eXHIBIT 10.1

MINeral property ACQUISITION AGREEMENT 

(Reference: 140 claims)

 

THIS AGREEMENT is dated for reference February 6, 2012.

BETWEEN:

TORON INC., a company having an address at 1000 de La Gauchetiere Street West,
24th Floor, Montreal, QC, H3B 4W5, Canada, herein represented by Michael
Whitehead duly authorized as he so declares;

 (the “Purchaser” or the “Company”);

AND:

9248-7792 QUEBEC INC., a company having an address at 970 Gilles Lupien,
Trois-Rivieres, QC, G9C 0B9, Canada;

(“9248-7792 Quebec”);

AND:

GLENN GRIESBACH, a businessman having an address at Perumahan Taman Permata
Millenium, Jalan Permata Bunda, Sektor 1, Blok C2/18, Lippo Karawaci, Banten
Provence, Indonesia, 15811.

                        (“GG”);

                        (9248-7792 Quebec and GG are also collectively referred
to as the “Vendor”).

 

WHEREAS:

The Vendor is the registered beneficial owner of an undivided one hundred
percent (100%) interest in and to those certain mineral interests which are more
particularly described in Schedule “A”  and shown in Schedule “B” attached
hereto (the “Property”).

            The Vendor wishes to sell to the Purchaser a one hundred percent
(100%) interest in and to the Property and any deposits of minerals on the
Property, and the Purchaser wishes to acquire the same on the terms and subject
to the conditions as are more particularly set forth herein.

THEREFORE in consideration of the mutual covenants and agreements in this
Agreement, the parties agree as follows:

 

 

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1.                                          DEFINITIONS AND INTERPRETATION

1.1                                      FOR THE PURPOSES OF THIS AGREEMENT:

(A)                "AFFILIATE" MEANS ANY PERSON, PARTNERSHIP, JOINT VENTURE,
CORPORATION OR OTHER FORM OF ENTERPRISE WHICH DIRECTLY OR INDIRECTLY CONTROLS,
IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, A PARTY TO THIS AGREEMENT.
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;

(B)               "ORE" SHALL MEAN ANY MINERALS OF COMMERCIAL ECONOMIC VALUE
MINED FROM THE PROPERTY;

(C)                "PAYMENT" MEANS THE PAYMENTS CONTEMPLATED IN PARAGRAPH 3.2;

(D)               "PRODUCT" SHALL MEAN ORE MINED FROM THE PROPERTY AND ANY
CONCENTRATES OR OTHER MATERIALS OR PRODUCTS DERIVED THEREFROM, BUT IF ANY SUCH
ORE, CONCENTRATES OR OTHER MATERIALS OR PRODUCTS ARE FURTHER TREATED AS PART OF
THE MINING OPERATION IN RESPECT OF THE PROPERTY, SUCH ORE, CONCENTRATES OR OTHER
MATERIALS OR PRODUCTS SHALL NOT BE CONSIDERED TO BE "PRODUCT" UNTIL AFTER THEY
HAVE BEEN SO TREATED.

(E)                "PROPERTY" MEANS MINERAL CLAIMS IN QUEBEC, MORE PARTICULARLY
DESCRIBED IN SCHEDULE “A” AND SCHEDULE “B” OF THIS AGREEMENT;

(F)                "PROPERTY RIGHTS" MEANS ALL LICENCES, PERMITS, EASEMENTS,
RIGHTS-OF-WAY, CERTIFICATES AND OTHER APPROVALS OBTAINED BY EITHER OF THE
PARTIES, EITHER BEFORE OR AFTER THE DATE OF THIS AGREEMENT, AND NECESSARY FOR
THE DEVELOPMENT OF THE PROPERTY OR FOR THE PURPOSE OF PLACING THE PROPERTY INTO
PRODUCTION OR OF CONTINUING PRODUCTION ON THE PROPERTY; AND

(G)               "SHARES" MEANS FULLY PAID AND NON-ASSESSABLE COMMON SHARES IN
THE SHARE CAPITAL OF THE PURCHASER, ISSUED PURSUANT TO EXEMPTIONS FROM
REGISTRATION AND PROSPECTUS REQUIREMENTS CONTAINED IN THE UNITED STATES
SECURITIES ACT OF 1933 AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER,
WHICH SHARES SHALL CONTAIN SUCH RESTRICTIVE LEGENDS REGARDING APPLICABLE HOLD
PERIODS AS REQUIRED BY SUCH SECURITIES LAWS.

1.2                                      FOR THE PURPOSES OF THIS AGREEMENT,
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED OR UNLESS THE CONTEXT OTHERWISE REQUIRES:

(A)                "THIS AGREEMENT" MEANS THIS MINING ACQUISITION AGREEMENT AND
ALL SCHEDULES ATTACHED HERETO;

(B)               ANY REFERENCE IN THIS AGREEMENT TO A DESIGNATED "SECTION",
"SCHEDULE", "PARAGRAPH" OR OTHER SUBDIVISION REFERS TO THE DESIGNATED SECTION,
SCHEDULE, PARAGRAPH OR OTHER SUBDIVISION OF THIS AGREEMENT;

 

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(C)                THE WORDS "HEREIN" AND "HEREUNDER" AND OTHER WORDS OF SIMILAR
IMPORT REFER TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR SECTION OR
OTHER SUBDIVISION OF THIS AGREEMENT;

(D)               ANY REFERENCE TO A STATUTE INCLUDES AND, UNLESS OTHERWISE
SPECIFIED HEREIN, IS A REFERENCE TO SUCH STATUTE AND TO THE REGULATIONS MADE
PURSUANT THERETO, WITH ALL AMENDMENTS MADE THERETO AND IN FORCE FROM TIME TO
TIME, AND TO ANY STATUTE OR REGULATIONS THAT MAY BE PASSED WHICH HAS THE EFFECT
OF SUPPLEMENTING OR SUPERSEDING SUCH STATUTE OR SUCH REGULATION;

(E)                ANY REFERENCE TO "PARTY" OR "PARTIES" MEANS THE VENDOR, THE
PURCHASER, 9248-7792 QUEBEC, GG OR ALL, AS THE CONTEXT REQUIRES;

(F)                THE HEADINGS IN THIS AGREEMENT ARE FOR CONVENIENCE OF
REFERENCE ONLY AND DO NOT AFFECT THE INTERPRETATION OF THIS AGREEMENT; AND

(G)               ALL REFERENCES TO CURRENCY REFER TO UNITED STATES DOLLARS.

1.3                                      THE FOLLOWING ARE THE APPENDICES TO
THIS AGREEMENT, AND ARE INCORPORATED INTO THIS AGREEMENT BY REFERENCE:

                           Schedule “A”:          Property-Legal (Claims
Identity Numbers) Description

                           Schedule “B”:          Property (Claims) Location Map

2.                                          REPRESENTATIONS AND WARRANTIES OF
THE VENDOR AND THE PURCHASER

2.1                                      THE VENDOR REPRESENTS AND WARRANTS TO
THE PURCHASER THAT:

(A)                THE VENDOR IS THE BENEFICIAL OWNER OF IT’S INTEREST IN THE
PROPERTY AND THE VENDOR HAS THE FULL RIGHT, POWER, CAPACITY AND AUTHORITY TO
ENTER INTO, EXECUTE AND DELIVER THIS AGREEMENT;

(B)               THE PROPERTY IS FREE AND CLEAR OF, AND FROM, ALL LIENS,
CHARGES AND ENCUMBRANCES WITH ALL ASSESSMENT WORK THEREIN HAVING BEEN, OR TO BE,
DULY COMPLETED UNTIL THE LAST SET OF CLAIMS ARE ACQUIRED BY THE PURCHASER;

(C)                THE VENDOR HOLDS ALL PERMITS, LICENCES, CONSENTS AND
AUTHORITIES ISSUED BY ANY GOVERNMENT OR GOVERNMENTAL AUTHORITY WHICH ARE
NECESSARY IN CONNECTION WITH THE OWNERSHIP AND OPERATION OF ITS BUSINESS AND THE
OWNERSHIP OF THE PROPERTY;

(D)               THE PROPERTY HAS BEEN PROPERLY STAKED, LOCATED AND RECORDED
PURSUANT TO THE APPLICABLE LAWS AND REGULATIONS OF THE PROVINCE OF QUEBEC AND
ALL MINING CLAIMS COMPRISING THE PROPERTY ARE IN GOOD STANDING;

(E)                TO THE BEST OF THE VENDOR'S KNOWLEDGE, THERE ARE NO
OUTSTANDING ORDERS OR DIRECTIONS RELATING TO ENVIRONMENTAL MATTERS REQUIRING ANY
WORK, REPAIRS,

 

 

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CONSTRUCTION OR CAPITAL EXPENDITURES WITH RESPECT TO THE PROPERTY AND THE
CONDUCT OF THE OPERATIONS RELATED THERETO, AND THE VENDOR HAS NOT RECEIVED ANY
NOTICE OF THE SAME AND IS NOT AWARE OF ANY BASIS ON WHICH ANY SUCH ORDERS OR
DIRECTION COULD BE MADE;

(F)                THERE IS NO ADVERSE CLAIM OR CHALLENGE AGAINST OR TO THE
OWNERSHIP OF OR TITLE TO ANY PART OF THE PROPERTY AND, TO THE BEST OF THE
VENDOR’S KNOWLEDGE THERE IS NO BASIS FOR SUCH ADVERSE CLAIM OR CHALLENGE WHICH
MAY AFFECT THE PROPERTY; AND

(G)               THE  CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT DOES NOT AND WILL NOT CONFLICT WITH, CONSTITUTE A DEFAULT UNDER,
RESULT IN A BREACH OF, ENTITLE ANY PERSON OR COMPANY TO A RIGHT OF TERMINATION
UNDER, OR RESULT IN THE CREATION OR IMPOSITION OF ANY LIEN, ENCUMBRANCE OR
RESTRICTION OF ANY NATURE WHATSOEVER UPON OR AGAINST THE PROPERTY OR ASSETS OF
THE VENDOR, UNDER ITS CONSTATING DOCUMENTS, ANY CONTRACT, AGREEMENT, INDENTURE
OR OTHER INSTRUMENT TO WHICH THE VENDOR IS A PARTY OR BY WHICH IT IS BOUND, ANY
LAW, JUDGMENT, ORDER, WRIT, INJUNCTION OR DECREE OF ANY COURT, ADMINISTRATIVE
AGENCY OR OTHER TRIBUNAL OR ANY REGULATION OF ANY GOVERNMENTAL AUTHORITY.

2.2                                      THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN PARAGRAPH 2.1 ARE PROVIDED FOR THE EXCLUSIVE BENEFIT OF THE
PURCHASER, AND A BREACH OF ANY ONE OR MORE REPRESENTATIONS OR WARRANTIES MAY BE
WAIVED BY THE PURCHASER IN WHOLE OR IN PART AT ANY TIME WITHOUT PREJUDICE TO ITS
RIGHTS IN RESPECT OF ANY OTHER BREACH OF THE SAME OR ANY OTHER REPRESENTATION OR
WARRANTY, AND THE REPRESENTATIONS AND WARRANTIES CONTAINED IN PARAGRAPH 2.1 WILL
SURVIVE THE EXECUTION AND DELIVERY OF THIS AGREEMENT.

2.3                                      THE PURCHASER REPRESENTS AND WARRANTS
TO THE VENDOR THAT:

(A)                THE PURCHASER IS A VALID AND SUBSISTING CORPORATION DULY
INCORPORATED AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF NEVADA;

(B)               THE PURCHASER  HAS THE FULL RIGHT, POWER, CAPACITY AND
AUTHORITY TO ENTER INTO, EXECUTE AND DELIVER THIS AGREEMENT AND TO BE BOUND BY
ITS TERMS;

(C)                THE CONSUMMATION OF THIS AGREEMENT WILL NOT CONFLICT WITH NOR
RESULT IN ANY BREACH OF ITS CONSTATING DOCUMENTS OR ANY COVENANTS OR AGREEMENTS
CONTAINED IN OR CONSTITUTE A DEFAULT UNDER ANY AGREEMENT OR OTHER INSTRUMENT
WHATEVER TO WHICH THE PURCHASER IS A PARTY OR BY WHICH THE PURCHASER IS BOUND OR
TO WHICH THE PURCHASER MAY BE SUBJECT;

(D)               NO PROCEEDINGS ARE PENDING FOR, AND THE PURCHASER IS UNAWARE
OF ANY BASIS FOR, THE INSTITUTION OF ANY PROCEEDINGS LEADING TO THE PLACING OF
THE PURCHASER IN BANKRUPTCY OR SUBJECT TO ANY OTHER LAWS GOVERNING THE AFFAIRS
OF INSOLVENT PARTIES; AND

(E)                THE PURCHASER HAS COMPLETED SUCH DUE DILIGENCE ON THE
PROPERTY AS THEY HAVE DEEMED NECESSARY.

 

 

 

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2.4                                      THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN PARAGRAPH 2.3 ARE PROVIDED FOR THE EXCLUSIVE BENEFIT OF THE VENDOR,
AND A BREACH OF ANY ONE OR MORE REPRESENTATIONS OR WARRANTIES MAY BE WAIVED BY
THE VENDOR IN WHOLE OR IN PART AT ANY TIME WITHOUT PREJUDICE TO ITS RIGHTS IN
RESPECT OF ANY OTHER BREACH OF THE SAME OR ANY OTHER REPRESENTATION OR WARRANTY,
AND THE REPRESENTATIONS AND WARRANTIES CONTAINED IN PARAGRAPH 2.3 WILL SURVIVE
THE EXECUTION AND DELIVERY OF THIS AGREEMENT.

2.5                                      THE VENDOR AND THE PURCHASER
ACKNOWLEDGE THAT THE VENDOR WILL MAINTAIN CONTROL OF THE PROPERTY, SUBJECT TO
THIS AGREEMENT, AND SUBJECT TO ALL APPROPRIATE LOCAL AND NATIONAL GOVERNMENTAL
APPROVALS AND ENVIRONMENTAL CONSIDERATIONS SAVE AND EXCEPT FOR ANY COSTS RELATED
TO THE RENEWALS OF THE CLAIMS PURCHASED.

3.                                          PURCHASE  

3.1                                      THE VENDOR HEREBY SELLS TO THE
PURCHASER A ONE HUNDRED PERCENT (100%) UNDIVIDED INTEREST IN AND TO THE PROPERTY
AND ALL MINERALS ON THE PROPERTY, FREE AND CLEAR OF ALL CLAIMS, TAXES, LIENS OR
ENCUMBRANCES, ON THE TERMS AND CONDITIONS SET OUT HEREIN.

3.2                                      THE CONSIDERATION PAYABLE BY THE
PURCHASER TO THE VENDOR PURSUANT TO THIS AGREEMENT SHALL CONSIST OF THE ISSUANCE
OF 5,000,000 (FIVE MILLION) COMMON SHARES OF THE PURCHASER AND PAYMENT OF
$20,000.00 (TWENTY THOUSAND DOLLARS).  THE CONSIDERATION SHALL BE PROVIDED AS
FOLLOWS:

3.2.1       $20,000 PAID AND RECEIVED PRO RATA TO GG AND 9248-7792 QUEBEC ON OR
BEFORE APRIL 16, 2012.    

3.2.2        5,000,000 (FIVE MILLION) SHARES DELIVERED AND RECEIVED PRO RATA TO
GG AND 9248-7792 QUEBEC ON OR BEFORE APRIL 16, 2012.

3.2.3     THE VENDOR WILL TRANSFER THE 140 CLAIMS IDENTIFIED IN SCHEDULE A, 5
DAYS AFTER  RECEIVING THE PAYMENT 3.2.1 AND 3.2.2 OF THIS CONTRACT. TRANSFER
COSTS OF CLAIMS, SHALL BE PAID BY THE BUYER

3.3                                      THE PURCHASER AGREES THAT IT WILL BE
RESPONSIBLE FOR ALL COSTS AND ADMINISTRATIVE ACTIONS REQUIRED TO RENEW ANY OF
THE CLAIMS IDENTIFIED IN SCHEDULE A. 

3.4                                      IF THE PURCHASER VERIFIES THAT HE HAS
INITIATED AND COMPLETED HIS DUE DILIGENCE ON THE PROPERTY AND IS SATISFIED THAT
THERE ARE PRESENTLY NO MATERIAL DEFECT IN THE VENDOR’S TITLE TO THE PROPERTY. IF
THE PURCHASER IDENTIFIES SUBSEQUENTLY ANY MATERIAL DEFECTS HE SHALL GIVE THE
VENDOR NOTICE OF SUCH DEFECT.  IF THE DEFECT HAS NOT BEEN CURED WITHIN 60 DAYS
OF RECEIPT OF SUCH NOTICE, THE PURCHASER SHALL BE ENTITLED TO TAKE SUCH CURATIVE
ACTION AS IS REASONABLY NECESSARY, AND SHALL BE ENTITLED TO DEDUCT THE COSTS AND
EXPENSES INCURRED IN TAKING SUCH ACTION FROM PAYMENTS THEN OTHERWISE DUE OR
ACCRUING DUE TO THE VENDOR.  IF THERE ARE NO SUCH PAYMENTS, THE PURCHASER SHALL
BE ENTITLED TO A REFUND IN THE AMOUNT OF SAID COSTS AND EXPENSES.

4.                                          PROPERTY TO BE HELD IN TRUST

4.1                                      THE PARTIES ACKNOWLEDGE THAT THE
PURCHASER, BEING A NEVADA CORPORATION CANNOT, UNDER QUEBEC LAWS, HOLD REGISTERED
TITLE TO THE CLAIMS DIRECTLY.  THE PURCHASER HAS INCORPORATED A NEW CANADIAN
FEDERALLY REGISTERED COMPANY (THE “SUBSIDIARY”), A WHOLLY OWNED SUBSIDIARY OF

 

 

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THE PURCHASER, WHICH WAS SOLELY FORMED TO HOLD REGISTERED OWNERSHIP OF THE
PROPERTIES IN TRUST FOR THE PURCHASER IF LEGALLY ALLOWED UNDER THE LAWS OF
QUEBEC AND ON THE TERMS AND CONDITIONS SET FORTH THEREIN.

5.                                          PROPERTY EXPLORATION AND MAINTENANCE

5.1                                      THE PURCHASER SHALL BE THE OPERATOR IN
CONNECTION WITH THE PROPERTY.

6.                                          RIGHT OF ENTRY

6.1                                      THE PURCHASER AND ITS EMPLOYEES,
AGENTS, DIRECTORS, OFFICERS AND INDEPENDENT CONTRACTORS WILL HAVE THE EXCLUSIVE
RIGHT IN RESPECT OF THE PROPERTY TO:

(A)                ENTER THE PROPERTY WITHOUT DISTURBANCE;

(B)               DO SUCH PROSPECTING, EXPLORATION, DEVELOPMENT AND/OR OTHER
MINING WORK ON AND UNDER THE PROPERTY TO CARRY OUT EXPLORATION EXPENDITURES AS
THE PURCHASER MAY DETERMINE NECESSARY OR DESIRABLE;

(C)                BRING AND ERECT UPON THE PROPERTY SUCH BUILDINGS, PLANT,
MACHINERY AND EQUIPMENT AS THE PURCHASER MAY DEEM NECESSARY OR DESIRABLE IN ITS
SOLE DISCRETION; AND

(D)               REMOVE FROM THE PROPERTY ALL METALS AND MINERALS DERIVED FROM
ITS OPERATIONS ON THE PROPERTY AS MAY BE DEEMED NECESSARY BY THE PURCHASER FOR
TESTING.

7.                                          RECORDING OF AGREEMENT

7.1                                      THE VENDOR AND THE PURCHASER WILL
EXECUTE AND DELIVER SUCH ADDITIONAL DOCUMENTATION AS LEGAL COUNSEL FOR THE
VENDOR AND THE PURCHASER DETERMINE IS NECESSARY IN ORDER TO DULY REGISTER AND
RECORD IN THE APPROPRIATE REGISTRATION AND RECORDING OFFICES NOTICE THAT THE
VENDOR’S INTEREST IN AND TO THE PROPERTY IS SUBJECT TO AND BOUND BY THE TERMS OF
THIS AGREEMENT AT THE COST OF THE PURCHASER.  

8.                                          CONDITIONS PRECEDENT

8.1                                      THE OBLIGATION OF THE PURCHASER TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT IS SUBJECT TO THE
PURCHASER BEING SATISFIED WITH THE TITLE TO THE PROPERTY HELD BY THE VENDOR
WHICH IS FOR THE PURCHASER’S SOLE BENEFIT AND MAY BE WAIVED IN WRITING BY THE
PURCHASER.

9.                                          JOINT OBLIGATIONS

9.1                                      UNLESS THIS AGREEMENT IS TERMINATED IN
ACCORDANCE WITH PARAGRAPH 13.1, THE PURCHASER, 9248-7792 QUEBEC AND GG COVENANT
AND AGREE WITH EACH OTHER THAT THEY WILL CO-OPERATE IN GOOD FAITH TO:

(A)                THE PURCHASER WILL MAINTAIN THE PROPERTY IN GOOD STANDING BY
DOING AND FILING ALL ASSESSMENT WORK OR MAKING PAYMENTS IN LIEU THEREOF AND BY
PERFORMING ALL OTHER ACTS WHICH MAY BE NECESSARY IN ORDER TO KEEP THE PROPERTY
IN GOOD STANDING AND

 

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FREE AND CLEAR OF ALL LIENS AND OTHER CHARGES ARISING FROM OR OUT OF THE
PURCHASER'S ACTIVITIES ON THE PROPERTY UNTIL THE PROPERTY IS FULLY PURCHASED BY
THE PURCHASER;

(B)               THE PURCHASER WILL DO ALL WORK ON THE PROPERTY IN ACCORDANCE
WITH SOUND MINING, EXPLORATION AND ENGINEERING PRACTICES AND IN COMPLIANCE WITH
ALL APPLICABLE LAWS, BYLAWS, REGULATIONS, ORDERS, AND LAWFUL REQUIREMENTS OF ANY
GOVERNMENTAL OR REGULATORY AUTHORITY AND COMPLY WITH ALL LAWS GOVERNING THE
POSSESSION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THOSE GOVERNING
SAFETY, POLLUTION AND ENVIRONMENTAL MATTERS; AND,

(C)                MAINTAIN TRUE AND CORRECT BOOKS, ACCOUNTS AND RECORDS OF
OPERATIONS THEREUNDER, SUCH RECORDS TO BE OPEN AT ALL REASONABLE TIMES UPON
REASONABLE NOTICE FOR INSPECTION BY THE OTHER PARTY OR ITS DULY AUTHORIZED
REPRESENTATIVE.

10.                                      TRANSFER OF THE PROPERTY

10.1                                  WITHIN  FIVE (5) DAYS FOLLOWING THE FINAL
PAYMENT OF THIS AGREEMENT, THE VENDOR WILL PROVIDE TO A LAWYER AT LAURIN DUHAIME
AVOCAT, IN TRUST, THE SIGNED CLAIMS TRANSFER IN FAVOUR OF TORON INC; THE 140
CLAIMS LISTED IN SCHEDULE A.  THIS TRANSFER WILL BE REGISTERED WITH THE MRNF
(MINISTERE DES RESSOURCES NATURELLE ET FAUNE – QUEBEC) WITHIN FIVE (5) DAYS
FOLLOWING THE RECEIPT OF THE FINAL PAYMENT BY THE VENDOR.  THE TRANSFER COST
WILL BE BORNE BY THE PURCHASER AND MUST BE PROVIDED TO THE VENDOR SO THAT THE
VENDOR MAY REGISTER THE CLAIMS TRANSFER WITH THE MRNF. 

10.2                                  THE PURCHASER WILL ACT OPERATE AS
ADMINISTRATOR OF THE PROPERTY AND WILL HAVE THE EXCLUSIVE RIGHT TO CONDUCT
OPERATIONS ON THE CLAIMS BETWEEN THE DATE OF SIGNATURE OF THE AGREEMENT AND THE
DATE OF RECEIPT BY THE VENDORS OF THE FINAL PAYMENT.   

11.                                      FORCE MAJEURE

11.1                                  IF EITHER PARTY IS AT ANY TIME DURING THE
PAYMENT PERIOD IS PREVENTED OR DELAYED IN COMPLYING WITH ANY OF THE PROVISIONS
OF THIS AGREEMENT (THE "AFFECTED PARTY") BY REASON OF STRIKES, LOCKOUTS, LAND
CLAIMS AND BLOCKAGES, NGO ACTIVITIES, FOREST OR HIGHWAY CLOSURES, EARTHQUAKES,
SUBSIDENCE, GENERAL COLLAPSE OR LANDSLIDES, INTERFERENCE OR THE INABILITY TO
SECURE ON REASONABLE TERMS ANY PRIVATE OR PUBLIC PERMITS OR AUTHORIZATIONS,
LABOUR, POWER OR FUEL SHORTAGES, FIRES, WARS, ACTS OF GOD, CIVIL DISTURBANCES,
GOVERNMENTAL REGULATIONS RESTRICTING NORMAL OPERATIONS, SHIPPING DELAYS OR ANY
OTHER REASON OR REASONS BEYOND THE REASONABLE CONTROL OF THE AFFECTED PARTY
WHETHER OR NOT FORESEEABLE (PROVIDED THAT LACK OF SUFFICIENT FUNDS TO CARRY OUT
EXPLORATION ON THE PROPERTY WILL BE DEEMED NOT TO BE BEYOND THE REASONABLE
CONTROL OF THE AFFECTED PARTY), THEN THE TIME LIMITED FOR THE PERFORMANCE BY THE
AFFECTED PARTY OF ITS OBLIGATIONS HEREUNDER WILL BE EXTENDED BY A PERIOD OF TIME
EQUAL IN LENGTH TO THE PERIOD OF EACH SUCH PREVENTION OR DELAY.  NOTHING IN THIS
PARAGRAPH 11.1 OR THIS AGREEMENT WILL RELIEVE EITHER PARTY FROM ITS OBLIGATION
TO MAINTAIN THE CLAIMS COMPRISING THE PROPERTY IN GOOD STANDING AND TO COMPLY
WITH ALL APPLICABLE LAWS AND REGULATIONS INCLUDING, WITHOUT LIMITATION, THOSE
GOVERNING SAFETY, POLLUTION AND ENVIRONMENTAL MATTERS.

11.2                                  THE AFFECTED PARTY WILL PROMPTLY GIVE
NOTICE TO THE OTHER PARTY OF EACH EVENT OF FORCE MAJEURE UNDER PARAGRAPH 11.1
WITHIN 7 DAYS OF SUCH EVENT COMMENCING AND UPON CESSATION

 

 

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OF SUCH EVENT WILL FURNISH THE OTHER PARTY WITH WRITTEN NOTICE TO THAT EFFECT
TOGETHER WITH PARTICULARS OF THE NUMBER OF DAYS BY WHICH THE TIME FOR PERFORMING
THE OBLIGATIONS OF THE AFFECTED PARTY UNDER THIS AGREEMENT HAS BEEN EXTENDED BY
VIRTUE OF SUCH EVENT OF FORCE MAJEURE AND ALL PRECEDING EVENTS OF FORCE MAJEURE.

12.                                      CONFIDENTIAL INFORMATION

12.1                                  THE TERMS OF THIS AGREEMENT AND ALL
INFORMATION OBTAINED IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT WILL
BE THE EXCLUSIVE PROPERTY OF THE PARTIES HERETO AND EXCEPT AS PROVIDED IN
PARAGRAPH 12.2, WILL NOT BE DISCLOSED TO ANY THIRD PARTY OR THE PUBLIC WITHOUT
THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY, WHICH CONSENT WILL NOT BE
UNREASONABLY WITHHELD.

12.2                                  THE CONSENT REQUIRED BY PARAGRAPH 12.1
WILL NOT APPLY TO A DISCLOSURE:

(A)                TO AN AFFILIATE, CONSULTANT, CONTRACTOR OR SUBCONTRACTOR THAT
HAS A BONA FIDE NEED TO BE INFORMED;

(B)               TO ANY THIRD PARTY TO WHOM THE DISCLOSING PARTY CONTEMPLATES A
TRANSFER OF ALL OR ANY PART OF ITS INTEREST IN THIS AGREEMENT;

(C)                TO A GOVERNMENTAL AGENCY OR TO THE PUBLIC WHICH SUCH PARTY
BELIEVES IN GOOD FAITH IS REQUIRED BY PERTINENT LAWS OR REGULATION OR THE RULES
OF ANY APPLICABLE STOCK EXCHANGE;

(D)               TO AN INVESTMENT DEALER, BROKER, BANK OR SIMILAR FINANCIAL
INSTITUTION, IN CONFIDENCE IF REQUIRED AS PART OF A DUE DILIGENCE INVESTIGATION
BY SUCH FINANCIAL INSTITUTION IN CONNECTION WITH A FINANCING REQUIRED BY SUCH
PARTY OR ITS SHAREHOLDERS OR AFFILIATES TO MEET, IN PART, ITS OBLIGATIONS UNDER
THIS AGREEMENT; OR

(E)                IN A PROSPECTUS OR OTHER OFFERING DOCUMENT PURSUANT TO WHICH
SUCH PARTY PROPOSES TO RAISE FINANCING TO MEET, IN PART, ITS OBLIGATIONS UNDER
THIS AGREEMENT.

13.                                      DEFAULT AND TERMINATION

13.1                                  SUBJECT TO SECTION 11, IF AT ANY TIME
DURING THE PAYMENT PERIOD, A PARTY IS IN DEFAULT OF ANY REQUIREMENT OF THIS
AGREEMENT OR IS IN BREACH OF ANY PROVISION CONTAINED IN THIS AGREEMENT, THE
PARTY AFFECTED BY THE DEFAULT (THE "NON-DEFAULTING PARTY") MAY TERMINATE THIS
AGREEMENT BY GIVING WRITTEN NOTICE OF TERMINATION TO THE OTHER PARTY BUT ONLY
IF:

(A)                IT WILL HAVE GIVEN TO THE OTHER PARTY WRITTEN NOTICE OF THE
PARTICULAR FAILURE, DEFAULT, OR BREACH ON THE PART OF THE OTHER PARTY; AND

(B)               THE OTHER PARTY HAS NOT, WITHIN 30 DAYS FOLLOWING DELIVERY OF
SUCH WRITTEN NOTICE OF DEFAULT, CURED SUCH DEFAULT OR COMMENCED TO CURE SUCH
DEFAULT, IT BEING AGREED BY EACH PARTY THAT SHOULD IT SO COMMENCE TO CURE ANY
DEFAULT IT WILL PROSECUTE SUCH CURE TO COMPLETION WITHOUT UNDUE DELAY.

 

 

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13.2                                  NOTWITHSTANDING ANY TERMINATION OF THIS
AGREEMENT, THE PURCHASER WILL REMAIN LIABLE FOR THOSE OBLIGATIONS SPECIFIED IN
SECTIONS 10, 12 AND 14 AND THE VENDOR WILL REMAIN LIABLE FOR ITS OBLIGATIONS
UNDER SECTIONS 12 AND 14.

14.                                      INDEPENDENT ACTIVITIES

14.1                                  EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH
PARTY SHALL HAVE THE FREE AND UNRESTRICTED RIGHT TO INDEPENDENTLY ENGAGE IN AND
RECEIVE THE FULL BENEFIT OF ANY AND ALL BUSINESS ENDEAVOURS OF ANY SORT
WHATSOEVER, WHETHER OR NOT COMPETITIVE WITH THE ENDEAVOURS CONTEMPLATED HEREIN
WITHOUT CONSULTING THE OTHER OR INVITING OR ALLOWING THE OTHER TO PARTICIPATE
THEREIN. NO PARTY SHALL BE UNDER ANY FIDUCIARY OR OTHER DUTY TO THE OTHER WHICH
WILL PREVENT IT FROM ENGAGING IN OR ENJOYING THE BENEFITS OF COMPETING
ENDEAVOURS WITHIN THE GENERAL SCOPE OF THE ENDEAVOURS CONTEMPLATED HEREIN. THE
LEGAL DOCTRINES OF "CORPORATE OPPORTUNITY" SOMETIMES APPLIED TO PERSONS ENGAGED
IN A JOINT VENTURE OR HAVING FIDUCIARY STATUS SHALL NOT APPLY IN THE CASE OF ANY
PARTY. IN PARTICULAR, WITHOUT LIMITING THE FOREGOING, NO PARTY SHALL HAVE ANY
OBLIGATION TO ANY OTHER PARTY AS TO:

(A)                ANY OPPORTUNITY TO ACQUIRE, EXPLORE AND DEVELOP ANY MINING
PROPERTY, INTEREST OR RIGHT PRESENTLY OWNED BY IT OR OFFERED TO IT OUTSIDE OF
THE PROPERTY AT ANY TIME; AND

(B)               THE ERECTION OF ANY MINING PLANT, MILL, SMELTER OR REFINERY,
WHETHER OR NOT SUCH MINING PLANT, MILL, SMELTER OR REFINERY TREATS ORES OR
CONCENTRATES FROM THE PROPERTY.

15.                                      INDEMNITY 

15.1                                  9248-7792 QUEBEC AND GG JOINTLY COVENANT
AND AGREE WITH THE PURCHASER (WHICH COVENANT AND AGREEMENT WILL SURVIVE THE
EXECUTION, DELIVERY AND TERMINATION OF THIS AGREEMENT) TO INDEMNIFY AND SAVE
HARMLESS THE PURCHASER AGAINST ALL LIABILITIES, CLAIMS, DEMANDS, ACTIONS, CAUSES
OF ACTION, DAMAGES, LOSSES, COSTS, EXPENSES OR LEGAL FEES SUFFERED OR INCURRED
BY THE PURCHASER, DIRECTLY OR INDIRECTLY, BY REASON OF OR ARISING OUT OF ANY
WARRANTIES OR REPRESENTATIONS ON THE PART OF THE VENDOR HEREIN BEING UNTRUE OR
ARISING OUT OF WORK DONE BY THE VENDOR ON OR WITH RESPECT TO THE PROPERTY.

15.2                                  THE PURCHASER COVENANTS AND AGREES WITH
THE VENDOR (WHICH COVENANT AND AGREEMENT WILL SURVIVE THE EXECUTION, DELIVERY
AND TERMINATION OF THIS AGREEMENT) TO INDEMNIFY AND SAVE HARMLESS THE VENDOR
AGAINST ALL LIABILITIES, CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES,
LOSSES, COSTS, EXPENSES OR LEGAL FEES SUFFERED OR INCURRED BY REASON OF OR
ARISING OUT OF ANY WARRANTIES OR REPRESENTATIONS ON THE PART OF THE PURCHASER
HEREIN BEING UNTRUE OR ARISING OUT OF THE PURCHASER AND ITS DULY AUTHORIZED
REPRESENTATIVES ACCESSING THE PROPERTY.

16.                                      GOVERNING LAW

16.1                                  THIS AGREEMENT WILL BE CONSTRUED AND IN
ALL RESPECTS GOVERNED BY THE LAWS OF THE PROVINCE OF BRITISH COLUMBIA.

 

 

9

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17.                                      NOTICES 

17.1                                  ALL NOTICES, PAYMENTS AND OTHER REQUIRED
COMMUNICATIONS AND DELIVERIES TO THE PARTIES HERETO WILL BE IN WRITING, AND WILL
BE ADDRESSED TO THE PARTIES AS FOLLOWS OR AT SUCH OTHER ADDRESS AS THE PARTIES
MAY SPECIFY FROM TIME TO TIME:

(A)                TO THE PURCHASER:

 

TORON INC.
1000 de La Gauchetiere Street West – 24th Floor

Montreal, Quebec, H3B 4W5

 (the “Purchaser”)

and:

(B)               TO THE VENDOR:

9248-7792 Quebec Inc.

970 Gilles Lupien, Trois-Rivieres, QC ,G9C 0B9

 

(“9248-7792 Quebec”)

and:

(C)                TO THE VENDOR:

GLENN GRIESBACH  

Perumahan Taman Permata Millenium, Jalan Permata Bunda, Sektor 1, Blok C2/18,
Lippo, Banten, Indonesia, 15811.

 (“GG”) 

Notices must be delivered, sent by email, telex, telegram, telecopier or mailed
by pre-paid post and addressed to the party to which notice is to be given. If
notice is sent by email, telex, telegram or telecopier or is delivered, it will
be deemed to have been given and received at the time of transmission or
delivery. If notice is mailed, it will be deemed to have been received thirty
business days following the date of the mailing of the notice. If there is an
interruption in normal mail service due to strike, labour unrest or other cause
at or prior to the time a notice is mailed the notice will be sent by email,
telex, telegram or telecopier or will be delivered.

17.2                                  EITHER PARTY HERETO AT ANY TIME OR FROM
TIME TO TIME NOTIFY THE OTHER PARTY IN WRITING OF A CHANGE OF ADDRESS AND THE
NEW ADDRESS TO WHICH A NOTICE WILL BE GIVEN THEREAFTER UNTIL FURTHER CHANGE.

18.                                      NET SMELTER ROYALTY

 

18.1     The Vendors shall jointly retain 2% net smelter returns royalty on the
Property, one half to GG and one half to 9248-7792 Quebec.  “Net Smelter Returns
Royalty” will be defined as set out in Schedule C hereto.

 

10

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18.2       The Vendors grant to the Purchaser the option (the “NSR Call Option”)
to purchase from the Vendors, at any time after the date of this Agreement, all
of the right, title and interest of the Vendors in and to one-half (being 1%
percent) of the Royalty, for a total consideration of $1,000,000 (the “NSR Call
Option Price”).  The Purchaser may exercise the NSR Call Option at any time
during the period commencing on the date of this Agreement and ending on the day
which is 20 years after the date of this Agreement, by delivering notice to that
effect to the Vendors.  The closing of purchase and sale will occur on the 61st
day following the date of receipt of such notice and, on closing, the Purchaser
will deliver a certified cheque or bank draft in payment of the full NSR Call
Option Price and the Vendors will, at the expense of the Purchaser, do or cause
to be done all such acts, execute and deliver all such instruments, deeds or
agreements and give all such further assurances as may be reasonably necessary
to give effect to the exercise of the NSR Call Option and the transfer to the
Purchaser of all of the right, title and interest of the Vendors in and to
one-half, being one percent (1%), of the Royalty.

                                                                                                                                         
 

18.3 From and after the exercise of the NSR Call Option, the NS Royalty reserved
in this Agreement to the Vendors will be reduced to one percent (1%) and the
Purchaser will pay such reduced NS Royalty to the Owners.

19.                                      ASSIGNMENT 

19.1                                  EACH PARTY HAS THE RIGHT TO ASSIGN ALL OR
ANY PART OF ITS INTEREST IN THE PROPERTY AND THIS AGREEMENT.  IT SHALL BE A
CONDITION TO ANY SUCH ASSIGNMENT THAT THE ASSIGNEE OF THE INTEREST BEING
TRANSFERRED AGREES IN WRITING TO BE BOUND BY THE TERMS OF THIS AGREEMENT, AS IF
IT HAD BEEN AN ORIGINAL PARTY HERETO.

20.                                      ARBITRATION 

20.1                                  IF THERE IS ANY DISAGREEMENT, DISPUTE OR
CONTROVERSY (HEREINAFTER COLLECTIVELY CALLED A "DISPUTE") BETWEEN THE PARTIES
WITH RESPECT TO ANY MATTER ARISING UNDER THIS AGREEMENT OR THE CONSTRUCTION
HEREOF, THEN THE DISPUTE SHALL BE DETERMINED BY ARBITRATION IN ACCORDANCE WITH
THE FOLLOWING PROCEDURES:  

(A)                THE PARTIES TO THE DISPUTE SHALL APPOINT A SINGLE MUTUALLY
ACCEPTABLE ARBITRATOR. IF THE PARTIES CANNOT AGREE UPON A SINGLE ARBITRATOR,
THEN THE PARTY ON ONE SIDE OF THE DISPUTE SHALL NAME AN ARBITRATOR, AND GIVE
NOTICE THEREOF TO THE PARTY ON THE OTHER SIDE OF THE DISPUTE;

(B)               THE PARTY ON THE OTHER SIDE OF THE DISPUTE SHALL WITHIN 14
DAYS OF THE RECEIPT OF NOTICE,  NAME AN ARBITRATOR; AND

(C)                THE TWO ARBITRATORS SO NAMED SHALL, WITHIN SEVEN DAYS OF THE
NAMING OF THE LATER OF THEM, NAME A THIRD ARBITRATOR. IF THE PARTY ON EITHER
SIDE OF THE DISPUTE FAILS TO NAME ITS ARBITRATOR WITHIN THE ALLOTTED TIME, THEN
THE ARBITRATOR NAMED MAY MAKE A DETERMINATION OF THE DISPUTE. EXCEPT AS
EXPRESSLY PROVIDED IN THIS PARAGRAPH, THE ARBITRATION SHALL BE IN ACCORDANCE
WITH THE COMMERCIAL ARBITRATION ACT (BRITISH COLUMBIA) AND CONDUCTED IN
VANCOUVER BC. THE DECISION SHALL BE MADE WITHIN 30 DAYS FOLLOWING THE NAMING OF
THE LATEST OF THEM, SHALL BE BASED EXCLUSIVELY ON THE ADVANCEMENT OF
EXPLORATION, DEVELOPMENT AND PRODUCTION WORK ON THE

 

 

11

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PROPERTY AND NOT ON THE FINANCIAL CIRCUMSTANCES OF THE PARTIES, AND SHALL BE
CONCLUSIVE AND BINDING UPON THE PARTIES. THE COSTS OF ARBITRATION SHALL BE BORNE
EQUALLY BY THE PARTIES TO THE DISPUTE UNLESS OTHERWISE DETERMINED BY THE
ARBITRATOR(S) IN THE AWARD.

21.                                      ENTIRE AGREEMENT

21.1                                  THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE VENDOR AND THE PURCHASER AND WILL SUPERSEDE AND REPLACE
ANY OTHER AGREEMENT OR ARRANGEMENT, WHETHER ORAL OR IN WRITING, PREVIOUSLY
EXISTING BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER OF THIS
AGREEMENT.

22.                                      CONSENT OR WAIVER

22.1                                  NO CONSENT OR WAIVER, EXPRESS OR IMPLIED,
BY EITHER PARTY HERETO IN RESPECT OF ANY BREACH OR DEFAULT BY THE OTHER PARTY IN
THE PERFORMANCE BY SUCH OTHER PARTY OF ITS OBLIGATIONS UNDER THIS AGREEMENT WILL
BE DEEMED OR CONSTRUED TO BE CONSENT TO OR WAIVER OR ANY OTHER BREACH OR
DEFAULT.

23.                                      FURTHER ASSURANCES

23.1                                  THE PARTIES WILL PROMPTLY EXECUTE, OR
CAUSE TO BE EXECUTED, ALL BILLS OF SALE, TRANSFERS, DOCUMENTS, CONVEYANCES AND
OTHER INSTRUMENTS OF FURTHER ASSURANCE WHICH MAY BE REASONABLY NECESSARY OR
ADVISABLE TO CARRY OUT FULLY THE INTENT AND PURPOSE OF THIS AGREEMENT OR TO
RECORD WHEREVER APPROPRIATE THE RESPECTIVE INTERESTS FROM TIME TO TIME OF THE
PARTIES HERETO IN AND TO THE PROPERTY.

24.                                      SEVERABILITY 

24.1                                  IF ANY PROVISION OF THIS AGREEMENT IS OR
WILL BECOME ILLEGAL, UNENFORCEABLE OR INVALID FOR ANY REASON WHATSOEVER, SUCH
ILLEGAL, UNENFORCEABLE OR INVALID PROVISIONS WILL BE SEVERABLE FROM THE
REMAINDER OF THIS AGREEMENT AND WILL NOT AFFECT THE LEGALITY, ENFORCEABILITY OR
VALIDITY OF THE REMAINING PROVISIONS OF THIS AGREEMENT.

25.                                      ENUREMENT 

25.1                                  THIS AGREEMENT WILL ENURE TO THE BENEFIT
OF AND BE BINDING UPON THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS.

26.                                      AMENDMENTS 

26.1                                  THIS AGREEMENT MAY ONLY BE AMENDED IN
WRITING WITH THE MUTUAL CONSENT OF ALL PARTIES.

27.                                      COUNTERPARTS 

27.1                                  THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS AND BY FACSIMILE TRANSMISSION WITH THE SAME EFFECT AS IF
ALL PARTIES HERETO HAD SIGNED THE SAME DOCUMENT. ALL COUNTERPARTS WILL BE
CONSTRUED TOGETHER AND CONSTITUTE ONE AND THE SAME AGREEMENT.

 

12

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IN WITNESS WHEREOF the parties hereto have executed this Agreement the 6 th day
of February, 2012.

 

TORON INC.

9248-7792 quebec inc.

 

 

 

 

 

Per:/s/ MICHAEL WHITEHEAD

 

 

 

Per:/s/ STEPHANE LEBLANC

Michael Whitehead

Authorized Signatory (Stephane Leblanc)

 

 

GLENN GRIESBACH

 

 

 

 

Per:/s/ GLENN GRIESBACH

 

 

 

Glenn Griesbach

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule A

List of 140 Quebec mineral claims that constitute the Property

 

2321050

2321078

2320788

2277001

2320476

2321051

2321079

2321087

2317149

2320477

2321052

2321080

2321088

2320122

2320478

2321053

2320769

2320789

2320123

2317155

2321054

2320770

2320790

2320124

2320479

2321055

2321081

2320791

2320125

2320480

2321056

2321082

2320792

2320460

2320481

2321057

2321083

2320793

2320461

2320482

2321063

2321084

2320794

2320462

2320483

2321062

2320771

2320795

2320463

2320484

2321061

2320772

2320796

2320464

2320485

2321060

2320773

2320797

2320465

2320486

2321059

2320774

2320798

2320466

2320487

2321058

2320775

2320502

2277003

2320488

2321064

2320776

2320503

2317150

2320489

2321065

2320777

2320799

2317151

2322727

2321066

2320778

2320800

2317152

2322728

2321067

2321085

2320801

2317153

2322729

2321068

2321086

2320802

2320467

2322730

2321069

2320779

2320803

2320468

2322731

2321070

2320780

2320804

2320469

2322732

2321071

2320781

2320805

2320470

2320809

2321072

2320782

2320806

2320471

2320810

2321073

2320783

2320807

2320472

2322733

2321074

2320784

2320808

2317154

2320811

2321075

2320785

2320504

2320473

2320812

2321076

2320786

2320505

2320474

2320813

2321077

2320787

2320506

2320475

2320814

 

 

 

 

 

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Schedule B

Sketch map showing the locations of the

140 Quebec mineral claims listed in Schedule A

(on SNRC map sheets 32C06 and 32C03)

[x12020613292000.jpg]       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule C

NET SMELTER RETURNS ROYALTY

1.                                          OBLIGATION 

(A)                IF ANY PARTY OR BECOMES ENTITLED TO A ROYALTY PURSUANT TO
PARAGRAPH 18.1 OF THE PURCHASE AGREEMENT (A “VENDOR”), THE PURCHASER SHALL
CALCULATE, AS AT THE END OF EACH QUARTER WITHIN EACH FISCAL YEAR USED BY THE
PURCHASER (“FISCAL YEAR”) SUBSEQUENT TO THE DATE COMMERCIAL PRODUCTION BEGINS.

(B)               THE PURCHASER SHALL WITHIN 45 DAYS OF THE END OF EACH QUARTER
OF EACH FISCAL YEAR, AS AND WHEN ANY NET SMELTER RETURNS ARE AVAILABLE FOR
DISTRIBUTION, PAY OR CAUSE TO BE PAID TO EACH VENDOR THE NET SMELTER RETURNS TO
WHICH THAT VENDOR IS ENTITLED.

(C)                THE PURCHASER AGREES THAT ON THE REQUEST OF ANY VENDOR IT
WILL EXECUTE AND DELIVER SUCH DOCUMENTS AS MAY BE NECESSARY TO PERMIT THAT
VENDOR TO RECORD ITS INTEREST AGAINST THE PROPERTY.

2.                  NET SMELTER RETURNS

(A)                “COMMENCEMENT OF COMMERCIAL PRODUCTION” MEANS (A) IF A MILL
IS LOCATED ON THE PROPERTY, THE LAST CALENDAR DAY OF A PERIOD OF 40 CONSECUTIVE
CALENDAR DAYS IN WHICH, FOR NOT LESS THAN 30 CALENDAR DAYS, THE MILL PROCESSED
ORE FROM THE PROPERTY AT 60% OF ITS RATED CONCENTRATING CAPACITY, OR (B) IF A
MILL IS NOT LOCATED ON THE PROPERTY, THE LAST DAY OF A PERIOD OF 30 CONSECUTIVE
CALENDAR DAYS DURING WHICH ORE HAS BEEN SHIPPED FROM THE PROPERTY ON A
REASONABLY REGULAR BASIS FOR THE PURPOSE OF EARNING REVENUES, BUT ANY PERIOD OF
TIME DURING WHICH ORE OR CONCENTRATE IS SHIPPED FROM THE PROPERTY FOR TESTING
PURPOSES, A BULK SAMPLE OR DURING WHICH MILLING OPERATIONS ARE UNDERTAKEN AS
INITIAL TUNE-UP, WILL NOT BE TAKEN INTO ACCOUNT IN DETERMINING THE DATE OF
COMMENCEMENT OF COMMERCIAL PRODUCTION;

(B)               "NET SMELTER RETURNS" MEANS AFTER COMMENCEMENT OF COMMERCIAL
PRODUCTION, THE NET AMOUNT OF MONEY TO BE PAID TO A VENDOR FOR ITS OWN ACCOUNT
FROM THE SALE OF MINERALS OR CONCENTRATES EXTRACTED AND DERIVED FROM THE ORE
MINED FROM THE PROPERTY (“MINERAL PRODUCTION”) TO A MILL, SMELTER OR OTHER ORE
BUYER AFTER DEDUCTION OF ALL PERMISSIBLE DEDUCTIONS.

(C)                “PERMISSIBLE DEDUCTIONS” MEANS THE AGGREGATE (TO THE EXTEND
NOT PREVIOUSLY DEDUCTED OR ACCRUED) THAT IS PAID OR ACCRUED IN EACH MONTHLY
PERIOD RELATING TO THE MINERAL PRODUCTION AS FOLLOWS:

(I)                 WEIGHING, SAMPLING, ASSAYING AND REPRESENTATION COSTS, AND
METAL LOSSES;

(II)               PROCESSOR, REFINERY OR SMELTER CHARGES;

(III)             ORE TREATMENT CHARGES, PENALTIES , AND ANY AND ALL CHARGES
MADE BY THE PURCHASER OF THE MINERAL PRODUCTION;

 

 

 

16

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(IV)             ANY AND ALL SHIPPING, HANDLING, BROKERAGE, FORWARDING AND
INSURANCE COSTS WHICH MAY BE INCURRED IN CONNECTION WITH THE TRANSPORTATION OF
THE MINERAL PRODUCTION;

(V)               ALL UMPIRE CHARGES WHICH THE PURCHASER MAY BE REQUIRED TO PAY;
AND

(VI)             GOVERNMENT IMPOSED PRODUCTION, ROYALTIES AND AD VALOREM TAXES
(EXCLUDING TAXES ON INCOME).

WHERE A COST OR EXPENSE OTHERWISE CONSTITUTING A PERMISSIBLE DEDUCTION IS
INCURRED IN A TRANSACTION WITH A PARTY NOT DEALING AT ARM’S LENGTH (AS THAT TERM
IS DEFINED IN THE INCOME TAX ACT (CANADA), SUCH COSTS OR EXPENSES MAY BE
DEDUCTED, BUT ONLY AS TO THE LESSER OF THE ACTUAL COST INCURRED OR THE FAIR
MARKET VALUE THEREOF CONSIDERING THE TIME OF SUCH TRANSACTION AND UNDER ALL THE
CIRCUMSTANCES THEREOF.

3.                  PAYMENTS AND AUDITED STATEMENTS

(A)                PAYMENT OF NET SMELTER RETURNS BY THE PURCHASER TO THE VENDOR
SHALL BE MADE QUARTERLY WITHIN 45 DAYS AFTER THE END OF EACH QUARTER OF EACH
FISCAL YEAR, AND SHALL BE ACCOMPANIED WITH UNAUDITED FINANCIAL STATEMENTS
PERTAINING TO THE OPERATIONS CARRIED OUT ON THE PROPERTY. 

(B)               WITHIN 120 DAYS AFTER THE END OF THE FISCAL YEAR, THE RECORDS
RELATING TO THE CALCULATION OF THE NET SMELTER RETURNS ROYALTY SHALL BE AUDITED
BY THE PURCHASER’S EXTERNAL INDEPENDENT AUDITOR AND ANY RESULTING ADJUSTMENTS IN
THE PAYMENT OF NET SMELTER RETURNS PAYABLE TO THE VENDOR SHALL BE MADE AS
FOLLOWS:

(I)                 IF AMOUNTS ARE OWED TO THE VENDOR, THE PAYMENT WILL BE MADE
FORTHWITH TOGETHER WITH INTEREST AT THE PRIME RATE OF THE ROYAL BANK OF CANADA
PLUS 2%, AND

(II)               IF THE VENDOR HAS BEEN OVER PAID, SUCH OVERPAYMENT WILL BE
DEDUCTED FROM SUBSEQUENT NET SMELTER RETURNS ROYALTY PAYMENTS TO THE VENDOR.

(C)                THE INFORMATION CONTAINED IN THE AUDITED STATEMENTS REFERRED
TO IN (B)  ABOVE, WILL INCLUDE DETAILED INFORMATION RELATING TO:

(I)                 THE QUANTITY OF MINERAL PRODUCTION AND SALE OF MINERAL
PRODUCTION FOR THAT FISCAL YEAR;

(II)               THE PERMISSIBLE DEDUCTIONS, INCLUDING PERMISSIBLE DEDUCTIONS
CARRIED OVER FROM PREVIOUS YEARS IF IN EXCESS OF THE GROSS SALES PRICE(S)
OBTAINED FOR THE MINERAL PRODUCTION IN SUCH PREVIOUS YEARS;

(III)             GROSS SALES PRICE(S) OBTAINED FOR THE MINERAL PRODUCTION; AND

(IV)             THE CALCULATION OF THE ROYALTY PAYABLE TO THE VENDOR.

(D)               EACH ANNUAL AUDITED STATEMENTS SHALL BE FINAL AND NOT SUBJECT
TO ADJUSTMENT UNLESS THE VENDOR DELIVERS TO THE PARTICIPANT WRITTEN EXCEPTIONS
IN REASONABLE DETAIL WITHIN 90 DAYS AFTER THE VENDOR RECEIVES SUCH STATEMENTS. 
THE VENDOR, OR ITS REPRESENTATIVE DULY

 

 

17

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AUTHORIZED IN WRITING, AT ITS EXPENSE, SHALL HAVE THE RIGHT TO AUDIT THE BOOKS
AND RECORDS OF THE PURCHASER RELATED TO NET SMELTER RETURNS TO DETERMINE THE
ACCURACY OF THE AUDITED STATEMENTS, BUT SHALL NOT HAVE ACCESS TO ANY OTHER BOOKS
AND RECORDS OF THE PARTICIPANT.  THE AUDIT SHALL BE CONDUCTED BY A CHARTERED OR
CERTIFIED PUBLIC ACCOUNTANT.  THE VENDOR’S AUDITOR SHALL HAVE THE RIGHT TO
CONDITIONAL ACCESS TO THE PARTICIPANTS’ BOOKS AND RECORDS ON EXECUTION OF A
WRITTEN AGREEMENT BY THE AUDITOR THAT ALL INFORMATION WILL BE HELD IN CONFIDENCE
AND USED SOLELY FOR PURPOSES OF AUDIT AND RESOLUTION OF ANY DISPUTES RELATED TO
THE REPORT.  A COPY OF THE VENDOR’S REPORT SHALL BE DELIVERED TO THE PARTICIPANT
UPON COMPLETION, AND ANY DISCREPANCY BETWEEN THE AMOUNT ACTUALLY PAID BY THE
PARTICIPANT AND THE AMOUNT WHICH SHOULD HAVE BEEN PAID ACCORDING TO THE VENDOR'S
REPORT SHALL BE PAID FORTHWITH, ONE PARTY TO THE OTHER.  IN THE EVENT THAT THE
SAID DISCREPANCY IS TO THE DETRIMENT OF THE VENDOR AND EXCEEDS 5% OF THE AMOUNT
ACTUALLY PAID BY THE PURCHASER, THEN THE PURCHASER SHALL PAY THE ENTIRE COST OF
THE AUDIT.

(E)                ANY DISPUTE ARISING OUT OF OR RELATED TO ANY REPORT, PAYMENT,
CALCULATION OR AUDIT SHALL BE RESOLVED SOLELY BY ARBITRATION UNDER THE
COMMERCIAL ARBITRATION ACT (BRITISH COLUMBIA) WITH A SINGLE ARBITRATOR.

 

 

 

 

 

 

 

 

 

 

 

 

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