ex10-1.htm


     

    Exhibit 10.1


     

    MINING OPTION
AGREEMENT

     

    THIS
AGREEMENT made as of July 9, 2006;

     

    BETWEEN:

     

    AYERS
EXPLORATION INC., a company incorporated under the laws of Nevada
with an office address at #6 Harston Avenue, Mosman, Sydney Australia
2088;

     

    (“Ayers”)

     

    AND:

     

    REDPATH
CLAY CORP.,
a company incorporated under the laws of Australia with an office address
at Suite 1100-37 York Street, Sydney 2000;

     

    (“Redpath”)

     

    BACKGROUND:

    


    A.                  Redpath
owns a 100% Interest (defined below) in certain mining property known as the Mt.
Cotton Property (the “Property”)
located in the State of Queensland, Australia as more particularly described in
Schedule “A” hereto;

     

    B.                      Redpath
has agreed to grant to Ayers the exclusive right and option to acquire all of
Redpath’s Interest in and to the Property on the terms and conditions
hereinafter set forth.

     

    C.                      Ayers
will have the exclusive option to acquire, subject to the reservation of a
royalty by Redpath and the covenant by Ayers to pay a production bonus, all of
Redpath’s Interest in the Property on the terms and conditions hereinafter set
forth.

     

     

    


     

    TERMS
OF AGREEMENT

     

    IN
CONSIDERATION of the mutual agreements herein contained and of
other good and valuable consideration (the receipt and sufficiency of which are
acknowledged by each party), the parties agree with one another as
follows:

     

    1.            
Definitions and Interpretation

     

    1.1           Definitions:  Whenever
used in this Agreement, the following words and terms will have the respective
meanings ascribed to them below:

     

     “Agreement”
means this agreement, including the recitals and the Schedules all as amended,
supplemented or restated from time to time.

     

     “Business
Day” means a day other than a Saturday, Sunday or statutory holiday in
Queensland.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Commercial Production” means the
extraction of clay/silt/sand mixes from the Property.

    


    “Effective Date” means July 8,
2006.

     

     “Expenditures”
means all items of outlay and expense whatsoever, direct or indirect, with
respect to Mining Operations, recorded by Ayers in accordance with this
Agreement.

     

    “Government
or Regulatory Authority” means any federal, state, regional, municipal or other
government, governmental department, regulatory authority, commission, board,
bureau, agency or instrumentality that has lawful authority to regulate or
administer or govern the business or property or affairs of any person, and for
the purposes of this Agreement also includes any corporation or other entity
owned or controlled by any of the foregoing and any stock exchange on which
shares of a Party are listed for trading.

     

    “Mining
Operations” means every kind of work done by Ayers on or in respect of the
Property or the products derived therefrom and includes, without limiting the
generality of the foregoing, work of assessment, geophysical, geochemical and
geological surveys, studies and mapping, assaying and metallurgical testing,
investigating, drilling, designing, examining, equipping, improving, surveying,
shaft-sinking, raising, crosscutting and drifting, searching for, digging,
trucking, sampling, working and procuring minerals, ores and concentrates,
bringing any mining claims to lease, reclamation and in doing all work usually
considered to be prospecting, exploration, development and mining work; in
paying wages and salaries of persons engaged in such work and in supplying food,
lodging, transportation and other reasonable needs of such persons; in
paying insurance premiums and assessments or premiums for workers’ compensation
insurance, contributions for unemployment insurance or other pay allowances or
benefits customarily paid in the district to such persons; in paying rentals,
licence renewal fees, taxes and other governmental charges required to keep the
Property in good standing; in purchasing or renting plant, buildings, machinery,
tools, appliances, equipment or supplies and in installing, erecting, detaching
and removing the same or any of them; and in the management of any work which
may be done on the Property for the due carrying out of such prospecting,
exploration, development and mining work.

     

    “Option”
has the meaning set out in Section 3.1 of this Agreement.

     

    “Option
Period” has the meaning set out in Section 3.2 of this Agreement.

     

    “Parties”
means the parties to this Agreement and their respective successors and
permitted assigns which become parties pursuant to this Agreement and “Party”
means any one of the Parties.

     

    “Permitted
Encumbrance” means

     

    
      	
              (a)

            	
              easements,
      rights of way, servitudes or other similar rights in land including,
      without limiting the generality of the foregoing, rights of way and
      servitudes for railways, sewers, drains, gas and oil pipelines, gas and
      water mains, electrical light, power, telephone, telegraph or cable
      television conduits, poles, wires and cables;

               

            
	
              (b)

            	
              the
      right reserved to or vested in any government or other public authority by
      the terms of any or by any statutory provision, to terminate, revoke or
      forfeit any of the lease or mining claims or to require annual or other
      periodic payments as a condition of the continuance thereof;

               

            
	
              (c)

            	
              rights
      reserved to or vested in any municipality or governmental, statutory or
      public authority to control or regulate any of the Property in any manner,
      and all applicable laws, rules and orders of any governmental authority;
      and

               

            
	
              (d)

            	
              the
      reservations, limitations, provisos and conditions in any original grants
      from the Crown, or other governmental entity of Australia on the Property
      or interests therein and statutory exceptions to
  title.

            


    

     

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    “Shares”
means common shares in the capital of Ayers as constituted on the date of this
Agreement.

     

    1.2           Headings.  The division of
this Agreement into paragraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
this Agreement. The terms “this Agreement”, “hereof”, “hereunder” and similar
expressions refer to this Agreement and not to any particular article,
paragraph or other portion hereof and include any agreement supplemental
hereto.  Unless something in the subject matter or context is
inconsistent therewith, references herein to articles and paragraphs are to
articles and paragraphs of this Agreement.

     

    1.3           Legislation.  Any reference
to a provision in any legislation is a reference to that provision as now
enacted, and as amended, re-enacted or replaced from time to time, and in the
event of such amendment, re-enactment or replacement any reference to that
provision shall be read as referring to such amended, re-enacted or replaced
provision.

     

    1.4           Extended
Meanings.  In this Agreement words importing the singular
number only shall include the plural and vice versa, words
importing the masculine gender shall include the feminine and neuter genders and
vice versa
and words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and
corporations.

     

    1.5           Currency.  All references to currency herein are to
lawful money of the United States of America.

     

    1.6           Schedules.  The following are
the Schedules annexed hereto and incorporated by reference and deemed to be part
hereof:

     

    
      	
              Schedule
      A

            	
              -

            	
              Description
      of Property

            


    

    


    


    2.            
Representations and Warranties

     

    2.1.           Representations
and Warranties of Redpath.  Redpath represents and
warrants to Ayers that:

     

    
      	
              (a)

            	
              Redpath
      is a corporation duly incorporated, organized and subsisting under the
      laws of Australia and registered in the State of Queensland with the
      corporate power to own its assets and to carry on its
      business;

               

            
	
              (b)

            	
              Redpath
      has good and sufficient power, authority and right to enter into and
      deliver this Agreement and, to the best of its knowledge, to option and
      transfer its legal and beneficial interest in the Property to Ayers free
      and clear of all liens, charges, encumbrances and other rights of others
      other than the Permitted Encumbrances;

               

            
	
              (c)

            	
               there
      is no contract, option or any other right of another binding upon or which
      at any time in the future may become binding upon Redpath to option, sell,
      transfer, assign, pledge, charge, mortgage, explore or in any other way
      option, dispose of or encumber all or part of the Property or any portion
      thereof or interest therein other than pursuant to the provisions of
      this Agreement;

               

            
	
              (d)

            	
              neither
      the entering into nor the delivery of this Agreement nor the completion of
      the transactions contemplated hereby by Redpath will result in the
      violation of any agreement or other instrument to which Redpath is a party
      or by which Redpath is bound, or any applicable law, rule or regulation;
      and

               

            
	
              (e)

            	
              Redpath
      is not a party to or bound by any contract or commitment to pay any
      royalty, fee or land payment with respect to the Property or any portion
      thereof or interest therein;

            


    

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    2.2.           Representations
and Warranties of Ayers.  Ayers represents and warrants
to Redpath that:

     

    
      	
              (a)

            	
              Ayers
      is a corporation duly incorporated, organized and subsisting under the
      laws of Nevada with the corporate power to own its assets and to carry on
      its business in the jurisdiction in which the Property are
      located;

               

            
	
              (b)

            	
              Ayers
      has all necessary power and authority to enter into this Agreement and any
      agreement or instrument referred to in or contemplated by this Agreement
      and to do all such acts and things as are required to be done, observed or
      performed by it, in accordance with the terms of this Agreement and any
      agreement or instrument referred to in or contemplated by this
      Agreement;

               

            
	
              (c)

            	
              neither
      the entering into nor the delivery of this Agreement nor the completion of
      the transactions contemplated hereby by Ayers will result in the violation
      of any agreement or other instrument to which Ayers is a party or by which
      Ayers is bound, or any applicable law, rule or regulation;
and

               

            
	
              (d)

            	
               the
      Shares to be issued and delivered to Redpath hereunder have been validly
      created and authorized for issuance and when so issued and delivered shall
      be duly and validly issued as fully paid and non-assessable Shares;
      and

            


    

     

    


     

    2.3.           Reliance and
Survival.  The representations, warranties,
acknowledgements and covenants set out in this Section 2 have been relied on by
the Parties in entering into this Agreement.  All representations and
warranties made herein will survive the delivery of this Agreement to the
Parties and the completion of the transactions contemplated hereby and,
notwithstanding such completion, will continue in full force and effect for the
benefit of Redpath or Ayers as the case may be, for a period of eighteen (18)
months from the exercise, lapse or termination of the Option.

     

    3.           
Grant of Option

     

    
      3.1.       Grant
of Option. Redpath hereby grants to the Ayers the sole and
exclusive right and option to acquire a 100% undivided interest in and to the
Property, free and clear of all charges, encumbrances and claims, except for the
Permitted Encumberances.

    

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    3.2.           Consideration for Option.

     

    


    
       
The
Option shall be exercised by Ayers making the following cash and Share issuances
to Redpath:

    

    


    
      	 
      	 
      	
              (i)

            	
              200,000
      Shares upon signing of this Agreement; and

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              (ii)

            	
              200,000
      Shares upon commencement of Commercial
  Production.

            


    

    


    
      	
               
      

            	
              If
      and when the Option has been exercised, a 100% undivided right, title and
      interest in and to the Property shall vest in Ayers, free and clear of all
      charges, encumbrances and claims except for the Permitted
      Encumberances.

            


    

     

    3.4.           Option
Only.  Nothing contained in this Agreement, nor any
payment made, Mining Operations conducted or expenditure incurred by Ayers on or
in connection with the Property or part of them, nor the doing of any act or
thing by Ayers under the terms of this Agreement shall obligate Ayers to do
anything else under this Agreement other than to make payment and incur
expenditures to the extent that it may have expressly undertaken to do so
pursuant to the terms of this Agreement, the obligations of Ayers hereunder
being simply those of an optionholder.

     

    4.             
Obligations during Option Period

     

    4.1.           Covenants
of Ayers. During the Option Period, Ayers covenants and agrees
with Redpath to conduct all Mining Work in a careful and miner-like manner and
in compliance with all applicable statutes, regulations, by-laws, orders and
judgments and all applicable directives, rules, consents, permits, orders,
guidelines and policies of any Government or Regulatory Authority with
jurisdiction over the Property.

     

    


     

    4.2.           Abandonment.  Ayers
may at any time, during the currency of the Option, abandon any one or more of
the claims which comprise the Property.  Ayers shall give Redpath
thirty (30) days notice in writing of any abandonment.  If Redpath so
requests, Ayers will retransfer such Claims as are to be abandoned to Redpath at
the sole cost of Ayers, which Claims shall be in good standing for a period of
at least 90 days from the initial notice of abandonment.

     

    4.3.           No
Encumbrances.  During the Option Period, neither Ayers
and Redpath shall pledge, mortgage or charge or otherwise encumber their
beneficial interest in the property or their rights under this
Agreement.

     

    5.             
Exercise of Option Granted in the Property

     

    5.1.           Exercise
of Option.  If, Ayers has issued the Shares and made the
payments referred to in Paragraph 3.3, Ayers may exercise the Option by giving
written notice to Redpath  In such event Ayers shall become the owner
of 100% of the right, title and interest in and to the Property.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    6.             
Termination

     

     

    6.1.           Termination for
Cause.  Subject to Paragraph 6.3, Redpath may terminate this
Agreement and the Option and working right herein shall lapse if:

     

    
      	
              (a)

            	
              Ayers
      is in default of any term or condition of this Agreement;

               

            
	
              (b)

            	
              Redpath
      gives Ayers written notice specifying the particulars of the default;
      and

               

            
	
              (c)

            	
              upon
      expiration of 30 days from the date of receipt by Ayers of such notice,
      Ayers has failed to cure the default or, if such default cannot reasonably
      be cured within such 30 day period, has failed to make commercially
      reasonable efforts to implement a cure for such
  default.

            


    

     

    6.2.           Surrender
of Rights.  Subject to Paragraph 6.3, Ayers may give
Redpath written notice of its intention to surrender all of its rights hereunder
and upon expiration of 30 days from the date of receipt by Redpath of such
notice, this Agreement shall terminate and working right and Option herein shall
lapse.

     

    6.3.           Obligations
on Termination.  Notwithstanding any other provisions of
this Agreement, in the event of lapse, termination or surrender of the Option
and/or this Agreement, as the case may be, Ayers shall:

     

    
      	
              (a)

            	
              ensure
      that the Property are in good standing for a period of at least 12 months
      from the lapse, termination or surrender of the Options and/or this
      Agreement, as the case may be, and upon request of Redpath, retransfer the
      Property to Redpath in the name of Ayers;

               

            
	
              (b)

            	
              deliver
      to Redpath any and all reports, maps, assessment reports and maps,
      samples, assay results, drill cores and engineering data of any kind
      whatsoever pertaining to the Property or related to Mining Work which have
      not been previously delivered to Redpath; and

               

            
	
              (c)

            	
              upon
      notice from Redpath, remove all materials supplies and equipment from the
      Property; provided however, that Redpath may retain ore and, at the cost
      of Ayers, dispose of any such materials, supplies or equipment not removed
      from the Property within 90 days of receipt of such notice by
      Ayers.

            


    

     

    6.4.           Provisions
which Operate Following Termination.  Notwithstanding
any termination of this Agreement for any reason whatsoever and with or without
cause, the provisions of Sections 2.6 and 6.3 and any other provisions of this
Agreement necessary to give efficacy thereto shall continue in full force and
effect following any such termination.

     

    7.             
Impossibility of Performance

     

    7.1.           Impossibility of
Performance.  Notwithstanding any term in this
Agreement, if a Party is at any time delayed from carrying out any action under
this Agreement due to circumstances beyond the reasonable control of such Party,
acting diligently, the period of any such delay shall be excluded in computing,
and shall extend the time within which such Party may exercise its rights and/or
perform its obligations under this Agreement.  A Party relying on this
Section 7 shall promptly deliver to the other Party notice of the event giving
rise to the application of this paragraph and a second notice stating the date
on which the application of this Section 7 ceased.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    8.             
Notices and Payments

     

    8.1.           Notice.  Any demand, notice
or other communication (a “Communication”) to be made or given in connection
with this Agreement shall be made or given in writing and may be made or given
by personal delivery, registered mail or facsimile addressed to the recipient at
the addresses or facsimile numbers of the parties provided on the first page of
this Agreement or such other address or individual as may be designated by
notice by either party to the other.  Any Communication made or given
by personal delivery shall be conclusively deemed to have been given on the day
of actual delivery thereof, if made or given by registered mail, on the 4th day,
other than a day which is not a Business Day, following the deposit thereof in
the mail, and if made or given by facsimile, on the day, other than a day
which is not a Business Day, following the day it was confirmed as
received.  If the party giving any Communication knows or ought
reasonably to know of any difficulties with the postal system which might affect
the delivery of the mail, any such Communication shall not be mailed but shall
be made or given by personal delivery.

     

    8.2.           Payments.  Payments hereunder
shall be made in lawful money of the United States, unless otherwise indicated,
and shall be addressed to the recipient at the addresses of the recipient
parties provided on the first page of this Agreement or such other address or
individual as may be designated by notice by the recipient party in accordance
with Paragraph 8.1.  If any payment herein shall become due on a day
that is not a Business Day, such payment shall be made on the next
succeeding Business Day.

     

    9.             
General Provisions

     

    9.1.           Entire
Agreement.  This Agreement, including all the Schedules
hereto, together with the agreements and other documents to be delivered
pursuant hereto, constitutes the entire agreement among the parties pertaining
to the subject matter hereof and supersedes any and all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties and there are no warranties, representations or other agreements among
the Parties in connection with the subject matter hereof except as specifically
set forth herein and therin.

     

    9.2.           Waiver.  The
failure of a Party in any one or more instances to insist upon strict
performance of any of the terms of this Agreement or to exercise any right or
privilege arising under it shall not preclude it from requiring by reasonable
notice that any other party duly perform its obligations or preclude it from
exercising such a right or privilege under reasonable circumstances, nor shall
waiver in any one instance of a breach be construed as an amendment of this
Agreement or waiver of any later breach.

     

    9.3.           Assignment.  Either
Party shall be permitted to assign this Agreement.  Any assignment
shall be subject to the assignee entering into an agreement, in form and
substance satisfactory to counsel for the other Party, to be bound by this
Agreement.  This Agreement shall enure to the benefit of and be
binding upon the Parties hereto and their respective successors and
assigns.

     

    9.4.           Further
Assurances.  Each Party shall from time to time at the
request of the other Party and without further consideration, execute and
deliver all such other additional assignments, transfers, instruments, notices,
releases and other documents and shall do all such other acts and things as may
be necessary or desirable to assure more fully the consummation of the
transactions contemplated hereby.

     

    9.5.           Time.  Time
shall be of the essence of this Agreement.

     

    9.6.         Amendment.  This
Agreement may be amended or varied only by agreement in writing signed by each
of the Parties.  Unless the context otherwise so requires, a reference
to this Agreement shall include a reference to this Agreement as amended or
varied from time to time.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    9.7.           Severability.  If any
provision of this Agreement is determined to be invalid or unenforceable in
whole or in part, such invalidity or unenforceability shall attach only to such
provision or part thereof and the remaining part of such provision and all other
provisions hereof shall continue in full force and effect.

     

    9.8.           Governing
Law and Attornment.  This Agreement shall be governed by
and interpreted in accordance with the laws of the Province of British Columbia
and the federal laws of Canada applicable therein and the Parties hereby
irrevocably attorn to the jurisdiction of the Courts of the Province of British
Columbia.  For the purpose of all legal proceedings, this Agreement
shall be deemed to have been performed in the Province of British Columbia and
the courts of the Province of British Columbia shall have exclusive jurisdiction
to entertain any action arising under this Agreement.

     

    9.9.          Counterparts.  This
Agreement may be executed by facsimile and in as many counterparts as are
necessary and shall be binding on each Party when each Party has signed and
delivered one such counterpart.  When a counterpart of this Agreement
has been executed by each Party, all counterparts together shall constitute one
agreement.

     

    IN
WITNESS WHEREOF this Agreement has been duly executed by the
respective parties hereto effective as of the date first above
written.

     

    REDPATH
CLAY CORP.

    


    By:

    
 

    Authorized Signatory

     

    AYERS
EXPLORATION INC.

    


    By:

    


    


    Authorized Signatory

    


    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    SCHEDULE
“A”

     

    To an
Agreement made as of July 9, 2006 between Ayers Exploration Inc. and Redpath
Clay Corp.

     

    Description of
Property

    


    


    


    
      	
              Licence
      Area

            	
              Tenure
      No.

            	
              Area

               

            
	
               

              Capalaba
      Area

               

            	
              EPM
      14848

            	
              5.4
      acres

            


    

    


     

    


     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        -9-