
land taken out of production until the time Delta reclaims the land to its
original productivity. Delta also agrees to pay Surface Owners $1,000.00 per
acre for crop land and $500.00 per acre for grazing land as compensation for any
land taken out of permanent grazing or farming production.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
Owners:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
----------------------------------- ------------------------------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxxx
Delta International Mining and Exploration, Inc.
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxxx, Director
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STATE OF MONTANA )
)ss:
COUNTY OF FERGUS )
On this 7th day of OCTOBER, in the year 1999, before me, a Notary
Public in and for said state, personally appeared Xxxxx X. Xxxxxxxxx, who is
Director of Delta International Mining and Exploration, Inc., personally known
(or proved) to me to be the person who executed the above instrument, and
acknowledged to me that he executed the same for purposes stated therein.
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Notary Public
My Commission Expires Nov. 15, 0000
XXXXX XX XXXXXXX )
)ss:
COUNTY OF FERGUS )
On this 7th day of OCTOBER, in the year 1999, before me, a Notary
Public in and for said state, personally appeared Xxxxxxx X. Xxxxx, who is the
Trustee of the Xxxxxxx X. Xxxxx Equity Trust, personally known (or proved) to me
to be the person who executed the above instrument, and acknowledged to me that
he executed the same for purposes stated therein.
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Notary Public
My Commission Expires Nov. 15, 0000
XXXXX XX XXXXXXX )
)ss:
COUNTY OF FERGUS )
On this 7th day of OCTOBER, in the year 1999, before me, a Notary
Public in and for the county of FERGUS , State of Montana, duly commissioned and
sworn, personally appeared Xxxxx X. Xxxxx, who acknowledged to me that he
executed the above Mining Exploration and Option Agreement.
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Notary Public
My Commission Expires Nov. 15, 2002
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