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EXHIBIT 10.21
 
 
FORMACION VURA EXPLORACION S.A.C.
Urbanizacion Leon XIII
Mz-G Lote 2-2do Piso,
Cayma, Arequipa,
Republic of Peru
 
September 15, 2011
 
Mr. Harold Gardner Zoro Mining Corp.
3040 North Campbell Ave., Suite 110
Tucson, AZ 85719
 
Re: Binding Letter of Intent for Participation in Yebechas Mineral Concessions
Dear Mr. Gardner:
 
Formacion Yura Exploracion S.A.C. ("YE") and South American Immobiliaria S.A.C.
("SAI") are pleased to propose the following binding letter of intent ("LOI")
for the participation of Zoro Mining Corp. ("Zoro") in YE's Yura Yebecahas
Mining Project located in Arequipa, Peru ("Yura Project"). The concessions
comprising the Yura Project are hereinafter set forth. This LOI sets forth the
terms whereby Zoro can earn (a) an initial fifty percent (50%) Joint Venture
interest in the Yura Project and (h) an additional twenty five percent (25%)
Joint Venture interest (for a total Joint Venture interest of 75%) in the Yura
Project. The parties agree that following completion by Zoro of the Initial
Exploration Program (as hereinafter defined) the parties will form a Joint
Venture ("Joint Venture") to govern operations of the Yura Project. The terms of
this LOI and the material terms and conditions of the Joint Venture agreement
are as follows:
 
Rights and Obligations of Donald LeRoy Stiles ("Stiles") and SAL
 
Stiles has transferred title to concessions known as Yebechas 2, 5, 6, 7, 9, 17
and 19 to YE. SAI, in consideration of the payment by Zoro of the outstanding
concession fees on its concession interests within the Yura Project, which
payment is acknowledged to have already been made, shall immediately transfer
title to concessions known as Yebechas 3, 4, 10, 11, 12, 13, 14 and 15 to YE.
Stiles further commits to transfer title to the concession known as Yebechas 8
to the Joint Venture whenever it is reasonably determined to be necessary to
support the Joint Venture operations. All of the foregoing Yebechas concessions
shall be collectively referred to as the "Yura Project".
 
Rights and Obligations of Zoro:
 
1.             Within ninety (90) days of the execution of this LOI by all
parties, Zoro shall submit to YE a detailed program for the exploration and
development of the Yura Project. This detailed program shall include quarterly
cash expenditure estimates to accomplish the Initial Exploration Program and the
Stage II Exploration Program (as hereinafter defined). The Initial Exploration
Program and the Stage II Exploration Program are collectively referred to herein
as the "Yura Exploration Program". YE shall have the right to review and comment
upon the Yura  Exploration Program and Zoro shall be required to obtain the
written approval of YE before proceeding with the Initial Exploration Program YE
shall not unreasonably withhold its approval of the Yura Exploration Program.

 
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Upon approval by YE of the Yura Exploration Program, Zoro and YE shall form a
management committee ("Management Committee") to oversee the Yura Exploration
Program. The Management Committee shall initially consist of two (2) members,
with each of Zoro and YE appointing one (1) member. The decisions of the
Management Committee shall be made by unanimous agreement. In the event that the
Management Committee is unable to come to unanimous agreement the Management
Committee shall appoint a third party. This third party must be acceptable to
both YE and Zoro and from and after such appointment the decisions of the
Management Committee will be based upon majority vote. From and after such time
as Zoro has acquired a seventy five percent (75%) interest in the Joint Venture,
the Management Committee shall consist of three (3) members, with Zoro
appointing two (2) members and YE appointing one (1) member and the decisions of
the Management Committee shall be based upon majority vote.
 
2.            To earn the 50% interest specified herein, Zoro must commence, pay
for and complete the Yura Exploration Program which shall consist of Zoro
incurring qualified Earn-In Expenditures totaling at least Five Million Dollars
(U.S. $5,000,000) within thirty (30) months from the date of full execution of
this LOI by all parties ("Earn-In Term"). Qualified Earn-In Expenditures are
defined as all costs and expenses to complete the exploration, drilling,
sampling and metallurgical testing program as eventually set forth in the Yura
Exploration Program, and include, in addition, all tax payments and related
costs of maintaining the mineral titles of the Yura Project during the Earn-In
Term ("Holding Costs") and payments for appropriate overhead expenses of Zoro
detailed in the Yura Exploration Program.
 
         YE acknowledges that the Yura Exploration Program consists of an
initial exploration program (the "Initial Exploration Program") on the Yura
Project, which Initial Exploration Program shall consist of Zoro commencing,
paying for and completing the $1,000,000 program set forth in the Yura
Exploration Program.
 
Upon completion of the Initial Exploration Program, Zoro shall commence, pay for
and complete the Stage II Exploration Program identified in the Yura Exploration
Program. YE and Zoro acknowledge and agree that the Yura Exploration Program may
be amended and modified by Zoro as reasonably necessary and as exploration
results and activities reasonably dictate. In the event that Zoro desires to
make any material changes or amendments to the Yura Exploration Program, Zoro
shall first obtain the written approval of YE. YE shall not unreasonably
withhold its approval of any such change or amendment.
 
Zoro and YE acknowledge and agree that the objective of the Yura Exploration
Program is to explore and develop a gold ore resource of not less than 600,000
ounces of measured and indicated gold resource. Zoro shall have earned its 50%
interest in the Joint Venture upon completion of the Yura Exploration Program,
regardless of whether the objectives of the Yura Exploration Program have been
accomplished.

 
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Zoro shall submit a detailed progress report to YE not less often than every
sixty (60) days throughout the Earn In Term indicating the status and results of
the program.
 
        The Earn In Term shall automatically be extended by the parties for any
delays caused by Force Majeure or act of God as further detailed in Paragraph 14
hereof. The Earn In Term shall also be extended at the expiration thereof if the
Yura Exploration Program has been materially completed and such an extension is
necessary for completion of the program.
 
         Zoro shall have the right, at any time upon completion of the Yura
Exploration Program, to purchase an incremental Twenty Five Percent (25%)
interest in the Joint Venture from YE upon the following terms and conditions.
The purchase by Zoro shall be calculated based upon the amount of the measured
and indicated gold resource established by the Yura Exploration Program. The
price shall be the greater of (a) $30,000,000 U.S. or (b) an amount determined
by taking the number of measured and indicated ounces of gold from the Yura
Exploration Program, multiplied by the London Daily spot price of gold per ounce
on the day of closing, multiplied by six percent (6%) and then multiplied by
fifty percent (50%). The purchase price shall be paid in a lump sum payment of
cash, in good funds.
 
6.             The parties acknowledge and agree that the intention of the Joint
Venture is to perform adequate and appropriate exploration and development to
establish a material gold resource on the Yura Project and to sell the Yura
Project to a major mining company for actual development and production of the
Yura Project. In the event that the Yura Exploration Program does not establish
an adequate gold resource of sufficient quality and quantity to attract a major
mining company's acquisition of the Yura Project within three (3) years from the
Earn In Date, then the Joint Venture shall continue as a 50% Zoro, 50% YE Joint
Venture to exploit the mineral resources established by the Yura Exploration
Program, and YE shall be the managing Joint Venture partner of such exploitation
program.
 
Additional Joint Venture Terms:
 
         Declaration of Earn-In. Upon conclusion of the Earn-In Term, Zoro can
elect to give notice in writing to YE that it has completed the Yura Exploration
Program and has successfully incurred the Earn-In Expenditures (the "Earn-In").
At such time, to the extent not previously done, Zoro shall furnish YE with
copies of all reports, information and data developed during the Yura
Exploration Program, and satisfactory evidence of the incurrence and payment of
the Earn-In Expenditures, which YE shall reasonably accept, and Zoro shall be
deemed to have earned an undivided 50% Joint Venture interest in the Yura
Project. The parties agree that at such time they will enter into a definitive
Joint Venture agreement on terms and conditions reasonably acceptable to each
party and consistent with the terms of this LOT. Upon execution of such Joint
Venture agreement YE shall cause the transfer of the Yura Project to the Joint
Venture described below.
 
          Joint Venture and Joint Operating Agreement. At the time that Earn-In
is achieved, the parties will form a Joint Venture and finalize and execute a
Joint Operating Agreement ("JOA") to govern their interests in the Yura Project,
modeled after the Rocky Mountain Mineral Law Foundation Form 5A — "Model Form
for Exploration, Development and Mine Operating Agreement," containing at least
the following provisions:

 
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·
provisions for programs, work plans and budgets (and approval procedures) for
further exploration and possible development of the project, including
provisions for cost overruns;

 
·
creation of a Joint Venture Management Committee with members appointed as set
forth herein above;

 
·
clause which appoints Zoro as the Operator/Manager under the JOA;

 
·
customary representations and warranties from Zoro and YE:

 
·
standard indemnification from Operator; and

 
·
within the JOA the following actions shall require the prior written approval of
YE, which approval shall not be unreasonably withheld:

 
a)
the winding up, liquidation, dissolution or voluntary bankruptcy of the Joint
Venture;

 
 
b)
the sale, lease, exchange or other disposition of all or substantially all of
the assets of the Joint Venture or the sale, lease, exchange or other
disposition of the Yura Project;

 
 
c)
the incurrence of debt or encumbrances on the Yura Project or assets of the
Joint Venture;

 
 
d)
expansion of the Joint Venture purposes beyond the Yura Project;

 
 
e)
the approval of each annual budget, including any overhead allocation to Zoro
corporate;

 
 
f)
the approval of any rate charged for overhead;

 
 
g)
hiring of the project geologist;

 
 
h)
the merger, sale, consolidation or amalgamation of the Joint Venture with or
into another person or entity; and

 
 
i)
the decision to conduct mining operations on the Yura Project.

 
Zoro further agrees that in consideration for YE entering into this LOI with
Zero, YE shall not be responsible for any costs associated with the Yura
Project, the Yura Exploration Program or the operation or business of the Joint
Venture. In short, YE is not subject to dilution of any kind under this LOI or
the JOA, YE shall have no responsibility for participation elections, cash calls
or other contribution requirements with respect to the Joint Venture or the Yura
Project. Zero acknowledges and agrees that no other dilution, cash calls or
capital contributions for any expenses shall be borne by YE, To clarify, YE's
ownership interest in the Joint Venture is that which is commonly referred to in
the industry as a "carried interest".

 
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3.             Covenants during Earn-In.
 
a)           Zoro shall conduct all its activities in good, workmanlike and
efficient manner, in accordance with sound mining and other applicable industry
standards and practices and in material compliance with all applicable laws,
including, but not limited to accounting for all expenditures and funds in
accordance with GAAP, and in accordance with the terms and provisions of leases,
licenses, permits, contracts and other agreements pertaining to the Joint
Venture's assets. To this extent, Zara shall indemnify, defend and hold harmless
YE from any and all liabilities, costs and expenses relating to the activities
of Zoro;
b)           Zoro shall pay in a timely manner all Holding Costs during Earn-In
and use commercially reasonable efforts to maintain the business, assets, and
operations of the Yura Project in accordance with current practices;
c)           Neither party shall, without the consent of the other, make, or
enter into any contract, lease or agreement that would materially affect the
Yura Project;
d)           Zoro and its advisors will have reasonable access to the project,
and YE will deliver to Zoro upon request copies of all documents pertaining to
the Yura Project; and
e)           The parties shall use their best efforts to obtain from their
respective directors, shareholders or partners (as applicable) and all
appropriate federal, provincial, municipal, or other governmental, regulatory or
administrative bodies such approvals or consents are required (if any) to
complete the transactions contemplated herein.
 
4.             Failure to achieve Earn-In. Should Zoro elect not to fully fund
or complete or fail to comply with the terms of the Earn-In, it shall be deemed
to have withdrawn without earning any interest in the Yura Project, and it shall
relinquish any residual rights to the Yura Project by way of quitclaim deed to
YE.
 
5.             Conditions. Each of the parties' obligations to consummate the
transactions contemplated by this LOT is conditional upon the satisfaction of,
or such party's waiver of satisfaction of, the following conditions:
 
a)          Satisfaction by Zoro of its Earn-In funding and other obligations
above;
b)           All necessary authorizations, including regulatory approvals or
governmental or stock exchange approvals, as may be required to complete
lawfully the transactions contemplated hereby shall have been obtained; and
c)           No injunction, restraining order or decree of any Court or
governmental authority shall exist against either party that prevents, or seeks
to prevent, the transactions contemplated hereby.
 
6.           Termination. The LOI may be terminated only as follows:
 
a)           By mutual written consent of the parties; and
b)           By YE if the obligations of Zoro set forth above have not been
satisfied by the timeframes provided therein.

 
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7.             Confidentiality of Information.
 
a)           The terms of this LOT and the Joint Venture and all information
obtained in connection with the performance of the Joint Venture shall be the
exclusive property of the parties and, except as provided in Subparagraph "b" of
this paragraph, shall not be disclosed to any person or entity or to the public
without the prior written consent of the other party, which consent shall not be
unreasonably withheld. The confidential restrictions contained in this paragraph
shall be binding so long as this LOI or the Joint Venture, as the case may be,
are in effect, and shall continue to be binding upon any party who withdraws
from the Joint Venture for 2 years following the date of withdrawal.
b)           The consent required by Subparagraph "a" above shall not apply to a
disclosure:
(i) to an affiliate, consultant, or contractor of a party that has a bona fide
need for the information; (ii) to any person or entity which is considering
purchasing of a party's participating interest or extending financing to a
party; or (iii) to a government agency or to the public which a party believes
in good faith is required by applicable laws or regulations or the rules of any
stock exchange on which the party's shares are traded or to be traded. A party
shall give written notice to the other party prior to any disclosure under this
Subparagraph (b), an in the case of disclosures under clauses (i) and (ii), the
disclosing party shall require the recipient of the disclosure in accordance
with this paragraph. Except as required by law or regulatory authority, neither
party shall make any public announcements or statements concerning this LOT or
any other activities conducted hereunder without the prior written approval of
the other party, which approval shall not be unreasonably withheld.
 
8.              Expenses. Each party to this LOT agrees that it shall be
responsible for the payment of any professional fees and expenses and other fees
and expenses incurred by it in connection with this LOT and the transactions
contemplated herein (including, but not limited to, fees and expenses of legal
counsel, accountants, investment bankers, brokers or other representatives or
consultants).
 
9.              Binding Effect, This 1401 and the terms contained herein are
legally binding upon the parties with effect from the date hereof, and shall
insure to the benefit of the respective successors and assigns of the parties.
Specifically, Zoro shall have the right and ability to assign the rights and
obligations of Zoro hereunder to any other entity of its choosing.
 
10.            Entire Agreement. This LOI constitutes the entire agreement
between the parties and supersedes all prior discussions, negotiations or
agreements covering the subject matter hereof, No changes of, modifications of,
or additions to this LOT shall be valid unless the same shall be in writing and
signed by all parties her6to,
 
11.           Unenforceability. If any provision of this LOT shall be determined
to be contrary to law and unenforceable by any Court, the remaining provisions
shall be severable and enforceable in accordance with their terms.
 
 
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12.           Disputes. In the event of a dispute between the parties under this
LOI, where negotiations between the chief executives of each party or their
designated representatives, and mediation or conciliation attempts, are
unsuccessful, all disputes will be arbitrated in Peru in accordance with the
commercial Arbitration Rules of the United Nations Council on International
Trade Law ("UNCITRAL"). Unless the parties mutually agree on one arbitrator,
each party shall select one qualified arbitrator. Each of these arbitrators
shall be a disinterested person qualified by experience to hear and determine
the issues to be arbitrated. The arbitrators so chosen shall select a neutral
arbitrator within ten (10) days of their selection. These three (3) arbitrators
shall then constitute an Arbitrage Court. If the named arbitrators cannot agree
on a neutral arbitrator, the arbitrators shall make application to the National
Mining Society of Peru, who shall select a third disinterested person qualified
by experience to hear and determine the issues to be arbitrated. This LOT shall
be construed and interpreted according to the laws of the Republic of Peru,
without regard to the application of choice of law principles.
 
13.            Press Releases. To the extent that Zoro is required or desires to
issue press releases or other public information related to the. Joint Venture,
the Yura Project, or other items involving this LOT, Zoro shall provide advance
copies of such proposed released to YE for its consent, which shall not
unreasonably be withheld.
 
14.            Force Majeure. Except for the obligation to make payments .when
due hereunder, theobligations of a party shall be suspended to the extent and
for the period that performance is prevented by any cause, whether foreseeable,
beyond its reasonable control, including, without limitation, traditional acts
of God; labor disputes; instructions or requests of any government or
governmental entity; acts of war or terrorism; judgments or orders of any court;
inability to obtain on acceptable terms any public or private license, permit or
other authorization; inability to obtain drilling equipment or personnel able to
reasonably test required drill targets or obtain access to drill sites according
to a drilling program; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective violation of environmental
laws; action or granted of any approval or authorization required to conduct
activities or operations beyond the reasonable expectations of the party.
 
15.            Counterparts. This LOI may be signed in two or more counterparts
which when takentogether shall constitute one and the same instrument.
 
16.            Notices. All notices, payments and other required communications
("Notices") to the parties shall be in writing, and shall be addressed
respectively as follows:
 

If to YE:  FORMACION YURA EXPLORACION S.A.C.
Urbanizacion Leon XIII
Mz-G Lote 2-2do Pisa,
Cayma, Arequipa,
Republic of Peru
    If to Zoro:
Zoro Mining Corporation
3040 N. Campbell Avenue, Suite 110
Tucson, Arizona USA 85719
Attention: President

 
All Notices shall be given by either personal delivery to the party, electronic
communication, with a confirmation sent by registered or certified mail return
receipt requested, or by registered or certified mail with return receipt
requested. All Notices shall be effective and shall be deemed delivered:

 
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a)
If by personal delivery on the date of delivery if delivered during normal
business hours, and, if not delivered during normal business hours, on the next
business day following the delivery;

 
b)
If by electronic communication on the next business day following the receipt of
the electronic communication; and

 
c)
If solely by mail, on the same business day of the actual receipt of the notice.

 
A party may change its address by Notice to the other party.
 
         Acknowledgment of Right to Mine Ore.Each of the parties to this LOT and
the Joint Venture acknowledge and agree that Kiowa Investments, LLC and YE have
entered into a joint venture (the "Kiowa N") under which they have received an
absolute and prior right to develop and extract 750,000 tons of ore from the
Yura Project, at whatever locations the Kiowa N determines appropriate. Each
party to this LOI and the Joint Venture acknowledge and agree that no future
exploration or exploitation of the Yura Project by Zoro, or any successor or
assign of Zoro, shall be permitted which interferes with or hinders the right of
the Kiowa IV to the 750,000 tons of ore. Any future sale or all or any part of
the Yura Project shall likewise have no right to interfere or hinder the rights
of the Kiowa 3V. Without limiting the rights of the Kiowa JV, Zoro and the Kiowa
N shall work together to reasonably accommodate the rights of each other such
that to the greatest extent reasonably possible the rights of all parties can be
realized. Notwithstanding the foregoing, Zoro shall have the right to require
the Kiowa JV to cease mining operations on the Yura Project in exchange for a
lump sum payment by Zoro to the Kiowa JV in an amount equal to $15,000,000 U.S.
Upon payment by Zoro of $15,000,000 U.S. to the Kiowa IV, the Kiowa JV
acknowledges and agrees that it shall have no further rights to ore derived from
the Yura Project.
 
If the foregoing accurately sets forth our understanding, please so signify by
signing the copy of this LOT in the space provided and returning it to the
undersigned.
 
Very truly yours,
 
Formacion Yura Exploracion S.A.C.
 
By:_____________________________
Name: Donald LeRoy Stiles
 
Title:____________________________
 
________________________________
Donald LeRoy Stiles, individually

 
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