Exhibit 10.1
PROPERTY OPTION AGREEMENT

THIS AGREEMENT made as of October 27, 2009.
 
BETWEEN:
 
WILPENA RESOURCES LTD. PTY.
 
(hereafter referred to as "Wilpena Resources")
 
AND:
 
AYERS EXPLORATION INC.
 
(hereafter referred to as "Ayers Exploration")
 
WHEREAS:
 
A. Wilpena Resources owns a 100% Interest (defined below) in certain mining
properties known as the Wilpena Property (the "Property") located in the State
of Queensland, Australia as more particularly described in Schedule "A" hereto;
 
B. Wilpena Resources has agreed to grant to Ayers Exploration the exclusive
right and option to acquire all of Wilpena Resources's Interest in and to the
Property on the terms and conditions hereinafter set forth.
 
C. Ayers Exploration will have the exclusive option to acquire, subject to the
reservation of a royalty by Wilpena Resources and the covenant by Ayers
Exploration to pay a production bonus, all of Wilpena Resources's Interest in
the Property on the terms and conditions hereinafter set forth.
 
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained the parties hereto mutually agree as
follows:
 
 
 
1. DEFINITIONS

 
 

 
 
For the purposes of this Agreement:

 
 

 
 
"Affiliate" means a corporation which is (i) a subsidiary of a party hereto,
(ii) a subsidiary of a corporation of which a party hereto is a subsidiary or
(iii) controlled by the same corporation or person as a party hereto (where
"controlled" means that more than 50% of the votes that may be cast to elect
directors of the corporation are held, other than by way of security only, by or
for the benefit of that corporation or person, and the votes attached to those
securities are sufficient, if exercised, to elect a majority of the directors of
the corporation);

 
 
 
"Business Day" means, for any obligation to be performed in Canada, any day
(other than a Saturday or Sunday) on which banks in Sydney, Australia;

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"Commencement of Commercial Production" means

 
 

 
 
if a Mill is located on the Property, the last day of a period of 40 consecutive
days in which, for not less than 30 days, such concentrator processed ore from
the Property at 70% of its nameplate concentrating capacity,

 
 
 
if no Mill is located on the Property, the first day on which direct shipping
ore has been shipped from the Property for the purpose of earning revenues, or

 
 
 
if the commencement of commercial production or the completion date of the mine,
as described in any project financing arrangements, is fulfilled under such
project financing arrangements before the dates described in (i) and (ii) above,
the day on which such fulfillment occurs,

 
 

 
 
but no period of time during which ore or concentrate is shipped from the
Property for testing purposes, shall be taken into account in determining the
date of Commencement of Commercial Production;

 
 
 
"Effective Date" means October 27, 2009;

 
 
 
"Expenditures" means all items of outlay and expense whatsoever, direct or
indirect, with respect to Mining Operations, recorded by Ayers Exploration in
accordance with this Agreement, and includes, without duplication, Ayers
Exploration's Fee. Without limiting generality, the following categories of
Expenditures shall have the following meanings:

 
 

 
 
"Construction Expenditures" means those Expenditures recorded after a production
decision and before the completion date of the mine;

 
 
 
"Exploration Expenditures" means those Expenditures recorded during the
exploration period prior to a decision having been made to put the Property into
production by building a mine; and

 
 
 
"Operating Expenditures" means those Expenditures recorded after the completion
date of the mine;

 
 

 
 
"Interest" means the undivided beneficial interest of Wilpena Resources in the
Property, which beneficial interest is subject to the charges contemplated in
Section 6.2(d);

 
 
 
"Mill" means any crusher, concentrator and other processing facilities to be
constructed on or in proximity to the Property and used for the processing of
production from the Property, whether or not in conjunction with or after
production from any other mineral property;

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"Mining Operations" means every kind of work done by Ayers Exploration on or in
respect of the Property including, without limiting generality, investigating,
prospecting, exploring, developing, property maintenance, preparing reports,
estimates and studies, designing, equipping, improving, surveying, construction
and mining, milling, concentrating, rehabilitation, reclamation, and
environmental protection;

 
 
 
"NSR Royalty" means the royalty to be paid by Ayers Exploration to Wilpena
Resources in accordance with the terms of this Agreement; 

 
 
 
"Option" means the sole and exclusive right and option granted by Wilpena
Resources to Ayers Exploration to acquire, subject to Wilpena Resources's NSR
Royalty which is hereby reserved, an undivided 100% right, title and Interest in
and to the Property pursuant to this Agreement;

 
 
 
"Shares" means the voting common shares in the capital of Ayers Exploration as
presently constituted; and

 
 

 
 
2. OPTION GRANT

 
 

 
 
1. Wilpena Resources hereby gives and grants to Ayers Exploration the Option in
accordance with the terms of this Agreement.

 
 
 
2.  In order for Ayers Exploration to acquire, subject to Wilpena Resources's
NSR Royalty, an undivided 100% Interest in the Property, it must:

 
 

 
 
a. within 30 days of the Effective Date issue to Wilpena Resources 45,000 Shares
; and

 
 
 
b. incur the Expenditures (or make cash payments to Wilpena Resources for any
shortfall), in the following amounts and on or before the following dates:

 
 

 
 
i. US$25,000 on or before April 27, 2010; and

 
 
 
ii. An additional US$50,000 on or  before October 27, 2010.

 
 

 
 
3. Ayers Exploration must have fulfilled all of the conditions in Section 2.2
and have exercised the Option by October 1, 2008, after which date the Option
will expire.

 
 
 
4. Provided Ayers Exploration has complied with Section 2.2 hereof, the Option
will have been exercised without any further action on the part of Ayers
Exploration and Ayers Exploration shall have acquired, subject to Wilpena
Resources's NSR Royalty, Wilpena Resources's Interest in the Property, and
Wilpena Resources will promptly execute and deliver all such documents and to do
all such things as may be required to transfer its Interest in the Property to
Ayers Exploration or its designated nominee. Ayers Exploration consents to
Wilpena Resources registering the NSR Royalty against title to the Property in
the Mining Registry of Queensland upon such transfer.

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For the purposes of Sections 2.2(a), and 3.1:

 

 
 
a. Wilpena Resources must give notice to Ayers Exploration of its election,
where applicable, to take payment in cash or in Shares, as the case may be, and,
if applicable, the name of the nominee in which the Shares should be registered,
on or before the fifth Business Day after the date on which the payment required
under such paragraph becomes due, and if Wilpena Resources does not give Ayers
Exploration such notice within such time period then Wilpena Resources will have
been deemed to have elected to receive the payment in cash;

 
 
 
b. the value of each Share (if any) to be issued shall be equal to the weighted
average trading price of the Shares on the Over-the Counter Bulletin Board ( the
"OTCBB")or the Australian Stock Exchange  (the "ASX"), as the case may be, for
the five trading days prior to the date on which the payment required under such
paragraph becomes due, such weighted average trading price to be determined by
dividing the aggregate number of Shares traded on the OTCBB or the ASX, as the
case may be, for the five days prior to the date on which the determination is
being made by the aggregate value of Shares traded on the ASX or the OTCBB
during such five day period;

 
 
 
c. Ayers Exploration shall issue certificates representing the Shares (if any)
as soon as practicable after receiving notice from Wilpena Resources of its
election to receive Shares, and in any event within five Business Days of
receipt of such election.

 
 

 
 
Notwithstanding anything to the contrary in this Agreement, the obligations
described in Sections 2.2(a) and 3.1 shall remain obligations of Ayers
Exploration throughout the term of this Agreement.

 
 
 
3. ADDITIONAL PAYMENT

 
 

 
 
1. In addition to the payment obligations described in Article 2 above that
Ayers Exploration must make in order to exercise the Option, on the six month
anniversary of the Commencement of Commercial Production on the Property, Ayers
Exploration will be obligated to pay to Wilpena Resources US$20,000 in cash or
in Shares, at the election of Wilpena Resources in its sole discretion.

 
 

 
 
4. TECHNICAL COMMITTEE

 
 

 
 
1. Wilpena Resources and Ayers Exploration shall form a technical committee with
respect to the Property, such technical committee to consist of one member from
Ayers Exploration and one member from Wilpena Resources.

 
 
 
2. The technical committee shall meet at least once per year, with the first
meeting of the technical committee to be held no later than April 27, 2009. At
each meeting of the technical committee, Ayers Exploration will provide to
Wilpena Resources evidence of and the results from the Expenditures made by
Ayers Exploration as of the date of the Meeting.

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5. NET SMELTER ROYALTY

 
 

 
 
1. Upon the Commencement of Commercial Production on the Property, Ayers
Exploration will be obligated to pay to Wilpena Resources the NSR Royalty in
accordance with Schedule "B" hereto.

 
 

 
 
6. REPRESENTATIONS AND WARRANTIES

 
 

 
 
1. Each of Wilpena Resources and Ayers Exploration hereby represent and warrant
to the other that as at the date hereof:

 
 

 
 
a. it has full power, capacity and authority to carry on its business and to
enter into and perform its obligations under this Agreement and any agreement or
instrument referred to or contemplated by this Agreement and this Agreement is
legally binding upon it and is enforceable in accordance with its terms;

 
 
 
b. neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated conflict with, result in the breach of or
accelerate the performance required by, any agreement to which it is a party;
and

 
 
 
c. the execution and delivery of this Agreement has been duly authorized by all
necessary corporate action on its part and will not violate or result in the
breach of the laws of any jurisdiction applicable or pertaining thereto or of
its constating documents.

 
 

 
 
2. Wilpena Resources hereby represents and warrants to Ayers Exploration that as
at the date hereof:

 
 

 
 
a. it holds a   100% Interest in the Property, which is registered in the name
of its principal and is in good standing;

 
 
 
b. Wilpena Resources has the exclusive right to enter into this Agreement and
all necessary authority to dispose of an interest in and to the Property in
accordance with the terms of this Agreement;

 
 
 
c. The Property is comprised of the mining concessions which are properly and
accurately described in Schedule "A" hereto;

 
 
 
d. to the best of its knowledge, no person, firm or corporation has any
proprietary or possessory interest in the Property or any right capable of
becoming an interest in the Property and, no person is entitled to any royalty
or other payment in the nature of rent or royalty on any minerals, ores, metals
or concentrates or any other such products removed from the Property;

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e. there are no actual, pending or threatened actions, suits, claims or
proceedings regarding the Property or any basis therefor of which it is aware;

 
 
 
f. there are no liens, charges or encumbrances (recorded or unrecorded), and
Wilpena Resources has not been served with any notice and is not aware of any
defects or objections, materially affecting Wilpena Resources's rights in
respect of the Property;

 
 
 
g. to Wilpena Resources's knowledge, conditions on and relating to the Property
and operations conducted thereon are in compliance with all applicable laws,
regulations or orders including, without limitation, laws relating to
environmental matters, waste disposal and storage and reclamation;

 
 
 
h. Wilpena Resources has not been served with any outstanding orders or
directions relating to environmental matters requiring any work, repairs,
construction or capital expenditures with respect to the Property and the
conduct of the operations related thereto;

 
 
 
i. Wilpena Resources has not received notice of any act or omission of any party
which could result by notice or lapse of time in the breach, termination,
abandonment, forfeiture, relinquishment or other premature termination of the
Property; and

 
 
 
j. any consents or approvals required by Wilpena Resources with respect to the
grant of the Option hereunder will be obtained prior to such grant.

 
 

 
 
3. The representations and warranties hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and shall survive
the acquisition of any interest in the Property by Ayers Exploration, for a
period of two years with respect to the representations and warranties in
Sections 6.2(e) to (j) and indefinitely with respect to the representations and
warranties in Sections. to (c) and 6.2(a) to (d), and each of the parties will
indemnify and save the other harmless from all loss, damage, costs, actions and
suits arising out of or in connection with any breach of any representation,
warranty, covenant, agreement or condition made by them and contained in this
Agreement.

 
 

 
 
7. COVENANTS

 
 

 
 
1. During the term of the Option and before Wilpena Resources's Interest in the
Property has been transferred by Wilpena Resources to Ayers Exploration or its
designated nominee pursuant to Section 2.4, Wilpena Resources hereby covenants
and agrees with Ayers Exploration to:

 
 

 

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a. not do or permit or suffer to be done any act or thing which would or might
in any way adversely affect the rights of Ayers Exploration hereunder and,
without limitation, will not transfer, convey, assign, mortgage or grant an
option in respect of or grant a right to purchase or in any manner transfer or
alienate any or all of the title to or its Interest in the Property, except as
expressly provided under this Agreement;

 
 
 
b. make available to Ayers Exploration and its representatives all records and
files in its possession relating to the Property and permit Ayers Exploration
and its representatives at their own expense to take abstracts therefrom and
make copies thereof;

 
 
 
c. promptly provide Ayers Exploration with any and all notices and
correspondence received by Wilpena Resources from government agencies in respect
of the Property;

 
 
 
d. do all things necessary to maintain its Interest in the Property;

 
 
 
e. immediately notify Ayers Exploration of any claims, actions, demands or
similar acts of a civil, labour or juridical nature, filed against it respecting
the Property; and

 
 
 
f. obtain the written consent of Ayers Exploration prior to entering into any
lease of the surface of the Property as to the terms of such proposed lease.

 
 

 
 
2. During the term of the Option and before Wilpena Resources's Interest in the
Property has been transferred by Wilpena Resources to Ayers Exploration or its
designated nominee pursuant to Section 2.4, Ayers Exploration hereby covenants
and agrees with Wilpena Resources to:

 
 

 
 
a. perform its obligations and conduct all operations in a workmanlike and
commercially reasonable manner, in accordance with sound mining, engineering and
processing methods and practices;

 
 
 
b. provide automobile liability insurance, having a limit consistent with local
practices as agreeable between the parties, and insuring against claims for
bodily injury, including death, and for property damage arising out of the use
of owned, leased and non-owned vehicles for the performance of any activities
under this Agreement;

 
 
 
c. provide health, accident, and unemployment insurance and worker's
compensation coverage for itself and its employees, agents and contractors hired
to perform the services in connection with the Property;

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d. keep the Property free and clear from any liens or encumbrances relating to
its work on the Property;

 
 
 
e. provide Wilpena Resources with regular progress reports during periods of
active exploration and with an annual summary of the work performed and the
results obtained. The annual summary shall include copies of any drill records,
assays, maps, plans and all other relevant factual information and materials not
previously delivered;

 
 
 
f. do and file such assessment work or other reports required to maintain tenure
to the Property in good standing;

 
 
 
g. maintain accounts of its Expenditures on the Property in accordance with
international accounting standards generally accepted in the mining industry;

 
 
 
h. indemnify Wilpena Resources for any claims arising against Wilpena Resources,
its Affiliates and the directors, officers, employees and agents thereof which
may arise as a result of Ayers Exploration's work and Expenditures on the
Property, such indemnification to expire two years from the date of the transfer
of Wilpena Resources's Interest to Ayers Exploration or its designated nominee;

 
 
 
i. use its commercial best efforts to incorporate the Subsidiary, and
immediately upon the incorporation of the Subsidiary provide notice to Wilpena
Resources of such incorporation, at which time all references herein to "Ayers
Exploration" will be deemed to be references to the Subsidiary, with the
exception of the requirements to issue shares of Ayers Exploration, which shall
continue to be the responsibility of Ayers Exploration. In addition, the
requirement to make the payment contemplated by Section 3.1 shall be a joint
liability of both Ayers Exploration and the Subsidiary.

 
 

 
 
8. RIGHTS AND DUTIES DURING OPTION PERIOD

 
 

 
 
1. During the term of this Agreement, Ayers Exploration or its designated
nominee pursuant to Section 2.4:

 
 

 
 
a. Ayers Exploration and its employees, agents and independent contractors shall
have the right to enter upon the Property and to do such prospecting,
exploration, development or other mining work thereon and thereunder as is
permitted by this agreement, including the removal of mineral samples for the
purpose of, and in the amounts appropriate for, testing such mineral samples,
and Ayers Exploration shall have the right to bring upon and erect upon the
Property such buildings, plant machinery and equipment as Ayers Exploration may
deem necessary or desirable to carry out such activities;

 
 
 
b. Ayers Exploration in its sole discretion will make any decision concerning
the Expenditures; and

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c. Ayers Exploration shall have exclusive and quiet possession of the Property.

 
 

 
 
9. TERMINATION OR FORFEITURE OF OPTION

 
 

 
 
1. Ayers Exploration shall at any time have the right to elect by notice in
writing to Wilpena Resources not to make the payments provided for under Section
2.2, thereby forfeiting its Option to acquire the Interest.

 
 
 
2. If Ayers Exploration fails to make a payment on or before the dates specified
in Section 2.2 and the default continues for 14 days after receipt by Ayers
Exploration of notice from Wilpena Resources of the default, the Option to
acquire the Interest will terminate on the 30th day after receipt of such notice
by Ayers Exploration. If Ayers Exploration cures any default in respect of a
payment in accordance with this section, Ayers Exploration will be deemed to
have duly made the payment in respect of such default.

 
 
 
3. If either party terminates this Agreement in accordance with this Article 9,
Ayers Exploration will:

 
 

 
 
a. leave the Property free and clear of all liens, charges and encumbrances
arising from its operations hereunder and in a safe and orderly condition and in
good standing;

 
 
 
b. deliver to Wilpena Resources within 60 days of its written request, all drill
cores, assay samples, pulps, rejects and copies of all maps, drill logs, assay
results and other factual technical data compiled by Ayers Exploration with
respect to the Property;

 
 
 
c. have the right and, if so requested by Wilpena Resources, the obligation, to
remove from the Property within six months of the effective date of termination
all facilities erected, installed or brought upon the Property by or at the
instance of Ayers Exploration;

 
 
 
d. comply with all laws, rules, orders and regulations in effect on the date of
termination with respect to reclamation and environmental rehabilitation in
relation to the work performed on the Property by Ayers Exploration under this
Agreement; and

 
 
 
e. leave the property in good standing with respect to any annual minimum
assessment work required and payment of any applicable taxes then due on the
Property,

 
 

 
 
whereupon this Agreement will terminate and be of no further force or effect.

 
 
 
10. SHARING OF AND CONFIDENTIAL NATURE OF INFORMATION

 
 

 
 
1. Each party agrees that all information obtained hereunder shall be the
exclusive property of the parties and not publicly disclosed or used other than
for the activities contemplated hereunder except as required by law or by the
rules and regulations of any regulatory authority or stock exchange having
jurisdiction, or with the written consent of the other party, such consent not
to be unreasonably withheld. Where a party releases information based on a
requirement at law or under the rules and regulations of any regulatory
authority or stock exchange having jurisdiction it will deliver a copy
concurrently to the other party.

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2. Consent to disclosure of information pursuant to Section 10.1 shall not be
unreasonably withheld where a party wishes to disclose any such information to a
third party for the purpose of arranging financing for its contributions
hereunder or for the purpose of selling its Interest, provided that such third
party gives its undertaking to the parties that any such information not
theretofore publicly disclosed shall be kept confidential and not disclosed to
others.

 
 
 
3. Except as provided for in Section 10.1, neither party will issue any press
release concerning the Property or this Agreement without first delivering a
copy of the proposed release to the other for comment and if such comment is not
forthcoming within two business days of such delivery, such press release may be
issued without the comment or consent of the other but a copy will be delivered
to such other party concurrently with its release by such party.

 
 
 
4. No party shall be liable to any other for the fraudulent or negligent
disclosure of information by any of its employees, servants or agents, provided
that such party has taken reasonable steps to ensure the preservation of the
confidential nature of such information.

 
 

 
 
11. RESTRICTIONS ON TRANSFER

 
 

 
 
1. The restrictions on transfer described in Sections　11.2 to 11.4 shall apply
during the term of the Option only, and, subject to Section　11.6, subsequent to
the term of the Option either party may sell, transfer, assign or otherwise
dispose of its right, title and interest in and to this Agreement and any of its
rights hereunder in its sole discretion.

 
 
 
2. Subject to Section 11.4, any party may sell, transfer, assign or otherwise
dispose of ("Assign", or an "Assignment") all or any portion of its right, title
and interest in and to this agreement to a third party ("New Party") only with
the consent of the other parties hereto, which consent may be withheld for any
reason.

 
 
 
3. Notwithstanding the foregoing, either party may, without the consent of the
other, Assign any or all of its Interest or its rights under this Agreement to
an Affiliate, provided that such Affiliate first complies with the provisions of
Section　11.4 and agrees with the other parties in writing to re-transfer such
Interest to the originally assigning party before ceasing to be an Affiliate of
such party.

 
 
 
4. Before the completion of any Assignment by a party of its Interest or rights
under this Agreement, to an Affiliate or otherwise, the New Party shall, at the
election of the parties not selling, enter into an agreement with the party not
selling on the same terms and conditions as set out in this Agreement.

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5. Each party agrees that its failure to comply with the restrictions set out in
this Article would constitute an injury and damage to the other party impossible
to measure monetarily and, in the event of any such failure the other party
shall, in addition and without prejudice to any other rights and remedies at law
or in equity, be entitled to injunctive relief restraining or enjoining any sale
of any Interest or assignment of any rights under this Agreement save in
accordance with the provisions of this section, and any party intending to make
a sale or making a sale contrary to the provisions of this section hereby waives
any defence it might have in law to such injunctive relief.

 
 
 
6. Subsequent to the term of the Option and upon exercise of the Option by Ayers
Exploration and the transfer by Wilpena Resources of its Interest to Ayers
Exploration, Ayers Exploration shall not transfer, assign or otherwise dispose
of all or any portion of its right, title and interest in and to this Agreement,
its rights hereunder or the Property to any third party without first causing
the assignee to deliver to Wilpena Resources an agreement between the assignee
and Wilpena Resources, in a form satisfactory to Wilpena Resources, acting
reasonably, under which such assignee acknowledges the NSR Royalty and covenants
to pay the NSR Royalty to Wilpena Resources on the same terms and conditions as
under this Agreement.

 
 

 
 
12. AMALGAMATION OR REORGANIZATION

 
 

 
 
1. The provisions of Article 11 shall not prevent a party from entering into an
amalgamation or corporate reorganization which will have the effect in law of
the amalgamated or surviving company possessing substantially all the property,
rights and interests and being subject to all the debts, liabilities and
obligations of each amalgamating or predecessor company.

 
 

 
 
13. NOTICE

 
 

 
 
1. Any notice, direction or other instrument required or permitted to be given
under this Agreement shall be in writing and may be given by the delivery of the
same or by sending the same by telecommunication, facsimile or other similar
form of communication, in each case addressed as follows:

 
 

 
 
if to Wilpena Resources at:

 
 
Wilpena Resources Building 6, Garden City Office Park, 2404 Logan Rd, Eight Mile
Plains QLD. 4113 Attention: President

 
 
 
if to Ayers Exploration at:

 
 

 
 
Ayers Exploration Inc.. #6 Harston Avenue, Mosman, Sydney Australia
2088 Attention: Greg Curson

 
 
 
2. Any notice, direction or other instrument will, if delivered, be deemed to
have been given and received on the day after it was delivered, and if sent by
telecommunication, facsimile or other similar form of communication, be deemed
to have been given or received on the day it was so sent, if sent during the
normal business hours of the recipient and otherwise on the first business day
following the day it was so sent.

 
 
 
3. Any party may at any time give to the others notice in writing of any change
of address of the party giving such notice and from and after the giving of such
notice the address or addresses therein specified will be deemed to be the
address of such party for the purposes of giving notice hereunder.

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14. FURTHER ASSURANCES

 
 

 
 
1. The parties will execute such further and other documents and do such further
and other things as may be necessary or convenient to carry out and give effect
to the intent of this Agreement.

 
 

 
 
15. MANNER OF PAYMENT

 
 

 
 
1. All references to monies hereunder shall be in lawful currency of the United
States of America. All payments to be made to any party hereunder may be made by
cheque or draft mailed or delivered to such party at its address for notice
purposes as provided herein, or deposited for the account of such party at such
bank or banks as such party may designate from time to time by written notice.
Said bank or banks shall be deemed the agent of the designating party for the
purpose of receiving, collecting and receipting such payment.

 
 

 
 
16. TIME OF ESSENCE

 
 

 
 
1. Time shall be of the essence in the performance of this Agreement.

 
 

 
 
17. HEADINGS

 
 

 
 
1. The headings of the sections of this Agreement are for convenience only and
do not form a part of this Agreement nor are they intended to affect the
construction or meaning of anything herein contained or govern the rights and
liabilities of the parties.

 
 

 
 
18. ENUREMENT

 
 

 
 
1. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.

 
 

 
 
19. FORCE MAJEURE

 
 

 
 
1. Neither party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its control including,
but not limited to adverse weather conditions, environmental protests or
blockages, acts of God, fire, flood, explosion, strikes, lockouts or other
industrial disturbances, laws, rules and regulations or orders of any duly
constituted governmental authority or non-availability of materials or
transportation (each an "Intervening Event").

 
 
 
2. A party relying on the provisions of Section 19.1 will promptly give written
notice to the other of the particulars of the Intervening Event and all time
limits imposed by this Agreement will be extended from the date of delivery of
such notice by a period equivalent to the period of delay resulting from an
Intervening Event described in Section　20.1. If an Intervening Event continues
for a period of more than one year, the parties hereto will enter into
negotiations to amend or terminate this Agreement, as appropriate.

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3. A party relying on the provisions of Section 19.1 will take all reasonable
steps to eliminate any Intervening Event and, if possible, will perform its
obligations under this Agreement as far as practical, but nothing herein will
require such party to settle or adjust any labour dispute or to question or to
test the validity of any law, rule, regulation or order of any duly constituted
governmental authority or to complete its obligations under this Agreement if an
Intervening Event renders completion impossible. A party relying on the
provisions of Section 19.1 will give written notice to the other as soon as such
Intervening Event ceases to exist.

 
 
 
4. During an Intervening Event Wilpena Resources will use its commercially
reasonable efforts to maintain its Interest in the Property, and Ayers
Exploration shall provide to Wilpena Resources any funds required to make any
payments to any governmental agencies or bodies with respect to the Property
necessary in order for Wilpena Resources to maintain its Interest.

 
 

 
 
20. DEFAULT

 
 

 
 
1. Notwithstanding anything in this Agreement to the contrary, if any party (a
"Defaulting Party") is in default of any requirement herein set forth the party
affected by such default shall give written notice to the Defaulting Party
specifying the default and the Defaulting party shall not lose any rights under
this Agreement, unless within 30 days after the giving of notice of default by
the affected party the Defaulting party has failed to take reasonable steps to
cure the default by the appropriate performance and if the Defaulting Party
fails within such period to take reasonable steps to cure any such default, the
affected party shall be entitled to seek any remedy it may have on account of
such default.

 
 

 
 
21. ENTIRE AGREEMENT

 
 

 
 
1. This Agreement constitutes the entire agreement between the parties and,
except as hereafter set out, replaces and supersedes all prior agreements,
memoranda, correspondence, communications, negotiations and representations,
whether oral or written, express or implied, statutory or otherwise between the
parties with respect to the subject matter herein.

 
 

 
 
22. GOVERNING LAW AND ARBITRATION

 
 

 
 
1. This Agreement shall be governed by and construed according to the laws of
the State of Nevada.

 
 
 
2. Any dispute arising under this Agreement will be determined by a panel of
three arbitrators, one of which will be appointed by Ayers Exploration, one of
which will be appointed by Wilpena Resources and one of which will be appointed
by Ayers Exploration and Wilpena Resources jointly, as follows:

 
 

 
 
a. either party may refer any such matter to arbitration by written notice to
the other and, within ten Business Days after receipt of such notice, the
parties will agree on the appointment of an arbitrator;

 
 
 
b. no person will be appointed as an arbitrator hereunder unless such person
agrees in writing to act;

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c. upon appointment in accordance with section (a), the arbitrator will
immediately proceed to hear and determine the matter in question and unless
otherwise agreed, such hearing shall take place in Vancouver, British Columbia;

 
 
 
d. the determination by the arbitrator will be made within 45 days after his
appointment subject to any reasonable delay due to unforeseen circumstances and
the decision of the arbitrator will be in writing and signed by the arbitrator
and will be final and binding upon the parties who will abide by such decision;

 
 
 
e. if the parties cannot agree on a single arbitrator as provided in section
(b), or if the person appointed is unwilling or unable to act, either party will
have the right to request the Court to mediate in the appointment of a mutually
acceptable arbitrator; and

 
 
 
f. the arbitrators' fees shall be paid by both parties in equal parts during the
course of the arbitration, but upon final decision of the dispute, the panel of
arbitrators shall determine the responsibility for the payment of all
arbitration costs, and if the arbitrators do not make such a determination then
the unsuccessful party shall pay all arbitration costs, including the amounts
paid by the prevailing party.

 
 

 
 
23. EXECUTION

 
 

 
 
1. This Agreement may be executed by each of Ayers Exploration and Wilpena
Resources in counterparts and by facsimile, each of which when so executed and
delivered shall be an original, but both such counterparts, whether executed and
delivered in the original or by facsimile, shall together constitute one and the
same instrument.

 
 

IN WITNESS WHEREOF the parties hereto have executed these presents as of the day
and year first above written.
 

 
　
WILPENA RESOURCES LTD. PTY.
　
By:
　
　
　
Authorized Signatory
　
AYERS EXPLORATION INC.
　
By:
　
　
　
Authorized Signatory

 

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SCHEDULE "A"  
 
WILPENA PROPERTY
 
Licence Area　
Tenure No.
Area
Mt. Morgan
EPM 15313
5 acres

　
 

 

 

 

 

 

 

 

 

 

 

 
 

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SCHEDULE "B"
 
DEFINITION, CALCULATION AND PAYMENT OF NSR ROYALTY
 
The NSR Royalty is the percentage royalty provided in the body of the Agreement
to which this Schedule "B" is attached and calculated and paid by Ayers
Exploration to Wilpena Resources in accordance with the following provisions:
 

 
Definitions

 
Unless otherwise set forth below, all capitalized terms used in this Schedule
shall have the meaning ascribed to them in the Agreement.

 
"Calendar Quarter" means each three-month period ending March 31st, June 30th,
September 30th and December 31st of each calendar year. 

 
 
"Mineral Price Quotation" means the final sale price of gold as quoted on the
London Metals Exchange, as published in Metals Week or a similar publication.

 
 
"Net Smelter Returns" or "NSR" means:

 

 
where all or a portion of the ores or concentrates derived from the Property are
sold as ores or concentrates, the gross amount received from the purchaser
following sale thereof after deduction (i) if applicable under the sale
contract, of all smelter or refinery charges, penalties and other deductions;
(ii) of all costs of transporting and insuring the ores or concentrates from the
mine to the smelter, refinery or other place of final delivery; and (iii) of
sales, use, severance, excise, net proceeds of mine, and ad valorem taxes and
any tax on or measured by mineral production, but excluding income taxes of
Ayers Exploration; and

 
 

 
 
where all or a portion of the said ores or concentrates derived from the
Property are treated in a smelter or refinery and a portion of the metals
recovered therefrom are delivered to, and sold by Ayers Exploration, the gross
amount received from the purchaser following sale of the metals so delivered,
after deduction of (i) all smelter or refinery charges, penalties and other
deductions; (ii) all costs of transporting and insuring the ores or concentrates
from the mine to the smelter or refinery; (iii) if applicable under the smelter
or refining contract, all costs of transporting and insuring the metals from the
smelter or refinery to the place of final delivery by the purchaser; and (iv)
sales, use, severance, excise, net proceeds of mine, and ad valorem taxes and
any tax on or measured by mineral production, but excluding income taxes of
Ayers Exploration,

 
and where any ores or concentrates are sold to, or treated in, a smelter or
refinery owned or controlled by Ayers Exploration, the pricing for that sale or
treatment will be established by Ayers Exploration on an arm's length basis so
as to be fairly competitive with pricing, net of transportation, insurance,
treatment charges and other related costs, then available on world markets for
product of like quantity and quality. Page .

 
 
NSR Royalty

 
Upon the Commencement of Commercial Production, each Calendar Quarter Ayers
Exploration shall be obligated to pay and Wilpena Resources shall be entitled to
receive the NSR Royalty as follows:

 
 
for gold produced from the Property:

 
(i) 1.5% of Net Smelter Returns if the average Mineral Price Quotation for gold
over the Calendar Quarter for which the NSR Royalty is being paid is less than
US$600 per ounce; or (ii) 2% of Net Smelter Returns if the average Mineral Price
Quotation for gold over the Calendar Quarter for which the NSR Royalty is being
paid is equal to or greater than US$600 per ounce; and 

 
 
for all other minerals produced from the Property, 1.75% of Net Smelter Returns.

 
 
Ayers Exploration shall, within 60 days of the end of each Calendar Quarter, as
and when any Net Smelter Returns are available for distribution:

 
 
pay or cause to be paid to Wilpena Resources that percentage of the Net Smelter
Returns to which Wilpena Resources is entitled under the Agreement;

 
 
deliver to Wilpena Resources a statement indicating:

 
(i) the gross amounts received from the purchaser contemplated in the definition
of "Net Smelter Returns" in subsection 1.01 of this Schedule　"B"; (ii) the
deductions therefrom in accordance with the definition of "Net Smelter Returns"
in subsection 1.01 of this Schedule "B"; (iii) the amount of Net Smelter Returns
remaining; and (iv) the amount of those Net Smelter Returns to which Wilpena
Resources is entitled; supported by such reasonable information as to the
tonnage and grade of ores or concentrates shipped as will enable Wilpena
Resources to verify the gross amount payable by the smelter or other
purchaser. Page

 
 
Adjustments and Verification

 
Payment of any Net Smelter Returns by Ayers Exploration shall not prejudice the
right of Ayers Exploration to adjust any statement supporting the payment;
provided, however, that all statements presented to Wilpena Resources by Ayers
Exploration for any quarter shall conclusively be presumed to be true and
correct upon the expiration of 12 months following the end of the quarter to
which the statement relates, unless within that 12-month period Ayers
Exploration gives notice to Wilpena Resources claiming an adjustment to the
statement which will be reflected in subsequent payment of Net Smelter Returns.

 
 
Ayers Exploration shall not adjust any statement in favour of itself more than
12 months following the end of the quarter to which the statement relates.

 
 
 
 
 

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Wilpena Resources shall, upon 30 days' notice in advance to Ayers Exploration,
have the right to request that Ayers Exploration have its independent external
auditors provide their audit certificate for the statement or adjusted
statement, as it may relate to the Agreement and the calculation of Net Smelter
Returns.

 
 
The cost of the audit certificate shall be solely for Wilpena Resources's
account unless the audit certificate discloses material error in the calculation
of Net Smelter Returns, in which case Ayers Exploration shall reimburse Wilpena
Resources the cost of the audit certificate. Without limiting the generality of
the foregoing, a discrepancy of one percent in the calculation of Net Smelter
Returns shall be deemed to be material.

 
Ayers Exploration to Determine Operations

 
Ayers Exploration will have complete discretion concerning the nature, timing
and extent of all exploration, development mining and other operations conducted
on or for the benefit of the Property and may suspend operations and production
on the Property at any time it considers prudent or appropriate to do so. Ayers
Exploration will owe Wilpena Resources no duty to explore, develop or mine the
Property, or to do so at any rate or in any manner other than that which Ayers
Exploration may determine in its sole and unfettered discretion. Ayers
Exploration may, but will not be obligated to treat, mill, heap leach, sort,
concentrate, refine, smelt or otherwise process, beneficiate or upgrade the
ores, concentrates, and other products at sites located on or off the Property,
prior to sale, transfer, or conveyance to a purchaser, user, or consumer. Ayers
Exploration will not be liable for mineral values lost in processing under sound
practices and procedures, and no royalty will be due on any such lost mineral
values.

 
Commingling

 
Ores, concentrates and derivatives mined or retrieved from the Property may be
commingled with ores, concentrates or derivatives mined or retrieved from other
properties. All determinations required for calculation of Net Smelter Returns,
including without limitation the amount of the metals contained in or recovered
from ores, solutions, concentrates or derivatives mined or retrieved from the
Property, the amount of the metals contained in or recovered from commingled
ores, solutions, concentrates or derivatives shall be made in accordance with
prudent engineering, metallurgical and cost accounting practices.

 
 
Trading Activities

 
Ayers Exploration may, but need not, engage in forward sales, futures trading or
commodity options trading, and other price hedging, price protection, and
speculative arrangements ("Trading Activities") which may involve the possible
delivery of base or precious metals produced from the Property. The parties
acknowledge and agree that Wilpena Resources shall not be entitled to
participate in the proceeds or be obligated to share in any losses generated by
the Trading Activities.

 
 

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