Exhibit 10.1
 

MINING LEASE AND AGREEMENT

THIS LEASE and AGREEMENT, made this 14th day of December, 2011 by and between
MARILYN BASHORE, Coeur d’Alene, Idaho (hereinafter called ‘“Owner”) and SOUTH
AMERICAN GOLD CORPORATION, a Nevada corporation (hereinafter called “South
American”).
 
WITNESSETH:

1.        Owner represents that subject to the paramount title of the United
States, it is the sole and only owner of the unpatented mining claims situated
in Yavapai County, Arizona, described on the attached Exhibit A (hereinafter
referred to as the “Property”); that each of the unpatented claims included in
the Property has been validly located, filed and recorded in compliance with the
laws of the State of Nevada and of the United States as they relate to location
and recordation of such claims; that Owner has timely complied with all of the
filing provisions of the Federal Land Policy and Management Act (43 U.S.C.
Section 1701, et seq.) as they pertain to the unpatented claims included within
the Property and that such claims are valid and subsisting mining claims; that
Owner has performed assessment work upon such claims through the assessment year
ended September 1, 2011, and has recorded and filed proof thereof, all of which
work, recordings and filings have been completed in accordance with the
applicable state and federal statues pertaining to assessment work; that Owner’s
rights in the Property are not subject to any prior agreement, encumbrance,
burden or restriction created by any act or instrument of Owner; the Property is
free from liens and encumbrances and adverse claims by third parties; and that
the Property is not burdened with any royalties, overriding royalties or
payments on production.
 
2.         Owner hereby grants, lets and leases to South American the Property,
for the term hereof, together with all ores and minerals of every kind, except
oil and gas, in, on or under the Property, with the exclusive right to prospect
and explore for, mine by underground or open pit methods, mill, prepare for
market, store, sell and dispose of the same, together with all such
rights-of-way, easements, water and water rights, of every kind and nature,
through, over, on or appertaining to the Property, and the right to erect,
maintain and operate thereon and therein, buildings, structures, machinery and
equipment, and to use, occupy and disturb so much of the surface of the Property
as South American may determine to be useful, desirable or convenient for the
exercise by South American of any and all of its rights hereunder.  In the event
Owner acquires rights to any additional interests in the Property after the
execution of this Agreement, all such additional interests shall be subject to
this Agreement.
 
3.          If Owner’s title is less than as stated in Section 1 hereof or is
subject to a superior adverse interest, all payments, including advance
royalties, without limitation, to be made to Owner hereunder shall be reduced to
the same proportion thereof as the undivided interest owned by the Owner bears
to the entire interest in the Property.
 
South American shall have sole discretion to determine the extent of its work on
the Property and the time or times for beginning, continuing or resuming mining
operations thereon.
 
 
 
 

 
- 1 -

--------------------------------------------------------------------------------

 

All activities carried out by South American under this Agreement shall conform
in all respects to the laws and regulations of the State of Arizona and the
United States.
 
4.        The term of this Agreement shall begin with the date hereof and shall
continue to and until the fifteenth anniversary of such date and so long
thereafter as minerals are produced on the Property, but subject to earlier
termination as herein provided.
 
5.        Until this Agreement is sooner terminated, South American shall pay
Owner advance royalty payments in accordance with the following schedule:
 
Advance Royalty Payment
 
Payable On Or Before
     
$500
 
On Execution (on or before 12/20/2011)
$750
 
Anniversary Date, 2012
$750
 
Anniversary Date, 2012-26, inclusive

 
The Advance Royalty payments payable to Owner pursuant to this paragraph shall
be credited to and recoverable from Production Royalty payments payable by South
American to owner, as provided below.  Said right of recovery shall apply to the
first such Production Royalty payments accruing and shall continue thereafter
until South American has recovered the full amount of previously paid Advance
Royalty payments.
 
The annual Advance Royalty payments shall be increased or decreased yearly on
the date of payment on such royalty by the percentage that the Producer Price
Index for Industrial Commodities as published in the U.S. Department of Labor,
Bureau of Labor Statistics bulletin bears to the amount of the royalty to be
paid.  Such index was 103.0% on the date of the execution of this Agreement.
 
South American shall pay to Owner a Production Royalty of two percent (2%) of
net smelter returns.  Net smelter returns shall be calculated for each calendar
quarter in which net smelter returns are realized, and such royalty payments as
are due Owner hereunder shall be made within thirty (30) days following the end
of the calendar quarter in Which the net smelter returns were realized.  Such
payments shall be accompanied by a statement summarizing the computation of net
smelter returns.
 
Quarterly royalty payments will be provisional and subject to adjustment at the
end of each accounting year.
 
The term “net smelter returns” as used herein shall mean the net proceeds
received by South American from the sale of minerals from the Property after
deductions for all of the following:
 
(a)     
Custom smelter costs, treatment charges and penalties including, but without
being limited to, metal losses, penalties for impurities and charges or
deductions for refining, selling, and transportation from smelter to refinery
and from refinery to market; provided, however, in the case of leaching
operations, all processing and recovery costs incurred by South American beyond
the point at which the metal being treated is in solution shall be considered as
treatment charges (it being agreed and understood, however, that such processing
and recovery costs shall not include the cost of mining, crushing, dump
preparation, distribution of leach solutions or other mining and preparation
costs up to the point at which the metal goes into solution);

 
 
 

 
 
- 2 -

--------------------------------------------------------------------------------

 

 
(b)     
Cost of transporting mineral product from the concentrator to a smelter or other
place of treatment; and

 
(c)     
Production taxes, severance taxes and sales, privilege and other taxes measured
by production or the value of production.

 
All payments and royalties payable hereunder may be made by South American’s
check, and delivery thereof shall be deemed completed on the mailing thereof to
Owner.
 
6.          South American will perform a minimum of $900.00 in assessment work
for the benefit of the Property for the assessment year ended September 2, 2012,
and a cumulative minimum of $900.00 for every assessment year thereafter in
which South American continues this Lease beyond July 1 of the assessment
year.  For each year in which South American performs assessment work, it will
record and file, as required by law, the affidavit of such assessment work.
 
On or before February 28 of each year, South American shall provide Owner a
report of activities on the Property for the preceding year, which report will
be limited to factual data such as maps, logs and other pertinent
information.  Owner shall treat such data as confidential and shall not disclose
it to third parties without the prior written consent of South American.
 
7.          Upon request, Owner will make available such abstracts of title or
other title records pertaining to the Property which he may have to aid South
American in any title searching it may wish to undertake.  South American may
remedy any title defects which Owner fails to remedy at South American’s
request, but expenses so incurred by South American shall be chargeable against
any Production Royalties which may accrue hereunder to Owner.
 
South American may investigate and cure as it sees fit any defects in the title,
location, recordation or filing of the unpatented mining claims comprising the
Property, and Owner agrees to cooperate fully with the curing of said
deficiencies at the expense of South American.  Owner additionally agrees that
South American at its discretion, may relocate, amend, restake, refile and
rerecord any particular mining claim or claims in the Property or documents
associated herewith.  Where required for restaking or relocation, Owner agrees
to execute notices of abandonment of mining claims, and, in turn, South American
agrees that any relocation or restaking will be accomplished in Owner’s name.
 
Owner agrees to apply for a patent for any of the unpatented mining claims upon
the request of South American.  All expenses authorized by South American in
connection with prosecuting patent proceedings shall be borne by South American
and the rights of South American under this Lease shall extend to any patented
mining claims and any amended location and relocation.
 
 
 

 
- 3 -

--------------------------------------------------------------------------------

 

 
 
If the United States of any third party attacks the validity of the mining
claims included in the Property, South American shall have no obligation to
defend their validity.
 
8.        South American is hereby granted the right to mine or remove from the
Property any ores, waste, water or other materials existing therein or thereon,
through or by means of shafts or openings which may be sunk or made upon
adjoining or nearby property controlled by South American and may stockpile any
ores, waste or other materials and/or concentrated products of ores or materials
from the Property upon stockpile grounds situated upon any such adjoining or
nearby property; and South American may use the Property and any part thereof
and any shafts, openings, and stockpile grounds, such or made thereon for the
mining, removal and/or stockpiling of any ores, waste, water and other materials
and/or concentrated products of ores or materials from any such adjoining or
nearby property, or for any purpose or purposes connected therewith, not,
however, preventing or interfering with the mining or removal of ore from the
Property.
 
South American may commingle ore from the Property with ore from other
properties, either before or after concentration of beneficiation, so long as
the data to determine the weight and assay, both of the ore removed from the
Property and of other ores to be commingled, are obtained by South
American.  South American shall use that weight and assay data to allocate the
royalties from the commingled ore between the Property and other properties from
which the other commingled ore was removed.  All such weight, assay and
allocation calculations by South American shall be done in a manner recognized
by the mining industry as practical and sufficient.
 
9.        South American’s records of all mining operations on the Property
pertinent to computation of royalties shall be available for Owner’s inspection,
but no more than once each quarter_ Owner may enter the mine workings and
structures on the Property at all reasonable times for inspection thereof, but
Owner shall so enter at his own risk and shall indemnify and hold South American
harmless against and from any damage, loss of liability by reason of injury to
Owner or his agents or representatives while on the Property on or in said mine
workings and structures.
 
10.      South American shall pay all taxes assessed against any personal
property which it may place on the Property and shall pay any taxes or increase
in taxes assessed against the Property due to its operations thereon.  South
American may take such action as it deems proper to obtain a reduction or refund
of taxes paid or payable by it.  Owner shall pay all other taxes assessed
against the Property, including all taxes assessed or payable at the time of the
execution of this Agreement.
 
11.      South American shall keep the Property free of all liens for labor or
materials furnished to it in its operations hereunder and will indemnify and
save harmless Owner against and from any damage, loss or liability by reason of
injury to person or damage to property as the result of its operations
hereunder, except as provided in Section 9 above.  South American may contest
the validity of any lien on the Property, and the same shall not be deemed a
default unless finally adjudicated to be valid and not discharged by the Owner.
 
 
 
 

 
- 4 -

--------------------------------------------------------------------------------

 

 
Owner agrees that it will not cause or allow any liens, encumbrances or adverse
claims to accrue against the Property, except such as may have been expressly
subordinated to this Agreement; and in the event any lien or encumbrance shall
hereafter accrue against the Property by act or neglect of Owner, then South
American may, at South American’s option, pay and discharge the same, and if
South American elects so to do, may deduct the amount so paid from any advance
royalties, Production Royalties or other payments hereunder, together with
interest thereon from the date of payment of said sums at the weighted average
of prime rates throughout the year (as established by the Chemical Bank of New
York} subject to the application of any Arizona usury statute.
 
12.         At any time after payment of the amount due on execution hereof,
South American may terminate this Agreement by written notice to Owner to that
effect.
 
Upon surrender of termination of this Agreement, and upon written request of
Owner made with thirty (30) days following such surrender or termination, South
American shall furnish Owner with a complete summary of the factual information
obtained as a result of work done by South American on the Property including,
but not limited to, logs of all holes drilled thereon, ore values encountered,
if any, analyses thereof and pertinent maps and surveys prepared by South
American in the course of such work.
 
13.          If South American defaults in any of its obligations hereunder,
Owner may give written notice thereof and specify the default or defaults relied
on.  If South American has not cured or begun to cure such default within a
reasonable time (which shall not, in any case, be less than thirty (30) days),
Owner may terminate this Agreement by written notice to South American, provided
that if South American shall dispute that any default has occurred, the matter
shall be determined by litigation in a court of competent jurisdiction, and if
the court shall find South American in default hereunder, South American shall
have a reasonable time (which shall not be less than sixty (60) days from
receipt of notice of such award) to cure such default, and if so cured, Owner
shall have no right to terminate this Agreement by reason of such default.
 
14.          The term of this Agreement shall be extended by the duration of any
event of force majeure, and the obligations of South American under this
Agreement shall be suspended and South American shall not be deemed in default
or liable for damages or other remedies while South American is prevented from
complying therewith by force majeure. For purposes of this Agreement, force
majeure shall include, but not be limited to, acts of God, the elements, riots,
acts or failure to act on the part of federal or state agencies or courts,
inability to obtain necessary permits, inability to secure material or to obtain
access to the Property, strikes, lockouts, damage to, destruction or unavoidable
shutdown of necessary facilities, or any other matters (whether or not similar
to those above mentioned) beyond South American’s reasonable control, provided,
however, that settlement of strikes or lockouts shall be entirely within the
discretion of South American, and provided, further, that South American shall
promptly notify Owner thereof and shall exercise diligence in an effort to
remove or overcome the cause of such inability to comply.
 
 
 
 

 
 
- 5 -

--------------------------------------------------------------------------------

 

 
15.         In the case of termination of this Agreement under the terms hereof
or for any cause, South American shall have no further liability or obligation
hereunder except for those already accrued at such date of termination.  Upon
such termination, South American shall surrender the Property to Owner, and upon
his request shall deliver to him a written instrument in further evidence of
such termination, in appropriate form for recording, shall have three (3) months
after termination within which to remove from the Property all its machinery,
equipment, buildings, structures and other items of property belonging to it.
 
16.         Owner shall not sell, transfer or otherwise dispose, or offer to
sell, transfer or otherwise dispose, or accept any offer to sell, transfer or
otherwise dispose, of the Property or any interest therein unless Owner first
offers by written notice to (hereinafter referred to as the “Offer’’) the prior
right to purchase, receive or otherwise acquire the same.  The Offer shall set
forth the nature of the interest in the Property offered for sale, the
consideration therefor expressed only in lawful currency of the United States,
the terms and conditions of the sale, and the Offer is open for acceptance for a
period of sixty (60) days after receipt of the Offer by South American.  South
American may accept the Offer by delivery of written notice of acceptance to
Owner within sixty (60) days after receipt of the Offer by South American.  If
the Offer is accepted by South American, the sale, transfer or other disposition
shall be completed in accordance with the terms of the Offer.  If the Offer is
not accepted by South American within the time provided, South American shall be
deemed to have declined the Offer and Owner may sell, transfer or otherwise
dispose of the interest in the Property to a third party, but only for the
consideration and only upon the terms and conditions as set out in the Offer and
only within the period of ninety (90) days after the expiry of the period for
acceptance by South American, and, if the Owner does not do so, the provisions
of this section 15 shall again become applicable to the sale, transfer or other
disposition of the Property or interest therein, and so on from time to time.
 
17.         Changes in the ownership of the Property or the rights to receive
royalties and advance royalties hereunder occurring after delivery of this
Agreement shall not be binding upon South American until it shall receive
written notice of such change, together with a certified copy or photographic
copy of the recorded documents reflecting such change.  No change or division in
the ownership of the Property, mineral interests, advance royalties or royalties
hereafter accomplished shall operate to enlarge the obligations or diminish the
rights of South American hereunder.
 
18.         All notices hereunder shall be in writing and may be delivered by
certified mail, and such mailing thereof shall be deemed the act of giving
notice.  Such mailed notices shall be addressed to Owner as follows:
 
Marilyn Bashore
228 East McFarland Avenue
Coeur d’Alene, Idaho 83814

And to South American as follows:

South American Gold Corporation
3645 East Main Street, Suite #107
Richmond, Indiana 47374

19.      “Owner” as used herein includes the plural, if there are more than one,
and reference to the Owner in one gender includes the other and the plural when
appropriate.
 

 
- 6 -

--------------------------------------------------------------------------------

 
 

 
20.        Upon request, Owner will execute a short form of Agreement covering
the Property for purposes of recording.
 
21.        Owner and South American may assign their rights under this
Agreement, in whole or in part with the prior written consent of South American
and Owner respectively, which consent will not be unreasonably withheld, and
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, their heirs, executors, administrators, successors and assigns.  South
American may assign this Lease to an affiliated company upon written notice to
Owner.
 
22.        All dollar denominated items in this Agreement refer to U.S.
currency.
 
IN WITNESS WHEREOF, the parties have executed this Mining Lease and Agreement as
of the day and year first above written.

 

 /s/  Marilyn Bashore                                          /s/ Raymond
DeMotte                                               
       Marilyn Bashore
      Raymond DeMotte
       Owner
      South American Gold Corporation

 
STATE OF IDAHO
)
 
) ss
COUNTY OF KOOTENAI
)

 
 
ON THIS 14th day of December, 2011, before me, the undersigned, a Notary Public
in and for the State of Idaho, duly commissioned and sworn, personally appeared
MARILYN BASHORE known to me or proven to me to be the person who acknowledged to
me that she executed the above Mining Lease and Agreement, as indicated above.
 

 
/s/  MARILYN BASHORE                                        
      MARILYN BASHORE

 
/s/ Peggy Hord                                                            
      Peggy Hord
      Notary in and for the County of Kootenal
      Residing at:  Coeur d'Alene, ID
      My commission expires: 12/08/2015
 
 
 

 
 
- 7 -

--------------------------------------------------------------------------------

 

 
STATE OF _____________
)
 
) ss
COUNTY OF ___________
)

 
 
ON THIS _____day of December, 2011, before me, the undersigned, a Notary Public
in and for the State of __________, duly commissioned and sworn, personally
appeared ________________________________ known to me or proven to me to be the
person who acknowledged to me that he executed the above Mining Lease and
Agreement in his capacity as ________________________________ of South American
Gold Corporation as indicated above, on behalf of said corporation and that the
corporation executed the above Mining Lease and Agreement.

 
/s/  Raymond DeMotte                                                
      Raymond DeMotte
 
 
 
/s/  Christopher L. Louiman                                      
      Christopher L. Louiman
      Notary in and for the County of Montgomery
      Residing at:  Huber Heights, Ohio
      My commission expires:  February 5, 2014
 
 
 
 
 
                                    

 
- 8 -

--------------------------------------------------------------------------------

 

 
EXHIBIT A
 
to
 
That certain Mining Lease and Agreement entered into by and between Marilyn
Bashore and South American Gold Corporation.
 
The nine (9) unpatented Mining Claims are situated in Section 27 and S½ of
Section 22;Township 9 North; Range 3 West, Yavapai County, Arizona.
 
Claim Reference Numbers

BLM Recording Number
 
County Recording Number
GB 1
AMC
393641
 
8 4608
 
P 313
GB 3
 
393643
 
8 4608
 
P 315
GB 4
 
393644
 
8 4608
 
P 316
GB 5
 
393645
 
8 4608
 
P 317
GB 6
 
393646
 
8 4608
 
P 318
GB 7
 
393647
 
8 4608
 
P 319
GB 8
 
393648
 
8 4608
 
P 320
GB 23
 
393931
 
8 4608
 
P 983
GB 25
 
393930
 
8 4608
 
P 984

 

 
 

 
A - 1

--------------------------------------------------------------------------------