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EXHIBIT 10(i)
MINING LEASE WITH PURCHASE OPTION
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MINING LEASE WITH PURCHASE OPTION
THIS MINING LEASE WITH PURCHASE OPTION ("Agreement") is made effective
September 1, 1997 ("Effective Date"), between METALINE CONTACT MINES, a
Washington corporation, whose address is 135 E. Cameron Avenue, Kellogg, Idaho
83837 (hereinafter referred to as "MCM CORP"), METALINE CONTACT MINES LLC, a
Delaware Limited Liability Company, whose address is 135 E. Cameron Avenue,
Kellogg, Idaho 83837 (hereinafter referred to as "MCM LLC") and COMINCO AMERICAN
INCORPORATED, a Washington corporation, whose address is 601 West Riverside
Avenue, Post Office Box 3087, Spokane, Washington 99220 (hereinafter referred to
as "CAI").
RECITALS
A. MCM CORP and the Bunker Hill Company entered into an Exploration and
Operating Agreement, dated April 14, 1976, (hereinafter the "1976
Agreement") regarding certain of MCM CORP's lands situated in Pend
Oreille County, Washington. Subsequently, CAI has acquired the interest
held by the Bunker Hill Company in this 1976 Agreement.
B. Prior to the Effective Date of this Agreement, MCM CORP conveyed the
surface estate of these lands to MCM LLC, with MCM CORP retaining
ownership of the mineral estate.
C. MCM CORP, MCM LLC and CAI have now agreed to revise the 1976 Agreement
in its entirety with this Agreement.
D. As such, subject to the terms this Agreement MCM CORP and MCM LLC shall
grant to CAI and CAI shall accept a comprehensively revised exclusive
lease of this property, together with an exclusive, irrevocable option
to purchase a portion of the surface estate of the property.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, it is agreed as follows:
1. Revision of the April 14. 1976 Exploration and Operating Agreement and
Relationship of MCM CORP and MCM LLC Pursuant to this Agreement
1.1 MCM CORP, MCM LLC and CAI mutually agree that as of the Effective
Date of this Agreement, the terms of the 1976 Agreement shall be
comprehensively revised and superseded in their entirety by the
terms of this Agreement. Accordingly, the parties agree that from
the Effective Date forward, the rights and obligations of the
parties in the described premises shall be determined by this
Agreement alone.
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1.2 MCM CORP and MCM LLC agree that they shall be collectively
referred to as "MCM" pursuant to the terms of this Agreement and
that for all purposes under this Agreement, whether for rights
and obligations contained in this Agreement pertaining to the
mineral estate, the surface estate or the combined estates of the
described premises, MCM CORP and MCM LLC shall be treated as a
single party. Subject to the terms and conditions of this
Agreement, MCM CORP and MCM LLC shall enter into such agreements
as may be appropriate and necessary to manage their respective
rights and obligations.
2. Grant of Lease
2.1 MCM does hereby demise, lease and let exclusively unto CAI, its
permitted successors and assigns, on the terms and conditions and
with the rights and privileges hereinafter set forth, the
premises (the Property) described in Exhibit "A", attached hereto
and made a part hereof, for the term of this Agreement, reserving
to MCM the right to harvest timber on the Property and to occupy
the surface of the Property for such other purposes as MCM deems
appropriate, so long as such uses do not unreasonably interfere
with CAI's rights under this Agreement, except as otherwise
hereinafter provided. Subject to the rights reserved to MCM, MCM
grants to CAI the exclusive right and privilege to occupy the
Property, to prospect for, explore and examine, develop, mine,
beneficiate and remove from the Property all Minerals.
2.1.1 "Property" means the lands and MCM's interests therein
described in Exhibit "A". CAI is granted authority to
correct the description of the Property, if necessary,
subject to the initialed approval of the parties
2.1.2 Property includes the surface and subsurface of these
lands (to the extent MCM has rights in the surface and
subsurface), all veins, lodes and all Minerals contained
in these lands, all right, title and interest of MCM in
and to all options, contracts, easements, licenses,
rights-of-way, water rights and other rights, reserved
or granted in, on, upon or pertaining to these lands,
and all right, title and interest which MCM may acquire
pertaining to these lands during the term of this
Agreement.
2.1.3 "Minerals" shall mean all base and precious metals,
including without limitation zinc, lead, copper, gold,
silver, platinum, antimony, mercury, and all other
mineral elements and mineral compounds, mineral
substances, metals, ore, and ore-bearing materials, and
geothermal resources (except oil, gas, coal, and other
hydrocarbons), whether the same are known to exist on
the
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Property or are after the Effective Date discovered on
the Property and regardless of the method of extraction,
mining, or processing the same, whether known to exist
or invented or developed after the Effective Date.
2.2 CAI is granted the right to reduce the area of the Property
leased pursuant to this Agreement at any time CAI, in its sole
and exclusive discretion, desires to do so, by executing and
tendering to MCM a good and sufficient Quitclaim Deed or other
suitable release document in recordable form for that portion of
the Property relinquished. From and after delivery of such
Quitclaim Deed or other release document, CAI shall be released
and relieved of all further obligations which might otherwise
thereafter accrue, applicable to the relinquished portion of the
Property. Unless otherwise provided to the contrary, CAI shall
not be released or relieved of obligations with respect to the
relinquished portion of the Property which accrued prior to such
relinquishment.
2.3 CAI shall be solely responsible for securing all necessary
governmental permits and approvals of its operations hereunder
and shall conduct its operations in compliance with applicable
federal, state and local laws and regulations.
3. Term
3.1 Subject to CAI's right of termination contained in Sections 2.2
and 12.2, the term of this Agreement shall be for a period of
twenty (20) years commencing on the Effective Date hereof (the
Initial Term) and, at the option of CAI, the term of this
Agreement may be extended for an additional period of twenty
(20) years (the Extended Term). CAI shall exercise its option to
enter into the Extended Term by providing MCM with written
notice thereof at least ninety (90) days prior to the expiration
of the Initial Term.
3.2 If productive mining operations on the Property continue beyond
the Extended Term of this Agreement, then this Agreement shall
continue in full force and effect for so long as CAI shall
conduct reasonable and diligent productive operations on the
Property, producing ore-bearing materials in paying quantities,
plus a reasonable time for reclamation activities (the Remaining
Term).
3.3 Notwithstanding the foregoing, the term of this Agreement shall
continue during any temporary shutdown of operations during the
Remaining Term. Temporary shutdown of operations shall mean the
nonpermanent suspension of exploration, development, mining,
milling, and processing operations by CAI, at CAI's sole
discretion for any period of time, provided
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that CAI does not surrender nor otherwise terminate its required
regulatory operating permits.
4. Rental Fee and Advance Royalty
4.1 Subject to CAI's right of termination contained in Section 12.2,
CAI shall pay the Holding Costs, as provided for in Section 6,
and the Taxes, as provided for in Section 13, as a Rental Fee.
Provided, however, this Rental fee shall be reduced
proportionately as the surface acreage of the Property may be
modified in accordance with Sections 2.2 and 9.
4.2 MCM acknowledges and agrees that the Rental Fees specified above
paid by CAI constitutes adequate consideration for any delays in
the commencement of Commercial Production by CAI. The timing and
manner of the conduct of all exploration, development, mining
and Commercial Production shall be at the sole discretion of
CAI.
4.3 Commercial Production shall be deemed to have commenced on the
date upon which Minerals mined from the Property are first
delivered to a purchaser on a commercial basis, or on the date
upon which concentrates or other products derived therefrom are
first delivered to a purchaser on a commercial basis, whichever
date is earlier. Provided, however, deliveries of Minerals,
ores, concentrates or other products resulting from pilot or
test operations shall not be considered as deliveries on a
commercial basis for the purposes of this Agreement.
4.4 CAI shall pay to MCM as an advance royalty ("Advance Royalty")
the following:
a. The sum of Three Thousand Dollars ($3,000.00) on or
before October 1, 1997 and the sum of Three Thousand
Dollars ($3,000.00) on or before the beginning of each
calendar quarter thereafter until the fifth anniversary
of the first Advance Royalty payment;
b. The sum of Four Thousand Dollars ($4,000.00) on or
before October 1 of the fifth anniversary of the first
Advance Royalty payment and the sum of Four Thousand
Dollars ($4,000.00) on or before the beginning of each
calendar quarter thereafter until the tenth anniversary
of the first Advance Royalty payment;
c. The sum of Five Thousand Five Hundred Dollars
($5,500.00) on or before October 1 of the tenth
anniversary of the first Advance Royalty payment and the
sum of Five Thousand Five Hundred Dollars ($5,500.00) on
or before the beginning of each calendar
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quarter thereafter until the fifteenth anniversary of
the first Advance Royalty payment; and
d. The sum of Six Thousand Dollars ($6,000.00) on or before
October 1 of the fifteenth anniversary of the first
Advance Royalty payment and the sum of Six Thousand
Dollars ($6,000.00) on or before the beginning of each
calendar quarter thereafter.
4.5 It is expressly understood and agreed that the Advance Royalty
payments provided for herein are calculated based upon the total
number of acres included within the Property. If this Agreement
shall expire or be terminated as to all of the Property, CAI
shall be released of all obligations to pay any Advance Royalty
payments occurring after the date of such expiration or
termination. Further, if CAI shall at any time or from time to
time surrender or terminate this Agreement as to any portion or
portions of the Property, then any Advance Royalty payments
accruing after the effective date of such surrender or
termination shall be reduced so that the new amount payable by
CAI equals the proportion that MCM's interest in the
un-surrendered portion of the Property bears to all of the
Property, provided, however, under the circumstances of a
partial surrender or termination, this reduction of the amount
of the Advance Royalty shall be limited to a maximum reduction
of 50% of the amounts described in Sections 4.4 (a), 4.4(b),
4.4(c) or 4.4(d) above, even if the partial surrender or
termination exceeds 50% of the Property.
4.6 All Advance Royalty payments provided for herein and paid by CAI
to MCM shall constitute prepayment of, and advances against, the
Production Royalty accruing to MCM during the term of this
Agreement and CAI may fully recoup and recover all such Advance
Royalty payments during the term of this Agreement by crediting
the same against, and in reduction of, all Production Royalty
payments payable by CAI to MCM under the terms of this
Agreement. All such Advance Royalty payments not recouped by CAI
during a given year may be carried over for recoupment in
subsequent years and no Production Royalty shall be due to MCM
until all Advance Royalty payments have been fully recouped.
5. Work Commitment
5.1 CAI shall expend a cumulative amount of One Hundred Twenty Five
Thousand Dollars ($125,000.00) in Exploration Work prior to the
fifth anniversary of the Effective Date of this Agreement. If
CAI fails to meet this requirement, then CAI shall have the
right to make up any deficiency by making a cash payment to MCM
in the amount of the deficiency within sixty (60) days after the
fifth anniversary of the Effective Date. The nature of the
Exploration Work shall be completely at CAI's discretion and CAI
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shall have the right to terminate this Agreement prior to the
fifth anniversary of the Effective Date without incurring any
liability to MCM for the Exploration Work obligation.
For the purposes of this Section 5.1, the term "Exploration
Work" shall mean the cost of work which is directly related to
efforts to explore and evaluate the Property including, without
limitation, all costs of mapping, sampling, assaying,
geophysical work, metallurgical testing, feasibility studies,
geochemical analysis, road building, trenching, drilling and
drill site preparation, mining claim maintenance fees, taxes and
all other project expenditures.
6. Claim Assessment and Fees; Amendments, Relocations, and Patents; Changes
in Federal Mining Law
6.1 Subject to CAI's right of termination contained in Sections 2.2
and 12.2, CAI hereby agrees as follows:
a. to perform all assessment work required by federal and
state laws to hold the unpatented mining claims
comprising the Property for each assessment year, as
defined by statute, within the period beginning
September 1, 1996, and ending upon the date on which
this Agreement expires or terminates for any reason;
b. to pay all holding fees, filing fees and recording fees
required to maintain in good standing the unpatented
mining claims, mill sites, and tunnel sites comprising
the Property (hereinafter "Holding Costs"), as required
by federal, state and local laws and regulations, which
fees become due within the period beginning September 1,
1996, and ending upon the date on which this Agreement
expires or terminates for any reason;
provided, however, that if CAI terminates this Agreement as to
all or any portion of the Property later than one hundred eighty
(180) days prior to the end of the applicable assessment year,
CAI shall be obligated to and, at the request of MCM, shall
perform the annual assessment work for that assessment year
and/or pay the fees which become due during said assessment
year.
6.2 CAI shall prepare and timely record in the appropriate county
recording office and file in the appropriate office of the U.S.
Bureau of Land Management an affidavit or other documents
complying with the requirements of state and federal laws to
maintain in good standing MCM's unpatented mining claims
comprising the Property, and shall
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provide MCM evidence of such timely recordation and filing by
providing MCM with photocopies of recorded and filed documents
and the receipts therefore.
6.3 Assessment work to be performed by CAI, if required by federal
and state laws, may consist of, but shall not necessarily be
limited to, excavation, road building, drill site preparation,
drilling, trenching, pitting, geological or other surveys, or
other work selected by CAI in its sole discretion provided that
the work so performed is of a type customarily accepted as
assessment work, and is of the value of at least the amount then
required by application of statute or government regulation. So
long as CAI complies with the provisions of this Section 6.3,
CAI shall not be liable for any loss or encumbrance resulting
from decisions of any court or government authority that work
performed by CAI as assessment work required hereunder is
inadequate for, or does not constitute, the assessment work
required to preserve title to the unpatented mining claims.
6.4 Subject to MCM's consent, which consent shall not unreasonably
be withheld, during the term of this Agreement CAI shall have
the right (but not the obligation) to amend or relocate any or
all of the unpatented mining claims included in the Property, to
locate placer claims on ground theretofore covered by lode
claims and vice versa, to locate mill sites on ground
theretofore covered by mining claims and vice versa, and to
locate any fractions existing on the date of this Agreement or
resulting from the location, amendment, or relocation of mining
claims or mill sites. CAI shall have the authority to record
amendments to the Notice and Memorandum, described in Section
22.1 of this Agreement, reciting any changes in the description
of the Property subject to this Agreement. All such locations,
amendments, or relocations shall be made in the name of MCM. At
the request of CAI, MCM shall apply for patent for any or all of
the unpatented mining claims and mill sites. All expenses
authorized by CAI in connection with locating, amending, or
relocating mining claims or mill sites or prosecuting patent
proceedings shall be borne by CAI. The rights of CAI under this
Agreement shall extend to all such locations, amended locations,
relocations, and patented mining claims and mill sites. Nothing
herein shall obligate CAI to pay any expenses associated with
any patent application after termination of this Agreement.
6.5 If the United States establishes a leasing system or other
system or modifies the existing system of tenure for lands or
minerals now subject to location under the mining laws, and if
the new system gives MCM an election to acquire rights under the
new system in exchange for or in modification of MCM's existing
rights, CAI may make the election in the name of MCM with
respect to any or all of the unpatented claims included
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in the Property. The rights of CAI under this Agreement shall
extend to the lease or other rights granted by the new system.
7. Production Royalty
7.1 Subject to CAI's right of termination contained in Sections 2.2
and 12.2 and further subject to the terms of CAI's payment of
the Advance Royalties described in Section 4, upon commencement
of Commercial Production, CAI shall pay to MCM a production
royalty on Minerals produced from the Property and sold by CAI
(the "Production Royalty"). The Production Royalty shall be
based upon three percent (3%) of the Net Returns, as defined in
Section 7.3, provided, however, for the first three (3) years
after the commencement of Commercial Production the total annual
amount of the Production Royalty payable by CAI to MCM shall be
a fixed amount of One Hundred Fifty Thousand Dollars
($150,000.00) per year. Notwithstanding the provisions of
Section 7.2 to the contrary, the first of these three annual
fixed Production Royalty payments shall be made on or before
thirty (30) days from the date Commercial Production commences
and the subsequent annual payments shall be made on or before
the anniversary date of the first payment.
7.2 Subject to delays in settlement, CAI shall pay to MCM on or
before thirty (30) days from the last day of each calendar
quarter a Production Royalty at the rate described above of the
Net Returns received by CAI during the preceding calendar
quarter from the sale or disposition of Minerals, ores and
concentrates produced from the Property. The Production Royalty
shall be payable and delivered to MCM at the address described
in this Agreement. Production Royalty payments shall be
accompanied by a statement showing in reasonable detail the
computation and derivation of such payments and the credits and
deductions to which CAI is entitled.
7.3 "Net Returns" means the amount actually received by CAI from the
purchaser for Minerals, ores and concentrates in first
marketable form, mined from the Property which are processed or
sold by or for the account of CAI, after first deducting all
charges, to the extent borne or to be borne by CAI, for (i)
royalty, tax, or other payment obligation based upon the amount,
quantity, value or income from the Minerals, ores and
concentrates mined and removed from the Property, including
sales, severance, net proceeds, reclamation and other similar
taxes or fees (except federal and state corporate income tax),
(ii) charges for and taxes on loading and transportation
(including insurance and security costs and charges during
transportation) from the mine or, if the Minerals, ores and
concentrates are processed, from the plant producing the
concentrates or other saleable products, to the place of sale,
(iii) purchaser's milling, smelting, refining, and other
treatment charges or costs, if any, (iv)
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representation, assaying, and umpire costs and fees, and (v)
marketing costs and commissions to the extent these costs are
incurred with an unaffiliated third party and no allocation is
made for internal marketing costs, commissions or overhead.
Purchaser's charges or costs referred to in item (iii) above
shall mean all treatment charges, penalties, and other
deductions applied in determining the net sum realized on sale
to the smelter or other purchaser; provided, however, in the
case of leaching operations, all processing and recovery costs
incurred by CAI beyond the point at which the metal being
treated is in dore, shall be considered as treatment costs.
If CAI processes the Minerals, ores and concentrates at its own
smelter or reduction plant, Net Returns shall be determined on
the basis similar to that which would be used if such ores or
concentrates were sold at prevailing prices or the best
available net return to other smelters or reduction plants,
after deducting the charges described in this Section, at the
time the same are shipped to and received by CAI's smelter or
reduction plant If CAI is shipping Minerals, ores and
concentrates from the Property to its own smelter or reduction
plant and there is no prevailing price for Minerals, ores and
concentrates of a similar grade and kind in effect at the time
of such shipment, then CAI's determination of the Net Returns
applicable to such Minerals, ores and concentrates shall be
final and binding unless challenged by MCM. Such challenge of
CAI's determination of the Net Returns shall be established by
delivery of a notice to CAI within ninety (90) days from the
date of the royalty settlement, which notice shall disclose the
specific smelter or reduction plant at which a better smelter
return could have been secured by CAI.
7.4 During the term of this Agreement, if CAI re-treats tailings or
other residues produced from the Property and recovers Minerals
or concentrate values which are sold by CAI, CAI shall pay to
MCM the Production Royalty specified in Section 7.1 on the
Minerals or concentrate values recovered and sold from the
re-treatment of such tailings and other residues. If CAI sells
any part of said tailings and residues, it shall pay MCM the
Production Royalty at the rate specified.
7.5 Subject to the payment of the Production Royalty as above
provided, all Minerals, ores, concentrates and other substances
produced hereunder shall belong to CAI and CAI may sell the same
to others or utilize them in its own smelter or reduction works.
8. Title, Representations and Lesser Interest
8.1 MCM represents that with respect to those lands that are
included within the Property which MCM possesses in fee simple,
MCM is in exclusive
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possession of and owns such Property free of all defects, liens
and encumbrances except those specifically identified in Exhibit
"A". MCM represents that MCM has the right to enter into this
Agreement. Further, except as provided elsewhere herein or
except as specifically identified in Exhibit "A" hereto, MCM
warrants to CAI that to the best of MCM's knowledge, it is the
owner of and has possession of the Property; that there are no
present outstanding preferential rights of purchase or lease
with respect to said Property; that said Property is not in any
manner encumbered as a result of any conduct or activity by MCM;
and that MCM has no knowledge of, and has received no notice of
any other claims of ownership by third parties regarding the
Property. MCM warrants to CAI the quiet enjoyment and possession
of the Property and the right to explore, develop and mine said
Property.
8.2 MCM warrants that there are no pending or threatened actions,
suits, claims or proceedings with respect to the Property or
with respect to MCM's rights in and to the Property. MCM has
complied with all applicable federal, state, and local laws and
regulations pertaining to the Property MCM is not aware of any
violation of such laws by any previous MCM lessee, or occupant
of the Property.
8.3 CAI represents that CAI has the right to enter into this
Agreement and that CAI is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Washington.
8.4 The representations and warranties set forth above shall survive
the execution and delivery of any documents of assignment or
conveyance provided under this Agreement.
8.5 If any defects in title to the Property are found by either MCM
or CAI, MCM shall have a reasonable time to correct such
defects. If MCM fails to do so, CAI may, at its option, rescind
this Agreement or proceed to remove such defects, in which event
all costs incurred by CAI in clearing title may be deducted from
any Production Royalty payments which may become due to MCM.
8.6 MCM agrees to provide CAI, at CAI's request, recording data with
respect to deeds, easements, or other documents which bear upon
MCM's title to the Property, and provide CAI with copies of all
such documents and all title reports and abstracts in MCM's
possession or control. MCM will, upon CAI's request, record any
such documents which have not been recorded, if such recordation
is appropriate pursuant to common practice.
8.7 If MCM owns a less interest in all or a portion of the Property
described in Exhibit "A" than the whole and undivided mineral
estate, then the
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Production Royalty payable herein with respect to this portion
of the Property shall be paid to MCM only in the proportion
which MCM's mineral interest bears to the whole and undivided
mineral estate.
9. Option to Purchase 200 acres of the Surface of the Property
9.1 MCM grants to CAI during the term of this Agreement the
exclusive, irrevocable option, exercisable at any time, to
purchase up to a total of 200 acres of the surface estate of
that portion of the Property described in Section 9.1 (a) below,
together with all appurtenances and improvements, free and clear
of all liens and encumbrances. CAI shall have the right to
purchase these 200 acres in one or more transactions, dealing
with one or more parcels of land, but each transaction must
comprise at least fifty (50) acres of land. The purchase price
and the terms and conditions of such purchase, or purchases, are
provided in Exhibit "B", attached to this Agreement and by this
reference incorporated herein.
a. That portion of the Property subject to CAI's option to
purchase, described in Section 9.1 above, is described
as the following lands situated in Pend Oreille County,
State of Washington as follows: Section 3, Twp 39 N, Rng
43 E and Section 34, Twp 40 N, Rng 43 E.
9.2 Following CAI's purchase of any portion of the Property as
described in Section 9.1, CAI shall own all right, title and
interest in and to the surface estate of that portion of the
Property, and all rights and interest of the parties under this
Agreement with respect to the purchased portion of the Property
shall terminate, except for the Production Royalty provided for
in Section 7.
10. Operations
10.1 CAI shall have free and unrestricted access to the Property, and
shall have the right (i) to explore, develop, and mine the
Property, and to extract, remove, and sell or otherwise dispose
of for its own account any and all Minerals, ores, concentrates
or other products, (ii) to remove Minerals, ores, concentrates,
air, water, waste, and materials from the Property by means of
underground or surface operations on or in the Property or on or
in other property, (iii) to deposit Minerals, ores,
concentrates, water, waste, tailings, and materials from the
Property on or in the Property, and to use any part of the
Property for waste dumps and tailings disposal areas, (iv) to
conduct on or in the Property general mining, treatment,
processing, and related operations respecting the Property and
to use any part of the Property for any purposes incident to
such operations, (v) to construct roads on the Property, after
providing
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prior notice to MCM, and to use and maintain on the Property
such roads as may be necessary or convenient for the conduct of
CAI's operations and (vi) to construct, use, and maintain on the
Property such improvements, structures, equipment, personal
property, and fixtures as may be necessary or convenient for the
conduct of CAI's operations.
10.2 CAI shall conduct all operations on the Property in a good and
workmanlike manner and in accordance with accepted mining
practices. All decisions with respect to the exploration,
development and mining of the Property and the selling of
Minerals, ores, concentrates or other products from the
Property, including all decisions regarding the commencement,
suspension, resumption or termination of any operation, shall be
made by CAI in its sole discretion. CAI may sell Minerals, ores,
concentrates, or other products and may stockpile Minerals,
ores, concentrates or other products for any length of time
before selling the same. There are no covenants or agreements
regarding these matters other than those expressly set forth in
this Agreement.
10.3 CAI shall comply with all laws and regulations governing its
operations on the Property. If this Agreement is inconsistent
with or contrary to any law or regulation, the law or regulation
shall control and this Agreement shall be deemed to be modified
accordingly.
10.4 To the extent that MCM has the right to do so, MCM grants CAI
the free use of water, stone, sand, gravel, clay, earth and
other materials from the Property for use in CAI's operations on
or in the Property.
10.5 CAI shall pay MCM a mutually acceptable compensation for any
damage to roads, fences, timber, or other tangible improvements
on the Property resulting from CAI's operations on the Property.
Such compensation shall be based upon the Fair Market Value, as
defined in Exhibit "C", attached hereto and by this reference
incorporated herein, for said damage and, if the parties are
unable to agree upon the Fair Market Value, the same shall be
determined in accordance with Exhibit "C". The term "timber"
shall include all merchantable timber whether suitable for saw
timber, stumpage, pulpwood, or other commercial uses.
10.6 CAI may commingle Minerals, ores, concentrates or other products
from the Property ("Subject Ore"), either underground, on the
surface, or in CAI's processing plants, with minerals, ores, or
other products from other property ("Other Ore"). Before
commingling, CAI shall weigh and sample the Subject Ore and
Other Ore in accordance with sound mining and metallurgical
practices for moisture and metal content and assay the samples
to determine metal content. CAI shall keep records showing
weights or volumes, moisture, percent metal content, and gross
metal
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content of the Subject Ore and Other Ore. Royalties shall be
allocated between Subject Ore and Other Ore on the basis of
gross metal content MCM may request permission from CAI to
verify sampling techniques, which consent shall not be
unreasonably withheld.
10.7 CAI shall perform reclamation work on the Property as required
by federal, state, and local law for disturbances resulting from
CAI's activities on the Property.
11. Arbitration
11.1 In the event that any controversy shall arise between the
parties as to any matter or thing arising out of or relating to
this Agreement, which cannot be settled between the parties
themselves, the same shall be determined by three arbitrators,
one selected by MCM and one by CAI, and the third selected by
agreement between the two arbitrators so selected. If the two so
selected are unable to agree upon a third arbitrator, MCM and
CAI shall promptly join in a request to the American Arbitration
Association (hereafter referred to as "Association") that it
submit to them a list of persons whom it would regard as
available arbitrators and especially qualified for the
particular arbitration. If, within fifteen (15) days of the
receipt of the list from the Association, MCM and CAI have not
agreed upon a third arbitrator, MCM and CAI shall join in a
written request to the Association for the appointment of the
third arbitrator, and the arbitrator named by the Association
shall be the third arbitrator. The award of such arbitrators, or
a majority of them, shall be conclusive and binding upon MCM and
CAI. In any arbitration between the parties arising out of, or
in connection with this Agreement or the construction or
enforcement thereof, the substantially prevailing party shall be
entitled to recover all reasonable costs, expenses and
attorneys' fees incurred by it in connection with such
arbitration.
11.2 During the period of arbitration, MCM's right of termination
shall be suspended and if the terms of the award of the
arbitration are that CAI is in default, then CAI shall be
allowed a reasonable time following this award within which to
cure the default.
12. Termination
12.1 In case of an alleged failure of CAI to keep and perform its
obligations under this Agreement, within sixty (60) days of the
time when MCM becomes aware of the alleged default, MCM shall
give to CAI written notice of the alleged default, specifying
the details of the same. If such alleged default is not remedied
within sixty (60) days after the receipt of said notice,
provided the same can reasonably be done within that time,
13
<PAGE> 15
or if not, if CAI has not within that time commenced action to
cure the same and does not thereafter diligently prosecute such
action to completion, then this Agreement may be terminated at
the option of MCM by written notice to CAI. However, if any
issue regarding CAI's default is arbitrated, MCM's right of
termination shall be suspended and upon the final decision,
stating that CAI is in default hereunder, CAI shall have a
reasonable time in which to cure said default. No forfeiture,
however, shall be based on a default hereunder or on a failure
to remedy the same, when resulting from any cause beyond the
control of CAI ("force majeure"), including, without limitation,
operation of law, government permit, approval or license
procedures, government regulation or interference, war whether
declared or not, riots or civil commotion, strikes or other
labor controversies, fire or acts of nature, inability to obtain
labor, material, or equipment on the open market, or delay of
carriers, whether or not the same could have been foreseen or
prevented.
12.2 CAI shall have the right to terminate this Agreement as to all
or any portion of the Property at any time CAI may desire to do
so by executing and tendering to MCM a good and sufficient
Quitclaim Deed or other suitable release document in recordable
form. From and after CAI's delivery of the Quitclaim Deed or
other release document, CAI shall be released and relieved of
all further obligations which might otherwise thereafter accrue
hereunder.
12.3 If CAI terminates this Agreement after mining on the Property is
completed and CAI wishes to continue the use and operations of
the facilities located on the Property for treatment of other
ores, or if CAI desires to continue to use the shafts, if any,
and underground workings and/or surface roadways and other
necessary installations on the Property for the mining and
raising of ores from other lands in the area, CAI may continue
such use, and continue to use the roadways thereon to its
processing facilities. CAI shall be entitled to this continued
use of the Property by duly noting the reserved use and the
portion of the Property reserved in the Quitclaim Deed or other
release document described in Section 12.2 and by payment to MCM
of a reasonable and mutually acceptable monthly rental for the
use of the affected portions of the Property. If the parties are
unable to agree on a fair and reasonable monthly rental rate,
then the same shall be determined in accordance with Section 11
hereof.
12.4 For a period of two (2) years after the termination or
expiration of this Agreement, CAI shall have the right, but not
the obligation, to remove from the Property all broken or
stockpiled ore, subject to the payment of the Production Royalty
upon the sale thereof. Further, during this two (2) year period
CAI shall remove, unless otherwise directed by MCM, all
14
<PAGE> 16
buildings, structures, machinery, equipment, personal property,
fixtures, and improvements owned by CAI or erected on or in the
Property by CAI, except mine timbers in place, and CAI may keep
one or more watchmen on the Property during such period.
Thereafter, CAI shall have no further rights in and to the items
subject to this Section 12.4.
12.5 Unless otherwise provided, upon termination or expiration of
this Agreement, CAI shall seal and close any shafts sunk or used
by it in mining hereunder, in accordance with any applicable
laws or regulations.
12.6 For as long as necessary after termination of this Agreement,
CAI shall have the right of access to and across the Property
for reclamation purposes.
13. Taxes
13.1 Subject to CAI's right to deductions contained in Section 7 of
this Agreement, CAI shall pay all property taxes levied against
the Property during the term of this Agreement to the extent
that such property tax liability is not increased after the
Effective Date due to the activities of MCM. To the extent that
property taxes on the Property are increased due to the
activities of MCM, then the amount of such increase shall be for
MCM's account and CAI shall have the right to deduct these
amounts from any payments it otherwise owes MCM. CAI shall also
pay all taxes during the term of this Agreement that are based
upon CAI's mining operations, including, without limitation,
taxes levied against all buildings, structures, machinery,
equipment, personal property, fixtures, and improvements placed
upon the Property by CAI, and all taxes levied against CAI as an
employer of labor.
13.1.1 In the case of taxes for the calendar year in which this
Agreement ends, there shall be an apportionment between
the parties, CAI to bear the proportion of its share, if
any, of the taxes upon the Property applicable to the
part of the calendar year included hereunder, and MCM to
bear the balance of the taxes.
13.1.2 If CAI leaves improvements on the Property after the
expiration or termination of this Agreement, as provided
in Section 12.4 of this Agreement, then CAI, at MCM's
request, shall continue to pay the taxes related to
those improvements, for the period during which CAI
retains an ownership interest therein after the
expiration or termination of this Agreement.
15
<PAGE> 17
13.1.3 If not paid directly by MCM, CAI shall deduct from MCM's
Production Royalty the proportionate share of any
applicable tax upon the ownership, mining, production,
processing, or severance of the Minerals covered herein
or upon the total or net proceeds from extraction of
such Minerals (other than federal or state income taxes
or state franchise taxes measured by income). MCM's
proportionate share of such taxes shall be in the same
proportion as the total of MCM's Production Royalty,
received during the tax period, bears to the revenue
received by CAI from the sales of Minerals hereunder
during the tax period.
13.1.4 All taxes shall be paid when due and before delinquent,
but neither MCM nor CAI shall be under any obligation to
pay any tax so long as the tax is being contested in
good faith and by appropriate legal proceedings and the
nonpayment thereof does not adversely affect any right,
title, or interest of either party in or on the
Property.
14. Insurance
14.1 CAI shall carry worker's compensation and other insurance as may
be required by state laws and mining regulations, or CAI may
self-insure as to such matters if it qualifies as a self-insurer
under the appropriate laws and regulations. CAI shall also
maintain Comprehensive General Liability insurance written under
a standard form contract with a combined single limit of not
less than five million dollars ($5,000,000), naming MCM as an
additional named insured.
15. Inspection Data
15.1 MCM, or MCM's authorized representatives, may enter onto the
Property at reasonable times when accompanied by CAI and for the
purpose of inspection, but shall enter at their own risk and so
as not to unreasonably hinder the operations of CAI. MCM shall
indemnify CAI as provided for in Section 16.3 from claims
arising out of the exercise of MCM's rights provided herein.
15.2 MCM, or MCM's authorized representatives, may at reasonable
times inspect production and assay records, and other records
pertinent and necessary for substantiating the compliance of CAI
with the provisions of this Agreement.
15.3 On a quarterly basis and at MCM's request, CAI shall make
factual data from the exploration of the Property available for
MCM's review and
16
<PAGE> 18
copying at MCM's expense. Factual data may include, but not be
limited to data on geology, sample analysis, geophysical
surveys, drilling and mineralization.
15.4 All information concerning this Agreement and all information
from operations on the Property shall be kept confidential
except for: (i) disclosure by mutual consent; (ii) disclosure
where required by law or the rules and regulations of any stock
exchange or other regulatory authority having jurisdiction over
the parties; or (iii) disclosure to a third party where either
party hereto is seeking participation of such third party in the
exploration, development or mining of the Property, and such
information is divulged under confidential circumstances,
including, without limitation, the execution of a written
confidentiality agreement with the third party.
15.4.1 Information releases required by statutory authorities
and requested to be made by a party shall be
communicated to the other party by a written copy,
facsimile or telephone call, prior to such release, for
comment and approval, but such approval shall not be
unreasonably withheld. If prior approval is not
reasonably possible after best efforts attempts are
made, then forthwith after making the release, that
party shall provide a written copy to the other party.
16. Protection from Liens and Damages: Indemnification
16.1 CAI agrees to furnish and pay for all labor, power, tools,
materials and all other materials and supplies that may be used
by CAI in the prosecution of work on the Property. CAI agrees to
indemnify MCM against any liens upon the Property or any part
thereof, for work, labor, materials and supplies that may be
furnished to or by CAI during the continuance of this Agreement.
Nothing in this clause shall prevent CAI from contesting any
claimed lien, but the entire amount thereof shall be promptly
discharged by CAI if the claim is finally decided against CAI.
16.2 CAI agrees to defend, indemnify and hold MCM harmless of and
from any and all liability whatsoever for any claims, actions or
damages (including attorney's fees and court costs) in any way
arising from CAI's occupation and use of the Property, whether
prior to the Effective Date, during the term of this Agreement,
or after the termination of this Agreement, excluding any damage
or injury arising from or related to MCM's negligence or
default.
16.3 MCM agrees to defend, indemnify and hold harmless CAI, its
officers, directors, employees, successors and assigns, of and
from any and all liability whatsoever for any claims, actions or
damages (including
17
<PAGE> 19
attorney's fees and court costs) in any way arising from MCM's
occupation or use of the Property, whether prior to the
Effective Date, during the term of the Agreement, or after the
termination of the Agreement, excluding any damage or injury
arising from or related to CAI's negligence or default.
17. Easements
17.1 If requested by CAI from time to time during the term of this
Agreement, MCM shall execute, acknowledge, and deliver to CAI
one or more instruments granting to CAI, without cost to CAI,
easements upon, over, or through the Property or upon, over, or
through other property owned by MCM, for all uses incident to
and in connection with the exploration, development, mining,
processing, beneficiating, marketing, and transporting Minerals
from the Property, including without limitation for the
construction, maintenance, use, and removal of pipe lines,
telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels,
and other facilities necessary or convenient for CAI's
operations on or in the Property. If CAI's utilization of an
easement granted pursuant to this Section 17.1 results in any
damage to the Property as described in Section 10.5, then CAI
shall compensate MCM as provided for in Section 10.5.
17.2 If requested by CAI from time to time during the term of this
Agreement, MCM shall execute, acknowledge, and deliver to CAI
one or more instruments granting to CAI, easements upon, over,
or through the Property or upon, over, or through other property
owned by MCM, for the benefit of other lands incident to and in
connection with CAI's exploration, development, mining,
processing, beneficiating, marketing, and transporting Minerals
from these other properties, including without limitation for
the construction, maintenance, use, and removal of pipe lines,
telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels,
and other facilities necessary or convenient for CAI's
operations on the other lands. CAI shall pay MCM a mutually
acceptable compensation for these easements on the Property.
Such compensation shall be based upon the Fair Market Value, as
defined in Exhibit "C", attached hereto and by this reference
incorporated herein, for said easements and, if the parties are
unable to agree upon the Fair Market Value, the same shall be
determined in accordance with Exhibit "C".
18. Notices
18.1 All notices required or permitted under this Agreement shall be
in writing and shall be given (i) by personal delivery, or (ii)
by electronic
18
<PAGE> 20
communication, with a confirmation sent by registered or
certified mail, return receipt requested, or (iii) by registered
or certified mail, return receipt requested. All notices shall
be effective and shall be deemed delivered (i) if by personal
delivery or electronic communication on the date of delivery or
transmission if delivered or transmitted during normal business
hours, and, if not delivered or transmitted during normal
business hours, on the next business day following delivery, or
(ii) if by mail, on the date of mailing. Such notices and
writings shall be addressed as follows:
MCM shall be addressed:
Metaline Contact Mines
135 E. Cameron Avenue
Kellogg, Idaho 83837
CAI shall be addressed:
Cominco American Incorporated
601 West Riverside Avenue
Post Office Box 3087
Spokane, Washington 99220
Attention: Legal Department
The address of any party to be utilized for any such notice may
be changed by written notice to the other party hereto.
19. Payments
19.1 CAI shall make all payments due MCM under this Agreement by
check which shall be made payable to MCM at the address provided
in Section 18.1 of this Agreement.
20. Assignment
20.1 Subject to the other provisions of this Agreement, neither party
may assign this Agreement or delegate the performance of any of
its obligations hereunder without the prior written consent of
the other party, which consent shall not be unreasonably
withheld, except (i) by transfer of all of its rights pursuant
to a merger, reorganization, consolidation or sale of
substantially all of its assets, or (ii) by any transfer to an
affiliate. The term "affiliate" means any person, partnership,
joint venture, corporation or other form of enterprise which
directly or indirectly controls, or is controlled by, or is
under common control with a party. For purposes of
19
<PAGE> 21
the preceding sentence, the "control" shall mean fifty percent
(50%) or greater ownership.
20.2 No change or division in the ownership of the Property or the
Production Royalty provided for herein, however accomplished,
shall enlarge the obligations or diminish the rights of CAI or
MCM. MCM covenants that any change in said ownership shall be
accomplished in such a manner that CAI shall be required to make
payments and to give notices to but one person, firm, or
corporation and upon breach of this covenant, CAI may retain all
monies otherwise due to MCM until the breach has been cured. No
change or division in ownership shall be binding on CAI until
thirty (30) days after MCM has given CAI a certified copy of the
recorded instrument evidencing the change or division.
20.3 If CAI assigns an undivided interest in this Agreement, each
holder of an undivided interest herein shall separately pay the
Rental Fees, Advance Royalty and the Production Royalty accruing
with respect to that holder's interest in the Property. If CAI
assigns the whole of or an undivided interest in this Agreement,
liability for breach of any obligation hereunder shall rest
exclusively upon the holder of this Agreement or of an undivided
interest herein who commits the breach. If this Agreement is
assigned as to a segregated portion of the Property, default by
the holder hereunder of that portion shall not affect the rights
of holders hereunder of any other portion.
21. MCM's Cooperation
21.1 MCM shall cooperate fully and actively with reasonable requests
or applications, which CAI may make during the term of this
Agreement, to any public bodies with respect to zoning or
similar matters and with any other rule, regulation or law of
any governmental agency or body, related to mineral rights,
exploration activities or mining activities regarding the
Property. MCM, when requested, shall consent to and sign all
reasonable applications which CAI may present regarding the
Property. All reasonable costs for the activities described in
this Section 21.1 shall be for CAI's account.
22. Short Form
22.1 Contemporaneously herewith, CAI and MCM have executed and
delivered a Notice and Memorandum of Mining Lease with Purchase
option. CAI may record the Notice and Memorandum of Agreement as
it may elect. Neither party shall record this Agreement without
the prior consent of the other party.
20
<PAGE> 22
23. Construction
23.1 The paragraph headings are for convenience only, and shall not
be used in the construction of this Agreement.
24. Inurement
24.1 This Agreement shall run to and be binding upon each of the
parties hereto, their heirs, legatees, legal representatives,
successors or assigns, respectively. If CAI assigns this
Agreement in whole or in part, CAI shall be relieved of all
obligations hereunder with respect to the assigned portion
arising subsequent to the date of assignment.
25. Governing Law
25.1 This Agreement shall be governed by the laws of the state in
which the Property is located.
26. No Partnership
26.1 Nothing contained in this Agreement shall constitute or be
presumed to constitute a partnership agreement or arrangement
between CAI and MCM. Nothing contained in this Agreement shall
constitute or be presumed to constitute a designation of MCM as
CAI's agent or CAI as MCM's agent, or in any way create a
principal and agent relationship between CAI and MCM.
27. Survivability of Provisions
27.1 The obligations set forth in Sections 6.1, 8, 10.7, 11, 12.3,
12.4, 12.6, 16, 17 and 24 of this Agreement shall specifically
survive termination of this Agreement.
28. No Waiver
28.1 No waiver by either party of any right herein shall be construed
as a waiver of any such right in the future or any other right
in this Agreement.
29. No Implied Covenants
29.1 The parties expressly agree that no express or implied covenant
or condition whatsoever shall be read into this Agreement
relating to the exploration, development, or mining of the
Property or the time therefor, or to any operations of CAI
hereunder or to the measure of diligence thereof.
21
<PAGE> 23
30. Entire Agreement
30.1 This Agreement sets forth the entire agreement of the parties
and supersedes all previous and contemporaneous agreements,
representations, warranties, or understandings, written or oral.
In Witness Whereof, the Parties have executed this Agreement the day and
year first hereinabove set out.
METALINE CONTACT MINES, LLC METALINE CONTACT MINES
BY METALINE CONTACT MINES, ITS
MANAGING MEMBER
By: /s/ J. W. KENDRICK By: /s/ J. W. KENDRICK
---------------------- ----------------------
Its: President Its: President
COMINCO AMERICAN INCORPORATED
/s/ GEORGE COLE
---------------------------
George Cole
Vice President, Exploration
22
<PAGE> 24
STATE OF WASHINGTON)
:ss.
COUNTY OF SPOKANE)
On this 24th day of October, 1997, before me personally appeared GEORGE
COLE, to me known to be the Vice President, Exploration of COMINCO AMERICAN
INCORPORATED, the corporation that executed the foregoing instrument, and
acknowledged the said instrument to be the free and voluntary act of said
corporation, for the uses and purposes therein mentioned, and on oath stated
that he was authorized to execute the said instrument on behalf of said
corporation.
Given under my hand and official seal the day and year in this
certificate first above written:
/S/ DAWN SCARTOZZI
-------------------------------------
[Notary Public Seal] Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 5/19/01
STATE OF IDAHO)
:ss.
COUNTY OF Shoshone)
On this 8th day of October, 1997, before me personally appeared
J. W. Kendrick, to me known to be the President of METALINE CONTACT MINES, the
corporation that executed the foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act of said corporation, for the uses
and purposes therein mentioned, and on oath stated that he was authorized to
execute the said instrument on behalf of said corporation.
Given under my hand and official seal the day and year in this certificate first
above written.
/S/ N. J. NELSON
-------------------------------------
Notary public in and for the State of
OFFICIAL SEAL Idaho residing at Cataldo.
N. J. NELSON My Commission Expires: 11/3/97
NOTARY PUBLIC - STATE OF IDAHO
23
<PAGE> 25
STATE OF IDAHO)
:ss.
COUNTY OF Shoshone)
On this 8th day of October, 1997, before me personally appeared J. W.
Kendrick, to me known to be the President of METALINE CONTACT MINES, the
Managing Member of METALINE CONTACT MINES, LLC, the limited liability company
that executed the foregoing instrument, and acknowledged the said instrument to
be the free and voluntary act of said limited liability company, for the uses
and purposes therein mentioned, and on oath stated that he was authorized to
execute the said instrument on behalf of said limited liability company.
Given under my hand and official seal the day and year in this certificate first
above written.
/S/ N. J. NELSON
-------------------------------------
Notary public in and for the State of
OFFICIAL SEAL Idaho residing at Cataldo.
N. J. NELSON My Commission Expires: 11/3/97
NOTARY PUBLIC - STATE OF IDAHO
24
<PAGE> 26
EXHIBIT "A"
PROPERTY DESCRIPTION
This Exhibit "A" is hereby attached to and made a part of that certain Mining
Lease with Purchase Option dated effective September 1, 1997, by and between
Metaline Contact Mines, Metaline Contact Mines LLC and Cominco American
Incorporated. The Property referred to in the Mining Lease with Purchase Option
shall consist of the real property located in Pend Oreille County, Washington,
and more particularly described as follows, to wit:
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Date
---------- ------------------ --------------
<S> <C> <C>
3-40-43 Day Mines, Inc. to MCM, described as follows: Book 41, Page 78
Lot Ten (10) and Northwest One-Quarter of
Southwest One-Quarter (NW 1/4 SW 1/4) of
Sec. Three (3), T. 40 N., R. 43 E., W.M.
4-40-43 Day Mines, Inc. to MCM, described as: Book 41, Page 78
Lot Five (5) of Sec. Four (4), T. 40 N.,
R. 43 E., W.M.
9-40-43 Ormand Lewis to Day Mines to MCM, described Book 41, Page 79
as follows: The mineral rights of the South-
east One-Quarter of Northeast One-Quarter
(SE 1/4 NE 1/4), Northeast One-Quarter of
Southeast One-Quarter (NE 1/4 SE 1/4) of
Sec. Nine (9), T. 40 N., R. 43 E., W.M.
10-40-43 Day Mines to MCM to City of Seattle, Book 41, Page 78
described as follows: Lots Four, Eight and and Exchange Deed
Nine (4, 8 & 9) and Northeast One-Quarter dated 3/5/63
of Southwest One-Quarter (NE 1/4 SW 1/4),
Northwest One-Quarter of Southeast One-
Quarter (NW 1/4 SE 1/4) of Sec. Ten (10),
T. 40 N., R. 43 E., W.M., less the real
property and property rights deeded to
City of Seattle described as: (1) Govern-
ment Lot 4, Government Lot 8, Government
Lot 9 and the NW 1/4 of SE 1/4 of said
Sec. 10, EXCEPT the West 300 feet of
Government Lot 9 and EXCEPT any portion
of the NW 1/4 of SE 1/4 and the South
660 feet of Government Lot 9 which lie
west of a line located 200 feet westerly
and horizontally from the 1990 foot
contour across said property; (2) All
surface, subsurface and mineral rights
to a depth of 500 feet on: The NE 1/4
of SW 1/4 of said Sec. 10; (3) Surface
rights only on: The west 300 feet of
Government Lot 9 and those portions of
the NW 1/4 of SE 1/4 and the South
660 feet of Government Lot 9 which lie
west of a line located 200 feet westerly
and horizontally from the 1990 foot
contour across said property.
</TABLE>
<PAGE> 27
-2-
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
<S> <C> <C>
10-40-43 Day Mines to MCM, described as: The mineral Book 41, Page 79
rights of Southwest One-Quarter of Northwest
One-Quarter (WS 1/4 NW 1/4), Northwest
One-Quarter of Southwest One-Quarter (NW 1/4 SW
1/4) of Sec. Ten (10), T. 40 N., R. 43 E., W.M.
15-40-43 City of Seattle to MCM, deed dated 3/5/63,
described as follows: All that portion of the
east one-half of Northwest One-Quarter of
Northwest One-Quarter (E 1/2 of NW 1/4 of NW 1/4)
lying east of County Road No. 62; the east
one-half of Southwest One-Quarter of Northwest
One-Quarter (E 1/2 of SW 1/4 of NW 1/4); the
Northeast One-Quarter of Northwest One-Quarter
(NE 1/4 of NW 1/4); the Southeast One-Quarter of
Northwest One-Quarter (SE 1/4 of NW 1/4) and the
south one-half of Southwest One-Quarter of
Northeast One-Quarter (S 1/2 of SW 1/4 of NE
1/4), all in Section 15, Township 40 North, Range
43 East, W.M., situate in Pend Orielle County,
State of Washington.
SUBJECT, HOWEVER, to that certain easement
heretofore granted to the United States of
America, Bonneville Power Administration,
recorded under Auditor's File No. 108972, Book 41
of Deeds, Pages 653 to 656, Records of Pend
Orielle County, Washington.
AND SUBJECT FURTHER to a reservation by the
Grantor of the right to enter upon, search for
and remove from said lands, sand, gravel or
borrow material without payment of any additional
consideration to Grantees, their successors or
assigns.
15-40-43 O'Brien to MCM, described as: The mineral rights (Schanda Patent) 4/15/20
to the SW 1/4 of Sec. 15, T. 40 N., R. 43 E., Book 3, Page 196
W.M. Book 1, Page 324
16-40-43 Anderson to MCM, described as: All of the mineral Book 2, Page 278
rights and metals and minerals contained beneath
the surface of the S 1/2 of S 1/2 of Sec. 16, T.
40 N., R. 43 E., W.M.
21-40-43 O'Brien to MCM, described as: The mineral rights (Buffington Patent) 3/15/2?
to the S 1/2 of NE 1/4 OF Sec. 21, T. 40 N., R. Book 3, Page 273
43 E., W.M. Book 1, Page 324
</TABLE>
<PAGE> 28
-3-
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
<S> <C> <C>
21-40-43 Metaline Pine Creek to MCM, described as follows: Vol. 2, Page 360
S 1/2 of the SE 1/4 and the NE 1/4 of the SE 1/4 of
Sec. 21, T. 40 N., R. 43 E., W.M.
22-40-43 Metaline Pine Creek to MCM, described as: Vol. 2, Page 360
SW 1/4 of the SW 1/4 of Sec. 22, T. 40 N.,
R. 43 E., W.M.
22-40-43 O'Brien to MCM, described as: The mineral (Hahn Patent) 12/20/21
rights to the NW 1/4 of the SW 1/4 of No. 839583
Sec. 22, T. 40 N., R. 43 E., W.M. Book 1, Page 324
22-40-43 O'Brien to MCM to Anderson, described as follows: (Carmichael Patent) 8/11/16
The NW 1/4 of Sec. 22, T. 40 N., R. 43 E., W.M., Book 1, Page 547
less patented mining claim M.S. 810 and less the Deeds Book 1, Page 324
surface rights only to N 1/2 of N 1/2 of the and Deed from MCM to
NW 1/4 of said Sec. 22. Anderson dated 2/11/57
22-40-43 Beatty to MCM, described as: SE 1/4 of the (Voight Patent) 5/18/21
SW 1/4 of Sec. 22, T. 40 N., R. 43 E., W.M. Book 2, Page 108
Lamon to M.C.M., Same Description Minerals in Vol. 1, Page 322
Surface in Book 37, Page 304
Book 40, Page 246
27-40-43 Beatty to MCM, described as: E 1/2 of the NW 1/4 (Voight Patent) 5/18/21
of Sec. 27, T. 40 N., R. 43 E., W.M. Book 2, Page 108
Lamon to M.C.M., Same Description Minerals in Vol. 1 Page 322
Surface in Book 37, Page 30?
Book 40, Page 246
33-40-43 Pend Oreille County to MCM, described as: Book 15, Page 443
NE 1/4 of SE 1/4, Sec. 33, T. 40 N., R. 43 E., W.M.
34-40-43 Pend Oreille County to MCM, described as: Book 15, Page 443
SW 1/4 of NW 1/4 and W 1/2 of the SW 1/4 of Sec. 34,
T. 40 N., R. 43 E., W.M.
34-40-43 O'Brien to MCM, described as: Mineral rights to (Ledbetter Patent) 11/21/1?
SE 1/4 and SE 1/4 of SW 1/4 of Sec. 34, T. 40 N., Book 3, Page 173
R. 43 E., W.M. Same mineral rights described in Book 1, Page 324
Book 1, Page 320 as: Lot 1, Lot 2, N 1/2 of SE 1/4,
and SE 1/4 of SE 1/4 of said Sec. 34.
</TABLE>
<PAGE> 29
-4-
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
----------- ------------------ --------------
<S> <C> <C>
34-40-43 Bunker Hill to MCM and Day Mines to MCM, (Enyert Patent) 5/26/16
described as follows from Bunker Hill: Book 3, Page 272
An undivided 3/4 interest in following Book 2, Page 303
described property, to-wit: The NE 1/4 Book 2, Page 299
of Sec. 34, T. 40 N., R. 43 E., W.M.,
excepting therefrom all present mining
claims located in said 1/4 section. Same
area described from Day Mines as follows:
An undivided 1/4 interest in said section
with same exceptions.
3-39-43 Pursche to MCM, described as follows: Lots (Pursche Patent) 8/11/16
2 and 3, SE 1/4 of the NW 1/4, SW 1/4 of the Book 1, Page 553
NE 1/4 of Sec. 3, T. 39 N., R. 43 E., W.M. Book 20, Page 465
3-39-43 O'Brien to MCM, described as follows: E 1/2 (McGee Patent) 12/30/22
of the S/W 1/4, N 1/2 of the SE 1/4 of Book 1, Page 464
Sec. 3, T. 39 N., R. 43 E., W.M., less that Book 24, Page 430
portion described in Deed dated 3/27/67 to
City of Seattle and described as follows:
All that portion of the Northeast Quarter of
Southeast Quarter (NE 1/4 of SE 1/4) of
Section 3, T. 39 N., R. 43 E., W.M., which lies
easterly of the following described Project
Boundary Line crossing said property.
Commencing at the northeast corner of the NE 1/4
of SE 1/4 of Section 3, T. 39 N., R. 43 E., W. M.,
THENCE South 4 (degrees) 33' 32" East, along the
east line of said Section 3, a distance of 899.22
feet, to a concrete monument set at the point of
intersection of said east line of Section 3 with
the Project Boundary Line and THE TRUE POINT OF
BEGINNING;
THENCE South 30 (degrees) 07' 13" West, along
said Project Boundary Line, a distance of 143.18
feet;
THENCE South 23 (degrees) 07' 35" West, a
distance of 174.78 feet;
THENCE South 20 (degrees) 56' 49" West, a
distance of 185.69 feet to a concrete monument
set at the point of intersection of said
Project Boundary Line with the South line of
said NE 1/4 of SE 1/4 of Section 3, said point
being located South 87 (degrees) 00' 14" West,
a distance of 242.73 feet from the Southeast
corner of said NE 1/4 of SE 1/4 of said
Section 3, and the TERMINUS of this description.
</TABLE>
<PAGE> 30
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
Situated in the County of Pend Oreille, State of
Washington and as shown on map of survey designated
as City of Seattle, Department of Lighting, Drawing
No. C-7061.
Reserving unto the Grantor the mineral rights
existing below 1400 feet elevation.
3-39-43 O'Brien to MCM, described as follows: The mineral Book 1, Page 324
rights to SW 1/4 of the SE 1/4 of Section 3,
T. 39 N., R. 43 E., W.M.
9-39-43 O'Brien to MCM, described as follows: The mineral Book 1, Page 324
rights to the SW 1/4 and S 1/2 of the NW 1/4 of
Section 9, T. 39 N., R. 43 E., W.M.
9-39-43 Day Mines to MCM, described as follows: The mineral Book 2, Page 332
rights of the E 1/2 of the NE 1/4 of Section 9,
T. 39 N., R. 43 E., W.M.
10-39-43 Day Mines to MCM, described as follows: The mineral Book 2, Page 332
rights of the W 1/2 of the NW 1/4 of Section 10,
T. 39 N., R. 43 E., W.M.
10-39-43 O'Brien to MCM, described as follows: The mineral Book 1, Page 324
rights to the E 1/2 of the NW 1/4 and Government
Lot 2 of Section 10, T. 29 N., R. 43 E., W.M.,
less those rights described in deed dated 3/27/67
from MCM to City of Seattle and described as follows:
Any interest in the surface, and all mineral and
sub-surface rights underlying the following described
Real Estate:
All that portion of Government Lot 2, Section 10,
T. 39 N., R. 43 E., W.M., which lies easterly of
the following described meander line;
Beginning on the south line of said Government Lot 2
at a point which is located North 87 (degrees) 18' 24"
East, a distance of 1012.35 feet from the southwest
corner of said Government Lot 2;
-86-
<PAGE> 31
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
<S> <C> <C>
THENCE North 26 (Degrees) 55' 15" East, a
distance of 379.39 feet;
THENCE North 35 (Degrees) 05' 04" East, a
distance of 205.36 feet;
THENCE North 30 (Degrees) 13' 05" East, a
distance of 196.79 feet;
THENCE North 10 (Degrees) 08' 01" East, a
distance of 85.36 feet;
THENCE North 25 (Degrees) 12' 34" East, a
distance of 112.36 feet;
THENCE North 39 (Degrees) 04' 38" East, a
distance of 109.14 feet;
THENCE North 27 (Degrees) 55' 59" East, a
distance of 204.59 feet;
THENCE North 23 (Degrees) 01 15" East, a
distance of 231.65 feet;
to a point of terminus at the north line
of said Government Lot 2, said point being
located North 87 (Degrees) 23' 02" East, a
distance of 1780.20 feet from the northwest
corner of said Government Lot 2;
Reserving unto the Grantor the mineral rights
existing below 1400 feet elevation.
11-39-43 Bunker Hill to MCM Book 2, Page 303
2-39-43 Day Mines to MCM, identical descriptions, Book 41, Page 78
Bunker Hill conveys an undivided 7/8 interest
and Day Mines conveys an undivided 1/8 interest,
described as follows:
The South One-Half South One-Half Southwest One-
Quarter Southeast One-Quarter (S 1/2 S 1/2 SW 1/4
SE 1/4) and South One-Half South One-Half South-
east One-Quarter Southeast One Quarter (S 1/2
S 1/2 SE 1/4 SE 1/4) of Section Two (2);
North One-Half Northeast One-Quarter (N 1/2 NE
1/4), Southeast One-Quarter Northeast One-Quarter
(SE 1/4 NE 1/4), North One-Half North One-Half
Northeast One-Quarter Southeast One-Quarter (N 1/2
N 1/2 NE 1/4 SE 1/4), North One-Half North One-Half
Southwest One-Quarter Northeast One-Quarter (N 1/2
N 1/2 SW 1/4 NE 1/4) of Section Eleven (11), all
located in Township 39 North, Range 43 E., W.M., and
</TABLE>
-87-
<PAGE> 32
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
<S> <C> <C>
11-39-43 Day Mines to MCM, described as follows: The mineral Book 41, Page 78
rights of NW 1/4 of the SE 1/4, S 1/2 of the NE 1/4
of the SE 1/4, S 1/2 of N 1/2 of NE 1/4 of SE 1/4,
N 1/2 of SE 1/4 of SE 1/4 of Section 11, T. 39 N.,
R. 43 E., W.M.
12-39-43 Day Mines to MCM, described as follows: The mineral Book 41, Page 78
rights of the NW 1/4 of the SW-1/4, N 1/2 of SW 1/4
of SW 1/4 of Section 12, T. 39 N., R. 43 E., W.M.
20-39-43 Beatty to MCM, described as follows: The mineral Book 1, Page 322
rights in E 1/2 of SW 1/4, and W 1/2 of SE 1/4 of
Section 20, T. 39 N., R. 43 E., W.M.
20-39-43 O'Brien to MCM, described as follows: That certain Book 17, Page 220
real property, to-wit: E 1/2 of SE 1/4 of Section 20,
T. 39 N., R. 43 E., W.M.
21-39-43 O'Brien to MCM, described as follows: That certain Book 17, Page 220
real property, to-wit: Government Lots 11 and 12
and SE 1/4 of NW 1/4 of Section 21, T.39 N.,
R. 43 E., W.M.
29-39-43 Metaline Mining & Leasing Co. to MCM, described Book 45, Page 652
as follows: Government Lots 8, 10, 12 and 17 of
Section 29 (except surface rights in 9 acres in
Lot 17 at extreme NE corner where said corner joins
Metaline Townsite), all in T. 39 N., R. 43 E., W.M.
29-39-43 Retan to Metaline Mining & Leasing Co. to MCM, Book 1, Page 330
described as follows: The mineral rights to Book 45, Page 653
Government Lot 11 of Section 29, T. 39 N.,
R. 43 E., W.M.
30-39-43 O'Brien to MCM, described as: Government Lot 9 Book 1, Page 324
of Section 30, T. 39 N., R. 43 E., W.M.
30-39-43 Appel to O'Brien to MCM, described as follows: Book 1, Page 316
All the mineral bearing rock and ores lying and Book 1, Page 324
being upon or under the S 1/2 of the NW 1/4 and
the SW 1/4 of Section 30, T. 39 N., R. 43 E.,
W.M. (S 1/2 of NW 1/4 being of record as Government
Lots 4 and 5, NW 1/4 of SW 1/4 and NE 1/4 of SW 1/4
being of record as Government Lots 11 and 10, and
SW 1/4 of SW 1/4 being of record as Government Lot
12 of said above description).
</TABLE>
-88-
<PAGE> 33
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
<S> <C> <C>
31-39-43 O'Brien to MCM, described as follows: All Book 1, Page 324
the mineral bearing rock and ores lying and
being upon or under the NE 1/4 of NW 1/4,
and the NW 1/4 of the NE 1/4 of Section 31,
T. 39 N., R. 43 E., W.M.
31-39-43 Day Mines to MCM, described as follows: The Book 41, Page 78
mineral rights of SW 1/4 of the NE 1/4 of
Section 31, T. 39 N., R. 43 E., W.M.
31-39-43 Day Mines to MCM, described as Government Book 41, Page 78
Lot 4, SE 1/4 of SW 1/4 and SE 1/4 of
Section 31, T. 39 N., R. 43 E., W.M.
32-39-43 Metaline Mining & Leasing to MCM, described Book 45, Pages 652-653
as follows: Government Lot 1, Government
Lot 4, S 1/2 of the NW 1/4, and NE 1/4 of
the SW 1/4, SE 1/4 of the SW 1/4, SW 1/4,
of the SE 1/4, and Government Lots 7 and 10
of Section 32, T. 39 N., R. 43 E., W.M.
32-39-43 Metaline Mining & Leasing to MCM, described Book 45, Page 653
as follows: Surface rights to State Shore
Lands by recorded deeds from State of
Washington dated November 3, 1937, abutting
the following described property:
(a) Lots 5, 9 and 12, Sec. 32;
(b) Hercules, Sterling, Lost Cabin and
Lost Cabin Fraction mining claims;
(c) Lot 1, Sec. 32;
(d) Lot 17, Sec. 29;
32-39-43 Retan to Metaline Mining & Leasing to MCM, Book 1, Page 330
described as follows: Book 45, Page 653
Granting Words: grant, bargain, sell, convey,
warrant and confirm unto the party of the
second part, its successors and assigns, all
of the gold, silver, lead, zinc and iron
bearing ores, and all other ores and minerals
of every kind, in, upon and under the follow-
ing described lands situated in the County of
Pend Oreille, State of Washington, to-wit:
</TABLE>
-89-
<PAGE> 34
<TABLE>
<CAPTION>
Sec-Twp-Rg Name & Description Recording Data
---------- ------------------ --------------
<S> <C> <C>
Lot Eleven (11) in section Twenty-nine (S29) and
Lots Two and Three (2 and 3) in Section Thirty-two
(S32), Township Thirty-nine (39) North, Range
Forty-three (43), E.W.M., in the County of Pend
Oreille, State of Washington.
together with the right to open air shafts or any
other operation necessary for the safety of mining
minerals, and of conducting mining operations in a
safe and convenient manner in and upon said lands
and premises.
32-39-43 Day Mines to MCM, described as: W 1/2 of the Book 41, Page 78
SW 1/4 of Section 32, T. 39 N., R. 3 E., W.M.
5-38-43 Day Mines to MCM, described as: S 1/2 of the Book 41, Page 78
NW 1/4 of Section 5, T. 38 N., R. 43 E., W.M.
6-38-43 Day Mines to MCM, described as: Government Lots Book 41, Page 78
1, 2, 3 and 4, the S 1/2 of NE 1/4, N 1/2 of the
SE 1/4, and SE 1/4 of SE 1/4, all of Section 6,
T. 38 N., R. 43 E., W.M.
7-38-43 Day Mines to MCM, described as: NE 1/4 of Book 41, Page 78
NE 1/4 of Section 7, T. 38 N., R. 43 E., W.M.
1-38-42 Day Mines to MCM, described as: SE 1/4 of Section 1, Book 41, Page 78
T. 38 N., R. 42 E., W.M.
1-38-42 Day Mines to MCM, described as: The mineral rights Book 41, Page 78
of Government Lots 2, 3 and 4 of Section 1, T. 38 N.,
R. 42 E., W.M.
1-38-42 Bunker Hill to MCM, described as: Government Lots Book 2, Page 303
1, 6, 7, 8 and 9 in Section 1, T. 38 N., R. 42 E.,
W.M.
2-38-42 Day Mines to MCM, described as: Government Lots 1, Book 41, Page 78
2, 7 and 8 of Section 2, T. 38 N., R. 42 E., W.M.
</TABLE>
-90-
<PAGE> 35
M.C.M. Mining Claim Registry
September 1, 1975
<TABLE>
<CAPTION>
Date of Patent
Sec-Twp-Rg Property Name or Location Recording Book - Page
---------- ------------- --------------- ---------------------
<S> <C> <C> <C>
Unpatented Claims:
(3 & 10)-40-43 Tom Cat Located 7/1/30 Locations 3 85
(3 & 10)-40-43 Raleigh Located 8/29/43 Locations 4 354
(3 & 10)-40-43 Champion Located 10/26/26 Locations 2 503
(3 & 10)-40-43 Bugle Located 9/01/39 Locations 4 48
(3 & 10)-40-43 Climax Located 8/29/43 Locations 4 355
(3 & 10)-40-43 Union Leader Located 9/01/39 Locations 4 49
21-40-43 B.J.5 Located 7/20/49 Volume 1 326
21-40-43 B.J.6 Located 7/20/49 Volume 1 327
22-40-43 Giant Located 1/12/24 Volume 2 209
" Amended 5/5/45 Volume 4 398
22-40-43 Giant Extension Amended 5/5/45 Volume 4 400
22-40-43 Giant Fraction Amended 9/4/40 Volume 4 101
" Amended 5/5/45 Volume 4 399
2-39-43 Bee No. 1 50% Located 9/14/73 Volume 9 332
35-40-43 Bee No. 2 50% Located 9/14/73 Volume 9 333
35-40-43 Bee No. 3 50% Located 9/15/73 Volume 9 334
35-40-43 Bee No. 4 50% Located 9/15/73 Volume 9 335
35-40-43 Bee No. 5 50% Located 9/15/73 Volume 9 336
35-40-43 Bee No. 6 50% Located 9/16/73 Volume 9 337
27-40-43 AX No. 1 50% Located 9/09/72 Volume 5 586
26-40-43 AX No. 2 50% Located 9/09/72 Volume 5 588
27-40-43 AX No. 3 50% Located 9/09/72 Volume 5 590
26-40-43 AX No. 4 50% Located 9/09/72 Volume 5 592
27-40-43 AX No. 5 50% Located 9/08/72 Volume 5 594
26-40-43 AX No. 6 50% Located 9/08/72 Volume 5 596
27-40-43 AX No. 7 50% Located 9/08/72 Volume 5 598
26-40-43 AX No. 8 50% Located 9/08/72 Volume 5 600
27-40-43 AX No. 9 50% Located 9/08/72 Volume 5 602
26-40-43 AX No. 10 50% Located 9/08/72 Volume 5 604
27-40-43 AX No. 11 50% Located 9/09/72 Volume 5 606
26-40-43 AX No. 12 50% Located 9/09/72 Volume 5 608
27-40-43 AX No. 13 50% Located 9/09/72 Volume 5 611
26-40-43 AX No. 14 50% Located 9/09/72 Volume 5 612
26-40-43 AX No. 15 50% Located 9/17/72 Volume 5 614
26-40-43 AX No. 16 50% Located 9/17/72 Volume 5 616
26-40-43 AX No. 17 50% Located 9/17/72 Volume 5 618
26-40-43 AX No. 18 50% Located 9/17/72 Volume 5 620
26-40-43 AX No. 19 50% Located 9/17/72 Volume 5 622
</TABLE>
-91-
<PAGE> 36
M.C.M. Mining Claim Registry
September 1, 1975
Page 2
<TABLE>
<CAPTION>
Sec-Twp-Rg Property Name Date of Patent or Location Recording: Book - Page
---------- ------------- -------------------------- -----------------------
<S> <C> <C> <C>
27-40-43 AX No. 20 50% Located 10/01/72 Volume 5 651
27-40-43 AX No. 21 50% Located 10/07/72 Volume 5 699
27-40-43 AX No. 22 50% Located 10/01/72 Volume 5 652
26-40-43 AX No. 23 50% Located 10/01/72 Volume 5 653
26-40-43 AX No. 24 50% Located 10/10/72 Volume 5 624
26-40-43 AX No. 25 50% Located 10/01/72 Volume 5 654
26-40-43 AX No. 26 50% Located 10/07/72 Volume 5 698
26-40-43 AX No. 27 50% Located 3/26/75 Volume 11 1553
(26,35)-40-43 AX No. 28 50% Located 3/26/75 Volume 11 1554
23-40-43 EX No. 1 50% Located 9/16/72 Volume 5 625
23-40-43 EX No. 2 50% Located 9/16/72 Volume 5 626
23-40-43 EX No. 3 50% Located 9/16/72 Volume 5 627
23-40-43 EX No. 4 50% Located 9/16/72 Volume 5 628
23-40-43 EX No. 5 50% Located 9/16/72 Volume 5 629
23-40-43 EX No. 6 50% Located 9/15/72 Volume 5 630
23-40-43 EX No. 7 50% Located 9/15/72 Volume 5 631
23-40-43 EX No. 8 50% Located 9/15/72 Volume 5 632
23-40-43 EX No. 9 50% Located 9/16/72 Volume 5 633
23-40-43 EX No. 10 50% Located 9/16/72 Volume 5 634
23-40-43 EX No. 11 50% Located 9/16/72 Volume 5 63?
23-40-43 EX No. 12 50% Located 9/16/72 Volume 5 63?
23-40-43 EX No. 13 50% Located 9/16/72 Volume 5 63?
23-40-43 EX No. 14 50% Located 10/08/72 Volume 5 69?
23-40-43 EX No. 15 50% Located 10/07/72 Volume 5 69?
23-40-43 EX No. 16 50% Located 10/07/72 Volume 5 69?
28-40-43 Rho No. 3 Located 7/14/49 Volume 4 63?
28-40-43 Rho No. 4 Located 7/16/49 Volume 4 63?
28-40-43 Rho No. 5 Located 7/14/49 Volume 4 63?
28-40-43 Rho No. 8 Located 7/15/49 Volume 4 64?
28-40-43 Rho No. 9 Located 7/13/49 Volume 4 64?
28-40-43 Rho No. 10 Located 7/13/49 Volume 4 64?
28-40-43 Rho No. 13 Located 7/13/49 Volume 4 64?
28-40-43 Rho No. 14 Located 7/13/49 Volume 4 64?
28-40-43 Rho No. 15 Located 7/13/49 Volume 4 6??
28-40-43 Rho No. 18 Located 7/12/49 Volume 4 6??
28-40-43 Rho No. 19 Located 7/14/49 Volume 4 6??
28-40-43 Rho No. 20 Located 7/12/49 Volume 4 6??
33-40-43 Rho No. 21 Located 7/13/49 Volume 4 6??
33-40-43 Rho No. 22 Located 7/13/49 Volume 4 6??
33-40-43 Rho No. 23 Located 7/13/49 Volume 4 6??
33-40-43 Rho No. 24 Located 7/12/49 Volume 4 6??
33-40-43 Rho No. 25 Located 7/12/49 Volume 4 6??
33-40-43 Rho No. 26 Located 7/12/49 Volume 4 6??
33-40-43 Rho No. 27 Located 7/12/49 Volume 4 6??
</TABLE>
<PAGE> 37
M.C.M. Mining Claim Registry
September 1, 1975
Page 3
<TABLE>
<CAPTION>
Sec-Twp-Rg Property Name Date of Patent of Location Recording: Book - Page
---------- ------------- -------------------------- ----------------------
<S> <C> <C> <C>
33-40-43 Rho No. 28 Located 7/12/49 Volume 4 660
33-40-43 Rho No. 29 Located 7/12/49 Volume 4 661
33-40-43 Rho No. 30 Located 7/12/49 Volume 4 662
33-40-43 Rho No. 31 Located 7/12/49 Volume 1 319
33-40-43 Rho No. 32 Located 7/12/49 Volume 1 320
33-40-43 Rho No. 33 Located 7/12/49 Volume 1 321
33-40-43 Rho No. 34 Located 7/12/49 Volume 1 322
35-40-43 Molly No. 2 Located 9/03/37 Volume 3 554
36-40-43 Molly No. 3 Located 9/03/37 Volume 3 555
36-40-43 Molly No. 4 Located 9/03/37 Volume 3 556
36-40-43 Molly No. 7 Located 9/03/37 Volume 3 559
36-40-43 Molly No. 9 Located 9/03/37 Volume 3 561
36-40-43 Molly No. 11 Located 9/02/37 Volume 3 563
36-40-43 Molly No. 12 Located 9/02/37 Volume 3 564
36-40-43 Molly No. 13 Located 9/02/37 Volume 3 565
36-40-43 Molly No. 74 Located 9/04/37 Volume 3 608
1-39-43 Molly No. 75 Located 9/04/37 Volume 3 609
36-40-43 Patsy No. 72 Located 5/20/37 Volume 3 517
36-40-43 Patsy No. 76 Located 5/20/37 Volume 3 521
36-40-43 Patsy No. 79 Located 6/02/37 Volume 3 522
36-40-43 Patsy No. 80 Located 6/02/37 Volume 3 523
36-40-43 Patsy No. 81 Located 6/02/37 Volume 3 524
36-40-43 Patsy No. 82 Located 6/02/37 Volume 3 525
31-40-43 Patsy No. 84 Located 6/02/37 Volume 3 527
36-40-43 Patsy Fraction Located 9/21/50 Volume 1 388
31-39-43 Annex No. 1 Located 5/11/51 Volume 1 473
31-39-43 Annex No. 2 Located 5/11/51 Volume 1 474
31-39-43 Annex No. 3 Located 5/11/51 Volume 1 476
</TABLE>
<TABLE>
<CAPTION>
Patented Claims:
----------------
<S> <C> <C> <C> <C>
Diamond R - M.S. 46-A Patented 7/27/95 Book A 83
Admiral, Gold Finder, Lone Star, Elk
Elk Horn #2 - M.S. 898 Patented 8/5/09 Book A 190
Bella May - M.S. 45-A Patented 7/27/95 Book A 79
Bella May Fraction, Bella May
Fraction #3 - M.S. 868 Patented 2/5/13 Book 4 102
May Bell, Emma L. - M.S. 874 Patented 1/25/09 Book A 234
Sterling, Reuco, Lost Cabin, Lost Cabin
Fraction, Hercules - M.S. 882-A Patented 3/3/13 Book 1 112
Sampson Fraction, Elk Horn,
Yellow Jacket - M.S. 875 Patented 3/18/13 Book A 115
Blue Bucket - M.S. 47-A Patented 7/27/95 Book A 81
January, February, March, April, May
Fraction, September Fraction, August,
Coyote, Mary Viola, Six Spot,
Seven Spot - M.S. 1236 Patented 3/14/55 Book 4 294
</TABLE>
<PAGE> 38
EXHIBIT "B"
OPTION TO PURCHASE PROPERTY
This Exhibit "B" is hereby attached to and made a part of that certain Mining
Lease with Purchase Option dated effective September 1, 1997 (hereafter the
"Mining Agreement"), by and between Metaline Contact Mines, Metaline Contact
Mines LLC and Cominco American Incorporated. The Option to Purchase referred to
in Section 9 of the Mining Agreement shall consist of the following:
1. In accordance with Section 9 of the Mining Agreement, MCM has granted to
CAI during the term of this Mining Agreement the exclusive, irrevocable
option, exercisable at any time, to purchase up to a total of 200 acres
of the surface estate of the Property, together with all appurtenances
and improvements, free and clear of all liens and encumbrances (the
"Option"). CAI shall have the right to exercise the Option to purchase
these 200 acres in one or more transaction, dealing with one or more
parcels of land, but each parcel must comprise at least fifty (50) acres
of land.
2. The purchase price under this Option shall be a sum equal to 110% of the
fair market value of the designated portion of the Property at the time
of said purchase. If the parties are unable to agree upon the fair
market value within ten (10) days after the date of CAI's notice of
election to purchase, then each party, at its own expense, shall have an
appraisal made by an appraiser. If the value as determined by the higher
appraisal does not exceed the value as determined by the lower appraisal
by more than ten percent (10%), then the fair market value shall be the
average of the two appraisals. If the value as determined by the higher
appraisal exceeds the value as determined by the lower appraisal by more
than ten percent (10%), the two appraisers shall select a third
appraiser who shall make an appraisal. The appraisals of the two
appraisers shall not be disclosed to the third appraiser. If the value
as determined by the appraisal of the third appraiser is between the two
appraisals, the fair market value shall be the value as determined by
the appraisal of the third appraiser. Otherwise, the fair market value
shall be the appraisal closest to the appraisal of the third appraiser.
The cost of the third appraisal shall be borne by the party whose
appraisal is further from the third appraisal. Each appraiser shall be a
member of or accredited by the American Institute of Real Estate
Appraisers or the Society of Real Estate Appraisers.
In appraising the surface and improvements the appraisers shall
determine the value of the property and improvements for non-mining
purposes on the date of CAI's notice of its election to purchase. The
appraisers shall not consider any increase or decrease in value which
may result from existing or proposed exploration, mining, and related
activities on or in the vicinity of the Property.
B-1
<PAGE> 39
3. All real estate and personal property taxes shall be prorated as of the
time of closing. Transfer taxes, excise taxes and recording fees shall
be paid by MCM. The cost of the title insurance or abstract of title
shall be paid by MCM. Each party shall be responsible for their own
legal fees.
4. MCM shall, through an escrow agent, upon the full payment of the price
specified above, convey the Property purchased to CAI by Warranty Deed,
free and clear of all liens and encumbrances and reservations, except
those approved by CAI. Such payment and conveyance shall be completed
within one hundred twenty (120) days after the exercise of the option.
5. MCM shall obtain, at least thirty (30) days prior to the date of
closing, title insurance or a complete abstract of title currently
continued by a recognized abstract or title company showing MCM's title
to the Property to be marketable and as called for in this Section. CAI
shall notify MCM of any valid objection to the title within fifteen (15)
days after receipt of said abstract or title insurance.
6. Following CAI's purchase of the Property, CAI shall own all right, title
and interest in and to the purchased portion of the Property, and all
rights and interest of the parties under this Mining Agreement with
respect to the purchased portion of the Property shall terminate, except
for the Production Royalty, as provided for in Section 7.
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EXHIBIT "C"
DETERMINATION OF FAIR MARKET VALUE
FOR DAMAGE COMPENSATION OR EASEMENTS
FOR THE BENEFIT OF OTHER LANDS
This Exhibit "C" is hereby attached to and made a part of that certain Mining
Lease with Purchase Option dated effective September 1, 1997, by and between
Metaline Contact Mines, Metaline Contact Mines LLC and Cominco American
Incorporated. The determination of Fair Market Value for damage compensation or
easements for the benefit of other lands referred to in Sections 10.5 and 17.2
respectively, of the Mining Lease with Purchase Option shall consist of the
following:
Should CAI be required to pay to MCM the compensation prescribed by Section 10.5
or 17.2 of the Mining Lease with Purchase Option, the amount of such
compensation shall be determined in the manner described below:
Any buildings, structures, or timber on the Property shall be appraised,
as well as any lands specifically subject to a proposed easement. CAI
and MCM will each choose an appraiser. Each appraiser shall be a member
of or accredited by the American Institute of Real Estate Appraisers or
the Society of Real Estate Appraisers or a qualified forester (for
timber). Each such individual shall appraise the buildings, structures,
or timber separately. With regard to a proposed easement, each such
individual shall appraise the lands specifically subject to the proposed
easement and determine the diminution in value, if any, to these lands
if the proposed easement were to be granted. If the two appraisals do
not vary by more than ten percent (10%) of the highest appraisal, the
Fair Market Value shall be deemed to be the average of the two
appraisals. If the variance exceeds ten percent (10%), the two
appraisers shall be directed to decide on a third appraiser of similar
qualifications. The third appraiser shall then make an independent
appraisal. The average of the three appraisals shall be deemed to be the
Fair Market Value. The cost of all appraisals shall be borne by CAI
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