Exhibit
10.1


 


 


 


May 31,
2015


 


	Fognani
    & Faught, PLLC	 	VIA
    EMAIL
	1801 Broadway	 	 
	Suite 800	 	 
	Denver, CO 80202	 	 


 


Attention:
John Fognani


 


Dear Mr.
Fognani:


 


Re:
Binding Letter of Intent In Connection With the Acquisition of a Base Metal Project


 


Thank
you for the opportunity to meet with you and your client in connection with our discussions regarding a strategy to acquire and
operate a Base Metal mine located in North America (the “Base Metal Mine”), currently owned and operated by a third
party (the “Mine Owner”) which your client has the exclusive right to acquire pursuant to an option with a third party
(the “Option”). A copy of the Option has been previously provided to us.


 


For
the purposes of this Binding Letter of Intent (“LOI”), we have discussed the prospect of working together with your
client (who is referred to as “Seller” or “Party” (in context) herein even though in certain instances
if may be more appropriate to reference “your client” given the context) by way of a merger to develop and thereafter
to own and operate the Base Metal Mine (the “Base Metal Mine Opportunity”). This LOI shall serve to confirm our agreement
to pursue a transaction to accomplish the Base Metal Mine Opportunity (the “Transaction”).


 


We
are excited by the opportunity to further enhance Star Mountain Resources, Inc. (“SMRS” or “Buyer”) by
joining with Seller in the development of its key assets, and coalescing the human talent and the goodwill and associated intangible
value accumulated over the years of the professional careers of your client’s managers and advisors.


 


As
such, SMRS and your client (each a “Party” and together the “Parties” hereunder) intend to enter into
this LOI to pursue a Transaction, the material terms of which shall include, but not be limited, to the following:


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284


 







    	 



    	 



    


 


Fognani
& Faught, PLLC


June 10,
2015


Page 2


 


1. Definitive
Merger Agreement. Except as provided below in paragraph 7 (regarding purchase rights) and in the second sentence of
paragraph 9 (regarding confidentiality), the Parties’ obligations hereunder are contingent upon the negotiation,
execution and delivery of a definitive agreement to effect the Transaction that is satisfactory to each of the Parties,
acting reasonably (a “Merger Agreement”). SMRS’s legal counsel will prepare and circulate the initial draft
of a Merger Agreement, which will contain, among other things, typical representations and warranties relating to each of the
Parties and their respective rights, undertakings and expectations under the Transaction.


 



2. Merger. The Merger Agreement will provide for the Seller to exchange 100% of its ownership interest for
2,100,000 shares (the “Initial Share Issuance”) of the common stock of SMRS, with a par value of $0.001 per share
(the “SMRS Common Stock”), inclusive of the 100,000 shares of common stock specified in paragraph 3 below (such
exchange sometimes referred to hereafter as the “Merger”). In the event SMRS subsequently issues any of its
common stock at a price less than $3.00 per share (the “Target Market Price”) from the date of the Initial Share
Issuance until the completion date of a Qualified Financing Transaction (as hereinafter defined) (the “Measurement
Period”), then the total number of shares of SMRS Common Stock granted to Seller shall be increased by 15,000 shares
for each $.10 increment below the Target Market Price (with pro rata adjustment for increments less than $.10) (the
“Share Increase”). For clarity, the Share Increase shall only apply to the total number of shares to be conveyed
to Seller and not the total number of shares to be conveyed to Fognani & Faught, PLLC (“Fognani”) pursuant to
paragraph 3 below. The term “Qualified Financing Transaction” shall mean any one transaction or series of
transactions during the Measurement Period through which SMRS receives gross proceeds of up to $10,000,000 from the issuance
of its common stock. Subject to paragraph 5(j) below, the shares associated with the Initial Share Issuance will be issued to
Seller (and to Fognani) concurrently with the closing of Seller’s acquisition of the Base Metal Mine Opportunity while
any additional shares associated with a Share Increase will be issuable to Seller concurrently with the closing of the
underlying Qualified Financing Transaction.


 


3. Partial
Settlement of Legal Fees Incurred. The Merger Agreement may provide for your firm to accept from the SMRS as a
partial payment of legal fees due to them 100,000 shares of SMRS common stock or perhaps additional shares as agreed on
between the Parties and Fognani prior to the date of execution of the Merger Agreement with any such additional shares being
allocated to Fognani in addition to those shares specified in paragraph 2 above.


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284


 




    	 



    	 



    


 


Fognani
& Faught, PLLC


June 10,
2015


Page 3


 



4. Adequate Financing. The Parties hereto recognize that time is of the essence in obtaining the financing
identified herein. Within 60 days of execution of this LOI by the undersigned on behalf of the Buyer (the date of such
execution being the “Effective Date”) (or 90 days if the Option Period has been extended pursuant to paragraph
7), or as soon as reasonably possible prior thereto, SMRS will provide proof satisfactory
to the Seller, acting reasonably, that SMRS has adequate financing sufficient to cover the payments required under paragraphs
5(e), (f), (g) (h) and (i), below. If SMRS fails to provide such proof, or if financing is otherwise obtained prior to that
time by Seller from a third party, this LOI will be terminable by Seller within 5 business days of written notice to SMRS.
In addition, within 60 days from the Effective Date (or 90 days if the Option Period has been extended pursuant to paragraph
7), SMRS will deposit $3.5 million into its legal counsel’s trust account as a good faith deposit to be applied to
the purchase price pursuant to the terms included in the Option (the “Deposit”), whereupon SMRS’s legal
counsel will provide written notification of the Deposit to Fognani. Such Deposit will remain in the trust account of
SMRS’s legal counsel until the time of the closing of the Transaction or termination of this LOI. If SMRS’s legal
counsel does not receive such Deposit from SMRS, or if such Deposit is removed from the trust account of SMRS’s legal
counsel before the time of the closing of the Transaction, this LOI and the Merger Agreement (if it has been executed by
then) will be terminable by Seller within 5 business days of written notice to SMRS. Forthwith upon notice of the Deposit
being given to the Seller in accordance with the terms hereof and provided that Seller has not already entered into a binding
agreement with a third party to finance the acquisition of the Base Metal Mine Opportunity, Seller shall discontinue any
efforts to further market or sell its interest in and to the Base Metal Mine Opportunity to any third party and shall
thereafter work in good faith with SMRS to conclude a Merger Agreement as contemplated by paragraph 6 below.


 


5. Additional
Terms and Conditions. Additional terms and conditions of the Transaction to be reflected in a Merger Agreement shall
include the following:


 


a) Net
Smelter Return Royalty. Your client will enter into an agreement with SMRS to receive a net smelter return royalty on all
base metals produced for the life of the Base Metal Mine, beginning on the recommencement of mining activities at the
Base Metal Mine (the “Royalty Agreement”). In addition, for the same period of time the Royalty Agreement shall
provide for payment to the Seller of an amount equal to a percentage of the gross receipts from the sale of all minerals
(including all metals and non-metals and any saleable waste material) other than base metals from the Base Metal Mine. The
Royalty Agreement will provide that the Seller will have the right to record its royalty interest and that all royalty
payments to the Seller will be measured monthly based on receipt of sales proceeds from sales of the respective production
and minerals and paid within 30 days after the end of each fiscal quarter. The Merger Agreement shall include a buy-out right
whereby SMRS will be entitled to buy out the Seller’s interest in the Royalty Agreement according to a method of
valuation and other terms and conditions acceptable to the Seller in its sole discretion.


 


b) SMRS
Board Seat. The Seller will be entitled to designate one member to SMRS’ Board of Directors for a period of at
least three years following the Merger.


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284


 




    	 



    	 



    


 


Fognani
& Faught, PLLC


June 10,
2015


Page 4


 


c) Advisory
Board. Each of the principal individuals representing the ownership interests in Seller who do not enter into an
employment agreement with SMRS pursuant to paragraph 5(d) below will be offered a position as a member of an advisory board
for a period of at least 3 years after the Merger that will make recommendations to the SMRS Board of Directors regarding
subsequent mergers and acquisitions and provide technical advice regarding mining related issues. Such Advisory Board members
shall be entitled to receive industry standard monetary compensation and share options in SMRS as from time to time are
approved by the Board of SMRS.


 


d) Employment
Agreements. SMRS shall enter into employment agreements with certain principals of the Seller to be agreed on by the
Parties as a part of the Transaction. Such employment agreements will provide for industry standard salaries, benefits and
other entitlements, as well as access to SMRS’s stock option plan and other such perquisites as from time to time are
approved by the Board of SMRS.


 


e) Finance
Charge Contribution. Upon closing of the Merger, SMRS will pay the Seller $250,000 as reimbursement for amounts
committed by the Seller or its members for finance charges due on the funds it has deposited in escrow as per the
Option.


 


f) Overhead
Expense Reimbursement. Upon closing of the Merger, SMRS will pay the Seller $500,000 as reimbursement for amounts loaned
to Seller by its members to make payments for overhead expenses for holding the Base Metal Mine Opportunity. To the maximum
extent allowable under the Option, such payments will be treated as advances towards the total purchase price to be paid to
the owner of the Base Metal Mine.


 


g) Due
Diligence Reimbursement. Upon closing of the Merger, SMRS will pay the Seller $100,000 as reimbursement for the
out-of-pocket expenses incurred by Seller in connection with due diligence and mine plan development activities of the Base
Metal Mine.


 


h) Legal
Fees Disbursement.Upon closing of the Merger, SMRS shall pay Fognani the remaining balance of any legal fees up to a
total capped amount of $540,000 as owed by Seller and that is not otherwise covered by the Seller’s payment of SMRS
Common Stock to Fognani as described in paragraph 3 above.


 


i) Delivery
of Segregated Audited Financials. Following written notice of the Deposit having been made, your client and SMRS will
continue its efforts to obtain within the time periods necessary to meet applicable SEC reporting requirements audited
financial statement for periods ended December 31, 2013 and 2014, and (only if required based on applicable materiality
thresholds) audited financial statements of Seller for the period ended December 31, 2014, as well as the closing balance
sheets for the period ended December 31, 2012, all of which must be prepared in accordance with U.S. generally accepted
accounting principles by an accounting firm registered with the Public Company Accounting Oversight Board
(“PCAOB”). In addition, Seller will deliver to SMRS unaudited interim financial statements for the period
concluding not more than 129 days prior to the closing date of the Merger. All expenses associated with the preparation of
such audited financial statements, balance sheets and interim financial statements shall be borne by SMRS.


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284


 




    	 



    	 



    


 


Fognani
& Faught, PLLC


June 10,
2015


Page 5


 


j) Closing
on Purchase of the Base Metal Mine. The closing of the Merger under the Merger Agreement will be contingent on the
Seller completing the purchase of the Base Metal Mine substantially on terms and conditions set forth in the Option pursuant
to an agreement reasonably approved by the Parties.


 


k) Confirmations.
Any Merger Agreement will be contingent on confirmation by the Parties that the Transaction, including the Merger, will not
terminate or change, inclusive of all options for extension, any agreements related to the Base Metal Mine Opportunity or the
Seller’s right, title and interest in and to the Base Metal Mine Opportunity or any other material contract necessary
to allow Seller to operate and exploit the Base Metal Mine.


 


l) Non-Compete
Agreements. By virtue of their becoming employees of SMRS pursuant to paragraph 5(d) above, such individuals will enter
into non-compete agreements as are normal, customary, and appropriate in transactions of the type and size proposed herein
and as otherwise reasonably requested by SMRS.


 


6. Closing.
As long as Seller has not already entered into a binding agreement with a third party to finance the acquisition of the Base
Metal Mine Opportunity, the Parties will use best efforts to enter into a Merger Agreement within 60 days from the Effective
Date of this LOI (or 90 days if the Option Period has been extended pursuant to paragraph 7). In the event that the Parties
fail to enter into a Merger Agreement on or before such date, this LOI will be terminable by any Party upon written notice to
the other Parties. Following execution of a Merger Agreement, the Parties will use best efforts on a good-faith basis to
close the acquisition of the Base Metal Mine Opportunity within 45 days from the execution of the Merger Agreement, or such
earlier date as determined by SMRS in the event SMRS is able to obtain comfort from its auditors that it will be able to
complete the audit within the time period prescribed under Form 8-K to be filed with the Securities and Exchange Commission
within 71 days after the required filing date of such Form 8-K after the closing under the Merger Agreement. In the event the
Parties do not close under the terms of the Merger Agreement (other than by reason of SMRS’ default or failure to make
the Deposit as provided in paragraph in paragraph 4 above) or they fail to enter into a Merger Agreement within the time
provided in this LOI, the Deposit shall be promptly refunded to SMRS without deduction for any cost or expense of
Seller.


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284


 




    	 



    	 



    


 


Fognani
& Faught, PLLC


June 10,
2015


Page 6


 


7. Purchase
Rights. Subject to paragraphs 4 and 6 above, and so long as Seller retains the Option and has not otherwise entered into
a binding agreement with the other party in which Seller is currently in negotiations to finance the acquisition of the Base
Metal Mine Opportunity, and so long as SMRS has deposited $250,000 (the “Termination Fee”) into the trust account
of SMRS’ legal counsel and SMRS’ legal counsel has provided confirmation to the Seller of the receipt of such
deposit, SMRS shall have the right to enter into the Merger Agreement on terms and conditions as provided for in this LOI for
the period specified in paragraph 4 above (the “Option Period”). This Option Period may be extended by SMRS for
one additional 30-day period provided that (i) SMRS provides Seller with 5 days advance written notice of its intention to
extend such Option Period and (ii) SMRS has deposited an additional $250,000 in the trust account of SMRS’ legal
counsel (increasing the Termination Fee to $500,000) and SMRS’ legal counsel has provided confirmation to Fognani and
Seller of the receipt of the additional $250,000 deposit. If for any reason by the end of the Option Period, SMRS has not
made the Deposit as provided in paragraph 4 above then the entire Termination Fee shall be immediately due and payable to
Seller and SMRS shall forthwith instruct its legal counsel to release the Termination Fee funds to Fognani by immediate wire
transfer to an account designated by Seller.


 


8. Securities
Laws. Each Party acknowledges that they are aware that the securities laws of the United States prohibit any person
who has material, non-public information concerning SMRS or its affiliates with respect to the intentions set forth in this
LOI from purchasing or selling securities of SMRS in reliance upon such information or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell
such securities of SMRS or its affiliated entities in reliance upon such information.


 


9. Information
and Access. Each Party will afford, and will cause its independent certified public accountants to afford, each of
the other Parties and their respective accountants, counsel, agents and other authorized representatives, access to its
business and affairs including such mining plans, due diligence materials, accounting books and records and non-privileged
and non-confidential information. The foregoing investigations will be subject to the condition of confidentiality and the
Parties, their agents and employees involved in such due diligence investigations will be bound accordingly.


 


10. Publicity.
The Parties agree that, except as otherwise required by law or regulation, no press release or other public announcement
related to this LOI or the Transaction contemplated by this LOI will be issued by any of them without the prior written
approval of the other Parties.


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284


 




    	 



    	 



    


 


Fognani
& Faught, PLLC


June 10,
2015


Page 7


 


11. Contract.
This LOI constitutes a binding contract between the Parties hereto and shall form the basis of a definitive Merger Agreement
for the completion of the Transaction.


 


12. Governing
Law. This Agreement and the Merger Agreement will be governed by the laws of the State of Nevada, without regard to
conflict of law principles.


 


If
the foregoing correctly sets forth our understanding, please sign all copies of this Binding Letter of Intent where indicated
below and return at least one copy to the undersigned.


 


Sincerely,


 


STAR
MOUNTAIN RESOURCES, INC.


 








	/s/ Mark
    Osterberg	 
	 	 
	Mark Osterberg, President & COO	 
	 	 
	Dated: 6/16/2015	 



 


Agreed
& Acknowledged by Fognani & Faught, PLLC and effective as of this 31st day of May 2015, at the City of Denver
in the State of Colorado.


 


Fognani
& Faught, PLLC


 


	By:	/s/
    John Fognani	 
	 	John Fognani,
    Esq.	 


 


Star
Mountain Resources, Inc. 605 W. Knox Rd., Suite 202 Tempe, AZ 85284