Sterling Group Ventures, Inc.- Exhibit 10.1






Exhibit 10.1 

Initial Agreement 

This agreement (“Initial Agreement”) entered into
between Sterling Group Ventures, Inc (“Sterling”) and Chenxi County
Hongyu Mining Co. Ltd. (“Hongyu”) on October 18, 2010 for the development
of Gaoping Phosphate mine located in Tanjiaxiang, Chenxi County, Hunan
Province, China (“GP Project”). Both parties agree that Hongyu will be
taken over and 90% majority –owned by a Hong Kong investment company
(“Investment Co”) controlled by Sterling. 

The Parties have agreed to the following terms: 

	1. 	
      Hongyu agrees to surrender its future exclusive
      cooperative rights to Sterling. Within three months from signing this
      agreement, Sterling does not complete taking over Hongyu through the
      Investment Co, then Sterling shall pay RMB 200,000 Yuan to the assigned
      account by Hongyu as down payment. 

	  	
       

	2. 	
      Before Hongyu is converted and is controlled by the
      Investment Co, Sterling’s contribution will be limited to the preliminary
      cost for the acquisition process including the daily operation of Hongyu, and will
      not be responsible for any investment in the mining and processing plant.
      After this agreement is signed, Hongyu shall hand over all company
      documents and seals to Sterling. Sterling shall be in charge of
      maintenance of Hongyu during the period of this agreement. 

	  	
       

	3. 	
      Hongyu agrees that 90% of its Shares will be acquired by the
      Investment Co. Sterling will ensure that the net assets value of Hongyu
      will be RMB five (5) million Yuan during the acquisition. 

	  	
       

	4. 	
      If any of the following events occur for any reason, it
      shall constitute a default (a “Default”) under this agreement:
    




	 	4.1 	
      Any action or omission by Hongyu causing any existing
      exploration or mining permits (the “Permits”) held by Hongyu to be
      transferred or leased to or used by a third party, or otherwise to expire
      or to terminate;

	 	 	 
	 	4.2 	
      Any failure or omission on the part of Hongyu to make the
      Permits for the benefit of Hongyu which is 90% majority –owned by the
      Investment Co, as provided for under this agreement.

	 	 	 
	 	4.3 	
      Any failure or omission on the part of Hongyu to apply
      for changing Hongyu to be controlled by the Investment Co pursuant to the
      terms of this agreement.



1





	 	
      4.4 
	
      Any material change caused or required by Hongyu to this
      agreement rendering it impossible to finalize the contract and articles of
      association for Hongyu to be controlled by the Investment Co.
  




	5. 	
      Should any Default occur and unless such Default is
      promptly remedied, then Sterling shall be entitled to demand from Hongyu
      as liquidated damages, an amount which shall be RMB one (1) million plus 15
      times (the “Damages”) of the total amounts of any payment, expenses, costs
      that Sterling has incurred or made as of the date of the occurrence of any
      such Default, by delivering a written default notice and demand to Hongyu,
      and such Damages shall become immediately due and payable by Hongyu. Any
      arrears of unpaid Damages shall bear interest at 0.3% per day.

	 	 
	6. 	
      Hongyu hereby agrees to grant Sterling an exclusive
      charge and secured interest of any and all Permits Hongyu now holds or may
      hold in the future, to guarantee its obligations hereunder and under this
      agreement. Hongyu further agrees to promptly enter into such mortgage,
      charge or pledge or other security agreements for the purpose of this
      paragraph, when and as required by Sterling.

	 	 
	7. 	
      In addition to the Damages, Sterling shall have the
      option to convert any Damages into title or interest in the GP Project
      at such time and ratio as it may reasonably determine subject to any
      applicable regulations, and Hongyu hereby grants Sterling such an
      option. Hongyu hereby agrees to do such things and sign such documents as
      may be required for the purposes of this
paragraph.




	8. 	
      This agreement shall be binding on the Parties and their
      related successors, transferees and assignees.




	9. 	
      Time shall be of the essence of this agreement.

	 	 
	10. 	
      There are two copies of this agreement. Each party holds
      one copy.




	Both parties 	 	  
	 	 	 
	Sterling Group Ventures, Inc. 	 	Chenxi County Hongyu Mining Co. Ltd.
  
	  	 	  
	/s/ Richard Shao
    	 	/s/
      Dongliang Hu 
	Authorized person 	 	Authorized person 
	  	 	  
	Date: October 18, 2010 	 	Date: October 18, 2010 


2




AGREEMENT 

This Agreement is dated for reference this
18th day of October, 2010 

Between: 

The Shareholders of Chenxi County
Hongyu Mining Co. Ltd. 
(hereinafter “Hongyu Shareholders”)


And: 

Chenxi County Hongyu Mining Co.
Ltd.
(hereinafter “Hongyu”) 

And: 

Sterling Group Ventures, Inc.

(hereinafter “Sterling”) 

WHEREAS: 

	A. 	
      Chenxi County Hongyu Mining Co. Ltd. is a Chinese mining
      company with connections and resources in Hunan, China. Hongyu is
      interested in exploring, developing and expanding its Phosphate business.
      Hongyu is the holder of a mining permit (the “Permit”) covering the
      Gaoping Phosphate mine located in Tanjiaxiang, Chenxi County of Hunan
      Province, China (the “GP Property”). Hongyu Shareholders are the
      founders and principals of Hongyu.

	 	 
	C. 	
      Sterling is a Nevada, US company specializing in
      exploration and development of natural resource projects and with its
      shares traded on the United States OTC Bulletin Board.

	 	 
	E. 	
      The Parties wish to structure a transaction contemplated
      under the Initial Agreement, and to jointly develop the GP Property and
      phosphate resources in Hunan Province and elsewhere, by way of Sterling
      acquiring an interest in Hongyu pursuant to the terms of this
      Agreement.



NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the premises and the covenants and agreements contained in this
Agreement, the Parties covenant and agree with each other as follows: 

1.               
  Initial Agreement. 

	 	1.1 	
      The Initial Agreement and this Agreement are hereby
      acknowledged as inclusive and to be read together as part and parcel of
      the same transaction.




	 	
      1.2
	
      Sterling shall incorporate a subsidiary in the British
      Virgin Islands to hold any interest pursuant to this Agreement and the
      Initial Agreement and all reference to Sterling herein shall include the
      subsidiary or shall mean the subsidiary as the context requires.
  




	 	1.3 	
      Hongyu Shareholders acknowledge and agree that an
      investment company (the “Investment Co.”) is to be established in
      Hong Kong. Hongyu Shareholders shall hold 20% of the issued shares of the
      Investment Co. and shall keep the GP Property in good standing at all
      times during the terms of the Agreement and shall keep the mining Permit
      valid and effective, free from any encumbrance or liability. Hongyu agrees
      to assist with these matters. The Investment Co. shall acquire 90% of Hongyu.
      The other 10% of Hongyu shall be transferred to the nominees of Sterling.
      After this transaction, Hongyu shall become a Hong Kong / Mainland China
      joint venture company (“HK Invested Hongyu”), and within 5 business days
      from the approval of HK Invested Hongyu, Sterling shall pay RMB two (2) million
      Yuan to Hongyu shareholders.




	 	1.4 	
      Hongyu Shareholders and Sterling agree that Sterling
      shall have all Hongyu’s title to and interest in any phosphate properties,
      including but not limited to the GP Property, and Sterling shall arrange
      for the financing of building a mining and processing plant on the GP
    Property.




	 	1.5 	
      The Parties agree that HK Invested Hongyu shall continue
      to hold all such approvals, permits and licenses pursuant to the terms and
      spirit of this Agreement and the Initial
Agreement.



3





	 	
      1.6 
	
      The Parties agree that the HK Invested Hongyu’s
      registered capital shall be increased to meet the required capital for
      building a mining processing plant and other facilities. Sterling
      shall cause all the registered capital of the HK Invested Hongyu to be
      timely advanced to the accounts of Hongyu according to Chinese regulations
      



2.                Mutual
  Requirements 

	 	
      2.1 
	
      The Parties shall cause Hongyu to adopt a business
      plan expeditiously for the exploration and development of the GP Property,
      and construction of related facilities. 

	 	 	  
	 	
      2.2 
	
      The Parties shall cause all necessary corporate actions
      to be taken to approve and effect the transactions contemplated above, and
      to make any adjustment, registration or filings necessary to meet
      applicable regulatory requirements. 

	 	 	  
	 	
      2.3 
	
      Sterling will control the Board of HK Invested Hongyu,
      appoints its President, Manager and Treasurer as well as other executives.
      



3.               
  Sterling’s Acquisition of Hongyu 

	 	
      3.1 
	
      Upon signing of this Agreement and subject to applicable
      regulatory approval, Sterling shall arrange the financing to put the GP Property into production and shall cause all necessary corporate
      actions to be taken to effect the transactions contemplated above,
      including the share acquisition and share issuance.




4.               
  Hongyu Shareholders’ covenants 

	 	4.1 	
      Hongyu Shareholders shall use their best efforts to
      assist Sterling in the incorporation of the Investment Co and in procuring any
      applicable regulatory approvals in China for the transfer of 90% of Hongyu
      to the Investment Co., as well as the remaining 10% of Hongyu to the nominees
      of Sterling. Hongyu Shareholders shall also arrange for the transfer and
      registration of such interests to the Investment Co. and nominees of
      Sterling hereunder expeditiously. 

	 	 	
       

	 	4.2 	
      Without written consent of Sterling, Hongyu Shareholders,
      their associates, successors and assignees and Hongyu shall not enter into
      any business transactions or relationships with any firm or company with
      respect to phosphate business in China. 



5.                Hongyu
  Shareholders and Hongyu Covenants 

	 	5.1 	
      Hongyu Shareholders agree to sell their 20% interest in the
      Investment Co to Sterling when requested to do so, for 10 million shares
      of Sterling to be issued as consideration for such sale and shall at all
      times be subject to the rules and requirements of the US regulatory bodies
      bearing jurisdiction.

	 	 	 
	 	5.2 	
      Hongyu Shareholders shall complete expeditiously its
      transactions with Sterling as contemplated hereunder, and advise Sterling
      from time to time of the developments in completing such
  transactions.

	 	 	 
	 	5.3 	
      Hongyu Shareholders agree and allow Sterling to place on
      the Board of Directors of HK Invested Hongyu and the Investment
  Co.



6.                Sterling
  Covenants 

	 	
      6.1 
	
      Sterling shall procure all required corporate and
      regulatory approvals for the issuance of Sterling shares required pursuant
      to the terms of this Agreement. 

	 	
       
	
       

	 	
      6.2 
	
      Sterling shall, when and as required by the mutually
      agreed budget to be prepared by Hongyu as agreed by Hongyu
      Shareholders, arrange and complete a financing for the operation on the GP
      Property. 



7.               
  Representations and Warranties of the Parties 

	 	7.1 	
      Each of the Parties hereby represents and warrants to the
      other Parties that:



4





	 	(a) 	
      if it is a company or if it is the sole Shareholder of a
      company which is the subject matter of this Agreement, that company is
      duly organized and legally existing under the laws of the jurisdiction
      where it is incorporated; it has all requisite corporate power and
      authority to execute and fully perform this Agreement, and has all
      corporate power and capacity to fully perform all obligations under this
      Agreement when this Agreement becomes effective; its execution and
      performance of this Agreement constitutes no breach or violation of its
      articles of association or any clause specified in the certificate of
      registration of the company, nor does it constitute any breach or
      violation of any applicable law, regulation or regulatory document, or any
      clause of any contract or agreement to which it is a party;

	 	 	 
	 	(b) 	
      if it is an individual then each of the individuals has
      the authority and power to enter into this Agreement, and is able to
      perform his/her obligations hereunder.

	 	 	 
	 	(c) 	
      the signing of this Agreement is fully authorized by each
      Party and this Agreement so signed shall be effective and binding upon
      each of the Parties.

	 	 	 
	 	(d) 	
      each of the Parties has duly disclosed all corporate,
      financial and technical information requested by other Parties and such
      information provided or disclosed is true and accurate to the best
      knowledge of the Party disclosing or delivering such
information.

	 	 	 
	 	(e) 	
      except those disclosed expressly in writing, there is no
      litigation or administrative proceedings outstanding or threatened against
      any of the Parties or with respect to the GP
Property.



8.                Fees
  and Expenses 

	 	8.1 	
      Each Party shall bear its respective costs and expenses
      associated with this Agreement.



9.          
     General 

	 	9.1 	
      This Agreement constitutes the entire agreement among the
      Parties with respect to the subject matter hereof, and supersedes any
      agreement or arrangement between or among any of the Parties.

	 	 	 
	 	9.2 	
      This Agreement may not be assigned by a Party, in whole
      or in part, without the express written consent of all the other
      Parties.

	 	 	 
	 	9.3 	
      This Agreement shall be governed by the laws of the
      province of British Columbia, Canada and any applicable Canadian federal
      laws.

	 	 	 
	 	9.4 	
      No amendment, waiver or consent shall bind any Party
      unless in writing and signed by all the Parties.

	 	 	 
	 	9.5 	
      The Parties acknowledge and agree to seek their own
      independent legal opinion with respect to this Agreement and/or any
      interpretation hereof.

	 	 	 
	 	9.6 	
      The failure by any Party at any time to enforce any of
      the provisions of this Agreement, or to require performance by any other
      Party of any of the provisions hereof, shall in no way be construed to be
      a waiver of such provisions or to affect either the validity of this
      Agreement or any part hereof, or the right of any party thereafter to
      enforce each and every provision in accordance with the terms of this
      Agreement.

	 	 	 
	 	9.7 	
      If any term, clause, or provision hereof is held invalid
      or unenforceable by a court of competent jurisdiction, such invalidity
      shall not affect the validity or operation of any other term, clause or
      provision of this Agreement and such invalid term, clause or provision
      shall be deemed to be severed from this Agreement.



5





	 	9.8 	
      The Parties agree that should any dispute arise with
      respect to this Agreement or the performance or interpretation hereof,
      they shall resolve such dispute amicably, failing which such dispute shall
      resolved by binding arbitration, at the Hong Kong International
      Arbitration Center, HKIAC pursuant to its rules of arbitration.

	 	 	 
	 	9.9 	
      If, for reasons beyond the control of the Parties, the HK
      Invested Hongyu cannot be established within six months of the date herof,
      then In such an event the Parties shall agree to negotiate in good faith
      to restructure any uncompleted transactions such that, among other things,
      Sterling’s interest in the Property shall be protected, and reasonably
      reflected or fairly compensated in any restructured
transactions.

	 	 	 
	 	9.10 	
      This Agreement shall be effective once duly signed by all
      the Parties hereto.



IN WITNESS WHEREOF the Parties have executed this
Agreement effective the day and year first above written. 

	Chenxi County Hongyu Mining Co. Ltd. 	 	Hongyu Shareholders: 
	 	 	 
	/s/ Dongliang Hu
    	 	/s/
      Chuanya Xiang 
	By its authorized signatory: 	 	(Signature) 
	 	 	 
	Printed Name:     
      Dongliang
      Hu                   
       	 	Printed Name:     
      Chuanya
      Xiang                     
       
	 	 	 
	 	 	 
	Sterling Group Ventures, Inc. 	 	  
	 	 	 
	/s/ Richard Shao
    	 	  
	By its authorized signatory: 	 	  
	 	 	 
	Printed Name:      Richard
      Shao                      
       	 	  
	Title:     
      President                                           
       	 	  


6