Exhibit 10.1
MINING LEASE
LEASE AGREEMENT
Nevada Mine Properties II, Inc. (NMP or Lessor) agrees to lease to Pacific
Spirit Inc. (Lessee) the unpatented lode mining claims attach as Exhibit "A",
located in portions of sections 29, 30, and 31, T 31 N, R 38 E, MDB&M, Pershing
County, Nevada (referred to as property), subject to the following conditions:
Recitals:
A. "Effective Date" means June 7, 2001.
B. "Lease Year" means each one (1) year period following the Effective Date
and each anniversary of the Effective Date.
C. WARRANTIES. The Lessor warrants that he is the owner of the lode mining
claims more particularly described in Exhibit A and said claims are free
from all liens and encumbrances.
D. EXPLORATION AND DEVELOPMENT RIGHTS. Lessor will grant the Property to
Lessee for the Lease period with the exclusive right to explore, develop,
and mine the Property for gold, silver, and other valuable minerals.
E. PERFORMANCE REQUIREMENTS / ASSUMPTION OF CLAIM MAINTENANCE. Under
applicable Federal, State and County laws and regulations, Federal, State,
and County annual mining claim maintenance or rental fees are required to
be paid for the unpatented mining claims which constitute all or part of
the Property, beginning with the annual assessment work period of September
1, 2001 to September 1, 2002. Lessee shall timely and properly pay the
Federal, State, and County annual mining claim maintenance or rental fees,
and shall execute and record or file, as applicable, proof of payment of
the Federal, State, and County annual mining maintenance or rental fees and
of Lessor's intention to hold the unpatented mining claims which constitute
the Property. If Lessee does not terminate this Lease before June 7 or any
subsequent Lease Year, Lessee will be obligated either to pay the Federal,
State, and Local annual mining claim maintenance or rental fees for the
Property due that year or to reimburse Lessor for same.
F. AREA OF INTEREST. Any additional claims located or acquired by the Lessee
within one (1) mile from the exterior boundaries of the mining claims
described in Exhibit "A" shall become a part of the leased property and
shall be subject to the terms of this lease as of the Effective Date.
G. SCHEDULE OF MINIMUM PAYMENTS. The Lessee shall pay to the Lessor minimum
payments, which shall be advance payments of the Royalty, of US$5000.00
(five thousand dollars) upon execution of this lease. The Lessee may extend
this lease upon payment of the following:
1. Pay Lessor US$8,000.00 on or before the first anniversary of the
execution of this lease.
2. Pay Lessor US$16,000.00 on or before the second anniversary of
the execution of this lease.
3. Pay Lessor US$24,000.00 on or before the third anniversary of the
execution of this lease.
4. Pay Lessor US$50, 000.00 on or before the fourth anniversary of
the execution of this lease.
5. Each annual payment thereafter shall be US$50,000.00 plus an
annual increase or decrease equivalent to the rate of inflation
designated by the Consumer's Price Index (CPI) for that year with
execution year as base year. Each such payment shall be made on
or before the successive anniversary of the execution of this
lease.
H. BUYOUT. Buyout price is US$5,000,000 (five million dollars) from which
advance royalty payments, made up to the day of the buyout, may be
subtracted from the Buyout price. Lessee will pay Lessor a perpetual
one-half per cent (0.5%) royalty on Net Smelter Returns (as defined below
in Section I. of this document) thereafter.
I. DEFINITION OF NET SMELTER RETURNS. During the term of this Agreement,
Lessee shall pay to Lessor, as a land owner's Production Royalty, a
percentage of the Net Smelter Returns (as defined below) from the sale of
any Valuable Minerals, Ore, and Product mined and sold from the Property.
"Net Smelter Returns" are defined as the gross revenues actually received
by the Lessee from the sales of any Valuable Minerals extracted and
produced from the Property less the following charges:
1. All costs to Lessee of weighing, sampling, determining moisture
content and packaging such material and of loading and transporting it
to the point of sale, including insurance and in-transit security
costs.
2. All smelter costs and all charges and penalties imposed by the
smelter, refinery, or purchaser.
3. Marketing costs and commissions.
4. Not withstanding the foregoing, for purposes of determining the
royalty payable to Lessor on any gold and/or silver produced from the
Property, the price attributed to such gold and/or silver shall be the
price per ounce of gold and/or silver on which the royalty is to be
paid (as the case may be) as quoted on the London Metals Exchange at
the PM fix on the day prior to the date of final settlement from the
smelter, refinery or other buyer of the gold and/or silver on which
the royalty is to be paid (the "Quoted Price"). For purposes of
determining the gross revenues, in the event the Lessee elects not to
sell any portion of the gold and/or silver mined from the Property,
but instead elects to have the final product of any such gold and/or
silver credited to be held for its account with any smelter, refiner,
or broker, such gold and/or silver shall be deemed to have been sold
at the Quoted Price on the day such gold and/or silver is actually
credited to or placed in Lessee's account. The percentage for this
Production Royalty shall be four per cent (4%).
5. Lessor shall be paid the Production Royalty quarterly by certified
check by the Lessee.
J. CONDITIONS OF TERMINATION BY LESSOR. This Lease may be terminated at any
time by the Lessor subject to the following:
1. If Lessee fails to meet the above lease payments, Lessor must give
written notice to Lessee of such default. After receipt of default,
Lessee has 15 days to cure the default.
2. If Lessee fails to make Federal, State, and County maintenance
payments or filing fees at least 15 days prior to due date, Lessee
shall notify Lessor of a possible default. After 10 days, if the
default is not cured Lessor may initiate payment on the claims. Lessee
will be able to cure this default by reimbursing all Federal, State,
and County Payments made by the Lessor plus a 20% penalty within 30
days.
K. CONDITIONS OF TERMINATION BY LESSEE. This Lease may be terminated at any
time by the Lessee subject to the following:
1. Lessee must give written notice 30 days prior to relinquishing the
leased property.
2. In the event Lessee desires to terminate the agreement after June1 of
any year, Lessee shall be responsible for all Federal, State, and
County maintenance and filing fees for the next assessment year
regarding the leased property.
3. Lessee shall deliver to Lessor, in reproducible form, all data
generated or obtained for the leased property, whether factual or
interpretive as defined in section P.
4. Lessee shall quitclaim to Lessors all claims located or acquired by
Lessee within one (1) mile area of interest described in section F.
L. RECLAMATION, COMPLIANCE WITH THE LAW. All exploration and development work
performed by the Lessee during the term of this Agreement shall conform
with the applicable laws and regulations of the state in which the Property
is situated and of the United States of America. Lessee shall be fully
responsible for compliance with all applicable Federal, State, and local
reclamation statutes, regulations, and ordinances relating to such work, at
Lessee's cost, and Lessee shall indemnify and hold harmless Lessor from any
and all claims, assessments, fines, and actions arising from Lessee's
failure to perform the foregoing obligations. Lessee's reclamation
obligation shall survive termination of the Agreement. Lessor agrees to
cooperate with Lessee in Lessee's application for governmental licenses,
permits, and approvals, the costs of which shall be borne by Lessee. Lessee
shall own all governmental licenses, permits, and approvals.
M. LIENS. Lessee shall keep the property free from any and all liens and
encumbrances.
N. TRANSFER, ASSIGNMENT, RIGHT OF FIRST REFUSAL. Either party shall be free to
assign its rights under the detailed agreement to an affiliate company.
They also shall have the right to transfer all or part of their interest in
the Agreement to a third party, but transfers to a third party shall be
subject to a right of first refusal by the Lessor. Assignments permitted
under this paragraph shall not be effective unless and until the permitted
assignee agrees in writing in form and substance acceptable to the
remaining party assuming all of the assigning party's obligations under
this Lease Agreement. The party assigning interest in this lease shall
notify the other party within 15 days of such assignment and all parts of
this agreement will remain in effect.
O. LEASE TERM. The term of this lease is for thirty (30) years, renewable for
an additional thirty (30) years so long as conditions of the lease are met.
P. DATA AND REPORTS. Upon and after execution of the detailed agreement,
Lessor will make available to Lessee all technical data, survey notes or
maps, samples, drilling results including drill logs and reports concerning
the Property which Lessor possesses, or to which it has access, of which it
acquires in the future. Within 60 days after termination of the detailed
agreement, Lessee shall return to Lessor all information of a nature
similar to that described above and developed by Lessee during the term of
the Mining Lease. If requested by Lessor not more than once in any 12
calendar months, Lessee shall submit to Lessor, within 60 days of Lessee's
receipt of such request, an annual progress report describing Lessee's work
upon the Property, the results of such work, and the amounts expended by
Lessee in furtherance thereof to the date of such report.
Q. NOTIFICATION TO LESSOR. All notices and payments from Lessee to Lessor
shall be sent to:
NEVADA MINE PROPERTIES II, Inc.
Attn. Xx. Xxxx Xxxxxxxx
000 Xxxxxx Xx.
Xxxx, XX. 00000 XXX
or any other person Lessor shall designate. If Lessor designates an
alternative person to receive notices and payment, they shall provide
written notice of such to Lessee. All lease payments shall be made in the
form of a check payable to Nevada Mine Properties II, Inc.
R. NOTIFICATION TO LESSEE. All notices from Lessor to Lessee shall be sent to:
Pacific Spirit Inc.
Attn. Xxxxx Xxxxxx, President
11640 - 00 X Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Xxxxxx
or any other person Lessee shall designate. If Lessee designates an
alternative person to receive notices, they shall provide written notice of
such to Lessor.
The parties have executed this Lease Agreement effective as of the Effective
Date.
NEVADA MINE PROPERTIES II, INC.
By /s/ Xxxxxx Elispulos
Title Secretary
Personally appeared before me Xxxxxx Elispulos with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence) and who
acknowledged that he executed the within instrument for the purposes therein
contained.
Witness my hand, at office, this 22nd day of May, 2001.
[SEAL]
/s/ Xxxxxxx XxxXxxxxx
NOTARY PUBLIC
PACIFIC SPIRIT INC.
By /s/ Xxxxx Xxxxxx
Title President
Personally appeared before me Xxxxx Xxxxxx with whom I am personally acquainted
(or proved to me on the basis of satisfactory evidence) and who acknowledged
that he executed the within instrument for the purpose therein contained.
Witness my hand, at office, this 7th day of June, 2001.
/s/ Xxx Xxxxxxx
NOTARY PUBLIC
[SEAL]
EXHIBIT "A"
CLAIM NAMES BLM SERIAL NUMBERS
----------- ------------------
XXX XXX #0 XXX 000000
DEL ORO #70 XXX 000000
XXX XXX #00 XXX 000000
NP #127 NMC 724576
NP #129 NMC 724578
NP #000 XXX 000000
