Document:

avino_ex46.htm

EXHIBIT 4.6

 

OPTION AGREEMENT

 

BETWEEN

 

AVARON MINING CORP.

 

AND

 

AVINO SILVER & GOLD MINES LTD.

 

DATED the 3rd day of January, 2012

 

 

 

 

 

TABLE OF CONTENTS

 

	
1

	
DEFINITIONS

	
1

	 
	
2

	
REPRESENTATIONS, WARRANTIES AND COVENANTS

	
4

	 
	
3

	
ASSOCIATION OF PARTIES

	
7

	 
	
4

	
THE INITIAL OPTION

	
8

	 
	
5

	
THE ADDITIONAL OPTION & ALTERNATIVE ADDITIONAL OPTION

	
11

	 
	
6

	
EXPLORATION

	
13

	 
	
7

	
ROYALTY

	
13

	 
	
8

	
AUTHORITY, DUTIES AND OBLIGATIONS OF THE OPERATOR

	
14

	 
	
9

	
SHARING OF AND CONFIDENTIAL NATURE OF INFORMATION

	
15

	 
	
10

	
NOTICES

	
16

	 
	
11

	
TERMINATION

	
17

	 
	
12

	
FORCE MAJEURE

	
17

	 
	
13

	
DEFAULT

	
18

	 
	
14

	
GENERAL

	
18

	 

 

Schedules

 

	
Schedule A -

	
Description of Property

	 	 
	
Schedule B -

	
Joint Venture Terms

	 	 
	
Schedule C -

	
Net Smelter Royalty

	 	 

 

 

 

 

 

THIS OPTION AGREEMENT is dated as of the 3rd day of January, 2012 (the “Execution Date”).

 

AMONG:

 

AVINO SILVER & GOLD MINES LTD., a company incorporated under the laws of British Columbia, having an office at #900, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

 

(the “Company”)

 

AND:

AVARON MINING CORP. a company incorporated under the laws of British Columbia, having an office at #900, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

 

(“Avaron”)

 

W H E R E A S:

 

A.          The Company is the registered, legal and beneficial holder of a 100% title and interest in fourteen (14) quartz mining leases granted under the Quartz Mining Act (Yukon) in the Yukon Territory known as the Eagle Property, which mining leases are fully described in Schedule A attached hereto (the “Property”); and

 

B.           The Company wishes to grant Avaron, or a permitted assignee of Avaron, the exclusive right and option to acquire a 100% title and interest in the Property and the parties wish to enter into this Agreement to provide for such right and option and other matters relating to the exploration and development of such mining leases.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the payment by each Party to the other of the sum of $10.00 (the receipt and sufficiency of which is hereby acknowledged by each Party) and of the mutual covenants and agreements contained herein the parties agree as follows:

 

	
1. 

	
DEFINITIONS

 

	
1.1  

	
In this Agreement and in the Schedules and the recitals hereto, unless the context otherwise requires, the following expressions will have the following meanings:

 

	
(a)

	
“Assets” mean the Property and all other assets acquired or held by the Parties with respect thereto or pursuant to this Agreement as the same may exist from time to time;

 

	
(b)  

	
“Commercial Production” means the commercial exploitation of ore but does not include milling for the purpose of testing or milling by a pilot plant or during the initial tune-up period of a plant. Commercial Production will be deemed to have commenced:

 

 

- 1 -

 

 

	
(i)  

	
if a plant is located on the Property, on the first day of the month following the first period of 30 consecutive days during which ore has been processed through such plant at an average rate of not less than 70% of the initial rated capacity of such plant, or

 

	
(ii)  

	
if no plant is located on the Property, on the first day of the month following the first period of 30 consecutive days during which ore has been shipped from the Property at the rate of not less than 70% of the milling rate specified in a feasibility study recommending placing the Property into commercial production;

 

	
(c)  

	
“Encumbrances” means all interests, mortgages, charges, royalties, security interests, liens, encumbrances, actions, claims, demands and equities of any nature whatsoever or however arising and any rights or privileges capable of becoming any of the foregoing;

 

	
(d)

	
“Environmental Laws” means all applicable federal, state, municipal and local laws, statutes, ordinances, by-laws, regulations, orders, directives and decisions, rendered by any ministry, department or administrative or regulatory agency relating to the protection of the environment, or pollutants, contaminants, chemicals, or industrial, toxic or hazardous wastes or substances;

 

	
(e)

	
“Exchange” means the TSX Venture Exchange on which the common shares of the Company are listed for trading;

 

	
(f)

	
 “Exploration Costs” means all costs, outlays and expenses of whatever kind or nature spent or incurred directly or indirectly in connection with the exploration of the Property since the Execution Date including, without limiting the generality of the foregoing, moneys expended in maintaining the Property in good standing and costs incurred in connection with complying with Environmental Laws, all costs incurred in connection with investigations and work normally conducted in exploration and in investigating the feasibility and viability of mining including all baseline environmental studies and pre-feasibility work, all insurance costs, moneys expended in doing and filing assessment work, expenses paid for or incurred in connection with any program of surface or underground prospecting, exploring, geophysical, geochemical and geological surveying, drilling, drifting, raising and other underground work, assaying, mineralogical, engineering and environmental studies, reclamation costs, bonds required to be posted, data preparation and analysis, submissions to government agencies, all associated sales taxes including the goods and services tax, paying the fees, wages, salaries, traveling expenses and fringe benefits of all persons engaged in work with respect to and for the benefit of the Property, money expended in rectifying or addressing an Intervening Event and in paying for food, lodging and other reasonable needs of such persons. For greater certainty, the cash and share payments described at sections 4.2, 4.3 and 5.3 shall not be considered Exploration Costs for the purposes of this Agreement;

 

 

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(g)  

	
“Interest” means the undivided beneficial percentage interest of a Party in the Property and the Assets;

 

	
(h)  

	
“Operator” means the Party acting as Operator with respect to the Property pursuant to this Agreement and the “Non-Operator” means the Party who is not the Operator;

 

	
(i)  

	
“Net Smelter Royalty” shall have the meaning set out in Schedule C;

 

	
(j)  

	
“Party” means either of the Company or Avaron and their successors and permitted assigns and “Parties” means together, the Company and Avaron and their successors and permitted assigns; and

 

	
(k)  

	
“Property” means the mining leases granted under the Quartz Mining Act (Yukon) described in Schedule A, together with the surface rights, mineral rights, personal property and permits associated therewith, and shall include any renewal thereof and any other form of successor or substitute title thereto.

 

	
1.2  

	
In this Agreement, unless something in the subject matter or context is inconsistent therewith:

 

	
(a)  

	
all references in this Agreement to “articles”, “sections” and other subdivisions or Schedules are to the designated articles, sections or other subdivisions or Schedules of or attached to this Agreement;

 

	
(b)  

	
the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section or other subdivision;

 

	
(c)  

	
the headings are for convenience only and do not form part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement;

 

	
(d)  

	
the singular of any term includes the plural, and vice versa, the use of any term is equally applicable to any gender and, where applicable, a body corporate, the word “or” is not exclusive and the word “including” is not limiting (whether or not non-limiting language is used with reference thereto);

 

	
(e)  

	
the words “written” or “in writing” include printing, typewriting or any electronic means of communication capable of being visibly reproduced at the point of reception including telex, telegraph, telecopy, facsimile or e-mail;

 

	
(f)  

	
any reference to a statute is a reference to the applicable statute and to any regulations made pursuant thereto and includes all amendments made thereto and in force from time to time and any statute or regulation that has the effect of supplementing or superseding such statute or regulation;

 

 

- 3 -

 

 

	
(g)  

	
a “day” shall refer to a calendar day and in calculating all time periods the first day of a period is not included and the last day is included and references to a “business day” shall refer to days on which banks are ordinarily open for business in Vancouver, British Columbia, but if a period ends on a day on which the banks are not open for business in Vancouver, British Columbia, the period will be deemed to expire on the next calendar day on which banks are open for business in Vancouver, British Columbia; and

 

	
(h)  

	
all references in this Agreement to “$” or “dollars” are references to the lawful currency of the Canada.

 

	
2.  

	
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

	
2.1  

	
The Company represents and warrants to Avaron that, as of the date of this Agreement:

 

	
(a)  

	
it is a valid and subsisting corporation duly incorporated under the laws of its jurisdiction of incorporation and has full corporate power and authority to execute and deliver this Agreement and to observe and perform its covenants and obligations hereunder and has taken all necessary corporate proceedings and obtained all necessary approvals in respect thereof and, upon execution and delivery of this Agreement by it, this Agreement will constitute a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms except that:

 

	
(i)  

	
enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally;

 

	
(ii)  

	
equitable remedies, including the remedies of specific performance and injunctive relief, are available only in the discretion of the applicable court;

 

	
(iii)  

	
a court may stay proceedings before them by virtue of equitable or statutory powers; and

 

	
(iv)  

	
rights of indemnity and contribution hereunder may be limited under applicable law;

 

	
(b)  

	
neither the execution of this Agreement nor the consummation of the transactions contemplated hereby conflict with, result in a breach of or accelerate the performance required by any agreement to which it is a party;

 

	
(c)  

	
neither the execution of this Agreement nor the consummation of the transactions contemplated hereby, result in a breach of the laws of any applicable jurisdiction or its constating documents;

 

	
(d)  

	
it is the legal, beneficial and registered owner of the Property and no person has any right or interest to acquire the Property;

 

 

- 4 -

 

 

	
(e)  

	
Schedule A attached hereto accurately sets out all of its interests in the mining leases comprising the Property;

 

	
(f)  

	
all of the mining leases constituting the Property have been duly and properly surveyed and have been and are validly held in accordance with applicable laws and regulations;

 

	
(g)  

	
it has the legal capacity to hold mining leases in Yukon Territory;

 

	
(h)  

	
Avaron has been provided with true and complete copies of all agreements material to the Property, and there are no existing defaults by the Company, or, to its knowledge, the other parties to such agreements;

 

	
(i)  

	
it is the legal, beneficial and registered owner of a 100% undivided interest in the Property free and clear of all Encumbrances and has the right to grant an interest in the Property;

 

	
(j)  

	
subject to applicable laws, it has the exclusive right to conduct mineral exploration on the Property as contemplated by this Agreement;

 

	
(k)  

	
there has been no act or omission by it, or to its knowledge by anyone else, that could result by notice or lapse of time, or both, in the breach, termination, abandonment, forfeiture, relinquishment or other premature termination of the Property or any of its rights with respect thereto;

 

	
(l)  

	
the Property is in good standing and no proceedings have been instituted to invalidate or assert an adverse claim or challenge against or to the ownership of or title to the Property, nor is there any basis therefor, and no other person is entitled to an agreement or option to acquire or purchase the Property or any portion thereof, and no person has any royalty or other interest whatsoever, in production from any part of the Property;

 

	
(m)  

	
the Property has full and free legal access and there is no fact or condition which would result in the interference with or termination of such access;

 

	
(n)  

	
there are no actions, suits or proceedings pending or to its knowledge, threatened, against or adversely affecting or which could adversely affect the Property before any federal, provincial, territorial, municipal or other governmental authority, court, department, commission, board bureau, agency or instrumentality, domestic or foreign, whether or not insured, and which might involve the possibility of any judgment or liability against the Property;

 

	
(o)  

	
all work carried out on the Property has been carried out in compliance with all applicable laws, including Environmental Laws, and neither the Company, nor to its knowledge any person, has received any notice of any breach of any such law and it has no knowledge of any facts which would lead a well informed operator in the mining industry to believe there are any environmental liabilities associated with the Property and there are no environmental audits, evaluations, assessments or studies relating to the Property;

 

 

- 5 -

 

 

	
(p)  

	
it has made full disclosure to Avaron of all relevant information that it possesses which relates to the Property which could have any effect upon Avaron determining whether it shall enter into this Agreement; and

 

	
(q)  

	
no consent or approval is required to permit the execution and delivery of this Agreement by the Company or the performance of its obligations hereunder.

 

	
2.2  

	
Avaron represents and warrants to the Company that as of the date of this Agreement:

 

	
(a)  

	
it is a valid and subsisting corporation duly incorporated under the laws of its jurisdiction of incorporation and has full corporate power and authority to execute and deliver this Agreement and to observe and perform its covenants and obligations hereunder and has taken all necessary corporate proceedings and obtained all necessary approvals in respect thereof and, upon execution and delivery of this Agreement by it, this Agreement will constitute a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms except that:

 

	
(i)  

	
enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally;

 

	
(ii)  

	
equitable remedies, including the remedies of specific performance and injunctive relief, are available only in the discretion of the applicable court;

 

	
(iii)  

	
a court may stay proceedings before them by virtue of equitable or statutory powers; and

 

	
(iv)  

	
rights of indemnity and contribution hereunder may be limited under applicable law;

 

	
(b)  

	
neither the execution of this Agreement nor the consummation of the transactions contemplated hereby conflict with, result in a breach of or accelerate the performance required by any agreement to which it is a party;

 

	
(c)  

	
neither the execution of this Agreement nor the consummation of the transactions contemplated hereby, result in a breach of the laws of any applicable jurisdiction or its constating documents.

 

	
2.3  

	
As soon as reasonably practicable following the Execution Date, the Company shall file notice of this Agreement and the transaction contemplated herein with the Exchange as an “Exempt Disposition”, as that term is defined under the policies of the Exchange. If requested by the Company, Avaron shall assist the Company with providing any additional information or documentation concerning Avaron as may be reasonably required by the Exchange.

 

 

- 6 -

 

 

	
2.4  

	
The representations, warranties and covenants hereinbefore set out are conditions on which the Parties have relied in entering into this Agreement and each of the Parties will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by it and contained in this Agreement. The representations and warranties set out herein shall survive for a period of five years following the Execution Date.

 

	
3.  

	
ASSOCIATION OF PARTIES

 

	
3.1  

	
All transactions, contracts, employments, purchases, operations, negotiations with third parties and any other matter or act undertaken on behalf of the Parties in connection with the Property will be done, transacted, undertaken or performed in the name of the transacting Party only and no Party will do, transact, perform or undertake anything in the name of any other Party or in the joint names of the Parties.

 

	
3.2  

	
Except as otherwise expressed in this Agreement, the rights and obligations of the Parties will be, in each case, several, and will not be or be construed to be either joint or joint and several. Nothing contained in this Agreement will, except to the extent specifically authorized hereunder, be deemed to constitute a Party a partner, an agent or legal representative of the other Parties. It is intended that this Agreement will not create the relationship of a partnership among the Parties and that no act done by any Party pursuant to the provisions hereof will operate to create such a relationship.

 

	
3.3  

	
Except as specifically provided hereunder:

 

	
(a)  

	
each Party will be at liberty to engage, for its own account and without duty to account to the other Party, in any other business or activity outside the Property constituted hereby, including the ownership and operation of any other mining permits, licenses, claims and leases wherever located;

 

	
(b)  

	
no Party will be under any fiduciary or other duty or obligation to the other Party which will prevent or impede such Party from participating in, or enjoying the benefits of, competing endeavours of a nature similar to the business or activity undertaken by the Parties hereunder outside of the Property; and

 

	
(c)  

	
the legal doctrines of “corporate opportunity” or “business opportunity” sometimes applied to persons occupying a relationship similar to that of the Parties will not apply outside of the Property with respect to participation by any Party in any business activity or endeavour.

 

 

- 7 -

 

 

	
3.4  

	
Subject to section 3.5, each Party, in proportion to its Interest at the relevant time, will indemnify and hold the other Party harmless from any claim of or liability to any third person asserted upon the ground that any action taken under this Agreement has resulted in or will result in any loss or damage to such third person, to the extent, but only to the extent, that such claim or liability is paid by the other Party. Prior to earning any Interest, Avaron will indemnify and hold the Company harmless from any claim of or liability to any third person asserted upon the ground that any action taken under this Agreement has resulted in or will result in any loss or damage to such third person, to the extent, but only to the extent, that such claim or liability is paid by the Company, and any such amount when paid to the Company will be included as an Exploration Cost hereunder. The Parties intend that the provisions of this section 3.4 will survive the termination of this Agreement.

 

	
3.5  

	
Notwithstanding any other provisions of this Agreement, the Company shall be responsible for, and shall indemnify and hold Avaron harmless from, any claim or liability resulting from breaches of Environmental Laws in respect of the Property existing as at the date of this Agreement from the Company’s activities carried out on the Property. Notwithstanding any other provision of this Agreement, Avaron shall be responsible for, and shall indemnify and hold the Company harmless from any claim or liability resulting from any claim or breaches of Environmental Laws in respect of the Property which were a result of Avaron’s actions or inactions prior to the termination of this Agreement.

 

	
4.  

	
THE INITIAL OPTION

 

	
4.1  

	
The Company hereby grants to Avaron the exclusive right and option to acquire a 75% Interest in the Property, free and clear of all Encumbrances in accordance with the terms of this Agreement (the “Option”). In connection with the grant of the Option, Avaron shall have the right to enter onto and occupy the Property in order to conduct such activity as is contemplated in this Agreement. Avaron shall comply with the relevant terms of the Company’s mining leases relating to the Property and shall indemnify and hold harmless the Company for any claims, losses or damages suffered or incurred by the Company as a result of Avaron’s failure to so comply.

 

	
4.2  

	
In order for Avaron to acquire a 75% Interest it must:

 

	
(a)  

	
make a total of $375,000 in cash payments to the Company as annual advance royalties by the fifth anniversary of the Execution Date as set forth in section 4.3;

 

	
(b)  

	
issue to the Company a total of 800,000 common shares of Avaron by the fifth anniversary of the Execution Date as set forth in section 4.3.

 

	
(c)  

	
incur Exploration Costs totaling $100,000 by the first anniversary of the Execution Date, which will be a firm commitment by Avaron, and therefore to the extent these Exploration Costs are not incurred within this time period, Avaron will forthwith pay the balance not incurred directly to the Company; further, the Parties intend that the provisions of this subsection 4.2(c) will survive the termination of this Agreement; and

 

	
(d)  

	
at its sole expense, complete drilling on a total of 35,000 metres in depth, or incur Exploration Costs of up to $7,100,000 in lieu of such drilling (which for greater certainty, includes the $100,000 firm commitment set out in subsection 4.2(c) above), by the fifth anniversary of the Execution Date as set forth in section 4.3.

 

 

- 8 -

 

 

These obligations must be met in accordance with the schedule set out in this Article 4 in order to keep the Option in good standing.

 

	
4.3  

	
In order to keep the Option in good standing and earn a 75% Interest, Avaron shall make payments to the Company by wire transfer or certified cheque in immediately available funds, issue to the Company common shares of Avaron, and incur Exploration Costs, as follows:

 

	
(a)  

	
pay $25,000 to the Company, and issue to the Company 150,000 common shares of Avaron within five days of the Execution Date;

 

	
(b)  

	
issue to the Company another 150,000 common shares of Avaron and incur $100,000 in Exploration Costs as a firm commitment pursuant to subsection 4.2(c) above, on or before the first anniversary of the Execution Date;

 

	
(c)  

	
pay an additional $100,000 to the Company, and at its sole expense, complete drilling at a minimum of 2,500 metres in depth on the Property or incur an additional $625,000 in Exploration Costs in lieu of such drilling, on or before the second anniversary of the Execution Date;

 

	
(d)  

	
pay an additional $100,000 to the Company and at its sole expense, complete drilling at a minimum of 5,000 metres in depth or incur an additional $1,000,000 in Exploration Costs in lieu of such drilling, on or before the third anniversary of the Execution Date;

 

	
(e)  

	
pay an additional $50,000 to the Company, issue another 250,000 common shares of Avaron to the Company, and at its sole expense, complete drilling at a minimum of 10,000 metres in depth or incur an additional Cdn$2,000,000 in Exploration Costs in lieu of such drilling, on or before the fourth anniversary of the Execution Date; and

 

	
(f)  

	
pay an additional $100,000 to the Company, issue 250,000 common shares of Avaron to the Company, and at its sole expense, complete drilling at a minimum of 17,500 metres in depth or incur an additional Cdn$3,375,000 in Exploration Costs in lieu of such drilling, on or before the fifth anniversary of the Execution Date.

 

 

- 9 -

 

 

	
4.4  

	
Upon Avaron making the cash payments, issuing common shares to the Company and incurring the Exploration Costs, all as set forth in sections 4.2 and 4.3, it will have been deemed to have acquired a 75% Interest, free and clear of all Encumbrances with no further action required by it.

 

	
4.5  

	
Other than the $100,000 firm commitment in Exploration Costs pursuant to subsection 4.2(c) above, the making of cash payments and share issuances to the Company, and incurring of Exploration Costs described in sections 4.2 and 4.3 are at Avaron’s option only, but nonetheless are required to keep the Option in good standing and accordingly are not firm and binding commitments of Avaron.

 

	
4.6 

	
Within 30 days of the Execution Date, the Company shall deliver to Avaron a memorandum of agreement for notice to third parties of this Agreement that Avaron may register in respect of the Property.

 

	
4.7  

	
Any common shares issuable by Avaron to the Company hereunder will be issued in accordance with applicable securities laws, and will be issued as fully paid and non-assessable common shares, free of any trading restrictions, except for such escrow or resale restrictions as may be imposed by applicable securities laws or the policies of the Exchange. Such common shares of Avaron will be issued as its capital is constituted on the Execution Date, and will be subject to adjustment in the event of any reorganization or reclassification of the capital of Avaron, including any subdivision or consolidation, or any reorganization, amalgamation, arrangement or merger with or into any other corporation, or in the event of any payment by Avaron of a stock dividend. As a condition of such reclassification or reorganization of capital, subdivision, consolidation, amalgamation, arrangement, merger, or payment of a stock dividend, the number of common shares of Avaron to be issued to the Company hereunder shall be adjusted and lawful and adequate provision shall be made whereby the Company shall thereafter have the right to receive upon the basis and upon the terms and conditions specified in this Agreement and in lieu of the common shares of Avaron issuable hereunder, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of common shares of Avaron issuable hereunder, had such reclassification or reorganization of capital, subdivision, consolid­ation, amalgamation, arrangement or merger, or payment of a stock dividend not taken place.

 

	
4.8  

	
Notwithstanding anything else contained in this Agreement, Avaron shall have the right to terminate this Agreement at any time upon written notice, provided that Avaron will thereby forfeit any right, title or Interest in and to the Property, and will immediately reconvey title and return possession of the Property to the Company at the sole expense of Avaron. In the event of such termination, Avaron shall not be responsible for any further cash payments, share issuances or Exploration Costs, other than the $100,000 firm commitment of Exploration Costs pursuant to subsection 4.2(c) above. The Parties intend that the provisions of this section 4.8 will survive the termination of this Agreement.

 

 

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4.9

	
Upon Avaron earning a 75% Interest in the Property in accordance with section 4.4, Avaron may elect to earn an additional 25% Interest in the Property pursuant to Article 5, or may elect to form a joint venture in accordance with section 6.4.

 

	
5.  

	
THE ADDITIONAL OPTION & ALTERNATIVE ADDITIONAL OPTION

 

	
5.1  

	
At any time from the fifth anniversary of the Execution Date until the date that is six months following the fifth anniversary of the Execution Date, Avaron may decide to proceed to Commercial Production (the “Production Decision”).

 

	
5.2  

	
Subject to Avaron making the Production Decision, and provided that the Option has been exercised, the Company hereby grants to Avaron the exclusive right and option to acquire an additional 25% Interest in the Property, free and clear of all Encumbrances in accordance with the terms of this Agreement (the “Additional Option”). In connection with the grant of the Additional Option, Avaron shall have the right to enter onto and occupy the Property in order to conduct such activity as is contemplated in this Agreement. Avaron shall comply with the relevant terms of the Company’s leases of the Property and shall indemnify and hold harmless the Company for any claims, losses or damages suffered or incurred by the Company as a result of Avaron’s failure to so comply. The Parties intend that this indemnity will survive the termination of this Agreement.

 

	
5.3  

	
In order for Avaron to acquire an additional 25% Interest pursuant to the Additional Option it must:

 

	
(a)  

	
make a Production Decision within six (6) months following the fifth anniversary of the Execution Date;

 

	
(b)  

	
commence Commercial Production by the third anniversary of the Production Decision;

 

	
(c)  

	
pay $200,000 to the Company within five days of the Production Decision, as an advance royalty payment; and

 

	
(d)  

	
subject to section 5.4 below, pay $200,000 to the Company on or before each of the second, third, fourth and fifth anniversaries of the Production Decision, as advance royalty payments.

 

These obligations must be met in accordance with the schedule set out in this Article 5 in order to keep the Additional Option in good standing.

 

	
5.4  

	
If Commercial Production occurs at any time before the fifth anniversary of the Production Decision, no additional payments pursuant to section 5.3 are due from Avaron to the Company and Avaron shall grant the Net Smelter Royalty to the Company pursuant to section 7.1.

 

 

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5.5  

	
Upon Avaron making the cash payments as set forth in section 5.3, it will have been deemed to have acquired a 25% Interest free and clear of all Encumbrances with no further action required by it.

 

	
5.6  

	
The making of cash payments described in section 5.3 are at Avaron’s option only but nonetheless are required to keep the Additional Option in good standing and accordingly are not firm and binding commitments of Avaron.

 

	
5.7  

	
Within 30 days of the Execution Date, the Company shall deliver to SBH Fiduciary Services Ltd., as escrow agent (the “Escrow Agent”), undated registerable transfers in relation to the Property in favour of Avaron, in a form approved by Avaron, and such transfer documents shall be held by the Escrow Agent in trust and will not be released to Avaron for registration until Avaron has completed the acquisition of the 75% interest in the Property or the remaining 25% interest in the Property, as the case may be. Concurrently with the execution of this Agreement, the Parties agree to execute and deliver escrow instructions to the Escrow Agent for the deposit of the transfers into escrow and the release conditions.

 

	
5.8  

	
As an alternative to the Additional Option, provided that the Option has been exercised, the Company hereby grants to Avaron the exclusive right and option to acquire an additional 25% Interest in the Property, free and clear of all Encumbrances in accordance with the terms of this Agreement (the “Alternative Additional Option”). In connection with the grant of the Alternative Additional Option, Avaron shall have the right to enter onto and occupy the Property in order to conduct such activity as is contemplated in this Agreement. Avaron shall comply with the relevant terms of the Company’s leases of the Property and shall indemnify and hold harmless the Company for any claims, losses or damages suffered or incurred by the Company as a result of Avaron’s failure to so comply. The Parties intend that this indemnity will survive the termination of this Agreement. In order for Avaron to acquire an additional 25% Interest pursuant to the Alternative Additional Option it must:

 

	
(a)  

	
pay $100,000 to the Company on or before each of the sixth and seventh anniversaries of the Execution Date, as advance royalty payments;

 

	
(b)  

	
issue to the Company 250,000 common shares of Avaron on or before each of the sixth and seventh anniversaries of the Execution Date; and

 

	
(c)  

	
at its sole expense, complete drilling at a minimum of an additional 10,000 metres in depth on the Property or incur an additional Cdn$2,000,000 in Exploration Costs in lieu of such drilling, on or before the seventh anniversary of the Execution Date.

 

	
(d)  

	
Upon Avaron satisfying the obligations set out in this section 5.8 it will have been deemed to have acquired an additional 25% Interest free and clear of all Encumbrances with no further action required by it. For greater certainty, the obligations in this section 5.8 are at Avaron’s option only but nonetheless are required to keep the Alternative Additional Option in good standing and accordingly are not firm and binding commitments of Avaron.

 

 

- 12 -

 

 

	
6.  

	
EXPLORATION

 

	
6.1  

	
Avaron will be the Operator during the term of this Agreement.

 

	
6.2  

	
The Operator shall incur such Exploration Costs, in addition to those contemplated in Article 4, as it deems prudent or advisable.

 

	
6.3  

	
Avaron shall be solely responsible for funding the Exploration Costs up until the termination of this Agreement.

 

	
6.4  

	
If Avaron does not make the Production Decision, but Avaron has exercised the Option, or the Additional Option or the Alternative Additional Option is not exercised by Avaron for any reason, but Avaron has exercised the Option, then the Parties covenant and agree to negotiate in good faith and forthwith execute and deliver a joint venture agreement on standard industry terms, including the summary of the essential terms set out in Schedule B for the further exploration and development of the Property.

 

	
7.  

	
ROYALTY

 

	
7.1  

	
Upon Avaron acquiring a 100% Interest in the Property free and clear of all Encumbrances, Avaron shall grant to the Company a 2.5% Net Smelter Royalty as described in Schedule C. All advance royalty payments made to the Company pursuant to subsections 5.3(c) and (d) and section 5.8 above will be credited towards Avaron’s payment of the Net Smelter Royalty.

 

	
7.2  

	
At any time Avaron may purchase all of the Net Smelter Royalty, by notice of such election to the Company and by paying to the Company $2,000,000 and issuing to the Company an additional 375,000 common shares of Avaron, as its capital is constituted on the Execution Date. The $2,000,000 cash payment will be increased by $1,000,000 per each $10/oz increase in the market price of silver and silver equivalent. The incremental unit market price increase will be based on the fair market price of the Product on the date of signing this Agreement, as determined under Schedule C. The overall Net Smelter Return buy-out payment will be capped at $4,000,000. Where in this Agreement, “silver equivalent” means the following:

 

Silver equivalent = (mineral grade X mineral recovery X Mineral Price Quotation) / (silver Mineral Price Quotation)

 

 

- 13 -

 

 

	
8.  

	
AUTHORITY, DUTIES AND OBLIGATIONS OF THE OPERATOR

 

	
8.1  

	
The Operator of the Property will have full authority to do everything necessary or desirable in accordance with good mining practice in connection with the day-to-day exploration, development or operation of the Property or the applicable part thereof.

 

	
8.2  

	
Without limiting the generality of section 8.1, the Operator shall have the following duties and obligations:

 

	
(a)  

	
to manage, direct and control all exploration, development and production operations in, on and under the Property, in a prudent and workmanlike manner, and in compliance with all applicable laws, rules, orders and regulations of Yukon Territory and applicable federal laws;

 

	
(b)  

	
to provide to the Company for each three months during which any Exploration Costs have been incurred written progress reports showing the work carried out and the results obtained, and an immediate report of any significant results or discovery;

 

	
(c)  

	
to provide the Company with copies of all sample location maps, drill hole assay logs, assay results and other technical data, including technical reports, compiled by or on behalf of the Operator with respect to the Property;

 

	
(d)  

	
to perform its duties and obligations in a manner consistent with good exploration and mining practices;

 

	
(e)  

	
to maintain the Property in good standing, including the payment of all taxes and maintenance charges, the cost of which may be credited to Exploration Costs;

 

	
(f)  

	
to provide administrative and technical assistance and facilities necessary to support the exploration activities;

 

	
(g)  

	
to transact, undertake and perform all necessary transactions, contracts, employments, purchases, operations, negotiations with third parties and any other matter or thing undertaken on behalf of the Parties but in the Operator’s name only;

 

	
(h)  

	
to permit each Party or its representatives duly appointed in writing, at its own expense and risk, access to the Property, and all data derived from carrying out work hereunder;

 

	
(i)  

	
to arrange for and maintain workers’ compensation or equivalent coverage for all eligible employees engaged by it in accordance with local statutory requirements;

 

 

- 14 -

 

 

	
(j)  

	
to obtain, maintain and keep in force during the term of this Agreement the following insurance coverages (and to provide the Company with a certificate of insurance which shows the Company as a named insured on the policy):

 

	
(i)  

	
commercial general liability insurance coverage against third party claims for bodily injury and property damage arising from the operations of Avaron with a limit of $5 million; and

 

	
(ii)  

	
statutory insurance coverage and $2 million of automobile liability insurance coverage on any licensed vehicles on the Property that Avaron operates, owns or leases,

 

and to provide 30 days written notice to the Company prior to cancelling or amending any such insurance; and

 

	
(k)  

	
to take all action and precautions reasonably necessary to protect and secure the Assets and in particular, without limiting the foregoing, store all drill core at a suitable facility.

 

	
(l)  

	
The Operator is responsible for securing all permits for the exploration and production programs and all reclamation work and bonding requirements as stipulated in the permit conditions issued by the Yukon Territory Government.

 

	
8.3  

	
In carrying out its exploration activities and incurring Exploration Costs on the Property, Avaron shall maintain in good standing all mining leases comprising the Property by the payment of all taxes and rentals and the performance of all other actions which may be necessary in that regard and to keep such mining leases free and clear of all liens and other charges arising from Avaron’s activities thereon except those at the time contested in good faith by Avaron. Avaron may use assessment work credits in respect of the Property where the maximum lease renewal term has been obtained. Such excess credits that are not required for any application for the renewal term for the Property can be used at Avaron’s discretion on any ground adjacent to the Property without obligations under this Agreement.

 

	
9.  

	
SHARING OF AND CONFIDENTIAL NATURE OF INFORMATION

 

	
9.1  

	
No Party will make any public statement or issue any press release concerning the transactions contemplated herein without the consent of the other Parties which consent shall not be unreasonably withheld. The Party making such disclosure will consult with the other Parties prior to making any statement or press release and the Parties will use all reasonable efforts, acting expeditiously and in good faith, to agree upon a text for such statement or release which is satisfactory to each of them within two business days. If the Parties fail to agree upon such text, the Party making the disclosure will make only such public statement or release as its counsel advises in writing is legally required to be made or is otherwise reasonable in the circumstances.

 

	
9.2  

	
The Parties further agree that this Agreement will not be provided to any third party or used other than for the activities contemplated hereunder except as required by law or by the rules and regulations of any regulatory authority or stock exchange having jurisdiction (in which case the Party being compelled to disclose such information shall to the extent practical give the other Party an opportunity to review and provide reasonable comments on the disclosure), or with the written consent of the other Party, such consent not to be unreasonably withheld.

 

 

- 15 -

 

 

	
9.3  

	
Consent to disclosure of information pursuant to Article 9 will not be unreasonably withheld where a Party wishes to disclose any such information to a third party for the purpose of arranging financing, entering into a corporate transaction or for the purpose of selling its Interest or its rights as contemplated in this Agreement, provided that such third party first enters into a written agreement with the other Party that any such information not theretofore publicly disclosed will be kept confidential and not disclosed to others on terms satisfactory to the other Party acting reasonably.

 

	
10.  

	
NOTICES

 

	
10.1  

	
Any notice, direction or other instrument required or permitted to be given under this Agreement will be in writing and may be given by the delivery of the same or by mailing the same by prepaid registered or certified mail or by sending the same by telecommunication, facsimile, e-mail or other similar form of communication, in each case addressed as follows:

 

	
(a)  

	
If to the Company at:

 

Suite 900, 570 Granville Street

Vancouver, British Columbia

Canada V6C 3P1

 

Attention: David Wolfin, President

Facsimile No.: 604 682-3600

E-mail: dwolfin@oniva.ca

 

	
(b)  

	
If to Avaron at:

 

Suite 900, 570 Granville Street

Vancouver, British Columbia

Canada V6C 3P1

 

Attention: Miloje Vicentijevic, President

Facsimile No.: 604 682-3600

E-mail: mgvicent@telusplanet.net

 

 

- 16 -

 

 

	
10.2  

	
Any notice, direction or other instrument will:

 

	
(a)  

	
if delivered, be deemed to have been given and received on the day it was delivered; and

 

	
(b)  

	
if sent by telecommunication, facsimile, e-mail or other similar form of communication, be deemed to have been given and received on the business day following the day it was so sent.

 

	
10.3  

	
A Party may at any time give to the other Party notice in writing of any change of address of the Party giving such notice and from and after the giving of such notice the address or addresses therein specified will be deemed to be the address of such Party for the purposes of giving notice hereunder.

 

	
11.  

	
TERMINATION

 

	
11.1  

	
Other than the provisions of this Agreement which explicitly survive termination, this Agreement will terminate upon the occurrence of the earliest of:

 

	
(a)  

	
the written agreement by the Parties to terminate;

 

	
(b)  

	
the failure by Avaron to fulfill its obligations under Articles 4 and 5 (subject to Articles 12 and 13); and

 

	
(c)  

	
Avaron’s termination of this Agreement pursuant to section 4.8.

 

	
12.  

	
FORCE MAJEURE

 

	
12.1  

	
Except in the case of a lack of funds, the obligations of a Party 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 licence, 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, provincial 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, terrorism, insurrection or rebellion; fire, explosion, earthquake; 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 (an “Intervening Event”).

 

 

- 17 -

 

 

	
12.2  

	
A Party relying on the provisions of section 12.1 will promptly give written notice to the other Party of the particulars of the Intervening Event and all time limits imposed by this Agreement will be extended from the date of delivery of such notice by a period equivalent to the period of delay resulting from an Intervening Event.

 

	
12.3  

	
A Party relying on the provisions of section 12.1 will take all reasonable steps to eliminate any Intervening Event and, if possible, will perform its obligations under this Agreement as far as commercially practical, but nothing herein will require such Party to settle or adjust any labour dispute or to question or to test the validity of any law, rule, regulation or order of any duly constituted governmental authority or to complete its obligations under this Agreement if an Intervening Event renders completion commercially impracticable. A Party relying on the provisions of section 12.1 will give written notice to the other Party as soon as such Intervening Event ceases to exist.

 

	
13.  

	
DEFAULT

 

	
13.1  

	
Notwithstanding anything in this Agreement to the contrary, if any Party (a “Defaulting Party”) is in default of any requirement herein set forth the Party or Parties affected by such default will give written notice to the Defaulting Party specifying the default and the Defaulting Party will not lose any rights under this Agreement, unless within 30 days after the giving of the first notice of default by an affected Party the Defaulting Party has failed to take reasonable steps to cure the default by the appropriate performance and if the Defaulting Party fails within such period to take reasonable steps to cure any such default, the affected Party will be entitled to seek any remedy it may have on account of such default including terminating this Agreement and/or seeking the remedies of specific performance, injunction or damages.

 

	
14.  

	
GENERAL

 

	
14.1  

	
The Parties will execute such further and other documents and do such further and other things as may be necessary or convenient to carry out and give effect to the intent of this Agreement, including in connection with engaging the services of the Escrow Agent.

 

	
14.2  

	
Time will be of the essence in the performance of this Agreement.

 

	
14.3  

	
This Agreement may be assigned by either Party only in compliance with the provisions set forth herein, and will enure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns. In the event that Avaron wishes to sell, transfer or assign its rights and obligations under this Agreement to any third party, such sale, transfer or assignment will not be binding upon the Company until notice of such sale, transfer or assignment has been delivered to the Company, and the purchaser, transferee or assignee has agreed to be bound by the terms of this Agreement, and provided that the obligation of Avaron to issue its common shares to the Company under sections 4.3 and 7.2 above is not transferable or assignable without the prior written consent of the Company and adequate provision being made acceptable to the Company for the issuance of equivalent securities or assets to the Company.

 

 

- 18 -

 

 

	
14.4  

	
This Agreement (including the Schedules thereto) constitutes the entire agreement between the Parties and, except as hereafter set out, replaces and supersedes all prior agreements, memoranda, correspondence, communications, negotiations and representations, whether oral or written, express or implied, statutory or otherwise between the Parties with respect to the subject matter herein. There are no implied covenants contained in this Agreement other than those of good faith and fair dealing.

 

	
14.5  

	
This Agreement will be governed by and construed according to the laws of British Columbia and the federal laws of Canada applicable therein.

 

	
14.6  

	
This Agreement may only be amended by the written agreement of all the Parties hereto and their permitted successors and assigns.

 

	
14.7  

	
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but each of which shall constitute one and the same instrument. This Agreement may also be executed and delivered by any Party by sending a faxed, e-mail or any other form of telecommunicated copy to the other Party, which when so delivered shall be considered for all purposes to be good delivery, as if it were an original signature of that Party.

 

IN WITNESS WHEREOF the Parties hereto have executed these presents as of the day and year first above written.

 

	 	
AVINO SILVER & GOLD MINES LTD.

	 
	 	 	 	 
	 	By:	/s/ David Wolfin	 
	 	 	Name: David Wolfin	 
	 	 	Title:	 
	 	 	 	 
	 	 	 	 
	 	AVARON MINING CORP.	 
	 	 	 	 
	 	By:	
/s/ Miloje Vicentijevic

	 
	 	 	Name: Miloje Vicentijevic	 
	 	 	Title	 

 

 

- 19 -

 

 

SCHEDULE A

 

Description of Property

 

AVINO SILVER & GOLD MINES LTD. – EAGLE PROPERTY MINING LEASES, YUKON

 

	
District

	
Grant Number

	
Reg Type

	
Quartz Lease

	
Claim Name

	
Claim Owner

	
Operation Recording Date

	
Claim Expiry Date

	
NTS Map Number

	
Mayo

	
14871

	
Quartz

	
NM00113

	
ALEXANDRA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
10/12/1923

	
4/29/2021

	
105M14

	
Mayo

	
14873

	
Quartz

	
NM00114

	
NATHALIE

	
Avino Silver and Gold Mines Ltd. - 100%.

	
10/12/1923

	
4/29/2021

	
105M14

	
Mayo

	
16171

	
Quartz

	
NM00115

	
EAGLE FRAC.

	
Avino Silver and Gold Mines Ltd. - 100%.

	
7/13/1926

	
4/29/2021

	
105M14

	
Mayo

	
38811

	
Quartz

	
NM00116

	
EAGLE 2

	
Avino Silver and Gold Mines Ltd. - 100%.

	
11/12/1934

	
4/29/2021

	
105M14

	
Mayo

	
38815

	
Quartz

	
NM00117

	
EAGLE 1

	
Avino Silver and Gold Mines Ltd. - 100%.

	
11/14/1934

	
4/29/2021

	
105M14

	
Mayo

	
55482

	
Quartz

	
NM00118

	
JEAN

	
Avino Silver and Gold Mines Ltd. - 100%.

	
1/24/1947

	
4/29/2021

	
105M14

	
Mayo

	
59662

	
Quartz

	
NM00119

	
NINA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59663

	
Quartz

	
NM00120

	
TORO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59664

	
Quartz

	
NM00121

	
PERO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59665

	
Quartz

	
NM00122

	
CASA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59666

	
Quartz

	
NM00123

	
LOMA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59667

	
Quartz

	
NM00124

	
PORCO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59668

	
Quartz

	
NM00125

	
GATO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59669

	
Quartz

	
NM00126

	
PAVO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

 

 

 

 

 

Eagle Property, Galena Hill, Yukon – NTS 105M/14

 

 

- 2 -

 

 

SCHEDULE B

 

Summary of Joint Venture Agreement Terms

 

	
1.

	
Definitions

 

	
-

	
as applicable

 

	
2.

	
Representations and Warranties

 

	
-

	
due incorporation

	
-

	
power and authority

	
-

	
ownership and title to assets

	
-

	
no adverse claim

 

	
3.

	
Purpose and Creation of the Joint Venture

 

	
-

	
best efforts to explore and develop property

	
-

	
joint venture does not create partnership

	
-

	
rights and obligations several and not joint or joint and several

	
-

	
beneficial ownership in proportion to respective interest

	
-

	
rights and obligations of parties strictly limited to the applicable joint venture property

 

	
4.

	
Dilution

 

	
-

	
initial deemed contributions and investment in proportion to each Party’s initial Interest (initially, 75% to Avaron - $7.5 million, and 25% to the Company - $2.5 million)

	
-

	
dilution of initial Interests based on proportionate funding of future costs

	
-

	
reduction of Interest below 10% results in loss of Interest, in consideration of a Net Smelter Royalty of 3% without any buy-down provisions

 

	
5.

	
Executive Committee

 

	
-

	
Two representatives and one alternate representative for each Party, with chairperson designated by Avaron and having casting vote in the event of a deadlock

	
-

	
votes equal percentage Interest in the Property from time to time

	
-

	
quorum equal to one representative of each Party

 

	
6.

	
Operator

 

	
-

	
Avaron is operator at all times during the currency of the joint venture and afterwards as long as it holds at least a 50% Interest

	
-

	
indemnification to the Party who is not the operator for non-negligent activities

	
-

	
monthly reports from Operator to the other Party

 

 

  

 

 

	
7.

	
Power, Duties and Obligations of Operator

 

	
-

	
standard

 

	
8.

	
Programs

 

	
-

	
expenditures incurred pursuant to work programs approved by majority of Executive Committee members

	
-

	
submission of proposed program within 60 days of completion of previous work programs

	
-

	
60 days to elect to participate in a program

	
-

	
minimum 6 month, maximum 12 month budget program periods

 

	
9.

	
Accounting Procedures

 

	
-

	
cash calls

	
-

	
administration overhead allowance 10% exploration, 3% development, 1.5% mining

 

	
10.

	
Information and Data

 

	
-

	
joint access to Property and project data/materials

 

	
11.

	
Partition

 

	
-

	
no partition

 

	
12.

	
Right of First Refusal

 

	
-

	
standard

 

	
13.

	
Royalty

 

	
-

	
Net Smelter Royalty general terms as defined in Schedule C, but as specifically amended by the terms hereof

 

	
14.

	
Force Majeure

 

	
-

	
standard

 

	
15.

	
Notice

 

	
-

	
similar to Article 10 of Option Agreement

 

	
16.

	
Waiver

 

	
-

	
standard

 

 

- 2 -

 

 

	
17.

	
Further Assurances

 

	
-

	
standard

 

	
18.

	
Use of Name

 

	
-

	
no use of name of other Party

 

	
19.

	
Entire Agreement

 

	
-

	
standard

 

	
20.

	
Amendment

 

	
-

	
in writing

 

	
21.

	
Dispute

 

	
-

	
The courts of British Columbia

 

	
22.

	
Right to Audit

 

	
-

	
Party to the Joint Venture Agreement acquiring a net smelter royalty has the right to audits

 

	
23.

	
Document Retention on Termination

 

	
-

	
standard

 

	
24.

	
Enurement

 

	
-

	
standard

 

	
25.

	
Governing Law

 

	
-

	
Province of British Columbia and the federal laws of Canada applicable therein

 

	
26.

	
Severability

 

	
-

	
standard

 

	
27.

	
Number and Gender

 

	
-

	
standard

 

	
28.

	
Headings

 

	
-

	
standard

 

 

- 3 -

 

 

	
29.

	
Time of Essence

 

	
-

	
standard

 

	
30.

	
Regulatory Approval

 

	
-

	
standard

 

	
31.

	
Assignment

 

	
-

	
consent of Party required of assignment by other Party, except if assignment being made to an Affiliate of the other Party as defined in the Securities Act (British Columbia) and provided such Affiliate agrees in writing to be bound by the terms of the Joint Venture Agreement

 

 

- 4 -

 

 

SCHEDULE C

 

Net Smelter Royalty

 

DEFINITION, CALCULATION AND PAYMENT OF NET SMELTER ROYALTY

 

The Net Smelter Royalty is the percentage provided in this Schedule attached and calculated and paid by Payor (as defined below) to the Royalty Holder (as defined below) in accordance with the following provisions:

 

1.           Definitions

 

Unless otherwise set forth below, all capitalized terms used in this Schedule shall have the meaning ascribed to them in the Agreement.

 

“Calendar Quarter” means each three-month period ending March 31st, June 30th, September 30th and December 31st of each calendar year.

 

“Mineral Content” means all marketable ores, concentrates, metals and minerals contained in Subject Ore as separately estimated by the Payor using head grade or assays taken prior to entering mill or heap leach facilities, mill or heap leach operation recovery levels, and recoveries and other adjustments at the refinery, as key components in the calculation of Mineral Content.

 

“Mineral Price Quotation” for a Product means the final sale price as quoted for the Product on the London Metals Exchange, as published in Metals Week or a similar publication. If publication of the final quotation on the London Metals Exchange shall be discontinued, the parties shall select a comparable commodity quotation for purposes of calculating the Net Smelter Returns. If such selection has not been completed prior to the end of the calendar month following the month in which the quotation is discontinued, the average quotation for the calendar month in which the quotation is discontinued shall be used on an interim basis pending such selection.

 

“Net Smelter Returns” for a Calendar Quarter in respect of all of the Product means the sum of (i) for each of the Products, the average Mineral Price Quotation for the Product for a Calendar Quarter multiplied by the total number of appropriate units of measurement of the Product beneficiated by the Payor or credited by the smelter, refiner or other bona fide purchaser to the Payor during that Calendar Quarter; less (ii) the deductions, adjustments and credits set forth in Section 3.

 

“Net Smelter Royalty” means Two Point Five Percent (2.5%) of Net Smelter Returns.

 

“Payor” means the Party who produces and sells Products from the Property from which the Royalty Holder is entitled to a Royalty as provided in the agreement.

 

“Product” shall mean Subject Ore at its highest stage of processing.

 

“Property” shall have the definition provided in the Agreement.

 

 

  

 

 

“Royalty Holder” means the Party or its successors or assigns that becomes entitled to a Royalty, as provided in the Agreement.

 

“Smelter Returns” for a Calendar Quarter in respect of all of the Products means, for each of the Products, the average Mineral Price Quotation for the Product for a Calendar Quarter multiplied by the total number of appropriate units of measurement of the Product beneficiated by the Payor or credited by the smelter, refiner or other bona fide purchaser to the Payor during that Calendar Quarter.

 

“Subject Ore” means all ore mined by the Payor from the Property.

 

2.           Reservation of Royalty

 

The Payor shall pay and the Royalty Holder shall be entitled to receive as the royalty, 2.5% of Net Smelter Returns.

 

3.           NSR Deductions

 

In calculating the Net Smelter Royalty, the Payor shall be entitled to deduct from Smelter Returns the following costs, to the extent incurred and borne by the Payor:

 

	
  

	
(a)

	
all smelting, minting and refining costs, and treatment charges and penalties at the smelter or refinery including, but without being limited to, deductions charged for metal losses and penalties for impurities;

 

	
  

	
(b)

	
all costs of transporting the Products from the Property to a smelter, mint or refinery including, without restricting the generality of the foregoing, any and all costs of insurance in respect thereto;

 

	
  

	
(c)

	
all sampling, assaying and representation charges in connection with sampling and assaying carried out after the Products have left the Property;

 

	
  

	
(d)

	
costs and expenses, if any, of marketing the Products, other than gold; and

 

	
  

	
(e)

	
taxes levied by any government on the value of Products produced or sold, but excluding income taxes if such charges are actual costs payable out of the proceeds received from a bona fide purchaser or are shown as deductions therefrom.

 

4.           General Provisions

 

	
  

	
(a)

	
Arm’s Length Provision

 

If smelting and/or refining are carried out in facilities owned or controlled by the Payor, charges, costs and penalties for such operations, including transportation, shall mean the amount that the Payor would have incurred if such operations were carried out at facilities not owned or controlled by the Payor then offering similar custom services for comparable products on prevailing terms.

 

 

- 2 -

 

 

	
  

	
(b)

	
Payment of the Royalty

 

All royalty or provisional royalty payments will be payable on or before the 30th day following each Calendar Quarter. Each such quarterly payment to the Royalty Holder shall be accompanied by a statement in reasonable detail showing the calculation of the payment. Each such quarterly payment shall be subject to adjustment as provided below in the next quarterly payment or when the final report for the year is issued as specified below.

 

	
  

	
(c)

	
Provisional Payments

 

If any payment becomes due and payable to the Royalty Holder prior to the Payor’s final estimates of the total amount payable, then the Payor shall pay the Royalty Holder a provisional royalty payment using the Payor’s then current estimates of the amount payable for Products produced during the Calendar Quarter.

 

	
  

	
(d)

	
Adjustments

 

The following adjustments shall be taken into account in determining the royalty payments or provisional royalty payments and shall be specified in a statement which will accompany each payment:

 

	
  

	
(i)

	
All payments made by the Payor to the Royalty Holder pursuant to Articles 4 and 5 of the Agreement shall be applied as credits toward the payment of the Net Smelter Royalty;

 

	
  

	
(ii)

	
Any adjustments to charges, costs, deductions or expenses imposed upon or given to the Payor but not taken into account in determining previous royalty payments;

 

	
  

	
(iii)

	
Any adjustments in the number of appropriate units of measurement of Products, beneficiated by the Payor, or previously credited to the Payor by a smelter, refiner or bona fide purchaser of Products shipped or sold by the Payor;

 

	
  

	
(iv)

	
Any adjustments in Mineral Content and average percentage recovery; and

 

	
  

	
(v)

	
Any payments that have not otherwise been credited against previous royalty payments.

 

	
  

	
(e)

	
Annual Final Report

 

Within 90 days after the end of each calendar year, the Payor shall deliver or cause to be delivered to the Royalty Holder a final report for the year certified as being accurate by a responsible officer of the Payor showing in reasonable detail the calculation of the royalty due the Royalty Holder for the prior year and all adjustments to the quarterly or other periodic reports and payments for the year. With such final report, the Payor shall, if applicable, make such additional royalty payment as is required by the report. If such report indicates that the Royalty Holder has received more than it should have been paid in respect of the royalty due to the Royalty Holder, then the excess shall be deducted from the next payment obligation owed pursuant to the provisions of this Schedule or, in the event of a temporary or permanent cessation of production, the Royalty Holder shall repay the excess within 15 days of the annual report.

 

 

- 3 -

 

 

	
  

	
(f)

	
Assignment by Payor

 

Upon any assignment, conveyance, termination or abandonment of the Property or any portion thereof, as the case may be, by the Payor, the Payor shall have no further obligation to the Royalty Holder in respect of the Property or such portion, as the case may be; provided that, in the case of assignment or conveyance, it shall be a condition of any assignment or conveyance that the assignee or transferee shall have agreed to assume the Payor’s obligation to the Royalty Holder to pay the royalty in respect of that portion of the Property acquired by such assignee or transferee.

 

	
  

	
(g)

	
Assignment by Royalty Holder

 

Notwithstanding anything to the contrary herein contained, if any part of the right to receive the Royalty is assigned by the Royalty Holder, it shall be a condition of such assignment that the assignee agrees with the Payor and all other parties entitled to receive any part of the Royalty as follows:

 

	
  

	
(i)

	
the amount of any royalty payable hereunder shall be settled only with the Royalty Holder or an authorized nominee (herein collectively called the “Nominee”) as designated by notice to the Payor (such notice to be executed by all parties entitled to receive any part of the Royalty), and such settlement shall be final and binding upon all interested parties and the Payor shall not be required to make any accounting to any person save such Nominee;

 

	
  

	
(ii)

	
payment of the royalty shall be made only to or to the order of the Nominee “In Trust” and such payment shall constitute a full and complete discharge to the Payor and it shall have no obligation to see to the distribution of any such payment;

 

	
  

	
(iii)

	
the Payor may settle disputes arising hereunder with the Nominee and such settlement shall be final and binding upon all interested parties;

 

	
  

	
(iv)

	
the Payor may rely upon any direction, advice or authorization signed by the Nominee and may act thereon as if the same was signed by all interested parties; and

 

	
  

	
(v)

	
the Payor shall not be required to deal with any person except the Nominee. Each interested party shall exercise all of their respective rights only through the Nominee and shall require each of their respective assignees to agree in writing to be bound by the provisions hereof.

 

 

- 4 -

 

 

	
  

	
(h)

	
Royalty Running With the Property

 

The Net Smelter Royalty created herein shall be a real property interest in all portions of the Property to which the royalty applies sufficient to secure the royalty payments herein provided.

 

	
(i)  

	
Purchase of Net Smelter Royalty

 

The Payor may at any time purchase all of the Net Smelter Royalty pursuant to the terms of the Agreement. In the event of any such purchase, the Net Smelter Royalty will be adjusted commencing on the first day of the next Calendar Quarter.

 

	
(j)  

	
Abandonment

 

	
  

	
In the event Payor intends to abandon any of the lands comprising a portion or all of the Property (“Abandonment Property”), Payor shall first give notice of such intention to Royalty Holder at least 70 days in advance of the proposed date of abandonment. If not later than 10 days before the proposed date of abandonment Payor receives from Royalty Holder written notice that Royalty Holder desires Payor to convey the Abandonment Property to Royalty Holder, Payor shall, without additional consideration, convey the Abandonment Property in good standing by quit claim deed, without warranty, to Royalty Holder and shall thereafter have no further obligation to maintain the title to the Abandonment Property. If Royalty Holder does not timely give such notice to Payor, Payor may abandon the Abandonment Property and shall thereafter have no further obligation to maintain the title to the Abandonment Property; provided, however, if Payor reacquires any of the ground covered by the Abandonment Property at any time within five (5) years following abandonment, Minerals previously or thereafter produced from such ground shall be subject to this Agreement.

 

 

- 5 -avino_ex47.htm

EXHIBIT 4.7

 

OPTION PURCHASE AND ASSIGNMENT AGREEMENT

THIS AGREEMENT is made effective as of the 30th day of November, 2012

 

AMONG:

 

BENZ CAPITAL CORP., a company incorporated under the laws of British Columbia, having an office at #900, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

 

("Benz")

AND:

 

AVARON MINING CORP., a company incorporated under the laws of British Columbia, having an office at #900, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

 

("Avaron")

 

AND:

 

AVINO SILVER & GOLD MINES LTD., a company incorporated under the laws of British Columbia, having an office at #900, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

 

("Avino")

 

WHEREAS:

	
A.  

	
Benz is a capital pool company within the meaning of Policy 2.4 (the "CPC Policy") of the Corporate Finance Manual of the TSX Venture Exchange (the "Exchange");

	
B.  

	
Avaron and Avino have entered into an Option Agreement dated January 3, 2012, as amended by and Amending Agreement dated November 22, 2012 (collectively, the "Option Agreement"), wherein Avaron has the sole and irrevocable option (the "Option") to acquire from Avino up to an undivided 100% right, title and interest in and to certain mineral mining leases in the Mayo District in the Yukon Territory, as more particularly described in Schedule "A" hereto (collectively, the "Property");

	
C.  

	
Avaron wishes to assign to Benz and Benz wishes to purchase, all of Avaron's right, title and interest in and to the Option Agreement and the Property in accordance with the terms of this Agreement (the "Option Purchase and Assignment");

	
D.  

	
Avino has agreed to provide its consent to the Option Purchase and Assignment; and

  

- 1 -

  

 

	
E.  

	
The Option Purchase and Assignment is intended to serve as the Qualifying Transaction (the "Qualifying Transaction") of Benz pursuant to Policy 2.4 – Capital Pool Companies ("Policy 2.4") of the TSX Venture Exchange (the "Exchange").

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties hereto covenant and agree as follows:

 

ARTICLE I

DEFINITIONS

	
1.1  

	
The following terms shall have the following meanings:

 

(a)   "Agreement" means this agreement, including the recitals and all Schedules to this agreement, as amended or supplemented from time to time, and "hereby", "hereof", "herein", "hereunder", "herewith" and similar terms refer to this Agreement and not to any particular provision of this Agreement;

 

(b)  "Applicable Laws" means applicable corporate and securities laws, regulations and rules, all policies thereunder and rules of applicable stock exchanges;

 

(c)  "Arbitrator" has the meaning set out in Section 18.1;

 

(d)  "Assignment Shares" means the 50,000 Common Shares to be allotted and issued by Benz to Avino on the Closing Date in consideration for the Avino Consent;

 

(e)  "Avaron" has the meaning ascribed thereto in the recitals to this Agreement;

 

(f)  "Avaron Shares" means the common shares of Avaron issuable to Avino under the Option Agreement;

 

(g)  "Avino" has the meaning ascribed thereto in the recitals to this Agreement;

 

(h)  "Avino Consent" has the meaning set out in Section 5.2;

 

(i)  "Benz" has the meaning ascribed thereto in the recitals to this Agreement;

 

(j)  "Closing" has the meaning set out in Section 15;

 

(k)  "Closing Date" means the date of Closing of the transactions contemplated under Sections 16.1 and 17.1 herein, or such other date to which the Parties may agree, subject to Section 15;

 

(l)  "Closing Time" means 10:00 a.m. (Vancouver time) on the Closing Date, or such other time to which the Parties may agree;

 

(m)  "Common Shares" means the common shares in the capital of Benz;

 

  

- 2 -

  

 

(n)  "Encumbrance" has the meaning set forth in Section 3.1(a) hereto;

 

(o)  "Environmental Laws" means any applicable law, ordinance, code, rule, or other requirement of any Governmental Authority and any judicial or administrative interpretation thereof, regulating, relating to or imposing liability or standards of conduct concerning: (i) the environment, human health or safety, or emissions, discharges, releases or threatened releases into the environment (including ambient air, surface water, underground water, noise and land), (ii) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of solid waste, waste water, pollutants, contaminants, chemicals or any Hazardous Materials, (iii) the reclamation or remediation of disturbed land, and (iv) the protection of archaeological sites, national or natural monuments and protected areas such as natural parks;

 

(p)  "Exchange" has the meaning set out in the recitals to this Agreement;

 

(q)  "Exploration Data" means a digital copy and hardcopy of all Property related data, including drill logs, maps and reports generated from said data, collected by Avaron and its contractors on the Property;

 

(r)  "Information Circular" means the management information circular prepared by Benz in relation to the Option Purchase and Assignment in accordance with Exchange Form 3B1, to be mailed to the shareholders of Benz and filed on SEDAR pursuant to Policy 2.4;

 

(s)  "Governmental Authority" means any (i) multinational, federal, provincial, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (ii) any subdivision, agent, commission, board, or authority of any of the foregoing, or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, and includes a stock exchange or self-regulatory authority;

 

(t)  "Hazardous Materials" means any hazardous, toxic, corrosive, flammable, or dangerous waste, substance or material defined as such in any of the applicable Environmental Laws;

 

(u)  "Loss" and "Losses" mean any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding damages for lost profits or lost business opportunities and excluding any indirect, consequential or punitive damages suffered by Benz or Avaron;

 

(v)  "Material Adverse Effect" has the meaning set out in Section 3.1(d);

 

(w)  "Meeting" means the special meeting of the shareholders of Benz for the consideration and, if deemed appropriate, approval of the Option Purchase and Assignment in accordance with Section 2.4;

 

  

- 3 -

  

 

(x)  "NSR" means the 2.5% net smelter royalty in favour of Avino subject to applicable buy-out provisions provided for under the Option Agreement, a copy of which NSR is attached as Schedule "B" to the Option Agreement;

 

(y)  "Option Agreement" has the meaning ascribed thereto in the recitals to this Agreement and a copy of which is attached as Schedule "B" to this Agreement;

 

(z)  "Option Purchase and Assignment" has the meaning ascribed thereto in the recitals to this Agreement;

 

(aa)  "Outside Date" means May 31, 2013;

 

(bb)  "Parties" means Benz and Avaron, and "Party" means any one of them;

 

(cc)  "Purchase Shares" means the 400,000 Common Shares to be allotted and issued by Benz to Avaron on the Closing Date in consideration for the Option Purchase and Assignment;

 

(dd)  "Permitted Encumbrances" means the NSR;

 

(ee)  "Person" includes an individual, partnership, association, body corporate, trustee, executor, administrator, legal representative, government, regulatory authority or other entity;

 

(ff)  "Private Placement" means the private placement comprised of Common Shares, flow-through Common Shares, units or any combination of the foregoing, for gross proceeds of up to $250,000 to be completed by Benz on a brokered and/or non-brokered basis concurrently with the Closing;

 

(gg)  "Property" has the meaning ascribed in the recitals hereof and as more particularly set forth and described in Schedule "A" attached hereto;

 

(hh)  "Policy 2.4" has the meaning set out in the recitals to this Agreement;

 

(ii)  "Qualifying Transaction" has the meaning set out in the recitals to this Agreement;

 

(jj)  "Property" has the meaning set out in the recitals to this Agreement;

 

(kk)  "SEDAR" means the System for Electronic Document Analysis and Retrieval;

 

(ll)  "Share Issuance Sections" has the meaning set out in Section 5.2;

 

(mm)  "U.S. Person" has the meaning set out in Section 6.2(b); and

 

(nn)  "U.S. Securities Act" has the meaning set out in Section 6.2(b).

 

  

- 4 -

  

 

	
1.2  

	
The following Schedules are included and form part of this Agreement:

	
Schedule "A"

	
-

	
Description of Property

	
Schedule "B"

	
-

	
Option Agreement

 

ARTICLE II

MUTUAL REPRESENTATIONS AND WARRANTIES

 

	
2.1  

	
Each of Benz and Avaron represents and warrants that:

 

(a)  it is a body corporate duly formed, organized and validly subsisting and in good standing under the laws of its incorporating or governing jurisdiction;

 

(b)  it has full right, corporate power and authority to carry on its business, execute and deliver this Agreement and any agreement or instrument referred to or contemplated by this Agreement;

 

(c)  this Agreement, when delivered in accordance with the terms hereof, will constitute a valid and binding obligation enforceable against the entity in accordance with its terms, except:

 

(i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws of general application affecting enforcement of creditors' rights generally, and

 

(ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies;

 

(d)  the consummation of this Agreement will not conflict with nor result in any breach of any agreement or other instrument whatsoever to which any Party hereto is a party or by which any Party is bound or to which any Party may be subject; and

 

(e)  the execution and delivery of this Agreement and any agreements or documents contemplated hereby will not violate or result in the breach of the laws of any jurisdiction applicable or pertaining thereto or of its constating or charter documents, nor will such result in a breach of, or accelerate the performance required by any contract or other commitment to which it is a party or by which it is bound.

 

  

- 5 -

  

 

	
2.2

	
The representations and warranties contained in Section 2.1 are provided for the mutual benefit of the Avaron and Benz, and a breach of any one or more representations or warranties may be waived by Avaron or Benz in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty, and the representations and warranties contained in Section 2.1 will survive the Closing Date for a period of two (2) years.

	
2.3

	
Upon the terms and subject to the conditions of this Agreement, Benz will, on Closing, (i) pay to Avaron a cash payment of $25,000 and issue the Purchase Shares to Avaron; and (ii) issue the Assignment Shares to Avino.

	
2.4

	
The Purchase Shares and the Assignment Shares will be issued in accordance with applicable Canadian securities laws and will be subject to a statutory and Exchange imposed restriction on resale for a period not exceeding four months from the Closing Date.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF AVARON

 

	
3.1

	
Avaron represents and warrants to, and covenants with Benz, and acknowledges that Benz is relying on such representations, warranties and covenants in entering into this Agreement that:

 

(a)  except for the Permitted Encumbrances, Avaron is the sole legal and beneficial owner of the Option, and to the knowledge of Avaron the Option is free and clear of, and from, all liens, security interests, charges and encumbrances (each, an "Encumbrance") and is not subject to any judgment, order or decree in any lawsuit or proceeding;

 

(b)  the Option Agreement is in good standing as at the date hereof and no default has occurred thereunder and Avaron has done no act whereby the Option Agreement has in any manner become impaired, and Avaron has not assigned all or any part of its interest in any of the Option Agreement and has not granted any options, interests or other rights in and to the Option Agreement;

 

(c)  subject to the required consent of Avino pursuant to Section 14.3 of the Option Agreement which consent is being obtained herein, Avaron has good right, full power and absolute authority to assign its interest in the Option Agreement to Benz;

 

(d)  neither the execution, delivery and performance of this Agreement, nor the consummation of the Option Purchase and Assignment, will conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any Encumbrance upon the Option or other instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Option;

 

(e)  the Property is in good standing and no proceedings have been instituted to invalidate or assert an adverse claim or challenge against or to the ownership of or title to the Property, nor is there any basis therefor, and no other person is entitled to an agreement or option to acquire or purchase the Property or any portion thereof, and no person has any royalty or other interest whatsoever, in production from any part of the Property;

 

  

- 6 -

  

 

(f)  to the best of Avaron's knowledge, are no actions, suits or proceedings pending or to its knowledge, threatened, against or adversely affecting or which could adversely affect the Property before any federal, provincial, territorial, municipal or other governmental authority, court, department, commission, board bureau, agency or instrumentality, domestic or foreign, whether or not insured, and which might involve the possibility of any judgment or liability against the Property;

 

(g)  Schedule "A" to this Agreement accurately sets out all of the mining leases comprising the Property;

 

(h)  to the best of Avaron's knowledge, all of the mining leases constituting the Property have been properly surveyed and are validly held in accordance with applicable laws and regulations;

 

(i)  to the best of Avaron's knowledge, except for the Permitted Encumbrances, there is no adverse claim or challenge against or to Avaron's ownership of the Option, nor, to the knowledge of Avaron is there any basis therefor, and there are no outstanding agreements or options to acquire or purchase the Property or any portion thereof and no person or company other than Avaron and Avino has any proprietary or possessory interest in the Property or any right whatsoever capable of becoming any of the foregoing;

 

(j)  to the knowledge of Avaron, there are no outstanding orders or directions relating to environmental matters requiring any work, repairs, construction or expenditures with respect to the Property and the conduct of operations related thereto, Avaron has not received any notice of the same and Avaron is not aware of any basis on which any such orders or directions could be made;

 

(k)  Avaron has duly filed all reports and returns required to be filed with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement and all of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the knowledge of Avaron, threatened, and none of them will be adversely affected by the entry into this Agreement or the consummation of the Option Purchase and Assignment;

 

(l)  to the knowledge of Avaron, Avaron has complied with all applicable laws, statutes, by laws, decrees, rulings, orders, judgments and regulations relating to the work it has conducted in respect of the Property, including environmental laws;

 

(m)  to the knowledge of Avaron, there is no adverse claim or challenge against or to the ownership of or title to any part of the Property and, to the knowledge of Avaron, there is no basis for such adverse claim or challenge which may affect the Property;

 

  

- 7 -

  

 

(n)  there are no actual or pending proceedings for, and Avaron is unaware of any basis for, the institution of any proceedings leading to the placing of Avaron in bankruptcy or subject to any other laws governing the affairs of insolvent parties;

 

(o)  except as set out herein no filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation of the Option Purchase and Assignment contemplated by this Agreement on the Closing Date; and

 

(p)  Avaron has made full disclosure to Benz of all relevant information that it possesses which relates to the Property which could have any effect upon Benz determining whether it shall enter into this Agreement.

	
3.2

	
The representations and warranties contained in Section 3.1 are provided for the exclusive benefit of Benz, and a breach of any one or more representations or warranties may be waived by Benz in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty, and the representations and warranties contained in Section 3.1 will survive the Closing Date for a period of two (2) years.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BENZ

 

	
4.1

	
Benz represents and warrants to, and covenants with Avaron and Avino, and acknowledges that Avaron and Avino are relying on such representations, warranties and covenants in entering into this Agreement that:

(a)  Benz is a reporting issuer in good standing in the provinces of British Columbia and Alberta;

 

(b)  the Common Shares are listed on the Exchange under the symbol BZ.P and, prior to the Closing Date, Benz is a Capital Pool Company as that term is defined in Policy 2.4;

 

(c)  the authorized capital of Benz consists of an unlimited number of Common Shares and preferred shares and as of the date hereof, an aggregate of 6,392,952 Common Shares are issued and outstanding and no preferred shares are issued and outstanding; and

 

(d)  the Purchase Shares and the Assignment Shares to be issued hereunder will be fully-paid and non-assessable shares in the capital of Benz, free of all restrictions on trading other than those required by applicable securities law or by the Exchange as set out in Section 6 hereof;

 

	
4.2

	
The representations and warranties contained in Section 4.1 are provided for the exclusive benefit of Avaron and Avino, and a breach of any one or more representations or warranties may be waived by Avaron and Avino in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty, and the representations and warranties contained in Section 4.1 will survive the Closing Date for a period of five (5) years.

 

  

- 8 -

  

 

ARTICLE V

PURCHASE AND ASSIGNMENT OF OPTION

 

	
5.1

	
Upon and subject to the terms and conditions of this Agreement, on the Closing Date, Avaron and Benz will complete the Option Purchase and Assignment as follows:

(a)  Avaron will, on the Closing Date, assign and transfer absolutely and forever to Benz all of its right, title and interest to the Option Agreement together with all benefits and advantages to be derived from the Option Agreement and all obligations and payments payable under the Option Agreement; and

 

(b)  Benz will, on the Closing Date, pay to Avaron the sum of $25,000 and allot and issue the Purchase Shares, being 400,000 Common Shares to Avaron.

	
5.2

	
Avino hereby provides its consent to the Option Purchase and Assignment in accordance with Section 14.3 of the Option Agreement (the "Avino Consent") and agrees that all Avaron Shares to be issued to it pursuant to each of Section 4.3(f), Section 4.3(g), Section 5.8(b) and Section 7.2 of the Option Agreement (the "Share Issuance Sections") shall be replaced and substituted with Common Shares. For greater certainty, effective from the Closing Date, Avino will receive Common Shares in lieu of Avaron Shares pursuant to the Share Issuance Sections.

	
5.3

	
In consideration for providing the Avino Consent, Benz will, on the Closing Date, allot and issue the Assignment Shares, being 50,000 Common Shares, to Avino.

 

ARTICLE VI

SECURITIES LAWS

 

	
6.1

	
The Parties hereto acknowledge that the issuance of the Purchase Shares and the Assignment Shares by Benz as contemplated herein is being made pursuant to an exemption from the registration and prospectus requirements of applicable securities laws pursuant to Section 2.13 of National Instrument 45-106.

	
6.2 

	
Each of Avaron and Avino hereby confirms to and covenants with Benz that:

(a) it will comply with all requirements of applicable securities laws in connection with the issuance to it of the Purchase Shares or the Assignment Shares, as applicable, and the resale of any of the Purchase Shares or the Assignment Shares, as applicable; and

(b) the Purchase Shares and the Assignment Shares have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or the securities laws of any State of the United States and that Benz does not intend to register the Purchase Shares or the Assignment Shares under the U.S. Securities Act, or the securities laws of any State of the United States and has no obligation to do so. Each of Avaron and Avino is not a "U.S. person" (as that term is defined in Regulation S under the U.S. Securities Act) and is not purchasing the Purchase Shares or the Assignment Shares, as the case may be, for the account or benefit of any U.S. persons; provided, however, that Avaron or Avino may sell or otherwise dispose the Purchase Shares or the Assignment Shares, as the case may be, pursuant to registration thereof under the U.S. Securities Act and any applicable State securities laws or pursuant to any available exemption from such registration requirements.

 

  

- 9 -

  

 

	
6.3

	
Upon the issuance of the Purchase Shares and the Assignment Shares, and until such time as is no longer required under applicable securities laws, the certificates representing the Purchase Shares or the Assignment Shares will bear the following legend required under National Instrument 45-102, in substantially the following form:

 

"Unless permitted under securities legislation, the holder of this security must not trade the security before [insert the date that is 4 months and a day after the distribution date]."

 

And the Purchase Shares will also bear the following legend pursuant to the policies of the Exchange in substantially the following form:

 

"Without prior written approval of the Exchange and compliance with all applicable securities legislation, the securities represented by this certificate may not be sold, transferred, hypotheca ted or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until [insert date]."

 

ARTICLE VII

COLLECTION OF PERSONAL INFORMATION

 

	
7.1

	
Each of Avaron and Avino acknowledges and consents to the fact that Benz may be required to collect its personal information which may be disclosed by Benz to:

(a)  an Exchange or securities regulatory authorities;

 

(b)  Benz's registrar and transfer agent;

 

(c)  Canadian tax authorities; and

 

(d) authorities pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).

	
7.2

	
By executing this Agreement, each of Avaron and Avino is deemed to be consenting to the foregoing collection, use and disclosure of such personal information and to the retention of such personal information for as long as permitted or required by law or business practice.

	
7.3

	
By executing this Agreement, each of Avaron and Avino hereby consents to the foregoing collection, use and disclosure of such personal information for such purposes only. Each of Avaron and Avino also consents to the filing of copies or originals of any of the documents described herein as may be required to be filed with the Exchange or any securities regulatory authority in connection with the transactions contemplated hereby. An officer of Benz is available to answer questions about the collection of personal information by Benz.

 

  

- 10 -

  

 

ARTICLE VIII

COVENANTS OF BENZ AND AVARON

 

	
8.1

	
Prior to the Closing Date, Avaron shall not without the prior written consent of Benz, allow the Option to become subject to any Encumbrances or enter into any agreement (whether written or verbal) that may result in the creation of any such Encumbrance or otherwise restrict in any manner whatsoever the Option Purchase and Assignment as contemplated by this Agreement.

	
8.2

	
Until the Closing Date, neither Avaron nor Benz shall, without the prior written consent of the other Party, enter into any contract in respect of its business or assets, other than in the ordinary course of business, or as otherwise contemplated by this Agreement and each Party shall continue to carry on its business and maintain its assets in the ordinary course of business.

ARTICLE IX

INVESTIGATIONS AND AVAILABILITY OF RECORDS

	
9.1

	
Benz and/or its directors, officers, auditors, counsel and other authorized representatives shall be permitted to make such commercially reasonable investigations of the Property and business of Avaron as Benz reasonably deems necessary or desirable, provided always that such investigations shall not unduly interfere with the operations of Avaron. Such investigations will not, however, affect or mitigate in any way the representations and warranties contained in this Agreement, which representations and warranties shall continue in full force and effect for the benefit of Benz.

ARTICLE X

NECESSARY CONSENTS AND SHAREHOLDER APPROVAL

	
10.1

	
Avaron shall use its commercially reasonable efforts to obtain from its directors, shareholders and all appropriate federal, provincial, municipal or other governmental or administrative bodies such approvals or consents as are required (if any) to complete the transactions contemplated herein.

	
10.2

	
Benz shall use its commercially reasonable efforts to obtain from its directors, shareholders and all appropriate federal, provincial, municipal or other governmental or administrative bodies such approvals or consents as are required (if any) to complete the transactions contemplated herein.

	
10.3

	
As soon as practicable after the execution and delivery of this Agreement and in accordance with Exchange policies, Benz will call and hold the Meeting. Benz will distribute such documents as may be necessary or desirable to permit the shareholders of Benz to consider, and if deemed appropriate, to approve the Option Purchase and Assignment in accordance with Policy 2.4.

 

  

- 11 -

  

 

ARTICLE XI

INFORMATION CIRCULAR

 

	
11.1

	
Benz will prepare the Information Circular and Avaron will furnish to Benz all information regarding Avaron as may reasonably be required to be included in the Information Circular pursuant to applicable law. Each of Benz and Avaron will:

(a)  ensure that all information provided by it or on its behalf that is contained in the Information Circular does not contain any misrepresentation or any untrue statement of a material fact or omit to state a material fact required to be stated in the Information Circular and necessary to make any statement that it contains not misleading in light of the circumstances in which it is made; and

 

(b)  promptly notify the other Party if, at any time before Closing, it becomes aware that the Information Circular contains a misrepresentation, an untrue statement of material fact, omits to state a material fact required to be stated in those documents that is necessary to make any statement it contains not misleading in light of the circumstances in which it is made or that otherwise requires an amendment or a supplement to those documents.

ARTICLE XII

MUTUAL CONDITIONS PRECEDENT

	
12.1

	
The obligation of Benz and Avaron to consummate the Option Purchase and Assignment on the Closing Date shall be subject to the prior completion of the following mutual conditions:

(a)  conditional acceptance by the Exchange of the Option Purchase and Assignment as the Qualifying Transaction of Benz;

 

(b)  the Purchase Shares and the Assignment Shares to be issued upon the completion of the Option Purchase and Assignment will have been conditionally accepted for listing by the Exchange, subject to Benz fulfilling the listing requirements of the Exchange;

 

(c)  there will not be in force any order or decree restraining or enjoining the consummation of the Option Purchase and Assignment; and

 

(d)  all consents, orders and approvals required, necessary or desirable for the completion of the transactions provided for in this Agreement shall have been obtained or received from the persons, authorities or bodies having jurisdiction in the circumstances, all on terms satisfactory to each of the Parties hereto, acting reasonably.

 

  

- 12 -

  

 

ARTICLE XIII

CONDITIONS PRECEDENT OF AVARON

 

	
13.1

	
The obligation of Avaron to consummate the Option Purchase and Assignment on the Closing Date shall be subject to the prior completion of the following conditions:

(a)  the representation and warranties of Benz contained in this Agreement will have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such Closing Date;

 

(b)  Benz will have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement to be fulfilled or complied with by Benz at or prior to the Closing Date;

 

(c)  Benz will deliver or cause to be delivered to Avaron the closing documents as set forth in Section 17.1 in a form satisfactory to Avaron acting reasonably;

 

(d)  all proceedings to be taken in connection with the transactions contemplated in this Agreement will be satisfactory in form and substance to Avaron, acting reasonably, and Avaron will have received copies of all instruments and other evidence as it may reasonably request in order to establish the consummation or closing of such transactions and the taking of all necessary proceedings in connection therewith; and

 

(e)  this Agreement and all other documents necessary or reasonably required to consummate the Option Purchase and Assignment, all in form and substance reasonably satisfactory to Avaron, will have been executed and delivered to Avaron.

 

ARTICLE XIV

CONDITIONS PRECEDENT OF BENZ

	
14.1

	
The obligation of Benz to consummate the Option Purchase and Assignment on the Closing Date shall be subject to the prior completion of the following conditions:

 

(a)  the representations and warranties of Avaron contained in this Agreement will have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such Closing Date;

 

(b)  Avaron will have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement to be fulfilled or complied with by Avaron at or prior to the Closing Date;

 

(c)  Avaron will deliver or cause to be delivered to Benz the closing documents as set forth in Section 16.1 in a form satisfactory to Benz acting reasonably;

 

(d)  all proceedings to be taken in connection with the transactions contemplated in this Agreement will be satisfactory in form and substance to Benz, acting reasonably, and Benz will have received copies of all instruments and other evidence as it may reasonably request in order to establish the consummation or closing of such transactions and the taking of all necessary proceedings in connection therewith;

 

  

- 13 -

  

 

(e)  this Agreement and all other documents necessary or reasonably required to consummate the Purchase and Assignment, all in form and substance reasonably satisfactory to Benz, will have been executed and delivered to Benz;

 

(f)  Benz will have completed to its reasonable satisfaction its due diligence on the Property;

 

(g)  Benz will have obtained a National Instrument 43-101 compliant technical report on the Property which report will have received the approval of the Exchange;

 

(h)  the Option Purchase and Assignment will have been approved by the shareholders of Benz at the Meeting;

 

(i)  completion of the Private Placement concurrently with the Closing; and

 

(j)  retention of a sponsor in accordance with Exchange Policy 2.2, unless an exemption therefor has been granted by the Exchange.

 

ARTICLE XV

CLOSING

 

	
15.1

	
The completion of the Option Purchase and Assignment (the "Closing") will take place on the Closing Date at the offices of the lawyers for Benz or at such other location as agreed to by the Parties. Notwithstanding the location of the Closing, each Party agrees that the Closing may be completed by the exchange of undertakings between the respective legal counsel for the Parties, provided such undertakings are satisfactory to each Party's respective legal counsel. The Closing must occur on or before the Outside Date, or this Agreement may be terminated at the election of either Avaron or Avino, upon notice to Benz and the other party, and upon delivery of such notice, this Agreement will be null and void.

 

ARTICLE XVI

CLOSING DELIVERIES OF AVARON

 

 

	
16.1 

	
At Closing, Avaron will deliver or cause to be delivered the following:

(a)  a certified copy of the resolutions of the directors and, if required, the shareholders of Avaron approving and authorizing the entry into this Agreement, the Option Purchase and Assignment and the transactions contemplated herein;

 

(b)  all information in the possession or control of Avaron with respect to the Property (including the Exploration Data), which has not been previously delivered to Benz;

 

(c)  a certificate of a senior officer of Avaron attesting that:

 

  

- 14 -

  

 

(i) the representations and warranties of Avaron are true and correct at the Closing Date as if made at that time,

(ii) all agreements, covenants and conditions required by this Agreement to be complied with or performed by Avaron on or before the Closing Date have been complied with or performed, and

(iii) all conditions precedent to the obligations of Avaron contained in this Agreement have been satisfied or waived; and

 

(d)  such other closing documents as may be required by Benz, acting reasonably.

 

ARTICLE XVII

CLOSING DELIVERIES OF BENZ

 

	
17.1 

	
At Closing, Benz will deliver or cause to be delivered the following:

(a)  a share certificate registered in the name of Avaron representing the Purchase Shares;

 

(b)  a share certificate registered in the name of Avino representing the Assignment Shares;

 

(c)  evidence that the Exchange has conditionally approved the Option Purchase and Assignment as the Qualifying Transaction of Benz;

 

(d)  a certified copy of the resolutions of the directors of Benz approving and authorizing the entry into this Agreement and the transactions contemplated herein;

 

(e)  a certificate of a senior officer of Benz attesting that:

(i) the representations and warranties of Benz are true and correct at the Closing Date as if made at that time,

(ii) all agreements, covenants and conditions required by this Agreement to be complied with or performed by Benz on or before the Closing Date have been complied with or performed,

(iii) all conditions precedent to the obligations of Benz contained in this Agreement have been satisfied or waived; and

 

(f)  such other closing documents as may be required by Avaron, acting reasonably.

 

ARTICLE XVIII

DISPUTE RESOLUTION

	
18.1

	
Any dispute between the Parties concerning any matter or thing arising from this Agreement shall be referred to a mutually agreeable professional (the "Arbitrator"). In the event that the Parties cannot mutually agree on the appointment of an Arbitrator within fifteen (15) days of written notice of a disagreement or dispute under this Agreement, the Arbitrator will be appointed by the B.C. Arbitration and Mediation Institute, as the appointing authority.

 

  

- 15 -

  

 

	
18.2

	
Any disagreement or dispute shall be resolved by arbitration pursuant to the Commercial Arbitration Act (British Columbia) R.S.B.C. 1996, c.55 and will be conducted in Vancouver, British Columbia, or as otherwise may be agreed as convenient for the parties. The cost of such arbitration shall initially be born equally by the Parties. Any arbitration shall determine, with finality, any disagreement or dispute and the Arbitrator’s decision shall be binding and final on the Parties from which there shall be no appeal. An Arbitrator shall also decide matters including the cost of the arbitration, and the Arbitrator is hereby authorized and instructed to award up to one hundred percent (100%) costs on a solicitor and client or special costs basis, as warranted, to the successful Party in connection with any arbitration. In the event a Party fails or is otherwise unable to pay its share of any costs under this provision, the other Party is hereby authorized but not obligated to make that payment and deduct the same from any money claimed owed by the respondent.

 

ARTICLE XIX

STANDSTILL

	
19.1

	
From the date of execution of this Agreement until the Closing Date or the earlier termination hereof, the Parties will not, directly or indirectly, solicit, initiate, assist, facilitate, promote or encourage proposals or offers from, entertain or enter into discussions or negotiations with or provide information relating to the securities, business, operations, affairs or financial condition of Benz or Avaron to any persons, entity or group in connection with the acquisition or distribution of any securities of Benz or Avaron, or any amalgamation, merger, consolidation, arrangement, restructuring, refinancing, sale of any material assets or part thereof, unless such action, matter or transaction is part of the transactions contemplated in this Agreement or is satisfactory to, and is approved in writing in advance by the other Party hereto (with such approval not being unreasonably withheld or delayed) or is necessary to carry on the normal course of business.

ARTICLE XX

FORCE MAJEURE

	
20.1

	
The obligations of the Parties hereto and the time frames established in this Agreement Shall be suspended to the extent and for the period that performance is prevented by any cause beyond either Party's reasonable control, whether foreseeable or unforeseeable, including, without limitation, labour disputes, acts of God, laws, regulations, orders, proclamations or requests of any Governmental Authority, inability to obtain on reasonable terms required permits, licenses, or other authorizations, or any other matter similar to the above.

ARTICLE XXI

PUBLIC STATEMENTS

	
21.1

	
Except as otherwise required by law or the policies of the Exchange, the Parties shall make no public pronouncements concerning the terms of this Agreement without the express written consent of the other Party, such consent not to be unreasonably withheld. In the event that either Party wishes to make a news release or public statement with respect to the terms of this Agreement, it shall first provide the other Party with a draft copy of such release or statement for review and comment. If the other Party fails to comment on the release within two (2) business days of receipt, it shall be deemed to have waived its rights under this Section.

 

  

- 16 -

  

 

ARTICLE XXII

NOTIFICATION

 

	
22.1

	
Between the date of this Agreement and the Closing Date, each of the Parties will promptly notify the other Party in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties as of the date of this Agreement, if it becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a material breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. During the same period, each Party will promptly notify the other Parties of the occurrence of any material breach of any of its covenants in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely.

 

ARTICLE XXIII

TERMINATION

 

	
23.1

	
This Agreement may be terminated at any time prior to the Closing Date contemplated hereby by:

(a)  mutual agreement of the Parties;

 

(b)  Benz, if there has been a material breach by Avaron of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Avaron that is not cured, to the reasonable satisfaction of Benz, within ten business days after notice of such breach is given by Benz (except that no cure period will be provided for a breach by Avaron that by its nature cannot be cured);

 

(c)  Avaron, if there has been a material breach by Benz of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Benz that is not cured, to the reasonable satisfaction of Avaron, within ten business days after notice of such breach is given by Avaron (except that no cure period will be provided for a breach by Benz that by its nature cannot be cured);

 

(d)  Either Party if any injunction or other order of a governmental entity of competent authority prevents the consummation of the Option Purchase and Assignment contemplated by this Agreement; and

 

(e)  Avaron or Avino under the provisions of Section 15.1.

 

  

- 17 -

  

 

	
23.2

	
In the event of the termination of this Agreement as provided in Section 23.1, this Agreement will be of no further force or effect, provided, however, that no termination of this Agreement will relieve any Party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations.

 

ARTICLE XXIV

INDEMNITY

	
24.1

	
Benz will indemnify, defend, and hold harmless Avaron from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Avaron by reason of, resulting from, based upon or arising out of:

 

(a)  any misrepresentation, misstatement or breach of warranty of Benz contained in or made pursuant to this Agreement or any certificate or other instrument delivered pursuant to this Agreement; or

 

(b)  the breach or partial breach by Benz of any covenant or agreement of Benz made in or pursuant to this Agreement or any certificate or other instrument delivered pursuant to this Agreement.

	
24.2

	
Avaron will indemnify, defend, and hold harmless Benz from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Benz by reason of, resulting from, based upon or arising out of:

 

(a)  any misrepresentation, misstatement or breach of warranty of Avaron contained in or made pursuant to this Agreement or any certificate or other instrument delivered pursuant to this Agreement; or

 

(b)  the breach or partial breach by Avaron of any covenant or agreement of Avaron made in or pursuant to this Agreement or any certificate or other instrument delivered pursuant to this Agreement.

 

ARTICLE XXV

NOTICE

 

	
25.1

	
Any notice, direction or other instrument required or permitted to be given under this Agreement will be in writing and may be given by the delivery of the same or by mailing the same by prepaid registered or certified mail or by sending the same by facsimile or other similar form of communication, in each case addressed as follows:

 

	 	
(a) 

	
If to Benz at: 

 

Suite 900 – 570 Granville Street

Vancouver, BC V6C 3P1

Email: info@benzcapital.com

Attention: President

 

  

- 18 -

  

 

	 	
(b) 

	
If to Avaron at: 

 

Suite 900 – 570 Granville Street

Vancouver, BC V6C 3P1

Email: ir@avaronmining.com

Attention: President

 

	 	
(c) 

	
If to Avino at: 

 

Suite 900 – 570 Granville Street

Vancouver, BC V6C 3P1

Email: dwolfin@oniva.ca

Attention: David Wolfin, President

 

	
25.2

	
Any notice, direction or other instrument aforesaid will, if delivered, be deemed to have been given and received on the day it was delivered; if faxed, be deemed to have been given and received on the next business day following transmission; and if mailed, be deemed to have been given and received on the fifth day following the day of mailing, except in the event of disruption of the postal services, in which event notice will be deemed to be given and received only when actually received.

	
25.3

	
Any party may at any time give to the other, notice in writing of any change of address or fax number of the party giving such notice, and from and after the giving of such notice, the address or fax number therein specified will be deemed to be the address or fax number of such party for the purposes of giving notice hereunder.

ARTICLE XXVI

GENERAL

	
26.1

	
This Agreement constitutes the entire agreement between the Parties and replaces and supersedes all prior agreements, memoranda, correspondence, communications, negotiations and representations, whether verbal or written, express or implied, statutory or otherwise between the Parties with respect to the subject matter herein.

	
26.2

	
The Parties agree that they shall use all commercially reasonable efforts to satisfy each of the conditions precedent to be satisfied by it as soon as practical and in any event before the Closing Date, and to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable that are commercially reasonable to permit the completion of the Option Purchase and Assignment in accordance with the terms and conditions of this Agreement. The Parties hereto agree that they and each of them will execute all documents and do all acts and things within their respective powers to carry out and implement the provisions or intent of this Agreement.

	
26.3

	
Avaron and Avino hereby acknowledge that this Agreement was prepared by Macdonald Tuskey for Benz and that Macdonald Tuskey does not represent Avaron and Avino. By signing this Agreement, Avaron and Avino each confirms that it fully understands this Agreement and (a) has obtained independent legal advice, or (b) waives the right to obtain independent legal advice.

 

  

- 19 -

  

 

	
26.4

	
This Agreement may be signed in counterparts, each of which may be delivered in facsimile or other electronic means. Each executed counterpart shall be deemed to be an original and all such counterparts when read together will constitute one and the same instrument.

	
26.5

	
Neither Party may assign this Agreement and its rights thereunder without the prior written approval of the other.

	
26.6

	
The headings to the respective sections herein will not be deemed part of this Agreement but will be regarded as having been used for convenience only.

	
26.7

	
In this Agreement, all references to sections, subsections and Schedules are to sections, subsections and Schedules of this Agreement.

	
26.8 

	
All references to monies hereunder will be in Canadian funds.

 

	
26.9

	
This Agreement will enure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.

 

	
26.10

	
This Agreement will be exclusively governed and interpreted in accordance with the laws of British Columbia and the laws of Canada applicable therein. All actions arising from this Agreement will be commenced and prosecuted in the courts of British Columbia, and the Parties hereby attorn to the jurisdiction thereof.

 

	
26.11

	
In the event of any conflict between the provisions of any document delivered on the Closing and this Agreement, the provisions of this Agreement shall prevail.

 

	
26.12 

	
Time is of the essence.

 

	
26.13 

	
This Agreement may only be amended in writing with the consent of each Party.

 

	
26.14

	
The representations and warranties, covenants and agreements of the Parties set forth herein will survive the Closing Date and, notwithstanding the completion of the transactions contemplated hereby, the waiver of any condition contained herein (unless such waiver expressly releases a Party of any such representation, warrant, covenant or agreement) or any investigation made by the Party, the same will remain in full force and effect.

 

	
26.15

	
If any provision of this Agreement is or will become illegal, unenforceable or invalid for any reason whatsoever, such illegal, unenforceable or invalid provisions will be severable from the remainder of this Agreement and will not affect the legality, enforceability or validity of the remaining provisions of this Agreement.

 

  

- 20 -

  

 

	
26.16

	
No consent or waiver, express or implied, by any Party hereto in respect of any breach or default by any of the other Parties in the performance by such other Party of its obligations under this Agreement will be deemed or construed to be consent to or waiver of any other breach or default.

 

 

 

 

[Signature Pages Follow]

 

 

 

 

 

 

  

- 21 -

  

 

IN WITNESS WHEREOF the parties hereto have signed this Agreement effective as of the date first written above.

 

	
BENZ CAPITAL CORP.

	 
	 	 	 
	
Per:

	/s/ Miloje Vicentijevic	 
	 	
Authorized Signatory

	 
	 	 	 
	 	 	 
	AVARON MINING CORP.	 
	 	 	 
	
Per:

	/s/ Kevin Drover	 
	 	
Authorized Signatory

	 
	 	 	 
	 	 	 
	AVINO SILVER & GOLD MINES LTD.	 
	 	 	 
	
Per:

	/s/ David Wolfin	 
	 	
Authorized Signatory

	 
	 	 	 

 

  

- 22 -

  

 

SCHEDULE "A"

 

DESCRIPTION OF CLAIMS

 

 

Description of Property

 

 

	
District

	
Grant 

Number

	
Reg 

Type

	
Quartz 

Lease

	
Claim Name

	
Claim Owner

	
Operation 

Recording 

Date

	
Claim 

Expiry 

Date

	
NTS 

Map 

Number

	
Mayo

	
14871

	
Quartz

	
NM00113

	
ALEXANDRA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
10/12/1923

	
4/29/2021

	
105M14

	
Mayo

	
14873

	
Quartz

	
NM00114

	
NATHALIE

	
Avino Silver and Gold Mines Ltd. - 100%.

	
10/12/1923

	
4/29/2021

	
105M14

	
Mayo

	
16171

	
Quartz

	
NM00115

	
EAGLE FRAC.

	
Avino Silver and Gold Mines Ltd. - 100%.

	
7/13/1926

	
4/29/2021

	
105M14

	
Mayo

	
38811

	
Quartz

	
NM00116

	
EAGLE 2

	
Avino Silver and Gold Mines Ltd. - 100%.

	
11/12/1934

	
4/29/2021

	
105M14

	
Mayo

	
38815

	
Quartz

	
NM00117

	
EAGLE 1

	
Avino Silver and Gold Mines Ltd. - 100%.

	
11/14/1934

	
4/29/2021

	
105M14

	
Mayo

	
55482

	
Quartz

	
NM00118

	
JEAN

	
Avino Silver and Gold Mines Ltd. - 100%.

	
1/24/1947

	
4/29/2021

	
105M14

	
Mayo

	
59662

	
Quartz

	
NM00119

	
NINA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59663

	
Quartz

	
NM00120

	
TORO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59664

	
Quartz

	
NM00121

	
PERO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59665

	
Quartz

	
NM00122

	
CASA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59666

	
Quartz

	
NM00123

	
LOMA

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59667

	
Quartz

	
NM00124

	
PORCO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59668

	
Quartz

	
NM00125

	
GATO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

	
Mayo

	
59669

	
Quartz

	
NM00126

	
PAVO

	
Avino Silver and Gold Mines Ltd. - 100%.

	
8/11/1950

	
4/29/2021

	
105M14

 

  

  

  

 

Eagle Property, Galena Hill, Yukon - NTS 105M/14

 

  

- 2 -

  

 

SCHEDULE "B"

 

OPTION AGREEMENT

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