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Exhibit 10.1

 
AMENDED AND RESTATED
PRECIOUS METALS PROCESSING AGREEMENT

This Amended and Restated Precious Metals Processing Agreement (this
“Agreement”) is made as of August 10, 2011 between the following parties:

WALTER O. BREEDING,
an individual residing at 2114-57th St., Lubbock, TX,
in his personal capacity,
and on behalf of WOB EQUITIES, INC.,
and also acting as the Power of Attorney for
the BREEDING FAMILY ESTATE TRUST
(collectively, the “Owner”)

- and -

ENSURGE NM, LLC,
a Utah registered limited liability company whose principal executive offices
are located
at 2825 E. Cottonwood Parkway, Suite 500, Salt Lake City, UT
(“EnsurgeNM”)

- and -

ENSURGE, INC.,
a Nevada registered corporation whose principal executive offices are located
at 2825 E. Cottonwood Parkway, Suite 500, Salt Lake City, UT
(“Ensurge Parent”)

RECITALS

WHEREAS:

A.           In this Agreement, the term “Ensurge” shall mean, jointly and
severally, EnsurgeNM, Ensurge Parent and any other wholly owned entity of
Ensurge Parent in the United States of America;

B.           The Owner and Ensurge Parent previously entered into that certain
Precious Metals Processing Agreement dated August 5, 2011 (the “Prior
Agreement”);

C.           The Owner, Ensurge and Ensurge Parent desire to enter into this
Agreement to amend and restate the Prior Agreement in its entirety to, among
other things, (i) add EnsurgeNM as a party to this Agreement, (ii) grant to
Ensurge certain exclusivity rights with respect to the Tailings (as defined
below), and (iii) provide that this Agreement may not be assigned by Ensurge
without the prior written consent of St. George Investments, LLC, an Illinois
limited liability company (“SGI”);

D.           The subject matter of this Agreement is the crushed black sand ore
tailings (the “Tailings”), which are currently located on a certain property in
New Mexico, as described in Appendix A to this Agreement, within a storage yard
that is currently enclosed by a chain-link fence (the “Storage Yard”);

 
 

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E.           The Owner owns the Tailings, but does not own the Storage Yard;

F.           The Tailings may have significant concentrations of valuable metals
and/or other elements, including gold, silver, platinum, rhodium and palladium
(the “Valuable Metals”);

G.            Ensurge is engaged in the mining business and is interested in
processing the Tailings to recover the Valuable Metals, in consideration for
paying certain royalties and other payments, and undertaking certain other
obligations, as further described below; and

H.           The parties to this Agreement and Turnbull Capital Management, LLC
(“Turnbull”) entered into a Memorandum of Understanding dated as of May 6, 2011,
which is superseded by this Agreement; Turnbull is not a party to this
Agreement, but shall be recognized as a third-party beneficiary hereunder;

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree to enter into this
legally binding agreement, with the following terms and conditions:

1.
Representations of the Owner:

The Owner represents and warrants as follows:

(a)      The Owner has the capacity to enter into and perform its obligations
under this Agreement, and Walter O. Breeding (“Breeding”) has the authority to
execute and deliver this Agreement on behalf of the Owner and to ensure that the
obligations of the Owner are performed as contemplated by this Agreement. This
Agreement has been duly executed and delivered by Breeding, on behalf of the
Owner, and all entities associated therewith, and is a valid and legally binding
agreement of the Owner, enforceable in accordance with its terms.

(b)      The Owner owns the Tailings, and the execution of this Agreement, and
the performance by the parties of the covenants contained in this Agreement,
will not violate any agreement or arrangement, to which the Owner is a party or
otherwise, to the best of the Owner’s knowledge, information and belief.

2.
Representations of Ensurge:

Ensurge represents and warrants as follows:

 
(a)
EnsurgeNM and Ensurge Parent each has the capacity to enter into and perform its
obligations under this Agreement, and all required corporate actions have been
taken by each of them to authorize it to enter into and perform its obligations
under this Agreement, and this Agreement has been duly executed and delivered by
each of them and is a valid and legally binding agreement of each of them,
enforceable in accordance with its terms.

 
(b)
The execution of this Agreement, and the performance by the parties of the
covenants contained in this Agreement, will not violate any agreement or
arrangement, to which EnsurgeNM or Ensurge Parent is a party or otherwise, to
the best of Ensurge’s knowledge, information and belief.

 
3.      No Other Representations: This Agreement contains the whole agreement
between the parties hereto relating to the subject matter hereof, and there are
no warranties, representations, terms, conditions or collateral agreements
expressed, implied or statutory, other than as expressly set forth in this
Agreement. Without limiting the foregoing, the Owner makes no representations
regarding the Tailings, or the existence or concentration of Valuable Metals in
the Tailings, which are being made available to Ensurge pursuant to this
Agreement on an “as is”, “where is” basis. The Owner makes no representations
regarding the total quantity of the Tailings.
 

 
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4.
Covenants of The Owner:

 
(a)      Consent to Ensurge’s Processing of the Tailings, etc.: The Owner hereby
consents to Ensurge’s undertaking all actions with regard to the Tailings that
Ensurge in its discretion, acting reasonably, believes appropriate or desirable,
for the following purposes (and for no other purpose):
 
 
 
(i)
processing the maximum practicable and economical amount of Valuable Metals from
the Tailings, such being determined at the discretion of Ensurge.

 
(ii)
processing the Tailings to the maximum practicable and economical extent (that
is, for greater certainty, to the extent that such processing is financially and
technically feasible at the discretion of Ensurge), and

 
(iii)
selling the Valuable Metals, on behalf of, and as agent for, the Owner, to
qualified commercial purchasers, so as to realize the maximum practicable and
economical Gross Sale Proceeds (as defined below in paragraph 8(a)) for the
Valuable Metals, as determined at the discretion of Ensurge,

In furtherance of the foregoing purposes, the actions which Ensurge may do to
the Tailings (including the Valuable Metals) include the following: (i) sampling
and testing, (ii) transporting and moving, (iii) extracting materials from,
and/or (iv) refining.

(b)      Appointment of Ensurge as Agent for the Sale Valuable Metals: The Owner
hereby appoints Ensurge to act as the Owner’s sole and exclusive agent for the
sale of the Valuable Metals.

(c)      Cooperation and Consultation with Ensurge in Third Party Dealings: The
Owner hereby agrees to cooperate and consult with Ensurge regarding all matters
relating to this Agreement, including, without limitation, dealing with, and
satisfying the requirements of, federal, state and/or local government officials
and departments, as well as private contractors and other third parties,
regarding the Tailings and their location, transportation, and processing. The
Owner shall provide whatever consents and other appropriate documentation that
may be required to implement the purposes of this Agreement. Without limiting
the foregoing, the Owner shall cooperate with Ensurge in dealing with the
landowner of the Property (the “Landowner”), as appropriate, as further
described below in paragraph 5(p), and also in dealing with the applicable
officials working for the State of New Mexico.

Notwithstanding the other provisions of this paragraph 4(c), and for greater
certainty, Ensurge shall remain solely responsible for dealing with, and
satisfying the requirements of, federal, state and/or local government officials
and departments, as well as private contractors and other parties, regarding the
Tailings and the implementation of Ensurge’s obligations under this Agreement,
and Ensurge shall solicit the Owner’s involvement only as Ensurge believes
necessary or desirable, in Ensurge’s discretion.

 
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If the Owner has reason to believe that Ensurge is not properly satisfying the
requirements of federal, state and/or local government officials and/or
departments, and the Owner also has notified Ensurge of its belief and the
reasons therefor, and has provided Ensurge with 30 days notice to address
Owner’s concerns, without any response from Ensurge in relation thereto, then
the Owner may deal directly with such officials and/or departments, at the
Owner’s own initiative, acting reasonably, to avoid or mitigate any possible
adverse consequences to the Owner’s interest in the Tailings, after attempting
to consult with Ensurge regarding the situation and cooperating with Ensurge, as
appropriate.

(d)      General Cooperation and Consultation with Ensurge: The Owner shall
generally cooperate and consult with Ensurge on all matters relating to this
Agreement, as each such other party may request from time to time.

(e)      Exclusivity: The Owner covenants and agrees that Ensurge shall have the
exclusive right to process and undertake any other actions contemplated herein
with respect to the Tailings during the term of this Agreement and that the
Owner shall not grant any such rights to any third party during the term of this
Agreement without the prior written consent of Ensurge.

5.
Covenants of Ensurge:

(a)      Confirm and Secure the Location of the Tailings: Ensurge shall ensure
that the Tailings are located at a site (which may or may not be the Storage
Yard) that does not jeopardize at any time the Owner’s interest in the Tailings
or their value to the Owner or the ability of the parties to perform their
respective obligations under this Agreement. If for any reason the Tailings must
be moved to avoid such adverse consequences, then Ensurge shall arrange and
implement such a move, at Ensurge’s own expense, in consultation with the Owner.
Ensurge shall be responsible for leasing or buying any property (other than the
Storage Yard, as further described below in paragraph 5(p)) at which the
Tailings are to be located or processed at any time, as may be required or
appropriate, and Ensurge shall be solely responsible for any remediation or
other costs or expenses associated with processing the Tailings at any such
property (including the Storage Yard), as further described below in paragraph
5(q) hereof.

Ensurge shall secure the location of the Tailings at all times, taking such care
and precautions with the Tailings as are reasonable and prudent in the
circumstances (by commercial standards in the North American mining industry),
to avoid any theft or other loss in value of the Tailings to the Owner. The
steps that may be appropriate for Ensurge to take include adding new fencing at
the location of the Tailings (with the relevant landowner’s consent, as
required) and/or potentially hiring private security guards to monitor and
protect the Tailings from theft or other loss in value to the Owner.

(b)      Conduct Additional Testing of the Tailings (“Phase 1”): Ensurge shall
conduct such testing of the Tailings, at Ensurge’s own expense, as is
appropriate in order to identify all of the elements contained in the Tailings,
with a view to using such knowledge to process the maximum economically
practicable value from the Tailings, as to be determined at the discretion of
Ensurge. This additional testing may be performed by Advanced Analytical, LLC
(current Web site: www.aaassaylabs.com) (“Advanced”) or any other testing
facility in Ensurge’s discretion, acting reasonably. This initial testing shall
be referenced herein as “Phase 1”.

(c)      Conduct Phase 2 Testing (Pilot Project): Ensurge shall engage Advanced
(or another third party selected by Ensurge, acting reasonably), at Ensurge’s
own expense, to construct a small scale processing facility, through which
Advanced (or such other third party) will process up to two tons of the Tailings
as a pilot project, to establish the possible yields of Valuable Metals from the
Tailings. This testing shall be referenced herein as “Phase 2” testing. Ensurge
shall be responsible for all costs associated with Phase 2 Testing, including
the costs of transporting one or more shipments of the Tailings to be used in
such testing.

 
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(d)      Construct an Onsite Processing Facility: Following the completion of
Phase 2 testing, Ensurge shall construct, at its own expense, an onsite
processing facility (the “Processing Facility”) at the location of the Tailings.
The Processing Facility shall be capable of processing the maximum economically
practicable amount of Valuable Metals from the Tailings to be determined at the
discretion of Ensurge.

The Processing Facility shall be constructed at such a scale and processing
capacity that it will process the Valuable Metals from the Tailings at a minimum
of at least 10,000 tons of Tailings per annum, if in each case such scale and
capacity is reasonably practicable and economically feasible to construct at the
discretion of Ensurge. The Processing Facility and any other equipment
associated with the Processing Facility shall be the property of Ensurge.

(e)      Operate the Processing Facility: Following completion of the Processing
Facility, Ensurge shall operate the facility, at its own expense. as
expeditiously as possible at the discretion of Ensurge.

(f)      Weigh the Tailings Prior to Processing: Ensurge shall weigh all
Tailings that are submitted to the Processing Facility for processing, at its
own expense, using such scales and procedures as are reasonably appropriate in
the circumstances, having regard to commercial standards in the North American
mining industry. Ensurge shall keep detailed records of the amount of Tailings
that are processed each day at the facility, including the basis and calculation
method for the relevant figures, and Ensurge shall submit those records to the
Owner on at least a weekly basis.

(g)      Secure and Protect the Valuable Metals: Ensurge shall take such steps
and adopt such procedures to secure and protect the Valuable Metals that are
processed from the Tailings from theft or other loss. Such steps and procedures
are expected to include security guards and video surveillance, as well as
appropriate internal controls and supervisory procedures. Such steps and
procedures shall be in general compliance with accepted commercial standards in
the North American mining industry. Ensurge shall promptly inform the Owner if
there are any suspected or actual losses of processed Tailings or Valuable
Metals as a result of theft or other causes.

(h)      Arrange for Refining of the Valuable Metals: Ensurge may submit the
Valuable Metals to one or more qualified commercial refiners if at the sole
discretion of Ensurge, such refining shall be technically and economically
feasible. In such case, Ensurge shall generally strive to ensure that no more
than approximately 14 days’ supply of Valuable Metals is in the custody of any
individual refiner at any time, having regard to the processing “run rate” of
the Refining Facility and also subject to the minimum inventory of Valuable
Metals that is reasonably required by the refiner in accordance with its normal
refining processes, unless the Owner otherwise agrees (acting reasonably).

(i)      Compliance with All Laws: Ensurge shall comply with all applicable laws
and regulations (including with rulings or orders issued by applicable
government departments, regulatory bodies or courts), in all matters relating to
the Tailings and Ensurge’s processing or movement of the Tailings or otherwise
in connection with Ensurge’s implementation of this Agreement, including
obtaining all necessary permits and approvals.

 
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(j)      Sale of the Valuable Metals: Ensurge shall sell the Valuable Metals as
agent for the Owner and on the Owner’s behalf, at the highest practicable price
for each sale. The frequency of such sales shall be based upon the output of the
Processing Facility and the capability of the commercial Refining Facility.

 
(k)
Reporting, Books and Records, etc.:

 
(i)
Maintain Books and Records and Allow for Inspection: Ensurge shall maintain
proper books and records relating to its dealings in the Tailings and all
matters relating to Ensurge’s implementation of this Agreement. Ensurge shall
make all such books and records available for inspection by the Owner, promptly
upon request, at Ensurge’s Corporate office where such records shall be
maintained.

 
(ii)
Have Sufficient Accounting Staff for Adequate Internal Controls: Ensurge shall
maintain sufficient internal accounting and booking staff (or shall retain
qualified outsourced staff), such that Ensurge’s internal financial controls
relating to Ensurge’s dealings in the Tailings are adequate, in accordance with
generally accepted auditing practices. The foregoing requirement shall only
apply following the second anniversary of the date of this Agreement, if this
Agreement has not been terminated prior to such anniversary in accordance with
the termination provisions in this Agreement.

 
(iii)
Independent Audit by Qualified CPA Firm: Ensurge shall have its annual financial
statements audited and quarterly financial statements reviewed by a qualified,
independent CPA firm at all times during the term of this Agreement. At the
request of Owner, Ensurge shall authorize its auditing firm to make itself
available and provide all information relating to the Tailings and Ensurge’s
implementation of this Agreement, at the expense of Owner.

 
(iv)
Report of Monthly Activity: Without limiting the foregoing, within fifteen days
following the completion of each calendar month (or part month) in which
Tailings have been processed at the Processing Facility, Ensurge shall provide a
report that specifies the following items, for the relevant month: (A) the
tonnage of Tailings processed; (B) the amount of each Valuable Metal extracted
from the Tailings (to the extent such amount is reasonably identifiable at such
time); and (C) the amount of sales of Valuable Metals in the month (broken down
by type of metal, price received per ounce or other unit, the quantity of each
sale and such other pertinent information as is reasonable in the circumstances
and is reasonably identifiable at such time).

 
(v)
General Obligation to Keep Other Parties Informed: Ensurge shall keep the Owner
informed of the progress of Ensurge’s implementation of this Agreement and any
significant developments relating to the subject matter of this Agreement, on a
regular basis and immediately when there has been any significant, unexpected
development.

(l)      Consult with the Owner: Ensurge shall regularly consult with the Owner
regarding Ensurge’s proposed method of implementing its obligations under this
Agreement. Ensurge shall listen to the Owner’s ideas and suggestions regarding
alternative possible methods for such implementation, and Ensurge shall in good
faith consider such ideas and suggestions, with a view to optimizing the
operational and financial results to the Owner from this Agreement. Ensurge
shall provide the Owner with such additional information and access to the
Processing Facility as the Owner may request, where the Owner determines (acting
reasonably) that the results being achieved from the extraction process are
unsatisfactory.

 
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(m)      Obtain Insurance: As soon as practicable following commencement of the
processing of Tailings at the Extraction Facility, Ensurge shall obtain a
reasonably appropriate amount of insurance, at its own expense, on the facility
and covering all operational aspects of the facility, including general
liability insurance and such other coverage as is reasonably appropriate in the
circumstances.

(n)      Signing Payment by Ensurge. Ensurge shall make an initial payment to
the Owner of $15,000.00 (fifteen thousand dollars) within 5 business days of the
signing of this agreement.

(o)       Monthly Payment by Ensurge. Ensurge shall make a monthly payment to
the Owner in the amount of $1,000 (one thousand dollars) during the term of this
Agreement, the intent of which, as outlined below, is to allow the Owner to make
rental payments in that amount to the Landowner under the Tailings Agreement, as
defined below in paragraph 5(p).

(p)      Tailings Agreement with the Landowner: The Owner and the Landowner have
executed and delivered a Tailings Agreement dated August 3, 2011 (the “Tailings
Agreement”), which establishes a lease arrangement (the “Lease”) between the
Landowner, as lessor, and the Owner, as lessee, with respect to the Storage
Yard. Ensurge is not a party to the Tailings Agreement, but is recognized as a
third-party beneficiary thereunder. References to the Tailings Agreement herein
do not obligate Ensurge to any performance thereunder, and are made for
reference purposes only, unless otherwise set forth herein.

Under the Tailings Agreement, the Owner is obligated to pay to the Landowner an
initial signing payment of $15,000.00 (fifteen thousand dollars), within ten
(10) business days of the date of that agreement. It is the Owner's intent and
instruction that the payment from Ensurge in that amount, referenced herein in
paragraph 5(n), may be made directly to the Landowner on the Owner’s behalf, or
to the Owner on account of such payment, promptly upon the execution and
delivery of this Agreement.

In addition, under the Tailings Agreement the Owner is obligated to pay to the
Landowner monthly cash rent of $1,000.00 (one thousand dollars) during the term
of the Lease, which monthly payment obligation begins on the first day of the
first calendar month after (i) the date when the construction of the Processing
Facility begins on the Storage Yard or (ii) the date which is six (6) months
after the date of the Tailings Agreement, whichever comes first. It is the
Owner's intent and instruction that Ensurge may pay that amount, with that
timing, directly to the Landowner on the Owner’s behalf, or to the Owner, in
fulfillment of Ensurge's obligation as set forth in paragraph 5(o) herein.

All royalty payments required to be paid to the Landowner under the Tailings
Agreement shall be paid by the Owner, from the Owner’s royalty payments set
forth in this Agreement.

Under the Tailings Agreement, the Owner may construct, modify and/or make
improvements to buildings, fences and/or water systems on the Storage Yard
(collectively, “Improvements”), at the Owner’s own expense; provided that such
Improvements shall not be removed upon termination of the Lease, but instead
shall remain on the Storage Yard and ownership shall be transferred to the
Landowner on such termination, at no charge, unless the Landowner requests their
removal, in which case the Improvements shall be removed at the Owner’s own
expense within 30 days following termination of the Lease, unless additional
time is granted by the Landowner in writing. The Owner also has the right to put
up signs on the Storage Yard, provided that such signs shall be removed by the
Owner at the end of the Lease, unless the Landowner otherwise agrees in writing.
In addition, if the Owner must remove the communications tower in the Storage
Yard in connection with the extraction process, then the Owner must dismantle
and then remove it at the Owner’s own expense, and the Owner must give to the
Landowner the dismantled pieces at no charge to the Landowner. The Tailings
Agreement also provides the Owner with the right to place and subsequently
remove from the Storage Yard any personal property (including portable buildings
and equipment), at the Owner’s own expense. Ensurge hereby agrees to comply with
the foregoing provisions on the Owner’s behalf, at no charge to the Owner.

 
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Under paragraph 17 of the Tailings Agreement, Ensurge is given the right, in its
discretion, to remedy or correct any default by the Owner which results in
termination of the Lease, in which case the Lease is deemed to be replaced by a
new lease (the “New Lease”) between the Landowner, as lessor, and Ensurge, as
lessee, which shall commence on the initial termination date and be based on the
same terms and conditions as those set forth in the Tailings Agreement. In that
event, the royalty payments due to the Landowner under the New Lease shall be
paid by Ensurge and shall be deducted from the royalty payments otherwise
payable to the Owner under this Agreement.

In the event that the Owner shall default on the Tailings Agreement, by not
paying the monthly cash rent due to the Landowner, which monthly cash rent
payment was made by Ensurge to Owner on a timely basis pursuant to paragraph
5(o), or by not paying the monthly royalties due to the Landowner, resulting (in
either case) in termination of the Lease and replacement thereof by a New Lease
with Ensurge as aforesaid, then Ensurge shall make those payments directly to
the Landowner. Any such payments that Ensurge makes to the Landowner under the
New Lease, Ensurge will deduct that amount from each monthly royalty payment due
to the Owner hereunder. In the event, that such rental or royalty payments are
made by Ensurge,the royalty payments due to the Owner hereunder also shall
decline by 2 percentage points (that is, reducing the royalty payments specified
to be payable directly to the Owner hereunder from 28% to 26%, or from 33% to
31%, as the case may be), from the time such payments are made by Ensurge until
the project has reached termination.

(q)      Remediate the Storage Yard: Without limiting Ensurge’s other
obligations under this Agreement, following completion of the extraction process
for all of the Tailings, and following any movement of the Tailings from one
location to another, Ensurge shall, at its own expense, remediate the relevant
property or properties, as required by the State of New Mexico. Ensurge also
shall comply with the Landowner’s requirements which are specified in paragraph
9 of the Tailings Agreement, at no charge to the Owner.

(r)      Non-Compete in New Mexico: The Owner has been pursuing, and may
continue to pursue, various mining and mineral extraction opportunities in the
State of New Mexico, apart from the Tailings. Ensurge hereby agrees to disclose
to the Owner any other mining or mineral extraction opportunities in the State
of New Mexico which Ensurge intends to pursue. Upon such disclosure, the Owner’s
consent shall be required in order for Ensurge to pursue the opportunity,
provided that such consent shall not be unreasonably withheld, and further
provided that the Owner must demonstrate to Ensurge the following: (i) that the
Owner had independent prior knowledge of the opportunity, and (ii) that the
Owner either was pursuing the opportunity or had plans to pursue it which
predated the notice from Ensurge. The Owner may, in its sole discretion,
disclose opportunities of this nature to Ensurge, with a view to pursuing them
in concert with Ensurge. Notwithstanding any other provision of this Agreement,
Ensurge shall not pursue any mining or mineral extraction opportunity within 100
miles of Carrizozo, New Mexico, during the term of this Agreement, without the
Owner’s prior written consent, in the Owner’s sole discretion.

 
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6.           Covenants of Ensurge Parent:  Ensurge Parent hereby guarantees the
performance of EnsurgeNM’s obligations hereunder and to cause EnsurgeNM to
perform its obligations hereunder.

7.
Payment Provisions – Milestone Payments:

 
(a)      Signing Payment: Ensurge shall pay a total of $300,000.00 (three
hundred thousand dollars) (the “Signing Payment”) to the Owner and to the order
of the Owner, promptly upon execution of this Agreement, as follows:

 
(i)
To the Owner: The sum of $270,000.00 (two hundred and seventy thousand dollars);
and

 
(ii)
To Turnbull, by This Order of the Owner: The sum of $30,000.00 (thirty thousand
dollars).

(b)      Facility Construction Milestone Payment: Ensurge shall pay a total of
$500,000.00 (five hundred thousand dollars) (the “Facility Construction
Milestone Payment”) when the Processing Facility’s construction is initiated,
allocated as follows:

 
(i)
To the Owner: The sum of $450,000.00 (four hundred and fifty thousand dollars);
and

 
(ii)
To Turnbull, by This Order of the Owner: The sum of $50,000.00 (fifty thousand
dollars).

Notwithstanding the foregoing, the Facility Construction Milestone Payment shall
become due and payable on the date which is nine (9) months from the date of
this Agreement, if in fact the Processing Facility’s construction has not been
initiated by such date; provided that (i) the Owner shall extend the foregoing
due date on a month-to-month basis, for a total of up to three (3) extra months,
where the reason for the delay in achieving the milestone was beyond Ensurge’s
reasonable control, and (ii) Ensurge may, in its discretion, choose not to make
the Facility Construction Milestone Payment on the due date, in which case this
Agreement shall terminate in accordance with paragraph 10(a), unless the parties
otherwise agree.

The Owner shall further extends the foregoing due date to accommodate any delay
that continues past the foregoing time limit, where such delay has been solely
caused by the failure of the State of New Mexico or any other governmental
department to issue, on a timely basis, the required permits for construction
and operation of the Processing Facility, provided that Ensurge has diligently
and expeditiously satisfied all of the requirements for such permits.

(c)      Facility Completion Milestone Payment: Ensurge shall pay a total of
$500,000.00 (five hundred thousand dollars) (the “Facility Completion Milestone
Payment”) upon completion of the Processing Facility, which shall be deemed to
have occurred on the earliest of the following dates: (i) the date when the
facility has operated for at least 30 days at a level that is reasonably similar
to its designed parameters, or (ii) the date that is six months from the initial
operation of the facility, regardless of its operating levels. The Facility
Completion Milestone Payment shall be paid to the Owner and to the order of the
Owner, allocated as follows:

 
(i)
To the Owner: The sum of $450,000.00 (four hundred and fifty thousand dollars);
and

 
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(ii) 
To Turnbull, by This Order of the Owner: The sum of $50,000.00 (fifty thousand
dollars).

Notwithstanding the foregoing, the Facility Completion Milestone Payment shall
become due and payable on the date which is twenty (20) months from the date of
this Agreement, if in fact the Extraction Facility has not been completed by
such date; provided that (i) the Owner shall extend the foregoing due date on a
month-to-month basis, for a total of up to (3) extra months, where the reason
for the delay in achieving the milestone was beyond Ensurge’s reasonable
control, and (ii) Ensurge may, in its discretion, choose not to make the
Facility Completion Milestone Payment on the due date, in which case this
Agreement shall terminate in accordance with paragraph 10(a), unless the parties
otherwise agree.

The Owner shall further extend the foregoing due date to accommodate any delay
that continues past the foregoing time limit, where such delay has been solely
caused by the failure of the State of New Mexico or any other governmental
department to issue, on a timely basis, the required permits for construction
and operation of the Processing Facility, provided that Ensurge has diligently
and expeditiously satisfied all of the requirements for such permits.

(d)      Logistics for Satisfaction of Payments: The Owner shall provide wire
transfer instructions, or check delivery instructions, for any payments to be
made to Owner under this Agreement and shall obtain such instructions from
Turnbull as well, and provide the same to Ensurge. Ensurge shall either execute
a wire transfer or deliver a cashier’s check, in each case representing
immediately available funds, to the Owner and Turnbull, as required to satisfy
each of the Signing Payment, the Facility Construction Milestone Payment and the
Facility Completion Milestone Payment (which three types of payment are
collectively referred to herein as “Milestone Payments”), as well as the royalty
payments described below in paragraph 8.

8.
Payment Provisions – Royalty Payments and Fees:

(a)      Definition of Gross Sale Proceeds: For purposes of this Agreement,
“Gross Sale Proceeds” shall mean the gross proceeds received from the sale of
the Tailings (including Valuable Metals) that are processed or sold during the
term of this Agreement, before any deductions as defined below:

For greater certainty and without limitation, Gross Sale Proceeds shall not
include deductions for any of the following items: (i) charges or costs for
transportation of the Tailings to places where the Tailings are to be extracted,
refined or sold; or (ii) charges or costs associated with extracting or refining
Valuable Elements from the Tailings (including capital costs for the Processing
Facility or otherwise).

(b)      Royalty Payments: Ensurge shall make the following royalty payments, in
cash, within fifteen (15) days from the date when Ensurge receives Gross Sale
Proceeds from the refiner (or from any other type of purchaser of the Tailings,
including the Valuable Metals):

(i)           To the Owner: 28% of the Gross Sale Proceeds from the first 60,000
short tons of Tailings processed and sold, and 33% of the Gross Sale Proceeds
from any and all Tailings in excess of 60,000 short tons that are processed and
sold.

(ii)           To Turnbull, by This Order of the Owner: 4% of the Gross Sale
Proceeds from any and all Tailings processed and sold.

 
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9.           Payment Provisions – Continuation Payments: Ensurge shall pay to
the Owner and to the order of the Owner the total sum of $500,000.00, allocated
as to $450,000.00 to the Owner and as to $50,000.00 to Turnbull, annually in
October of each year, commencing in October 2014, until termination of this
Agreement, if in the immediately prior calendar quarter (ending June of the same
year), the total royalties paid to the Owner and to the order of the Owner in
respect of such quarter aggregated to less than $500,000.

The Owner shall extend the foregoing due date to accommodate any delay that
continues past the foregoing time limit, where such delay has been solely caused
by the failure of the State of New Mexico or any other governmental department
to issue, on a timely basis, the required permits for construction and operation
of the Processing Facility, provided that Ensurge has diligently and
expeditiously satisfied all of the requirements for such permits.

10.           Term and Termination of this Agreement: The term of this Agreement
shall commence on the date hereof and shall continue until terminated in
accordance with the following provisions:

(a)       Presumed Termination for Failure to Make Milestone Payments: This
Agreement shall be deemed to have been terminated by Ensurge upon any failure by
Ensurge to make a Milestone Payment on a timely basis; specifically, within five
(5) business days in the case of the due date for the Signing Payment and within
ten (10) business days of the due date in the case of either the Facility
Construction Milestone Payment or the Facility Completion Milestone Payment.

(b)      Presumed Termination for Failure to Make Continuation Payments: This
Agreement shall be deemed to have been terminated by Ensurge upon any failure by
Ensurge to make a Continuation Payment on a timely basis; specifically, within
seven (7) business days of the due date for such payment.

In the case of a presumed termination pursuant to this paragraph , Ensurge shall
not remain obligated to make the Continuation Payment that it failed to make,
which resulted in the deemed termination. However, Ensurge shall not be
reimbursed for any prior Milestone Payments, Continuation Payments or royalty
payments previously made by Ensurge.

(c)      Termination by Notice from Ensurge: Ensurge may terminate this
Agreement at any time upon 60 days’ notice to the Owner, for any reason,
provided that, upon the effective date of such termination, Ensurge shall cease
to have any rights to any of the Tailings that have not been processed and sold
prior to such termination date.

(d)      Termination by the Owner for Cause: The Owner may terminate this
Agreement at any time upon 30 days’ notice to Ensurge, where Ensurge has
committed a material breach of its obligations under this Agreement; provided
that, where such breach is capable of being cured by Ensurge and Ensurge wishes
to cure such breach, it may do so, in which case this Agreement shall not
terminate, provided that the breach is reasonably considered to have been cured
within 30 days of the notice from the Owner. Further, Ensurge may challenge the
Owner’s assertion that a material breach has occurred, in which event, if the
parties are unable to resolve the dispute, it shall be submitted to arbitration
in accordance with paragraph 12(l) hereof, where the matter will be settled.

(e)      Automatic Termination: This Agreement shall automatically and
immediately terminate if at any time Ensurge shall be adjudged bankrupt or take
advantage of any statute offering relief for insolvent debtors.

 
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(f)      Effect of Termination: Any termination of this Agreement shall cause
all obligations of the parties to cease as of the termination date; provided,
however, that the parties’ rights and obligations in respect of any actions,
omissions or other matters occurring prior to the termination date shall
continue, except as otherwise expressly provided in this Agreement. Further, any
payment obligations relating to Tailings that were fully processed or sold prior
to the termination date shall continue following termination of this Agreement.

11.           Indemnification: Each party hereby agrees to indemnify and hold
harmless the other two parties, and such other parties’ respective officers,
directors, members, partners, employees and each person who owns or controls
either of them, from and against any losses, claims, damages, liabilities and
expenses whatsoever (including the reasonable costs of investigating or
defending any action) to which they or any of them may become subject, arising
out of the first party’s entering into or implementing this Agreement or the
first party’s failure to comply with any provision of this Agreement.

12.           Other Covenants of the Parties:

(a)      Uncrushed Head Ore: The Tailings that were previously sampled by
Ensurge represent ore that has been crushed, milled, washed and reduced to fine
mesh (which Tailings are referred to herein as “Prepared Tailings”). There is
substantial additional ore on the Property that as yet is uncrushed (and
otherwise unprepared) as of the date of this Agreement (the “Unprepared Head
Ore”). The Unprepared Head Ore is currently outside the chain-link fence that
bounds the Storage Yard. For greater certainty, the Unprepared Head Ore is not
subject to this Agreement (i.e., it shall not be considered Tailings) and
remains the property of the Owner, unaffected by this Agreement. Accordingly
(and in other words), the Tailings include only Prepared Tailings and does not
include Unprepared Head Ore. Notwithstanding the foregoing, however, the Owner
has agreed, as additional inducement to Ensurge to enter into this Agreement and
perform its obligations hereunder, to pay to Ensurge an amount equal to ten
percent (10%) of the net income, if any, received by the Owner from extracting
metals from the Unprepared Head Ore. For greater certainty, the Owner shall
remain free and unfettered in its discretion as to whether and how to extract
metals from the Unprepared Head Ore. This obligation to pay a ten percent (10%)
share of net income shall expire (i) upon any termination of this Agreement
prior to the processing of at least fifty percent (50%) of the Tailings by
Ensurge; or (ii) at all events, twelve (12) years from the date of this
Agreement, whether or not by such date the Owner has extracted any metals from
the Unprepared Head Ore.

(b)      Carve-Out of a Portion of the Tailings: The Owner shall be entitled to
remove a total of 2,000 tons of the Tailings, which must be weighed on the date
of removal, to be selected at the Owner’s discretion from the Tailings, at no
charge to the Owner, but also at the Owner’s own expense in terms of the removal
costs, at any time within six months from the date of this Agreement; provided
that the removed Tailings shall not come from pile #1 (as designated on the map
attached hereto as Appendix A). Ensurge and the Owner shall cooperate with each
other, as appropriate, to facilitate such removal and to confirm the amount of
Tailings that have been removed. The Owner shall provide reasonable prior notice
to Ensurge, before the date when such Tailings are intended to be removed.
Tailings shall only be removed while a representative of Ensurge is in
observance of the removal of the 2,000 tons of Tailings and approves of the
quantity and the pile from which the Tailings were removed. Upon such removal,
the removed Tailings shall be deemed not to have been included in the Tailings
under this Agreement. To the extent that the Owner has not removed the specified
amount of Tailings, in whole or in part, within six calendar months from the
date of this Agreement, then the Owner’s right to remove a portion of the
Tailings under this paragraph shall cease.

 
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(c)      Residual Tailings: As Ensurge engages in the processing Valuable Metals
from the Tailings using the Processing Facility, the Owner shall have the right,
but not the obligation, to take possession of the “residual Tailings” (i.e., the
residual output from the facility, excluding the Valuable Metals extracted and
collected by the facility, which Ensurge has determined it does not wish to
reprocess in the facility), at no charge or expense to the Owner, provided that
that the Owner shall be responsible for bearing its own removal costs.

(d)      Unprocessed Tailings: Ensurge shall advise the Owner promptly, if and
when Ensurge determines, during the term of this Agreement, that it will not
process certain specific portions of the Tailings at the Processing Facility,
because Ensurge has determined, in its discretion, that it is not economically
or technically feasible to do so. In that event, the Owner shall have the right,
but not the obligation, to take possession of those unprocessed Tailings, at no
charge or expense to the Owner, provided that the Owner shall be responsible for
bearing its own removal costs.

(e)      Ensurge Shall Not Pay Any of its Costs “in Specie”: Ensurge shall not
pay any of its costs or expenses incurred pursuant to this Agreement, or in any
way connected with the Tailings, by way of providing the applicable vendor or
service provider with a portion of the Tailings (i.e., including the Valuable
Metals). Instead, Ensurge shall pay all such costs and expenses fully in cash,
from its own financial resources. Without limiting the foregoing, in dealings
with Refiners and other vendors and service providers, Ensurge shall seek to
avoid any embedded or hidden consideration accruing to such parties in the form
of their retention of a portion of the Tailings (including the Valuable Metals).

(f)      The Owner May Take Valuable Metals instead of Cash Royalties: If
Ensurge is successful in extracting Valuable Metals from the Tailings and
accordingly commences a program to sell such Valuable Metals as agent for the
Owner, then the Owner may, in its discretion, direct Ensurge, from time to time,
to deliver some of the Valuable Metals to the Owner, prior to sending the
Valuable Metals to the refiners, (or to the Owner’s chosen custodian), such
Valuable Metals to be valued as of the date of the Owner’s written exercise of
this option, in lieu of some or all of the cash royalties otherwise payable to
the Owner under paragraph 8. The Owner shall provide adequate notice to Ensurge
of this election, in each instance. Owner shall pay any additional expenses
associated with obtaining these Valuable Metals from Ensurge.

(g)      Tax Considerations: For greater certainty, each party shall be
responsible for its own tax liabilities in connection with this Agreement;
provided that the parties shall cooperate in good faith, acting reasonably, to
address tax matters, tax elections and other structural and contractual issues
that have tax consequences, in a manner that is efficient and beneficial to the
parties.

(h)      Each Party to Bear its Own Costs: Except as expressly provided for
herein, each party hereto shall bear its own costs in connection with this
Agreement and its subject matter, whether such costs were incurred before or
after the date of this Agreement. Notwithstanding the foregoing, if any party
should institute any action or proceeding to enforce or interpret any term or
provision hereof, then the party prevailing in such action or proceeding shall
be entitled to its reasonable attorneys’ fees and out-of-pocket disbursements
from the non-prevailing party or parties.

(i)      Amendment or Replacement of this Agreement: The parties may mutually
decide to amend or replace this Agreement, in each party’s sole discretion, and
with the consent of all of the parties hereto, if the parties determine that it
would be beneficial to do so. In that event, the parties shall negotiate such
amendments or replacement agreement in good faith, with a view to furthering the
purposes of this Agreement.

 
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(j)      Public Disclosure: This Agreement shall be kept confidential by the
parties; and no matters relating to this Agreement and the Tailings may not be
disclosed to any third party; except as follows: (i) Ensurge may publicly
disclose this Agreement or its major provisions, and the key facts relating to
its implementation, if and to the extent that Ensurge considers such disclosure
to be necessary or desirable, given Ensurge’s status as a public company that is
subject to public disclosure obligations under applicable law; and (ii) each
party may disclose this Agreement, with approval from the other party, and
matters relating to its implementation to its professional advisors and to a
limited number of specifically identified third parties (such as, without
limitation, specific banks, investors or prospective investors, and other
financial institutions), where such disclosure is considered necessary or
desirable by the disclosing party; and (iii) any party may disclose this
Agreement and matters relating to its implementation if required by any
applicable law, regulation or court, or to make or defend claims pursuant to
this Agreement. Notwithstanding the foregoing, however, the Owner may publicly
disclose the major provisions of this Agreement, but not until after Ensurge has
approved of the form, content and timing of such disclosure. The Owner shall not
disclose the subsequent status of implementation of the provisions of this
Agreement, without Ensurge’s prior written consent.

(k)      Owner Representative: The Owner shall designate a single individual as
the “Owner Representative”, who is authorized and directed to ensure that the
Owner’s obligations hereunder are performed and satisfied and generally to
represent the Owner in connection with all matters relating to this Agreement,
for dealings with Ensurge and other parties. The Owner may change the Owner
Representative from time to time in its sole discretion, by notice to the other
parties hereto. The Owner hereby designates Breeding as the initial Owner
Representative. In the event of the death or incapacity of the Owner
Representative, the Owner shall designate a replacement Owner Representative as
soon as practicable.

(l)      Arbitration: In the event of any disputes, controversies or claims
arising from an alleged breach of this Agreement or relating to the
implementation of this Agreement by the parties, the parties hereby agree to be
bound by binding arbitration to be conducted in Lubbock, Texas in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
All disputes arising out of or related to this Agreement over issues concerning
technical mining or metallurgical matters shall be resolved by arbitrators who
are experts in the relevant fields. The applicable substantive law shall be the
laws of the State of Texas and discovery shall be conducted pursuant to the
rules of the arbitrator.

13.           Notices: All notices permitted or required to be given under this
Agreement shall be sufficiently given for all purposes if (i) made in writing
and delivered personally, or (ii) sent by documented overnight delivery service,
or, to the extent receipt is confirmed, by email transmission, to the following
addresses:

If to the Owner:

Walter O. Breeding
c/o WOB Equities, Inc.
P.O. Box 12391
Lubbock, TX 79452
Tel/Fax: 806-762-6399
Mobile: 806-241-1042
Email: wobequities@gmail.com
With a copy to (for emailed notices): walterbreeding1@aol.com

 
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If to Ensurge:

Ensurge NM, LLC
2825 E Cottonwood Parkway, Suite 500
Salt Lake City, UT 84121
Tel: 801-990-3457
Fax: 801-990-3111
Email: jordan.estra@ensurgegold.com
With a copy to (for emailed notices): jeff.hanks@ensurgegold.com

Either party hereto may change its address for purposes of this paragraph by
written notice given in the manner provided above.

14.
General Provisions:

(a)      Not a Partnership: This Agreement does not establish a partnership
between the parties. No party has the right to bind any other party without the
expressed written consent of such other party; provided that Ensurge shall act
as agent for the Owner in the sale of the Tailings (including Valuable Metals),
as stipulated in this Agreement.

(b)      Entire Agreement; Amendment: As stated in paragraph 3, this Agreement
constitutes the entire understanding and agreement among the parties hereto
regarding the subject matter hereof and supersedes all prior agreements and
understandings relating thereto. This Agreement may only be amended in writing,
signed by the parties hereto.

(c)      No Waiver, etc.: No failure on the part of any party in exercising any
of its rights or remedies hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or remedy, preclude any other
or further exercise thereof or the exercise of any other right or remedy at law
or in equity or otherwise. Except as otherwise expressly provided herein, no
waiver of any provision of this Agreement, including this paragraph, shall be
effective otherwise than by an instrument in writing executed by the duly
authorized representative(s) of the party making such waiver.

(d)      Severability: If any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, then
this Agreement shall continue in full force and effect without such provision;
provided that no such severability shall be effective if it materially reduces
the economic benefit of this Agreement to any party, without the consent of such
party.

(e)      Successors and Assigns, etc.: This Agreement shall inure to the benefit
of, and shall be binding on, the executors, administrators, estates, heirs,
legal successors, assigns and representatives of the parties hereto.
Notwithstanding the foregoing, this Agreement shall not be assignable by Ensurge
for so long as SGI is the holder of debt securities issued by Ensurge (the “SGI
Indebtedness”) except with SGI’s prior written consent; provided, however, the
foregoing restriction on assignments by Ensurge shall be terminated at such time
that the SGI Indebtedness has been repaid in full by Ensurge.

(f)      Specific Enforcement: The parties hereto agree that irreparable damage
for which money damages would not be an adequate remedy would occur in the event
that any provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that,
in addition to any other remedies that a party may have at law or equity, the
parties shall be entitled to seek an injunction of injunctions to prevent any
breach of this Agreement and to enforce specifically the terms hereof.

 
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(g)      Time is of the Essence: Time is of the essence in this Agreement.

(h)      Governing Law: This shall be governed in all respects by the laws of
the State of Texas, without regard to the provisions relating to conflicts of
laws among different jurisdictions.

(i)      Execution of this Agreement: This Agreement may be executed through the
use of separate signature pages or in any number of counterparts with the same
effect as if the parties executing such counterparts had all executed one
counterpart; and the parties agree that faxed signatures or emailed, scanned
signatures shall be as effective as if originals.

[The remainder of this page has been intentionally left blank.]

 
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(j)      Cancellation of Prior Agreement: Upon the execution of this Agreement,
the Prior Agreement shall be cancelled, null and void and of no further force
and effect, and no party thereto shall have any further liability or obligation
thereunder.

IN WITNESS of this Agreement, the parties have executed and delivered this
Agreement as of the date first written above.

 
WALTER O. BREEDING, in his personal capacity,
 
and on behalf of WOB EQUITIES, INC., and
 
also acting as the Power of Attorney for the BREEDING
 
FAMILY ESTATE TRUST
         
/s/ Walter O. Breeding
 
Walter O. Breeding
                 
ENSURGE NM, LLC
             
By: /s/ Jordan Estra
 
       Jordan Estra
 
       Chief Executive
                 
ENSURGE INC.
             
By: /s/ Jordan Estra
 
       Jordan Estra
 
       Chief Executive

 
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APPENDIX A

DESCRIPTION AND MAP OF THE PROPERTY

The Property is described as follows: 6589 Hwy 380, Carrizozo, NM 88301.

[Insert the map of the Property, with a designation of “Pile #1”]

[The map should also identify the Storage Yard]

 
 
 
 
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