Document:

MD - Filed by Filing Services Canada Inc. (403) 717-3898

 

OPTION AGREEMENT-Yago Property Nayarit Mexico

 

THIS AGREEMENT made as of the 17th day of June, 2011

 

BETWEEN:

 

ALMADEN MINERALS LTD.,

Suite 1103, 750 West Pender Street,

Vancouver, British Columbia. V6C 2T8

 

(the “Optionor”)

 

AND:

 

G4G RESOURCES LTD,

658 409 Granville Street,

Vancouver, British Columbia, V6C1T2

 

(the “Optionee1”)

 

WITNESSES THAT WHEREAS:

	  	  	  
	  	
A.

	
The Optionor, through its, Mexican subsidiary, Minera Gavilan SA de CV, is the legal and beneficial owner of those mineral properties (the ‘‘Claims”), which are located in Nayarit State, Mexico and described in Schedule A.

	  	  	  
	  	
B.

	
The Optionee is a reporting issuer whose shares are listed for trading on the TSX Venture Exchange under the symbol ‘GXG’.

 

THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Optionor, the parties covenant and agree as follows:

 

DEFINITIONS

 

1.01 In this Agreement bracketed words and phrases have the meanings assigned to them where they appear in this Agreement, and, unless there is something in the subject matter or context inconsistent therewith:

 

“Anniversary” means the anniversary of the date, the Exchange accepting the transaction encompassed in this Agreement provided always that the Parties agree that if such acceptance is not effected on or before the 31st day of August,2011 this agreement shall thereupon and without requirement of notice become null and void save and except for those obligations which have accrued due prior to such date of termination;

 

“Bankable Feasibility Study” shall mean a JORC or National Instrument 43-101 compliant study prepared by a recognized firm of mining engineering consultants which contains a detailed examination of the feasibility of bringing, a deposit of minerals on the Claims into commercial production by the establishment of amine, which reviews all outstanding issues, which contains the statement of the ore reserves, which reviews the nature and scale of any proposed operation, which contains an estimate of the construction costs and production costs and is in the form of a bankable document (meaning a document appropriate for presentation to a. bank or other financial institutions from which a party might wish to: secure financing),.

  

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“Claims” means those mineral property claims and other areas more particularly described in Schedule “A”;

 

“Exchange” means the TSX Venture Exchange, or such other stock exchange or quotation system on which the common shares of the Optionee are listed from time to time;

 

“Exploration Expenses” means all expenditures incurred on reclamation of the Claims and on exploration and development activities (including activities associated with preparation of a feasibility study) directed towards disclosure and definition of an ore body on the Claims, including payments required to maintain the Claims in good standing, monies” expended in paying the fees, wages, salaries, traveling expenses and fringe benefits of all persons directly engaged in work with respect to, or for the benefit of the Claims and which are attributable to such persons’ work on the Claims;

 

“Option” means the sole and exclusive right and option to acquire an undivided 60% legal and beneficial right, title and interest in and to the Claims;

 

“Option period” means the period from the date of execution to and including the date of exercise, or termination of the Secondary Option; and

 

“Secondary Option” means the sole and exclusive right and option to acquire an undivided 10% legal and beneficial right, title and interest in and to the Claims, in addition to the interest which may be acquired pursuant and subject to the exercise of the Option.

 

1.02 The words “section”, “subsection”, “paragraph”, “subparagraph”, “clause”, ‘herein” and “hereunder” refer to this Agreement, and the words “this Agreement” include every schedule attached hereto and each schedule forms part of this Agreement.

 

REPRESENTATIONS AND WARRANTIES OF THE OPTIONOR

	  	  	  
	
2.01

	
The Optionor hereby represents and warrants to the Optionee that:

	  	  
	  	
(a)

	
The Optionor validly exists as a corporation duly incorporated and in good standing under the.laws of British Columbia,

	  	  	  
	  	
(b)

	
the Optionor is the legal and beneficial owner of a 100% legal and beneficial right, title and interest in and to the Claims (which is comprised of 28 claims that total approximately 22898.2 hectares) free and clear of all liens, charges, encumbrances and adverse claims whatsoever except for the Minera Fumarola S.A. de C.V. royalty agreement as described in Schedule C;

	  	  	  
	  	
(c)

	
to the best of Optionor’s knowledge at this time the Claims have been validly staked and legally and validly recorded in the name of the Optionor pursuant to all applicable laws, all. exploration and development work required to be performed, recorded and filed upon the Claims has been performed recorded and filed (or fees paid in lieu thereof) through the date of this Agreement, all of which work, recordings and filings have been. completed in accordance with applicable statutes pertaining to such, work and all claim maintenance fees and taxes have been paid thereon until the date hereof;

 

  

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(d)

	
to the best of Optionor’s knowledge at this time all necessary material information and data (including, without limitation, all geological, geophysical and assay results and maps) concerning the Claims and prior exploration and development work carried out thereon and within Optionors’ knowledge has been made available to Optionee and, will be made. available at any time while Optionee has an interest in the Option, any such information and data of which Optionors may become aware will be be made available to Optionee;

	  	  	  
	  	
(e)

	
to the best of Optionor’s knowledge at this time the Optionor has no information or knowledge of any facts pertaining to the Claims, the lands to which the Claims relate or any substances thereon, therein or therefrom not disclosed in wilting to Optionee which if known to Optionee, might reasonably be expected to deter Optionee from completing, the transactions contemplated hereby on the terms and conditions contained herein;

	  	  	  
	  	
(f)

	
to the best of Optionor’s knowledge at this time there are no obligations or commitments for reclamation, closure or other environmental corrective, clean-up or remediation action directly or indirectly relating to the mineral properties to which the Claims relate;

	  	  	  
	  	
(g)

	
to the best of its knowledge at this time there are no actions, suits, claims, proceedings, litigation or investigations pending or threatened against the Optionor or in respect of the Claims; and

	  	  	  
	  	
(h)

	
there is no adverse claim or challenge against or to the ownership of or title to any of the Claims, nor to the knowledge of the Optionor is there any basis therefor, and there are no outstanding agreements or options to acquire or purchase the Optionor’s interest in the Claims or any portion thereof, and no person has any royalty, net profits or other interest whatsoever, absolute or contingent, in production from any of the Claims.

 

2.02 The representations and warranties contained in section 2.01 are provided for the exclusive benefit of the Optionee, and any misrepresentation or breach of warranty may be waived by the Optionee in whole or in part at any time without prejudice to its rights in respect of any other misrepresentation or breach of the same or any other representation or warranty; and the representations and warranties contained in section 2.01 shall survive the execution and performance of this Agreement.

 

REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE

	  	  
	
3.01

	
The Optionee represents and warrants to the Optionor that:

  

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(a)

	
the Optionee validity exists as a corporation duly incorporated and in good standing under the laws of British Columbia; and

	  	  	  
	  	
(b)

	
the Optionee’s common shares are listed on and trade through the facilities of the Exchange.

 

3.02 The representations and warranties contained in section 3.01 are provided for the exclusive benefit of the Optionor and a misrepresentation or breach of warranty may be waived by the Optionor in whole of in part at any time without prejudice to its rights in respect of any other misrepresentation or breach of the same or any other representations or warranty; and the representations and warranties contained in section 3,01 shall survive the execution hereof

 

GRANT OF OPTION AND SECONDARY OPTION

 

4.01 The Optionor hereby grants the Option to the Optionee.

 

4.02. The Option may be exercised by the Optionee paying $50,000 dollars to the Optionor, and issuing and delivering to the Optionor 500,000 Common shares of the capital of the Optionee within 5 business days: of acceptance of this transaction by the Exchange and by incurring Six Million United States Dollars (USD $6,000,000) in Exploration Expenses on the Claims and issuing an additional 2,500,000 Common shares of the Optinee (“Shares”), as follows:

	  	  	  
	  	
(a)

	
On or before the First Anniversary incurring $500,000 Exploration issuing Expenses and issuing 500,000 Shares to the Optionor (this is a firm commitment by the Optionee, subject to the receipt of the acceptance of the transaction contemplated in this Agreement by the Exchange);

	  	  	  
	  	
(b)

	
On or before the Second Anniversary incurring $1,000,000 US additional Exploration Expenses and issuing an additional 500,000 Shares;

	  	  	  
	  	
(c)

	
On or before the Third Anniversary inclining $1,000,000 US additional Exploration Expenses and issuing an additional 500,000 Shares;

	  	  	  
	  	
(d)

	
On or before the Fourth Anniversary inclining $1,000,000 US additional Exploration Expenses and issuing an additional 5,000,000 Shares; and

	  	  	  
	  	
(e)

	
On or before the Fifth Anniversary incurring $2,500,000 US additional Exploration Expanses and issuing an additional 500,000 Shares.

	  	  	  
	  	  	
Should the Option be exercised and the Secondary Option hereinafter provided be terminated or not exercised the Optionee shall within 30 days of such termination or lapsing by reason  of  non-exercise issue to the Optionor an additional 2,000,000 Common Shares of the Optionee and the Parties shall enter into a Joint Venture on the terms set forth in Schedule “B” and there shall be pro rata sharing of all costs and expenses and revenues relating to the Claims, according to their proportionate interests in the Claims.

  

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4.03 The Optionor hereby grants the Secondary Option to the Optionee,

 

4.04 The Secondary Option may be exercised by the Optionee exercising the Option and by

	  	  	  
	  	
•

	
completing at its sole cost and expense a Bankable Feasibility Study and delivering it to the Optionor on or before the Seventh Anniversary;

	  	  	  
	  	
•

	
after the exercise of the Secondary Option the Parties shall enter into a Joint Venture on the terms set forth in Schedule “B” and there shall be pro rata snaring of ail costs and expenses and revenues relanting to the Claims from and after the fulfillment by Optionee of the Bankable Feasibility procurement expenses commitment (being after such time as a Bankable Feasibility. Study has been delivered by Optionee), according to then proportionate interests in the Claims;

	  	  	  
	  	
•

	
from and after such time any such Bankable Feasibility Study has been delivered by Optionee, Optionee and. Optionor shall each fund their pro rata share of all costs and expenses required in connection with development programs and budgets and all other programs and budgets in connection with mining operations;

	  	  	  
	  	
•

	
Optionee shall use its best efforts to obtain project financing to find development in which project financing Optionor shall be entitled to participate on the same terms as is available to Optionee. In the event that Optionor shall be willing to either fully participate in the project financing obtained by Optionee, or to arrange its own financing to provide its full pro rata share of expenditures, its 30% interest in the Property and the Joint Venture shall revert to a 2% net smelter return royalty;

 

4.05 Notwithstanding any other provision of this Agreement, if the Optionee incurs Exploration Expenditures exceeding the Exploration Expenditures required to be incurred during any of the periods described in section 4.02 to maintain and exercise the Option, the Optionee may apply the excess Exploration Expenditures to reduce Exploration Expenditures otherwise required to be made by it to maintain or exercise the Option during the following or subsequent years by a like amount.

 

4.06 All shares issued pursuant to this Agreement will be issued as fully paid and non-­assessable, free and clear of all liens, charges and encumbrances, and subject only to such resale restrictions and hold periods as may be imposed by applicable securities legislation and the Exchange.

 

4.07 Within 30 days of the end of each 12 month period during the Option Period, Optionee shall deliver to Optionor a certificate stating the amount of Exploration Expenses incurred. The certificate of Optionee shall be prima facie evidence of such expenditures having been made. Optionee shall also provide periodic technical reports complying with industry standards for technical reporting, not less frequently than annually, reporting on all the exploration and development work conducted on the Claims in the period preceding such report. Should Optionee terminate its option, it is obligated to provide a final report to Optionor reporting all Work carried out on the properly up to the time of termination and subsequent to the last technical report.

 

  

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4.08 Upon receipt of the certificate from Optionee referenced in section 4.07 hereof. Optionor shall have the right to verify fits expenditures, at its own sole cost and expense and upon request in writing. Optionee shall provide to Optionor with 30 days of receipt of such request sufficient detail of the expenditures on Exploration Expenses to permit such verification.

 

EXERCISE OF OPTION

 

5.01 If the Optionee makes the payments and provides documentation, that it has incurred the Exploration Expenses described in section 4.02 before such time, if any, as the Option is validity terminated, it will, without any further act or payment, have and be deemed for all purposes to have exercised the Option.

 

5.02 If and when the Option has been exercised, an undivided 60% right, title and interest in and to the Claims will vest in the Optionee free and clear of all liens, charges, encumbrances and claims of others whatsoever, except as may have arisen due to any action or failure to take action by the Optionee.

 

5.03 If the Optionee delivers the Bankable Feasibility Study as described in section 4.04 before such time, if any, as the Secondary Option is validly terminated, it will, without any further act or payment, have and be deemed for all purposes to have exercised the Secondary Option.

 

5.04 If and when me Secondary Option has been exercised, an additional undivided 10% right, title and interest in find to the Claims will vest in me Optionee free and clear of all liens, charges, encumbrances and claims, of Others whatsoever, except as may have arisen due to any action or failure to take action by me Optionee.

 

5.05. Except for the payment due on acceptance of this agreement by the Exchange and the firm commitment stipulated in Section 4.02 (a) which is conditional on such acceptance by the Exchange, nothing in this Agreement will obligate the Optionee to pay any money to the Optionor issue any shares to the Optionor or incur any Exploration Expenses; and the Optionee may at any time by delivery of written notice to the Optionor terminate the Option and its obligations hereunder; provided always that the Optionee shall leave in good standing for a period of at least 1 year from the termination or expiration of the Option those Claims that are in good standing on the date hereof or that are in good standing when acquired by the Optionor if acquired after the date of this Agreement.

 

5.06 The Optionee may at any time by delivery of written notice to the Optionor terminate the Secondary Option provided always that the Optionee shall leave in good standing for a period of at least 1 year from me termination or expiration of the Secondary Option those Claims that are in good standing on the date hereof or mat are in good standing when acquired by the Optionor if •acquired after the date of this Agreement.

  

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5.07 In the event of any subdivision, consolidation or other change in the. share capital of the Optionee prior to the exercise in full of the Secondary Option, the number of shares to be delivered or issued to the Optionor thereafter in connection with the exercise of the Secondary Option shall be adjusted in accordance with such subdivision consolidation or other change in the share capital of the Optionee. In the event the Optionee undertakes an amalgamation, merger, reorganization or other arrangement prior to the exercise in full of the Secondary Option, the number of shares to be delivered or issued to the Optionor to exercise the Secondary Option thereafter shall be adjusted such that the Optionee or its successor may exercise the Secondary Option, as applicable, by delivering that type and number of securities or other property to which the Optionor would have been entitled had the Optionor held the relevant number of shares of the Optionee specified in section 4.04, immediately before such amalgamation, merger, reorganization or other arrangement.

 

OPERATORSHIP AND RIGHT OF ENTRY

 

6.01 The Optionee will be the “Operator” in respect of the Claims and any other mineral claims which may become subject to this Agreement, before exercise of the Option and Secondary Option, and, as such, shall have the sole and exclusive right in respect of the Claims to:

	  	  	  
	  	
(a)

	
enter thereon;

	  	  	  
	  	
(b)

	
have exclusive and quiet possession thereof, subject always to the rights granted pursuant to section 8.01 (b);

	  	  	  
	  	
(c)

	
do such prospecting, exploration, development and/or other mining work thereon and thereunder as the Optionee may determine to be necessary, desirable or advisable;

	  	  	  
	  	
(d)

	
bring upon and erect upon the Claims and use in its operations, at any tirne and from time “to time, such buildings, plant, machinery, equipment, vehicles, tools, appliances and supplies as the Optionee may deem necessary, desirable or advisable; and

	  	  	  
	  	
(e)

	
remove therefrom and dispose of reasonable quantities of ores, minerals and metals for the purposes of sampling, obtaining assays or malting other tests.

 

TRANSFER OF PROPERTY INTERESTS

 

7.01 Forthwith following exercise of the Option, the Optionor shall deliver to the Optionee duly executed instruments of transfer and such other documentation, deeds, certificates and assurances Which may reasonably be required to convey, transfer and assign the legal title to an undivided 60% interest in the Claims to the Optionee, and to permit registration of such interest in the name of the Optionee or its nominee, and shall appoint the Optionee as agent of the Optionor for the purpose of filing the same in applicable governmental and administrative registries.

 

7.02 Forthwith following exercise of the Secondary Option, the Optionor shall deliver to the Optionee duly executed instruments of transfer and such other documentation, deeds, certificates and assurances which may reasonably be required to convey, transfer and assign the legal title to an additional undivided 70% interest in the Claims to the Optionee, and to permit registration of such interest in the name of the’ Optionee or its nominee, and shall appoint, the Optionee as agent of the Optionor for the purpose of filing the same in applicable governmental and administrative registries.

  

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7.03 The Optionee shall be entitled to record the transfers contemplated hereby at its own cost with the appropriate government office.

 

7.04 Upon exercise of the Secondary Option or, if the Option is exercised and the Secondary Option is not exercised, then upon the date of termination or lapse of the. Secondary Option, the parties will form a joint venture and carry on to business of such joint venture in accordance with a. Joint Venture Agreement to be negotiated in good faith by the parties and having the general terms set out in Schedule “B” hereto; In the event the parties cannot reach agreement on any additional terms or conditions of to Joint Venture Agreement, any such additional terms may be set by an arbitrator appointed pursuant to the terms of this Agreement.

 

7.05 The parties acknowledge the rights; and privilege, of the Optionor or Optionee to file, register and/or to otherwise deposit a copy of mis Agreement in the appropriate recording office for the jurisdiction in which the Property is located and with any other governmental agencies to give third parties notice of this Agreement, and hereby agree, each with the others, to do or cause to be done all acts or things reasonably necessary to effect such filing, registration or deposit, and, in to event the Option is not exercised, to remove such registration.

 

OBLIGATIONS OF THE OPTIONEE DURING OPTION PERIOD

 

8.01 During the Option Period and thereafter until exercise or termination of the Secondary Option, unless otherwise agreed between the parties, to Optionee shall, in its capacity as operator:

	  	  	  
	  	
(a)

	
maintain the Claims in good standing by filing of assessment work and to performance of other actions as may be necessary in that regard and in order to keep the Claims free and clear of all liens and other charges arising from the Optionee’s activities thereon except those at to time contested in good faith by the Optionee;

	  	  	  
	  	
(b)

	
permit the directors, officers, employees and designated consultants of the Optionor and its servants, agents and independent contractors, at their own risk arid expense access to the Claims and to all reports and data developed or acquired by the Optionee with respect to the Claims and the operations conducted thereon at all reasonable times; provided that the Optionor agrees (and the Optionor does hereby so agree) to indemnify the Optionee against and to save it harmless from and against all liens, costs, claims, actions, causes of action, liabilities and expenses that the Optionee may incur or suffer as a result of any injury (including injury causing death) to any director, officer, employee, agent or designated consultant of the Optionor while on the Claims;

  

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(c)

	
do all work on the Claims in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority;

	  	  	  
	  	
(d)

	
provide to the Optionor copies of all news releases and other continuous disclosure documents filed or disseminated by the Optionee under securities laws of Canada and such other jurisdictions to which the Optionee may be subject which releases or documents shall comply with appropriate disclosure standards including, without limitation, NI 43-101; and

	  	  	  
	  	
(e)

	
all reports of Exploration Expenses shall be in detail sufficient to meet good industry standards as to the work conducted on the Claims to meet the .requirements of the exercise of the Option. Should such reports not be provided or should. such reports not show expenditures in detail sufficient to meet good industry standards) sufficient (together with any excess expenditures in accordance with section. 4.05 hereof) to meet the required expenditures for the period covered by such report the Optionor may, on notice in accordance with Section 9.01, terminate the Option.

 

TERMINATION OF OPTION

 

9.01 Subject to section. 16.01 and 5.05, the Option may be terminated by the Optionor, by notice in writing to the Optionee, if the Optionee fails to do any of the things described in section 4.02 within the permitted time periods.

 

9.02 If the Option is terminated, the Optionee shall deliver to the Optionor, at no cost to the Optionor, copies of all reports, maps, assay results and other relevant technical data in the possession of the Optionee with respect to the Claims.

 

9.03 Subject to section 16.01 and 5.05, the Secondary Option may be terminated by the Optionor, by notice in writing to the Optionee, if the Optionee fails to do any of the things described in section 4.04 within the permitted time periods.

 

POWER TO CHARGE PROPERTY

 

10.01 Neither party hereto shall have any right to grant mortgages, charges or liens of or upon the Claims or any portion thereof; any mill or other fixed assets located thereon, or any of the tangible personal property located on or used in connection with the Claims, except in connection with financing after a decision is made to put some or all of the Claims into commercial production as provided in the Joint Venture Agreement.

 

  

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TRANSFERS

 

11.01 Prior to the exercise of the Option and the Secondary Option, if exercised, the Optionee shall not assign any of its interest in this Agreement without the consent of the Optionor, first bad and obtained, such consent not to be unreasonably withheld. After the exercise of the Option and the Secondary Option, if exercised, the Optionee, with the consent of the Optionor first had and obtained, such Consent not to be unreasonably withheld, may at any time during the Option Period sell, transfer or otherwise dispose of all or any portion of its interest in the Claims and/or its rights and obligations under this Agreement; provided that any purchaser, grantee or transferee of any such interest delivers to the Optionor its agreement related to this Agreement. and to the Claims, containing;

	  	  	  
	  	
(a)

	
a covenant by such transferee to perform all the obligations of the Optionee to be performed under ibis Agreement in respect of the interest to be acquired by it from the Optionee to the same extent as if this Agreement bad been, originally executed by such transferee as principal obligarit; and

	  	
(b)

	
a provision subjecting any further sale, transfer or other disposition of such interest in the Claims and/or this Agreement or any portion thereof to the restrictions contained in this section;

 

and further provided that any shares of any purchaser, grantee or transferee delivered to the Optionor in connection with the exercise of the Option must be shares having an equivalent value to those of the Optionor, based on the relative share prices at the time.

 

11.02 No assignment by the Optionee of any interest less man its entire interest in this Agreement shall, as between the Optionee and the Optionor, discharge it from any of its obligations hereunder but upon the transfer by the, Optionee of the entire interest at the time held by it in this Agreement (whether to one or more transferees and whether in one or in a number of successive transfers), the Optionee shall be deemed to be discharged from all obligations hereunder save and except for unconditional obligations which arose prior to the date of transfer.

 

11.03 If the Optionor or the Optionee (in either case, the “Vendor”) should at any time after exercise of the Option receive a bona fide offer from an independent third party (the “Proposed Purchaser”) dealing at arm’s length with the Vendor to purchase all or substantially all of its interest in and to the Claims, which offer the Vendor desires to accept, or if the Vendor intends to sell all or substantially all of its interest in and to the Claims, the Vendor shall first make an offer (the “Offer”) of such interest in writing to the other party (the “Offeree”) upon terms no less favourable than those offered by the Proposed Purchaser or intended to be offered by the Vendor, as the case may be.

 

11.04 Each Offer shall specify the price and terms and conditions of such sale, the name, of the Proposed Purchaser (which term shall, in the case of an intended offer by the Vendor, mean the person or persons to whom the Vendor intends to offer its interest) and, if the offer received by the Vendor from the Proposed Purchaser provides for any consideration payable to the Vendor otherwise than in cash, the Offer shall include the Vendor’s good faith estimate of the cash equivalent of the non-cash consideration.

 

11.05 If within a period of 30 days of the receipt of the Offer the Offeree notifies the Vendor in writing that it will accept the same, the Vendor shall be bound to sell such interest to the Offeree (subject as hereinafter provided with respect to price) on the terms and conditions of the Offer.

  

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11. 06 If the Offer so accepted by the Offeree contains the Vendor’s good faith estimate of the cash equivalent consideration as aforesaid, and if the Offeree disagrees with the Vendor’s best estimate, the Offeree shall so notify the Vendor at the time of acceptance and the Offeree shall, in such notice, specify what it considers, in good faith, the fair cash equivalent to be and the resulting total purchase price,

 

11.07 If the Offeree: so notifies the Vendor, the acceptance by the Offeree shall be effective and binding upon the Vendor and the Offeree and the cash equivalent of any such non-cash consideration, if not agreed upon by the parties, shall be determined by binding arbitration under the Commercial Arbitration Act of British Columbia and shall be payable by the Offeree, subject to prepayment as hereinafter provided, within 60 days following its determination by arbitration; and the’ Offeree shall in such case pay to the Vendor, against receipt of an absolute transfer of cleat and unencumbered title to the interest of the Vendor being sold, the total purchase price which is specified in its notice to the Vendor and such amount shall be credited to the amount determined following arbitration of the cash equivalent of any non-cash consideration,

 

11.08 If the Offeree fails to notify the Vendor before me expiration of the time limited therefor that it will purchase the interest offered, the Vendor may sell and transfer such interest to the Proposed Purchaser at the price and on the terms and conditions specified in the Offer for a period of 60 days, provided that the terms of this paragraph shall again apply to such, interest if the sale to the Proposed Purchaser is not completed within the said 60 days.

 

11.09 Any sale hereunder shaft be conditional upon the Proposed Purchaser delivering a written undertaking to the Offeree, in form and substance satisfactory to its counsel, to be bound by the terms and conditions of this Agreement

 

REGULATORY APPROVALS AND REQUIREMENTS

 

12.01 The respective rights and obligations of the Optionor and the Optionee hereunder are subject to acceptance by the Exchange and the Optionee will use reasonable efforts to expeditiously seek and obtain acceptance of the Exchange of any and all filings required to be made with the Exchange in respect of this Agreement and/or the subject matter hereof.

 

SURRENDER OF PROPERTY INTERESTS PRIOR TO TERMINATION

 

13.01 The Optionor or the Optionee may at any time elect to abandon its respective interest in any one or more of the Claims by giving notice to the other party of such intention, and in such events for a period of 30 days after the date of delivery of such notice the other party may elect to have the first party transfer its interest in any or all of the Claims in respect of which such notice has been given to it by delivery of a request therefor to the party having given the notice, whereupon the party having given the initial notice shall deliver to the electing party a quitclaim, bill of sale or other appropriate deed or assurance in registrable form transferring its interest in such Claims to the electing, party; provided that no such abandonment or transfer shall be effective until and unless arrangements satisfactory to the other party have been made for the satisfaction of the abandoning party’s portion of any indebtedness outstanding in connection with the claims being abandoned by it and for payment of the abandoning party’s portion of any costs relating to required reclamation work on such claims. Upon the Optionor or the Optionee abandoning any Claim, the Optionee shall have no further obligations in respect of that Claim hereunder.

 

  

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FORCE MAJEORE

 

14.01 If the Optionee is at any time prevented from or delayed in complying with any provisions of this Agreement by reason of strikes, lock-outs, labour shortages, power shortages, fuel shortages, inability to obtain equipment fires, acts of war, insurrection or terrorism, inclement weather, acts of God, governmental regulations restricting normal operations, shipping or other transportation delays, delays in obtaining required governmental or regulatory approvals or permits, aboriginal or other land claims, environmental claims or notices (or inability to obtain or delays in obtaining environmental consents) or any other reason or reasons (other than lack of funds) beyond the control of the Optionee, the time limited for the performance by the Optionee of its obligations hereunder shall be extended by a period of time equal in length to the period of each such prevention or delay.

 

14.02 The Optionee shall give prompt notice to the Optionor of each event of force majeure under section 14.01 and upon cessation of such event shall furnish the Optionor with notice to that effect together with particulars of the number of days by which the obligations of the Optionee hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure.

 

ARBITRATION

 

15.01 This Agreement will be interpreted in accordance with and governed by the laws of the Province of British Columbia, and in the event of any dispute arising out of or in connection with this Agreement or in respect of any legal relationship associated therewith or derived therefrom shall be first attempted to be resolved by mediation failing which the matters in dispute shall be referred to and finally resolved by arbitratioin under the rules of the British Columbia International Commercial Arbitration Centre (“Centre”) in which the Centre shall be the appointing authority in accordance with the Rules of the Centre and the place of the arbitration hearing shall be Vancouver, British Columbia.

 

Upon referral of a dispute for arbitration, the Optionor and the Optionee will endeavor to agree on the appointment of an arbitrator. The arbitrator will be a person who by a combination of education and experience is competent to adjudicate the matter in dispute and who has indicated his willingness and ability to act as arbitrator in accordance with this Article 15. If the Optionor and the Optionee are unable to agree on an arbitrator, a three member panel will be appointed consisting of one arbitrator appointed by the Optionor, one arbitrator appointed by the Optionee and two such appointees shall select a third arbitration

  

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RIGHT TO CURE DEFAULT

 

16.01 Notwithstanding any other provision of this Agreement, the Optionor shall not have the right to terminate the Option or the Secondary Option unless:

	  	  	  
	  	
(a)

	
it has first given to the Optionee written notice of default containing particulars of the default; and

	  	  	  
	  	
(b)

	
the Optionee has not, within 30 days following receipt of such notice of default, cured such default or, if such default, is caused by actions of a person who is not a party to this agreement and cannot be cured within .30 days, taken action to cure such default and is diligently pursuing such cure.

 

16.02 Should the Optionee fail to cure or pursue a cure of any default as permitted by subsection 16.01, the Optionor may thereafter terminate this Agreement by notice in writing,

 

NOTICES

 

17.01 Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by prepaid registered mail addressed to the party entitled to receive the same, or delivered 1o such party by hand, or communicated by electronic transmission, telex or telecopy, at the address for such party specified above.

 

17.02 The date of receipt of any notice, demand or other communication shall be the date of delivery thereof if delivered, the date of transmission if communicated by electronic transmission, telex or telecopy, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the third day after the same shall have been so mailed except in the case of interruption of postal services for any reason whatever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee.

 

17.03 Either party may at any time and from time to time notify the other party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.

 

GENERAL

 

18.01 This Agreement supersedes and replaces all other agreements or arrangements, whether oral or written, heretofore existing between the parties in respect of the subject matter of this Agreement.

 

18.02 No consent or waiver expressed or implied, by either party in respect of any breach or default by the other in the performance by such other of its obligations hereunder shall be deemed or construed to be consent to or a waiver of any other breach or default,

 

18.03 The parties will promptly execute or cause to be executed all documents, deeds, conveyances and other instruments of further assurance which may be reasonably necessary or advisable to carry out fully the intent of this Agreement or to record wherever appropriate the respective interests from time to tirne of the parties in the Claims.

  

13

  

 

18.04 If any term, provision, covenant or condition of this Agreement, or any application thereof, should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions of this Agreement, and all applications thereof, not held. invalid, void or unenforceable shall continue in full force and effect, and in no way “be affected, impaired or invalidated thereby.

 

18.05 The parties hereto agree to do and perform all such further and other acts and things, and to execute all such further and other instruments and documents, and to give all such further and other-assurances as may be necessary to give effect to the intent of this Agreement.

 

18.06 This Agreement shall ensure to the benefit of and be binding upon the parries and their respective successors and permitted assigns.

 

BOARD APPROVAL

 

19.01 This Agreement is subject to the approval of the Board of Directors of the Optionor and the Optionee.

 

AREA OF INTEREST

 

20.01 In the event that the during the term of the Option or Secondary Option either Party acquires any interest in any mining claims or other properties or mineral interests, the whole or any portion of which is within a three kilometer radius of the external boundaries of the Claims (“Additional Claims”), the whole of such Additional Claims shall form part of the Claims, The outside boundaries of each new Additional Claim shall constitute, new external boundaries for the Claims; If the Additional Claim, is acquired by the Optionor, the Optionee shall reimburse the Optionor for the costs of acquisition which reimbursement shall be considered Exploration Expenses and if the Additional Claim is acquired by the Optionee, the cost of such acquisition shall be considered Exploration Expenses.

 

IN WITNESS WHEREOF the Optionee and the Optionor have executed this Agreement as of the day first set forth above,

 

 

 

 

  

14

  

 

SCHEDULE “A”

 

Attached to and forming part of the Option Agreement between Almaden Minerals. Ltd. and G4GResources Inc. made the day of June, 2011.

 

	
Claim Name

	  	
Type

	  	
Title#

	  	
File #

	  	
Hectares

	  	
Initial Date

	  	
Expiry Date

	
LA SARDA

	  	
EXPLOIT,

	  	
162577

	  	
59/3743

	  	
9.000

	  	
07-Jul-78

	  	
06-Jul-28

	
SAGITARIO

	  	
EXPLOIT.

	  	
219840

	  	
3/1.3/494

	  	
96,772

	  	
22-Apr-03

	  	
21-Apr-53

	
LA GUADALUPE

	  	
EXPLOIT.

	  	
180099

	  	
321.1/3-42

	  	
18.000

	  	
23-Mar-87

	  	
22-Mar-37

	
LA CUCARACHA

	  	
EXPLOIT.

	  	
194422

	  	
3/1.3/221

	  	
84.000

	  	
30-Dec-91

	  	
29-Dec-41

	
YAGO I

	  	
exploit.

	  	
200955

	  	
3/1,3/254

	  	
465.767

	  	
17-Oct-94

	  	
16-Oct-44

	
AMPLIACI6N LASARDA

	  	
EXPLOIT.

	  	
226221

	  	
3/1.3-0380

	  	
9.000

	  	
02-Dec-OS

	  	
0l-Dec-55

	
NUEVOSAN JUAN

	  	
EXPtOIT.

	  	
218233

	  	
3/1.3/543

	  	
35.599

	  	
17-Oct-D2

	  	
16-0ct-52

	
LA NUEVA MAGNOLIA

	  	
EXPLOIT,

	  	
218232

	  	
3/1.3/542

	  	
9.000

	  	
17-Oct-D2

	  	
16-0ct-52

	
AMfMA NUEVAMAGNOLIA

	  	
EXPLOIT.

	  	
218227

	  	
3/1.3/541

	  	
16.000

	  	
17-Oct-02

	  	
16-0ct-52

	
AMP, NUEVO SAN JUAN

	  	
EXPLOIT.

	  	
218254

	  	
3/1.3/544

	  	
6.417

	  	
17-Oct-02

	  	
16-Oct-52

	
DON ALNSO

	  	
EXPLOR.

	  	
213559

	  	
59/06540

	  	
21.757

	  	
18-May-01

	  	
l7-May-51

	
TEP1C4

	  	
EXPLOR.

	  	
219437

	  	
59/6722

	  	
.14,915

	  	
06-Mar-03

	  	
05-Mar-53

	
TEPIC3FRACCCION I

	  	
EXPLOR.

	  	
220036

	  	
59/06715

	  	
34.951

	  	
27-May-03

	  	
26-May-53

	
TEPIC3.FRACCion II

	  	
EXPLOR.

	  	
220037

	  	
59/05715

	  	
27,050

	  	
27-May-03

	  	
26-May-53

	
TEP1C5

	  	
EXPLOR,

	  	
220289

	  	
59/06728

	  	
13.088

	  	
03-Jul-03

	  	
02-Jul-53

	
TEPIC7

	  	
MINING

	  	
228596

	  	
59/07001

	  	
1,869.978

	  	
12-Dec-06

	  	
11-Dec-56

	
YAGOF. l

	  	
MINING

	  	
234677

	  	
59/0753?

	  	
11,142.817

	  	
29-Jul-09

	  	
28-Jul-59

	
YAGOF. 2

	  	
MINING

	  	
234678

	  	
59/07337

	  	
842.933

	  	
29-Jul-09

	  	
28-Jul-59

	
YAGOF. 3

	  	
MINING

	  	
234679

	  	
53/07537

	  	
116.535

	  	
29-Jul-09

	  	
28-Jul-59

	
YAGO SUR

	  	
MINING

	  	
234681

	  	
59/07538

	  	
5,858.389

	  	
29-Jul-C9

	  	
28-Jul-59

	
GALLO

	  	
MINING

	  	
227010

	  	
59/H6S09

	  	
889.928

	  	
l l-Apr-06

	  	
10-Apr-56

	
AS DEORO

	  	
EXPLOR.

	  	
22028B

	  	
059/6718

	  	
75.608

	  	
03-JUI-03

	  	
02-Jul-53

	
GALLO 2 FRACCION I

	  	
MINING

	  	
227086

	  	
$9/06850

	  	
22.000

	  	
04-May-06

	  	
03-May-56

	
GALLO 2 FRACCION II

	  	
MINING

	  	
1227087

	  	
59/06850

	  	
17,454

	  	
04-May-05

	  	
03-May-56

	
GALLO 3

	  	
MINING

	  	
227139

	  	
59/06861

	  	
.23.449

	  	
17-May-06

	  	
16-May-56

	
EL GALLO DEORO

	  	
MINING

	  	
228416

	  	
3/1/610

	  	
11.326

	  	
22-NOV-06

	  	
21-Nov-56

	
GALLO 4

	  	
MINING

	  	
236662

	  	
59/07604

	  	
1,075.748

	  	
06-Aug-10

	  	
05-Aug-60

	
MINA MARIA

	  	
EXPLOR,

	  	
213537

	  	
59/6524

	  	
90.660.

	  	
18-May-01

	  	
17-May-51

 

  

15

  

 

 

SCHEDULE “B”

 

Attached to and forming part of Option Agreement between Almaden Minerals Ltd, and G4G Resources Inc. (“G4G”) made thee 17th day of June, 2011.

 

JOINT VENTURE AGREEMENT TERMS

	  	  
	
1.

	
Participating Interests

	  	  
	  	
Initial interests and initial investments will be as set forth in the Option Agreement to which this is attached.

	  	  
	
2.

	
Management Committee

	  	  
	  	
The joint venture will be under the management of a management committee consisting of one representative of each participant and at least one alternate representative. A quorum for any Management Committee meeting shall be present if the representatives of all parties are present. The representative of the Operator shall be the chairman of Management Committee meetings. The Management Committee shall decide every question submitted to it by a vote with each representative being entitled to cast that number of votes which is equal to its party’s interest percentage. The Management committee shall make decisions by simple majority.

	  	  
	
3.

	
Operator

 

	  	  	  
	  	
(a)

	
G4G will be the first operator and remain so unless its interest is reduced below 50% or it resigns or is removed for default. Upon G4G ceasing as operator, the Management Committee shall thereupon select another party to become Operator.

	  	  	  
	  	
(b)

	
The non-perator may refer a question of operator default to arbitration if it is outvoted on a management committee motion to remove, the operator for default.

	  	  	  
	  	
(c)

	
The operator must keep the property in good standing and free of encumbrances, comply with laws, and maintain proper books and accounts and adequate insurance.

	  	  	  
	  	
(d)

	
The operator must conduct joint venture activities according to approved programs and budgets, with sole responsibility for non-approved overruns exceeding 20% on exploration programs and 10% on development and. other programs, and otherwise in accordance with good mining practices.

	  	  	  
	  	
(e)

	
The operator will have the right to cash call in advance to cover anticipated approved program expenditures, including a reasonable amount of working capital.

	  	  	  
	  	
(f)

	
The operator’s charges for management will be; 10% of exploration costs, reduced to 5% on any single third parry contract exceeding $50,000; 1% of construction costs; and 2% of mine operating costs. This charge is intended as a reimbursement of the costs of the time incurred by head office management and support functions in respect of approved programs on the Claims, which is not otherwise billed as a cost. The charge has been established as an estimate of anticipated management and administrative costs and on the basis that the party acting as Operator shall not profit nor suffer loss by virtue of acting in its capacity as Operator providing these services,

 

  

16

  

 

	  	  	  
	  	
(g)

	
After commencement of commercial production the operator will have alien on the non operator’s interest to secure the non operator’s cost-share of expenditures and the right to advance the cost share of a party in default, any such advances’ to be accounted for in dilution formulae outlined in Sections 5(c) and 5(d) of this Schedule.

	  	  	  
	  	
(h)

	
Prior to a production decision, the operator will submit annual exploration programs for management committee approval, and will report on results on a quarterly basis,

	  	  	  
	  	
(i)

	
Unless a feasibility study was delivered prior to the formation of the joint venture, the Management Committee may approve a program which contemplates the preparation of a feasibility report at such time, if any, as it deems fit.

	  	  	  
	  	
(j)

	
A development program will be prepared by operator based on a feasibility study approved by the Management Committee.

	  	  	  
	  	
(k)

	
Each party must finance its own cost share of development costs, with the right to pledge its interest for such purpose.

	  	  	  
	  	
(j)

	
After commencement of commercial production, operator will submit annual operating programs for management committee approval.

 

	  	  	  
	
4

	
Participation in Programs and Dilution

	  	  	  
	  	
(a)

	
Parties will have an election as to whether to participate in any approved exploration program or approved development program up to the amount of its interest at such time.

	  	  	  
	  	
(b)

	
Electing to participate in an approved program will make a participant liable for its agreed cost share of all expenditures for that program.

	  	  	  
	  	
(c)

	
Electing not to participate in an approved program will result in dilution of interest, i.e. each party’s interest will be calculated as follows:

	  	  	  
	  	  	

	  	  	
(Where:

	  	  	  
	  	  	
A = the interest of the party being diluted prior to the start of the Relevant Program as defined below;

	  	  	  
	  	  	
B = the sum of all deemed and prior contributions of all parties prior to the start of the Relevant Program;

	  	  	  
	  	  	
Y = the actual contributions (if any) of the diluting party to the Relevant Program; and

	  	  	  
	  	  	
C = the total amount actually contributed by all parties to the Relevant Program; and

	  	  	  
	  	  	
“Relevant Program” means a program to which the diluting party elected not to contribute and the Program is subsequently funded by the other party increasing its contribution by the amount of the shortfall.)

	  	  	  
	  	  	
and the contributing party’s interest will be correspondingly increased.

  

17

  

	  	  	  
	  	
(d)

	
Notwithstanding (c) above, in the case of a development program which involves construction of mining facilities and bringing a mine to commercial production based on a feasibility study, a party electing to participate in such program in an amount less than its interest at the time (including not to participate at all) will result in dilution of such party’s interest to that percentage of budgeted expenditures which it has agreed to contribute, subject to (f) below.

	  	  	  
	  	
(e)

	
Until commencement of commercial production, a participant’s failure to pay its cost share of an approved program, after electing to participate will constitute default and result in double dilution of interest, i.e, the defaulting party’s interest will be:

	  	  	  
	  	  	

	  	  	  
	  	  	
(A, B, Y and C having the meanings given above.)

	  	  	  
	  	  	
and the-non-defaulting party’s interest will be correspondingly increased,

	  	  	  
	  	  	
After commencement of commercial production, a participant’s failure to pay its cost share of an. approved program after electing to participate will constitute default and result in dilution of interest, such that the defaulting party’s interest will be:

	  	  	  
	  	  	

	  	  	  
	  	  	
(A, B, Y and G having the meanings given above.)

	  	  	  
	  	  	
and the non-defaulting party’s interest will be correspondingly increased.

	  	  	  
	  	
(f)

	
Dilution to 10% will effect a deemed surrender of an interest in the joint venture, and conversion of such interest to a 2.0% net smelter royalty, which will be. in a form to he agreed by the parties.

	  	  	  
	  	
(g)

	
There will be no election, as to participation in an approved operating program.

	  	  	  
	
5.

	
Disposition of Production

	  	  
	  	
(a)

	
Each participant shall have the right to take its share of production in kind.

	  	  	  
	  	
(b)

	
The operator will be free to sell the share of production of any participant who fails to take its share in kind or make arrangements for sale, deducting its costs and expenses from the proceeds.

	  	  	  
	
6.

	
Transfers of Interests

	  	  
	  	
(a)

	
Any transfer of interest in the property and the joint venture agreement will be subject to a right of first offer of tie other participant substantially in the form set forth in the Option Agreement under the heading “Right of First Offer” Such a transfer cannot be made without the consent of the other party, which consent cannot be unreasonably withheld, and is subject to the transferee agreeing to be bound by the terms of the Joint Venture Agreement,

  

18

  

 

	  	  	  
	  	
(b)

	
No encumbrances of any interest will be permitted except for financing of development and then subject to the joint venture agreement.

	  	  	  
	
7.

	
Withdrawal and Winding Up

	  	  
	  	
No withdrawal by a party or winding up of the joint venture will be permitted without adequate payment of or security for reclamation and closure costs.

	  	  
	
8.

	
Dispute Resolution

	  	  
	  	
Arbitration administered by the British Columbia International Commercial Arbitration Centre.

	  	  
	
9.

	
Other

	  	  
	  	
(a)

	
Area of interest on the same terms as the Option Agreement

	  	  	  
	  	
(b)

	
Force majeure

	  	  	  
	  	
(c)

	
Confidentiality

	  	  	  
	  	
(d)

	
Subject to British Columbia law.

	  	  	  
	
10.

	
In the case of any conflicts in the terms of this Joint Venture Agreement and the Option Agreement to which it is appended, the terms of the Option Agreement shall prevail.

  

19

  

 

SCHEDULE “C”

Attached, to and forming part of opeiont Agreement between Almaden Minerals Ltd. and G4G Resources Inc. made the day of June, 2011, Mexican Claim Purchase agreement with Minera Fumarola, S.A. de C.V. (“Fumarola”) and English translation in which a royalty on an approximately 103.9 hectare area is retained by Minera Fumarola S.A. de C.V. The terms of this 2% NSR royalty are that the royalty is payable until a total of US$250,000 has been paid to Fumarola after which time the royalty is terminated.

  

20MD - Filed by Filing Services Canada Inc. (403) 717-3898

TRANSFER AGREEMENT

 

This transfer agreement (the “Agreement”) is made as of the 23rd day of September, 2011 (the “Effective Date”).

 

BETWEEN:

	  	  
	  	
MINERA GAVILAN S.A. DE C.V., a body corporate incorporated under the laws of Mexico, having an address at Suite 1103, 750 West Pender Street, Vancouver, B.C. V6C 2T8

	  	  
	  	
(hereinafter called “Minera Gavilan”)

	  	  
	  	
OF THE FIRST PART

	  	  
	
AND:

	  
	  	  
	  	
CANDYMIN S.A. DE C.V., a body corporate incorporated under the laws of Mexico, having an address at Ave. De Anza #701, Col. Pitic, Hermosillo, Sonora, Mexico, C.P. 83150

	  	  
	  	
(hereinafter called “Candymin”)

	  	  
	  	
OF THE SECOND PART

	  	  
	
AND:

	  
	  	  
	  	
GOLDGROUP MINING INC., a body corporate continued under the laws of British Columbia, having an address at Suite 2184, 1055 Dunsmuir Street, Vancouver, B.C. V7X 1L3

	  	  
	  	
(hereinafter called “Goldgroup”)

	  	  
	  	
OF THE THIRD PART

 

WHEREAS:

 

A. Pursuant to an exploration and promise of assignment agreement made as of May 31, 2007 between Minera Gavilan and Minera Cardel S.A. de C.V. (“Minera Cardel”), as amended (the “Caballo Option Agreement”), Minera Gavilan granted an option (the “Caballo Option”) to Minera Cardel to acquire a seventy percent (70%) interest in the Caballo Blanco Project (as defined in the Caballo Option Agreement) and the Caballo Blanco property being as more particularly described on the map attached as Schedule “A” to this Agreement (the “Caballo Blanco Property”);

 

B. Pursuant to a share purchase agreement made as of November 23, 2009 (the “NGEX Agreement”), Goldgroup Resources Inc., an affiliate of Goldgroup, acquired the Topco Shares (as defined in the NGEX Agreement) and thereby indirectly acquired the Caballo Option;

  

2

  

 

C. Pursuant to an assignment of rights agreement made as of July 29, 2010 between Minera Cardel and Candymin (the “Assignment Agreement”), Minera Cardel assigned to Candymin all of the rights of Minera Cardel in the Caballo Option Agreement and the Caballo Option;

 

D. Pursuant to a Memorandum of Agreement dated February 5, 2010, Goldgroup Holdings Corp. (formerly Goldgroup Resources Inc.) (“Goldgroup Holdings”) advanced $200,000 to Almaden Minerals Ltd. (“Almaden”) and was granted a 40% interest in the El Cobre property (the “El Cobre Interest”) more particularly described on the map attached as Schedule “B” to this Agreement (the “El Cobre Property”). Goldgroup Holdings has agreed to transfer the El Cobre Interest to Candymin prior to the Closing Date; and

 

E. Minera Gavilan has agreed to transfer all its interest in the Caballo Blanco Property and Candymin has agreed to transfer, release and quit claim the El Cobre Interest.

 

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants, conditions and premises herein contained and for other good and valuable consideration (the receipt and sufficiency whereof being hereby acknowledged) it is agreed as follows:

 

1. DEFINITIONS AND CROSS-REFERENCES

 

1.1 Definitions. The terms defined in Schedule “C” and elsewhere in this Agreement shall have the defined meaning wherever used in this Agreement, including in the Schedules.

 

1.2 Cross-References. References to “Schedules”, “Exhibits,” “Articles”, “Sections” and “Subsections” refer to Schedules, Exhibits, Articles, Sections and Subsections of this Agreement. References to “Paragraphs” and “Subparagraphs” refer to paragraphs and subparagraphs of the referenced Schedules.

 

2. REPRESENTATIONS AND WARRANTIES

 

2.1 Representations and Warranties of Goldgroup and Candymin. Goldgroup and Candymin are providing the representations and warranties attached in Schedule “D” to this Agreement and acknowledge that Minera Gavilan is relying on such representations and warranties to enter into this Agreement.

 

2.2 Representations and Warranties of Minera Gavilan. Minera Gavilan is providing the representations and warranties attached in Schedule “E” to this Agreement and acknowledges that Goldgroup and Candymin are relying on such representations and warranties to enter into this Agreement.

 

3. TRANSFER OF INTERESTS IN THE CABALLO BLANCO AND EL COBRE PROPERTIES AND PROJECTS

 

3.1 In consideration of the covenants and agreements set forth herein, on the basis of the warranties, representations and covenants of Minera Gavilan in this Agreement and subject to the fulfillment of any condition that has not been waived by the Party entitled to the benefit thereof, Candymin will purchase from the Minera Gavilan and Minera Gavilan will transfer to Candymin all of its right, title and interest in and to the Caballo Blanco Property and any and all rights in and under the Caballo Option Agreement at the Time of Closing (as defined in Section 4.5) free and clear of all Encumbrances, save and except for the Existing Encumbrances, and on the terms and conditions herein set forth.

  

3

  

 

3.2 (a) Subject to the acceptance for filing by the Toronto Stock Exchange (the “Exchange”) of this Agreement including the authorization of the allotment and issue of the common shares of the capital of Goldgroup as provided herein and subject to the terms and conditions of this Agreement, Candymin shall purchase the right, title and interest in and to the Caballo Blanco Property and any and all rights in and under the Caballo Option Agreement from Minera Gavilan by:

 

	  	
(i)

	
payment to Minera Gavilan in the amount of $2,500,000;

	  	  	  
	  	
(ii)

	
entering into the Royalty Agreement; and

	  	  	  
	  	
(iii)

	
providing an instrument of transfer, in a form satisfactory to Minera Gavilan, whereby Candymin transfers, releases and quit claims the El Cobre Interest to Minera Gavilan;

	  	
(b)

	
Forthwith upon Commercial Production, Candymin shall transfer to Minera Gavilan, 1,000,000 common shares of Goldgroup as fully paid and non-assessable shares, free and clear of any and all encumbrances and restrictions save and except for,

	  	
(i)

	
a period of four months and a day imposed under Canadian securities laws and regulation and the policies of the Exchange (the “Hold Period”); and

	  	  	  
	  	
(ii)

	
500,000 of such common shares of Goldgroup shall bear a legend stating that such shares shall not be traded for a period of 6 months after the expiry of the Hold Period;

	  	
(c)

	
Forthwith upon Commercial Production and measured and indicated resources reaching 2,000,000 Ounces, Candymin shall transfer to Minera Gavilan an additional 2,000,000 common shares of Goldgroup as fully paid and non-assessable shares, free and clear of any and all encumbrances and restrictions save and except for a period of four months and a day imposed under Canadian securities laws and regulation and the policies of the Exchange;

	  	  	  
	  	
(d)

	
Forthwith upon Commercial Production and measured, indicated and inferred resources reaching 5,000,000 Ounces, Candymin shall transfer to Minera Gavilan, an additional 2,000,000 common shares of Goldgroup as fully paid and non-assessable shares, free and clear of any and all encumbrances and restrictions save and except for a period of four months and a day imposed under Canadian securities laws and regulation and the policies of the Exchange; and

	  	  	  
	  	
(e)

	
Forthwith upon Commercial Production and measured, indicated and inferred resources reaching 10,000,000 Ounces, Candymin shall transfer to Minera Gavilan, an additional 2,000,000 common shares of Goldgroup as fully paid and non-assessable shares, free and clear of any and all encumbrances and restrictions save and except for a period of four months and a day imposed under Canadian securities laws and regulation and the policies of the Exchange (the common shares of Goldgroup to be transferred to Minera Gavilan pursuant to this Section 3.2 are collectively referred to as the “Production Shares”).

  

4

  

 

3.3 Pursuant to the terms of this Agreement and when the obligation arises under Section 3.2, Goldgroup Holdings shall acquire the Production Shares from Goldgroup in exchange for common shares of Goldgroup Holding and Candymin shall acquire the Production Shares from Goldgroup Holding in exchange for common shares of Candymin.

 

3.4 The Parties agree that the VAT (IVA) will be added to the payment amount, which may be covered in its local currency equivalent at the exchange rate to settle liabilities denominated in foreign currency payable in Mexico, published by the Bank of Mexico in the Official Journal of the Federation for the day prior the date on which payment is made.

 

4. CLOSING ARRANGEMENTS

 

4.1 Conditions in Favour of Goldgroup and Candymin. The obligation of Candymin to purchase Minera Gavilan’s right, title and interest in and to the Caballo Blanco Property and any and all rights in and under the Caballo Option Agreement on the Closing Date is subject to satisfaction or waiver by Goldgroup and/or Candymin of the following terms and conditions for the exclusive benefit of Goldgroup and Candymin:

 

	  	
(a)

	
the representations and warranties of Minera Gavilan contained in Schedule “E” of this Agreement will be true and correct in all material respects on the Closing Date with the same force and effect as if such representations and warranties were made at and as of such time;

	  	  	  
	  	
(b)

	
all of the terms, covenants and conditions of this Agreement to be complied with or performed by Minera Gavilan on or before the Closing Date will have been complied with or performed in all material respects, or such compliance or performance will have been waived by Goldgroup and/or Candymin; and

	  	  	  
	  	
(c)

	
receipt by Candymin of a favourable opinion of Minera Gavilan’s Mexican counsel dated as of the Closing Date, in a form acceptable to Candymin and its counsel, acting reasonably, as to all legal matters reasonably requested by Goldgroup and Candymin relating to title to the mining claims, mining leases, concessions, permits and licences of occupation relating to the Caballo Blanco Property.

 

If any of the conditions contained in this Section 4.1 will not be performed or fulfilled on or before the Closing Date to the satisfaction of Goldgroup and/or Candymin, acting reasonably, Goldgroup and/or Candymin may, by notice to Minera Gavilan, terminate this Agreement and thereupon the obligations of the Parties under this Agreement, other than the obligations contained in Section 5.2 will terminate.

  

5

  

 

4.2 Conditions in Favour of Minera Gavilan. The obligation of Minera Gavilan to sell its right, title and interest in and to the Caballo Blanco Property and any and all rights in and under the Caballo Option Agreement on the Closing Date is subject to the satisfaction or waiver by Minera Gavilan of the following terms and conditions for the exclusive benefit of Minera Gavilan:

 

	  	
(a)

	
the representations and warranties of Goldgroup and Candymin contained in Schedule “D” of this Agreement will be true and correct in all material respects on the Closing Date with the same force and effect as if such representations and warranties were made at and as of such time; and

	  	  	  
	  	
(b)

	
all of the terms, covenants and conditions of this Agreement to be complied with or performed by Goldgroup and Candymin on or before the Closing Date will have been complied with or performed in all material respects, or such compliance or performance will have been waived by Minera Gavilan;

 

If any of the conditions contained in this Section 4.2 will not be performed or fulfilled on or before the Closing Date to the satisfaction of Minera Gavilan acting reasonably, Minera Gavilan may terminate this Agreement and thereupon the obligations of the Parties under this Agreement, other than the obligations contained in Section 5.2 will terminate.

 

4.3 Closing Date. At the Time of Closing:

 

	  	
(a)

	
Minera Gavilan shall deliver or cause to be delivered to Goldgroup and Candymin:

	  	  	
(i)

	
a certificate of a senior officer of Minera Gavilan dated as of the Closing Date certifying that the representations and warranties of Minera Gavilan contained in Schedule “E” of this Agreement are true and correct in all material respects as of the date made and as of the Closing Date and that all covenants contained in the Agreement have been performed;

	  	  	  	  
	  	  	
(ii)

	
an instrument of transfer and a quit claim deed, transferring and quit-claiming Minera Gavilan’s interest in the Caballo Option Agreement to Candymin, duly executed by Minera Gavilan;

	  	  	  	  
	  	  	
(iii)

	
the Royalty Agreement, duly executed by Minera Gavilan; and

	  	  	  	  
	  	  	
(iv)

	
the Irrevocable Proxy, duly executed by Minera Gavilan.

	  	  	  	  
	  	
(b)

	
Goldgroup and/or Candymin shall deliver or cause to be delivered to Minera Gavilan:

	  	  	  	  
	  	  	
(i)

	
certificates of a senior officer of each of Goldgroup and Candymin dated as of the Closing Date certifying that the representations and warranties of Goldgroup and Candymin contained in Schedule “D” of this Agreement are true and correct in all material respects as of the date made and as of the Closing Date and that all covenants contained in the Agreement have been performed;

  

6

  

	  	  	
(ii)

	
the sum of $2,500,000;

	  	  	  	  
	  	  	
(iii)

	
the Royalty Agreement, duly executed by Candymin; and

	  	  	  	  
	  	  	
(iv)

	
an instrument of transfer and a quit claim deed, transferring and quit-claiming the El Cobre Interest to Minera Gavilan, duly executed by Candymin.

 

4.4 Transfer of Title. As soon as reasonably practicable after the Time of Closing, Minera Gavilan shall cause to be transferred to Candymin title to the Caballo Blanco Property and shall deliver or cause to be delivered to Candymin all such related documents and forms required by Candymin’s Mexican counsel, acting reasonably (collectively the “Title”) and, until such Title is so transferred and registered, Minera Gavilan shall:

 

	  	  	
(i)

	
maintain its corporate existence;

	  	  	  	  
	  	  	
(ii)

	
use its best efforts to cause such Title to be effectively transferred to Candymin as soon as reasonably practicable and in a manner satisfactory to Goldgroup and Candymin, acting reasonably, and Minera Gavilan acknowledges that Goldgroup and Candymin shall be permitted to take all such actions as they deem necessary or desirable to effect such transfer;

	  	  	  	  
	  	  	
(iii)

	
maintain the Caballo Blanco Property and title thereto and hold the Caballo Blanco Property in trust for Candymin;

	  	  	  	  
	  	  	
(iv)

	
comply with all obligations, contractual or otherwise, relating to the Caballo Blanco Property as agent for Candymin, at Candymin’s cost and for Candymin’s benefit;

	  	  	  	  
	  	  	
(v)

	
co-operate with Candymin in any reasonable and lawful arrangements requested by Candymin designed to provide the benefits of the Caballo Blanco Property to Candymin;

	  	  	  	  
	  	  	
(vi)

	
enforce, at the request of Candymin, any rights of Minera Gavilan related to or arising from the Caballo Blanco Property against any third Person, including the right to elect to terminate any such rights in accordance with the terms of such rights upon the written direction of Candymin; and

	  	  	  	  
	  	  	
(vii)

	
in order that the full value of the Caballo Blanco Property may be realized for the benefit of Candymin, Minera Gavilan shall, at the request and expense and under the direction of Candymin, in the name of Minera Gavilan or otherwise as Candymin may specify, take all such action and do or cause to be done all such things as are, in the opinion of Candymin, necessary or proper in order that the obligations of Minera Gavilan in connection with the Caballo Blanco Property may be performed in such manner that the value of the Caballo Blanco Property is preserved and enures to the benefit of Candymin.

  

7

  

 

4.5 Closing. The closing shall take place at 10:00 a.m. (Vancouver time) (the “Time of Closing”) on the Closing Date at the offices of Blake, Cassels and Graydon LLP in Vancouver, British Columbia, or at such other time on the Closing Date or such other place as may be agreed to by the Parties.

 

5. REPORTING RIGHT OF INSPECTION AND CONFIDENTIALITY

 

5.1 Subject to Section 5.2, Candymin shall maintain records of production from the Caballo Blanco Property and Minera Gavilan shall have the right to go upon the Caballo Blanco Property at its own risk and expense and to have an independent audit of all, records and accounts maintained by Candymin with respect to operations on the Caballo Blanco Property with all costs borne by Minera Gavilan. Any inspection of the Caballo Blanco Property and any audit conducted shall be made during Candymin’s normal business hours.

 

5.2 Confidentiality.

 

	  	
(a)

	
Minera Gavilan shall treat confidentially and not disclose, and shall cause each of its Representatives to treat confidentially and not disclose, other than as expressly contemplated by this Agreement, any Confidential Information of Candymin or Goldgroup, save and except such information as may be required to be disclosed under any applicable law, including applicable securities laws and the requirement of any applicable stock exchange, or by order of any applicable court.

	  	  	  
	  	
(b)

	
Minera Gavilan may disclose Confidential Information only to those Representatives who need to know such Confidential Information for the purpose of monitoring the Commercial Production in regards to the Royalty Agreement and Production Shares contemplated by this Transfer Agreement. Minera Gavilan shall not use, nor permit its Representatives to use, Confidential Information for any other purpose nor in any way that is, directly or indirectly, detrimental to Candymin or Goldgroup.

 

6. INTERIM COVENANTS

 

6.1 Action During Interim Period. During the Interim Period:

 

	  	
(a)

	
Minera Gavilan shall not, enter into any transaction or perform any act which is inconsistent with the successful completion of the acquisition of the Caballo Blanco Property and the rights in and under the Caballo Option Agreement by Candymin pursuant to this Agreement;

	  	  	  
	  	
(b)

	
Candymin and Goldgroup shall not, enter into any transaction or perform any act which is inconsistent with the successful completion of the transfer and quit claim of the El Cobre Interest; and

  

8

  

	  	
(c)

	
Minera Gavilan, Goldgroup and Candymin shall not take any action that would cause any of the representations and warranties in Schedule “D” and “E”, respectively, to become untrue on the Closing Date.

 

6.2 The Parties will take all such actions to obtain all material third party and governmental consents and approvals required to transfer the Caballo Blanco Property and the El Cobre Interest on the Closing Date.

 

7. COVENANT TO VOTE SHARES

 

7.1 Voting. For so long as Minera Gavilan or any of its affiliates are shareholders of Goldgroup, Minera Gavilan covenants and agrees that at every meeting of the shareholders of Goldgroup with respect to any matter brought before the shareholders of Goldgroup for their consideration and approval, and at every adjournment or postponement thereof, and on every action or approval by written consent of the shareholders of Goldgroup with respect to any matter brought to the shareholders of Goldgroup for their consideration and approval, Minera Gavilan and any of its affiliates shall vote all shares of Goldgroup (to the extent such shares have voting rights) or shall sign a written consent in lieu of a meeting, in accordance with the recommendation of the board of directors of Goldgroup.

 

7.2 Minera Gavilan or any of its affiliates shall not enter into any agreement or understanding with any person to vote or otherwise give instructions in any manner inconsistent with this Section 7.

 

7.3 Irrevocable Proxy. Minera Gavilan covenants and agrees to deliver to Goldgroup an irrevocable proxy, in a form satisfactory to Goldgroup, (the “Irrevocable Proxy”) addressing the matters in Section 7.1 hereof, which shall be irrevocable to the fullest extent permitted by applicable law, covering the total number of shares of Goldgroup, owned or controlled, indirectly or directly, by Minera Gavilan or its affiliates.

 

7.4 Additional Documents. Minera Gavilan covenants and agrees to execute and deliver any additional documents reasonably necessary or desirable to carry out the purpose and intent of this Section 7.

 

8. INDEMNIFICATION

 

8.1 All provisions of this Agreement and of any other agreement, certificate or instrument delivered pursuant to this Agreement shall not merge on the Closing Date but shall survive the execution, delivery and performance of this Agreement, the Closing Date and the execution and delivery of any transfer documents or other documents of title to the Caballo Blanco Property and the El Cobre Property and all other agreements, certificates and instruments delivered pursuant to this Agreement and the payment of the consideration for the Caballo Blanco Property and the rights in and under the Caballo Blanco Agreement.

 

8.2 Minera Gavilan shall indemnify Goldgroup and Candymin and their respective Indemnified Parties and save them fully harmless against, and will reimburse them on an after tax basis for, any Losses arising from, in connection with or related in any manner whatsoever to:

  

9

  

	  	
(a)

	
any incorrectness in or breach of any representation or warranty of Minera Gavilan contained in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement;

	  	  	  
	  	
(b)

	
any breach or any non-fulfillment of any covenant or agreement on the part of Minera Gavilan contained in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement; and

	  	  	  
	  	
(c)

	
any taxes required to be paid by Minera Gavilan in connection with the Caballo Blanco Property, relating or attributable to any period ending on or before the commencement of the Option Period (as defined in the Caballo Option Agreement).

 

8.3 Goldgroup and Candymin shall indemnify Minera Gavilan and its Indemnified Parties and save them fully harmless against, and will reimburse them on an after tax basis for, any Losses arising from, in connection with or related in any manner whatsoever to:

 

	  	
(a)

	
any incorrectness in or breach of any representation or warranty of Candymin or Goldgroup contained in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement; and

	  	  	  
	  	
(b)

	
any breach or any non-fulfillment of any covenant or agreement on the part of Candymin or Goldgroup contained in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement.

 

9. BORDER COOPERATION

 

9.1 Should any Party purchase or otherwise acquire surface rights that extend into the Caballo Blanco Property or the El Cobre Property of the other Party, as the case may be, (the “Extended Rights”) the acquiring party shall offer such Extended Rights to the other Party who may purchase such Extended Rights for such portion of the acquisition costs, plus any and all costs associated with such transfer, as the extended rights bear to the total surface rights acquired by the offering party.

 

10. TERMINATION

 

10.1 This Agreement may be terminated at any time:

 

	  	
(a)

	
by the written agreement of the Parties;

	  	  	  
	  	
(b)

	
by any Party by written notice to the other at any time if there is instituted by or against the other Party proceedings in the nature of bankruptcy or under insolvency laws or for receivership or dissolution and the other Party does not in good faith contest such proceedings or the other Party makes an assignment for the benefit of its creditors or a receiver or receiver-manager is appointed or the other Party is adjudged bankrupt;

	  	  	  
	  	
(c)

	
by Goldgroup and/or Candymin as contemplated in Section 4.1; and

  

10

  

	  	
(d)

	
by Minera Gavilan as contemplated in Section 4.2.

 

11. GENERAL PROVISIONS

 

11.1 Notices. All notices, payments and other required or permitted communications (“Notices”) to any Party shall be in writing, and shall be addressed respectively as follows:

 

	 	
If to Minera Gavilan:

	 	  
	 	
Minera Gavilan S.A. de C.V.

	 	
Suite 1103, 750 West Pender Street

	 	
Vancouver, B.C. V6C 2T8

	 	
Attention:

	
Morgan Poliquin

	 	
Telephone:

	
604-689-7644

	 	
Facsimile:

	
604-689-7645

 

	 	
If to Candymin:

	 	  
	 	
Candymin S.A. de C.V.

	 	
c/o Goldgroup Mining Inc.

	 	
Suite 2184, 1055 Dunsmuir Street

	 	
Vancouver, B.C. V7X 1L3

	 	
Attention:

	
President

	 	
Telephone:

	
604.682.1943

	 	
Facsimile:

	
604.682.5596

	 	
Email:

	
jsutherland@goldgroupmining.com

 

	 	
If to Goldgroup:

	 	  
	 	
Goldgroup Mining Inc.

	 	
Suite 2184, 1055 Dunsmuir Street

	 	
Vancouver, B.C. V7X 1L3

	 	
Attention:

	
CFO

	 	
Telephone:

	
604.682.1943

	 	
Facsimile:

	
604.682.5596

	 	
Email:

	
jsutherland@goldgroupmining.com

 

	 	
With a copy to:

	 	  
	 	
Blake, Cassels & Graydon LLP

	 	
Suite 2600 – 595 Burrard Street

	 	
Vancouver, B.C. V7X 1L3

	 	
Attention:

	
Steve McKoen

	 	
Telephone:

	
604.631.3300

	 	
Facsimile:

	
604.631.3309

	 	
Email:

	
steve.mckoen@blakes.com

 

All Notices shall be given (a) by personal delivery to the Party, (b) by electronic communication, capable of producing a printed transmission, (c) by registered or certified mail return receipt requested; or (d) by overnight or other express courier service. All Notices shall be effective and shall be deemed given on the date of receipt at the principal address if received during normal business hours, and, if not received during normal business hours, on the next business day following receipt, or if by electronic communication, on the date of such communication. Any Party may change its address by Notice to the other Parties.

  

11

  

 

11.2 Gender. The singular shall include the plural, and the plural the singular wherever the context so requires, and the masculine, the feminine, and the neuter genders shall be mutually inclusive.

 

11.3 Currency. All references to “dollars” or “$” herein shall mean lawful currency of the United States of America.

 

11.4 Headings. The subject headings of the Sections and Subsections of this Agreement and the Paragraphs and Subparagraphs of the Schedules to this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions.

 

11.5 Waiver. The failure of any 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 such Party’s right thereafter to enforce any provision or exercise any right.

 

11.6 Modification. No modification of this Agreement shall be valid unless made in writing and duly executed by all Parties.

 

11.7 Force Majeure. Except for the obligation to make payments as provided in Section 3.1 (a), the obligations of Candymin shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseeable or unforeseeable, beyond its reasonable control, including, without limitation, labour disputes (however arising and whether or not employee demands are reasonable or within the power of the Party to grant); acts of God; Laws, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorization; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of Environmental Laws; action or inaction by any federal, state or local agency that delays or prevents the issuance or granting of any approval or authorization required to conduct Operations beyond the reasonable expectations of the party seeking the approval or authorization; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riot, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse weather condition; delay or failure by suppliers or transporters of materials, parts, supplies, services or equipment or by contractors’ or subcontractors’ shortage of, or inability to obtain, labour, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; actions by native rights groups, environmental groups, or other similar special interest groups; or any other cause whether similar or dissimilar to the foregoing. Candymin shall promptly give notice to Minera Gavilan of the suspension of performance, stating therein the nature of the suspension, the reasons therefor, and the expected duration thereof. Candymin shall resume performance as soon as reasonably possible.

  

12

  

 

11.8 Rule Against Perpetuities. The Parties do not intend that there shall be any violation of any applicable rule against perpetuities or any applicable rule against unreasonable restraints on the alienation of property. Accordingly, if any right or option to acquire any interest in the Properties, in a participating interest, in the assets, or in any real property exists under this Agreement, such right or option must be exercised, if at all, so as to vest such interest within time periods permitted by any such rules. If, however, any such violation should inadvertently occur, the Parties hereby agree that the provision for such right or option may be varied in such a way as to approximate most closely the intent of the Parties within the limits permissible under such rules.

 

11.9 Further Assurances. Each Party shall take, from time to time and without additional consideration, such further actions and execute such additional instruments as may be reasonably necessary or convenient to implement and carry out the intent and purpose of this Agreement.

 

11.10 Entire Agreement. Subject to the terms of the Royalty Agreement and the Retained Interest Agreement, this Agreement contains the entire understanding of the Parties and supersedes all prior agreements and understandings among the Parties relating to the subject matter hereof.

 

11.11 Enurement. This Agreement shall be binding upon and enure to the benefit of the Parties and their respective successors and permitted assigns.

 

11.12 Words of Limitation. The word “including” is not limiting whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto.

 

11.13 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.

 

11.14 Governing Law. This Agreement shall be governed by and construed, interpreted and enforced in accordance with the Laws of Mexico. Each Party irrevocably and unconditionally agrees that any and all disputes shall be referred to and finally resolved by arbitration under the rules of the British Columbia International Commercial Arbitration Centre.

  

13

  

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

 

MINERA GAVILAN S.A. DE C.V.

 

	
By

	
/s/Duane Poliquin

	  
	  	
Authorized Signatory

	  

 

CANDYMIN S.A. DE C.V.

 

	
By

	
/s/John Sutherland

	  
	  	
Authorized Signatory

	  

 

GOLDGROUP MINING INC.

 

	
By

	
/s/Keith Piggott

	  
	  	
Authorized Signatory

	  

  

 

  

 

Schedule “A”

Map Description of the Caballo Blanco Property

  

  

  

 

Schedule “B”

Map Description of the El Cobre Property

  

  

  

 

Schedule “C”

Definitions

 

“Agreement” shall mean this transfer agreement and all Schedules and Exhibits including all amendments, all of which are incorporated by this reference.

 

“Applicable Law” means, with respect to any Person, property, transaction, event or other matter, (i) any foreign or domestic constitution, treaty, law, statute, regulation, code, ordinance, principle of common law or equity, rule, municipal by-law, Order or other requirement (including a requirement arising at common law) having the force of law, and (ii) any policy, practice, protocol, standard or guideline of any Governmental Authority which, although not necessarily having the force of law, is regarded by such Governmental Authority as requiring compliance as if it had the force of law (collectively, the “Law”) relating or applicable to such Person, property, transaction, event or other matter and also includes, where appropriate, any interpretation of the Law (or any part thereof) by any Person having jurisdiction over it, or charged with its administration or interpretation.

 

“CIM Definition Standard” shall mean those definitions adopted from time to time by the Canadian Institute of Mining, Metallurgy and Petroleum Council.

 

“Closing Date” shall mean the date that is 10 business days after the Parties receive acceptance for filing by the Exchange of this Agreement including the authorization of the allotment and issue of the common shares of Goldgroup as provided in Section 3 of this Agreement.

 

“Commercial Production” shall be occur upon the date upon which ore from the Caballo Blanco Property is being consistently heap leached on a continuous basis, and for at least 30 consecutive Business Days, at 75% of the rate projected in the final feasibility study, if any, or 180 days after the date on which ore from the Caballo Blanco Property is first mined not including bulk sampling, whichever shall first occur, but in any event the Royalty shall be payable on the sale of all production.

 

“Confidential Information” shall mean:

 

	  	
(a)

	
all information, in whatever form communicated or maintained, that Candymin or Goldgroup discloses to, or that is gathered by inspection by Minera Gavilan or any of Minera Gavilan’s Representatives in the course of Minera Gavilan’s review of the transactions contemplated by this Agreement, whether provided before or after the date of this Agreement, that contains or otherwise reflects information concerning Goldgroup, Candymin or its businesses, affairs, financial condition, assets, liabilities, operations, prospects or activities;

	  	  	  
	  	
(b)

	
all plans, proposals, reports, analyses, notes, studies, forecasts, compilations or other information, in any form, that are based on, contain or reflect any Confidential Information regardless of the identity of the Person preparing the same; and

  

- 2 -  

  

	  	
(c)

	
any matter relating to this Agreement or its terms;

	  	  	  
	
but does not include any information that:

	  
	  	
(d)

	
is at the time of disclosure to Minera Gavilan or thereafter becomes generally available to the public, other than as a result of a disclosure by Minera Gavilan or any of the Minera Gavilan’s Representatives in breach of this Agreement;

	  	  	  
	  	
(e)

	
is or was received by Minera Gavilan on a non-confidential basis from a source other than Goldgroup or Candymin or their Representatives if such source is not known to Minera Gavilan to be prohibited from disclosing the information to Minera Gavilan by a contractual, fiduciary or other legal confidentiality obligation in respect of such information; or

	  	  	  
	  	
(f)

	
was known by Minera Gavilan prior to disclosure in connection with the transactions contemplated by this Agreement and was not subject to any contractual, fiduciary or other legal confidentiality obligation on the part of Minera Gavilan.

 

“Encumbrances” has the meaning given to that term in the Caballo Option Agreement.

 

“Environmental Law” means all Applicable Law in respect of the natural environment, public or occupational health or safety, and those pertaining to reporting, licensing, permitting, investigation, remediation and clean up in connection with any presence, release, discharge, escape or disposal of contaminants (being any substance or material that is prohibited, controlled or regulated pursuant to any applicable Environmental Law) or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of contaminants.

 

“Existing Encumbrances” has the meaning given to that term in the Caballo Option Agreement and includes the net smelter return royalties payable to NGEx Resources Inc. and Yolanda Alvarez Gudini.

 

“Governmental Authority” means any national, federal, provincial, state, regional, municipal, local or county government or authority or political subdivision thereof, including any ministry, governmental department, commission, board, bureau, agency, regulatory authority, instrumentality, judicial or administrative body (including, for greater certainty, the Instituto Nacional de Antropología e Historia) having jurisdiction over the matter or matters in question.

 

“Hazardous Substance” means any hazardous substance or pollutant, contaminant, toxic or dangerous waste, substance or material, as defined or regulated by any Environmental Law or other Applicable Law.

  

- 3 -  

  

 

 “Indemnified Parties” means the respective directors, officers, employees, partners, agents and shareholders of the Party that is to be indemnified under Article 8 of this Agreement.

 

“Interim Period” means the period of time between the Effective Date and the Closing Date.

 

“Losses” means actual losses, liabilities, damages, injuries, costs or expenses.

 

“Mineral Resource” shall be determined in accordance with the CIM Definition Standards.

 

“Ounces” shall mean ounces of gold produced from the Cabello Blanco Property and shall include ounces of gold determined as being a Mineral Resources.

 

“Option Agreement” means the option agreement dated May 31, 2007 between Almaden, Minera Gavilan, Canadian Gold Hunter Corp. (now NGEx Resources Inc.) and Minera Cardel.

 

“Parties” means, Minera Gavilan, Goldgroup and Candymin or “Party” means any one of them.

 

“Person” is to be broadly interpreted and includes an individual, a corporation, a partnership, a trust, an unincorporated organization, a Governmental Authority, and the executors, administrators or other legal representatives of an individual in such capacity.

 

“Representative” when used with respect to a Party means each director, officer, employee, agent, consultant, adviser and other representative of that Party who is involved in the transactions contemplated by this Agreement.

 

“Retained Interest Agreement” shall mean the retained interest agreement dated September 23, 2011 between Goldgroup, 0919921 B.C. Ltd. and Almaden.

 

“Royalty Agreement” shall mean the Royalty Agreement annexed to this Agreement as Schedule “F”.

  

  

  

 

Schedule “D”

Representations and Warranties of Goldgroup and Candymin

 

Representations and Warranties of Goldgroup and Candymin. Goldgroup and Candymin represent and warrant to Minera Galivan as follows:

 

	  	
(a)

	
Organization. It is a corporation duly organized and in good standing in its jurisdiction of incorporation and is qualified to do business and is in good standing in those jurisdictions where necessary in order to carry out the purposes of this Agreement;

	  	  	  
	  	
(b)

	
Authority. It has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate, board of directors, shareholder, and other actions required to authorize it to enter into and perform this Agreement have been properly taken;

	  	  	  
	  	
(c)

	
Conflicts. It will not breach any other agreement by entering into and performing this Agreement, nor will entering into and performing this Agreement result in a default under any instrument by which it is bound or to which its properties are subject nor will such actions conflict with or result in any violation of the provisions of any Laws;

	  	  	  
	  	
(d)

	
Orders. It is not subject to any governmental order, judgment, decree, debarment, sanction or Laws that would preclude the permitting or implementation of this Agreement;

	  	  	  
	  	
(e)

	
Consents. No consent, approval, authorization, order, registration, notification or qualification of or with any court, government agency, or other regulatory authority is required in order that it may execute and deliver this Agreement and perform its obligations hereunder as contemplated herein,

	  	  	  
	  	
(f)

	
Execution. This Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms;

	  	  	  
	  	
(g)

	
Bankruptcy and Insolvency. It has not committed an act of bankruptcy, is not insolvent, has not proposed a compromising arrangement to its creditors generally, has not had a petition for a receiving order in bankruptcy filed against it, has not made a voluntary assignment in bankruptcy, has not taken any proceedings with respect to a compromise or arrangement, has not taken any proceeding to have itself declared bankrupt or wound-up, has not taken any proceeding to have a receiver appointed of any part of its assets, has not had any encumbrancer take possession of any of its property and has not had any execution or distress become enforceable or become levied upon any of its property;

	  	  	  
	  	
(h)

	
Interest in the Property. To the knowledge of Goldgroup and Candymin, neither Goldgroup nor Candymin have entered into any contract or done any act whereby the El Cobre Interest has been or may become impaired or encumbered or subject to an adverse interest;

  

- 2 -  

  

	  	
(i)

	
Litigation. To the knowledge of Candymin and Goldgroup, there is no legal, administrative, arbitration or other proceeding, claim or action of any nature or investigation pending or to the knowledge of Goldgroup and Candymin, threatened against or involving the El Cobre Interest or which questions or challenges the validity of this Agreement, or any action taken or to be taken by Goldgroup or Candymin pursuant to this Agreement or any other agreement or instrument to be executed and delivered by Goldgroup or Candymin or in connection with the transactions contemplated hereby and neither Goldgroup or Candymin knows or has any reason to know of any valid basis for any such legal, administrative, arbitration or other proceeding, claim, action of any nature or investigation. Neither Goldgroup or Candymin is subject to any judgment, order or decree entered in any lawsuit or proceeding which has had or may be expected to have an adverse effect on the El Cobre Interest;

	  	  	  
	  	
(j)

	
No Condemnation. Goldgroup and Candymin have not received notice of the existence of condemnation, expropriation or similar proceedings affecting the El Cobre Interest; and

	  	  	  
	  	
(k)

	
No Material Change. There has been no material change, as defined by national instrument 51-102, to the information provided by Goldgroup and Candymin to Minera Gavilan with respect to the Caballo Blanco Project or the El Cobre Project.

  

  

  

 

Schedule “E”

Representations and Warranties of Minera Gavilan

 

Representations and Warranties of Minera Gavilan. Minera Gavilan represents and warrants to Goldgroup and Candymin, as follows:

 

	  	
(a)

	
Organization. It is a corporation duly organized and in good standing in its jurisdiction of incorporation and is qualified to do business and is in good standing in those jurisdictions where necessary in order to carry out the purposes of this Agreement;

	  	  	  
	  	
(b)

	
Authority. It has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate, board of directors, shareholder, and other actions required to authorize it to enter into and perform this Agreement have been properly taken;

	  	  	  
	  	
(c)

	
Conflicts. It will not breach any other agreement by entering into and performing this Agreement, nor will entering into and performing this Agreement result in a default under any instrument by which it is bound or to which its properties are subject nor will such actions conflict with or result in any violation of the provisions of any Laws;

	  	  	  
	  	
(d)

	
Orders. It is not subject to any governmental order, judgment, decree, debarment, sanction or Laws that would preclude the permitting or implementation of this Agreement;

	  	  	  
	  	
(e)

	
Consents. No consent, approval, authorization, order, registration, notification or qualification of or with any court, government agency, or other regulatory authority is required in order that it may execute and deliver this Agreement and perform its obligations hereunder as contemplated herein;

	  	  	  
	  	
(f)

	
Execution. This Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms;

	  	  	  
	  	
(g)

	
Bankruptcy and Insolvency. It has not committed an act of bankruptcy, is not insolvent, has not proposed a compromising arrangement to its creditors generally, has not had a petition for a receiving order in bankruptcy filed against it, has not made a voluntary assignment in bankruptcy, has not taken any proceedings with respect to a compromise or arrangement, has not taken any proceeding to have itself declared bankrupt or wound-up, has not taken any proceeding to have a receiver appointed of any part of its assets, has not had any encumbrancer take possession of any of its property and has not had any execution or distress become enforceable or become levied upon any of its property;

	  	  	  
	  	
(h)

	
No Brokers. Neither Almaden nor Minera Gavilan have agreed to pay any brokerage fees, finder’s fees, financial advisory fees, agent’s commissions or other similar forms of compensation in connection with the transactions contemplated by this Agreement or any similar transaction for which Minera Gavilan or Almaden may become responsible;

  

- 2 -  

  

	  	
(i)

	
No Default. Minera Gavilan and Almaden are not in default under, and prior to the date of the Caballo Option Agreement there exists no event, condition or occurrence which, after notice or lapse of time or both, would constitute such a default or would trigger a right of termination under any contract, agreement, lease, license, permit, or other instrument or obligation in connection with the Caballo Blanco Property;

	  	  	  
	  	
(j)

	
Material Contracts. Minera Gavilan and Almaden have no material contractual commitments or obligations that affect their interest in the Caballo Blanco Property, except for this Agreement, the Caballo Option Agreement and the Spanish language restatement of the Caballo Option Agreement;

	  	  	  
	  	
(k)

	
Licences, Permits, etc. At all times, prior to the date of the Caballo Option Agreement, when conducting its business in connection with the Caballo Blanco Property, Minera Gavilan possessed all necessary licences, permits, authorizations, approvals or other evidence of authority necessary to properly conduct such business (the “Licenses”). As at the Closing Date, to the knowledge of Almaden and Minera Gavilan, each License is (i) in full force and effect; and (ii) not subject to any dispute. As at the Closing Date, to the knowledge of Almaden and Minera Gavilan, no event has occurred which, with the giving of notice, lapse of time or both, could constitute a default under, or in respect of, any License;

	  	  	  
	  	
(l)

	
Interest in the Property. To the knowledge of Almaden and Minera Gavilan, Minera Gavilan is the beneficial owner of an undivided 30% interest in the Caballo Blanco Property and the registered owner of 100% interest in the Caballo Blanco Property, free and clear of any and all Encumbrances, subject to the Existing Encumbrances and the Caballo Option Agreement;

	  	  	  
	  	
(m)

	
Adverse Interests. Save and except for the Existing Encumbrances, the Caballo Option Agreement and this Agreement, to the knowledge of Almaden and Minera Gavilan, there are no other agreements, adverse interests or options to acquire or purchase the Caballo Blanco Property or any portion thereof. To the knowledge of Almaden and Minera Gavilan, no Person has any proprietary or possessory interest in the Caballo Blanco Property, subject only to the Existing Encumbrances and the Caballo Option Agreement. Save and except for the Existing Encumbrances, the Caballo Option Agreement and NGEx Agreement to the knowledge of Almaden and Minera Gavilan, no Person is entitled to any royalty or other payment in the nature of rent or royalty on any minerals, metals or concentrates or any other such products removed or produced from the Caballo Blanco Property;

  

- 3 -  

  

	  	
(n)

	
Compliance with Laws. Prior to the date of the Caballo Option Agreement, each of Almaden and Minera Gavilan have fully complied with all Applicable Laws, including without limitation, Environmental Laws, and Almaden and Minera Gavilan, have not received notice of any breach, violation or default with respect to the Caballo Blanco Property. To the knowledge of Almaden and Minera Gavilan, all of the rights and titles relating to the Caballo Blanco Property have been validly recorded in accordance with the laws of Mexico. To the knowledge of Almaden and Minera Gavilan, conditions on and relating to the Caballo Blanco Property are in compliance with all Applicable Laws, including without limitation, Environmental Laws;

	  	  	  
	  	
(o)

	
Property in Good Standing. To the knowledge of Almaden and Minera Gavilan, the mining claims forming part of the Caballo Blanco Property are in good standing or pending and prior to the date of the Caballo Option Agreement no event, condition or occurrence existed that, after notice or lapse of time or both, would constitute a default with respect to the Caballo Blanco Property;

	  	  	  
	  	
(p)

	
Hazardous Substances. To the knowledge of Almaden and Minera Gavilan, prior to the date of the Caballo Option Agreement no Hazardous Substance has been placed, held, located, used or disposed of, on, under or at the Caballo Blanco Property. To Almaden and Minera Gavilan’s knowledge, no claim has ever been asserted and there are no present circumstances known to Almaden and Minera Gavilan which could reasonably form the basis for the assertion of any claim against Minera Gavilan or Almaden for Losses of any kind as a direct or indirect result of the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release from the Caballo Blanco Property of any Hazardous Substance;

	  	  	  
	  	
(q)

	
Work Orders. To the knowledge of Almaden and Minera Gavilan, prior to the date of the Caballo Option Agreement there are no outstanding work orders or actions required or reasonably anticipated to be required to be taken in respect of the rehabilitation or restoration of the Caballo Blanco Property or relating to environmental matters in respect of the Caballo Blanco Property or any operations thereon, nor has Almaden or Minera Gavilan received notice of same;

	  	  	  
	  	
(r)

	
Mining Practices. To the knowledge of Almaden and Minera Gavilan, prior to the date of the Caballo Option Agreement, the prospecting work, processes, undertaking and other operations carried on in respect of the Caballo Blanco Property were carried on or conducted in a sound and workmanlike manner and in compliance with sound geological, geochemical and geophysical exploration and mining, engineering and metallurgical practices and, on or after the date of the Caballo Option Agreement, the prospecting work, processes, undertaking and other operations carried on or conducted by or on behalf of Minera Gavilan in respect of the Caballo Blanco Property have been carried on or conducted in a sound and workmanlike manner and in compliance with sound geological, geochemical and geophysical exploration and mining, engineering and metallurgical practices. All such work, processes, undertaking and other operations are in compliance with all Applicable Laws;

  

- 4 -  

  

	  	
(s)

	
Litigation. There is no legal, administrative, arbitration or other proceeding, claim or action of any nature or investigation pending or to the knowledge of Almaden and Minera Gavilan, threatened against or involving the Caballo Blanco Property or which questions or challenges the validity of the Caballo Option Agreement or this Agreement, or any action taken or to be taken by Almaden or Minera Gavilan pursuant to this Agreement or any other agreement or instrument to be executed and delivered by Almaden or Minera Gavilan or in connection with the transactions contemplated hereby and neither Almaden or Minera Gavilan knows or has any reason to know of any valid basis for any such legal, administrative, arbitration or other proceeding, claim, action of any nature or investigation. Neither Almaden or Minera Gavilan is subject to any judgment, order or decree entered in any lawsuit or proceeding which has had or may be expected to have an adverse effect on the Caballo Blanco Property;

	  	  	  
	  	
(t)

	
No Condemnation. Almaden and Minera Gavilan have not received notice of the existence of condemnation, expropriation or similar proceedings affecting the Caballo Blanco Property;

	  	  	  
	  	
(u)

	
All Material Information. Each of Almaden and Minera Gavilan have made available to Goldgroup and/or NGEx Resources Ltd. all technical data in their possession or under their control relating to the Caballo Blanco Property and have provided to Goldgroup all notices in their possession, or of which Almaden and Minera Gavilan have knowledge, material to conducting mining operations on the Caballo Blanco Property received from any Governmental Authority having jurisdiction over the Caballo Blanco Property and during the Interim Period shall continue to make available to Goldgroup all such technical information or notices in their possession or under their control relating to the Caballo Blanco Property;

	  	  	  
	  	
(v)

	
No Material Change. There has been no material change, as defined by national instrument 51-102, to the information provided by Almaden and Minera Gavilan to Goldgroup and Candymin with respect to the Caballo Blanco Project or the El Cobre Project; and

	  	  	  
	  	
(w)

	
Insider. Almaden and Minera Gavilan are not insiders of Goldgroup, as defined by the Securities Act (British Columbia) or under Canadian securities laws and regulations and the policies of the Exchange. Almaden and Minera Gavilan are not acting jointly or in concert with any insiders of Goldgroup.

  

- 5 -  

  

 

Schedule “F”

 

ROYALTY AGREEMENT

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