Exhibit 10.1

 
Volcan Australia Corporation Pty Ltd
ACN 131 553 341
Level 34, 50 Bridge Street, Sydney NSW 2000
Tel: (02) 8216-0777   Fax: (02) 8216-0788
 

 
30 October 2009
 
Mr Barry Dawes
Martin Place Securities Pty Limited
Level 3
14 Martin Place
SYDNEY  NSW  2000
 
Dear Barry
 
Letter agreement between Volcan Australia Corporation Pty Ltd and Martin Place
Securities Pty Limited ACN 094 927 947
 
Volcan Australia Corporation Pty Ltd (Volcan Australia) is the registered holder
of the exploration licences set out in the Schedule for the exploration of Group
1 and Group 2 minerals near Inverell in New South Wales (Exploration Licences).
Volcan Australia is a wholly-owned subsidiary of Volcan Holdings, Inc. (Volcan
Holdings), a company listed on the NASDAQ OTC Bulletin Board in New York, USA.
 
Martin Place Securities Pty Ltd (MPS) is a broking and corporate advisory firm.
 
The parties propose to establish a new company (Newco), with its initial
shareholders being MPS and Volcan Holdings (or its nominee). Upon payment of the
option fee (details of which are set out below) Newco will obtain an option to
earn interests in the Exploration Licences through various farm-in payments and
investments (Proposed Transaction).
 
The parties have entered into this agreement (Letter Agreement) to set out the
material terms and conditions of the Proposed Transaction.  The parties intend
to be bound by this Letter Agreement but also intend to have its terms restated
in a full form farm-in joint venture agreement (Farm-in Agreement) which will
not be different in effect from, but may be more expansive and precise than,
this Letter Agreement.
 
The parties agree on the following terms and conditions:
 
1.  
Key provisions

 
(a)  
NewCo

 
On the execution of this Letter Agreement:
 
●  
the parties must procure that NewCo is incorporated with an initial share
capital of 10,000,000 shares;

 
●  
Of this initial share capital:

 
o  
 MPS must subscribe $5,000 for 5,000,000 shares at $0.001 per share; and

 
o  
Volcan Holdings (or its nominee) must subscribe $5,000 for 5,000,000 shares at
$0.001 per share; and

 
 
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●  
MPS must procure that Newco commences a fundraising so as to raise $500,000 from
an investor(s) by the issue of 2,500,000 shares at $0.20 per share by 6 November
2009.

 
●  
MPS will also use reasonable endeavours to procure that Newco raises an
additional $1,050,000 at A$0.30 for an issue of 3,500,000 shares by 11 December
2009 and further funds as required at higher prices per share.

 
The parties acknowledge and agree that Newco may raise additional capital in
order to fund its earn-in and investment entitlements and obligations under this
Letter Agreement by the subsequent issue of new shares to investors.
 
The intention is for Newco to list on the ASX by mid next year following a JORC
inferred resource being identified on the tenements the subject of the
Exploration Licences.
 
(b)  
Option and option fee

 
To obtain the option to earn interests in the Exploration Licences through
various farm-in payments and investments, MPS must procure that Newco provides:
 
●  
$250,000 to the Queensland Government on 30 October 2009 in payment of tenement
fees due and payable on that day to keep the Exploration Leases located in
Queensland in good standing;

 
●  
$100,000 to Volcan Holdings by 6 November 2009;

 
●  
$150,000 to Volcan Holdings by 30 November 2009; and

 
●  
Makes all other payments necessary to keep all tenements in good standing during
the option period (being 24 months from the date of this Letter Agreement).

 
(c)  
Further Use of Funds:

 
Of the $500,000 to be raised by Newco by 6 November 2009 (see paragraph 1(a)
above), $150,000 must be applied by Newco to the payment of expenses incurred in
the course of the agreed exploration program.
 
Further funds raised will be disbursed towards the exploration of the tenements
as approved by the Board of Newco.
 
(d)  
Details of Option:

 
EL 7301:
 
Newco has the right to earn a 25% interest of Volcan Australia’s interest in NSW
EL 7301 by identifying a JORC compliant inferred resource of 100M tonnes of
economic grade bauxite on that tenement within 12 months of the date of this
Letter Agreement, and investing $3M into Volcan Holdings at $10 per share.
 
Newco has the right to earn a further 25% (up to 50% of Volcan Australia’s
interest in that tenement) by identifying a JORC compliant inferred resource of
300M tonnes of economic grade bauxite on that tenement within 12 months of the
date of this Letter Agreement, and investing a further $3M into Volcan Holdings
at $10 per share.
 
It is acknowledged that Volcan Australia has entered into a Heads of Agreement
with the Quantum Group of NY (Quantum) that potentially would see Quantum
acquire a 50% interest in this tenement, such that Newco would be earning up to
a maximum of 25% of the total tenement, being 50% of Volcan Australia’s interest
in that tenement.
 
 
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All other tenements as outlined in the schedule (Tenements):
 
Newco has the right to earn a 10% interest in each of the Tenements (other than
NSW EL 7301). To earn a 10% interest in a particular tenement, Newco must spend
$500,000 within 24 months of the date of this Letter Agreement on that
particular tenement.
 
Once Newco has earned a 10% interest in a tenement by expending $500,000 on that
tenement, it will then have the right to earn an additional 10% interest in that
tenement by investing $500,000 in Volcan Holdings at $10 per share within 24
months of the date of this Letter Agreement.
 
(e)  
Management:

 
Newco will enter into an exclusive management agreement with Australian Gemstone
Mining Pty Ltd (AGM) for the provision of geological and project management
services by AGM for all projects associated with the tenements held by Volcan
Australia at cost as approved by the board of Newco, plus a 15% management fee,
for a minimum of 24 months from the date of the Letter Agreement and thereafter
for such time that this Agreement remains in full force and effect.
 
2.  
Announcements

 
No announcement or other disclosure may be made concerning the contents of this
document, the Farm-in Agreement or any ancillary matter expect in each of the
following cases:
 
(a)  
by mutual written consent of the parties;

 
(b)  
as required by law or by a stock exchange on which the party’s shares (or that
of its holding company) are listed;

 
(c)  
to a party’s professional advisors and financiers; or

 
(d)  
any disclosure document or other fundraising document issued by Volcan Alumina
to raise capital.

 
3.  
Confidentiality

 
(a)  
Subject to clause 3(b), each party must keep the terms of this Letter Agreement
and any information of which it becomes aware in connection with this Letter
Agreement (including any information arising out of due diligence
investigations), confidential.

 
(b)  
A party may make any disclosure in relation to this Letter Agreement:

 
(i)  
to any professional adviser, financial adviser, banker, financier or auditor
where that person is obliged to keep the information confidential;

 
(ii)  
to comply with any applicable law, or any requirement of any regulatory body,
including the ASX;

 
(iii)  
to any of its employees to whom it is necessary to disclose the information;

 
(iv)  
to obtain the consent of any third party to any term of, or to any act pursuant
to, this Letter Agreement;

 
(v)  
to enforce its rights or to defend any claim or action under this Letter
Agreement;

 
(vi)  
in a manner authorised by this Letter Agreement; and

 
 
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(vii)  
where the information has come into public domain through no fault of that
party.

 
4.  
Legally binding nature of this Letter Agreement

 
(a)  
This Agreement is intended to create legally binding obligations on the parties
and will bind each party when executed by that party.

 
(b)  
The parties acknowledge that this Letter Agreement is to be replaced by the
Farm-in Agreement that will be fuller, and more formal, in form but will be no
different in effect and will reflect this document.  Until this Letter Agreement
is so replaced, it is the intention of the parties that this Letter Agreement is
enforceable, that this Letter Agreement must be treated as certain, clear and
complete and as such binding.

 
5.  
Notices

 
(a)  
Any notice or communication given to a party under this Letter Agreement is only
given if it is in writing and sent in one of the following ways:

 
(i)  
delivered or posted to that party at its address as set out below; or

 
(ii)  
faxed to that party at its fax number set out below.

 
Volcan Australia
Name:
Volcan Australia Corporation Pty Ltd
Address:
Level 34, 50 Bridge Street, Sydney NSW 2000
Fax No:
(02) 8216 0788
Attention:
Sholom Feldman
MPS
 
Name:
Martin Place Securities Pty Limited
Address:
Level 3, 14 Martin Place SYDNEY  NSW  2000
Fax No:
 
Attention:
Mr Barry Dawes

 
6.  
Stamp duty

 
Newco will pay any stamp duty due in respect of this Letter Agreement.
 
7.  
Amendments

 
This Agreement may only be varied by a document signed by or on behalf of the
parties.
 
8.  
Assignment

 
A party cannot assign, novate or otherwise transfer any of its rights or
obligations under this Letter Agreement without the prior written consent of the
other party.
 
9.  
Waiver

 
A provision of, or right created under, this Letter Agreement may not be:
 
(a)  
waived except in writing signed by the party granting the waiver; or

 
(b)  
varied except in writing signed by the parties.

 
10.  
Consents

 
Any consent referred to in, or required under, this Letter Agreement from any
party may not be unreasonably withheld, unless this Letter Agreement expressly
provides for that consent to be given in that party’s absolute discretion.
 
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11.  
Counterparts

 
(a)  
The parties may execute this Letter Agreement in two or more counterparts.

 
(b)  
The parties deem that each counterpart is an original.

 
(c)  
All counterparts together constitute one instrument.

 
12.  
Entire agreement

 
This agreement constitutes the entire agreement of the parties and supersedes
all prior discussions, undertakings and agreements.
 
13.  
No representation or reliance

 
(a)  
The parties acknowledge that no party (nor any person acting on a party’s
behalf) has made any representation or other inducement to it to enter into this
Letter Agreement, except for representations or inducements expressly set out in
this Letter Agreement.

 
(b)  
Each party acknowledges and confirms that it has not entered into this Letter
Agreement in reliance on any representation or other inducement by or on behalf
of any other party, except for representations or inducements expressly set out
in this Letter Agreement.

 
14.  
Costs

 
Each party is liable for the costs and expenses incurred by it in connection
with the negotiation, entering into and completion of this document and the
Farm-in Agreement.
 
15.  
GST

 
If any payment made by one party to any other party under or relating to this
document constitutes consideration for a taxable supply for the purposes of GST
or any similar tax, the amount to be paid for the supply will be increased so
that the net amount retained by the supplier after payment of that GST is the
same as if the supplier was not liable to pay GST in respect of that
supply.  This provision is subject to any other agreement regarding the payment
of GST on specific supplies, and includes payments for supplies relating to the
breach or termination of, and indemnities arising from, this document.
 
16.  
Governing law and jurisdiction

 
(a)  
This Agreement is governed by, and will be construed according to the laws of,
New South Wales.

 
(b)  
The parties submit to the non-exclusive jurisdiction of the courts of New South
Wales.

 
(c)  
The parties agree that any dispute regarding the preparation, interpretation and
subject matter of the Letter Agreement shall be referred to and resolved through
a process of arbitration, the determination of such process shall be binding on
the parties.

 
Please evidence your agreement to the terms contained in this Letter Agreement
by signing this Letter Agreement at the place indicated below.
 
 
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Executed by Volcan Australia Corporation Pty Limited ACN 131 553 341 in
accordance with section 127 of the Corporations Act 2001 (Cth):
)
)
)
)
 
/s/ Shlomo Feldman      
Director
 
                                                          
Director/Secretary
 
Shlomo Feldman             
(Print) Full Name
 
 
                                                          
(Print) Full Name

Executed by Martin Place Securities Pty Ltd ACN 094 927 947 in accordance with
section 127 of the Corporations Act 2001 (Cth):
)
)
)
 
/s/ Barry Dawes              
Director
 
                                                          
Director/Secretary
 
Barry Dawes                      
(Print) Full Name
 
 
                                                         
(Print) Full Name

Signed by Volcan Holdings Inc in the presence of:
)
)
 
                                                              
Signature of Witness
 
                                                                    
Signature of
 
                                                              
(Print) Name of Witness
 
 
                                                                     
Address

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Schedule
 
 
Exploration Licences
 

 
A 
B 
C 
D 
E 
F 
1 
Tenement Number
Units
Area (sq km)
Status
Project Name
Company
2
EL 7301
336
1008
granted 23/2/2009
Inverell East, NSW
Volcan Australia
3
EL 7302
282*
846*
granted 23/2/2009
Inverell East, NSW
Volcan Australia
4
EL 7291
238
714
granted 13/2/2009
Monaro, NSW
Volcan Australia
5
EL 7292
250
750
granted 13/2/2009
Monaro, NSW
Volcan Australia
6
EL 7293
234
702
granted 13/2/2009
Monaro, NSW
Volcan Australia
7
EL 7294
231
693
granted 13/2/2009
Monaro, NSW
Volcan Australia
8
EL 7295
227
681
granted 13/2/2009
Monaro, NSW
Volcan Australia
9
EPMA 18139
100
300
offered 23/10/2009
Atherton, Qld
Volcan Australia
10
EPMA 18138
31
93
offered 23/10/2009
Atherton, Qld
Volcan Australia
11
EPMA 13186
93
279
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
12
EPMA 18141
99
297
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
13
EPMA 18134
85
255
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
14
EPMA 18149
98
294
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
15
EPMA 18152
86
258
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
16
EPMA 18133
100
300
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
17
EPMA 18131
100
300
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
18
EPMA 18144
100
300
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
19
EPMA 18153
100
300
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
20
EPMA 18142
62
186
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
21
EPMA 18143
15
45
offered 23/10/2009
Kingaroy, Qld
Volcan Australia
22
EPMA 18132
31
93
offered 23/10/2009
Childers/Kingaroy, Qld
Volcan Australia
23
EPMA 18135
96
288
offered 23/10/2009
Pittsworth, Qld
Volcan Australia
24
EPMA 18155
100
300
offered 23/10/2009
Pittsworth, Qld
Volcan Australia
25
EPMA 18156
73
219
offered 23/10/2009
Pittsworth, Qld
Volcan Australia
26
EPMA 18137
96
288
offered 23/10/2009
Pittsworth, Qld
Volcan Australia
27
EPMA 18146
75
225
offered 23/10/2009
Pittsworth, Qld
Volcan Australia
28
EPMA 18145
34
102
offered 23/10/2009
Pittsworth, Qld
Volcan Australia
29
EPMA 18140
36
108
offered 23/10/2009
Ravenshoe, Qld
Volcan Australia

 
 
 
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