Document:

exhibit104.htm

Exhibit 10.4

TERMINATION AND TRANSACTION AGREEMENT

This TERMINATION AND TRANSACTION AGREEMENT, hereinafter (the “Agreement) is effective as of the 18th of November, 2011 between the following parties:

 

Sikuri Minerals S.A.S., a partnership that has been duly created and is in good standing in accordance with the laws in force at the Republic of Colombia, its identification number is NIT.900.338.194-7 and is duly represented by Ángela María Osorio Zappa, of age, bearer of Identification card number 52.427.335 issued in Bogotá D.C., who has been duly authorized by the Board of Directors,  just as stated in Exhibit A of this Agreement,  Mining Latam Energy S.A. a partnership that has been duly created and is in good standing in accordance with the laws in force at the Republic of Colombia, its identification number is NIT. 900.329.056-0 and is duly represented by
Ángela María Osorio Zappa, of age, bearer of Identification card number 52.427.335 issued in Bogotá D.C., who has been duly authorized by the Board of Directors, just as stated in Exhibit B of this Agreement, Guachaves Minerals Resources S.A.S., a partnership that has been duly created and is in good standing in accordance with the laws in force at the Republic of Colombia, its identification number is NIT. 900-360.779-7 and is duly represented by Santiago González Ramos, of age, bearer of Identification card number 7.691.508 issued in Neiva, who has been duly authorized by the Board of Directors, just as stated in Exhibit C of this Agreement, and Mallama Minerals Resources S.A.S a partnership that has been duly created and is in good standing in accordance with the laws in force at the Republic of Colombia, its identification number is NIT. 900.353.607-1 and is duly
represented by Santiago González Ramos, of age, bearer of Identification card number 7.691.508 issued in Neiva, who has been duly authorized by the Board of Directors, just as stated in Exhibit D of this Agreement, hereinafter together all four companies shall be referred to as (the “Companies”);

 

 

 

 

  

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Yesid Armando Beltrán Moreno, of age, bearer of identification card number 19.242.800 issued in Bogotá D.C., hereinafter (the “Holder”) and duly represented by Santiago González Ramos, of age, bearer of identification card number 7.691.508 issued in Neiva, as stated in Public Deed No. 429 issued before the Notary First of the Circle of Bogotá D.C. on February 11th, 2010, as stated in exhibit E of this Agreement; and

Minera Nariño S.A.S. a partnership that has been duly created and is in good standing in accordance with the laws in force at the Republic of Colombia, its identification number is NIT. 900.393.801-3 and is duly represented by Camilo Velásquez Vargas, of age, bearer of Identification card number No.80.083.525 issued in Bogotá D.C., who has been duly authorized by the Board of Directors, hereinafter (the “Assignee”)

Each one, the Companies, the Assignee and the Holder shall be individually referred to as (a “Party”) and collectively as (the “Parties”).

They have agreed to enter into this Agreement which is governed by the terms stated in articles 2469 and following of the Colombian Civil Code, so that it has the force of a matter settled in court as a last resort, which shall be governed by the clauses stated below, in accordance with the following:

WHEREAS:

1.           That the Parties have entered into the Contract to Transfer Mining Concession No. IKE-10421X on the 22nd of November, 2010, hereinafter (the “Contract”).

2.           That as per the terms provided in the Contract, the Companies and the Holder are bound jointly and irrevocably to perform all the acts needed to: (i) request for the granting of the transference contract derived from the mining request identified with code number IKE-10421X under the terms stated in the legislation that is in force within the ten (10) work days following the Holder’s being registered as the sole holder of the 

 

 

 

 

  

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concession contract  that is derived from mining request identified with code number IKE-10421X in the National Mining Registry and,  (ii) once the resolution has been issued giving  effect to the concession contract as derived from the mining request identified with code number  IKE-10421X to the Assignee (the “Transfer”), register that Transference to the Assignee at the National Mining Registry (the “Registry”).

3.           That as per the terms provided in the Contract, and as a especial consideration to the duties acquired by the Companies, the Assignee has deposited the amount of five hundred thousand dollars (US$ 500.000) (the “Resources”), in a trust fund with Fiduciaria de Occidente, (the “Trust Fund”), which shall be paid to the Companies once the Registry process is fully completed.

4.           That on August 19th, 2011 the Parties subscribed Supplementary Agreement  No. 1 to the Contract, extending the term for the Registry to be effective for four  (4) months in addition to the term initially set forth in the Contract.

5.           That in accordance to the aforesaid, the trust management agreement by means of which the Trust Fund was modified by a Supplementary Agreement, and the term that had been provided to submit the Registry by the Companies was extended and as a consequence the term to give the Resources changed from the eight (8) months that had initially been said to twelve (12) months counted as of the day the Resources are paid.

6.           That due to the changes made to the mining legislation as per Act 1382 from 2010, specifically regarding crediting the mining transference contract applicant’s technical and economical capacity, the proceedings corresponding to the request identified with code number IKE-10421X has taken longer than the Parties had anticipated.

 

 

 

 

 

  

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7.           That the Parties are able under the terms of article 2470 of the Civil Code, and wish to terminate the Contract and provide against any present or future difference or litigation and that to that end have they subscribed this Agreement.

Hereby with regard to the aforesaid, the Parties mutually

             AGREE:

First.- Purpose: The purpose of this Agreement is to terminate the Contract by mutual agreement, as well as to terminate all differences that may have come up between the Parties with regard to the Contract, or due to any other cause that is directly or indirectly linked to these, therefore, by means of this Agreement, the Parties hereby agree that  all rights and obligations, true or untrue that may arise in their favor as a result of the Contract or as a result of the commercial relationship held among the Parties, are hereby settled by subscribing this Agreement.

 

Second.- Terms of the transaction and mutual granting: By means of subscribing this Agreement the Parties hereby grant the following, reciprocally:

	
a)  

	
Holder’s and Companies’ Granting:

	
(i)  

	
Both the Companies and the Holder expressly accept that all the Resources that were deposited by the Assignee in the Trust Fund in virtue of the Contract, shall be transferred to Kata Enterprises S.A.S. identified with NIT 900.388.159-2 to the checking account number 102020385 at GNB Sudameris Bank within the five (5) working days following the signing of this Agreement.

	
(ii)  

	
The Companies hereby bind themselves to subscribe a Letter of Instructions for the Termination of the Trust Management Agreement, which is attached here as Exhibit F of this Agreement.

 

 

 

 

 

  

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(iii)  

	
Both the Companies and the Holder directly and through their  predecessors, and through each one of their corresponding managers, employees, attorneys, directors, partners, agents, statutory auditor, licensees, successors, any kind of beneficiaries or assignees (all together the “Companies and Their Representatives”) as of the date this Agreement is subscribed waive and relinquish any action against the Assignee and each and every one of its  managers, employees, directors, stockholders, matrixes, divisions, affiliates, partners, agents, attorneys,
statutory auditors, administrators, licensees, successors, any kind of beneficiaries or assignees  (the “Assignee and Its Affiliates”) any of the following:  (a) any claim that is originated or derived from the nature, negotiation, subscription, execution or termination of the Contract, or that is linked in any way to the Contract; (b) exercising any judicial out – of – court before the ordinary justice or before an arbitration tribunal o any administrative authority that is originated or derived from the subscription, execution or termination of the Contract , in  Colombia or in any country; (c) all the rights enshrined to his favor, regardless of their nature, that may be originated or derived from the subscription, execution, or termination of the Contract; (d) any
kind of process, trial, claim, lawsuit, or action regardless of its nature or objective, in accordance with the law  or in equity, regarding the nature, subscription, execution, and termination of the Contract or with any other cause linked to it,  (e) any claim that is originated from any other relationship that already exists between the Parties, and (f) of any claim, lawsuit, action, cause,  controversy, debt, costs, lawyers’ fees, clerk’s fees, damages, sentences or claims due to legal liability of any nature, in accordance with the law or in equity, that may already exist, have existed or may exist between the  Parties, based on any fact, circumstance, event, action or mission that may occur  at any time and up to the date of this Agreement, including those regarding or that belong in any way to, or come up as a result f
the negotiation, execution, or termination of the Contract, all this as per the  terms stated in the considerations of this Agreement.

 

 

 

 

  

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(iv)  

	
Both the Companies and the Holder hereby expressly state that the Assignee is Free and Clear of any obligation derived from the Contract.

	
b)  

	
 Concessions by the Assignee:

	
(i)  

	
The Assignee binds himself to subscribe the Letter of Instructions for the Termination of the Trust management Agreement, which is attached as Exhibit E of this Agreement.

 

	
(v)  

	
The Assignee hereby expressly state that the Companies and the Holder of the obligation for Transferring the mining concession contract resulting from mining request IKE-10421X are Free and Clear of any obligation.

 

	
(vi)  

	
The Assignee hereby expressly states that the Companies and the Holder are Free and Clear of any obligation derived from the Contract.

Third.- Liability: The Parties hereby expressly accept that this Agreement ends all differences, claims, disputes and actions that may already exist or that may arise between the Parties, including but not limited, to the ones derived from the  nature, negotiation, subscription, execution and termination of the Contract.

Fourth- Wholeness: This Agreement has been freely entered into by the Parties and with the intention to abide by the legal consequences set forth in article 2483 of the Civil Code. This Agreement substitutes any other written or oral agreement the Parties may have entered into and, therefore, it is the only transaction contract between them regarding the negotiation, subscription, execution and termination of the Contract and regarding any other cause as may be directly or indirectly linked to these.

 

 

 

 

  

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Fifth.- Effects.- The Parties hereby express their wish for this Agreement to enforce the effects of a sentence settled as a last resort and that the waivers herein stated in this Agreement are in full force and are fully valid and legal, regardless of the jurisdiction they are called, pleaded or defended. As a consequence, the Parties hereby expressly state that this Agreement is in full force and is fully valid from the legal standpoint in Colombia, as well as in any other jurisdiction before which any claim is entered regarding any rights or the request for invalidity of any agreement among the Parties. The Parties hereby expressly state that they are entering into this Agreement in order to
provide against any possible litigation under the terms and for the effects provided by Title 39 of Book 4o of the Colombian Civil Code. As a consequence, in the event any of the Parties should fail to comply the terms hereby being agreed upon, the complying party shall only be entitled to claim for the obligations under this contract, as well as for the corresponding compensation for damages, but not to finish the contract.

Sixth. - Law: This Agreement is governed by the law of the Republic of Colombia.

Seventh. - Severability: In the event that any of the clauses of this Agreement should be declared inefficient, void, unenforceable, this sole fact shall not affect the efficiency, validity or enforceability of the Agreement as a whole, except in the case that without the corresponding clause it would be understood that the parties had not entered into this Agreement.

Eighth - Confidentiality: The Parties hereby bind themselves to keep the secrecy and to not disclose to any third party the terms and conditions of this Agreement.

 

Ninth.- Taxes and expenses caused by this Contract: Each one of the Parties shall pay their own taxes or expenses as caused by the subscription of this Agreement.

 

Tenth – Total Dispute Settlement: This Agreement contains the whole of the transaction of the disputes that already exist between the Parties.

Eleventh –Arbitration: The Parties hereby agree that any dispute or controversy that may arise between them as derived from this Agreement, shall be solved by arbitration before an Arbitration Tribunal which shall be appointed by the Conciliation and Arbitration Center of the Chamber of Commerce of Bogotá, from the list of arbitrators that are duly registered at the said center. The Tribunal shall be subject to the following rules:

 

 

 

 

  

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a)  

	
The Tribunal shall consist of one (1) arbitrator appointed by the Parties by mutual agreement.  In case the Parties are not able to agree, the arbitrator shall be appointed by the Conciliation and Arbitration Center of the Chamber of Commerce of  Bogotá, upon request of any of the  Parties;

	
b)  

	
The internal organization of the Tribunal, including their fees and applicable costs shall be subject to the regulations from the Conciliation and Arbitration Center of the Chamber of Commerce of  Bogotá;

	
c)  

	
The Tribunal shall meet in Bogotá D.C., at the offices of the said center;

	
d)  

	
The regulations governing the process shall be the ones in force upon summoning the Tribunal; and

 

	
e)  

	
The Tribunal shall decide according to law.

  

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In witness whereof the Parties sign this Agreement on the 18th of November, 2011, which shall be effective upon signage

 

The Companies:

 

	
SIKURI MINERALS S.A.S.

	
MINING LATAM ENERGY S.A.

	 	 
	 	 
	 /s/ Angela Maria Osorio Zappa                          	/s/  Angela Maria Osorio Zappa                        
	
      Ángela María Osorio Zappa

	
      Ángela María Osorio Zappa

	
       Legal Representative

	
       Legal Representative

	  	  
	  	  
	  	  
	
GUACHAVES MINERALS

	
MALLAMA MINERALS

	
RESOURCES S.A.S

	
RESOURCES S.A.S

	 	 
	 	 
	 /s/ Santiago González Romos                              	 /s/ Santiago González Romos                             
	
      Santiago González Ramos

	
       Santiago González Ramos

	
      Legal Representative

	
       Legal Representative

	  	  
	  	  
	
Holder:

	
Assignee:

	 	 
	  	  
	  	

MINERA NARIÑO S.A.S.

	 	 
	  	  
	 /s/ Santiago González Romos                              	

 /s/ Camilo Velásquez Vargas                               

	
      Santiago González Ramos

	

       Camilo Velásquez Vargas

	
      Attorney

	

       Legal Representative

	
      Yesid Armando Beltrán Moreno

	 
	
      C.C. 19.242.800 de Bogotá D.C.

	
 

 

 

  

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EXHIBIT E

 LETTER OF INSTRUCTION TO TERMINATE THE TRUST MANAGEMENT CONTRACT

 

Minera Nariño S.A.S., a company that was created by means of private document dated October 26th, 2010, with its headquarters in Medellín and duly registered before the Chamber of Commerce of that city, being represented in this act by  Camilo Velásquez Vargas, bearer of identification card No. 80.083.525 from Bogotá D.C., who is acting in his capacity of legal representative (the  “Grantor”) and (ii) Sikuri Minerals S.A.S., a company that has been duly created and is in good standing as per the laws of the Republic of Colombia, bearer of  NIT.900.338.194-7
and duly represented by Ángela María Osorio Zappa, of age,  bearer of identification card number 52.427.335 from Bogotá D.C.,  Mining Latam Energy S.A. a company that has been duly constituted and that exists as per the laws of the Republic of Colombia, identified with NIT. 900.329.056-0 and duly represented by Ángela María Osorio Zappa, of age, bearer of identification card number  52.427.335 from Bogotá D.C., Guachaves Minerals Resources S.A.S., s a company that has been duly created and is in good standing as per the laws of the Republic of Colombia, bearer of  NIT.900.360.779 - 7 and duly represented by Santiago González Ramos, of age,  bearer of identification card number 7.691.508 from Neiva, Mallama Minerals Resources S.A.S a company that has been duly created and is in good standing as per the
laws of the Republic of Colombia, bearer of  NIT. 900.353.607-1 and duly represented by Santiago González Ramos, of age,  bearer of identification card number 7.691.508 from Neiva, and Kata Enterprises S.A.S, legally represented by Camilo Velásquez Vargas, of age, living in Bogotá D.C., the Republic of Colombia, bearer of identification card No. 80.083.525 from Bogotá D.C.,  a company that has been created as per the laws of the Republic of Colombia, identified with NIT No. 900.388.159-2, hereinafter, jointly all four companies shall be referred to as  (the “Beneficiaries”); and together with the Grantor, (the “Parties”), we have agreed to terminate the irrevocable mercantile
trust management and payments contract entered into between the Grantor and Fiduciaria de Occidente S.A. on the 21st of December, 2010 (“Contract under Commission”), as follows:

 

 

 

 

 

  

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1.  

	
Termination. The Parties expressly, in common agreement and according to clause 11.2 number 4 of the Contract under Commission, hereby terminate the Contract under Commission as of the date this document is signed.

 

	
2.  

	
Liquidation. Within the thirty (30)  calendar ays following subscription of this document the Contract under Commission shall be liquidated as per the terms stated in Chapter XII of the Contract under Commission.

 

	
3.  

	
Transference. As a result of the aforementioned, the Fiduciary must transfer to the  Granting Party the amount that results from liquidating the  Management Contract into checking account number 102020385 from GNB Sudameris Bank to  Kata Enterprises S.A.S.

 

 

 

 

 

  

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In witness whereof, this document is signed on the 18th of November, 2011

 

 

	
THE GRANTING PARTY

	
 

	 	 
	MINERA NARIÑO S.A.S.	 
	 	 
	 	 
	

 /s/ Camilo Velásquez Vargas                               

	 
	
      Camilo Velásquez Vargas

	
 

	
       Legal Representative

	
 

	      	  
	 	 
	BENEFICIARIES:	 
	 	 
	 	 
	SIKURI MINERALS S.A.S.	MINING LATAM ENERGY S.A.
	 	 
	 	 
	 /s/  Angela Maria Osorio Zappa                        	  /s/  Angela Maria Osorio Zappa                        
	       Ángela María Osorio Zappa	       Ángela María Osorio Zappa
	       Legal Representative	        Legal Representative
	 	 
	 	 
	
GUACHAVES MINERALS

	
MALLAMA MINERALS

	
RESOURCES S.A.S.

	
RESOURCES S.A.S

	 	 
	 	 
	 /s/ Santiago González Romos                              	 /s/ Santiago González Romos                             
	
      Santiago González Ramos

	
       Santiago González Ramos

	
      Representative Legal

	
       Representative Legal

	  	  
	  	  
	
KATA ENTERPRISES S.A.S.

	
 

	  	  
	 	 
	  	  
	  /s/ Camilo Velásquez Vargas                               	

 

	
      Camilo Velásquez Vargas

	

 

	
      Legal Representative

	

       

 

 

 

  

E - 3exhibit101.htm

Exhibit 10.1

 

MINING LEASE AND AGREEMENT

THIS LEASE and AGREEMENT, made this 14th day of December, 2011 by and between MARILYN BASHORE, Coeur d’Alene, Idaho (hereinafter called ‘“Owner”) and SOUTH AMERICAN GOLD CORPORATION, a Nevada corporation (hereinafter called “South American”).

 

WITNESSETH:

1.        Owner represents that subject to the paramount title of the United States, it is the sole and only owner of the unpatented mining claims situated in Yavapai County, Arizona, described on the attached Exhibit A (hereinafter referred to as the “Property”); that each of the unpatented claims included in the Property has been validly located, filed and recorded in compliance with the laws of the State of Nevada and of the United States as they relate to location and recordation of such claims; that Owner has timely complied with all of the filing provisions of the Federal Land Policy and
Management Act (43 U.S.C. Section 1701, et seq.) as they pertain to the unpatented claims included within the Property and that such claims are valid and subsisting mining claims; that Owner has performed assessment work upon such claims through the assessment year ended September 1, 2011, and has recorded and filed proof thereof, all of which work, recordings and filings have been completed in accordance with the applicable state and federal statues pertaining to assessment work; that Owner’s rights in the Property are not subject to any prior agreement, encumbrance, burden or restriction created by any act or instrument of Owner; the Property is free from liens and encumbrances and adverse claims by third parties; and that the Property is not burdened with any royalties, overriding royalties or payments on
production.

 

2.         Owner hereby grants, lets and leases to South American the Property, for the term hereof, together with all ores and minerals of every kind, except oil and gas, in, on or under the Property, with the exclusive right to prospect and explore for, mine by underground or open pit methods, mill, prepare for market, store, sell and dispose of the same, together with all such rights-of-way, easements, water and water rights, of every kind and nature, through, over, on or appertaining to the Property, and the right to erect, maintain and operate thereon and therein, buildings, structures, machinery and
equipment, and to use, occupy and disturb so much of the surface of the Property as South American may determine to be useful, desirable or convenient for the exercise by South American of any and all of its rights hereunder.  In the event Owner acquires rights to any additional interests in the Property after the execution of this Agreement, all such additional interests shall be subject to this Agreement.

 

3.          If Owner’s title is less than as stated in Section 1 hereof or is subject to a superior adverse interest, all payments, including advance royalties, without limitation, to be made to Owner hereunder shall be reduced to the same proportion thereof as the undivided interest owned by the Owner bears to the entire interest in the Property.

 

South American shall have sole discretion to determine the extent of its work on the Property and the time or times for beginning, continuing or resuming mining operations thereon.

 

 

 

 

  

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All activities carried out by South American under this Agreement shall conform in all respects to the laws and regulations of the State of Arizona and the United States.

 

4.        The term of this Agreement shall begin with the date hereof and shall continue to and until the fifteenth anniversary of such date and so long thereafter as minerals are produced on the Property, but subject to earlier termination as herein provided.

 

5.        Until this Agreement is sooner terminated, South American shall pay Owner advance royalty payments in accordance with the following schedule:

 

	
Advance Royalty Payment

	  	
Payable On Or Before

	  	  	  
	
$500

	  	
On Execution (on or before 12/20/2011)

	
$750

	  	
Anniversary Date, 2012

	
$750

	  	
Anniversary Date, 2012-26, inclusive

 

The Advance Royalty payments payable to Owner pursuant to this paragraph shall be credited to and recoverable from Production Royalty payments payable by South American to owner, as provided below.  Said right of recovery shall apply to the first such Production Royalty payments accruing and shall continue thereafter until South American has recovered the full amount of previously paid Advance Royalty payments.

 

The annual Advance Royalty payments shall be increased or decreased yearly on the date of payment on such royalty by the percentage that the Producer Price Index for Industrial Commodities as published in the U.S. Department of Labor, Bureau of Labor Statistics bulletin bears to the amount of the royalty to be paid.  Such index was 103.0% on the date of the execution of this Agreement.

 

South American shall pay to Owner a Production Royalty of two percent (2%) of net smelter returns.  Net smelter returns shall be calculated for each calendar quarter in which net smelter returns are realized, and such royalty payments as are due Owner hereunder shall be made within thirty (30) days following the end of the calendar quarter in Which the net smelter returns were realized.  Such payments shall be accompanied by a statement summarizing the computation of net smelter returns.

 

Quarterly royalty payments will be provisional and subject to adjustment at the end of each accounting year.

 

The term “net smelter returns” as used herein shall mean the net proceeds received by South American from the sale of minerals from the Property after deductions for all of the following:

 

	
(a)     

	
Custom smelter costs, treatment charges and penalties including, but without being limited to, metal losses, penalties for impurities and charges or deductions for refining, selling, and transportation from smelter to refinery and from refinery to market; provided, however, in the case of leaching operations, all processing and recovery costs incurred by South American beyond the point at which the metal being treated is in solution shall be considered as treatment charges (it being agreed and understood, however, that such processing and recovery costs shall not include the cost of mining, crushing, dump preparation, distribution of leach solutions or other mining and preparation costs up to the point at which the metal goes
into solution);

 

 

 

 

  

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(b)     

	
Cost of transporting mineral product from the concentrator to a smelter or other place of treatment; and

 

	
(c)     

	
Production taxes, severance taxes and sales, privilege and other taxes measured by production or the value of production.

 

All payments and royalties payable hereunder may be made by South American’s check, and delivery thereof shall be deemed completed on the mailing thereof to Owner.

 

6.          South American will perform a minimum of $900.00 in assessment work for the benefit of the Property for the assessment year ended September 2, 2012, and a cumulative minimum of $900.00 for every assessment year thereafter in which South American continues this Lease beyond July 1 of the assessment year.  For each year in which South American performs assessment work, it will record and file, as required by law, the affidavit of such assessment work.

 

On or before February 28 of each year, South American shall provide Owner a report of activities on the Property for the preceding year, which report will be limited to factual data such as maps, logs and other pertinent information.  Owner shall treat such data as confidential and shall not disclose it to third parties without the prior written consent of South American.

 

7.          Upon request, Owner will make available such abstracts of title or other title records pertaining to the Property which he may have to aid South American in any title searching it may wish to undertake.  South American may remedy any title defects which Owner fails to remedy at South American’s request, but expenses so incurred by South American shall be chargeable against any Production Royalties which may accrue hereunder to Owner.

 

South American may investigate and cure as it sees fit any defects in the title, location, recordation or filing of the unpatented mining claims comprising the Property, and Owner agrees to cooperate fully with the curing of said deficiencies at the expense of South American.  Owner additionally agrees that South American at its discretion, may relocate, amend, restake, refile and rerecord any particular mining claim or claims in the Property or documents associated herewith.  Where required for restaking or relocation, Owner agrees to execute notices of abandonment of mining claims, and, in turn, South American agrees that any relocation or restaking will be accomplished in Owner’s
name.

 

Owner agrees to apply for a patent for any of the unpatented mining claims upon the request of South American.  All expenses authorized by South American in connection with prosecuting patent proceedings shall be borne by South American and the rights of South American under this Lease shall extend to any patented mining claims and any amended location and relocation.

 

 

 

  

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If the United States of any third party attacks the validity of the mining claims included in the Property, South American shall have no obligation to defend their validity.

 

8.        South American is hereby granted the right to mine or remove from the Property any ores, waste, water or other materials existing therein or thereon, through or by means of shafts or openings which may be sunk or made upon adjoining or nearby property controlled by South American and may stockpile any ores, waste or other materials and/or concentrated products of ores or materials from the Property upon stockpile grounds situated upon any such adjoining or nearby property; and South American may use the Property and any part thereof and any shafts, openings, and stockpile grounds, such or made thereon for the mining, removal and/or
stockpiling of any ores, waste, water and other materials and/or concentrated products of ores or materials from any such adjoining or nearby property, or for any purpose or purposes connected therewith, not, however, preventing or interfering with the mining or removal of ore from the Property.

 

South American may commingle ore from the Property with ore from other properties, either before or after concentration of beneficiation, so long as the data to determine the weight and assay, both of the ore removed from the Property and of other ores to be commingled, are obtained by South American.  South American shall use that weight and assay data to allocate the royalties from the commingled ore between the Property and other properties from which the other commingled ore was removed.  All such weight, assay and allocation calculations by South American shall be done in a manner recognized by the mining industry as practical and sufficient.

 

9.        South American’s records of all mining operations on the Property pertinent to computation of royalties shall be available for Owner’s inspection, but no more than once each quarter_ Owner may enter the mine workings and structures on the Property at all reasonable times for inspection thereof, but Owner shall so enter at his own risk and shall indemnify and hold South American harmless against and from any damage, loss of liability by reason of injury to Owner or his agents or representatives while on the Property on or in said mine workings and structures.

 

10.      South American shall pay all taxes assessed against any personal property which it may place on the Property and shall pay any taxes or increase in taxes assessed against the Property due to its operations thereon.  South American may take such action as it deems proper to obtain a reduction or refund of taxes paid or payable by it.  Owner shall pay all other taxes assessed against the Property, including all taxes assessed or payable at the time of the execution of this Agreement.

 

11.      South American shall keep the Property free of all liens for labor or materials furnished to it in its operations hereunder and will indemnify and save harmless Owner against and from any damage, loss or liability by reason of injury to person or damage to property as the result of its operations hereunder, except as provided in Section 9 above.  South American may contest the validity of any lien on the Property, and the same shall not be deemed a default unless finally adjudicated to be valid and not discharged by the Owner.

 

 

 

 

  

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Owner agrees that it will not cause or allow any liens, encumbrances or adverse claims to accrue against the Property, except such as may have been expressly subordinated to this Agreement; and in the event any lien or encumbrance shall hereafter accrue against the Property by act or neglect of Owner, then South American may, at South American’s option, pay and discharge the same, and if South American elects so to do, may deduct the amount so paid from any advance royalties, Production Royalties or other payments hereunder, together with interest thereon from the date of payment of said sums at the weighted average of prime rates throughout the year (as established by the Chemical Bank of New York}
subject to the application of any Arizona usury statute.

 

12.         At any time after payment of the amount due on execution hereof, South American may terminate this Agreement by written notice to Owner to that effect.

 

Upon surrender of termination of this Agreement, and upon written request of Owner made with thirty (30) days following such surrender or termination, South American shall furnish Owner with a complete summary of the factual information obtained as a result of work done by South American on the Property including, but not limited to, logs of all holes drilled thereon, ore values encountered, if any, analyses thereof and pertinent maps and surveys prepared by South American in the course of such work.

 

13.          If South American defaults in any of its obligations hereunder, Owner may give written notice thereof and specify the default or defaults relied on.  If South American has not cured or begun to cure such default within a reasonable time (which shall not, in any case, be less than thirty (30) days), Owner may terminate this Agreement by written notice to South American, provided that if South American shall dispute that any default has occurred, the matter shall be determined by litigation in a court of competent jurisdiction, and if the court shall find South
American in default hereunder, South American shall have a reasonable time (which shall not be less than sixty (60) days from receipt of notice of such award) to cure such default, and if so cured, Owner shall have no right to terminate this Agreement by reason of such default.

 

14.          The term of this Agreement shall be extended by the duration of any event of force majeure, and the obligations of South American under this Agreement shall be suspended and South American shall not be deemed in default or liable for damages or other remedies while South American is prevented from complying therewith by force majeure. For purposes of this Agreement, force majeure shall include, but not be limited to, acts of God, the elements, riots, acts or failure to act on the part of federal or state agencies or courts, inability to obtain necessary permits, inability
to secure material or to obtain access to the Property, strikes, lockouts, damage to, destruction or unavoidable shutdown of necessary facilities, or any other matters (whether or not similar to those above mentioned) beyond South American’s reasonable control, provided, however, that settlement of strikes or lockouts shall be entirely within the discretion of South American, and provided, further, that South American shall promptly notify Owner thereof and shall exercise diligence in an effort to remove or overcome the cause of such inability to comply.

 

 

 

 

 

  

- 5 -

  

 

15.         In the case of termination of this Agreement under the terms hereof or for any cause, South American shall have no further liability or obligation hereunder except for those already accrued at such date of termination.  Upon such termination, South American shall surrender the Property to Owner, and upon his request shall deliver to him a written instrument in further evidence of such termination, in appropriate form for recording, shall have three (3) months after termination within which to remove from the Property all its machinery, equipment, buildings, structures and other items
of property belonging to it.

 

16.         Owner shall not sell, transfer or otherwise dispose, or offer to sell, transfer or otherwise dispose, or accept any offer to sell, transfer or otherwise dispose, of the Property or any interest therein unless Owner first offers by written notice to (hereinafter referred to as the “Offer’’) the prior right to purchase, receive or otherwise acquire the same.  The Offer shall set forth the nature of the interest in the Property offered for sale, the consideration therefor expressed only in lawful currency of the United States, the terms and conditions of the sale, and
the Offer is open for acceptance for a period of sixty (60) days after receipt of the Offer by South American.  South American may accept the Offer by delivery of written notice of acceptance to Owner within sixty (60) days after receipt of the Offer by South American.  If the Offer is accepted by South American, the sale, transfer or other disposition shall be completed in accordance with the terms of the Offer.  If the Offer is not accepted by South American within the time provided, South American shall be deemed to have declined the Offer and Owner may sell, transfer or otherwise dispose of the interest in the Property to a third party, but only for the consideration and only upon the terms and conditions as set out in the Offer and only within the period of ninety (90) days after the expiry of the period for acceptance by South American, and, if the
Owner does not do so, the provisions of this section 15 shall again become applicable to the sale, transfer or other disposition of the Property or interest therein, and so on from time to time.

 

17.         Changes in the ownership of the Property or the rights to receive royalties and advance royalties hereunder occurring after delivery of this Agreement shall not be binding upon South American until it shall receive written notice of such change, together with a certified copy or photographic copy of the recorded documents reflecting such change.  No change or division in the ownership of the Property, mineral interests, advance royalties or royalties hereafter accomplished shall operate to enlarge the obligations or diminish the rights of South American hereunder.

 

18.         All notices hereunder shall be in writing and may be delivered by certified mail, and such mailing thereof shall be deemed the act of giving notice.  Such mailed notices shall be addressed to Owner as follows:

 

Marilyn Bashore

228 East McFarland Avenue

Coeur d’Alene, Idaho 83814

And to South American as follows:

South American Gold Corporation

3645 East Main Street, Suite #107

Richmond, Indiana 47374

19.      “Owner” as used herein includes the plural, if there are more than one, and reference to the Owner in one gender includes the other and the plural when appropriate.

 

  

- 6 -

  

 

 

20.        Upon request, Owner will execute a short form of Agreement covering the Property for purposes of recording.

 

21.        Owner and South American may assign their rights under this Agreement, in whole or in part with the prior written consent of South American and Owner respectively, which consent will not be unreasonably withheld, and this Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and assigns.  South American may assign this Lease to an affiliated company upon written notice to Owner.

 

22.        All dollar denominated items in this Agreement refer to U.S. currency.

 

IN WITNESS WHEREOF, the parties have executed this Mining Lease and Agreement as of the day and year first above written.

 

	 /s/  Marilyn Bashore                                         	 /s/ Raymond DeMotte                                                
	
       Marilyn Bashore

	      Raymond DeMotte
	
       Owner

	      South American Gold Corporation

 

	
STATE OF IDAHO

	
)

	  	
) ss

	
COUNTY OF KOOTENAI

	
)

 

 

ON THIS 14th day of December, 2011, before me, the undersigned, a Notary Public in and for the State of Idaho, duly commissioned and sworn, personally appeared MARILYN BASHORE known to me or proven to me to be the person who acknowledged to me that she executed the above Mining Lease and Agreement, as indicated above.

 

 

/s/  MARILYN BASHORE                                         

      MARILYN BASHORE

 

/s/ Peggy Hord                                                             

      Peggy Hord

      Notary in and for the County of Kootenal

      Residing at:  Coeur d'Alene, ID

      My commission expires: 12/08/2015

 

 

 

 

  

- 7 -

  

 

	
STATE OF _____________

	
)

	  	
) ss

	
COUNTY OF ___________

	
)

 

 

ON THIS _____day of December, 2011, before me, the undersigned, a Notary Public in and for the State of __________, duly commissioned and sworn, personally appeared ________________________________ known to me or proven to me to be the person who acknowledged to me that he executed the above Mining Lease and Agreement in his capacity as ________________________________ of South American Gold Corporation as indicated above, on behalf of said corporation and that the corporation executed the above Mining Lease and Agreement.

 

/s/  Raymond DeMotte                                                

      Raymond DeMotte

 

 

 

/s/  Christopher L. Louiman                                       

      Christopher L. Louiman

      Notary in and for the County of Montgomery

      Residing at:  Huber Heights, Ohio

      My commission expires:  February 5, 2014

 

 

 

 

 

                                    

  

- 8 -

  

 

EXHIBIT A

 

to

 

That certain Mining Lease and Agreement entered into by and between Marilyn Bashore and South American Gold Corporation.

 

The nine (9) unpatented Mining Claims are situated in Section 27 and S1⁄2 of Section 22;Township 9 North; Range 3 West, Yavapai County, Arizona.

 

Claim Reference Numbers

	
BLM Recording Number

	  	
County Recording Number

	
GB 1

	
AMC

	
393641

	  	
8 4608

	  	
P 313

	
GB 3

	  	
393643

	  	
8 4608

	  	
P 315

	
GB 4

	  	
393644

	  	
8 4608

	  	
P 316

	
GB 5

	  	
393645

	  	
8 4608

	  	
P 317

	
GB 6

	  	
393646

	  	
8 4608

	  	
P 318

	
GB 7

	  	
393647

	  	
8 4608

	  	
P 319

	
GB 8

	  	
393648

	  	
8 4608

	  	
P 320

	
GB 23

	  	
393931

	  	
8 4608

	  	
P 983

	
GB 25

	  	
393930

	  	
8 4608

	  	
P 984

 

 

 

  

A - 1

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