EXHIBIT 10.15
LINCOLN HILL GOLD PROPERTY
EXPLORATION AND MINING LEASE AGREEMENT
BETWEEN
MOUNTAIN GOLD EXPLORATION INC./LANE ▇. ▇▇▇▇▇▇▇
AND
WESTERN GOLDFIELDS, INC.
Effective Date:
December 23, 2002
Table of Contents
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Page
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION II - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 4
2.1 Capacity of the Parties. . . . . . . . . . . . . . . . . . . . . . 4
2.2 Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 WG Representation and Warranties . . . . . . . . . . . . . . . . . 4
2.4 MGE Representations. . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Survival of Representations. . . . . . . . . . . . . . . . . . . . 5
SECTION III - PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION IV - RELATIONSHIP OF THE PARTIES . . . . . . . . . . . . . . . . . . . 5
4.1 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Other Business Opportunities . . . . . . . . . . . . . . . . . . . 5
4.3 Transfer or Termination of Rights. . . . . . . . . . . . . . . . . 6
4.4 Implied Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION V - TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Effective Date and Lease Time Period Term. . . . . . . . . . . . . 6
5.2 General Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Production Royalty . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Buy Down of Royalty Option . . . . . . . . . . . . . . . . . . . . 8
5.7 Mining of Gold and Mineral Specimens . . . . . . . . . . . . . . . 8
SECTION VI - DUTIES OF OPERATOR. . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Powers, Duties and Obligations of WG . . . . . . . . . . . . . . . 8
6.2 Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Assessment Work. . . . . . . . . . . . . . . . . . . . . . . . . .10
SECTION VII - AUDIT AND ACCOUNTING . . . . . . . . . . . . . . . . . . . . . .10
7.1 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
7.2 General Accounting Records . . . . . . . . . . . . . . . . . . . .10
SECTION VIII - WITHDRAWAL AND TERMINATION. . . . . . . . . . . . . . . . . . .10
8.1 Termination by Expiration, Default or Agreement. . . . . . . . . .10
8.2 Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
8.3 Continuing Obligations and Environmental Liabilities . . . . . . .11
8.4 Disposition of Assets on Termination . . . . . . . . . . . . . . .11
8.5 Non-Compete Covenants. . . . . . . . . . . . . . . . . . . . . . .11
8.6 Right to Data After Termination. . . . . . . . . . . . . . . . . .11
8.7 Continued Authority. . . . . . . . . . . . . . . . . . . . . . . .11
SECTION IX - ACQUISITIONS WITHIN AREA OF INTEREST. . . . . . . . . . . . . . .11
9.1 Acquisition within Area of Interest. . . . . . . . . . . . . . . .11
SECTION X - ABANDONMENT AND SURRENDER OF PROPERTIES. . . . . . . . . . . . . .12
10.1 Surrender or Abandonment of Properties . . . . . . . . . . . . . .12
10.2 Reacquisition. . . . . . . . . . . . . . . . . . . . . . . . . . .12
SECTION XI - TRANSFER OF INTEREST. . . . . . . . . . . . . . . . . . . . . . .12
11.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
11.2 Limitations on Free Transferability. . . . . . . . . . . . . . . .12
SECTION XII - CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . .13
12.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
12.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
12.3 Draft For Comment. . . . . . . . . . . . . . . . . . . . . . . . .13
12.4 Notice Required, . . . . . . . . . . . . . . . . . . . . . . . . .14
12.5 Duration of Confidentiality. . . . . . . . . . . . . . . . . . . .14
SECTION XIII - GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . .14
13.1 MGE Guarantee of its Affiliates. . . . . . . . . . . . . . . . . .14
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Table of Contents
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(continued)
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13.2 WG Guarantee of its Affiliates . . . . . . . . . . . . . . . . . .14
SECTION XIV - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . .14
14.1 Notices and Payment. . . . . . . . . . . . . . . . . . . . . . . .14
14.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . .15
14.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
14.4 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . .15
14.5 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . .15
14.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .15
14.7 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
14.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . .16
14.9 Survival of Terms and Conditions . . . . . . . . . . . . . . . . .16
14.10 Entire Agreement, Successors and Assigns . . . . . . . . . . . . .16
14.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .16
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LINCOLN HILL GOLD PROPERTY
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EXPLORATION AND MINING LEASE AGREEMENT
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THIS AGREEMENT is made, entered into and effective on the 23rd day of
December, 2002, (the "Effective Date"), regardless of the dates upon which it
actually is signed by the parties hereto, between MOUNTAIN GOLD EXPLORATION,
INC., a Nevada Corporation and LANE ▇. ▇▇▇▇▇▇▇, an individual, collectively
referred to herein as ("MGE") whose address is ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ and Western Goldfields, Inc., an Idaho Corporation, herein referred to as
("WG") whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ #▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇. Pursuant to this agreement, MGE grants WG an Exploration and Mining
Lease Agreement (the "Project"), located in Pershing County, Nevada. The
Project is comprised of such mineral rights as more particularly described in
Exhibit "A" hereto and additional mineral rights, if any, acquired within the
Area of Interest defined also in Section I, Section IX, Exhibit "A" and shown in
Exhibit "C"
RECITALS
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WHEREAS, MGE controls, holds rights and/or owns an interest in the Lincoln
Hill Gold Property located in Pershing County, Nevada including (herein referred
to as (the "Property") and as identified, described and shown in Exhibit "A" and
Exhibit "C."
WHEREAS, WG desires to enter into an Exploration and Mining Lease Agreement
with MGE for the Lincoln Hill Gold Property.
NOW, THEREFORE, MGE and WG agree to enter into an Exploration and Mining
Lease Agreement, herein referred to as (the "Agreement") and in consideration of
the mutual covenants and agreements contained herein, the Parties mutually agree
as follows:
SECTION I - DEFINITIONS
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"ACCOUNTING PROCEDURE" means the procedures set forth in Section 6.1 h and
7.2.
"ACQUIRING PARTY" means the Party who has acquired additional interests
within the Area of Interest and as described in Section 9.1, 12.1 and 12.2 of
this Agreement.
"ACTUAL EXPENDITURES" means all expenditures of WG after the Effective Date
shall be WG's Actual Expenditures.
"ADVANCED ROYALTY PAYMENTS" means the advanced' royalty payments to be made
during the term of Agreement described in Section 5.2.
"AFFILIATE'(S)" means in respect of a party, any individual'(s),
partnership'(s), corporation'(s), representative'(s), consultant'(s), joint
venture'(s), or other form of enterprise that directly or indirectly controls,
is controlled by, or is under common control with, MGE or WG. For purposes of
the preceding sentence, "control" means possession, directly or indirectly, of
the power to direct or cause direction of management and policies through
ownership of voting securities, contract, voting trust or otherwise.
"AGREEMENT" means this Lincoln Hill Gold Property - Exploration and Mining
Lease Agreement or any agreements that involve or influence MGE, including all
amendments and modifications thereof, and all schedules and exhibits, which are
hereby incorporated herein by reference.
"AREA OF INTEREST (AOI)" means an Area of Mutual Interest which includes
Mining Claims, mill sites, tunnel rights, real property, third parties claims,
fee lands, private lands, permits, concessions, leases, right-of-ways,
easements, water rights any and all other property rights, titles and interests
within a one (1) mile distance beyond the boundary of the MGE Claims, and more
particularly described and shown in Section 5.2 (d), 9.1, Exhibit "A."
"ASSETS" means the assets of the Lincoln Hill Gold Property and includes
without limitation the Property, Metals and all other real and personal
property, tangible and intangible, held or to be held for the benefit of the
Property.
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"BUDGET" means a detailed estimate and actual expenditures of all costs to
be incurred by WG with respect to a Program.
"MINING CLAIMS" means all patented and/or unpatented lode and placer
claims, mill sites and tunnel rights within the Property
"DATA" means all and any geological, geochemical and geophysical data
generated and acquired including, but not limited to all written and digital
data including but not limited to: reports, documents correspondences, financial
documents, maps, drill logs, drill chips trays, core, coarse rejects, pulps,
core tests, surveys, assays, analyses, production reports, operations,
technical, accounting and financial records, and other information acquired
while this Agreement is in effect.
"DEEMED EXPENDITURES" means the amount determined in accordance with the
provisions in Section 5.2 of this Agreement.
"DEVELOPMENT" means all preparation other than Exploration for the removal
and recovery of Metals, including the construction or installation of a mill or
any other improvements to be used for the mining, handling, milling, processing
or other beneficiation of Metals.
"DOLLARS OR $" means all currency, dollars or moneys are in U.S Dollar
Currency.
"WG" means Western Goldfields, Inc., a company incorporated under the laws
of Idaho and its Affiliates, successors and assigns.
"EFFECTIVE DATE" means December 23, 2002.
"EXPLORATION" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Metals.
"EXPLORATION EXPENDITURES" means all cash, expenses and obligation spent or
incurred by WG on Operations and shall include, but not be limited to, all
rentals, fees, option payments and assessment work required to keep the Lincoln
Hill Gold Property Exploration and Mining Lease Agreement and the Lode Claims
and AOI comprising the Property in good standing, all expenditures for
Corporate, Exploration Field Office, and all office and field related
exploration- activities including, without limitations, geophysical, geological,
geochemical, analytical and laboratory work, all surveys, drilling, assaying,
metallurgical testing, engineering, and all other expenditures directly
benefiting the Property.
"FORCE MAJEURE" shall have the meaning described to it in Section 14.5.
"INTEREST" means all rights, titles and interests to any and all MGE
Claims, AOI, Lands, Property-Properties, and/or agreements.
"LANDS" means all Mining Claims, mill sites, tunnel rights, real property,
fee lands, private lands, permits, concessions, leases, right-of-ways,
easements, water rights or any other property rights, titles and interests.
"LEASE" means the ("Lincoln Hill Gold Property - Exploration and Mining
Lease Agreement") granted by MGE to WG as described in Section 5.1.
"METAL INTEREST" means any applicable mining easement and other mining
rights or interests and all Lands acquired on the Property and those additional
Metals, Metal Interests, Metal Products and Ore, which may be substituted,
supplemented or acquired to form part of the Property.
"MINING" means the mining, extracting, producing, handling, milling or
other processing of Metals.
"METALS" means all precious and base metals including: gold, silver,
antimony, mercury, copper, lead, zinc, and all other metals, concentrates which
are discovered or exist on the Property or which can be extracted, mined or
processed by any method presently known or developed or invented. All industrial
clays, rock or stone industrial substances, materials, products, compounds and
any and all other saleable or leaseable materials,
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including but not limited to dumortierite and andalusite are excluded and not
made apart of this Agreement. WG shall have no rights, title and/or interests to
any of these materials and Interests.
"METAL PRODUCTS" means the metallic precipitates, cathodes, ▇▇▇▇▇ solutions
and any other primary, secondary or final product derived from operating the
mine during the term of this Agreement or removed from the Property.
"MGE" means Mountain Gold Exploration, Inc., a Nevada Corporation
incorporated under the laws of Nevada with 50% ownership in the Property and
▇▇▇▇ ▇▇▇▇▇▇▇, an Individual with 50% ownership in the Property and their
Affiliates, successors, and assigns.
"MGE CLAIMS" means Mountain Gold Exploration, Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇'▇
claims, lands, and any all rights, titles and interests within the perimeters of
the claims with regards to all Metals, Metal Interests, Ores and Metal Products
within the claims that are of record as of the effective date of this Agreement,
and more particularly described and shown in Section 5.2 (d), 9.1, Exhibit "A"
and Exhibit "C."
"ORE" means Metals from the Property, that justifies either: (1) mining or
removing from the property during the term of this Agreement, shipping and
selling the same, or delivering the same, to a processing plant for physical or
chemical treatment; (2) treatment, including leaching, on the Property during
the term of this Agreement.
"OPERATIONS" means the activities on or in relation to the Property carried
out under this Agreement including, without limitation, Exploration,
Development, Financing, Mining, and Acquisition of additional Properties in the
Area of Interest, and marketing of Metals.
"OPERATOR" means WG or any and all "Affiliates," successor operators,
whether during the Lease Period or thereafter.
"PARTY" and "PARTIES" mean the Parties to this Agreement, MGE and
Affiliates and WG and Affiliates.
"PROGRAM" means a description in reasonable detail of Operations and
Budgets to be conducted and objectives to be accomplished by WG for a specified
time period.
"PROJECT" means the conduct of work relating to the Property for the
purpose of Operations.
"PROJECT ACCOUNT" shall mean fot the account of the Lincoln Hill Gold
Property as funded by WG or Affiliates during the Lease Period.
"PROPERTY" or "PROPERTIES" means an Area of Mutual Interest and the Metals,
Metal Interests and Metal Products in all lands within the Area of Interest
boundary which includes MGE Claims, mill sites, tunnel rights, real property,
third parties claims, fee lands, private lands, permits, concessions, leases,
right-ofways, easements, water rights any and other property rights, titles and
interests which exists or acquired while this Agreement is in affect and more
particularly described and shown in Section 5.2 (d), 9.1, Exhibit "A" and
Exhibit "C."
"PROPERTY PAYMENTS" means all payments or expenditures required pursuant to
this Agreement and all payments or expenditures required to maintain title to
the Property or Metal Interest in the Property, including without limitation to
the government.
"PURCHASE OPTION" means MGE grants to WG the right and option to purchase
one (1%) percent of the two (2%) percent NSR Royalty within two (2) years of the
Effective Date from MGE for One Million Dollars ($1,000,000, the "Purchase
Price"), $500,000 to Mountain Gold Exploration, Inc. and $500,000 to Lane ▇.
▇▇▇▇▇▇▇ and more particularly described in Section 5.6.
"ROYALTY" means the non-executive, non-participating and non-working net
smelter returns production royalty of: 1. two percent Net Smelter Royalty ("2%
NSR") payable to MGE (one (1%) percent to Mountain Gold Exploration, Inca and
one (1%) percent to ▇▇▇▇ ▇▇▇▇▇▇▇ from the MGE Claims); 2. one percent Net
Smelter Royalty ("1% NSR") payable to MGE (one half (1/2% NSR) percent to
Mountain Gold Exploration, Inc. and one half (1/2% NSR) percent to ▇▇▇▇ ▇▇▇▇▇▇▇
from the Lands within the AOI and outside of the MGE Claims with Section 5.2,
5.5 and Exhibit "B."
3
"TERMS" means the payments, production royalty, stock, and all other
monetary interests outlined in accordance with Section 5.2.
"TRANSFER" means sell, grant, assign, encumber, pledge, quit claim or
otherwise commit or dispose of.
"WG" means Western Goldfields Corporation, a company incorporated under the
laws of Idaho, and its Affiliates, successors and assigns.
"WORK COMMITMENT" means the commitment of WG to fund Exploration and Mining
Expenditures as set forth in Section 5.2.
"WORK COMMITMENT PERIOD" means the period beginning on the Effective Date
as set forth in Section 5.2.
"WORK EXPENDITURE NOTICE" shall mean the notice from an authorized officer
of WG stating that the expenditures required under Section 5.2 have been
completed.
SECTION II - REPRESENTATIONS AND WARRANTIES
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2.1 CAPACITY OF THE PARTIES
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Each of the Parties represents andwarrants to the best of their knowledge
as of the Effective Date and as of the date this Agreement is actually signed as
follows:
a) That it is an individual or corporation duly incorporated and in good
standing in its jurisdiction of incorporation and that it is qualified
to do business and is in good standing in those jurisdictions where
necessary in order to carry out the purposes of this Agreement;
b) That it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this
Agreement have been properly taken;
c) That this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms.
2.2 DISCLOSURES
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Each of the Parties represents and warrants to the best of their knowledge
and as of the Effective Date and as of the date this Agreement is actually
signed that it is unaware of any material facts or circumstances which have not
been disclosed in this Agreement, which should be disclosed to any other Party
in order to prevent the representations in this Agreement from being materially
misleading.
2.3 WG REPRESENTATION AND WARRANTIES
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a) WG and/or its Affiliates shall not commit any act or acts, which will
encumber or cause a lien to be placed on the claims.
b) WG and/or its Affiliates will at its sole cost and expense, remove or
take remedial action with regards to any materials released by WG or
its Affiliates, contractors and agents into the environment at, on or
near the Property after the date of this Agreement for which any
removal or remedial action is required pursuant to any law,
regulations or governmental action, whether enacted, made or declared
in force before or after the date of this Agreement.
c) WG will at all times retain any and all liabilities arising from the
handling, treatment, storage, transportation or disposal of
environmental or similar contaminants on or near the Property by WG or
by WG's Affiliates.
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2.4 MGE REPRESENTATIONS
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MGE represents and warrants to the best of their knowledge as of the
Effective Date and as of the date this Agreement is actually signed that:
a) MGE properly located, staked and recorded the MGE Claims as described
in Exhibit "A" and the MGE Claims are in good standing under the laws
of the applicable jurisdiction.
b) MGE has paid all rentals, taxes, assessments, charges, fees and other
levies imposed upon or required with respect to the MGE Claims.
c) MGE makes no representations or warranty, express or implied, as to
the accuracy, reliability or completeness of any information or data
made available to WG hereunder or to the fitness or suitability of
such information or data for any purpose.
2.5 SURVIVAL OF REPRESENTATIONS
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The above representations are conditions on which the parties have relied
in entering into this Agreement and each party will indemnify and hold harmless
from all loss, damage, costs, actions and suits arising out of or in connection
with any breach of any representation or warranty made by them and contained in
this Agreement (including, without limitations, lawyer's fees and
disbursements).
SECTION III - PURPOSE
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3.1 GENERAL
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This Agreement is to set forth requirements of WG to maintain and exercise
the Exploration and Mining Lease Agreement. MGE and WG agree that all of their
rights and all of the Operations on or in connection with the Property, Assets
or the Area of Interest shall be subject to and governed by this Agreement.
3.2 PURPOSES
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The purpose and scope of this Agreement is for WG to undertake Operations
with a view to initially conducting exploration of the Property, develop
potential mineral showings and ultimately to delineate and mine one or more ore
deposits containing precious and/or base metals amenable to commercial mining.
SECTION IV - RELATIONSHIP OF THE PARTIES
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4.1 NO PARTNERSHIP
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Nothing contained in this Agreement shall be deemed to constitute either
Party the partner or the venturer of the other, or, except as otherwise herein
expressly provided, to constitute either Party the agent or legal representative
of the other, or to create any fiduciary relationship between them. The Parties
do not intend to create, and this Agreement shall not be construed to create,
any mining, commercial or other partnership or joint venture. Neither Party,
nor any of its directors, officers, employees, agents and attorneys, or
Affiliates, shall act for or assume any obligation or responsibility on behalf
of the other Party, except as otherwise expressly provided herein, and any such
action or assumption by a Party's directors, officers, employees, agents and
attorneys, or Affiliates shall be a breach by such Party of this Agreement. The
rights, duties, obligations and liabilities of the Parties shall be several and
not joint or collective. Each Party shall be responsible' only for its
obligations as herein set out and shall be liable only for its share of the
costs and expenses as provided herein, and it is the express purpose and
intention of the Parties that their ownership of Assets and the rights acquired
hereunder shall be as tenants in common.
4.2 OTHER BUSINESS OPPORTUNITIES
------------------------------
Except as expressly provided in this Agreement, each Party shall have the
right independently to engage in and receive full benefits from business
activities, whether or not competitive with the Operations, without consulting
any other Party. The doctrines of "corporate opportunity" or "business
opportunity" shall not be applied to any
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other activity, venture, or operation of any Party, and no Party shall have any
obligation to any other Party with respect to any opportunity to acquire any
property outside the Area of Interest at any time.
4.3 TRANSFER OR TERMINATION OF RIGHTS
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Except as otherwise provided in this Agreement, neither MGE nor WG shall
transfer all or any part of its interest in the Property, the Properties, the
Assets or this Agreement or otherwise permit or cause such interests to
terminate without approval by written consent by both Parties.
4.4 IMPLIED COVENANTS
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There are no implied covenants contained in this Agreement other than those
of good faith and fair dealing.
SECTION V - TERMS
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5.1 EFFECTIVE DATE AND LEASE TIME PERIOD TERM
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The Effective Date of this Agreement shall be December 23, 2002. Unless
sooner terminated as provided in this Agreement, the term of this Exploration
and Mining Lease Agreement shall be for a primary period of Ten (10) years from
the effective date and for so long thereafter as WG continues to make Advanced
Royalty Payments to MGE. In no event, however, shall the term of this Agreement
exceed fifty (50) years.
5.2 GENERAL TERMS
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General Terms of this Exploration and Mining Lease Agreement are as
follows:
a) Royalty: The Royalty that WG shall pay to MGE, in accordance with
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Section 1 Definitions, 5.5 and Exhibit "B" shall be as follows:
1. Two percent Net Smelter Royalty ("2% NSR") payable to MGE; (one
(1%) percent to Mountain Gold Exploration, Inc. and one (1%)
percent to ▇▇▇▇ ▇▇▇▇▇▇▇ from the MGE Claims);
2. One percent Net Smelter Royalty ("1% NSR") payable to MGE; (one
half (1/2% NSR) percent to Mountain Gold Exploration, Inc. and
one half (1/2% NSR) percent to ▇▇▇▇ ▇▇▇▇▇▇▇ from the Lands within
the AOI and outside of the MGE Claims
b) Payments: Advance Royalty Payment schedule beginning of the
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Effective Date due to MGE while this Agreement is in force are as
follows:
- On Signing: The Effective Date $ 5,000
- Due on or before the 6th Month Anniversary $ 6,650
- Due on or before the 1St year Anniversary $ 20,000
- Due on or before the 2nd year Anniversary $ 30,000
- Due on or before the 3rd year Anniversary $ 40,000
- Due on or before the 4th year Anniversary $ 50,000
- Due on or before the 5th year Anniversary and each thereafter $100,000
c) Stock Bonus: WG agrees to issue on signing the following amount of
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WG Shares with a one year restricted trading data beginning on the
Effective Date (Beneficiary Date), December 23, 2002 and unrestricted
on December 22, 2003.
WG shares to be issued on Signing: 75,000 shares total:
To ▇▇▇▇ ▇▇▇▇▇▇▇ 50,000 shares
To MGE 25,000 shares
d) Exploration Expenditures - Work Commitment: Minimum yearly work
obligations shall be:
- Prior to the 1st Anniversary date of this Agreement $ 10,000
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- - Prior to the 2 d Anniversary date of this Agreement $ 20,000
- - Prior to the 3rd Anniversary date of this Agreement $ 30,000
- - Prior to the 4th Anniversary date of this Agreement $ 50,000
- - Prior to the 5th Anniversary date of this Agreement $ 75,000
- Prior to the 6th Anniversary date of this Agreement and each thereafter $100,000
All expenditures would be cumulative and any excess spent in any one
year would be credited towards future exploration obligations. If
there is any deficiency in the required Exploration Expenditures in
any required time period, WG may pay 75% of such deficiency in US
dollars to MGE as the fulfillment of WG's obligation. Such payment
shall be paid within 60 days at the end of the time period in
question. If the Exploration Expenditures, Advanced Royalty Payments
or Royalty Payment are not completed as set forth above, the
Exploration and Mining Lease Agreement shall terminate automatically
and WG shall have no further rights or interests in the Lincoln Hill
Gold Property, and the parties shall have no further obligation to
each other.
e) Area of Interest (AOI): There shall be an Area of Interest
-------------------------
appurtenant to this Agreement which shall be al Lands encompassed
within a one-mile distance from the MGE Claims as described and shown
in Exhibit "A" and Exhibit "B." All Lands acquired by MGE or WG within
the Area of Interest during the term of this Agreement shall be made
apart of this Agreement and the claims, lands, interests, leases,
joint ventures, purchases or otherwise, any and all interests or of
the like in the Property shall be made apart of this Agreement and
subject to the one-mile Area of Interest and shall include Royalty
payment of one percent (1%) NSR due to MGE; one half percent (1/2 %
NSR) to Lane ▇. ▇▇▇▇▇▇▇ and one half percent (1/2% NSR) to Mountain
Gold Exploration, Inc.
f) New Claims Acquired: All new claims staked or acquired by WG shall
--------------------
be located and recorded in the MGE's names, subject to the existing
terms of this Agreement, and all associated fees and costs shall be
paid in full by WG or Affiliate's.
g) Annual Claim Fees and other Payments: WG or Affiliates shall pay
---------------------------------------
all Federal, State and County annual mining claim maintenance fees,
rental fees and/or any and all taxes that constitute' all or part of
the Lincoln Hill Gold Property. WG assumes all underlying lease
payments and agreements.
h) Construction of Protection Fences: WG agrees to construct within
------------------------------------
the 1s` Anniversary of this Agreement all fencing securing any and all
potential unsafe mine or trench openings or cuts on the Property. WG
accepts all responsibilities and liabilities for any and all possible
injuries to third parties on the property.
5.3 OBLIGATIONS
-----------
WG shall be obligated during this Agreement to conduct activities as a
prudent operator in accordance with Section 6.1 and 6.2.
5.4 DEFAULT
-------
Subject to the terms of Section 5, if WG fails to perform any of the
obligations specified in this Agreement and in particularly Sections 5.2 and 5.3
required to maintain this Agreement on the date called for such performance
hereunder, MGE may give a written notice (the "Default Notice") specifying the
due date and the obligation not performed and if performance or payment in full
is not received within thirty (30) days of the Default Notice, this Agreement
shall expire upon the expiration of five (5) days after the receipt by WG of a
termination notice. Upon Termination, WG shall have no rights, titles or
interests of any and all kinds whatsoever in the Property, the Royalty or any
other rights. Interests or Assets obtained or governed by this Agreement during
the term from and after that date, unless during such thirty (30) day notice
period WG cures any default and keeps this Agreement and the Lease in good
standing.
7
5.5 PRODUCTION ROYALTY
-------------------
WG shall pay to MGE the Royalty described in this Section, Section 1
(Definitions), Section 5.2 (a) and Exhibit "B" during the time which WG produces
any Metals, Metals Products, Ore or Metal Interests. Payment of the Royalty
shall be determined and paid in accordance with the provisions of Exhibit "B."
The Royalty payable by WG to MGE under this Agreement shall be based on the
payments actually received by WG minus those deductions specified for Net
Smelter Returns in Exhibit "B" or, if WG retains title to gold or silver derived
from Metals, Metals Products, Metal Interests or Ore, on the average fiscal
quarter price minus those deductions specified for Net Smelter Returns in
Exhibit "B." The Royalty percentage rate shall be as follows:
1. Two percent Net Smelter Royalty ("2% NSR") payable to MGE; (one
(1%) percent to Mountain Gold Exploration, Inc. and one (1%)
percent to ▇▇▇▇ ▇▇▇▇▇▇▇ from the MGE Claims);
2. One percent Net Smelter Royalty ("1% NSR") payable to MGE; (one
half (1/2% NSR) percent to Mountain Gold Exploration, Inc. and
one half (1/2% NSR) percent to ▇▇▇▇ ▇▇▇▇▇▇▇ from the Lands within
the AOI and outside of the MGE Claims.
5.6 BUY DOWN OF ROYALTY OPTION
--------------------------
WG shall have the option, within two (2) years of the Effective Date, to
purchase one (1%) percent of the two (2%) percent NSR Royalty from MGE from
production on the MGE Claims for One million dollars ($1,000,000) (the "Purchase
Option"), $500,000 to Mountain Gold Exploration, Inc. and $500,000 to Lane ▇.
▇▇▇▇▇▇▇. WG shall exercise such right by delivering written notice to that
effect to MGE and setting a date, time, and place of closing, which date shall
be no sooner than 10 days and no later than 30 days after the date of said
notice. At the closing, WG shall pay MGE the Purchase Price, and MGE shall
execute, acknowledge, and deliver to WG a Purchase Deed conveying the one (1%)
percent NSR to WG.
5.7 MINING OF GOLD AND MINERAL SPECIMENS
-----------------------------------------
In the event WG identifies unique gold or other mineral specimens during
mining, it shall take reasonable measures to accommodate the collection of such
specimens by MGE or its representatives, provided that such activity does not
delay, or otherwise interfere with WG's exploration or mining operations. WG
shall determine, in its sole discretion, whether and in what manner gold and
other mineral specimen collection activities are allowable, based upon its
exploration and mining plans. Within 30 days after MGE removes any gold or
other mineral specimens from the Property, MGE shall deliver to WG, as payment,
such specimens amounting to 50% of the total market value of the removed
specimens. Any specimen removed by MGE shall be valued based upon a mutually
accepted method. If MGE and WG are unable to agree on a mutually accepted
valuation, the value of such specimens shall be independently determined by a
committee of two third-party appraisers, with MGE and WG each selecting one
appraiser. WG shall not be responsible for any Royalties on any gold specimens
collected by MGE or its representatives. MGE shall be solely liable for any
royalty obligation arising under the Underlying Agreements or any state, federal
or local law, relating to the collection of gold specimens by MGE or its
representatives.
SECTION VI - DUTIES OF OPERATOR
-------------------------------
6.1 POWERS, DUTIES AND OBLIGATIONS OF WG
-----------------------------------------
a) WG shall keep the Assets free and clear of all liens and
encumbrances and mechanic's or material men's liens.
b) In no event shall WG permit or allow title to the Assets to be lost
as the result of the nonpayment of any taxes, assessments or like
charges; and shall do all other acts reasonably necessary to maintain
the Assets.
c) WG shall: (i) apply for all necessary permits, licenses and
approvals; (ii) comply with all applicable laws and regulations; (iii)
notify promptly MGE of any allegations of substantial violation
thereof; and (iv) prepare and file all reports or notices required by
WG. WG shall not be in breach of this provision if a violation has
occurred in spite of the WG's good faith efforts to comply, and WG has
timely cured or disposed of such violation through performance, or
payment
8
of fines and penalties. For greater certainty, in respect of
Subsections 6.1 (b) during the Lease Period, WG shall be responsible
for title, property and permitting issues.
d) WG shall prosecute and defend, but shall not initiate without
consent of MGE, all litigation or administrative proceedings arise out
of Operations. MGE shall have the right to participate in such
litigation or administrative proceedings. MGE shall approve in advance
any settlement involving payments, commitments or obligations in
excess of fifty thousand dollars (US$50,000) in cash or value.
e) WG shall maintain a General Liability Insurance Policy in the amount
of $1,000,000 for the benefit of the Property while this Agreement is
in affect. WG shall deliver to MGE within 10 days of Notification, a
copy of all insurance policies or Agreements that involve or influence
MGE.
f) WG shall not: (i) dispose of Assets or begin a liquidation of the
Property; or (ii) dispose of all or a substantial part of the Assets.
g) WG shall perform or cause to be performed during the term of this
Agreement all work necessary to comply with agreements, concessions or
other instruments constituting and governing the MGE Claims, Property
and Operations and shall take measures necessary to maintain same in
full force and effect.
h) WG shall keep and maintain all required accounting and financial
records pursuant to the Accounting Procedure and in accordance with
customary accounting practices in the mining industry and as necessary
to comply with local law and accounting requirements of the
jurisdiction of the Property.
i) At the request of MGE, WG shall keep MGE advised of all Operations
by submitting in writing and in digital form to MGE: (i) quarterly
progress reports which include statements of expenditures and
comparisons of such expenditures to the adopted Budget; (ii) periodic
summaries of data acquired; (iii) copies of reports concerning
Operations; (iv) a detailed final report within forty-five (45) days
after completion of each Program and/or Budget, which shall include
comparisons between actual and budgeted expenditures and comparisons
between the objectives and results of Programs; and (v) such other
reports as MGE may reasonably request.
j) At all reasonable times WG shall provide MGE access to, and the
right to inspect, remove and copy any and all reports, documents
correspondences, financial documents, maps, drill logs, core tests,
surveys, assays, analyses, production reports, operations, technical,
accounting and financial records, and other information acquired while
this Agreement is in effect.
k) WG shall undertake all other activities reasonably necessary to
fulfil the foregoing.
l) If WG encounters dumortierite deposits during the conduct of its
mining operations on the Property, it shall stockpile such
dumortierite for the exclusive benefit of MGE. WG and MGE shall form
a=committee, consisting of four representatives, with MGE and WG each
selecting two representatives, to make recommendations to WG regarding
the methods used in the mining and handling of the dumortierite.
However, the timing, manner and location of the removal and
stockpiling of dumortierite shall be at WG's sole discretion. Any
subsequent processing or handling of dumortierite by or on behalf of
MGE shall be done at MGE's cost, and in a manner that does not
interfere with WG's exploration or mining operations.
6.2 STANDARD OF CARE
------------------
WG shall conduct all Operations in a good, workmanlike and efficient
manner, in accordance with sound mining and other applicable industry standards
and practices, and in accordance with the terms and provisions of the Property,
the Lincoln Hill Gold Exploration and Mining Lease Agreement, any Metal
Interest, claims, leases, licenses, permits, contracts and other agreements
pertaining to the Assets. WG shall not be liable for any act or omission
resulting in damage or loss except to the extent caused by or attributable to
WG's negligence. The Operator shall timely post any bonding requirement in
accordance with applicable government regulations for any
9
operation conducted for the Property. WG shall have the obligation to apply such
Standard of Care at all time during the Lease Period.
6.3 ASSESSMENT WORK
----------------
(a) If required by applicable law, WG shall perform, to the extent not
already performed by MGE, annual labor or assessment work for the benefit of the
Property, pay any maintenance, rental, holding fee, or other payment required to
maintain the MGE Claims for the assessment year beginning on September 1, 2003,
and for every assessment year thereafter with respect to those MGE Claims for
which WG continues this Agreement beyond July 1st of that year. In the event WG
gives notice of termination to MGE pursuant to Section 13, on or before July 1,
WG shall have no obligation to make any payment to maintain the subject MGE
Claims that is or becomes due after the date such notice is given. If any such
law permits the performance of assessment work or annual labor in lieu of making
all or a portion of any such payment, WG shall determine whether to make such
payment, perform such work or labor,' or both. If required by applicable law,
WG shall pay any location fee or payment required to relocate any Claim that WG
determines, pursuant to Section 8(b), below, should be relocated.
(b) For each assessment year in which WG performs annual labor or
assessment work or makes any such payment, it shall prepare, record, and file in
a proper and timely manner such affidavits and other documents relating thereto
as are required to maintain the Claims and in good standing.
SECTION VII - AUDIT AND ACCOUNTING
----------------------------------
7.1 AUDITS
------
MGE may request an annual or quarterly audit. Upon request made within
twenty-four (24) months following the end of any calendar year, MGE may audit
the accounting and financial records for such calendar year (or other accounting
period). All written exceptions to and claims upon WG for discrepancies
disclosed by such audit shall be made not more than twelve (12) months after
initiation of the audit. Failure to make any such exception or claim within the
twelve (12) month period after initiation of the audit shall mean the audit is
correct and binding. The audit shall be done at the expense of MGE unless a
discrepancy of at least ten percent (10%) is disclosed by such audit in any
material item in the financial statements. If such a discrepancy of at least
ten percent (10%) is disclosed the specific audit costs shall be to WG.
7.2 GENERAL ACCOUNTING RECORDS
----------------------------
WG shall maintain detailed and comprehensive accounting records suitable to
establish a detailed audit trail, in accordance with this Accounting Procedure,
including general ledgers, supporting and subsidiary journals, invoices, checks
and other customary documentation, sufficient to provide a record of revenues
and expenditures and periodic statements of financial position and the results
of operations for managerial, tax, regulatory or other financial reporting
purposes for MGE and the Property. Such records shall be retained for the
duration of the period allowed to MGE for audit or the period necessary to
comply with tax or other regulatory requirements. The records shall comply with
generally accepted accounting principles in the United States ("U.S. GAAP").
Furthermore, WG shall provide MGE and its auditors with reasonable access to its
books and records for purposes of complying with applicable reporting
requirements for MGE and its affiliates.
SECTION VIII - WITHDRAWAL AND TERMINATION
-----------------------------------------
8.1 TERMINATION BY EXPIRATION, DEFAULT OR AGREEMENT
-----------------------------------------------
This Agreement shall terminate as expressly provided herein, unless earlier
terminated by written agreement by both parties.
8.2 WITHDRAWAL
----------
WG may terminate and withdraw from the Property in accordance with the
provision of this Agreement. Upon such withdrawal, this Agreement shall
terminate, and WG shall give MGE the option to have transferred to MGE all of
its rights, titles, interests and Data of the Property and/or Assets without
cost, free and clear of all encumbrances arising by, through or under such
withdrawing Party, except those to which both Parties have agreed.
10
WG shall execute and deliver all instruments as may be necessary in the
reasonable judgement of MGE to affect the transfer of its interests in the
Property and/or Assets to MGE.
8.3 CONTINUING OBLIGATIONS AND ENVIRONMENTAL LIABILITIES
--------------------------------------------------------
During the term of this Agreement and after termination of the Property or
this Agreement under Sections 8.1 and 8.2, WG shall remain liable for its
liabilities to third parties (whether such arises before or after such
withdrawal), including environmental liabilities and related bonding
requirement. WG's liabilities shall include environmental damage and
liabilities, which are caused by or as a result of work done on the Property.
8.4 DISPOSITION OF ASSETS ON TERMINATION
----------------------------------------
Promptly after termination under Sections 8.1 and 8.2, WG shall take all
action necessary to wind up the activities of the Property. All costs and
expenses incurred in connection with the termination of this Agreement and any
business related to this Agreement shall be expenses chargeable to WG.
8.5 NON-COMPETE COVENANTS
----------------------
Neither a Party that withdraws or is deemed to have withdrawn pursuant to
Section 8.2, nor any Affiliate of such a Party, shall directly or indirectly
acquire any interest or right to explore or mine, or both, on any property any
part of which is within the Property while this Agreement in enforce. If a
withdrawing Party, or the Affiliate of a withdrawing Party, breaches this
Section, such Party shall be obligated to offer to convey to the non-withdrawing
Party, without cost, any such property or interest so acquired (or ensure its
Affiliate offers to convey the Property or interest to the non-withdrawing
Party, if the acquiring Party is the withdrawing Party's Affiliate). Such offer
shall be made in writing and can be accepted by the nonwithdrawing Party at any
time within ten (30) days after the offer is received by such non-withdrawing
Party. Failure of a Party's Affiliate to comply with this Section, shall be a
breach by such Party of this Agreement.
8.6 RIGHT TO DATA AFTER TERMINATION
-----------------------------------
After termination of the Property pursuant to Sections 8.1 and 8.2, each
Party shall be entitled to make copies of all applicable information acquired
hereunder before the effective date of termination not previously furnished to
it, but a terminating or withdrawal Party shall not be entitled to any such
copies after any other termination or withdrawal.
8.7 CONTINUED AUTHORITY
--------------------
On termination of the Property under Sections 8.1 and 8.2, MGE (or WG) in
the event of a withdrawal by MGE) shall have the power and authority to do all
things which are reasonably necessary or convenient to: (a) wind up operations
and (b) complete any transaction and satisfy any obligation, unfinished or
unsatisfied, at the time of such termination or withdrawal, if the transaction
or obligation arises out of operations prior to such termination or withdrawal.
MGE shall have the power and authority to grant or receive extensions of time or
change the method of payment of an already existing liability or obligation,
prosecute and defend actions on behalf of both Parties and the Property, and
take any other reasonable action.
SECTION IX - ACQUISITIONS WITHIN AREA OF INTEREST
-------------------------------------------------
9.1 ACQUISITION WITHIN AREA OF INTEREST
---------------------------------------
There shall be an Area of Interest (AOI) consisting of one (1) miles beyond
the boundary of the MGE Claims as specified in Section 1 and Exhibit "A" and
shown on Exhibit "C", whereby WG or its Affiliates (the Acquiring Party)
acquiring any Interest, including without limitation, any Metals, minerals,
surface or water rights or Metal Interests, Metal Products, Ores within the AOI
shall be required to include one hundred percent (100%) of such Interest in the
Lands to this Agreement, and made subject to this Agreement under the same terms
and conditions as the acquisition of such Metal Interest by the Acquiring Party.
If MGE is the Acquiring Party of such Metal Interest in the Area of
Interest, such interest shall be required to offer one hundred percent (100%) to
WG for the benefit of the Property. If WG does not elect within sixty (60)
11
days of receiving a written notice from MGE to have the Metal Interest and the
area or Lands recommended to be included in the Property, MGE shall have the
exclusive rights, title and interests to acquire all Interests to the area or
Lands recommended and submitted to WG.
SECTION X - ABANDONMENT AND SURRENDER OF PROPERTIES
---------------------------------------------------
10.1 SURRENDER OR ABANDONMENT OF PROPERTIES
------------------------------------------
MGE may authorize WG to cause the surrender or abandonment of part or all
of the Properties. If MGE authorizes any such surrender or abandonment, then WG
shall so notify MGE during this Agreement, and at MGE's sole, exclusive election
and option, WG shall assign to MGE by the appropriate conveyance document and
without cost, of that Interest in the Property to be abandoned or surrendered,
and the abandoned or surrendered Property shall cease to be part of the Property
and this Agreement, and WG shall remain obligated for liabilities arising prior
to abandonment.
10.2 REACQUISITION
-------------
If any Lands within the Property are abandoned or surrendered under the
provisions of Section 10.1, by WG, then unless this Agreement is earlier
terminated, WG shall abandon all Interests to the Lands and Property-Properties
and WG agrees not acquire any Interests to the abandoned or surrendered Lands or
Property (s) for a period of two years following the date of such abandonment or
surrender. If WG reacquires any Property (s) in violation of this Section, the
MGE may elect by notice to the reacquiring Party within 45 days after it has
actual notice of such reacquisition, to have such properties made subject to the
terms of this Agreement. In the event such an election is made, the reacquired
properties shall thereafter be treated as the Property, and the costs of
reacquisition shall be borne solely by WG.
SECTION XI - TRANSFER OF INTEREST
---------------------------------
11.1 GENERAL
-------
The transfer by a party to any Interest in the this Agreement, the Property
or this Agreement shall be subject to the non-transferring parties pre-emptive
right in accordance with this Section.
11.2 LIMITATIONS ON FREE TRANSFERABILITY
--------------------------------------
The Transfer right of WG or for MGE in Section 11.1 shall be subject to the
following terms and conditions:
a) A Party wishing to transfer an Interest shall promptly notify the
other of its intentions, by written notice stating the price and other
pertinent terms of the intended transfer and shall be accompanied by a
copy of the offer or contract for sale.
b) The other Party shall have thirty (30) days from the date of delivery
and receipt of the notice to state whether it elects to acquire the
offered Interest at the same price and on the same terms and
conditions as set forth in the notice.
c) If the other Party so elects, the transfer shall be consummated as
promptly as possible after the election notice is delivered to the
transferring Party.
d) If the non-transferring Party does not so elect to exercise its right,
the transferring Party shall have one hundred and eighty (180) days to
consummate the proposed transaction with the third party on terms no
less favourable that made to the non-transferring Party.
e) If the transaction is not consummated within the said one hundred and
eighty (180) days, the non-transferring Party's pre-emptive right
shall be revived.
f) Any transfer made without obtaining the non-transferring Party's
waiver of such right or compliance with the subsections of this
Section will be null and void.
12
g) No transferee of all or any part of the Interest of a Party shall have
the rights of that Party unless and until the transferee, as of the
effective date of the Transfer, has committed in writing to be bound
by this Agreement as if an original Party thereto to the same extent
as the transferring Party.
h) No Transfer permitted by this Section shall relieve the transferring
Party of its share of any liability, whether accruing before or after
such Transfer, which arises out of Operations conducted prior to such
Transfer.
i) The transferring Party and the transferee shall bear all tax
consequences of the Transfer.
j) In the event of a Transfer of less than all of a Party's Interest, the
transferring Party and its transferee shall act and be treated as one,
k) If the Transfer is the grant of a security interest by mortgage, deed
of trust, pledge, lien or other encumbrance of any interest in this
Agreement, any Party's Interest or the Assets to secure a loan or
other indebtedness of a Party in a bona fide transaction, such
security interest shall be subordinate to the terms of this Agreement
and the rights and interests of the other Party hereunder. Upon any
foreclosure or other enforcement of rights in the security interest
the acquiring third party shall be subject to the pre-emptive right
described in this Section and it shall comply with and be bound by the
terms and conditions of this Agreement.
l) No transfer, sale or disposition shall in any way modify the
non-transferring rights in the Property.
SECTION XII - CONFIDENTIALITY
-----------------------------
12.1 GENERAL
-------
The financial terms of this Agreement and all information obtained in
connection with the performance of this Agreement shall be the exclusive
property of the Parties and, except as provided in Section 12.2, shall not be
disclosed to any third party or the public without the prior written consent of
the other Party, which consent shall not be unreasonably withheld.
12.2 EXCEPTIONS
----------
The consent required by Section 12.1 shall not apply to a disclosure:
a) To an Affiliate, consultant, contractor or subcontractor that has a
bona fide need to be informed provided such person agrees to maintain
the confidentiality of such information;
b) To any third party to whom the disclosing Party contemplates a
Transfer of all or any part of its Interest in or to this Agreement,
its Participating Interest, or the Assets provided such party agrees
to maintain the confidentiality of such information; or
c) To a governmental agency or to the public, which the disclosing Party
believes in good faith is required by pertinent law or regulation or
the rules of any stock exchange provided that the pertinent disclosure
is given to the other party and no objection is received within
twenty-four (24) hours.
12.3 DRAFT FOR COMMENT
-------------------
In the event that either WG or MGE wishes or is required to issue a press
release or public statement, it will first provide the other Party with a draft
copy for review and comment. In the event that the other Party fails to comment
on the release within twenty-four (24) hours of its receipt, or such earlier
deadline as may be necessary to permit the Party issuing the release to satisfy
all regulatory requirements, they will be deemed to have approved of the release
in its entirety.
13
12.4 NOTICE REQUIRED,
-----------------
In any case to which Section 12.3 is applicable, the disclosing Party shall
give notice to the other Party concurrently with the making of such disclosure.
As to any disclosure pursuant to Section 12.2 (a) and (b), only such
confidential information as such third party; shall have a legitimate business
need to know shall be disclosed- and such third party shall first agree in
writing to protect the confidential information from further disclosure to the
same extent as the Parties are obligated under this Section.
12.5 DURATION OF CONFIDENTIALITY
-----------------------------
The provisions of this Section shall apply during the term of this
Agreement and for two years following termination of this Agreement pursuant to
Section 8.1, and shall continue to apply to any Party who Transfers its
Participating Interest, for two (2) years following the date of such occurrence.
SECTION XIII - GUARANTEE
------------------------
13.1 MGE GUARANTEE OF ITS AFFILIATES
-----------------------------------
MGE hereby guarantees the performance by its Affiliates of their respective
obligations under this Agreement.
13.2 WG GUARANTEE OF ITS AFFILIATES
----------------------------------
WG hereby guarantees the performance by its Affiliates of their respective
obligations under this Agreement.
SECTION XIV - GENERAL PROVISIONS
--------------------------------
14.1 NOTICES AND PAYMENT
---------------------
All notices, payments and other required communications ("Notices") to the
Parties shall be in writing, and shall be addressed respectively as follows:
MGE's Authorized Representative: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇.▇. ▇▇▇ ▇▇▇▇▇ Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Facsimile No: ▇▇▇-▇▇▇-▇▇▇▇
WG's Authorized Representative: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
7000 ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ #▇▇▇ Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Facsimile No: ▇▇▇-▇▇▇-▇▇▇▇
All Notices shall be given (i) by personal delivery to the Party, or (ii)
by electronic communication, with a confirmation sent by registered or certified
mail return receipt requested, or (iii) by registered or certified mail return
receipt requested. All Notices shall be effective and shall be deemed delivered
(i) if by personal delivery on the date of delivery if delivered during normal
business hours, and, if not delivered during normal business hours, on the next
business day following delivery, (ii) if by electronic communication on the next
business day following receipt of the electronic communication, and (iii) if
solely by mail on the next business day after actual receipt. A Party to this
Agreement may change its address by Notice to the other Party to this Agreement.
Any payment called for shall be made at the place designated in this Section
14.1. Any payment shall be made in U.S. clearinghouse funds, or as otherwise
permitted by the receiving Party.
Notification or changes of authorized representatives for WG or MGE shall
be provided in writing, in advance, in accordance with Section 14.1.
14
14.2 BINDING EFFECT
---------------
WG and MGE agree to be bound by this Agreement from the Effective Date and
that this Agreement shall replace any prior understandings or agreements. Each
Party agrees to bear its own costs for the negotiation of this Agreement.
14.3 WAIVER
------
The failure of a Party to insist on the strict performance of any provision
of this Agreement or to exercise any right, power or remedy upon a breach hereof
shall not constitute a waiver of any provision of this Agreement or limit the
Party's right thereafter to enforce any provision or exercise any right.
14.4 MODIFICATION
------------
No modification of this Agreement shall be valid unless made in writing and
duly executed by the Parties.
14.5 FORCE MAJEURE
-------------
Except for the obligation to make payments when due hereunder, the
obligations of a Party shall be suspended to the extent and for the period that
performance is prevented by any cause, whether foreseeable or unforeseeable,
beyond its reasonable control, including, without limitation, labour disputes
(however arising and whether or not employee demands are reasonable or within
the power of the Party to grant); acts of God; Laws, instructions or requests of
any government entity; judgements or orders of any court; inability to obtain on
reasonably accepted terms any public or private license, permit or other
authorization; curtailment or suspension of activities to remedy or avoid an
actual or alleged, present or prospective violation of environmental laws;
action or inaction by any federal, state or local agency that delays or prevents
the issuance or granting of any approval or authorization required to conduct
operations beyond the reasonable expectations of the Party seeking the approval
or authorization; acts of war or conditions arising out of or attributable to
war, whether declared or undeclared; riot, civil strife, insurrection or
rebellion; fire, explosion, earthquake, storm, flood, drought or other adverse
weather condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors' or subcontractors'
shortage of, or inability to obtain, labour, transportation, materials,
machinery, equipment, supplies, utilities or services; accidents; breakdown of
equipment, machinery or facilities; actions by native rights groups,
environmental groups, or other similar special interest groups; or any other
cause whether similar or dissimilar to the foregoing. The affected Party shall
promptly give notice to the other Party of the suspension of performance,
stating therein the nature of the suspension, the reasons therefore, and the
expected duration thereof. The affected Party shall resume performance as soon
as reasonably possible. During the period of suspension the obligations of both
Parties to advance funds shall be reduced to levels consistent with then current
Operations.
14.6 GOVERNING LAW
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It is mutually understood and agreed that the rights and obligations of the
parties under or related to this Agreement shall' be governed in accordance with
and by the laws of the State of Nevada (without regards to choice of laws
provisions), both as to interpretation and performance, and that any action at
law, suit in equity or judicial proceeding for the enforcement of this Agreement
or any provision thereof shall be instituted only in the courts of Washoe County
in the State of Nevada and maintained only in any court of competent
jurisdiction in Washoe County to the State of Nevada. In the event suit or
action is filed by any party to enforce this Agreement or respect to a breach of
this Agreement, the prevailing party shall be entitled to recover, in addition
to all other costs, damages and rewards, its reasonable attorney fees at trial,
upon any appeal and petition for review.
14.7 ARBITRATION
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An arbitration procedure for the interpretation of this Agreement and any
dispute arising between the Parties will be implemented under arbitration
proceedings all parties agreed in advance. It is expressly agreed and
acknowledged that WG and MGE will cause their subsidiaries and their
representatives involved in the Property, whether directly or indirectly, to act
in accordance with any arbitration result and to cause them to take all
reasonable steps to confirm or carry out any ruling or order made in the
arbitration proceedings or as a result of any arbitration proceedings or
results.
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14.8 FURTHER ASSURANCES
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Each of the Parties to take from time to time such actions and execute such
additional instruments as may be reasonably necessary or convenient to implement
and carry out the intent and purpose of this Agreement.
14.9 SURVIVAL OF TERMS AND CONDITIONS
--------------------------------
The following Sections shall survive the termination of this Agreement to
the full extent necessary for their enforcement and the protection of the Party
in whose favor they run: Sections 2.2, 5.4, 8.2, 8.3, 12.3 and 12.5.
14.10 ENTIRE AGREEMENT, SUCCESSORS AND ASSIGNS
----------------------------------------
This Agreement contains the entire understanding of the Parties and
supersedes all prior agreements and understandings between the Parties relating
to the subject matter hereof. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the Parties.
In the event of any conflict between this Agreement and any Exhibit attached
hereto, the terms of this Agreement shall be controlling.
14.11 COUNTERPARTS
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
MOUNTAIN GOLD EXPLORATION, INC. AND LANE ▇. ▇▇▇▇▇▇▇
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, MGE's Authorized Representative
and
WESTERN GOLDFIELDS, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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