Exhibit 10.1

 

EXECUTION COPY

 

MASTER AGREEMENT AND LEASE AGREEMENT

 

THIS MASTER AGREEMENT AND LEASE AGREEMENT (alternatively the “Lease” or the
“Agreement”) is entered into this 1st day of July, 2015, by and between Minera
William S.A. de C.V. (hereinafter “William”) and Minera Hecla, S.A. de C.V.
(hereinafter “Hecla”).

 

W I T N E S S E T H

 

WHEREAS, William is the owner of Leased Premises, as described herein;

 

WHEREAS, Hecla wishes to lease the Leased Premises from William, and William
wishes to lease the Leased Premises to Hecla, pursuant to the terms and
conditions established in this Agreement.

 

NOW THEREFORE, in consideration of the terms and conditions contained in this
Agreement, the parties hereby agree as follows:

 

SECTION 1 — LEASED PREMISES

 

“Leased Premises” shall mean (i) an easement (the “Easement”) granted or to be
granted by William to Hecla over those certain lands set forth in Exhibit A, and
(ii) the oxide processing plant and related buildings and facilities located at
William’s Velardeña properties (“Plant 2”) as set forth in Exhibit B.

 

SECTION 2 - REPRESENTATIONS

 

I.                                        William hereby represents that:

 

a)                                     It is a company duly incorporated and
existing pursuant to the laws of Mexico, with Tax ID number MWI960314368 with
the required authority and sufficient means to enter into this Agreement.

 

b)                                     Its legal representative executing this
Agreement on its behalf is authorized and has sufficient power and authority to
do so.

 

c)                                      WILLIAM MAKES NO REPRESENTATION OR
WARRNTY REGARDING THE CONDITION OF THE LEASED PREMISES, WHICH ARE BEING LEASED
TO HECLA ON AN AS IS, WHERE IS BASIS, OR ABOUT THE FITNESS OF THE LEASED
PREMISES FOR MINERAL PROCESSING OR ANY OTHER PURPOSE.

 

II.                                   Hecla hereby represents that:

 

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a)                                     It is a company duly incorporated and
existing pursuant to the laws of Mexico, with Tax ID number MHE920507BY1 with
the required authority and sufficient means to enter into this Agreement.

 

b)                                     Its legal representative executing this
Agreement on its behalf is authorized and has sufficient power and authority to
do so.

 

c)                                      It has had the opportunity to inspect
and perform sufficient due diligence regarding the Leased Premises, including
the condition of Plant 2.  Hecla accepts the Leased Premises on an AS IS, WHERE
IS basis.

 

SECTION 3 - LEASE

 

William hereby leases to Hecla and Hecla hereby leases from William the Leased
Premises, AS IS and WHERE IS, pursuant to the terms and conditions hereinafter
set forth in this Agreement.

 

SECTION 4 - TERM

 

The initial term of the Lease shall be for eighteen (18) months (the initial
term and as it may be extended, the “Lease Term”), commencing on July 1, 2015
(the “Commencement Date”) and ending on December 31, 2016. Hecla has the right
to extend the Lease Term for an additional term of six (6) months until June 30,
2017 (the “Additional Term #1”), by written notice to William at least 90
calendar days prior to the end of the Lease Term.  During the Additional Term
#1, Hecla shall retain exclusive use of the Leased Premises, on the same terms
and conditions set forth in this Agreement.  Hecla may request extension of the
Lease Term for a second additional term of six (6) months until December 31,
2017 (the “Additional Term #2”), by written notice to William at least 90
calendar days prior to the end of Additional Term #1.  William may reject
Hecla’s request for Additional Term #2 at William’s sole option, in the event
that William elects to use the Leased Premises, or to prepare to use the Leased
Premises, to process material produced from a property controlled by William or
an affiliate of William.  If William grants Hecla’s request for an Additional
Term #2, Hecla shall retain exclusive use of the Leased Premises during such
Term, on the same terms and conditions as set forth in this Agreement.

 

SECTION 5 — USE OF THE LEASED PREMISES

 

a)                                     Plant 2 includes an oxide processing
plant. Attached hereto as Exhibit C of this Agreement is an inventory of
machinery and equipment (the “Equipment”).  Said Equipment is part of Plant 2
and the Leased Premises.

 

b)                                     Hecla shall use the Leased Premises for
the delivery, storage and processing through Plant 2 of minerals and mineralized
material, the proper deposition of waste from such mineral processing, and the
shipment of mineral products from the Leased Premises to other locations for
further processing or sale, and related activities (collectively the “Permitted
Use”),

 

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and Hecla shall not use the Leased Premises for any other purposes.  Hecla may
use Plant 2 to process only such material and such amount of material as is
permitted by applicable tailings, environmental and other permits (whether such
permits be permits issued to Hecla or to William) and as can be processed in
compliance with the terms of this Lease including without limitation the
provisions of Section 7(b), and Hecla agrees to comply with the processing
limitations and other requirements of all such permits.  Hecla may use, for the
disposal of waste material from its operations at Plant 2, up to a total volume
of 80,000 cubic meters of tailings dam capacity in the tailings facility on the
Leased Premises during the Lease Term, provided that such amount may be
increased in accordance with Section 9.

 

c)                                      Hecla may make certain improvements and
alterations to Plant 2 at Hecla’s cost, subject to the prior written approval of
William which shall not be unreasonably withheld.  Hecla shall provide William
with a detailed description of the proposed improvements and alterations to
Plant 2 when it requests approval of the same, and following the construction or
addition of any such improvements and alterations Hecla shall provide an updated
description of the as built improvements and alterations, together with
engineering drawings and plans and such other information as William reasonably
requests in writing.

 

d)                                     Hecla will conduct its operations on the
Leased Premises pursuant to and in compliance with environmental permits and
licenses required by applicable law for Hecla’s operations and obtained by
Hecla.  If Hecla reasonably believes and notifies William in writing, in
reasonable detail, that it will be unable to obtain its own environmental
permits and licenses on or before March 31, 2016, but that approval of
environmental authorities can be obtained on or before March 31, 2016 for Hecla
to conduct its operations pursuant to the environmental permits and licenses of
William, then Hecla and William shall proceed to obtain such approval.  The
advance approval of environmental authorities is required in order for Hecla to
process its material through Plant 2 and use the tailings facility.  Hecla may
not process any of its material through Plant 2 or use the tailings facility
prior to receiving such approvals.  William and Hecla will cooperate and assist
each other in requesting the required approvals from the environmental
authorities, including providing information regarding material to be processed
by Hecla and other aspects of Hecla’s planned operations.  If the approvals of
environmental authorities required for Hecla to process its material through
Plant 2 and use the tailings facility have not been obtained on or before
March 31, 2016, either Hecla or Golden shall have the right to terminate this
Agreement.  In order to exercise this right, the party wishing to terminate
shall provide written notice of such termination to the other party on or before
5:00 p.m., Torreon time, on March 25, 2016.  Termination of this Agreement is
terminated under this Section 5(d) shall be without penalty to either Hecla or
William.

 

e)                                      William is party to a labor contract
with Sindicato Nacional de Trabajadores Mineros, Metalurgicos, Siderurgicos y
Similares de la Republica Mexicana (the “Syndicato”)that currently covers the
operation of Plant 2.  Hecla will negotiate with the Syndicato to establish its
own labor contract with respect to its activities on the Leased Premises, and
William will work with Hecla in these matters.  If Hecla has not entered into a
labor contract with the Syndicato on or before January 1, 2016 then Hecla and
William will cooperate so that employees working for Hecla on the Leased
Premises will be employed by William, with the costs thereof plus a fee equal to
5% of such costs and applicable VAT reimbursed monthly by Hecla to William
within 5

 

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working days following receipt of the factura for the same.  Under all
circumstances, Hecla will comply with the union contract applicable to its
operations on the Leased Premises, including without limitation the payment of
employment and statutory taxes, e.g. IMSS and infonavit.  Hecla acknowledges
that William’s current labor contract is subject to renegotiation and possible
termination in or after March 2016, and agrees that, if Hecla does not have its
own labor contract, Hecla will conduct its operations on the Leased Premises
pursuant to any labor contract subsequently negotiated by William that is in
effect during the Lease Term.  If Hecla does not have its own labor contract,
and William does not enter into a new labor contract following the expiration of
the current labor contract, William shall have the right to terminate this
Agreement without penalty.  Hecla will cooperate with and assist William in
maintaining positive relations with the Syndicato.

 

f)                                       Hecla will conduct its operations on
the Leased Premises in a good and workmanlike manner in accordance with standard
international mining industry practices.  Hecla will provide to William within 5
days following the end of each calendar month a report of daily tonnage of
material processed through Plant 2 for that calendar month..

 

g)                                      Each of Hecla and William will conduct
its operations on the Leased Premises in compliance with all valid and
applicable federal, state and local laws, rules and regulations in the United
States and Mexico, including without limitation such laws, rules and regulations
pertaining to social security, unemployment compensation, wages and hours and
conditions of labor, environmental laws, licenses and permits, and
anti-corruption laws including without limitation the United States Foreign
Corrupt Practices Act.

 

h)                                     Hecla shall keep the title to the Leased
Premises free and clear of all liens and encumbrances that result, or to the
extent such result, from its performance of its operations and related
activities hereunder; provided, however, that Hecla may refuse to pay any claims
asserted against it which it disputes in good faith.  At its sole cost and
expense, Hecla shall contest any suit, demand or action commenced to enforce
such a claim and, if the suit, demand or action is decided by a court or other
authority of ultimate and final jurisdiction against Hecla or the Leased
Premises or William, Hecla shall promptly pay the judgment and shall post any
bond and take all other action necessary to prevent any sale or loss of the
Leased Property or any part thereof.  These obligations shall survive the
termination of this Agreement.

 

i)                                         Hecla will be responsible for
maintaining safety rules in accordance with industry standards, including but
not limited to those mandated by applicable law.  Hecla shall bear all
responsibility under the law for the safety of its own personnel employed on the
Leased Premises and for persons entering the Leased Premises as Hecla’s agents
or authorized visitors.  Hecla will designate a safety representative who shall
be responsible for all safety aspects of any activities or operations carried
out by Hecla.

 

j)                                        Hecla shall assume full responsibility
for the security of the Leased Premises, its operations on the Leased Premises
and for the materials and supplies, equipment, ore and mineral products on the
Leased Premises.  If at any time the security arrangements of Hecla with respect
to the Leased Premises are deemed or any regulatory agency to be inadequate or
incomplete, William or Hecla may take whatever action is reasonably necessary to
remedy such

 

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inadequacy or incompleteness and any costs associated with such action shall be
for the account of Hecla.  If William believes that the security arrangements of
Hecla with respect to the Leased Premises are not adequate, William shall
provide written notice to Hecla, and Hecla and William shall cooperate to
resolve William’s concerns. The taking of such action shall in no way relieve
Hecla of any responsibility for the complete security of the Leased Premises and
its equipment and other assets located on the Leased Premises.

 

k)                                     Hecla shall provide efficient,
experienced, knowledgeable and technically qualified management and supervision
to operate Plant 2 and the tailings facilities, including a designated
representative who shall be available to a designated representative of William
for communication on all aspects of improvements and alterations, Plant 2
operations and maintenance, tailings dam coordination, environmental reporting,
data collection and related activities being performed by Hecla.  The initial
designated representative of Hecla shall be John Jordan.  The initial designated
representative of William shall be Luis Serna. Each party may change its
designated representative by written notice to the other party.

 

l)                                         Hecla shall maintain such liability
and other insurance in respect of its activities on the Leased Premises as is
customary in the mining industry including without limitation a Responsibilidad
Civil policy providing civil liability coverage for operating the plant of at
least $5.0 million which shall name William as an additional insured, it being
the intention of the parties that the carrier of each party shall be liable for
any and all losses covered by the above-described insurance.  Hecla’s civil
liability policy shall contain provisions that no cancellation or material
changes in the policies shall become effective except on thirty (30) days’
advance written notice thereof to William.  Hecla’s insurance policies shall be
primary insurance without right of contribution from any policy carried by
William.

 

SECTION 6 — LEASE PAYMENTS

 

a)                                     As consideration for this Lease, Hecla
shall pay William, on the fifth day of each calendar month, the monthly fee for
that month as set forth in Exhibit D and the other payments to be made by Hecla
to William pursuant to this Agreement.  Hecla shall pay William an advance
payment of $500,000 (the “Advanced Payment”), plus applicable VAT taxes on such
amount, within five (5) days following (i) receiving the environmental permits
required for its operations on the Leased Premises as set forth in
Section 5(d) or (ii) its determination of a permitting strategy reasonably
expected to result in its receipt of the environmental permits required for its
operations on the Leased Premises.  The Advanced Payment shall be applied
against scheduled payments set forth in Exhibit D that are subsequent to the
date that the Advanced Payment, plus applicable VAT taxes, is paid by Hecla.

 

b)                                     In addition to the monthly lease payments
described above (“Monthly Lease Payments”), Hecla shall pay William $22.00 per
dry tonne of ore processed, plus applicable VAT taxes on such amount (“Monthly
Per Tonne Payments”) calculated as set forth in Exhibit D, payable within 15
days following the end of the month in which the ore is processed.  Monthly Per
Tonne Payment.  The amount of Monthly Per Tonne Payments may be reduced as
provided in Section 9.

 

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c)                                      Hecla shall make all payments to William
pursuant to this Lease, including without limitation the $500,000 Advanced
Payment, Monthly Lease Payments and Monthly Per Tonne Payments by wire transfer
to the following bank account:

 

Minera William S.A. de C.V.

Scotiabank Inverlat, S.A.

########

########### (Acct #)

 

d)                                     William will be responsible for payment
of the ownership taxes on the Leased Premises.

 

SECTION 7 - UTILITIES

 

a)                                     Hecla shall directly contract all
utilities of any nature including sewer, gas, telephone and any other utilities
that it may require in the Leased Premises, except that Hecla shall obtain
electric power and water from William as set forth in Exhibit E and paragraph b)
below.

 

b)                                     Hecla shall not use more than 600 cubic
meters of water per day.  William agrees not to sell any water from its own
wells to third parties during the Lease Term. During any period in which water
availability to William from its own wells has decreased for any reason (other
than the sale of water to third parties, which William has agreed in the
preceding sentence not to do during the Lease Term), Hecla’s water usage shall
be reduced, pro rata, at the same rate in which William’s overall water
availability from its own wells has been reduced.  William shall have no
liability to Hecla for damages of any kind if a sufficient amount of water is
not available for Hecla’s planned operation of the Leased Premises.

 

SECTION 8 - REPAIRS AND MAINTENANCE

 

a)                                     Hecla shall be responsible at its sole
expense, to maintain, service and repair, all the Leased Premises including
without limitation maintenance of Plant 2, Equipment and any other equipment on
the Leased Premises required to keep such in good working order in accordance
with standard industry practices, recognizing that maintenance manuals may not
be available for all equipment, and maintenance of the roads shown on
Exhibit A.  Hecla may engage William to perform road maintenance at reasonable
market rates.

 

b)                                     For the avoidance of doubt, William shall
have no responsibility for maintenance, service or repair of, or hidden defects
in, the Leased Premises, the Equipment, or any portion thereof or anything
located thereon.

 

c)                                      In the event of a onetime catastrophic
failure of or maintenance problem at Plant 2, the tailings facility or otherwise
on the Leased Premises that would require expenditures in excess of $1,000,000
to restore Plant 2 to operation or result in a continuous period in excess of
three months in which Hecla is unable to operate Plant 2, which does not result
from the

 

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negligence or misconduct of Hecla or its consultants or contractors, Hecla shall
promptly provide written notice thereof to William and Hecla shall have the
right within thirty (30) days following such notice to terminate this Agreement
without penalty.  In the event of a onetime catastrophic failure of or
maintenance problem at Plant 2, the tailings facility or otherwise on the Leased
Premises that would require expenditures in excess of $1,000,000 to restore
Plant 2 to operation or result in a continuous period in excess of three months
in which Hecla is unable to operate Plant 2, which results from the negligence
or misconduct of Hecla or its consultants or contractors, Hecla shall promptly
provide written notice thereof to William and will promptly at Hecla’s own cost
either repair and restore the Leased Premises to their original condition or
within thirty (30) days pay to William an amount equal to the cost of paying a
reputable third party company experienced in the constructions, maintenance and
repair of mills, tailings facilities or other failed or destroyed facilities to
do so.

 

SECTION 9 — TAILINGS FACILITY

 

Hecla and William recognize that Hecla may wish to use in excess of a total
volume of 80,000 cubic meters of tailings dam capacity during the Lease Term for
the disposal of waste material from its operations at Plant 2.  Recognizing that
significant time may be required to develop a tailings facility expansion plan
acceptable to both parties, obtain necessary permits and approvals for such a
plan and construct an expansion, Hecla and William shall meet prior to
December 31, 2015 to discuss and negotiate a mutually agreeable method of
expansion of the tailings facility, at Hecla’s cost, to accommodate any use by
Hecla of tailings capacity in excess of 80,000 cubic meters while preserving
flexibility for future tailings expansion by William following termination of
this Agreement.  The parties shall cooperate in obtaining government approvals
and permits for an agreed tailings expansion plan.  Should Hecla fund, complete
and commence use of any tailings expansion, the Monthly Per Tonne Payment for
tonnes processed by Hecla in excess of the number of tonnes processed that
resulted in use by Hecla of a total volume of 80,000 cubic meters of tailings
dam capacity shall be calculated at the rate of $14.50 per dry tonne processed. 
If William and Hecla fail to reach agreement on a tailings facililty expansion
plan or are not able to obtain necessary permits and approvals, Hecla will not
use more than a total volume of 80,000 cubic meters of tailings dam capacity
during the Lease Term and, upon reaching such volume limitation, Hecla may
terminate this Agreement without penalty.

 

SECTION 10 - DESTRUCTION

 

OMITTED.

 

SECTION 11 - INSPECTION

 

a)                                     Promptly following execution and delivery
of this Agreement, and prior to Hecla conducting any activities on the Leased
Premises, an inspection of Plant 2 and related facilities will be conducted by
an independent facilities auditor who has been selected as mutually agreeable by
both parties. The auditor will prepare and deliver to both parties a report that
documents the components of Plant 2 and the related facilities and the condition
of such

 

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components.  The cost of this inspection is to be borne in equal shares by both
William and Hecla.

 

b)                                     At the end of the Lease Term, the
independent facilities auditor performing the inspection identified in paragraph
(a), shall conduct an inspection of Plant 2 and related facilities to determine
and document the then current condition of the components of Plant 2 and related
facilities including whether each such component is in substantially the same
condition as prior to occupancy by Hecla, ordinary wear and tear excepted, and
for any component not in such condition, the repairs or replacements required to
restore such component to such condition. The cost of this inspection is to be
borne in equal shares by both William and Hecla. The cost for any identified
repairs to return Plant 2 and related facilities to pre-occupancy condition,
ordinary wear and tear excepted, shall be borne by Hecla.  Hecla shall complete
such repairs within 45 days of termination of this Lease, and shall have access
to the Leased Premises for this purpose.

 

c)                                      Representatives of William and Hecla may
observe the inspections required by paragraphs a) and b) above, and may review
and provide comments to the auditor regarding the auditor’s report within 10
days of receiving the same.  Following consideration of such comments, and
incorporation of such comments as the auditor deems appropriate in its sole
discretion, the auditor shall issue a final report to both parties.  The final
report of the independent facilities auditor shall be final and binding on both
parties with respect to the matters covered thereby.

 

d)                                     William shall have the right to enter and
inspect the Leased Premises during business hours upon 24 hours prior written
notice for the purpose of ascertaining the condition of the Leased Premises and
compliance with the Lease requirements; provided, however, William shall use
reasonable efforts to minimize any disruption to Hecla’s business in the Leased
Premises during such entry.

 

e)                                      As used in this Lease, “ordinary wear
and tear” shall exclude damage to or the use or wear of certain components for
which Hecla will compensate William as set forth on Exhibit F.

 

SECTION 12 - ASSIGNMENT AND SUBLETTING

 

Hecla shall not assign, delegate or otherwise transfer this Lease or any of its
rights or obligations hereunder, permit the Leased Premises or any part thereof
to be used by any person or party other than Hecla, or sublet the Leased
Premises or any portion thereof without prior written consent of William.  These
restrictions apply equally to third parties and to Hecla’s subsidiary companies,
parent, affiliated entities.

 

SECTION 13 - RETURN OF THE LEASED PREMISES

 

a)                                     Upon the expiration of the Lease Term or
any Additional Term, as applicable, Hecla shall return the Leased Premises and
Equipment to William in substantially the same condition as when received,
except for ordinary wear and tear.

 

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b)                                     Hecla shall have the option to remove its
equipment, personal property and any improvements and alterations installed by
Hecla within the Leased Premises (other than modifications to the tailings
facility) within 30 days following termination of the Lease, and shall have the
obligation to remove any such improvements and other alterations as requested in
writing by William within 20 days following termination of the Lease.  Upon any
such removal, Hecla shall restore the Leased Premises to a condition
substantially similar to the condition when received by Hecla.  Removal of
Hecla’s improvements and alterations shall be at Hecla’s sole cost.  Any
equipment, personal property or alterations not removed by Hecla within this
period shall be deemed to have been conveyed to William at no cost to William.

 

c)                                      If William believes that amounts payable
to William under the Lease are outstanding following the Lease Term, William
shall so notify Hecla in writing.  Hecla shall have the right to pay such amount
directly to William.  In the event the Hecla does not pay such amount to William
within 30 calendar days, William may draw the balance due from the financial
security provided pursuant to Section 17, and the remaining balance of the
financial security shall be released to Hecla within 30 calendar days following
either Hecla’s payment to William of such amount or William’s draw from the
financial security.

 

SECTION 14 - TERMINATION

 

a)                                     If Hecla is unable to use the Leased
Premises to process ore for a period in excess of 90 continuous days commencing
on or after January 1, 2016 due to a strike or labor dispute, order of an
environmental or other regulatory agency, unavailability of water or power,
event of the type described in Section 8(c), or other cause not related to
Hecla’s San Sebastien mining operation or due to Hecla’s action or inaction,
Hecla shall have the right to terminate the Lease without penalty by 10 days
written notice to William.  In the event of such termination, Hecla shall pay to
William within ten (10) days following such termination all amounts then due and
payable under the Lease, other than amounts that may subsequently become payable
pursuant to Section 11, which amounts shall be expended or paid by Hecla as set
forth in Section 11.

 

b)                                     For the avoidance of doubt, in the event
of termination of the Lease “without penalty,”  Hecla shall pay to William
within ten (10) days following such termination all amounts then due and payable
under the Lease, other than amounts that may subsequently become payable
pursuant to Section 11, which amounts shall be expended or paid by Hecla as set
forth in Section 11.

 

c)                                      If either party breaches any of its
obligations under this Agreement and the breach is not substantially cured
within the cure period specified below, then the other party may terminate this
Agreement, without need of judicial resolution and no penalty, by 30 days
written notice to the breaching party at any time before the breach is
substantially cured.  The breaching party shall be entitled to a cure period of
5 days following written notice describing a breach of any payment obligation
under the Lease, and to a cure period of 15 days following written notice
describing a breach of any other obligation under the Lease provided that if a
longer period is reasonably required to cure any such breach (other than a
breach of payment obligation), the cure period shall be extended for as long as
the breaching party is diligently prosecuting such cure to completion.  The
existence of a breach, notice and diligent prosecution of a cure pursuant to
this

 

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paragraph (c) shall not prevent a party from exercising its termination rights
under any other paragraph.

 

d)                                     Hecla may terminate this Agreement for
convenience upon sixty (60) days written notice to William.  If Hecla terminates
this Agreement for convenience prior to the end of the initial Lease Term on
December 31, 2016, Hecla shall pay to William upon such termination an amount
equal to the Monthly Lease Payment of $125,000 per month for each month
remaining in the initial Lease Term.

 

SECTION 15 - BROKERAGE

 

William and Hecla each warrant to the other that it has had no dealings with any
real estate broker or agent or other third party in connection with the
negotiation of this Lease, and that it knows no real estate broker or agent or
other third party who is or might be entitled to a commission or other such
payment in connection with this Lease.

 

SECTION 16 - AUDITING

 

Hecla shall make available at the Leased Premises for the inspection of William
all books and records related to its operations and activities on the Leased
Premises, and William shall have the rights to audit such books and records from
time to time. Hecla shall have the right to exclude from William’s inspection or
audit the identification of its vendors and suppliers and other information
regarding its operating and other costs (other than repair and maintenance
costs), marketing, sales and financial results. William and Hecla shall attempt
to select times that are mutually acceptable to each Party for the inspection of
records.

 

SECTION 17 — FINANCIAL SECURITY

 

Within 10 days following the date of this Lease, Hecla shall furnish William
with a $1,000,000 letter of credit, bond, or other such financial instrument in
a form acceptable to William as security of its obligations under this Lease. 
William shall be entitled to draw on such financial instrument to satisfy any
payment obligations of Hecla that are not timely paid as required by this Lease
including without limitation Section 14 hereof.

 

SECTION 18 — INDEMNIFICATION

 

a)                                     Each of Hecla and William agrees to
indemnify, defend and hold harmless the other party (and its respective
officers, affiliates, directors, successors, and assigns) from and against any
and all debts, liens, claims, causes of action, administrative orders and
notices, costs (including, without limitation, response and/or remedial costs),
personal injuries, losses, damages, liabilities, demands, interest, fines,
penalties and expenses, including reasonable attorney’s fees and expenses,
consultant’s fees and expenses, court costs and all other out-of-pocket
expenses, suffered or incurred by such other party and its successors as a
result of:

 

(i)                                     any breach by Hecla or William of any of
its respective representations, warranties, covenants and obligations set forth
in this Agreement; or

 

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(ii)                                  any operations or activities engaged in by
Hecla or William on the Leased Premises, including without limitation any
matter, condition or state of fact involving environmental laws or hazardous
materials or environmental liabilities which may arise during the term of this
Agreement and that is caused by Hecla or William as a result of its operations
on the Leased Premises.

 

b)                                     Each of Hecla and William, hereto, within
5 days after the service of process upon either of them in a lawsuit, including
any notices of any court action or administrative action (or any other type of
action or proceeding), or promptly after either of them, to its respective
knowledge, shall become subject to, or possess actual knowledge of, any damage,
liability, loss, cost, expense, or claim to which the indemnification provisions
of this Section 18 relate, shall give written notice to the other party setting
forth the facts relating to the claim, damage, or loss, if available, and the
estimated amount of the same. “Promptly” for purposes of this paragraph shall
mean giving written notice within 5 days.  Failure by Hecla or William to
provide prompt notification to the indemnifying party not relieve the
indemnifying party of its indemnification obligations hereunder unless the
indemnifying party is materially prejudiced thereby. Upon receipt of such notice
relating to a lawsuit, the indemnifying party shall be entitled to:

 

(i)                                     participate at its own expense in the
defense or investigation of any claim or lawsuit; or

 

(ii)                                  assume the defense thereof, in which event
the indemnifying party shall not be liable to the indemnified party for legal or
attorney fees thereafter incurred by the indemnified party in defense of such
action or claim; provided, that if the indemnified party may have any
unindemnified liability out of such claim, the indemnified party shall have the
right to approve the counsel selected by the indemnifying party, which approval
shall not be withheld unreasonably.

 

If the indemnifying party assumes the defense of any claim or lawsuit, all costs
of defense of such claim or lawsuit shall thereafter be borne by the
indemnifying party and the indemnifying party shall have the authority to
compromise and settle such claim or lawsuit, or to appeal any adverse judgment
or ruling with the cost of such appeal to be paid by the indemnifying party;
provided, however, if the indemnified party may have any unindemnified liability
arising out of such claim or lawsuit then the indemnifying party shall have the
authority to compromise and settle each such claim or lawsuit only with the
written consent of the indemnified party, which shall not be withheld
unreasonably.  The indemnified party may continue to participate in any
litigation at its expense after the indemnifying party assumes the defense of
such action. In the event the indemnifying party does not elect to assume the
defense of a claim or lawsuit, the indemnified party shall have authority to
compromise and settle such claim or lawsuit only with the written consent of the
indemnifying party, which consent shall not be unreasonably withheld, or to
appeal any adverse judgment or ruling, with all costs, fees, and expenses
indemnifiable under this Section 18 hereof to be paid by the indemnifying party.
Upon the indemnified party’s furnishing to the indemnifying party an estimate of
any loss, damage, liability, or expense to which the indemnification provisions
of this Section 18 relate, the indemnifying party shall pay to indemnified party
the amount of such estimate within 10 days after receipt of such estimate.

 

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SECTION 19 — NOTICES

 

Notice to William or Hecla pursuant to this Agreement shall be given when made
in writing and delivered personally, sent by prepaid reputable courier service,
or transmitted by facsimile transition with return receipt confirmed, to such
party at the following addresses.  William or Hecla may change its address for
purposes of this Section 19 by written notice to the other party.

 

In the case of a notice to William at:

 

Minera William S.A. de C.V.

Calle Río Tamesis No. 2505

Colonia Magdalenas

C.P. 27010

Torreón, Coahuila

Mexico

Attention:  General Manager, Velardena Operations

Fax:

Tel:  ##(###) #######

 

With a copy, which shall not constitute notice, at:

 

Golden Minerals Company

350 Indiana Street, Suite 800

Golden, Colorado, 80401

United States

Attention:  Chief Executive Officer

Fax:  #(###) ###-####

Tel:   #(###) ###-####

 

In the case of a notice to Hecla at:

 

Minera Hecla, S.A. de C.V.

Attn: President

Av. 20 de Noviembre No. 519 Oriente,

Col. Centro, Durango, Durango

Mexico

Fax:

Tel:

 

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With a copy, which shall not constitute notice, to:

 

Hecla Limited

Attn: President

6500 N. Mineral Dr., Ste 200

Coeur d’Alene, ID 83815

United States

Fax:

Tel:

 

SECTION 20 - GOVERNING LAW AND JURISDICTION

 

This Agreement shall be governed and construed in accordance with the laws of
the state of Colorado (other than its rules as to conflicts of law) and the laws
of the United States as applicable. The exclusive venue for any dispute pursuant
to or action to enforce this Agreement shall in the state or federal courts
located in Denver Colorado, and each of Hecla and William hereby submits to the
jurisdiction thereof.

 

SECTION 21 — LANGUAGE AND MISCELLANEOUS

 

a)                                     This Agreement is executed in the English
language. In case of the preparation of a Spanish version of this Agreement, the
English language version of this Agreement shall prevail in the event of any
discrepancy between the English and Spanish versions.

 

b)                                     This Agreement may be executed by each of
William and Hecla in counterparts and by facsimile, or by electronic delivery,
each of which when so executed and delivered shall be an original, but both such
counterparts, whether executed and delivered in the original or by facsimile or
by electronic delivery, shall together constitute one and the same agreement.

 

c)                                      All dollar references in this Agreement
are to United States dollars.

 

d)                                     In the event that any one or more of the
provisions contained in this Agreement or in any other instrument or agreement
contemplated hereby shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement or any such other
instrument or agreement contemplated hereby.

 

e)                                      This Agreement may not be amended or
modified, nor may any obligation hereunder be waived, except by writing duly
executed on behalf of both parties, and unless otherwise specifically provided
in such writing, any amendment, modification, or waiver shall be effective only
in the specific instance and for the purpose it is given.

 

f)                                       Neither party shall have liability to
the other party for lost profits or consequential, punitive, incidental, special
or direct damages.

 

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g)                                      The following Sections of this Lease
shall survive termination of the Lease: 6, 11, 13 and 16 through 21.

 

h)                                     This Agreement and the Contrato de
Servidumbre de Paso between Hecla and William constitute all of the agreements
among the parties with respect to the subject matter hereof and thereof.

 

i)                                         Whenever the singular or masculine or
neuter is used in this Agreement, the same will be construed as meaning plural
or feminine or body politic or corporate or vice versa, as the context so
requires.  Use of the word “including” in this Agreement means “including
without limitation” or “including but not limited to.”  Each of the Exhibits and
Schedules attached to this Agreement is incorporated into the Agreement by this
reference.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
and year first above written.

 

 

WILLIAM

 

By:

/s/ Robert P. Vogels

 

 

 

Print Name:

Robert P. Vogels

 

 

 

Title:

Vice President and Director

 

 

 

HECLA

 

By:

/s/ John Jordan

 

 

 

Print Name:

John Jordan

 

 

 

Title:

Vice President Technical Services

 

 

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EXHIBIT D

 

LEASE PAYMENTS

 

As consideration for this Lease, Hecla shall pay to William the fees set forth
on or before the dates set forth as follows:

 

Monthly Lease Payments

 

Hecla shall pay to William, on or before the fifth day of each calendar month
the following Monthly Lease Payment, plus VAT:

 

Period 1: July 1, 2015 through September 30, 2015:

 

$25,000 per month

Period 2: October 1, 2015 through December 31, 2015:

 

$50,000 per month

Period 3: January 1, 2016 until Lease termination

 

$125,000 per month

 

If, during Periods 1 or 2, the water usage by Hecla on any day is in excess of
300 cubic meters or the mill feed on any day exceeds 50 tonnes of rock. The
Monthly Lease Payment will be increased to $125,000 per month for the calendar
month in which such water use or mill feed amount occurred and shall remain at
such rate until the termination of the Lease.

 

Monthly Per Tonne Payments

 

Except as specified in the final paragraph below, Hecla shall pay to William
monthly the amount of $22.00 per dry tonne (or such reduced amount as may become
applicable pursuant to Section 9) for each dry tonne of material processed
through Plant 2 during the preceding month, plus VAT, to be calculated, verified
and paid as follows.

 

Within 10 working days following the end of each calendar month, Hecla shall
deliver to William a written statement of the number of total dry tonnes of
material processed through Plant 2 (the “Processed Tonnes”) during the preceding
month, accompanied by supporting information including without limitation the
metallurgical balance, track weights and belt weights for the preceding month. 
Within 5 days following receipt of a factura from William in the amount of the
Monthly Per Tonne Payment based on the Processed Tonnes reported, plus VAT,
Hecla shall pay to William such amount by wire transfer to the account specified
by William.

 

If William disputes the Processed Tonnes reported by Hecla for any month,
William shall so notify Hecla in writing within 60 days of receiving Hecla’s
statement.  Representatives of William and Hecla shall meet within 5 working
days following such notice to discuss and try to resolve such dispute.  If
representatives of William and Hecla have failed to resolve such dispute within
10 working days of their initial meeting, either William or Hecla may refer such
dispute to the independent facilities auditor for resolution.  William and Hecla
shall promptly provide the independent facilities auditor with any information
he requests.  The independent facilities auditor shall endeavor to deliver
within 60 days his decision setting forth his determination of the

 

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number of Processed Tonnes for the month in question.  The decision of the
independent facilities auditor shall be final and binding on the parties hereto,
and any adjustment to the Monthly Per Tonne Payment for the month in question
required as a result of his decision shall be reflected on the next factura for
Monthly Per Tonne Payments issued by William.

 

For any calendar month following January 1, 2016 in which Hecla has not
processed at least 6,000 dry tonnes, the total Monthly Per Tonne Payment shall
be equal to $22.00 (without reduction pursuant to Section 9) multiplied by
6,000, plus VAT, which shall be paid by Hecla by wire transfer to the account
specified by William within 5 days following receipt of a facture from William
in the amount of such Monthly Per Tonne Payment, plus VAT.

 

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