EXHIBIT 10.1

 

EARN-IN AGREEMENT

 

THIS AGREEMENT made as of the 11th day of October, 2018.

 

BETWEEN:

 

Barrel Energy Inc., a corporation incorporated under the laws of Nevada, USA
("Barrel")

 

AND:

 

True Grit Resources, a corporation incorporated under the laws of British
Columbia, Canada ("TGR")

 

WHEREAS

 

Barrel willfully enters into an option agreement with TGR to Earn-in a 100%
participating interest on the Mineral Agreement Option held by TGR on the L.G.
Property in Arizona (the “Project Property”)

 

RECITALS

 

A. TGR holds in good standing a binding Mineral Agreement on the L.G. Property
(the “Project Property”);

 

B. Barrel wishes to acquire a Participating Interest in the Project Property;

 

C. TGR have agreed to grant to Barrel the right to earn a direct 100%
Participating Interest in the Project Property by Barrel by incurring Earn-in
Expenditures; and

 

D. the parties are entering into this Agreement to formally document their
agreement in respect of the matters referred to in the foregoing recitals.

 

E. capitalized terms used in these recitals without definition have the meanings
assigned to them in Section 1.1 hereof;

 

NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the premises
and the respective covenants and agreements herein contained, the parties hereto
covenant and agree as follows:

 

PART 1

DEFINITIONS AND INTERPRETATION

 

Definitions

 

1.1 In this Agreement, unless the context otherwise requires, the following
terms will have the meanings hereinafter set forth:

 

"Arbitration Act" means the Commercial Arbitration Act of the Province of
British Columbia;

 

"Affiliate" means any person, partnership, limited liability company, joint
venture, corporation, or other form of enterprise which Controls, is Controlled
by, or is under common Control with a party to this Agreement;

 

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"Budget" means a detailed estimate of all costs to be incurred and a schedule of
Earn-in Expenditures to be made by Company with respect to a Program;

 

"Business" means the contractual relationship of the parties under this
Agreement in relation to the Project;

 

"Business Day" means any day upon which chartered banks in Vancouver, British
Columbia are open for business;

 

"Closing Period" has the meaning assigned to it in Section 2.2;

 

"Confidential Information" means the Existing Data, any information pertaining
to the Property and all other information, data, knowledge and know-how
(including, but not limited to, formulas, patterns, compilations, programs,
devices, methods, techniques and processes) disclosed by one party to the other
party hereunder that derives independent economic value, actual or potential, as
a result of not being generally known to, or readily ascertainable by, third
parties and which is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy, and includes all analyses,
interpretations, compilations, studies and evaluations of such information,
data, knowledge and know-how generated or prepared by or on behalf of either
party but does not include any information, data, knowledge or know-how that is
already in the receiving party's possession prior to receipt thereof from the
disclosing party or that enters the public domain other than as a consequence of
a breach of this Agreement by one of the parties or that comes into a party's
possession from a third party who is not, to the knowledge of the receiving
party after due enquiry, under an obligation of confidentiality to the other
party to this Agreement;

 

"Constating Documents" means the charter, the memorandum, the articles of
association, the articles of incorporation, the articles of continuance, the
articles of amalgamation or any other instrument pursuant to which a legal
entity is created, incorporated, continued, amalgamated or otherwise
established, as the case may be, together with any amendments thereto, and/or
which governs in whole or in part such entity's affairs;

 

"Development" means all preparation (other than Exploration) on the Project
Property for the removal and recovery of Products, including the development of
a mine and the construction and installation of processing facilities or any
other improvements to be used for the mining, handling, milling or other
processing of Products, and all related Environmental Compliance;

 

"Earn-in Expenditures" means expenditures incurred by Company for,

 

(i) Exploration pursuant to the understanding of the mineral potential of the
Project,

 

 

(ii) If warranted, Development pursuant to extraction of any mineral on the
Project

 

 

(iii) the payment of fees, taxes and other amounts payable to any Governmental
Authority to maintain the Project Property in good standing in accordance with
the terms of the Existing Licenses and applicable Law and, to the extent
reasonably possible, to upgrade and otherwise improve the legal interest of the
Company or Subsidiary in the Project Property, and such other expenditures as
Barrel and TGR may, from time to time, agree;

 

"Earn-in Period" has the meaning assigned to it in Section 2.2;

 

"Earn-in Right" has the meaning assigned to it in Section 2.2;

 

"Effective Date" has the meaning assigned to it in Section 2.2;

 

"Encumbrance" means any mortgage, charge, pledge, hypothecation, security
interest, lien, easement, right-of-way, encroachment, covenant, condition,
right-of-entry, lease, license, assignment, option or claim or any other
encumbrance, charge or any title defect of whatever kind of nature, regardless
of form, whether or not registered or registrable and whether or not consensual
or arising by law (statutory or otherwise);

 

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"Existing Data" means maps, drill logs and other drilling data, core tests,
pulps, reports, surveys, assays, analyses, production reports, operations,
technical, accounting and financial records, title, tenure, permit and legal
documentation and other material information existing in respect of the Project
Property as of the Effective Date;

 

"Existing Licenses" means, collectively, Mineral Exploration License holding the
project in good standing with all relevant government authority currently issued
to TGR;

 

"Exploration" means all activities on the Project Property directed toward
ascertaining the existence, location, quantity, quality or commercial value of
deposits of Products, including but not limited to

additional drilling required after discovery of potentially commercial
mineralization, and including related Environmental Compliance;

 

"Governmental Authority" means any national, central, federal, provincial,
state, municipal or county government or regional authority and includes any
ministry, department, commission, bureau, board, administrative or other agency
or regulatory body or instrumentality thereof;

 

"incur" means to incur and pay;

 

"Initial Exploration Program and Budget" has the meaning assigned to it in
Section 3.5;

 

"Interest" has the meaning assigned to it in Section 5.5;

 

"Company Representative" has the meaning assigned to it in Section 2.4;

 

"Joint Venture" means the joint venture in respect of the Project Property to be
formed by the parties pursuant to the Joint Venture Agreement;

 

"Joint Venture Agreement" means an agreement between the parties of the nature
described in Section 4.3;

 

"Law" or "Laws" means all applicable governmental laws (statutory or common),
rules, ordinances, regulations, grants, concessions, franchises, licenses,
orders, directives, judgments, decrees, and other governmental restrictions,
including permits and other similar requirements, whether legislative,
municipal, administrative or judicial in nature;

 

"Minimum Expenditure Commitment" has the meaning assigned to it in Section
2.2(a);

 

"Mining" means the mining, extracting, producing, handling, milling or other
processing of Products;

 

"Notices" has the meaning assigned to it in Section 10.1; "Offer Notice" has the
meaning assigned to it in Section 2.5; "Offeree"

 

"Operations" means Exploration and, if warranted, Development and other
activities to be carried out and funded by Company under this Agreement pursuant
to the Earn-in Expenditures;

 

“Operating Party” means which company is conducting the Exploration efforts on
the Project Property

 

"The Project Property" or “Subject Property” means the geographical area which
contains all relevant Exploration and/or Exploitation Licenses or Exploration
License issued to TGR;

 

"Party" means TGR or Barrel, or any permitted successor or assign of TGR or
Barrel under this Agreement; 

 

 

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"Participating Interest" means the percentage interest representing the
beneficial ownership interest of a party in the Project Property;

 

"Products" means all ores, minerals, mineral concentrates, metals, chemical
by-products and refinements or partial refinements thereof produced from the
Project Property;

 

"Program" means a description in reasonable detail of Operations to be conducted
and objectives to be accomplished by Company in accordance with the terms of
this Agreement for a period determined by the Earn-in Committee;

 

Interpretation

 

1.2 For the purposes of this Agreement, except as otherwise expressly provided:

 

(a) "this Agreement" means this agreement, including the schedules hereto, and
not any particular part, section or other portion hereof, and includes any
agreement, document or instrument entered into, made or delivered pursuant to
the terms hereof, as the same may, from time to time, be supplemented or amended
and in effect;

 

(b) all references in this Agreement to a designated "part", "section",
"subsection" or other subdivision or to a schedule are references to the
designated part, section, subsection or other subdivision of, or schedule to,
this Agreement;

 

(c) the words "hereof", "herein", "hereto" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
part, section, subsection or other subdivision or schedule unless the context or
subject matter otherwise requires;

 

(d) the division of this Agreement into parts, sections and other portions and
the insertion of headings are for convenience of reference only and are not
intended to interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof;

 

(e) unless otherwise provided herein, all references to currency in this
Agreement are to lawful money of the United States of America;

 

(f) a reference in this Agreement to a statute includes all regulations made
thereunder, all amendments to the statute or regulations in force from time to
time, and any statute or regulation that supplements or supersedes such statute
or regulations;

 

(g) the singular of any term includes the plural, and vice versa, and the use of
any term is generally applicable to any gender and, where applicable, a body
corporate, firm or other entity, and the word "or" is not exclusive and the word
"including' is not limiting whether or not non-limiting language (such as
"without limitation" or "but not limited to" or words of similar import) is used
with reference thereto;

 

(h) in the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action will
be required to be taken on the next succeeding day which is a Business Day; and

 

(i) all references to "approval", "authorization" or "consent" in this Agreement
mean written approval, authorization or consent.

 

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1.3 Schedules

 

Attached to and forming part of this Agreement are the following Schedules:
Schedule "A" - Project Property

 

PART 2

EARN-IN RIGHTS AND OBLIGATIONS

 

2.1 Grant of Earn-in Right

 

2.1 In consideration of Barrel's Minimum Expenditure Commitment and further
commitments, TGR hereby grants to Barrel, with effect as of the Effective Date,
the right to Earn-in a 100% interest in the Subject Property.

 

2.2 Description of Earn-in Right

 

TGR hereby grants to Barrel the exclusive right, for so long as this Agreement
remains in effect, (i) to enter upon the Property to explore, evaluate and
develop the Concessions, and (ii) to acquire up to one hundred percent (100%)
interest in the Property (the “Earn-In Right”), for the following
consideration::

 

(a) Barrel, within 10 days of the execution and delivery of this Agreement,
shall pay to TRG the amount of US $100,000 (the “Initial Payment”).

 

(b) In addition, in order to maintain its Earn-In Right in full force and effect
and to acquire a forty nine percent (49%) interest in the Property, Barrel is
required to pay or expend to the Property the cumulative sum of $400,000
(including the Initial Payment) within 30 days of the Initial Payment (the
‘Minimum Expenditure Commitment’).

 

(c) To acquire a total of seventy percent (70%) interest in the Property, Barrel
is required to expend or pay a minimum cumulative sum of $1,400,000 in Earn-in
Expenditures; and

 

(d) To acquire a total of one hundred percent (100%) interest in the Property,
Barrel is required to expend or pay a minimum cumulative sum of $2,400,000 in
Earn-in Expenditures.

 

2.2 Earn-in Period

 

The period during which Barrel may exercise the Earn-in Right and thereby earn
up to a 100% Participating Interest in the Project Property (the "Earn-in
Period") will commence on the Effective Date and end on any of the of the
following dates:

 

 

2.2.1 subject to Barrel not having incurred, payments or Earn-in Expenditures
equal to or greater than the Minimum Expenditure Commitment, within 30 days of
the Initial Payment

 

 

 

 

2.2.2 the date upon which Barrel notifies TGR pursuant to Section 3.10 that
Company is electing to relinquish the Earn-in Right without having earned a
Participating Interest in the Project

 

 

 

 

2.2.3 subject to Barrel having earned a Participating Interest in the Project of
at least forty nine per cent (49%), the date upon which Company notifies TGR
pursuant to Section 2.2 that Company is electing to relinquish any further
Earn-in Rights without having earned the maximum Participating Interest
available thereunder;

 

 

 

 

2.2.4 the date upon which the aggregate Earn-in Expenditures incurred by Barrel
equals or exceeds the amount of Earn-in Expenditures required in order to earn
the maximum 100% Participating Interest available pursuant to the Earn-in Right;

 

 

 

 

2.2.5 subject to Barrel having earned a Participating Interest in the Project of
at least forty nine per cent (49%), further Earn in rights will be relinquished
if Barrel is inactive in payments or Expenditures to the property for a period
of four years.

 

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2.3 Option to Fully Relinquish Earn-in Right

 

Barrel may, at any time during the process of incurring Earn-in Expenditures
sufficient to earn a Participating Interest in the Project, by way of Notice to
TGR, elect to cease incurring Earn-in Expenditures and relinquished its right to
acquire any Participating Interest in the Project Property and the Earn-in Right
will thereupon be deemed terminated.

 

2.4 Option to Partially Relinquish Earn-in Right

 

Provided that Company has earned a Participating Interest in the Project
Property of at least forty nine per cent (49%), Company may, at any time prior
to incurring Earn-in Expenditures sufficient to earn the maximum Participating
Interest available pursuant to the Earn-in Right, by Notice to TGR, elect to
cease incurring Earn-in Expenditures and relinquish the Earn-in Right without
having earned the maximum Participating Interest available thereunder whereupon,
Company will be deemed to have relinquished its right to acquire any further
Participating Interest in the Project Property over and above its then-earned
Participating Interest and the Surface Access Rights and the Earn-in Right will
thereupon be deemed terminated.

 

2.5 Subsequent Programs and Budgets

 

Programs and Budgets pertaining to the Property will be prepared by the
Operating Party in good faith having regard to all information available to with
respect of the Project Property, generally accepted mining industry practice and
the terms of this Agreement and will be limited to the conduct of Exploration
and Development for the sole purpose of determining the economic viability of
extracting Products. Prior to implementation, each Program and Budget pertaining
to subsequent years of the Earn-in Schedule will be submitted to the Earn-in
Committee for review and approval.

 

2.6 Access and Data

 

Throughout the Earn-in Period, TGR will afford to Barrel such access to the
Project Property and to all Existing Data pertaining to the Project Property
within TGR's possession or control as Company may, from time to time, reasonably
request in connection with the enjoyment of its rights and the performance of
its obligations under this Agreement. The Parties will afford to each other
access to and copies of, and will keep each other fully informed of, all
Confidential Information pertaining to the Property, if and to the extent
pertinent to the selection of drill targets on the Project Property or otherwise
relevant to planning Exploration including, without limitation, Exploration by
TGR or Barrel pursuant to Section 3.15, and will keep TGR fully informed of,
and, as TGR may, from time to time, reasonably request, afford to TGR access to,
the Operations, the Project Property and all information generated by Company
pursuant to the Earn-in Expenditures.

 

2.7 Indemnity

 

The Parties will carry out Operations in compliance with all applicable laws,
rules and regulations and the terms of the Existing Licenses, and in a good and
workmanlike manner in accordance with generally accepted mining and exploration,
and environmental practices. Such operations will be at the Operators sole risk
and the Operator will indemnify and save harmless the other Party and its
Affiliates and their respective officers, directors and employees from and
against any and all claims, debts, demands, suits, actions and causes of action
whatsoever which may be brought or made against one or more of them by any
person, firm or corporation and all loss, cost, damages, expenses and
liabilities which may be suffered or incurred by them arising out of or in
connection with or in any way referable to, whether directly or indirectly, the
Operations including without limitation bodily injuries or death at any time
resulting therefrom or damage to property including legal costs incurred in
defending same.

 

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2.8 Audit Rights

 

If requested by TGR from time to time within ninety (90) days of the end of a
calendar year, Company will cause its statements of Earn-in Expenditures under
Section 3.9 to be audited by a firm of chartered accountants and a copy of the
audit report will be provided by Company to TGR. The costs of the audit will be
borne by TGR if such statements understated the Earn-in Expenditures actually
incurred or overstated the Earn-in Expenditures actually incurred by not more
than two per cent (2%) and will be borne by Company if such statements
overstated the Earn-in Expenditures actually incurred by greater than two per
cent (2%).

 

2.9 Independent Activities

 

TGR may at any and all times conduct Exploration, provided it does not unduly
interfere with Company's Operations. TGR will, if requested by Company, provide
to Company a detailed report of the work performed and the results obtained to
which the report relates. Barrel will maintain the right to reimburse the costs
for TGR’s exploration efforts which will then be deemed to be Earn-in
Expenditures toward increasing Barrels percentage interest in the Project

 

PART 3

VESTING AND TRANSFER OF INTEREST

 

3.1. Upon Barrel having completed Payments equal to the Exploration Expenditures
in accordance with Section 2.2 (b) and 2.2 (c) TGR shall provide Barrel with
written notice of its attained Earned-in Percentage of the Project within 30
days after its completion.

 

3.2 Upon Barrel having exercised the full one hundred percent (100%) Earn-In
Right in accordance with Section 2.2 (d) TGR shall provide Barrel with written
notices of its completion of the full Earn in Right and will transfer all
Existing Data and Existing Licenses related to the title of the Project to
Barrel. At such time TGR and Barrel will enter into a Development and Mine
Operating agreement (the “Development Agreement”) with respect to TGR retaining
a 5% Royalty on production of any Mineral Products from the Project.

 

3.3 Barrel will retain first right of Refusal on the Purchase of the 5% Royalty
held by TGR on the production from the Subject Property.

 

PART 4

JOINT VENTURE AND ADDITIONAL AREAS

 

4.1. Upon Barrel having completed Payments and/or Earn-in Exploration
Expenditures in accordance with Section 2.2 (c), the Parties agree that if
further exploration and/or exploitation of the Project is warranted that such
activities will be conducted on a Joint Venture basis. TGR and Barrel propose to
act by way of a Joint Venture with exploration and Project expenditures
completed on a Pro-rata basis until such time Barrel has attained its maximum
Earned-in Percentage on the Project or Barrel acts according to Section 2.3 or
2.4.

 

4.2 Upon Barrel having completed its Earn-In Right in accordance with Section
2.2 (b), TGR shall allow Barrel to acquire an option to acquire any additional
claims that TGR possesses that is within 8km (5 miles) of the Subject
Properties’ Existing Licenses.

 

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PART 5

REPRESENTATIONS AND WARRANTIES

 

5.1 Representations and Warranties of Both Parties Each party warrants and
represents to the other that:

 

(a) it is a corporation duly incorporated, organized and validly existing and
current with respect to all filings required under the laws of its jurisdiction
of incorporation, it has the corporate power and authority, and is duly licensed
or qualified, to do business and is in good standing in those jurisdictions
where necessary in order to carry out the purposes of this Agreement and no
proceedings have been taken or authorized by it or, to the best of its
knowledge, by any other person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding-up of such party;

 

(b) its execution and delivery of this Agreement, including all matters
contemplated hereby, has been authorized by all necessary corporate action and
the party has the corporate power and authority to enter into and perform its
obligations under this Agreement;

 

(c) none of the execution and delivery of this Agreement, the implementation of
the Subject Transactions or the fulfillment of, or compliance with, the terms
and provisions hereof do or will, with the giving of notice or the lapse of time
or otherwise,

 

(i) result in the breach of, or violate any term or provision of, the party's
Constating Documents,

 

(ii) conflict with, result in the breach of, constitute a default under, or
accelerate or permit the acceleration of the performance required by, any
material agreement to which the party is a party or by which it is bound or to
which any of its material assets are subject, or

 

(iii) result in the creation of any Encumbrance upon the party's interest in
this Agreement or in the Project Property; and

 

(d) no exemption, consent, approval, order or authorization of, or registration
or filing with any court, Governmental Authority or any third party is required
by, or with respect to, the party in connection with the execution, delivery and
performance of this Agreement by the party or the consummation by the party of
the Subject Transactions; and

 

(e) this Agreement has been duly executed and delivered by it and is valid and
binding upon it in accordance with its terms subject to bankruptcy, insolvency
and other laws affecting the enforcement of creditors' rights generally and to
general principles of equity.

 

5.2 Additional Representations and Warranties of TGR

 

TGR makes the following additional representations and warranties to Company:

 

(f) the TGR Subsidiary is a company duly incorporated, organized and validly
existing and current with respect to all filings required under the laws of
British Columbia, Canada, it has the corporate power and authority, and is duly
licensed or qualified, to do business and is in good standing in those
jurisdictions where necessary in order to carry out the purposes of this
Agreement and no proceedings have been taken or authorized by it or, to the best
of its knowledge, by any other person, with respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of the TGR Subsidiary;

 

(g) none of the execution and delivery by TGR of this Agreement, the
implementation of the Subject Transactions or the fulfillment of, or compliance
with, the terms and provisions hereof do or will, with the giving of notice or
the lapse of time or otherwise,

 

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(i) result in the breach of, or violate any term or provision of, the TGR
Subsidiary's Constating Documents,

 

(ii) conflict with, result in the breach of, constitute a default under, or
accelerate or permit the acceleration of the performance required by, any
material license, permit or agreement including, without limitation, the
Existing Licenses, to which the TGR Subsidiary is a party or by which it is
bound or to which any of its material assets are subject, or

 

(iii) result in the creation of any Encumbrance upon any of the TGR Subsidiary's
material assets including, without limitation, the Existing Licenses;

 

(d) to the knowledge of TGR, no exemption, consent, approval, order or
authorization of, or registration or filing with any court, Governmental
Authority or any third party is required by, or with respect to, the TGR
Subsidiary in connection with the execution, delivery and performance of this
Agreement by TGR or the consummation by TGR of the Subject Transactions;

 

(e) with respect to the Project Property (i) no person, other than the parties
and their respective affiliates, owns, or has the right to acquire, any interest
in any securities of the TGR Subsidiary, (ii) to the knowledge of TGR, no
person, other than the TGR Subsidiary, owns, or has the right to acquire, any
interest in the Existing Licenses, (iii) neither TGR nor the TGR Subsidiary has
received any notice of default of any of its obligations under the Existing
Licenses, (iv) nothing in this Agreement conflicts with or could reasonably be
expected to cause the TGR Subsidiary to breach any of its obligations under the
Existing Licenses or the Constating Documents of the TGR Subsidiary;

 

(g) TGR has delivered to or made available for inspection by Company all
Existing Data in its possession or control, and true and correct copies of all
leases or other contracts relating to the Project Property;

 

(h) to the best of the TGR's knowledge (i) the Existing Licenses have been
properly granted and issued by the appropriate Governmental Authority, (ii) all
requirements for holding the Existing Licenses have been met, (iii) all filings
required to be made with the appropriate Governmental Authority have been made,
(iv) all work required in order for the TGR Subsidiary to hold the Existing
Licenses has been performed and all fees payable to the appropriate Governmental
Authority have been paid to date, (v) the Existing Licenses are free and clear
of Encumbrances or defects in title and (vi) there are no conflicting mineral
licenses or tenures;

 

(i) there are no pending or threatened actions, suits, claims or proceedings,
and there have been no previous transactions affecting the Project Property
which have not been for fair consideration;

 

(j) except as to matters otherwise disclosed in writing to Company,

 

(i) to the best of the TGR's knowledge, the conditions existing on or with
respect to the Project Property and the TGR's activities on the Project Property
are not in violation of any Laws (including without limitation any Environmental
Laws), nor causing or permitting any damage or impairment to the health, safety,
or enjoyment of any person at or on the Project Property or in the general
vicinity of the Project Property,

 

(ii) to the best of the TGR's knowledge, there have been no past violations by
it of any Environmental Laws or other Laws affecting or pertaining to the
Project Property, nor any past creation of damage or threatened damage to the
air, soil, surface waters, groundwater, flora, fauna, or other natural resources
on, about or in the general vicinity of the Project Property, and

 

(iii) neither TGR nor the TGR Subsidiary has received inquiry from or notice of
a pending investigation from any governmental agency or of any administrative or
judicial proceeding concerning the violation of any Laws.

 

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5.3 Knowledge

 

For the purposes of any representation or warranty in this Part 4 made to a
party's "knowledge", the term "knowledge" means actual knowledge of:

 

(a) the indicated conclusion in respect of the relevant matter; or

 

(b) facts that would reasonably lead to the indicated conclusion in respect of
the relevant matter; on the part of the officers and employees of the
representing party.

 

5.4 Survival of Representations and Warranties

 

The representations and warranties set forth above will survive for a period of
three (3) years after the Effective Date.

 

5.5 Indemnities/Limitation of Liability

 

Subject to Section 5, each party will indemnify the other party, its directors,
officers, employees, agents, attorneys and Affiliates (collectively "Indemnified
party") from and against the entire amount of any Material Loss. A "Material
Loss" will mean all costs, expenses, damages or liabilities, including
attorneys' fees and other costs of litigation (either threatened or pending)
arising out of or based on a breach by a party ("Indemnifying party") of any
representation, warranty or covenant contained in this Agreement which amounts,
in the aggregate, to at least $1,000,000. If any claim or demand is asserted
against an Indemnified party in respect of which such Indemnified party may be
entitled to indemnification under this Agreement, the Indemnified party will
promptly give Notice of such claim or demand to the Indemnifying party. The
Indemnifying party will have the right, but not the obligation, by notifying the
Indemnified party after its receipt of the Notice of the claim or demand, to
assume the entire control of (subject to the right of the Indemnified party to
participate, at the Indemnified party's expense and with counsel of the
Indemnified party's choice), the defence, compromise, or settlement of the
matter, including, at the Indemnifying party's expense, employment of counsel of
the Indemnifying party's choice. Any damages to the assets or business of the
Indemnified party caused by a failure by the Indemnifying party to defend,
compromise, or settle a claim or demand in a reasonable and expeditious manner,
after the Indemnifying party has given Notice that it will assume control of the
defence, compromise, or settlement of the matter, will be included in the
damages for which the Indemnifying party will be obligated to indemnify the
Indemnified party. Any settlement or compromise of a matter by the Indemnifying
party will include a full release of claims against the Indemnified party which
have arisen out of the indemnified claim or demand.

 

PART 6

CONDITIONS PRECEDENT

 

6.1 Due Diligence

 

Barrel will be entitled to conduct thorough evaluations and investigations
respecting TGR and any TGR Subsidiary and their respective ownership, assets,
liabilities (actual and contingent) and all related technical and engineering
information, books and records, financial statements, agreements, licenses,
permits, concessions and authorizations, of every nature and other
documentation, if any, relating to each or all of them. As part of its due
diligence investigations, Barrel may, at its own expense, instruct counsel of
its choosing to prepare a legal opinion (the "Local Counsel Opinion") pertaining
to the status, under the Laws of Arizona, of the Existing Licenses and the
Project Property, the efficacy, under the Laws of Arizona, of the Surface Access
Rights and such other matters Barrel considers appropriate. For these purposes,
TGR will grant to Company and its duly authorized directors, officers,
employees, agents and advisors access in a timely manner to all documents (and
copies thereof), information and personnel relevant to such investigations and
will (and will cause of its subsidiaries to) cooperate fully and in a timely
manner with all reasonable requests by Company, its directors, officers,
employees, agents and advisors in respect of such evaluations and
investigations. All information so obtained by Company will be deemed to be
Confidential Information. If requested by TGR, Barrel will furnish TGR with a
copy of the Local Counsel Opinion.

 

  10

   

 

6.2 Exchange Approval

 

The Parties participation in the Subject Transactions may be subject to the
prior approval of individual Governing Exchanges. TGR hereby covenants and
agrees to expeditiously apply for and use reasonable good faith efforts to
obtain such consents, acceptances and approvals from the Exchange as may be
necessary or desirable to fulfil its obligations hereunder and for the
implementation of the Subject Transactions.

 

6.3 Mutual Condition Precedent

 

The respective obligations of the parties hereto to complete the Subject
Transactions will be subject to the mutual conditions that:

 

(a) there will not be in force, on the Effective Date, any order or decree of a
court of competent jurisdiction or any Governmental Authority restraining,
interfering with or enjoining the consummation of the Subject Transactions. This
condition precedent will be deemed to have been waived by both parties unless
one of them gives Notice on the Effective Date that the condition has not been
satisfied;

 

6.4 Conditions for the Benefit of Barrel

 

The obligations of Barrel to complete the Subject Transactions are subject to
the satisfaction, on or before the Effective Date, of the following conditions,
any of which may be waived by Barrel without prejudice to its right to rely on
any other or others of them:

 

(a) the representations and warranties of TGR contained in Section 4 will be
true in all material respects immediately prior to the Effective Date with the
same effect as though made at and as of such time;

 

(b) each of the acts and undertakings of TRG to be performed on or before the
Effective Date pursuant to the terms of this Agreement will have been duly
performed by it; and

 

(c) the Exchange will have conditionally accepted notice of the Subject
Transactions subject only to the filing of documents customary for similar
transactions.

 

6.5 Conditions for the Benefit of TGR

 

The obligations of Barrel to complete the Subject Transactions are subject to
the satisfaction, on or before the Effective Date, of the following conditions,
any of which may be waived by Company without prejudice to its right to rely on
any other or others of them:

 

(a) the representations and warranties of Barrel contained in Sections 4 will be
true in all material respects immediately prior to the Effective Date with the
same effect as though made at and as of such time;

 

(b) each of the acts and undertakings of Barrel to be performed on or before the
Effective Date pursuant to the terms of this Agreement will have been duly
performed by it;

 

(c) Barrel, acting reasonably, will be satisfied with the results of its due
diligence investigations pursuant to Section 5.1;

 

(d) Barrel will have procured the Local Counsel Opinion and, acting reasonably,
will be satisfied with its contents and conclusions;

 

(e) the Exchange will have conditionally accepted notice of the Subject
Transactions subject only to the filing of documents customary for similar
transactions.

 

  11

   

 

6.6 Failure of Conditions Precedent

 

If a condition precedent to the obligations of a party in this Agreement have
not been satisfied or waived within the time provided, this Agreement will
terminate automatically without prejudice to the right of such party to claim
damages for breach of the terms of this Agreement where there has been default
by the other party.

 

PART 7

ARBITRATION

 

7.1 Single Arbitrator

 

Any matter in dispute under this Agreement that is referred to arbitration will
be determined by a single arbitrator to be appointed by the parties hereto.

 

7.2 Notice of Intent to Arbitrate

 

Either party may refer any matter in dispute under this Agreement to arbitration
by Notice to the other party and, within thirty (30) days after receipt of such
Notice, the parties will agree on the appointment of an arbitrator, who will be
capable of commencing the arbitration within twenty one (21) days of his
appointment. No person will be appointed as an arbitrator hereunder unless such
person agrees in writing to act.

 

7.3 Effect of Lack of Agreement on Arbitration

 

If the parties cannot agree on a single arbitrator as provided in Section 6.2
either party may request a court of competent jurisdiction to appoint a single
arbitrator in accordance with the Arbitration Act.

 

7.4 Procedural Matters

 

Except as specifically provided in this Part, an arbitration hereunder will be
conducted in accordance with the Arbitration Act. The arbitrator will fix a time
and place in Vancouver, British Columbia for the purpose of hearing the evidence
and representations of the parties, all of which will be in camera, and he will
preside over the arbitration and determine all questions of procedure not
provided for under the Arbitration Act or this Part. After hearing any evidence
and representations that the parties may submit, the arbitrator will make an
award and reduce the same to writing and deliver one copy thereof to each of the
parties. The award will be kept confidential by the parties except to the extent
that disclosure is required by applicable securities laws or stock exchange
rules. The decision of the arbitrator will be made within forty five (45) days
after his appointment, subject to any reasonable delay due to unforeseen
circumstances. The expense of the arbitration will be paid as specified in the
award. The parties agree that the award of the single arbitrator will be final
and binding upon each of them and will not be subject to appeal.

 

PART 8

CONFIDENTIALITY,

USE

AND DISCLOSURE OF INFORMATION

 

8.1 Confidential Information

 

Except as provided in Sections 7.2 and 7.3, or with the prior written consent of
the other party, each party will keep confidential and not disclose to any third
party or the public any Confidential Information.

 

8.2 Permitted Disclosure of Confidential Information Either party may disclose
Confidential Information to:

 

(a) a party's officers, directors, partners, members, employees, Affiliates,
shareholders, agents, attorneys, accountants, consultants, contractors,
subcontractors or advisors, for the sole purpose of such party's performance of
its obligations under this Agreement;

 

(b) any actual or potential lender, underwriter or investor for the sole purpose
of evaluating whether to make a loan to or investment in the disclosing party;

 

(c) a third party with whom the disclosing party contemplates any independent
business activity or operation; or

 

(d) a third party to whom the disclosing party contemplates a sale or other
disposition of the whole or part of its Participating Interest.

  

  12

   

  

The party disclosing Confidential Information pursuant to this Section 9.2 will
disclose such Confidential Information to only those parties who have a bona
fide need to have access to such Confidential Information for the purpose for
which disclosure to such parties is permitted under this Section 9.2 and who
have agreed in writing supplied to, and enforceable by, the other party to
protect the Confidential Information from further disclosure, to use such
Confidential Information solely for such purpose and to otherwise be bound by
the provisions of this Part 9. The party disclosing Confidential Information
will be responsible and liable for any use or disclosure of the Confidential
Information by such parties in violation of this Agreement and such other
writing.

 

8.3 Disclosure Required By Law

 

Notwithstanding anything contained in this Part 7, a party may disclose any
Confidential Information if, in the opinion of the disclosing party's legal
counsel:

 

(e) such disclosure is legally required to be made in a judicial, administrative
or governmental proceeding pursuant to a valid subpoena or other applicable
order; or

 

(f) such disclosure is legally required to be made pursuant to the applicable
securities laws, rules and regulations or, the rules or regulations of a stock
exchange or similar trading market applicable to the disclosing party.

 

Prior to any disclosure of Confidential Information under this Section 7.3, the
disclosing party will give the other party at least five (5) days' prior Notice
(unless less time is permitted by such rules, regulations or proceeding) and, in
making such disclosure, the disclosing party will disclose only that portion of
Confidential Information required to be disclosed and will take all reasonable
steps to preserve the confidentiality thereof, including, without limitation,
obtaining protective orders and supporting the other party in intervention in
any such proceeding.

 

8.4 Public Announcements

 

Prior to making or issuing any press release or other public announcement or
disclosure of the subject matter of this Agreement or any Confidential
Information, a party will first consult with the other party as to the content
and timing of such announcement or disclosure, unless in the good faith judgment
of such party, there is not sufficient time to consult with the other party
before such announcement or disclosure must be made under applicable Laws; but
in such event, the disclosing party will notify the other party before such
announcement or disclosure is made if at all reasonably possible and, if not, as
soon as reasonably possible thereafter. Any press release or other public
announcement or disclosure to be issued by either party relating to the Business
will also identify the other party.

 

  13

   

 

PART 9

GENERAL PROVISIONS

9.1 Notices

 

All notices, payments and other required or permitted communications ("Notices")
to either party will be in writing, and will be addressed respectively as
follows:

 

If to TGR: Byron Coulthard

Attention: President

Telephone: 604-657-7004

Address: c/o Sharon Lewis Consulting

Suite 404 – 999 Canada Place

Vancouver, B.C. V6C 3E2

 

If to Barrel: Harp Sangha

Attention: Chairman

Telephone: 702-595-2447

Address: 8275 S. Eastern Ave, Suite 200

Las Vegas, NV, 89123

 

All Notices will be given (a) by personal delivery to the party, (b) by
electronic communication, capable of producing a printed transmission, (c) by
registered or certified mail return receipt requested; or (d) by overnight or
other express courier service. All Notices will be effective and will be deemed
given on the date of receipt at the principal address if received during normal
business hours, and, if not received during normal business hours, on the next
business day following receipt, or if by electronic communication, on the date
of such communication. Either party may change its address by Notice to the
other party.

 

9.2 Waiver

 

The failure of either party to insist on the strict performance of any provision
of this Agreement or to exercise any right, power or remedy upon a breach hereof
will not constitute a waiver of any provision of this Agreement or limit such
party's right thereafter to enforce any provision or exercise any right.

 

9.3 Modification

 

No modification of this Agreement will be valid unless made in writing and duly
executed by both parties.

 

894 Force Majeure

 

Except for the obligation to make payments when due hereunder and any failure to
incur Earn-in Expenditures in accordance with the Earn-in Schedule due to lack
of funds, the obligations of a party will be suspended to the extent and for the
period that performance is prevented by any cause, whether foreseeable or
unforeseeable, beyond its reasonable control, including, without limitation,
labour disputes (however arising and whether or not employee demands are
reasonable or within the power of the party to grant); acts of God; Laws,
instructions or requests of any government or governmental entity; judgments or
orders of any court; inability to obtain on reasonably acceptable terms any
public or private license, permit or other authorization; curtailment or
suspension of activities to remedy or avoid an actual or alleged, present or
prospective violation of Environmental Laws; action or inaction by any federal,
state or local agency that delays or prevents the issuance or granting of any
approval or authorization required to conduct Operations beyond the reasonable
expectations of the party seeking the approval or authorization; acts of war or
conditions arising out of or attributable to war, whether declared or
undeclared; riot, civil strife, insurrection or rebellion; fire, explosion,
earthquake, storm, flood, sink holes, drought or other adverse weather
condition; delay or failure by suppliers or transporters of materials, parts,
supplies, services or equipment or by contractors' or subcontractors' shortage
of, or inability to obtain, labour, transportation, materials, machinery,
equipment, supplies, utilities or services; accidents; breakdown of equipment,
machinery or facilities; actions by native rights groups, environmental groups,
or other similar special interest groups; or any other cause whether similar or
dissimilar to the foregoing. The affected party will promptly give Notice to the
other party of the suspension of performance, stating therein the nature of the
suspension, the reasons therefor, and the expected duration thereof. The
affected party will resume performance as soon as reasonably possible.

 

  14

   

 

 

9.5 Further Assurances

 

Each of the parties will take, from time to time and without additional
consideration, such further actions and execute such additional instruments as
may be reasonably necessary or convenient to implement and carry out the intent
and purpose of this Agreement.

 

9.6 Entire Agreement

 

This Agreement contains the entire understanding of the parties and supersedes
all prior agreements and understandings between the parties relating to the
subject matter hereof.

 

9.7 Assignment

 

Except as expressly permitted elsewhere in this Agreement, neither party may
assign its rights or obligations under this Agreement without the prior written
consent of the other party, such consent not to be unreasonably withheld.

 

9.8 Successors and Assigns

 

This Agreement will be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties.

 

9.9 Time

 

Time is of the essence of this Agreement.

 

9.10 Governing Law

 

This Agreement will be governed by and interpreted in accordance with the laws
of British Columbia Canada without regard for any conflict of laws or choice of
laws principles that would permit or require the application of the laws of any
other jurisdiction.

 

9.11 Counterparts

 

This Agreement may be executed in any number of counterparts, and it will not be
necessary that the signatures of both parties be contained on any counterpart.
Each counterpart will be deemed an original, but all counterparts together will
constitute one and the same instrument.

 

  15

   

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above

 

/s/ Bryan Coulthard

 

Name:

Byron Coulthard     Title: CEO          

 

Barrel Energy Inc.

 

 

 

 

 

 

 

/s/ Harp Sangha

 

 

Name:

Harp Sangha

 

 

Title:

Chairman

 

 

  16

   

 

SCHEDULE "A"

PROJECT PROPERTY

 

 

1. PROPERTY DESCRIPTION AND LOCATION

 

True Grit’s present land position is comprised of 5130.96 acres (2077 hectares)
of Arizona State Land, held under Mineral Exploration Permits, and 88 placer
claims totaling 1760 acres (713 hectares), located in Graham County, Arizona
(see Figures 1 through 5). Placer claims and Mineral Exploration Permits fall
within Township 7 South, Range 25 East, and Township 8 South, Range 26 East,
Salt River Base and Meridian.

 

In order, by date of location, contiguous placer claim groups include Green Clay
# 1-24, # 25-66 and # 67-88. All claims are Graham County recorded. Green Clay #
1-66 are BLM recorded with Maintenance Fees paid through August 31, 2018. BLM
recording and assignment of AMC #’s is pending. To maintain claims in good
standing, BLM Maintenance Fee payments of $155.00 per claim are due on or before
August 31 of each year. There is no annual fee requirement with Graham County.

 

Eleven Mineral Exploration Permits, totaling 4490.96 acres and granted to True
Grit Lithium Inc., (as registered in Nevada and Arizona), encompass all or
portions of eleven sections (Tables 1 and 2). Annual renewal date for all eleven
permits is April 27. An additional 640-acre (259 hectare) permit, with a
November 25 annual renewal date, is held by Noel Cousins and assigned to True
Grit through Mineral Agreement.

 

1.1 Property Description – State Land

 

State Trust Land Mineral Exploration Permits grant exclusive prospecting and
exploration rights for contained minerals including ingress and egress for up to
five years. Minimum acreage per application is 20 acres (8 hectares), with 640
acres (259 hectares) maximum. Arizona schools are the primary State Trust
beneficiary. Financial obligations per individual permit include an annual
$500.00 application renewal fee, rental fees of $1.00 per acre, per year, and
annual minimum work expenditures equal to $10.00 per acre for years one and two,
and $20.00 per acre for years three thru five. A bond in the amount of $3000.00
for a single permit, or a blanket bond of $15,000.00 for five or more permits is
also required. Rental fees for both years one and two are due within 30 days
upon notification to issue the permit. If work expenditures are conducted on a
portion of the total permit acreage, credit may be applied to adjacent permits,
and toward subsequent years while permits remain active. When exploration
activities are projected to exceed the minimum expenditure amount, or when
disturbance will occur, a commercial general liability insurance policy of not
less than $1,000,000.00 is also required.

 

Upon discovery of a valuable mineral deposit, the Permittee must apply for and
obtain a Mineral Lease, which is initially issued for ten years with provisions
to extend up to a maximum of twenty years. Following submittal of a Mineral
Development Report, royalties are established based on market analysis, followed
by the auction process which determines the market value (royalty rate), of the
commodity at public auction.

 

  17

   

 

 

 

 

 

[barrel_ex101img19.jpg]

Figure 1: Location map for the project area.

 

  18

   

 

 

[barrel_ex101img20.jpg]

 

Figure 2: Project location in details and topography.

 

  19

   

 

State Land disturbance mandates a Plan of Operations defining scope of
operations and a reclamation proposal. Site specific archaeological and
biological surveys may also be required. For exploration drilling, Arizona
statues call for filing a Notice of Intention to Drill and a Notice of Intent to
Abandon a Well with the Arizona Department of Water Resources. If operations
involve surface impoundments, an Aquifer Protection Permit (APP), issued by the
Arizona Department of Environmental Quality (ADEQ), may be required. At present,
and to the best of the writer’s knowledge, True Grit is current on permit
renewals, rental fees and expenditure requirements. A blanket bond totaling
$15,000.00, and verification of an active $1,000,000.00 commercial liability
insurance policy, has been provided to the State. State Land drilling permits
are being drafted, but have not yet been obtained, and will be contingent on
further refinement of drill collar locations.

 

1.2 Property Description – State Surface/Federal Mineral

 

Ground held under claim by Green Clay placers # 1-88, fall on lands designated
federal mineral, State surface (Figure 3). All mineral rights belong to the
claimant, and are not subject to royalties, except those allocated by Mineral
Agreement. For ingress, egress and exploration activities, (ASLD) requires
filing a blanket Special Land Use Permit with a one-time fee of $300.00.
Affected State surface sections are also subject to a yearly rental of $1.00 per
acre.

 

Where surface ownership is State, and mineral rights are held by claim, BLM is
the lead agency in permitting. For disturbance less than five acres, a Notice
for surface disturbing activity is filed. Operations exceeding five acres
require filing a Plan of Operations. BLM Notice level permits present access,
proposed equipment, a reclamation proposal and a reclamation coat estimate. The
reclamation cost estimate serves as the bond amount posted prior to operations.
As with State surface, a Notice of Intent to Drill and Abandon a Well is filed
with the Arizona Department of Water Resources, and an APP may be required for
any surface impoundment. A BLM site exam by in house land use specialists, if
available, may be undertaken to determine if archaeological or biological
surveys will be required.

 

To the best of the writer’s knowledge, no grazing leases or other surface
entitlements would affect the right or ability to perform work on the property.

 

  20

   

 

Figure 3 Land Ownership

 

[barrel_ex101img15.jpg]

 

Figure 3: Land ownership.

 

  21

   

 

[barrel_ex101img16.jpg]

Figure 4: Claims/Mineral Exploration Permits (west)

 

  22

   

 

 

[barrel_ex101img17.jpg]

Figure 5: Mineral Exploration Permits (east)

 

  23

   

 

Table 1: List of 11 Mineral Exploration Permits from the Arizona State Land
Department with True Grit Lithium Inc. as the permittee, are dated April 27,
2017, and encompass the following lands in Graham County, AZ (Figure 4 & 5).

 

Permit Number

Location

Number 08-119360

(covering approximately 400 acres in Section 8, T7S, R25E, G&SRM)

Number 08-119361

(covering approximately 600 acres in Section 9, T7S, R25E, G&SRM)

Number 08-119362

(covering approximately 640 acres in Section 16, T7S, R25E, G&SRM)

Number 08-119363

(covering approximately 40 acres in Section 18, T7S, R25E, G&SRM)

Number 08-119364

(covering approximately 626 acres in Section 19, T7S, R25E, G&SRM)

Number 08-119366

(covering approximately 280 acres in Section 21, T7S, R25E, G&SRM)

Number 08-119367

(covering approximately 160 acres in Section 35, T7S, R25E, G&SRM)

Number 08-119368

(covering approximately 615 acres in Section 36, T7S, R25E, G&SRM)

Number 08-119369

(covering approximately 320 acres in Section 10, T8S, R26E, G&SRM)

Number 08-119370

(covering approximately 450 acres in Section 16, T8S, R26E, G&SRM)

Number 08-119371

(covering approximately 360 acres in Section 20, T7S, R25E, G&SRM)

 

One additional Mineral Exploration Permit from the Arizona State Land
Department, with Noel Cousins as the permittee, and dated November 25, 2016,
encompasses the following lands in Graham County, Arizona (Figure 4):

 

Number 08-118982 (covering approximately 640 acres in Section 17, T7S, R26E,
G&SRM)

 

  24

   

 

Table 2: List of 88 unpatented placer mining claims, located by True Grit
Lithium Inc., within Sections 18, 20, 21, 26, 29, 30 and 35. T7S, R25E, G&SRM,
Graham County, Arizona as identified by the BLM and Graham County, Arizona
records below.

 

 

Claim Name

 

BLM Serial No.

 

Location Date

Recorded as

Document No.

Green Clay #1

AMC444594

3/6/2017

2017-01392

Green Clay #2

AMC444595

3/6/2017

2017-01393

Green Clay #3

AMC444596

3/6/2017

2017-01394

Green Clay #4

AMC444597

3/6/2017

2017-01395

Green Clay #5

AMC444598

3/6/2017

2017-01396

Green Clay #6

AMC444599

3/6/2017

2017-01397

Green Clay #7

AMC444600

3/6/2017

2017-01398

Green Clay #8

AMC444601

3/6/2017

2017-01399

Green Clay #9

AMC444602

3/6/2017

2017-01400

Green Clay #10

AMC444603

3/6/2017

2017-01401

Green Clay #11

AMC444604

3/6/2017

2017-01402

Green Clay #12

AMC444605

3/6/2017

2017-01403

Green Clay #13

AMC444606

3/6/2017

2017-01404

Green Clay #14

AMC444607

3/6/2017

2017-01405

Green Clay #15

AMC444608

3/6/2017

2017-01406

Green Clay #16

AMC444609

3/6/2017

2017-01407

Green Clay #17

AMC444610

3/6/2017

2017-01408

Green Clay #18

AMC444611

3/6/2017

2017-01409

Green Clay #19

AMC444612

3/6/2017

2017-01410

Green Clay #20

AMC444613

3/6/2017

2017-01411

Green Clay #21

AMC444614

3/6/2017

2017-01412

Green Clay #22

AMC444615

3/6/2017

2017-01413

Green Clay #23

AMC444616

3/6/2017

2017-01414

Green Clay #24

AMC445017

3/6/2017

2017-01415

Green Clay #25

AMC445020

3/27/2017

2017-01416

Green Clay #26

AMC445021

3/27/2017

2017-01417

Green Clay #27

AMC445022

3/27/2017

2017-01418

Green Clay #28

AMC445023

3/27/2017

2017-01419

Green Clay #29

AMC445024

3/27/2017

2017-01420

Green Clay #30

AMC445035

3/27/2017

2017-01421

Green Clay #31

AMC445026

3/27/2017

2017-01422

Green Clay #32

AMC445027

3/27/2017

2017-01423

Green Clay #33

AMC445028

3/27/2017

2017-01424

Green Clay #34

AMC445029

3/27/2017

2017-01425

Green Clay #35

AMC445030

3/27/2017

2017-01426

Green Clay #36

AMC445031

3/27/2017

2017-01427

Green Clay #37

AMC445032

3/27/2017

2017-01428

Green Clay #38

AMC445033

3/27/2017

2017-01429

Green Clay #39

AMC445034

3/27/2017

2017-01430

 

  25

   

 

Green Clay #40

AMC445035

3/27/2017

2017-01431

Green Clay #41

AMC445036

3/27/2017

2017-01432

Green Clay #42

AMC445037

3/27/2017

2017-01433

Green Clay #43

AMC445038

3/27/2017

2017-01434

Green Clay #44

AMC445039

3/27/2017

2017-01435

Green Clay #45

AMC445040

3/27/2017

2017-01436

Green Clay #46

AMC445041

3/27/2017

2017-01437

Green Clay #47

AMC445042

3/27/2017

2017-01438

Green Clay #48

AMC445043

3/27/2017

2017-01439

Green Clay #49

AMC445044

3/27/2017

2017-01440

Green Clay #50

AMC445045

3/27/2017

2017-01441

Green Clay #51

AMC445046

3/27/2017

2017-01442

Green Clay #52

AMC445047

3/27/2017

2017-01443

Green Clay #53

AMC445048

3/27/2017

2017-01444

Green Clay #54

AMC445049

3/27/2017

2017-01445

Green Clay #55

AMC445050

3/27/2017

2017-01446

Green Clay #56

AMC445051

3/27/2017

2017-01447

Green Clay #57

AMC445052

3/27/2017

2017-01448

Green Clay #58

AMC445053

3/27/2017

2017-01449

Green Clay #59

AMC445054

3/27/2017

2017-01450

Green Clay #60

AMC445055

3/27/2017

2017-01451

Green Clay #61

AMC445056

3/27/2017

2017-01452

Green Clay #62

AMC445057

3/27/2017

2017-01453

Green Clay #63

AMC445058

3/27/2017

2017-01454

Green Clay #64

AMC445059

3/27/2017

2017-01455

Green Clay #65

AMC445060

3/27/2017

2017-01456

Green Clay #66

AMC445061

3/27/2017

2017-01457

Green Clay #67

Pending

 

 

Green Clay #68

Pending

 

 

Green Clay #69

Pending

 

 

Green Clay #70

Pending

 

 

Green Clay #71

Pending

 

 

Green Clay #72

Pending

 

 

Green Clay #73

Pending

 

 

Green Clay #74

Pending

 

 

Green Clay #75

Pending

 

 

Green Clay #76

Pending

 

 

Green Clay #77

Pending

 

 

Green Clay #78

Pending

 

 

Green Clay #79

Pending

 

 

Green Clay #80

Pending

 

 

Green Clay #81

Pending

 

 

Green Clay #82

Pending

 

 

Green Clay #83

Pending

 

 

Green Clay #84

Pending

Green Clay #85

Pending

 

 

Green Clay #86

Pending

 

 

Green Clay #87

Pending

 

 

Green Clay #88

Pending

 

 

 

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2. General – Mineral Agreement Terms

 

In June of 2017, True Grit entered into a 3.5-year agreement with joint property
owners Steven Van Ert and Noel Cousins. Mineral Agreement terms are as follows:

 

Cash and Share Payments;

 

-$40,000.00 and 500,000 shares upon signing

-$75,000.00 and 600,000 shares on or before November 25, 2017

-$100,000.00 and 800,000 shares on or before November 25, 2018

-$150,000.00 and 1,000,000 shares on or before November 25, 2019

 

Expenditures;

 

-$200,000.00 by first anniversary of Effective Date

-$200,000.00 by second anniversary of Effective Date

-$400,000.00 by third anniversary of Effective Date

-$400,000.00 by fourth anniversary of Effective Date

 

Production royalty of 5% of net smelter returns. Royalty rate of 5% can be
reduced to a minimum of 2% upon payment of $1,000,000.00 per percentage point.

 

Option period expires November 24, 2020

 

Upon exercise of option, annual preproduction (advance royalty) payments in the
amount of $2,000,000.00 commence January 1, 2021.

 

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3. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

 

a. Access

 

The property is accessible from the towns of Safford and Thatcher, Arizona by
paved highway and a system of County gravel roads. Portions of the property are
accessible by numerous secondary dirt roads and quad trails. Safford is located
164 miles (264 km) southeast of Phoenix via Highways 60 and 70, and 125 miles
northeast of Tucson via Interstate 10 and Highway 191 (Figure 1).

 

b. Climate

 

The project area, ranging in elevation from 3120 ft (951 m) to 3240 ft (988m),
reports a mean average temperature of 80.4 F (27 C) and an average low of 47.3 F
(8.5 C). Average December and January lows are 29 F (-1.6 C), with highs in
June-July averaging 98 F (37 C). Mean annual rainfall for Safford, elevation
2940 ft (896m), is 10 inches (25 cm). Snowfall is light, with a 3.5 inch (9 cm)
yearly average. Two seasons of precipitation characterize this part of Arizona.
The monsoon season, typically lasts from late June through September.
Thunderstorm activity during the monsoon, can bring local, heavy rainfall and
vigorous lightning. Winter rainfall season is from December through March.

 

c. Local Resources and Infrastructure

 

Safford, Arizona is the closest community of size, and is proximal to and serves
as the major support hub for active mining in the Safford-Lone Star porphyry
copper District. A sizable workforce, trained in all aspects of mine related
activity, resides in the area. Globe, Arizona, located 77 miles west, similarly
employs a large, trained workforce in the copper mining industry. Farming and
irrigation demands in the immediate area, also supports several active well
drilling and related contractors. For most of the project area, power lines are
located within 0.5 (.85 km) to 3 miles (4.8 km).

 

d. Physiography

 

The project area, ranging is elevation from about 3120 ft (951m) to 3240 ft
(988m), is positioned on the southwest flanks of the broad, gentle relief Gila
Valley or Safford Basin. The Pinaleno Mountains, located a short distance
southwest of the valley, are the prominent topographic feature of the area, and
rise abruptly to a high point of 10,720 ft (3267m) at Mt Graham. Broad alluvial
fans, locally truncated by Quaternary fault scarps, mark the transition from
steep mountain drainages to the valley floor. Project area terrain is dominated
by a gentle relief veneer of sandy to small boulder outwash, overlying mostly
thin bedded silty clays representing fine, basin fill lake sediments. Scattered,
local, flat topped mesas, 1 to 200 ft (30 to 60m) in height, representing
erosional remnants of large, down cut alluvial fans, mark the western edge of
the property (Figure 6).

 

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[barrel_ex101img18.jpg]

 

Figure 6: Physiography of SE Arizona

 

 

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