Unassociated Document


EXHIBIT 10.7


 


AGREEMENT TO PURCHASE INTEREST IN CLAIMS



 


THIS AGREEMENT effective as of the 28th day of February, 2014 (the “Effective Date”).


 



	
BETWEEN:

	
ENERGIZER RESOURCES INC., a corporation existing under the laws of the State of Minnesota and having a place of business at 141 Adelaide Street West, Suite 520, Toronto, Ontario, M5H 3L5













	
  

	
(hereinafter referred to as the “Vendor”)













	
AND:

	
HONEY BADGER EXPLORATION INC., a corporation existing under the laws of Ontario and having a place of business at 141 Adelaide Street West, Suite 520, Toronto, Ontario, M5H 3L5













	
  

	
(hereinafter referred to as the “Purchaser”)












WHEREAS the Vendor is the beneficial and duly registered owner of 377 mining claims located in the Province of Québec, Canada, known as the Sagar Property, as more particularly described in Schedule “A” attached hereto to form part hereof (the “Claims”);







WHEREAS Virginia Mines Inc. (the “Virginia”) currently holds a 1.5% net smelter return royalty (the “Virginia Royalty”) affecting certain of the Claims, as more particularly described in Schedule “B” attached hereto, the whole pursuant to the terms and conditions of that certain letter of intent entered into between the Vendor and Virginia as of April 27, 2006 (the “Virginia Agreement”) pursuant to which the Vendor acquired its interest in the Claims that are subject to the Virginia Royalty;







WHEREAS pursuant to the Virginia Agreement, should the Vendor discover a potentially exploitable Gold Deposit (as defined in the Virginia Agreement) with an indicated resource outlined (defined according to NI 43-101 – Standards of Disclosure for Mineral Projects) of no less than 500,000 ounces of contained gold equivalent (for all precious metals), Virginia shall have, within 90 days of notice of the Vendor of the discovery of such Gold Deposit, a one-time right (the “Back-In Right”) to re-acquire a 51% interest in the Claims that are subject to the Virginia Royalty, by issuing a cash payment or common shares of Virginia equivalent to that amount equal to two and a half times the Current Expenditures (as defined in the Virginia Agreement) incurred by the Vendor on the discovery prior to Virginia’s election;







WHEREAS pursuant to the Virginia Agreement, Virginia has a right of first refusal on any sale, assignment or transfer of the Vendor’s interests in the Claims (the “Right of First Refusal”);







WHEREAS Pierre Poisson (50%) and Joanne Jones (50%) currently hold a 1% net smelter return royalty (the “First Royalty”) affecting certain of the Claims, as more particularly described in Schedule “C” attached hereto to form part hereof, of which 0.5% may be re-purchased by the Vendor for $200,000, the whole pursuant to the terms and conditions of that certain option agreement entered into among Virginia, Pierre Poisson and Joanne Jones as of May 27, 1992 (the “Poisson Agreement”) pursuant to which Virginia acquired its interest in the Claims acquired pursuant to the Poisson Agreement;


 




  





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WHEREAS Pierre Poisson (50%) and Joanne Jones (50%) currently hold a 0.5% net smelter return royalty (the “Second Royalty”) affecting certain of the Claims, as more particularly described in Schedule “D” attached hereto to form part hereof, of which 0.25% may be repurchased by the Vendor for $100,000, the whole pursuant to the terms and conditions of that certain amendment agreement entered into amongst Virginia, Pierre Poisson and Joanne Jones as of November 3, 1992 (the “Amending Agreement”);







WHEREAS the Purchaser has agreed to purchase a 75% undivided interest in all of the rights, title and interests of the Vendor in and to the Claims and the Vendor has agreed to sell a 75% undivided interest in all of its rights, title and interests in and to such Claims to the Purchaser, subject to the terms and conditions set forth in this agreement (the “Transaction”); and







WHEREAS Virginia has waived its Right of First Refusal pursuant to the Virginia Agreement in connection with the Transaction provided that the Purchaser and the Vendor complete the Transaction within one year from the date hereof; should the Transaction not close within one year from the date hereof, Virginia shall have a fresh and new Right of First refusal in respect thereof, pursuant to the Virginia Agreement.







NOW, THEREFORE, THIS AGREEMENT WITNESSETH that, in consideration of the premises and the mutual covenants and agreements expressed herein, the Vendor and the Purchaser (hereinafter collectively referred to as the “Parties” and, individually, a “Party”) hereby agree as follows:








	
1.  

	
Reciprocal Representations and Warranties













	
1.1  

	
Each Party hereby represents and warrants to each of the other Parties that, as of the date hereof:













	
(a)  

	
it is a body corporate duly incorporated or continued, as the case maybe, and in good standing under the laws of its jurisdiction of incorporation or continuation, as the case may be, is qualified to do business and is in good standing in those jurisdictions where necessary in order to carry out its purposes;













	
(b)  

	
all corporate and other actions required to authorize it to enter into and perform this agreement, the Transaction and all other transactions contemplated by this agreement have been properly taken, with the exception of the regulatory approvals and filings which are a condition of Closing (as defined in Section 7 hereof) (the “Regulatory Approvals”);













	
(c)  

	
it has all requisite corporate power to own, lease and operate its assets and to carry on its business as now conducted;







 




  





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(d)  

	
it has the capacity to enter into this agreement, the Transaction, all other transactions contemplated by this agreement and all other documents contemplated herein;













	
(e)  

	
subject to the Regulatory Approvals, it will not breach any other agreement or arrangement to which it is a party or be in violation of any law to which it is subject, by entering into or performing this agreement, the Transaction, all other transactions contemplated by this agreement and all other documents contemplated herein;













	
(f)  

	
this agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms; and













	
(g)  

	
except as otherwise set forth herein, no consent from a lender or any third party is necessary to authorize it to execute this agreement, to complete the Transaction and all other transactions contemplated by this agreement, and to execute and deliver all related documents.













	
2.  

	
Representations and Warranties of the Vendor













	
2.1  

	
The Vendor hereby represents and warrants to the Purchaser that, as of the date hereof:













	
(a)  

	
it is the beneficial and registered owner of a 100% interest in the Claims, free and clear of all defects, liens, adverse claims, demands, charges, restrictions, encumbrances, royalties and liabilities of any nature and quality whatsoever, existing or threatened, except for the First Royalty, the Second Royalty, the Virginia Royalty, the Back-In-Right and the Right of First Refusal (hereinafter collectively, the “Liens”), and the Purchaser shall acquire good, legal and marketable title to the Claims and beneficial ownership thereof; and













	
(b)  

	
it is not aware of any material facts or circumstances which have not been disclosed in this agreement and which should be disclosed in order to prevent the representations and warranties in this agreement from being materially misleading.













	
2.2  

	
With respect to the Claims, the Vendor hereby represents and warrants to the Purchaser that, as of the date hereof:













	
(a)  

	
Subject to the Liens, it is the exclusive and absolute owner of all mining and proprietary rights attaching to the Claims and proper evidence of such ownership has been duly filed, registered or recorded wherever necessary to perfect and preserve the Vendor's rights, title and interest thereto;













	
(b)  

	
all mining and proprietary rights have been properly staked or otherwise properly constituted, as applicable, and are valid, in good standing and free and clear of all liens, except for the Liens and public utilities,;







 




  





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(c)  

	
it does not owe any amount in connection with the First Royalty, the Second Royalty and the Virginia Royalty as of the Effective Date;













	
(d)  

	
it has delivered to the Purchaser all relevant information concerning title to each Claim;













	
(e)  

	
to the best of the Vendor's knowledge and belief, all activities and operations on any of the Claims, prior to the date hereof, have been performed in a manner consistent with the laws and regulations in effect at the relevant time and all filings required in order to maintain the mining rights in good standing have been properly and timely recorded or filed with the appropriate government agencies;













	
(f)  

	
there is no judgment, decree, injunction, ruling or order of any court, governmental department, commission, agency, instrumentality or arbitrator and no claim, suit, action, litigation, arbitration or governmental proceeding in progress, pending or threatened against or relating to, or affecting any of the Claims which could prevent the Vendor from entering into this agreement and performing its obligations hereunder and from completing the Transaction;













	
(g)  

	
to the best of the Vendor's knowledge and belief, each Claim is free and clear of any hazardous or toxic material, pollution, or other adverse environmental conditions which may give rise to any environmental liability;













	
(h)  

	
it has full authority to grant, sell, assign, and transfer to the Purchaser, as applicable, the mining and proprietary rights attaching to each Claim and its rights and obligations under each of the First Royalty, the Second Royalty and the Virginia Royalty, as contemplated herein; and













	
(i)  

	
it is not in default or violation of any agreement, lease, license, permit, certificate, instrument, regulation, statute or decree applicable to it, which default or violation could adversely affect its ownership of any of the Claims, its right to conduct mineral exploration thereon or its performance or operations in respect thereof.













	
2.3  

	
The Vendor represents and warrants to the Purchaser that each of the representations and warranties set forth in any provision of this Section 2 is true, correct and complete as at the date of this agreement and shall be true and accurate as of the Closing Date (as described in Section 7 hereof) as if given as of such date.













	
2.4  

	
The Vendor recognizes that the accuracy and completeness of each representation and warranty set forth in any provision of this Section 2 is a condition upon which the Purchaser is relying and without which the Purchaser would not have agreed to complete the Transaction.













	
2.5  

	
No investigation or inquiry made by or on behalf of the Purchaser shall have the effect of waiving or diminishing any of the representations and warranties set forth in any provision of this Section 2.







 




  





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3.  

	
Representations and Warranties of the Purchaser













	
3.1  

	
The Purchaser hereby represents and warrants to the Vendor that, as of the date hereof, it is not aware of any material facts or circumstances which have not been disclosed in this agreement and which should be disclosed in order to prevent its representations and warranties in this agreement from being materially misleading.













	
3.2  

	
This Agreement has been duly authorized by the board of directors of the Purchaser and no other corporate proceedings on the part of the Purchaser are necessary to authorize this Agreement, any related agreements to which the Purchaser is a party or the transactions contemplated hereby and thereby. This Agreement and all related agreements to which the Purchaser is a party have been duly executed and delivered by the Purchaser and constitute legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser by the Vendor in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.













	
3.3  

	
The execution and delivery by the Purchaser of this Agreement and all related documents to which the Purchaser is a party, the performance by the Purchaser of its obligations hereunder and thereunder and the completion of the transactions herein and therein provided for will not result in the violation of, or constitute a default under or cause the acceleration of any obligation of the Purchaser under:













	
(a)  

	
any agreement to which the Purchaser is a party or by which it is bound;













	
(b)  

	
any provision of the constating documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of the Purchaser (and no conflict with the same will be caused thereby);













	
(c)  

	
any judgment, decree, order or award of any agency or arbitrator; or













	
(d)  

	
any applicable laws of Canada, Ontario or any jurisdictions where the Purchaser is qualified or required to be qualified to do business or where it carries on business.













	
3.4  

	
There is no requirement for the Purchaser to make any filing with, give any notice to or obtain any Permit of, any agency as a condition to the lawful consummation of the transactions contemplated by this Agreement













	
3.5  

	
Shares:







 



	
(a)  

	
Upon issuance, the Initial Vendor Shares and the Additional Vendor Shares (collectively, the “Shares”) will be duly authorized and validly issued as fully paid and non-assessable shares in the capital of the Purchaser.













	
(b)  

	
No prospectus is required nor are any other documents required to be filed, proceedings taken or approvals, permits, consents or authorizations obtained under the Ontario Securities Act and the rules and regulations thereunder ("Ontario Securities Laws") to permit the Vendor to trade the Shares in the Province of Ontario, either through registrants or dealers registered under Ontario Securities Laws who comply with such laws or in circumstances in which there is an exemption from the registration requirements under Ontario Securities Laws, provided that:







 




  





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(i)  

	
at the time of such trade, the Purchaser is and has been a "reporting issuer" (as defined under Ontario Securities Laws) in the Province of Ontario for the four months immediately preceding the trade;













	
(ii)  

	
at the time of such trade, at least four months have elapsed from the Closing Date;













	
(iii)  

	
a certificate representing the Shares has been issued that carries a legend in the form prescribed by National Instrument 45-102 – Resale of Securities ("NI 45-102");













	
(iv)  

	
the trade is not a "control distribution" (as such term is defined in NI 45-102) and the seller is not a "promoter" within the meaning of Ontario Securities Laws;













	
(v)  

	
no unusual effort is made to prepare the market or to create a demand for the Shares;













	
(vi)  

	
no extraordinary commission or consideration is paid to a person or company in respect of the trade; and













	
(vii)  

	
if the selling security holder is an insider or officer of the Purchaser, the selling security holder has no reasonable grounds to believe that the Purchaser is in default of "securities legislation" (as such term is defined in National Instrument 14-101).













	
(c)  

	
The Purchaser is, and has been for a period of four months, a "reporting issuer" (as defined under Ontario Securities Laws) in the Province of Ontario.













	
3.6  

	
In the past twelve month period, the Purchaser has made all securities filings that it was required to file under any applicable securities laws on a timely basis (the "Securities Filings"). As of their respective dates, each of the Securities Filings complied with all requirements of the applicable securities laws, and none of the Securities Filings contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Purchaser included in the Securities Filings: (i) comply with applicable accounting requirements and with the published rules and regulations of applicable securities laws with respect thereto; (ii) have been prepared in accordance with IFRS or Canadian GAAP, as applicable, during the period involved (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by applicable securities laws); and (iii) fairly present (subject, in the case of any unaudited statements, to recurring audit adjustments normal in nature and amount) the consolidated financial position of the Purchaser at the date thereof and the consolidated results of its operations and cash flows or changes in financial position for the periods then ended.







 




  





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4.  

	
Consideration












In order to complete the Transaction and as consideration for the purchase and sale of the 75% undivided interest in the Claims, the Purchaser agrees to the following:








	
4.1  

	
Cash Payments













	
(a)  

	
pay to the Vendor, by certified cheque, wire transfer or other form of payment acceptable to the Purchaser, the sum of $1,500,000 in cash (the “Initial Cash Payment”) within 15 days upon the earlier of (i) the completion of a financing, in accordance with Section 10.6 hereof, or (ii) nine months following the Effective Date; and













	
(b)  

	
pay to the Vendor, by cheque, wire transfer or other form of payment acceptable to the Purchaser, an additional sum of $1,500,000 in cash (the “Additional Cash Payment”) within 18 months of the Effective Date (the “Second Cash Payment”).













	
4.2  

	
Issuance of Shares













	
(a)  

	
issue and deliver to the Vendor within 15 days after the Initial Cash Payment, an amount of fully paid and non-assessable common shares of the Purchaser (the “Initial Vendor Shares”), which represents 9.5% of the Purchaser’s total number of issued and outstanding common shares at the time of issuance, to a maximum of 15,000,000 common shares;













	
(b)  

	
issue and deliver to the Vendor fully paid and non-assessable common shares of the Purchaser (the “Additional Vendor Shares”), within 15 days after the later of (i) receipt of the approval of the shareholders of the Purchaser and (ii) the Second Cash Payment an amount of common shares that in aggregate (Initial Vendor Shares plus Additional Vendor Shares) does not represent a number of common shares greater than 15% (the “Vendor’s Equity Position”) of the Purchaser’s issued and outstanding common shares at the time of issuance, to an aggregate maximum of 35,000,000 common shares, which is inclusive of the Initial Vendor Shares.












For clarity, the maximum Additional Vendor Share issuance would be the lesser of 20,000,000 common shares or a number of shares that when added to the Initial Vendor Shares previously issued to the Vendor represents an aggregate number of shares equal to 15% of the Purchaser’s issued and outstanding shares at the time of issuance;


 




  





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(c)  

	
if regulatory or shareholder approval for the issuance of the Additional Vendor Shares has not been received and therefore, the Additional Vendor Shares cannot be issued to the Vendor pursuant to the terms of this agreement, the Purchaser shall pay to the Vendor an additional sum of $750,000 in lieu of the Additional Vendor Shares to acquire the initial 75% interest in the Claims and will submit a request to the TSX Venture Exchange («TSXV») to issue an amount of shares that when added to the Initial Vendor Shares previously issued to the Vendor does not represent an aggregate number of common shares greater than 9.5% of the Purchaser’s issued and outstanding common shares at the time of issuance, to a maximum of 20,000,000 common shares; and













	
(d)  

	
the Initial Vendor Shares and the Additional Vendor Shares to be issued pursuant to Section 4.2 hereof shall be issued under a private placement exemption and subject to a four-month restricted period stipulated in a legend and any other restrictions under applicable securities laws or TSXV rules, before becoming freely tradable, the issuance of which shall be subject to prior acceptance for listing by the TSXV.













	
5.  

	
Right of First Refusal












The Purchaser hereby acknowledges and agrees that Virginia has waived its Right of First Refusal pursuant to the Virginia Agreement in connection with the Transaction provided that the Purchaser and the Vendor complete the Transaction within one year from the date hereof; should the Transaction not close within one year from the date hereof, Virginia shall have a fresh and new Right of First refusal in respect thereof, pursuant to the Virginia Agreement.








	
6.  

	
Assignment of the Virginia Agreement, Poisson Agreement and Amending Agreement













	
6.1  

	
The Purchaser acknowledges and agrees that the Claims are subject to the Virginia Agreement, the Poisson Agreement and the Amending Agreement (collectively, the “Assigned Contracts”) and effective as of Closing, the Vendor hereby assigns and transfers unto the Purchaser a 75% undivided interest in all of its rights, interests, duties and obligations under each of the Assigned Contracts, and the Purchaser hereby accepts the assignment and transfer of the Assigned Contracts effective as of Closing and covenants and agrees that, from and after the Closing Date, the Purchaser will observe, perform and fulfil each and every covenant, provision, obligation, term and condition of, or applicable to the Vendor under the Assigned Contracts as if it was an original party thereto, and following such assignment and transfer, the Vendor shall be relieved of liability thereunder.













	
6.2

	
The Purchaser agrees to execute such further and other agreements, including with the parties to the Assigned Contracts, to evidence that the Purchaser has agreed to assume the obligations of the Vendor under the Assigned Contracts.







 




  





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7.  

	
Closing Date












Closing of the Transaction (the “Closing”), being the completion of the acquisition by the Purchaser of the Claims, shall take place on or prior to November 30, 2014 or such other date as may be agreed upon between the Vendor and the Purchaser (the “Closing Date”).








	
8.  

	
Covenants













	
8.1  

	
Covenants of the Purchaser:













	
(a)  

	
With respect to the issuance, sale and delivery of the Shares to the Vendor hereunder, the Purchaser covenants to use all reasonable commercial efforts to obtain all necessary approvals from the TSXV and comply with all necessary requirements of any applicable securities laws; and upon the issuance of the Shares to the Vendor, the Purchaser will have received all necessary approvals from the TSXV, and complied with all necessary requirements of any applicable securities laws, with respect to the issuance, sale and delivery of the Shares to the Vendor hereunder;













	
(b)  

	
The Purchaser shall present a resolution to its shareholders at its next annual meeting of shareholders scheduled for June 2014, to authorize and approve the aggregate issuance of up to 19.5% of the issued and outstanding capital of the Purchaser to the Vendor as required pursuant to this agreement













	
(c)  

	
the Purchaser shall use its best efforts to maintain its status as a "reporting issuer" under Canadian securities laws for a period of two (2) years following the Closing, and shall use its best efforts to maintain its listing of its common shares on the TSXV for a period of two (2) years following Closing.













	
9.  

	
Conditions of Closing












The Transaction shall be subject to the following conditions, which may be waived by the Purchaser or the Vendor, where applicable, in whole or in part:








	
9.1  

	
Due Diligence. Forthwith upon execution of this agreement, the Vendor shall arrange to provide the Purchaser and its authorized representatives and agents, free access, during reasonable business hours, to such information and records, which the Purchaser may reasonably request in order to obtain the information necessary to evaluate the Claims and to prepare the documentation necessary to obtain the Regulatory Approvals. The Vendor agrees to use reasonable commercial efforts to cause the officers, senior employees and other personnel and consultants of the Vendor to meet and collaborate with the Purchaser and its representatives in this regard. The Transaction is conditional upon the Purchaser being satisfied, in its sole and absolute discretion, with the results of such due diligence review.







 




  





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9.2  

	
Approvals. Before the Closing Date, all regulatory approvals, authorizations and other consents with respect to the Closing which may be required by law, together with all such permits, licenses and other authorizations as may be reasonably required in order to close the Transaction shall have been obtained, including, without limiting the generality of the foregoing, approval from the Toronto Stock Exchange for the Vendor and from TSXV for the Purchaser, failing which this agreement shall terminate and the parties shall have no further obligations thereunder, with the exception of those contained in Sections 15 and 166 hereof.













	
9.3  

	
Consents. Prior to the Closing Date, the Vendor shall have obtained all consents, permits and approvals from parties to any contracts or other agreements that may be required in connection with the Transaction, without limiting the generality of the foregoing, the consent of Virginia as contemplated in Section 5 hereof.













	
9.4  

	
Transfer of Documents. On the Closing Date, all necessary transfer forms, agreements, instruments, conveyances, assignments, releases and other document required or useful in the opinion of the Purchaser' legal advisors to properly convey the Claims to the Purchaser shall have been executed.













	
10.  

	
Delivery of Documents












The transactions contemplated herein and the purchase of the Claims by the Purchaser hereunder shall be conditional upon the delivery of the following documents at or before the Closing Date:








	
10.1  

	
Following the performance by the Purchaser of its obligations pursuant to Section 4 hereof, the Vendor shall execute, acknowledge and deliver to the Purchaser a Transfer of Mining Rights prepared by the Purchaser and satisfactory to the Vendor in proper form for registration in the Public Register of Real and Immovable Mining Rights maintained at the ministère des Ressources naturelles (Québec) in favour of the Purchaser pursuant to which the Vendor transfers to the Purchaser a 75% undivided interest in all of its right, title and interest in the Claims, with registration fees in connection with this transfer to be paid by the Purchaser.













	
10.2  

	
The Purchaser shall deliver or cause to be delivered to the Vendor an assignment, assumption and release agreement among the Vendor, the Purchaser, Pierre Poisson and Joanne Jones pursuant to which (i) the Vendor assigns to the Purchaser a 75% undivided interest in all its rights, interests, duties and obligations under each of the Poisson Agreement and the Amending Agreement in connection with each of the First Royalty and the Second Royalty; and (ii) the Purchaser agrees to observe and be bound by all of the provisions each of the Poisson Agreement and the Amending Agreement with respect to the rights, interests and obligations assigned to or assumed by the Purchaser in the place and stead of the Vendor in connection with the First Royalty and the Second Royalty.







 




  





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10.3  

	
The Purchaser shall deliver or cause to be delivered to the Vendor an assignment, assumption and release agreement among the Vendor, the Purchaser and Virginia pursuant to which (i) the Vendor assigns to the Purchaser a 75% undivided interest in all its rights, interests, duties and obligations under the Virginia Agreement including in connection with the Virginia Royalty and the Back-In-Right; and (ii) the Purchaser agrees to observe and be bound by all of the provisions of the Virginia Agreement with respect to the rights, interests and obligations assigned to or assumed by the Purchaser in the place and stead of the Vendor.













	
10.4  

	
The Parties shall have received evidence that all requisite approvals, consents and acceptances of the appropriate regulatory authorities and the Toronto Stock Exchange and the TSXV required to be made or obtained by either one of the Parties in order to complete the Closing have been made or obtained on terms satisfactory to each of the Parties, acting reasonably.













	
10.5  

	
The Purchaser shall deliver or cause to be delivered to the Vendor evidence satisfactory to the Vendor that the shareholders of the Purchaser have approved the Transaction, if such approval is required by the TSXV, corporate laws or by securities regulations.













	
10.6  

	
The Purchaser shall have raised capital through the completion of placement of its securities for gross proceeds of a minimum of $3,000,000 on such terms and conditions as may be determined by the Parties (the “Financing”), it being understood that the Purchaser shall use reasonable commercial efforts to complete the Financing.













	
10.7  

	
The Purchaser shall deliver or cause to be delivered to the Vendor by cheque, wire transfer or other form of payment acceptable to the Vendor, the Initial Cash Payment pursuant to Section 4.1(a) hereof.













	
10.8  

	
The Purchaser shall deliver or cause to be delivered to the Vendor a common share certificate representing the Initial Vendor Shares pursuant to Section 4.2(a) hereof.













	
11.  

	
Post-Closing












The Transaction shall also be subject to the following post-Closing conditions and documents, which may be waived by the Purchaser or the Vendor, where applicable, in whole or in part:








	
11.1  

	
The Purchaser shall deliver or cause to be delivered to the Vendor by cheque, wire transfer or other form of payment acceptable to the Vendor, the Additional Cash Payment pursuant to Section 4.1(b) hereof.













	
11.2  

	
The Purchaser shall deliver or cause to be delivered to the Vendor a common share certificate representing the Additional Vendor Shares pursuant to Section 4.2(b) hereof or, in lieu of the Additional Vendor Shares, the $750,000 cash payment pursuant to Section 4.2(c) hereof, by cheque, wire transfer or other form of payment acceptable to the Vendor.







 




  





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12.  

	
Default












If the Purchaser does not issue the shares or make the payments required in accordance with Section 4 hereof, then the Vendor may provide written notice to the Purchaser of its failure. If the Purchaser does not make the outstanding payment or issue that number of outstanding common shares of the Purchaser in accordance with Section 4 hereof within 90 days of such notice, then its rights and obligations under this agreement shall automatically terminate and be of no further force and effect and the Purchaser shall transfer back to the Vendor its undivided interest in the Claims, and the Purchaser shall bear all fees, costs and other expenses that may be incurred in connection therewith.








	
13.  

	
Option













	
13.1  

	
If and when the Purchaser has made all the Cash Payments and the Issuance of all Shares (or cash in lieu thereof, as permitted or required herein) in accordance with Section 4 hereof, the Vendor will grant to the Purchaser a three (3) year term option to purchase the remaining 25% interest in the Claims (the “Option”), for the period beginning on the date that is the later of (i) June 1, 2015 and (ii) the Vendor satisfying all of the purchase conditions as described herein. The Option will automatically terminate on a date that is three (3) years from the later of (i) or (ii) above. In order to exercise the Option, the Purchaser shall:













	
(a)  

	
pay to the Vendor an additional sum of $1,000,000; assuming the applicable shareholder approval has been received, issue an additional amount of the Purchaser’s common shares (the “Option Shares”) that in aggregate (Initial Vendor Shares plus Additional Vendor Shares plus Option Shares), does not represent a number of common shares greater than 19.5% of the Purchaser’s issued and outstanding common shares at the time of issuance of the Option Shares, to an aggregate maximum of 60,000,000 common shares. For clarity, the maximum Option Shares issued would be the lesser of 25,000,000 common shares or a number of shares that when added to all the previous share issuances to the Vendor as outlined above represents an aggregate number of shares equal to 19.5% of the Purchaser’s issued and outstanding shares at the time of issuance;













	
(b)  

	
or, in the event that shareholder approval is required for the issuance of the Option Shares and the Purchaser has not received such shareholder approval, the Purchaser shall pay an additional sum of $1,875,000 in lieu of the Option Shares in order to acquire the remaining 25% interest in the Claims;













	
(c)  

	
grant the Vendor a pre-emptive right to participate in any further equity financing of the Purchaser in order to allow the Vendor to maintain the Vendor’s equity position in the Purchaser’s share capital (the “Pre-Emptive Right”) at the time of the contemplated equity financing. The Pre-Emptive Right shall be exercisable by the Vendor at any time until 5:00 p.m. (Eastern Standard Time) on the date that is five business days following written notice by the Purchaser to the Vendor that it is proceeding with a proposed financing. The Pre-Emptive Right to be granted to the Vendor upon exercise of the Option shall automatically terminate on the earliest to occur of the following; (i) should the Vendor’s equity position in the Purchaser’s share capital at any time be less than 5% of the Purchaser’s issued and outstanding common shares; (ii) should the Vendor decline to participate in two consecutive equity financings of the Purchaser; or (iii) 5 years from the date of this agreement.







 




  





- 12 -











  












	
13.2  

	
At any time from the date of this agreement, the Vendor or its successor will not increase, directly or indirectly, its aggregate ownership interest of the Purchaser to more than 19.5% of all issued and outstanding common shares of the Purchaser, without the prior written approval of the Purchaser.













	
13.3  

	
Notwithstanding the exercise of the Option by the Purchaser, the Vendor shall retain a 2% net smelter returns royalty (“NSR”) in the form attached hereto as Schedule “E” in respect of the Claims, of which 1% may be repurchased by the Purchaser, at any time and from time to time, in consideration for payment of $1,000,000 in cash or immediately available funds.













	
13.4  

	
If the Option is not exercised by the Purchaser within the timing outlined in 13.1, then the Parties agree to enter into a joint venture agreement consistent with industry norms for such agreements including a standard dilution clause for non-participation. The Vendor would then be entitled to a free carried interest on its 25% participating interest until the delivery by the Purchaser of a bankable feasibility study or equivalent on the Claims.













	
14.  

	
Conduct of Business












Up to the Closing Date, there shall have been no material adverse changes on the Claims, nor shall there be any change in the operations of the Vendor which would materially adversely affect the Claims and on or before the Closing Date, each of the conditions and undertakings contained in this agreement, shall have been entirely respected.








	
15.  

	
Expenses












Each Party shall bear all fees, costs and other expenses that may be incurred in connection with (i) the preparation, negotiation, execution and delivery of this agreement and any other agreements or documents required to consummate the Transaction and (ii) the preparation, completion, delivery or execution of all documents and regulatory filings related thereto.








	
16.  

	
Confidentiality












All information, records and documents obtained by the Purchaser and its authorized representatives and agents in connection with the Transaction and relating to this agreement shall be deemed to be of a confidential nature and shall be treated as such by the Purchaser until the Closing Date or for a period of one year after the date hereof in the event there is no Closing. The Purchaser hereby undertakes to keep confidential such documents, information and records, both during negotiations and thereafter, until the Closing Date, except for such documents, records or information which were already in the public domain or which are subsequently obtained by third parties through no fault or without the intervention (directly or indirectly) of the Purchaser.


 




  





- 13 -











  






 



	
17.  

	
Exclusivity












The Vendor agrees that it will not offer to, or solicit offers from, or enter into any negotiations with, any third party for the sale of the Claims, or any part thereof until the expiration of the date provided for the Closing Date as set forth above.








	
18.  

	
Indemnification













	
18.1  

	
Indemnification by the Vendor












The Vendor shall indemnify and save harmless the Purchaser, its directors, officers, shareholders, affiliates, employees and agents (the "Purchaser Indemnified Parties") from and against any and all claims, demands, proceedings, losses, damages, obligations, liabilities, deficiencies, fines, costs and expenses (including all legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) (collectively, "Losses") suffered or incurred by the Purchaser Indemnified Parties as a result of or arising directly or indirectly out of or in connection with:








	
(a)  

	
any breach by the Vendor of or any inaccuracy of any representation or warranty of the Vendor contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Vendor; or













	
(b)  

	
any breach or non-performance by the Vendor of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Vendor.













	
18.2  

	
Indemnification by the Purchaser












The Purchaser shall indemnify and save harmless the Vendor, its directors, officers, shareholders, affiliates, employees and agents (the "Vendor Indemnified Parties") from and against any and all Losses suffered or incurred by the Vendor Indemnified Parties as a result of or arising directly or indirectly out of or in connection with:


 



	
(a)  

	
any breach by the Purchaser of or any inaccuracy of any representation or warranty contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Purchaser; or













	
(b)  

	
any breach or non-performance by the Purchaser of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Purchaser (including the Assigned Contracts).













	
18.3 

	
The Vendor’s and the Purchaser's indemnification obligations under this agreement shall be limited to an amount equal to the dollar value, from time to time, of the consideration received pursuant to this agreement. Notwithstanding the foregoing, there will be no limit on a party’s liability for indemnification hereunder to the extent the claim arises from fraud.







 




  





- 14 -











  












	
19.  

	
General Provisions













	
19.1  

	
Assignment. This agreement shall enure to the benefit of and be binding upon the respective successors and permitted assigns of the Parties. Neither Party shall assign its rights or delegate its obligations hereunder voluntarily or by operation of law, without the prior written consent of the other Party.













	
19.2  

	
Waiver of Rights. The failure of a Party to insist on the strict performance of any provision of this agreement or to exercise any right, power or remedy upon a breach hereof shall not constitute a waiver of any provision of this agreement or limit the Party's right thereafter to enforce any provision or exercise any right.













	
19.3  

	
Amendments. No modification or amendment to this agreement shall be valid unless made in writing and duly executed by the Parties.













	
19.4  

	
Entire Agreement. This agreement, contains the entire understanding of the Parties and cancels and replaces all prior understandings between the Parties relating to the subject matter hereof, and all prior agreements.













	
19.5  

	
Arbitration. Any dispute or conflict between the parties concerning this Agreement which cannot be settled by them shall be submitted firstly to a mutually agreeable mediator who will have no authority to bind the parties and, in the event that mediation efforts are unsuccessful, to a single arbitrator pursuant to the provisions of the Arbitration Act (Ontario), or, if the parties cannot agree upon a single arbitrator, to three arbitrators, one appointed by the Vendor, one appointed by the Purchaser and a third appointed by the arbitrators appointed by the Vendor and the Purchaser. The arbitrator or arbitrators, as the case may be, may order any party to produce documents prior to the arbitration or to submit a witness to discovery. Arbitration proceedings shall take place in Toronto, Ontario at such place as the arbitrator or arbitrators shall determine.













	
19.6  

	
Severability. If any term, part or provision of this agreement is declared unenforceable, illegal, or in conflict with any laws to which this agreement is subject, such term, part or provision shall be considered severed from this agreement, the remaining portions thereof shall not be affected and this agreement shall be construed and enforced as if it did not contain that term, part or provision.













	
19.7  

	
Time. Time is of the essence of this agreement and all related documents.













	
19.8  

	
Further Assurances. Each of the Parties hereby undertakes to refrain from performing any act or entering into any transaction or negotiation which would interfere or be inconsistent with the terms of this agreement and the due completion of the Transaction.













	
19.9  

	
Currency. All monetary amounts expressed in dollars in this agreement shall be determined and payable in Canadian currency, unless otherwise expressly provided.













	
19.10  

	
Public Announcements. A Party desiring to make a disclosure, statement or press release concerning this agreement shall first consult with the other Party prior to making such disclosure, statement or press release, and the Parties shall use all reasonable efforts, acting expediently and in good faith, to agree upon a text for such statement or press release which is satisfactory to the Parties.







 




  





- 15 -











  












	
19.11  

	
Notice. Any notice or other required communications hereunder shall be given in writing and delivered by hand, registered air mail, telefax, or by overnight courier. Any such notice shall be given to each of the Parties at their following addresses:













	
  

	
TO THE VENDOR:

	
ENERGIZER RESOURCES INC.








	
  

	
141 Adelaide Street West 

Suite 520


Toronto, Ontario M5H 3L5





















 



	
  

	
Attention: Richard E. Schler





                                                




	
  

	
TO THE PURCHASER: 

	
HONEY BADGER EXPLORATION INC.










	
  

	
141 Adelaide Street West 

Suite 520


Toronto, Ontario M5H 3L5





















 



	
  

	
Attention: Peter Liabotis













	
  

	
or to any other addresses that any Party may at any time designate by written notice to the other Party.













	
  

	
All notices shall be effective and shall be deemed delivered (i) if by hand, or by overnight courier, on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next business day following delivery, (ii) if by electronic communication, on the next business day following receipt of the electronic communication, and (iii) if by mail, on the next business day after actual receipt.













	
19.12  

	
Counterparts. This agreement may be executed in any number of counterparts, and it shall not be necessary that the signatures of all Parties be contained on any counterpart. Each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument.













	
19.13  

	
Independent Legal Advice. The Parties expressly declare that they have been given sufficient time to seek such independent legal or other advice as they deem appropriate with respect to this matter and the terms of this agreement and the Parties voluntarily accept the said terms.













	
19.14  

	
Governing Law. This agreement is made under and shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.







 


[SIGNATURE PAGE FOLLOWS]


 




  





- 16 -











  






 


IN WITNESS WHEREOF, the Parties have duly executed this agreement as of the date first above written.


 



	ENERGIZER RESOURCES INC.	 	HONEY BADGER EXPLORATION INC.
	 	 	 	 	 
	 	 	 	 	 
	
By:

	
“Peter Harder”

	 	
By:

	
“J.P. Desrochers”


	
Name:

	
Peter Harder

	 	
Name:

	
J.P. Desrochers


	
Title:

	
Chairman of the Board

	 	
Title:

	
Director







 



	
By:

	
“Richard Schler”

	  	
By:

	
“Peter Liabotis”


	
Name:

	
Richard Schler

	  	
Name:

	
Peter Liabotis


	
Title:

	
Chief Executive Officer

	  	
Title:

	
Chief Financial Officer







 


 


[Signature Page – Agreement to Purchase Claims]


 




  





- 17 -











  






 


SCHEDULE “A”


 


Description of the Sagar Property


 




	
CDC 36315

	 	
CDC 1043890

	 	
CDC 1043925

	 	
CDC 1043960

	 	
CDC 1044170

	 	
CDC 1132961


	
CDC 36316

	 	
CDC 1043891

	 	
CDC 1043926

	 	
CDC 1043961

	 	
CDC 1103333

	 	
CDC 1132962


	
CDC 36317

	 	
CDC 1043892

	 	
CDC 1043927

	 	
CDC 1043962

	 	
CDC 1103334

	 	
CDC 1132963


	
CDC 36318

	 	
CDC 1043893

	 	
CDC 1043928

	 	
CDC 1043963

	 	
CDC 1103335

	 	
CDC 1132964


	
CDC 36319

	 	
CDC 1043894

	 	
CDC 1043929

	 	
CDC 1043964

	 	
CDC 1103336

	 	
CDC 1132965


	
CDC 36320

	 	
CDC 1043895

	 	
CDC 1043930

	 	
CDC 1043965

	 	
CDC 1103337

	 	
CDC 1132966


	
CDC 36321

	 	
CDC 1043896

	 	
CDC 1043931

	 	
CDC 1043966

	 	
CDC 1103338

	 	
CDC 1132967


	
CDC 36322

	 	
CDC 1043897

	 	
CDC 1043932

	 	
CDC 1043967

	 	
CDC 1103339

	 	
CDC 1132968


	
CDC 36323

	 	
CDC 1043898

	 	
CDC 1043933

	 	
CDC 1043968

	 	
CDC 1132934

	 	
CDC 1132969


	
CDC 36324

	 	
CDC 1043899

	 	
CDC 1043934

	 	
CDC 1043969

	 	
CDC 1132935

	 	
CDC 1132970


	
CDC 36325

	 	
CDC 1043900

	 	
CDC 1043935

	 	
CDC 1043970

	 	
CDC 1132936

	 	
CDC 1132971


	
CDC 36326

	 	
CDC 1043901

	 	
CDC 1043936

	 	
CDC 1043971

	 	
CDC 1132937

	 	
CDC 1132972


	
CDC 36327

	 	
CDC 1043902

	 	
CDC 1043937

	 	
CDC 1043972

	 	
CDC 1132938

	 	
CDC 1132973


	
CDC 1043868

	 	
CDC 1043903

	 	
CDC 1043938

	 	
CDC 1043973

	 	
CDC 1132939

	 	
CDC 1132974


	
CDC 1043869

	 	
CDC 1043904

	 	
CDC 1043939

	 	
CDC 1043974

	 	
CDC 1132940

	 	
CDC 1132975


	
CDC 1043870

	 	
CDC 1043905

	 	
CDC 1043940

	 	
CDC 1043975

	 	
CDC 1132941

	 	
CDC 1132976


	
CDC 1043871

	 	
CDC 1043906

	 	
CDC 1043941

	 	
CDC 1043976

	 	
CDC 1132942

	 	
CDC 1132977


	
CDC 1043872

	 	
CDC 1043907

	 	
CDC 1043942

	 	
CDC 1043977

	 	
CDC 1132943

	 	
CDC 1132978


	
CDC 1043873

	 	
CDC 1043908

	 	
CDC 1043943

	 	
CDC 1043978

	 	
CDC 1132944

	 	
CDC 1132979


	
CDC 1043874

	 	
CDC 1043909

	 	
CDC 1043944

	 	
CDC 1043979

	 	
CDC 1132945

	 	
CDC 1132980


	
CDC 1043875

	 	
CDC 1043910

	 	
CDC 1043945

	 	
CDC 1043980

	 	
CDC 1132946

	 	
CDC 2097640


	
CDC 1043876

	 	
CDC 1043911

	 	
CDC 1043946

	 	
CDC 1043981

	 	
CDC 1132947

	 	
CDC 2097641


	
CDC 1043877

	 	
CDC 1043912

	 	
CDC 1043947

	 	
CDC 1043982

	 	
CDC 1132948

	 	
CDC 2097642


	
CDC 1043878

	 	
CDC 1043913

	 	
CDC 1043948

	 	
CDC 1043983

	 	
CDC 1132949

	 	
CDC 2097643


	
CDC 1043879

	 	
CDC 1043914

	 	
CDC 1043949

	 	
CDC 1043984

	 	
CDC 1132950

	 	
CDC 2097644


	
CDC 1043880

	 	
CDC 1043915

	 	
CDC 1043950

	 	
CDC 1043985

	 	
CDC 1132951

	 	
CDC 2097645


	
CDC 1043881

	 	
CDC 1043916

	 	
CDC 1043951

	 	
CDC 1043986

	 	
CDC 1132952

	 	
CDC 2097646


	
CDC 1043882

	 	
CDC 1043917

	 	
CDC 1043952

	 	
CDC 1043987

	 	
CDC 1132953

	 	
CDC 2097647


	
CDC 1043883

	 	
CDC 1043918

	 	
CDC 1043953

	 	
CDC 1043988

	 	
CDC 1132954

	 	
CDC 2097648


	
CDC 1043884

	 	
CDC 1043919

	 	
CDC 1043954

	 	
CDC 1043989

	 	
CDC 1132955

	 	
CDC 2097649


	
CDC 1043885

	 	
CDC 1043920

	 	
CDC 1043955

	 	
CDC 1043990

	 	
CDC 1132956

	 	
CDC 2097650


	
CDC 1043886

	 	
CDC 1043921

	 	
CDC 1043956

	 	
CDC 1043991

	 	
CDC 1132957

	 	
CDC 2097651


	
CDC 1043887

	 	
CDC 1043922

	 	
CDC 1043957

	 	
CDC 1043992

	 	
CDC 1132958

	 	
CDC 2097652


	
CDC 1043888

	 	
CDC 1043923

	 	
CDC 1043958

	 	
CDC 1043993

	 	
CDC 1132959

	 	
CDC 2120537


	
CDC 1043889

	 	
CDC 1043924

	 	
CDC 1043959

	 	
CDC 1043994

	 	
CDC 1132960

	 	
CDC 2120538







 




  





- 18 -











  




 




	
CDC 2120539

	 	
CDC 2377789

	 	
CDC 2384943

	 	
CDC 2384982

	 	
CDC 2388395

	 	 
	
CDC 2120540

	 	
CDC 2377790

	 	
CDC 2384944

	 	
CDC 2384983

	 	
CDC 2388396

	 	 
	
CDC 2120541

	 	
CDC 2377791

	 	
CDC 2384945

	 	
CDC 2384984

	 	
CDC 2388397

	 	 
	
CDC 2120542

	 	
CDC 2377792

	 	
CDC 2384946

	 	
CDC 2384985

	 	
CDC 2388398

	 	 
	
CDC 2120543

	 	
CDC 2377793

	 	
CDC 2384947

	 	
CDC 2384986

	 	
CDC 2388399

	 	 
	
CDC 2120544

	 	
CDC 2377794

	 	
CDC 2384948

	 	
CDC 2384987

	 	
CDC 2389191

	 	 
	
CDC 2120545

	 	
CDC 2377795

	 	
CDC 2384949

	 	
CDC 2384988

	 	
CDC 2389192

	 	 
	
CDC 2120546

	 	
CDC 2377796

	 	
CDC 2384950

	 	
CDC 2384989

	 	
CDC 2389193

	 	 
	
CDC 2120547

	 	
CDC 2377797

	 	
CDC 2384951

	 	
CDC 2384990

	 	
CDC 2389194

	 	 
	
CDC 2120548

	 	
CDC 2377798

	 	
CDC 2384952

	 	
CDC 2384991

	 	
CDC 2389195

	 	 
	
CDC 2120549

	 	
CDC 2377799

	 	
CDC 2384953

	 	
CDC 2384992

	 	
CDC 2389196

	 	 
	
CDC 2120550

	 	
CDC 2377800

	 	
CDC 2384954

	 	
CDC 2384993

	 	 	 	 
	
CDC 2120551

	 	
CDC 2377801

	 	
CDC 2384955

	 	
CDC 2385416

	 	 	 	 
	
CDC 2120552

	 	
CDC 2377802

	 	
CDC 2384956

	 	
CDC 2385417

	 	 	 	 
	
CDC 2120553

	 	
CDC 2377803

	 	
CDC 2384957

	 	
CDC 2385418

	 	 	 	 
	
CDC 2120554

	 	
CDC 2377804

	 	
CDC 2384958

	 	
CDC 2385419

	 	 	 	 
	
CDC 2120555

	 	
CDC 2377805

	 	
CDC 2384959

	 	
CDC 2385420

	 	 	 	 
	
CDC 2120556

	 	
CDC 2377806

	 	
CDC 2384960

	 	
CDC 2385421

	 	 	 	 
	
CDC 2120557

	 	
CDC 2377807

	 	
CDC 2384961

	 	
CDC 2385422

	 	 	 	 
	
CDC 2120558

	 	
CDC 2377808

	 	
CDC 2384962

	 	
CDC 2385423

	 	 	 	 
	
CDC 2120559

	 	
CDC 2377809

	 	
CDC 2384963

	 	
CDC 2385424

	 	 	 	 
	
CDC 2120560

	 	
CDC 2377810

	 	
CDC 2384964

	 	
CDC 2385425

	 	 	 	 
	
CDC 2120561

	 	
CDC 2377811

	 	
CDC 2384965

	 	
CDC 2385426

	 	 	 	 
	
CDC 2120562

	 	
CDC 2377812

	 	
CDC 2384966

	 	
CDC 2386856

	 	 	 	 
	
CDC 2120563

	 	
CDC 2377813

	 	
CDC 2384967

	 	
CDC 2386857

	 	 	 	 
	
CDC 2120564

	 	
CDC 2377814

	 	
CDC 2384968

	 	
CDC 2386858

	 	 	 	 
	
CDC 2120565

	 	
CDC 2377815

	 	
CDC 2384969

	 	
CDC 2386859

	 	 	 	 
	
CDC 2120566

	 	
CDC 2377816

	 	
CDC 2384970

	 	
CDC 2386860

	 	 	 	 
	
CDC 2120567

	 	
CDC 2384932

	 	
CDC 2384971

	 	
CDC 2386861

	 	 	 	 
	
CDC 2120568

	 	
CDC 2384933

	 	
CDC 2384972

	 	
CDC 2388385

	 	 	 	 
	
CDC 2120569

	 	
CDC 2384934

	 	
CDC 2384973

	 	
CDC 2388386

	 	 	 	 
	
CDC 2120571

	 	
CDC 2384935

	 	
CDC 2384974

	 	
CDC 2388387

	 	 	 	 
	
CDC 2120572

	 	
CDC 2384936

	 	
CDC 2384975

	 	
CDC 2388388

	 	 	 	 
	
CDC 2120573

	 	
CDC 2384937

	 	
CDC 2384976

	 	
CDC 2388389

	 	 	 	 
	
CDC 2120574

	 	
CDC 2384938

	 	
CDC 2384977

	 	
CDC 2388390

	 	 	 	 
	
CDC 2120575

	 	
CDC 2384939

	 	
CDC 2384978

	 	
CDC 2388391

	 	 	 	 
	
CDC 2120576

	 	
CDC 2384940

	 	
CDC 2384979

	 	
CDC 2388392

	 	 	 	 
	
CDC 2120577

	 	
CDC 2384941

	 	
CDC 2384980

	 	
CDC 2388393

	 	 	 	 
	
CDC 2377788

	 	
CDC 2384942

	 	
CDC 2384981

	 	
CDC 2388394

	 	 	 	 





 




  





- 19 -











  










 


SCHEDULE “B”









Description of the Claims that are subject to the Virginia Royalty


 





	
CDC 1043868

	 	
CDC 1043903

	 	
CDC 1043938

	 	
CDC 1043973

	 	
CDC 1132939

	 	
CDC 1132974


	
CDC 1043869

	 	
CDC 1043904

	 	
CDC 1043939

	 	
CDC 1043974

	 	
CDC 1132940

	 	
CDC 1132975


	
CDC 1043870

	 	
CDC 1043905

	 	
CDC 1043940

	 	
CDC 1043975

	 	
CDC 1132941

	 	
CDC 1132976


	
CDC 1043871

	 	
CDC 1043906

	 	
CDC 1043941

	 	
CDC 1043976

	 	
CDC 1132942

	 	
CDC 1132977


	
CDC 1043872

	 	
CDC 1043907

	 	
CDC 1043942

	 	
CDC 1043977

	 	
CDC 1132943

	 	
CDC 1132978


	
CDC 1043873

	 	
CDC 1043908

	 	
CDC 1043943

	 	
CDC 1043978

	 	
CDC 1132944

	 	
CDC 1132979


	
CDC 1043874

	 	
CDC 1043909

	 	
CDC 1043944

	 	
CDC 1043979

	 	
CDC 1132945

	 	
CDC 1132980


	
CDC 1043875

	 	
CDC 1043910

	 	
CDC 1043945

	 	
CDC 1043980

	 	
CDC 1132946

	 	 
	
CDC 1043876

	 	
CDC 1043911

	 	
CDC 1043946

	 	
CDC 1043981

	 	
CDC 1132947

	 	 
	
CDC 1043877

	 	
CDC 1043912

	 	
CDC 1043947

	 	
CDC 1043982

	 	
CDC 1132948

	 	 
	
CDC 1043878

	 	
CDC 1043913

	 	
CDC 1043948

	 	
CDC 1043983

	 	
CDC 1132949

	 	 
	
CDC 1043879

	 	
CDC 1043914

	 	
CDC 1043949

	 	
CDC 1043984

	 	
CDC 1132950

	 	 
	
CDC 1043880

	 	
CDC 1043915

	 	
CDC 1043950

	 	
CDC 1043985

	 	
CDC 1132951

	 	 
	
CDC 1043881

	 	
CDC 1043916

	 	
CDC 1043951

	 	
CDC 1043986

	 	
CDC 1132952

	 	 
	
CDC 1043882

	 	
CDC 1043917

	 	
CDC 1043952

	 	
CDC 1043987

	 	
CDC 1132953

	 	 
	
CDC 1043883

	 	
CDC 1043918

	 	
CDC 1043953

	 	
CDC 1043988

	 	
CDC 1132954

	 	 
	
CDC 1043884

	 	
CDC 1043919

	 	
CDC 1043954

	 	
CDC 1043989

	 	
CDC 1132955

	 	 
	
CDC 1043885

	 	
CDC 1043920

	 	
CDC 1043955

	 	
CDC 1043990

	 	
CDC 1132956

	 	 
	
CDC 1043886

	 	
CDC 1043921

	 	
CDC 1043956

	 	
CDC 1043991

	 	
CDC 1132957

	 	 
	
CDC 1043887

	 	
CDC 1043922

	 	
CDC 1043957

	 	
CDC 1043992

	 	
CDC 1132958

	 	 
	
CDC 1043888

	 	
CDC 1043923

	 	
CDC 1043958

	 	
CDC 1043993

	 	
CDC 1132959

	 	 
	
CDC 1043889

	 	
CDC 1043924

	 	
CDC 1043959

	 	
CDC 1043994

	 	
CDC 1132960

	 	 
	
CDC 1043890

	 	
CDC 1043925

	 	
CDC 1043960

	 	
CDC 1044170

	 	
CDC 1132961

	 	 
	
CDC 1043891

	 	
CDC 1043926

	 	
CDC 1043961

	 	
CDC 1103333

	 	
CDC 1132962

	 	 
	
CDC 1043892

	 	
CDC 1043927

	 	
CDC 1043962

	 	
CDC 1103334

	 	
CDC 1132963

	 	 
	
CDC 1043893

	 	
CDC 1043928

	 	
CDC 1043963

	 	
CDC 1103335

	 	
CDC 1132964

	 	 
	
CDC 1043894

	 	
CDC 1043929

	 	
CDC 1043964

	 	
CDC 1103336

	 	
CDC 1132965

	 	 
	
CDC 1043895

	 	
CDC 1043930

	 	
CDC 1043965

	 	
CDC 1103337

	 	
CDC 1132966

	 	 
	
CDC 1043896

	 	
CDC 1043931

	 	
CDC 1043966

	 	
CDC 1103338

	 	
CDC 1132967

	 	 
	
CDC 1043897

	 	
CDC 1043932

	 	
CDC 1043967

	 	
CDC 1103339

	 	
CDC 1132968

	 	 
	
CDC 1043898

	 	
CDC 1043933

	 	
CDC 1043968

	 	
CDC 1132934

	 	
CDC 1132969

	 	 
	
CDC 1043899

	 	
CDC 1043934

	 	
CDC 1043969

	 	
CDC 1132935

	 	
CDC 1132970

	 	 
	
CDC 1043900

	 	
CDC 1043935

	 	
CDC 1043970

	 	
CDC 1132936

	 	
CDC 1132971

	 	 
	
CDC 1043901

	 	
CDC 1043936

	 	
CDC 1043971

	 	
CDC 1132937

	 	
CDC 1132972

	 	 
	
CDC 1043902

	 	
CDC 1043937

	 	
CDC 1043972

	 	
CDC 1132938

	 	
CDC 1132973

	 	 









 




  





- 20 -











  






 


SCHEDULE “C”


 


Description of the Claims that are subject to the First Royalty


 



	
CDC 1043868

	  	
CDC 1043903

	  	
CDC 1043938

	  	
CDC 1043973

	  	
CDC 1132946


	
CDC 1043869

	  	
CDC 1043904

	  	
CDC 1043939

	  	
CDC 1043974

	  	
CDC 1132947


	
CDC 1043870

	  	
CDC 1043905

	  	
CDC 1043940

	  	
CDC 1043975

	  	
CDC 1132948


	
CDC 1043871

	  	
CDC 1043906

	  	
CDC 1043941

	  	
CDC 1043976

	  	
CDC 1132949


	
CDC 1043872

	  	
CDC 1043907

	  	
CDC 1043942

	  	
CDC 1043977

	  	
CDC 1132950


	
CDC 1043873

	  	
CDC 1043908

	  	
CDC 1043943

	  	
CDC 1043978

	  	
CDC 1132951


	
CDC 1043874

	  	
CDC 1043909

	  	
CDC 1043944

	  	
CDC 1043979

	  	
CDC 1132952


	
CDC 1043875

	  	
CDC 1043910

	  	
CDC 1043945

	  	
CDC 1043980

	  	
CDC 1132953


	
CDC 1043876

	  	
CDC 1043911

	  	
CDC 1043946

	  	
CDC 1043981

	  	
CDC 1132954


	
CDC 1043877

	  	
CDC 1043912

	  	
CDC 1043947

	  	
CDC 1043982

	  	
CDC 1132955


	
CDC 1043878

	  	
CDC 1043913

	  	
CDC 1043948

	  	
CDC 1043983

	  	
CDC 1132956


	
CDC 1043879

	  	
CDC 1043914

	  	
CDC 1043949

	  	
CDC 1043984

	  	
CDC 1132957


	
CDC 1043880

	  	
CDC 1043915

	  	
CDC 1043950

	  	
CDC 1043985

	  	
CDC 1132958


	
CDC 1043881

	  	
CDC 1043916

	  	
CDC 1043951

	  	
CDC 1043986

	  	
CDC 1132959


	
CDC 1043882

	  	
CDC 1043917

	  	
CDC 1043952

	  	
CDC 1043987

	  	
CDC 1132960


	
CDC 1043883

	  	
CDC 1043918

	  	
CDC 1043953

	  	
CDC 1043988

	  	
CDC 1132961


	
CDC 1043884

	  	
CDC 1043919

	  	
CDC 1043954

	  	
CDC 1043989

	  	
CDC 1132962


	
CDC 1043885

	  	
CDC 1043920

	  	
CDC 1043955

	  	
CDC 1043990

	  	
CDC 1132963


	
CDC 1043886

	  	
CDC 1043921

	  	
CDC 1043956

	  	
CDC 1043991

	  	
CDC 1132964


	
CDC 1043887

	  	
CDC 1043922

	  	
CDC 1043957

	  	
CDC 1043992

	  	
CDC 1132965


	
CDC 1043888

	  	
CDC 1043923

	  	
CDC 1043958

	  	
CDC 1043993

	  	
CDC 1132966


	
CDC 1043889

	  	
CDC 1043924

	  	
CDC 1043959

	  	
CDC 1043994

	  	
CDC 1132967


	
CDC 1043890

	  	
CDC 1043925

	  	
CDC 1043960

	  	
CDC 1044170

	  	
CDC 1132968


	
CDC 1043891

	  	
CDC 1043926

	  	
CDC 1043961

	  	
CDC 1132934

	  	
CDC 1132969


	
CDC 1043892

	  	
CDC 1043927

	  	
CDC 1043962

	  	
CDC 1132935

	  	
CDC 1132970


	
CDC 1043893

	  	
CDC 1043928

	  	
CDC 1043963

	  	
CDC 1132936

	  	
CDC 1132971


	
CDC 1043894

	  	
CDC 1043929

	  	
CDC 1043964

	  	
CDC 1132937

	  	
CDC 1132972


	
CDC 1043895

	  	
CDC 1043930

	  	
CDC 1043965

	  	
CDC 1132938

	  	
CDC 1132973


	
CDC 1043896

	  	
CDC 1043931

	  	
CDC 1043966

	  	
CDC 1132939

	  	
CDC 1132974


	
CDC 1043897

	  	
CDC 1043932

	  	
CDC 1043967

	  	
CDC 1132940

	  	
CDC 1132975


	
CDC 1043898

	  	
CDC 1043933

	  	
CDC 1043968

	  	
CDC 1132941

	  	
CDC 1132976


	
CDC 1043899

	  	
CDC 1043934

	  	
CDC 1043969

	  	
CDC 1132942

	  	
CDC 1132977


	
CDC 1043900

	  	
CDC 1043935

	  	
CDC 1043970

	  	
CDC 1132943

	  	
CDC 1132978


	
CDC 1043901

	  	
CDC 1043936

	  	
CDC 1043971

	  	
CDC 1132944

	  	
CDC 1132979


	
CDC 1043902

	  	
CDC 1043937

	  	
CDC 1043972

	  	
CDC 1132945

	  	
CDC 1132980







 




  





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SCHEDULE “D”


 


Description of the Claims that are subject to the Second Royalty


 




	
CDC 1103333


	
CDC 1103334


	
CDC 1103335









 




  





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SCHEDULE “E”







Net Smelter Returns Royalty


 


Net Smelter Return Royalty (“NSRR”) shall mean any and all amounts received by the Purchaser from a third party, from time to time, for the product extracted from ore mined from the Claims, deducting therefrom:








	
a)  

	
If the product is treated by an arm’s length party at a smelter, refinery or mint, all expenses relating thereto, including all costs and charges for the treatment, tolling, smelting, refining or minting of such product and all costs associated therewith such as transporting, insuring, handling, weighing, sampling, assaying and marketing, as well as all penalties, representation charges, referee’s fees and expenses, import taxes and export taxes, that is to say the net amount received by the Purchaser from the smelter, refinery or mint, as the case may be, less all costs associated therewith or;













	
b)  

	
If the product is treated at a smelter, refinery or mint owned, operated or controlled by the Purchaser or an affiliate of it, all costs, charges and expenses relating thereto or associated therewith, excluding any capital costs incurred in the mining and milling of the product by including the expenses in (a) above, such charges by similar smelters, refineries or mints as the case may be, in arm’s length transactions for the treatment of like quantities and quality of product.












Any dispute or difference between the parties with respect to the determination of Net Smelter Returns shall, if objections made by the Vendor with the timeframe stipulated herein be submitted to arbitration in accordance with the Arbitration Act of the Province of Ontario.







The Net Smelter Return Royalty shall not be calculated or payable until the first anniversary of the commencement of commercial production. The Net Smelter Return Royalty shall become payable on all production subsequent to that date. Calculations shall be made at the end of each subsequent calendar quarter in which ores or concentrates from the Claims are sold or otherwise deemed disposed of and payment to the Vendor shall be made within 30 days after the end of each quarter.







The Net Smelter Return Royalty holders, on the 30-day prior notice to the Purchaser may effect that the payment of their proportionate share of the Net Smelter Return Royalty shall be satisfied by the delivery In Kind to or to the order of the Vendor of their said proportionate share of the metals and/or minerals received by the Net Smelter Return Royalty holders of the smelting, refining and other treatment of the ore extracted from the Claims. At the time of such delivery, the Purchaser shall have deducted their said proportionate share of all charges and costs noted in this paragraph which are deducted in the course of calculating the Net Smelter Return Royalty herein.


 


 




- 23 -