UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-KSB
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period from __________________ to _____________
Commission File Number _____________________
IDAHO CONSOLIDATED METALS CORPORATION
(Name of Small Business Issuer in its Charter)
British Columbia, Canada 82-0465571
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
504 Main Street, Suite 470
Post Office Box 1124
Lewiston, Idaho 83501
(Address of Principal Executive Offices)
(208) 743-0914
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12 (g) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Common Stock Without Par Value
Section 12(g) of the Act: ------------------------------
(Title of Class)
Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State Issuer's revenue for its most recent fiscal year. $165,000
The aggregate market value of the voting stock held by non-affiliates of the
registrant at December 31, 1997 was C$2,131,262 (based on the closing sale price
on the Vancouver Stock Exchange on December 31, 1997). This calculation does not
reflect a determination that persons are affiliates for any other purposes.
At December 31, 1997, there were 7,104,208 of the registrant's voting shares
issued and outstanding.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
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IDAHO CONSOLIDATED METALS CORP.
Form 10-KSB
For the Fiscal Year Ended December 31, 1997
TABLE OF CONTENTS
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Page
PART I
ITEM 1. DESCRIPTION OF BUSINESS..................................................................................1
ITEM 2. DESCRIPTION OF PROPERTY..................................................................................7
ITEM 3. LEGAL PROCEEDINGS.......................................................................................35
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....................................................38
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................................................39
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...............................................42
ITEM 7. FINANCIAL STATEMENTS....................................................................................47
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE....................47
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT............................................................................................48
ITEM 10. EXECUTIVE COMPENSATION..................................................................................49
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........................................51
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................................................53
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K........................................................................58
SIGNATURES.......................................................................................................62
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Forward-Looking Information
Certain statements within this Form 10-KSB and in the documents attached as
exhibits hereto are "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995. Any statements
that express or involve discussions with respect to predictions, expectations,
beliefs, plans, objectives, assumptions or future events or performance (often,
but not always, using words and phrases such as "expects", "believe",
"believes", "plans", "anticipates", "is anticipated", or stating that certain
actions, events or results "will", "may", "should", or "can" be taken, occur or
be achieved) are not statements of historical fact and may be "forward-looking
statements". Such statements may be included, among other places, in the
Company's press releases, the Company's 1996 and 1997 Annual Report and the
Company's Offering Memorandum dated November 12, 1997. The statements referred
to above generally relate to the prospects of the Company's exploration and
development activities. Forward-looking statements are based on expectations,
estimates and projections at the time the statements are made that involve a
number of risks and uncertainties which could cause actual results or events to
differ materially from those anticipated by the Company. These risks and
uncertainties include, but are not limited to, the inherent risks associated
with precious metals and mineral property development and production such as,
the competitive nature of the precious metals industry, the existence of
competitors with integrated development and marketing organizations, market
fluctuations in the world price of gold and other precious metals, the
fluctuation in the supply and demand for gold and other precious metals and the
proximity and capacity of competitors, the risks and uncertainties associated in
complying with governmental regulations, including regulations relating to price
controls, taxes, royalties, land tenure, allowable production, the import and
export of precious metals and environmental protection, the risk that no
commercial quantities of precious metals will be discovered, the uncertainties
related to dealing with third-party operators of precious metal properties, the
risks and uncertainties related to the future development and acquisition of
suitable additional producing properties or prospects, the risks associated with
unusual or unexpected geological formations, pressures or other unforeseen
conditions during drilling, the risks associated with liabilities and damages
relating to pollution or other hazards against which the Company may not be able
to adequately insure against and the risk that actual costs incurred in the
abandonment of drilling or mines will substantially exceed the estimated
abandonment costs. The Company assumes no obligation to update the information
contained in this Form 10-KSB upon the occurrence of one or more of the factors
listed above.
Summary
The Company was incorporated by registration of its memorandum and articles
under the laws of the Province of British Columbia on September 15, 1988 under
the name "Consolidated Idaho Platinum Resources Inc." The Company changed its
name from "Consolidated Idaho Platinum Resources Inc." to "Idaho Consolidated
Metals Corp." (the "Company") effective as of June 30, 1989. The Company's head
and principal office is located at 504 Main Street, Suite 470, P.O. Box 1124,
Lewiston, Idaho, 83501, U.S.A. The Company's registered and records office is
located at #1040 - 1055 West Hastings Street, Vancouver, British Columbia, V6E
2E9, Canada.
The Company has a wholly owned subsidiary, Idaho Consolidated Metals
International, Ltd., incorporated under the laws of the British Virgin Islands
on July 17, 1996. Its registered and records office is located at Craigmuir
Chambers, P.O. Box 71 Road Town, Tortola, British Virgin Islands and its
business address is located at 504 Main Street, Suite 470, P.O. Box 1124,
Lewiston, Idaho, 83501, U.S.A. This company does not operate any business at
this time.
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The Company is engaged in the acquisition, exploration and, when warranted,
development of precious metals properties and the mining and processing of ores.
The principal precious metal targeted by the Company is gold. The Company's
business strategy is the production of precious metals from its properties by
careful exploration, conservative development and implementation of practices
that achieve minimal environmental disturbances. The Company's material property
interests consist of the Petsite Property, Tuxedo Property, Dean Mill Property,
Friday Property, Deadwood Property, Buffalo Gulch Property, Gallaugher Property,
S/S Ophir Property, Mineral Zone Property and Cyprus Joint Venture Agreement.
The Company's primary focus is on the Elk City, Idaho area and the Company's
four primary properties: Buffalo Gulch, Deadwood, Petsite and Dixie. The Company
or its joint venture partner is in the process of carrying out preliminary
drilling or exploration programs on these properties except with regard to the
Buffalo Gulch Property which is in the development phase and the Petsite,
Deadwood and Friday properties which are in the advanced exploration stage. None
of the Company's properties are in commercial production. There is no guarantee
that ore will be found in any of these properties or that if it is found, it
will be found in commercially mineable quantities and grades. For further
particulars, see "Description of Property."
Cyprus Joint Venture
On May 20, 1996, the Company entered into a joint venture agreement (the "Joint
Venture Agreement") with Cyprus Gold Exploration Corporation ("Cyprus Gold" or
"Cyprus") to jointly explore, evaluate, develop, mine, and market the Petsite
Property and the Friday Property. Cyprus Gold has earned a 70% participating
interest in the joint venture by expending $1.8 million on the exploration of
both properties. The Joint Venture Agreement also grants to Cyprus Gold the
right to explore the Eagle and Golden Eagle properties. Pursuant to the Joint
Venture Agreement, the Company has the right to produce 50,000 ounces of gold
from high grade epithermal vein systems. Once production exceeds 50,000 ounces,
Cyprus Gold may participate in the production by providing its share of the
production costs and expenses. Also pursuant to the Joint Venture Agreement, the
Company and Cyprus Gold may elect to alter their contributions to the program
and budget. Kinross Gold Corporation ("Kinross Gold" or "Kinross") has merged
with Amax Gold Inc. and now controls both of Cyprus Gold's joint ventures on
both the Petsite and Deadwood properties.
Kinross Gold has initiated a 7000 foot-large diameter ore drilling program on
the Friday Property to test the high grade gold zone encountered by Cyprus in
their 1997 drilling. The anticipated cost of this exploration program is
$500,000 which will accrue to the Petsite Joint Venture.
Concurrent with the drilling, a IP/resistivity geophysical program has been
initiated on the Deadwood Property to delineate the Orogrande shear zone and
locate the mineralizing structures. The anticipated cost of this exploration
program is $50,000 which will accrue to the Deadwood Joint Venture.
Swisher-Br Process
The Swisher-Br Process is a bromine based leaching process for recovering gold
locked in sulfide minerals. The use of bromine as a leaching agent, rather than
the traditional cyanide, expedites the natural oxidation process liberating any
metals encapsulated by the sulfides. The resultant pregnant solution is then
exposed to various resins to selectively remove each type of metal from the
pregnant solution. The use of the resins is required as bromine, unlike cyanide,
is not gold selective.
Pursuant to an agreement dated March 3, 1993, amended July 20, 1994 and further
amended by letter agreement on August 25, 1994, entered into between Idaho
Mining and Development Company, Inc. ("IMD") and Mr. Joe Swisher, the President
of IMD, on the one hand, and the Company, on the other hand, the Company
acquired (i) an exclusive license to use the Swisher-Br Process and the right to
license same to selected third parties (provided, however, that any licensing
royalties, payments or other
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consideration received from third parties shall be allocated 50% to the Company
and 50% to IMD and Mr. Swisher), (ii) certain mining and milling equipment
developed to utilize the Swisher-Br Process (the "Plant") and (iii) certain
options to acquire mineralized property in the vicinity of the Plant. The
purchase price for such assets consisted of: (a) 600,000 shares of the Company's
common stock; (b) $80,000 payable on or before July 1, 1996; (c) a cash payment
of $84,175 due on demand; and (d) warrants to purchase an additional 300,000
shares of the Company's common stock at C$3.00 per share. Subsequent to December
31, 1997, Items (c) and (d) have been eliminated by a Global Settlement
Agreement entered into by the Company, Mr. Swisher and IMD. For more information
see note 7 to the Company's December 31, 1997 Financial Statements, which are
attached as an exhibit hereto. The Company ceased working on the Swisher-Br
Process as a result of inconsistencies found between data provided by Mr.
Swisher and independent analysis. This event led to a lawsuit by Mr. Swisher and
the resulting Global Settlement Agreement. As a result of the Global Settlement
Agreement, the Company has exchanged its interests in the Swisher-Br Process,
for a 2% gross royalty interest therein.
Plant
The Company originally acquired the Swisher-Br Process and the Plant because
much of the ores that would be mined by the Company are refractory ores
containing gold locked in sulfide mineral, which reduces or eliminates the
effectiveness of traditional cyanide leaching, substantially reducing gold
recovery from such ores. In late 1995, the Company contracted an extractive
metallurgist as a result of problems arising with the Plant. After reviewing his
findings, the Company has terminated work and testing on the Plant. However, the
Company has since changed its focus and now relies more on its joint venture
partners for exploration and development. Accordingly, the Company has
relinquished its rights under the Agreement pertaining to the Swisher-Br Process
in exchange for a 2% gross royalty payable to the Company. Given the Company's
change of focus and shift away from the Swisher-Br Process, the Plant is of
limited value to the Company. In connection with the Global Settlement
Agreement, the Company and IMD are disengaging themselves from the project, and
accordingly, the Company will be commissioning an appraisal and the equipment
will be liquidated at a time deemed most appropriate by the Company.
Mini-Strip Mining
The mini-strip method of mining is a refinement of exploration trenching and is
well suited to the deposit model developed for narrow quartz vein systems.
Wilfried J. Struck, the Company's Chief Operating Officer and Vice President in
charge of Mining and Exploration, has obtained permits to employ the Struck
Mini-Strip system on certain of the Company's properties. However, the method
will not likely be utilized in the future unless ore resources are delineated on
the Company's properties that would be suited to the method.
Competition
There are numerous companies, partnerships and individuals engaged in mineral
exploration and development, not only in the geographic areas in which the
Company proposes to conduct activities, but also throughout the continental
United States and abroad. To the extent that the Company seeks further
opportunities to participate in promising exploration projects, the Company will
have to compete with other parties for the discovery and acquisition of
properties considered to have commercial potential. Many of these competitors
possess or have access to financial and other resources that exceed those
available to the Company.
Potential profitability of mining ventures and mineral properties depends upon
factors beyond the Company's control. For instance, world prices of, and markets
for, non-precious and precious metals and minerals are unpredictable, highly
volatile, potentially subject to government fixing, pegging and controls, and
respond to changes in domestic, international, political, social and economic
environments. Additionally, in the current period of world-wide economic
uncertainty, the availability and costs of
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funds for exploration, development and production and other costs have become
increasingly difficult, if not impossible, to project. These changes and events
will materially affect the financial performance of the Company.
Regulations and Environmental Protection Matters
Environmental Protection Law Compliance
The Company believes that it complies in all material respects with applicable
environmental protection laws and regulations. The Company is not presently
under any order to remedy any existing violation of any environmental protection
law or regulation. The Company is committed to achieving and maintaining full
compliance with all laws, including those governing environmental protection,
and to prompt resolution of any alleged violations in accordance with applicable
law.
General
The Company's business is subject to extensive federal, state and local
governmental controls and regulations, including regulation of mining and
exploration operations, discharge of materials into the environment, disturbance
of land, reclamation of disturbed lands, threatened or endangered species and
other environmental matters. Generally, compliance with these regulations
requires the Company to obtain permits issued by federal, state and local
regulatory agencies. Certain permits require periodic renewal or review of their
conditions. The Company cannot predict whether it will be able to renew such
permits or whether material changes in permit conditions will be imposed.
Non-renewal of permits or the imposition of additional conditions could have a
material adverse effect on the Company's financial condition or results of
operations. The Company believes that its operations and facilities comply in
all material respects with current federal, state, and local permits and
regulations at each of its exploration properties. However, compliance with
existing and future laws and regulations may require additional control measures
and expenditures which cannot be estimated at this time. Compliance requirements
for any mines and mills may require substantial additional control measures that
could materially affect proposed permitting and construction schedules for such
facilities. Under certain circumstances, facility construction may be delayed
pending regulatory approval. The cost of complying with existing and future laws
and regulations may render existing and any future properties unprofitable and
could adversely affect the level of the Company's ore resources, if any.
Environmental Protection Laws
At its exploration operations, the Company is required to comply with federal
environmental protection laws and with implementing regulations adopted by the
U.S. Environmental Protection Agency (the "EPA"), the U.S. Forest Service (the
"USFS"), the Bureau of Land Management (the "BLM"), the U.S. Fish and Wildlife
Service, the United States Army Corps of Engineers and other agencies. In each
state in which the Company operates, various federal, state and local agencies
enforce extensive laws and regulations which address the environmental impacts
of mining and mineral processing, including the potential for contamination of
soil, water and air from various discharges or wastes generated in the normal
course of mining activities. In particular, various legislation, including, but
not limited to, the Clean Air Act, the Clean Water Act, the Endangered Species
Act and the National Environmental Policy Act, requires analyses and/or imposes
effluent standards, new source performance standards, air quality and emissions
standards and other design or operational requirements upon various aspects of
gold exploration, mining and processing.
Clean Air Act
The 1990 amendments to the Clean Air Act imposed a large number of new
regulatory requirements, including the establishment of a federal air permitting
program, a list of regulated hazardous air pollutants, including various metals
and cyanide, and expanded enforcement authority. The EPA has
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published final regulations establishing minimum elements of state operating
permit programs. The individual states were given until November 15, 1993 to
submit their permit programs to the EPA for review and approval. Until federal
approval of these state programs occurs, the full effect of the new regulations
on the Company cannot be accurately predicted. At a minimum, the new federal
program will require additional permitting at certain existing facilities and
may require additional facility monitoring and additional air pollution control
equipment.
Clean Water Act
The Clean Water Act is one of the principal federal environmental protection
laws regulating mining operations. The Clean Water Act sets effluent limitations
on waste water discharges and establishes the National Pollution Discharge
Elimination System (the "NPDES"), which permits limited discharges from point
sources, including certain mining facilities, into waters of the United States.
Some dry washes are deemed to be waters of the United States within the meaning
of the Clean Water Act. Permits with strict effluent limitations are often
issued for discharges from ore-processing, maintenance and heap leaching
operations, tailings ponds, and acid mine drainage. The Clean Water Act permits
are also required for the dredging and filling of all waters and wetlands (which
are broadly defined under federal law) and for certain storm water discharges
where runoff comes in contact with overburden. The Company does have certain
required clean water obligations, specifically in regard to the Buffalo Gulch
Property. See Item 2 - Description of Properties for further details.
Endangered Species Act
Certain of the Company's properties are directly affected by the Endangered
Species Act through the listing of salmon as a threatened species. Absent the
success of pending reform proposals to lessen the effect of the Endangered
Species Act, the Company anticipates increasingly difficult permitting and
operating conditions under the Endangered Species Act.
National Environmental Policy Act
The National Environmental Policy Act requires all agencies to consider the
impact on the human environment of major federal actions within the meaning of
the National Environmental Policy Act. The Company's exploration activities
often involve federal lands or federal permits, or both, and may trigger major
federal actions. The National Environmental Policy Act's requirements for major
federal actions is that they be reviewed in an environmental impact statement
prepared by or under the direction of a federal agency, if the major federal
actions have a significant impact on the human environment. Preparation of an
environmental impact statement can delay the federal action being reviewed and
the Company's activity which depends on that action. The Company has no control
over the preparation or review of the environmental impact statement, and delays
resulting from environmental impact statement preparation or review are
uncertain risks to the completion of any activity subject to the environmental
impact statement required under the National Environmental Policy Act. The
Company currently does not have any activity subject to an environmental impact
statement.
State Environmental Protection Laws
Certain state environmental protection laws address subjects - most notably
groundwater withdrawal - not directly regulated by federal law. Other state
environmental protection laws complement or overlap federal laws. Where states
have enacted environmental protection laws covering similar subject matter as
federal laws and the state laws are more stringent or burdensome, the Company
must comply with the state law in all cases except where the state law is
pre-empted by the federal law.
Governmental Permits, Reclamation and Permitting
The Company must seek governmental permits for its exploration activities at its
properties. Obtaining the necessary governmental permits is a complex and
time-consuming process involving numerous federal, state and local agencies. The
duration and success of each permitting effort are contingent upon
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many variables not within the Company's control. In the context of environmental
protection permitting, including the approval of reclamation plans, the Company
must comply with the known standards and existing laws and regulations which may
entail greater or lesser costs and delays depending on the nature of the
activity to be permitted and the interpretation of the regulations implemented
by the permitting authority. All future exploration and development projects of
the Company require or will require a variety of permits. Although the Company
believes the permits for its projects can be obtained in a timely fashion,
permits have only been obtained to operate the Eckert's Hill Plant and
full-scale mill facility, as well as to begin mini-strip mining on the Golden
Eagle Property. The Company does not believe that existing permitting
requirements or other environmental protection laws and regulations will have a
material adverse effect on its business, financial condition or results of
operations, however, the failure to obtain certain permits could have a material
adverse effect on the Company's business, operations and prospects.
Unpatented Mining Claims
Lands owned by the United States on which unpatented mining claims have been
located by the Company (or located by others and acquired by the Company or by
the joint ventures) under the General Mining Law of 1872 account for
approximately 10,000 acres of federal mineral rights controlled by the Company
through ownership of the unpatented mining claims. The Company also controls
five patented lode mining claims.
Requirements for the location of a valid unpatented mining claim depend on the
type of claim being staked, but generally include discovery of valuable
minerals, erecting a monument and posting thereon a location notice, marking the
boundaries of the unpatented mining claim, and filing a notice of location
within the county in which the claim is located. If the statutes and regulations
for the location of an unpatented mining claim are complied with the claimant
obtains a valid possessory right to the contained minerals. To preserve an
otherwise valid unpatented mining claim, a claimant also must make certain
additional findings with the county and the BLM and annually pay a fee required
by the United States. Failure to pay the fee or make the required filings may
render the unpatented mining claim void or voidable.
Because unpatented mining claims are self-initiated and self-maintained, they
possess some unique vulnerabilities not associated with other types of property
interests. It is impossible to ascertain the validity of unpatented mining
claims from public real property records, and therefore it can be difficult or
impossible to confirm that all of the requisite steps have been followed for
location and maintenance of an unpatented mining claim.
Claim Rental Fees
On October 5, 1992, the United States Congress enacted the Interior Department
and Related Agencies Appropriations Act of 1993, Public Law 102-381 (the
"Appropriations Act"), which, among other things, established a mandatory annual
rental fee of $100 for each mining claim or site located and held on public
lands under the Mining Law. The requirements of the Appropriations Act were
recently renewed by the United States Congress.
The Company has identified approximately 1,700 peripheral claims which have been
dropped as a result of the impact of the Appropriations Act. The Claims do not
materially affect the Company's control of the mineral rights in the various
areas of interest. The key claims in each claim block covered by the various
property agreements have been retained with less cost to the Company by way of
certain existing exemptions within the new BLM claim rental regulations.
The Company paid rental fees on 190 claims in Idaho and 16 claims in Nevada, and
these claims remain active. Kinross paid the rental fees on the claims in the
Joint Ventures and these totaled approximately
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250 claims. The majority of the Golden Eagle claims have been returned to Mr.
Swisher and a detailed list may be reviewed in the Exhibits to this Form 10-KSB.
Access to Mineral Rights
Many of the mineral rights controlled by the Company do not have public or
negotiated private access which the Company would need to conduct exploration,
development or mining on such mineral rights. Where existing public or
negotiated private access routes do not cross or touch the property on which the
Company controls mineral rights, access is not assured for the personnel and
equipment necessary for exploration and mining activities. Federal agencies
regulate the access to unpatented mining claims not located on established
access routes. There is no assurance that the Company will be able to negotiate
satisfactory access to all of its mineral rights, however the Company is
currently unaware of any private landowners whose rights could limit access to
the properties.
Research and Development
The Company has not spent any amounts on research and development activities
during each of the last two fiscal years. The Company spent $268,857 and
$370,823 on exploration and development in 1997 and 1996 respectively, and
$105,585 and $312,993 on acquisitions in 1997 and 1996 respectively.
Office Lease
The Company's principal offices are located at 504 Main Street, Suite 470,
Lewiston, Idaho 83501, U.S.A., and consist of approximately 1,450 square feet.
These offices are leased from Towne Square Mall for an aggregate monthly rental
of $1,500, which lease expires December 31, 1998.
Employees
On December 31, 1997, the Company had 5 full time employees and one part-time
employee. None of the Company's employees is represented by a labor union.
ITEM 2. DESCRIPTION OF PROPERTY
The Company has no mineral producing properties at this time and receives no
revenues from production. All of the Company's properties are exploration
projects, and there is no assurance that a commercially viable ore deposit
exists in any such properties until further exploration work and a comprehensive
evaluation based upon unit cost, grade, recoveries and other factors conclude
economic feasibility.
Investment Policies
Other than the mining properties described below, the Company does not have any
investments in real estate, interests in real estate, investments in real estate
mortgages, or securities of or interests in persons primarily engaged in real
estate activities. Accordingly, the Company has not established any limitations
on the percentage of assets which may be invested in any one investment, or type
of investment. However, pursuant to the listing requirements of the Vancouver
Stock Exchange ("VSE"), if such an investment were to be made, and the
investment was outside of the ordinary business of the Company, and as a result
of such investment, the revenue of the Company was increased by more than 25%,
approval of the VSE would be required.
Petsite Property
Pursuant to an agreement dated May 24, 1989 and amended February 29, 1991 (the
"Petsite Agreement"), the Company purchased from IMD, a company controlled by
Mr. Swisher, a shareholder of the Company, 89 unpatented contiguous mining
claims located in the Orogrande Mining District, Idaho County, Idaho ("Petsite
Property"). See "Conflicts of Interest, Certain Relationships and Related
Transactions." The purchase price of the property was $20,000 and 20,000 shares
of the Company. IMD
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retained a 5% net profits interest in the property. Under the agreement, the
Company is required to perform or cause to be performed on the claims and each
of them, all such annual assessment work as may be required under applicable
state law and otherwise to maintain the claims in good standing and against
relocation by others. If the Company fails to perform the annual assessment
work, IMD, after providing written demand to the Company to commence such
assessment work within 60 days, may perform or cause to be performed such
assessment work and deliver to the Company a statement detailing expenses
incurred. If the Company fails to reimburse IMD for the expenditures set forth
in the statement, the Company, upon written demand therefor, will be required to
assign and transfer the claims back to IMD. IMD served the Company with a formal
demand on March 27, 1997 for payment of the Company's portion of the assessment
work under the May 24, 1989 agreement, as amended, and by letter of October 14,
1997 has advised the Company that its failure to pay the required amounts has
resulted in the Company forfeiting its interest in the Petsite Property claims.
The Company is of the view that IMD's allegations are without merit and will
defend any action brought by IMD in this regard should such action be commenced.
Subsequent to December 31, 1997, this situation has been resolved and the annual
assessment requirement has been dropped pursuant to the terms of the Global
Settlement Agreement. For more information see Item 3 - Legal Proceedings, and
Notes 3 and 7 to the Company's December 31, 1997 Financial Statements.
The Petsite Property is located in the Nez Perce National Forest approximately
10 miles southwest of Elk City, Idaho. The Petsite Property is in the advanced
exploration stage. The 89 unpatented mining claims are described in Notices of
Location recorded in the office of the county recorder of Idaho County. Access
to the Petsite Property is gained from Elk City by traveling seven miles west on
Idaho State Highway 14 to the intersection with the all-weather gravel Crooked
River Road, then south 11.5 miles to the Penman Hill Road (USFS Route 331), and
then one mile south to the Petsite Property.
Water is abundant on the Petsite Property. It is generally covered with heavy
snow between November and April of each year. The area is heavily timbered,
except for local west-facing slopes and the more open slopes below the Petsite
workings, which are generally in dry land grasses with minimal underbrush except
near drainages. Overburden on the property is not deep, but outcrops are scarce.
There is no underground or surface plant or equipment, however there is power to
within 200 feet of the Friday Claims.
Development in the Orogrande District started in 1861 with the discovery of rich
placer properties in the area, which were worked and reworked through the
mid-1900's. The first lode gold discovery in the area was made in 1870, but the
main period of production was from 1902 to 1915. Historical documents suggest
that during the period from 1902 to 1931 $69,598 (3,367 ounces of gold @
$20.67/oz) of lode gold was recovered (Shenon and Reed, 1934) in this district,
mainly from low-grade deposits situated along the Crooked River.
Historically, most of the precious metal mineralization developed on the Petsite
Property has been associated with an elliptically-shaped stock of rhyolite
porphyry which has intruded into the underlying Idaho Batholith granodiorite
near the center of the property. Due to lack of outcrop and the compositional
similarities between the rhyolite porphyry and the granodiorite, the size and
shape of this stock has not yet been accurately determined. An east-west
trenching system of mineralized quartz veins and stringers has been emplaced
near the northern contact of this stock as a result of particularly intense
local hydrothermal activity. The most prominent of these, the Petsite Vein
System, was developed by the 450-foot long Waligura Tunnel, now caved, which is
reported to have exposed quartz veining containing varying amounts of pyrite,
chalopyrite, galena, molybdenite, tetradymite, petzite, wolframite
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and scheelite, with free gold being observed locally in association with the
telluride mineralization(1). Without the access to the Waligura Tunnel, most
recent exploration has been confined to surface sampling in the immediate area
of the workings, in an effort to outline a low grade, bulk tonnage deposit along
the northern contact of the rhyolite stock. Assays as high as 0.43 ounces per
ton gold across 27 feet have been obtained from trenches on this portion of the
property.
Through 1934, production from this portion of the property is reported to have
been limited to only a few sacks of high-grade ore. In 1942, a shipment of
concentrate, derived from 95 tons of ore taken from the Waligura Tunnel,
reportedly yielded 17,498 ounces of gold and 6.12 ounces of silver (David M.
Nelles, 1989). Minor underground development and various exploration work is
reported to have been undertaken on this portion of the property through 1970.
In 1971, Midwest Oil Corporation examined the property as a copper prospect, but
determined the size and grade of the deposit to be too small to warrant further
exploration. In 1974, two trenches, totaling over 1,000 feet in length, were
bulldozed for Henrietta Mines, Inc. in the area of the old workings and road cut
samples were taken. While some encouraging assays were obtained, the average
grade of the sampled area precluded it as a bulk mining target at the gold
prices which then prevailed. Coastal Mining Company later collared two diamond
drill holes of unknown length outside the rhyolite stock with apparently
disappointing results. In 1975, an induced polarization and resistivity survey
was performed on the property by Kerr-McGee Corporation during their examination
of the Petsite Property. An anomalous response measuring approximately 4,500
feet by 2,500 feet and between 500 feet and 1,000 feet thick was picked up in
the area of the rhyolite stock, and a sulfide content of from 3% to 6% by volume
was hypothesized. In 1980, U.S. Borax collected and analyzed 61 surface samples
from the property, five of which returned values exceeding 0.1 ounces of gold
per ton. Although these results warranted further work, U.S. Borax allowed the
claims to lapse, and the claims were acquired by IMD.
IMD leased the property to Billiton Exploration USA, Inc. ("Billiton") in 1986.
Billiton conducted an initial soil and plant geochemical sampling program which
successfully delineated several gold anomalies. Billiton allowed its lease to
lapse in 1988 when the USFS permit required for its proposed trenching and road
building program was delayed pending the outcome of an environmental impact
review. One of the anomalies identified by Billiton correlated well with the
rhyolite stock in the center of the property. However, a second anomaly was
identified along the western edge of the property approximating the trace of the
regional shear zone which transects the Orogrande area. Geochemical samples as
high as 345 parts per billion gold were returned from the soil samples making up
this anomaly, which has a strike length of approximately one mile and is open to
the north towards the recently discovered Friday Deposit.
In 1989, based on the recommendations of a January 1989 report on the Petsite
Property commissioned by the Company, the Company carried out a drilling program
to determine the size and grade of the precious metal mineralization associated
with the rhyolite stock. Nine shallow five and one-half inch holes totaling
3,350 feet were reverse circulation drilled at a total cost of approximately
$81,000. The holes were drilled approximately perpendicular to the strike of the
rhyolite/granodiorite contact from five pads established both north and south of
the Waligura Tunnel. Samples were taken for assay at five foot intervals over
the entire length of each hole. This program was successful in defining the
geometry of the Petsite Vein System in the area of the Waligura Tunnel.
Significant intervals of variably mineralized quartz veining were intersected in
six of the nine holes, assessing the system over a total strike length of 500
feet to a maximum depth of 340 feet. The true width of the veining system was
determined to
- ------------
(1) A number of companies (Henrietta Mines, Inc., U.S. Borax, Midwest Oil
Corporation and Kerr-McGee Corporation) have collected samples on the
property. The assays have ranged in value from nil to 1.7 ounces of gold
per ton across a 6 inch vein (John S. Vincent, 1984). The exact location of
all of the sampling is not known.
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increase down dip from a maximum three feet in the Waligura Tunnel to a maximum
of 35 feet at a depth of 300 feet. While the vein itself was found to be
moderately enriched with sulfide mineralization at depth, it contained only low
gold and silver values in the area tested. Values from the five foot samples
taken across the vein system ranged from trace to 775 parts per billion gold;
however, anomalous values ranging up to 5,950 parts per billion gold were
obtained from samples taken a short distance into both the foot and the hanging
wall of the rhyolite/granodiorite contact. In one hole, a continuous series of
21 samples grading better than 670 parts per billion gold were taken across a
105 foot interval adjacent to the contact. Samples taken elsewhere in the
rhyolite stock were also elevated in gold, ranging up to 1,690 parts per billion
gold; however, no clear pattern of enrichment emerged from the drill results.
Check assays were subsequently performed on several of the anomalous samples,
with erratic results, and are to be reconfirmed using standard one-ton fire
assay procedures, however such supplemental assays have not yet been performed.
Beginning in October 1991, and based on the recommendations of a report on the
Petsite Property prepared by an independent geological engineer, dated December
15, 1989, the Company carried out an additional exploration program which
included the opening of four old exploration adits and a three-hole, 1,324 foot
core drilling program. The preliminary results tended to confirm the historic
assays and indicate a need for further exploration work.
In September 1992, Wilfried J. Struck, an independent geological engineer
retained by the Company, who now is an executive officer of the Company,
completed a report on the Petsite Property. Mr. Struck concluded that
mineralization occurred on the Petsite Property as finely disseminated sulfides
in a quartz stockwork, a quartz porphyry rhyolite and associated granodiorite.
Mr. Struck recommended a program of trenching, mapping, sampling and drilling on
the Petsite Property.
On May 20, 1996, the Company entered into a joint venture agreement with Cyprus
Gold Corporation ("Joint Venture Agreement") to jointly explore, evaluate,
develop, mine, and market the Petsite Property and Friday Property. See "Cyprus
Joint Venture Agreement." Cyprus Gold will earn up to a 70% interest in the
joint venture upon completion of certain prerequisites. As of December 31, 1997
Cyprus had made a $50,000 payment upon execution of the Agreement, contributed
certain of its unpatented mineral claims to the joint venture, completed
cumulative exploration and development expenditures of $1,500,000 and maintained
the unpatented mining claims during the earn in period. Subsequent to December
31, 1997 Cyprus advised the Company that it had completed the earn in of 70% and
was preparing to proceed with the formal joint venture. As of December 31, 1997,
the Company has spent a total of $264,012, on acquisition and exploration of the
Petsite Property, which amount does not include the amounts that Cyprus has
spent on the property, which amounts were $1,775,000 for acquisition and
exploration of the Petsite Property, as at December 31, 1997.
Cyprus Joint Venture Agreement
On May 20, 1996, the Company entered into a joint venture agreement (the "Joint
Venture Agreement") with Cyprus Gold to jointly explore, evaluate, develop,
mine, and market the Petsite Property and the Friday Property. Cyprus Gold has
earned a 70% participating interest in the joint venture by expending $1.8
million on the exploration of both properties. The Joint Venture Agreement also
grants to Cyprus Gold the right to explore the Eagle and Golden Eagle
properties. The Company has reserved the right to produce 50,000 ounces of gold
from high grade epithermal vein systems. Once production exceeds 50,000 ounces,
Cyprus Gold may participate in the production by providing its share of the
production costs and expenses. Also pursuant to the Joint Venture Agreement, the
Company and Cyprus Gold may elect to alter their contributions to the program
and budget. Kinross Gold has since merged with Amex Gold and now controls both
of Cyprus Gold's joint ventures on both the Petsite and Deadwood properties.
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Kinross Gold has initiated a 7000-foot large-diameter core drilling program on
the Friday Property to test the high grade gold zone encountered by Cyprus in
their 1997 drilling and further define the Orogrande Shear Zone. The anticipated
cost of this exploration program is $500,000 which will accrue to the Petsite
Joint Venture.
Concurrent with the drilling, a IP/resistivity geophysical program has been
initiated on the Deadwood Property to delineate the Orogrande shear zone and
locate the mineralizing structures. The anticipated cost of this exploration
program is $50,000 which will accrue to the Deadwood Joint Venture.
Golden Eagle Property
The Golden Eagle Property is located in the Nez Perce National Forest,
approximately 140 miles north of Boise, in Idaho County.
Pursuant to 3 agreements dated October 15, 1992 (the "Golden Eagle Agreements"),
the Company acquired a 60% interest in 238 unpatented contiguous claims ("Golden
Eagle Property") (identified as claim blocks XI, XIV and XV in the agreements)
and a right of first refusal to acquire the remaining 40% interest from IMD and
Silver Crystal Mines, Inc. ("Silver Crystal"), both companies controlled by Mr.
Swisher, for consideration of $60,000 per claim block and 100,000 common shares
of the Company per claim block. This agreement was amended pursuant to an
agreement dated January 25, 1996 ("Amending Agreement"), which Amending
Agreement amended a total of 13 agreements between the Company and IMD. The
Amending Agreement would allow the expenditures made on the processing facility,
located on the Eckert's Hill Property, where ore from the Golden Eagle Property
is to be bulk tested and processed, to qualify as expenditures for purposes of
the Company acquiring the 60% undivided interest in these properties. The
Company entered into an agreement dated February 8, 1996 with IMD whereby the
Company has been granted exploration rights and the option to purchase IMD's 40%
interest in claim blocks XIV and XV of the Golden Eagle Property. The Company is
currently in the process of relinquishing the Amending Agreement, except for
certain specific claims which have been retained to provide a buffer on the
northwestern corner of the Petsite Joint Venture.
The Golden Eagle Property, Claim Blocks XI, XIV, and XV, consists of 238
unpatented contiguous mining claims located in the Nez Perce National Forest,
approximately 140 miles north of Boise, in Idaho County. The Golden Eagle
Property is without proven mineralization and ore resources, and is in the
exploration stage. A patent application has been filed with the BLM on the
claims within the Golden Eagle Property known as Golden Eagle, Golden Eagle #2
and Golden Eagle #3. Access is gained from Elk City by traveling 14.2 miles west
on State Highway 14 (or from Grangeville by traveling 45 miles east on State
Highway 14) to the intersection with Santiam-Sourdough Road (USFS Route 492,
shown on some maps as USFS Route 1110), then 8.5 miles south to the gate at
Summit Flats, the northern edge of the property.
The Golden Eagle Property is located in the Ten Mile and Orogrande Mining
districts.Since the mid-1970's when the original Golden Eagle claims were first
located by Mr. Swisher, the current President of IMD, the Golden Eagle Property
has had several mineral examinations conducted on it by government agencies as
well as private corporations. Mineral examinations conducted by USFS personnel
in anticipation of patent procedures led to the conclusions that the Golden
Eagle Property was valuable for base metal retrieval and that the property
indicated large enough values of ore to sustain a profitable mine operation.
During this examination, 13 samples were collected and had gold values of up to
1.76 ounces per ton and silver values of up to 0.58 ounces per ton.
The historic working on the Golden Eagle Property are primarily located on a
quartz vein system striking easterly or northeasterly and steeply dipping. These
veins are often associated with aplite or leucocratic
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dike structures genetically related to the Idaho Batholith. The host rock varies
from a biotite schist and gneiss near the surface to quartz monzonite and
granodiorite at depth.
The quartz is generally an opaque to pale bluish color and often locally banded.
The veins contain up to 10% sulfides consisting of pyrite, arsenopyrite and some
minor galena. Vein samples examined on the various dumps often had very light
limonite and hematite staining, while fresh fracture surfaces showed unaltered
sulfides. Vein rock observed underground was primarily unoxidized with minor
limonite staining along some fractures. The quartz vein observed in the Yellow
Jacket adit was brecciated, contained massive pyrite and had one inch of myonite
separating it from the hanging wall.
Based on observation of the surface pits, cuts and historical data, the veins
exhibit good continuity along strike and down dip. The quartz veins range in
thickness from one to five feet upon the surface and generally appear to thicken
with depth. The vein at the Winner/Sungold Mine was reported as being 40 feet
across at a depth of 30 feet below the surface and was said to average 0.35
ounces of gold per ton across the entire width.
An ultramafic dike 50 feet in width, striking northwesterly, was also observed
on the property, north of the Umatilla Mine.
Pursuant to a joint venture agreement dated May 20, 1996, Cyprus Gold has the
right to participate in the production of the Golden Eagle Property once
production is beyond the initial 50,000 ounces, by providing its share of the
production costs and expenses. See "Cyprus Joint Venture Agreement." As at
December 31, 1997 the Company has expended $332,077 on the acquisition and
exploration costs of this property.
A lawsuit was brought against the Company on October 10, 1996 by Mr. Swisher and
IMD claiming, amongst other things, an aggregate amount of $1,920,000 or
alternatively, 800,000 shares of the Company, allegedly owing under the Amending
Agreement to the plaintiffs. Subsequent to December 31, 1997, this lawsuit was
settled. See "Legal Proceedings" and Note 3 to the Company's December 31, 1997
Financial Statements for additional information.
As a result of the Global Settlement Agreement, the Company's interest in the
Golden Eagle Property has been completely restructured. The prior agreements
have been terminated, and the Company now has a simple lease for the Golden
Eagle Property, and the right to certain claims on the property. As the Golden
Eagle Property is subject to the Cyprus/Kinross Gold joint venture, Kinross has
decided to relinquish all of the Golden Eagle Properties except for 12 claims,
named Eagle 112, 113, 117, 119, 120, 122, 123, 124, 129, 130, 182 and 185. For
more information, see Legal Proceedings and Notes 3 and 7 to the Company's
December 31, 1997 Financial Statements.
Friday Property
The Friday Property is at the southern end of the Elk City Gold Belt and
consists of 63 unpatented lode mining claims, five patented lode mining claims
and one mill site claim. The Friday Property is in the advanced exploration
stage. The claims are located in the Nez Perce National Forest approximately 138
miles north of Boise in Idaho County. Access is gained from Grangeville by
travelling 55 miles east on Highway 14 to the intersection with Crooked River
Road (USFS 233), then 10 miles south to the bridge over the Crooked River at the
confluence of Quartz Creek, which is in the central portion of the property. The
Company acquired a leasehold interest in these claims (known as the "Friday
Claims") from Idaho Gold Corporation ("Idaho Gold"), an unaffiliated third
party, pursuant to an agreement dated December 11, 1995 ("Friday Agreement") for
an initial term of five years. In consideration for the grant of the lease, the
Company must deliver 60,000 shares of the Company; incur exploration and
development expenditures of not less than $135,000 within five years; replace
all bonds; bear all costs of
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environmental compliance; pay a 3% net smelter return royalty; and grant an
option to acquire a 49% working interest in the Friday Claims to Idaho Gold. The
Company may acquire the option by payment of C$300,000 to Idaho Gold. The
Company has issued the required 60,000 shares to Idaho Gold. There are no bonds
to replace.
On May 20, 1996, the Company entered into a joint venture agreement with Cyprus
Gold to jointly explore, evaluate, develop, mine, and market the Petsite
Property and Friday Property. See "Cyprus Joint Venture Agreement." Cyprus Gold
will earn a 50% participating interest in the joint venture upon completion of
the expenditure of $700,000 over the initial two year period. As at December 31,
1997 expenditures by the joint venture total approximately $1,775,000 on
acquisition costs, permitting, bonding, drilling and geological consulting
expenditures.
Physiography
The property is located on the south slope of the Elk City Basin in the Idaho
Peneplane at an elevation of 4,000 to 5,500 feet. The area is characterized by
gently rolling rounded hills which have been deeply incised by the valleys of
the Deadwood Creek and tributaries and the Crooked River and tributaries. The
terrain along the Crooked River is steeper and more incised than the Deadwood
Creek drainage. Vegetation consists of open pine forests on the south facing
slopes and ridges with thicker stands of spruce predominating on the north
slope. The area averages 25 to 30 inches of precipitation per year with the
major portion falling in the fall and winter.
History and Previous Work
Placer gold was discovered in the drainages of Elk City in 1861. Hydraulic
mining of the higher level placers, stream sluicing and operation of bucket
wheel dredges began in the late 1860's and ran intermittently through the late
1950's. The dredging of the upper region of the Crooked River near Orogrande was
one of the last phases. The claims comprising the Friday Property were assembled
into one group in 1983 by Joseph Gray of Joyce Mines, Inc. and optioned to ABM
Mining Group ("ABM") in the fall of 1983. ABM conducted reconnaissance surveys
over the old showings surrounding Deadwood Mountain and detail mapped and
prospected the Orogrande-Frisco mine. ABM optioned the property in the spring of
1984 to Centennial Minerals Ltd. ("Centennial") of Vancouver, B.C. Centennial
concentrated their work on the Orogrande-Frisco mine area. They completed
detailed gold soil geochemical sampling, induced polarization surveys and rock
chip sampling surveys over both properties and drilling 2,047 feet of HQ diamond
core and 4,645 feet of reverse circulation drilling in 21 holes on the
Orogrande-Frisco property and a total of 1,610 feet of reverse circulation
drilling in six holes on the Friday patented claims.
Regionally, Centennial collected 450 stream silt samples, 301 soil samples and
323 rock samples throughout the claim area. These surveys outlined several large
disseminated gold targets in sheared, altered rocks along the east flank of
Deadwood Mountain on the Zenith and Lucky Strike properties and the upper
reaches of Campbell Creek (North Deadwood area).
Centennial allowed their option on the claims to expire in the summer of 1985
without further testing the results on the Friday patented claims and the
indicated Deadwood Mountain disseminated gold zones.
Amir optioned the Friday Property in September 1985 and subsequently joint
ventured the property with Normine in November 1985 and Glamis Gold Ltd.
("Glamis") in May 1986. Glamis may earn a 51% interest by placing the project in
production with Normine and Amir retaining 25% and 24% interests respectively.
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Present Work
During November 1985, Normine carried out a seven hole reverse circulation drill
program consisting of 2100 feet on the Alaska 3 and 4 patented mineral claims of
the Friday patented claims. The program was to test a large 1000' x 400' wide,
strong gold anomaly of greater then 100 ppb in soil as the southern extension of
the Friday Knob Hill zone. The drilling returned mixed results with one hole
grading 0.031 oz/ton gold over 50 feet.
In May 1986 Amir and Normine entered into a Joint Venture Agreement with Glamis
where Glamis would fund exploration on the claims through private placements to
a detailed development stage.
During the period May to October 1986 detailed drilling was conducted on the
Friday patented claims and the Orogrande-Frisco mine to test anomalous gold
values in soil and rocks as defined by Centennial in 1985 and the eastern flank
of Deadwood Mountain was prospected. The programs executed are outlined below.
1. On the Orogrande-Frisco property 2,780 feet of drilling was completed in
thirteen holes to test a large soil geochemical anomaly immediately west of
the open cut.
2. On the Friday patented claims a total of 6,645 feet of reverse circulation
drilling in 37 holes traced the mineralization at the Knob Hill open cut
northward 1,200 feet to the Crooked River. Detailed geological mapping and
chip sampling was also conducted on this zone.
3. An extensive reconnaissance program consisting of soil sampling, geological
mapping and rock chip sampling was conducted along four miles of grid from
the south fork of the Clearwater River to Deadwood Mountain to test the
Deadwood Mountain disseminated gold zones as indicated by the Centennial
reconnaissance program in 1985.
A total of 2,685 soil samples and 821 rock chip samples were taken during
the 1986 field season distributed as follows:
Regional soil samples 375
Detailed soil samples:
Zenith Grid 881
North Deadwood Grid 1,424
Regional rock samples 601
Detailed rock samples:
North Deadwood 180
Friday Patented Claims 70
On the North Deadwood Gold Zones II and III a total of 2,865 feet of
reverse circulation was completed in twenty holes to test a portion of a
large gold soil geochemical anomaly with coincident rock chip assays
ranging from 0.014 to 0.120 oz/ton gold.
The soil samples were analysed for gold and arsenic by atomic absorption and the
rock samples by fire assay-gravimetric for gold and silver.
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Friday Patented Claims
Geology
The geological information on the Friday patented claims is derived from mapping
of float, surface pits and recent road cuts and a 160 foot long adit, open pit
and logging of 37 reverse circulation drill holes.
The gold mineralization is associated with a dense limonitic fracture stockwork
within highly sheared and sericite altered pendant of schist and gneiss
surrounded by a leucocratic quartz monzonite stock. The sheared gold zone
strikes north, is approximately 160 to 180 feet wide and has been drill tested
over 1,400 feet of strike length. The gold zone dips steeply and is oxidized to
a depth of 50 to 150 feet. Below the oxide zone pyrite coats the fracture
stockwork and has similar grades as the oxide zone. The zone is open to depth
below current drilling.
Detailed mapping shows the zone to be an intimate mix of sericite gneiss-schist
(75%) and leucocratic quartz monzonite (25%). The quartz monzonite has been
injected as irregular dykes and apothesis 5 to 20 feet wide along foliation and
joint fracture planes, then sheared and crosscut by gold bearing limonitic
fractures. No extensive silicification is seen on surface or underground,
however, several more competent silicified zones were intersected in drilling.
The gold however, is not specifically associated with these zones.
The sheared gold zone has sharp distinct contacts with competent leucocratic
quartz monzonite to the west. On the east the quartz monzonite is strongly
sheared with highly limonitic fractures over 100 to 200 feet and contains weak
gold mineralization up to 0.02 oz/ton over 200 feet. A sharp break in slope
marks the contact of the sheared and competent leucocratic quartz monzonite.
Mineralization and Ore Resources
A total of 6,645 feet of circulation drilling in 37 holes was completed on the
Friday patented claims by Normine/Glamis in 1986. Holes were spaced on grid
lines at 200 foot intervals with drilling on line at 100 foot spacing at
- -50(Degree) to -65(Degree) altitudes to the east and west.
The position and results of six reverse circulation holes drilled by Centennial
were used in estimating mineralization on the Friday Property.
Calculations were made by the polygonal section method with vertical cross
sections spaced at 200 foot intervals; ore blocks were then projected half way
between section lines. Based on these calculations, the Company believes the
mineralization can be broken down into oxide deposits and sulphide deposits; a
summary is given as follows:
Estimated Oxide 1,354,782 tons = .038 oz/ton gold
Estimated Sulphide Deposit 1,706,648 tons = .039 oz/ton gold
-------------- ----------------
Estimated Combined Oxide and 2,993,764 tons = .039 oz/ton gold
Sulphide Deposits
The ore:waste ratio is estimated to be approximately 1 : 1.5.
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Metallurgy
Metallurgical sampling consists of five bottle roll tests of oxide and sulphide
material from drill cuttings and one column leach test of material from the
Friday Open Cut. Bottle roll recoveries ranged from 44% to 80%, and the column
test showed 75% gold recovery in 25 days.
The Friday Property is in the exploration stage of development, and there is no
assurance that a commercially viable ore deposit exists in any such properties
until further exploration work and a comprehensive evaluation based upon unit
cost, grade, recoveries and other factors conclude economic feasibility.
As at December 31, 1997, the Company has made exploration and development
expenditures of $50,688 on the Friday Claims.
Deadwood Property
The Deadwood Property consists of 64 unpatented lode mining claims located in
Idaho County in Townships 28 and 29 North in Range 7 East, Sections 5, 6, 7 and
8, Boise Meridian. Each claim is approximately 20 acres in extent. The Deadwood
Property is in the exploration stage. The claims are located in the Nez Perce
National Forest approximately 145 miles north of Boise in Idaho County. Access
is gained from Grangeville by travelling 58 miles east on Highway 14 to the
intersection with the Wheeler Mountain Road (USFS 222), then 0.5 miles south to
the Little Campbell Creek which is at the northeastern end of the property. The
Company acquired its interest in the property from Idaho Gold pursuant to an
agreement dated December 11, 1995 whereby Idaho Gold transferred certain mining
interests known as the "Deadwood Claims" to the Company. In consideration for
such transfer, the Company must deliver 70,000 shares of the Company; incur
exploration and development expenditures of not less than $135,000 within five
years; replace all bonds; bear all costs of environmental compliance; pay a 3%
net smelter return royalty; and grant an option to acquire a 49% working
interest in the Deadwood Claims to Idaho Gold. The Company may acquire the
option by payment of C$100,000 to Idaho Gold. To date, the Company has made
exploration and development expenditures of $20,000 on the Deadwood Claims and
issued 70,000 shares to Idaho Gold. There are no bonds to replace. As at
December 31, 1997, the Company has expended exploration and development
expenditures of $72,588 on the Deadwood Property.
Pursuant to a Joint Venture Agreement relating to the Deadwood Property, made
effective June 13, 1997, between the Company and Cyprus Gold (the "Deadwood
Joint Venture Agreement"), Cyprus Gold will earn a 60% interest in the joint
venture subject to the following requirements: payment of future BLM and county
claim maintenance and filing fees; maintaining in good standing all existing
leases/options presently held by the Company within the area of interest;
reimburse the Company for the lease costs incurred on the Joyce Mines &
Thunderbird Resources - Amir Mines agreement during 1997; payment of $65,000 on
signing of the Agreement and $50,000 upon receiving proof to Cyprus Gold's
satisfaction that the Company has completed the acquisition of the Eagle/Golden
Eagle Claim group pursuant to the Cyprus Joint Venture Agreement; and purchase
$100,000 in common shares of the Company within 6 months from the date of the
agreement; and expend exploration costs of $1,150,000 within a three year
period. Cyprus Gold has the option to earn a further 20% interest in the joint
venture by continuing to maintain the Company's unpatented lode claims and pay
BLM and county claim maintenance and filing fees, maintaining in good standing
all existing leases or option presently held by the Company within the area of
interest, and expenditure of further exploration costs of $1,350,000. Cyprus
Gold will extend similar financing arrangements to the Company as the one that
exists in the Petsite Joint Venture agreement. Cyprus has spent a total of
$239,000 on the Deadwood Property as of December 31, 1997.
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The following description includes excerpts from an internal report prepared by
Bema Industries Ltd., the former owners of the property.
The North Deadwood zone is the most significant gold zone outlined by
reconnaissance prospecting on the Friday Property to date.
Stream silt sampling by Centennial in 1985 outlined an anomalous gold source
area at the head of Little Campbell Creek. Several drainages over a northerly
strike length of 5,000 feet from the South Fork of the Clearwater River to
Campbell Creek had values of 900 to 4,000 ppb gold.
Reconnaissance mapping and sampling was carried out along a road accessing the
Carter group of patented claims and westerly up Little and Big Campbell Creeks
to the divide. Geological mapping and sampling outlined a silicified, sheared
and brecciated structure 200 feet wide on the Carter claims with rock sample
values of 0.01 to 0.036 oz/ton and soil values of 25 to 400 ppb gold. The
anomalous silt and soil samples continued south through to Big Campbell Creek
5,000 feet to the south.
To trace this persistent gold structure a large soil geochemical grid measuring
10,000 feet by 4,000 feet was established extending southwesterly from the South
Fork of the Clearwater River just east of the height of land.
Geochemistry
A gold soil geochemical sampling program consisting of 1,424 soil samples on 200
foot spaced grid lines at 100 foot centers was completed over a grid area
measuring 10,000 feet by 4,000 feet. The survey outlined a broad gold
geochemical anomaly greater than 25 ppb gold striking N20(Degree)E over the
entire grid length of 10,000 feet with a width varying from 500 to 2,000 feet.
The anomaly has a strongly defined core of greater than 100 ppb to a maximum of
1,220 ppb gold which corresponds to an intensely sheared, brecciated and
silicified gold zone.
Geology and Gold Zones
Geological mapping was conducted over the gold soil geochem grid as a follow up
on the large gold geochemical anomaly. A broad zone of pervasive sericite-clay
alteration which averages 2,000 to 3,000 feet in width was traced throughout the
grid area and surrounds the gold soil anomaly. On the northern portion of the
grid the alteration zone corresponds to the outer limits of the greater than 10
ppb gold soil anomaly and on the southern portion of the grid it extends 2,000
feet further north outside the soil anomaly. This extension may be due to a
weakly limonitic quartz monzonite intrusive mapped in this area.
The persistent linear core gold anomaly of greater than 100 ppb is associated
with a strongly sheared, brecciated, and intensely limonitic silicified zone
which has been traced from the northern most line 420N to the southern most
portion of the grid L324N. Detailed mapping and channel sampling on recent drill
road cuts in the center of the area on line 380-376N shows the zone to be a
complex brecciated system. The rock is a mixed assemblage of quartz monzonite
and sericite schist which has been altered to sericite and clay, then
silicified, sheared and brecciated with gracutes and voids coated with intense
orange to dark chocolate brown limonite. The oxide zone extends to a depth of 50
to 200 feet below surface and averaging 170 to 200 feet on the ridge tops. Below
the oxide zone the fractures and voids are filled with pyrite and traces of
arsenopyrite.
The alteration has characteristics of a porphyry copper system, with large
advanced argillic alteration zones and mineralization being associated with
fractures fillings in zones of brecciation and
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silicification. The inner fault zone is a part of a large scale regional shear
zone which has controlled intrusive implacement, alteration and gold
mineralization.
Gold Zone
Rock sampling has been conducted over the length of the silicified, brecciated
and limonitic gold zone and has outlined four strong gold zones with values of
0.010 to 2.8 oz/ton gold with an average of 0.03 to 0.05 oz/ton gold. These gold
zones are numbered I to IV and are described in detail below.
Zone II
Rock sampling has outlined a zone 800 feet in strike by 150 to 200 feet in width
with an average of seven rock chips of 0.05 oz/ton gold. The zone lies on the
southern fringe of the Carter patented claims. Two vertical reverse circulation
drill holes tested the southern fringe of this zone with one hole returning
0.012 oz/ton gold over 50 feet.
Zone III Central Zone
This is the largest gold soil geochemical anomaly outlined along the sheared
gold structure. Detailed mapping and rock channel sampling on three drill access
road cuts have outlined a large gold bearing structure. A central zone 400 feet
wide consisting of strong brecciation and silicification with intense limonitic
fracture coatings and void fillings is flanked on either side by several hundred
feet of soft intensely clay-sericite altered limonitic schist. Channel sampling
show the best gold values of 0.03 to 0.283 oz/ton gold to the south in the area
of the best reverse circulation drill holes. A total of 18 reverse circulation
drill holes totaling 2,385 feet tested the zone in October 1986. Three holes in
the southern portion of the drill area intersected significant gold
mineralization over a strike of 300 feet. Gold soil geochem and rock sampling
have traced the zone 1,000 feet to the south with five rock chip samples
averaging 0.048 oz/ton gold.
Summary
A broad gold bearing zone has been outlined by drilling and channel sampling in
the area of the southernmost drill holes 86-04 to 86-06. Channel sampling on
surface indicate average grades of 0.02 to 0.028 oz/ton gold with significant
drill intersections averaging 0.028 oz/ton gold on the southernmost holes with
the zone open to depth and on strike to the southwest and north.
The silicified brecciated structure is 350 to 400 feet wide and is flanked by a
soft intensely sericite-clay altered zone to the north and south of over several
hundred feet. Channel sampling on the southern sericite-clay altered zone
averaged 0.02 and 0.028 over 100 to 200 feet on road cuts.
Drilling indicates the gold zone may be vertically zoned with grades and
alteration dropping off to the north down slope into the steeply incised little
Campbell Creek. The depth of oxide is greatest in the bench area of holes 86-04
to 86-06 with a thickness of 150 to 200 feet. This zone is the main drill
target.
The gold zone has a potential strike length of 1,200 feet and a width of 800
feet. The zone should be tested by 5,000 feet of angled reverse circulation
drill holes on 200 foot centers during the 1987 field season.
Zone IV
The soil geochemistry and rock sampling has outlined a large gold zone extending
over 3,000 feet in the southern portion of the gird area. This gold zone is
separated from the Central Gold Zone III by a projected east-west fault zone
along Big Campbell Creek with an inferred displacement of 1,000 feet. Rocks in
the northern portion of the Zone IV Gold Zone are a highly sheared and
sericite-clay altered
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mixed zone of quartz monzonite and schist with irregular crushed silicified
zones. In the main southern portion of the gold zone sericite quartzite is the
main rock type which has been highly fractured and cut by irregular quartz veins
and veinlets. The silicification of Zone IV is characterized by the splayed out
zone of quartz veins and veinlets rather than a central core flanked by soft
intense sericite alteration as in the Northern Gold Zones I to III.
Conclusion
Gold Zone IV is divided into two parts IV(i) and IV(ii).
The northern portion of the gold zone IV(i) is 100 to 200 feet wide and has a
strike of 1,500 feet. It consists of mixed schist and quartz monzonite which is
highly sheared and altered to a soft sericite-clay with sheared silicified
zones. Soil geochemistry and rock sampling indicate gold mineralization is
irregular and should be drill tested after the southerly zone (ii).
The southern portion of the gold zone IV(ii) is 400 to 500 feet wide and has a
strike length of 2,000 feet. It consists of highly fractured and limonitic
sericite quartzite with minor sericite schist-gneiss. It is cut by numerous
quartz veins and veinlets with similar gold grade to the limonitic sericite
quartzite. The average gold value of thirteen rock samples is 0.05 oz/ton with a
range of 0.004 to 0.163 oz/ton gold. This is a strong persistent gold system
with good alteration, fracturing and gold values.
The southern portion of the Zone IV gold zone should be tested by 4,000 to 5,000
feet of angled reserve circulation drilling spread throughout the anomaly at 200
to 300 foot centers.
The northern portion of the gold zone IV(i) is 100 to 200 feet wide and has a
strike of 1,500 feet. It consists of mixed schist and quartz monzonite which is
highly sheared and altered to a soft sericite-clay with sheared silicified
zones. Soil geochemistry and rock sampling indicate gold mineralization is
irregular and should be drill tested after the southerly zone (ii).
The southern portion of the gold zone IV(ii) is 400 to 500 feet wide and has a
strike length of 2,000 feet. It consists of highly fractured and limonitic
sericite quartzite with minor sericite schist-gneiss. It is cut by numerous
quartz veins and veinlets with similar gold grade to the limonitic sericite
quartzite. The average gold value of thirteen rock samples is 0.05 oz/ton with a
range of 0.004 to 0.163 oz/ton gold. This is a strong persistent gold system
with good alternation, fracturing and gold values.
The southern portion of the Zone IV gold zone should be tested by 4,000 to 5,000
feet of angled reserve circulation drilling spread throughout the anomaly at 200
to 300 foot centers.
Buffalo Gulch Property
Location, Description and Acquisition
The Buffalo Gulch property is located 3 miles west of Elk City, Idaho in Idaho
County and is in the development stage. The deposit lies within sections 17, 20
and 21, Township 29 North, Range 8 East. Elk City is approximately 55 mile east
of Grangeville, Idaho. Access from Grangeville is on state highway 13 and 14.
The property can be accessed directly from highway 14, by a secondary logging
road along Buffalo Gulch. Most services including fuel, groceries, and lodging
are available in Elk City and Grangeville. There is also a small landing strip
for lighter aircraft at Elk City, and an airport with fuel at Grangeville.
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Pursuant to an agreement (the "Buffalo Gulch Agreement") dated December 11, 1995
with Idaho Gold, Idaho Gold transferred to the Company certain mining interest
known as the "Buffalo Gulch Claims" to the Company. In consideration for such
transfer, the Company issued 120,000 shares of the Company to Idaho Gold and
will incur exploration and development expenditures of not less than $310,000
within five years; bear all costs of environmental compliance; pay a 3% net
smelter return royalty capped at C$3,000,000; and grant an option to acquire a
49% working interest in the Buffalo Gulch Claims to Idaho Gold. The Company may
acquire the option by payment of C$300,000 to Idaho Gold. As at December 31,
1997, the Company has incurred exploration and development expenditures of
$320,643 on the Buffalo Gulch property, excluding the deemed cost related to the
acquisition of the property.
The Company is also a party to three underlying agreements pertaining to the
Buffalo Gulch property as follows:
Black Bear Agreement - On August 1, 1996, the Company entered into an agreement
(the "Black Bear Agreement") with Frank H. Piatt, John R. Heigis and Thomas C.
Rich ("Owners") whereby the Company was granted an option to acquire a 100%
interest in six claims known as the "Black Bear Mining Claims" located in the
Elk City Mining District, Idaho. To keep the option in good standing, the
Company must pay to the Owners $4,000 on the signing and $1,200 per quarter
commencing July, 1996, for a period of one year. At the end of the first year,
the Company may exercise the option by payment of a lump sum of $90,000 or by
quarterly payments over a five year period totaling $120,000. The Company has
elected to exercise the option on the quarterly payment basis. The Company is
required to pay $2,400 per quarter commencing August 1, 1997 (paid), $3,600 per
quarter commending August 1, 1998 (paid to end of 3rd quarter 1998), $4,800 per
quarter commencing August 1, 1999, $6,000 per quarter commencing August 1, 2000,
$7,200 per quarter commencing August 1, 2001 and a final payment of $24,000 by
July 31, 2002. In the event the Company places the claims into production, the
Owners agree to transfer the claims to the Company and the Owners shall receive
$120,000 less all quarterly payments made. If the claims are not placed into
production by July 1, 2002, then the Company shall have no further interest in
the claims unless it pays the sum of $120,000 less all quarterly payments made.
Pursuant to the terms of the agreement, the Company must expend a total of
$3,000 per year on the claims, commencing July 1,1997. The Company must also
perform assessment work or make payments in lieu thereof and pay all applicable
taxes on the claims. The Company has been granted unrestricted access and
exclusive rights to the claims for the purposes of certain exploration and
activities. The Company has right of first refusal to purchase the land pursuant
to the agreement. As at December 31, 1997, the Company has made all required
payments to the owners of the Black Bear Mining Claims, under the agreement
totaling $14,100.
Whiskey Jack Agreement - The Company has assumed the obligation of an underlying
agreement dated July 1, 1988 which requires quarterly payments of $600 to a
maximum of $85,000. As of December 31, 1997, the Company or Idaho Gold has made
all required payments under this agreement totaling $22,800.
Gray Estates Agreement - The Company has assumed the obligations of an
underlying agreement dated May 21, 1984 which requires quarterly advance royalty
payments of a minimum of $6,000 to a maximum of $500,000. The agreement is
subject to a 5% net smelter royalty over certain claims with the Buffalo Gulch
property. As of December 31, 1997, the Company or Idaho Gold Corporation has
made all required payments under this agreement totaling $324,000.
Exploration & Development History
Gold mineralization was discovered by the Bema Group through prospecting and
reconnaissance stream sediment and soil sampling campaigns. Subsequently, grid
soil sampling and dozer trenching defined the extent of the mineralization in
bedrock. Drilling on the Buffalo Gulch property consisted of 150 vertical
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reverse circulation drill holes, drilled on a 100 foot grid. This drill hole
distribution and spacing are sufficient to define the deposit. The deepest
mineralized intersection is at a depth of about 500ft. The oxide mineralization
has been completely delineated by drilling; the sulphide mineralization is open
at depth to the east, to the north and to the south.
Limited surface mapping has been done because of poor exposure. Excavation of
the test pit for metallurgical samples allowed limited geological mapping.
Buffalo Gulch ore has been the subject of an extensive metallurgical testing
program, beginning with bottle-roll cyanidation leach tests in 1986 performed by
Bateman Labs and Glamis Gold Corp., through two pilot-scale heap leach tests
carried out in 1987 and 1989.
Following permit approval for full-scale operation in late 1990, initial
construction activities began in anticipation of mine construction in the spring
of 1991. These initial construction activities consisted of logging the site,
upgrading the access road, building sediment control "brush filter winrows"
around the site, and completion of over 12,000 feet of pole fence along the
perimeter of the project site. These activities have been completed, leaving the
site prepared for construction to begin upon completion of required permitting.
Permitting Status
The Company has made various applications for permits required to operate the
Buffalo Gulch mine.
The Plan of Operations submitted by the Company was subject to an Environmental
Assessment which was approved by way of a Finding of No Significant Impact
(FONSI) which was issued by the BLM on August 30, 1990. Six permits required
from the State of Idaho have also been approved.
The Company is in the process of obtaining or reactivating the Section 404
wetlands permit and the cyandization permit from the State of Idaho.
The Company is awaiting approval of the other permits required to operate the
Buffalo Gulch mine. There can be no assurance that such approval will be
obtained in a timely manner. See "Item 1. Description of Business - Government
Permits, Reclamation and Permitting."
The Geology
The Buffalo Gulch Property is underlain by Precambrian gneisses, schists and
quartzites which have been intruded by the Cretaceous-Tertiary granitic rocks.
The intrusives form small dykes, sills, irregular lensoid bodies and breccias
within the country rocks. The regional structural lineament/fracture zone is
thought to be the feeder for the gold mineralization with associated
hydrothermal fluids. The resulting alteration envelope around the Buffalo Gulch
Deposit weakened the local rock fabric, which was then subjected to deep
weathering. Much of the host rock is totally dissociated to sand and gravel
sized fragments, yet original rock fabric is still visible and mappable.
Weathering is up to 300 feet deep, facilitating trenching, sampling and reverse
circulation drilling. Although little determinative work has been done, detailed
assaying indicates the gold was liberated from the sulphides and now occurs as
free grains associated with siliceous, hematitic or limonitic zones. Sulphide
gold mineralization underlies the oxidized zone with the deepest mineralization
occurring at about 500 feet depth. The deposit is open and untested at depth.
Drilling
Recent drilling at Buffalo Gulch consisted of nine diamond drill holes of core
size HQ. The drilling contractor was Sunrise Exploration of Northport,
Washington. Total footage drilled was 2762 feet.
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Recoveries were generally good with the exception of the upper portion of
several holes. At the beginning of the program, recovery in the top portion of
the holes was averaging about 45%. As the program progressed different methods
were implemented to boost recovery in the top portion of the holes. A triple
tube system and a face discharge bit were used in the softer near surface
material to curtail washing of the core. This system helped to bolster
recoveries to an average of about 76% for the upper portion of later holes. The
soft washable material represents about 18% of the material drilled. Below this
zone of soft material, recoveries were very good, generally 100%. A graph of
gold values versus recovery indicates that the amount of material recovered had
no statistical affect on the grade of the material.
Down hole surveys were conducted in holes BGDDH-01 through BGDDH-05. Holes
BGDDH-03 through BGDDH-05 are angle holes. The bottom of holes BGDDH-01 and
BGDDH-02 deviated less then 1 degree. BGDDH-03 deviated about 35 feet southward
and the inclination remained constant. The hole deviated 2.5 degrees between the
collar and 96 feet, 2 degrees between .96 feet and 196 feet, 3 degrees between
196 feet and 296 feet and 2.5 degrees between 296 feet and 396 feet. BGDDH-04
dipped a total of about 20 feet and deviated about 10 feet northward. The hole
deviated 1.5 degrees and dipped 4 degrees between the collar and 191 feet, and
deviated back southward 1 degree and dipped 1 degree between 191 and 291 feet.
BGDDH-05 deviated less than 10 feet northward and dipped about 10 feet. The
deviation in direction as about 1 degree, while the hole steepened about 4
degrees over the entire length.
Regionally the Buffalo Gulch deposit is within Proterozoic biotite gneiss which
lies between the two separate lobes of the Idaho Batholith. It is also located
adjacent to a regional fault known as the Orogrande Shear Zone. This is a
structure which is at least twelve miles long, stretching from Orogrande on the
south to just north of the Buffalo Gulch deposit. On the northern end the
structure disappears under Tertiary gravel deposits.
Locally the Buffalo Gulch deposit lies along conjugate structures to the
Orogrande shear zone within altered gneissic rocks. Deposit lithologies include:
highly altered monzonite gneiss, less altered biotite gneiss, pegmatite, mafic
material, ultra mafic material, biotite schist and a quartz rich unit of
possible hydrothermal origin. Gneissic material is the most abundant rock type
on the property, pegmatite is the second most abundant, followed by the quartz
rich unit and then the minor units (ultra mafic, mafic and schist). Pegmatite is
an abundant rock type within the deposit. It often occurs as thin lenses from 4
to 12 inches, but may also occur as thicker units up to several tens of feet. A
quartz rich unit is oriented along the eastern side of the Buffalo Gulch
deposit. The ultra mafic and mafic material occur as thin sills or dikes which
seem to be localized to the southern end of the deposit area. The interpreted
structures represent areas where shearing is the greatest in intensity, and are
the probable location of faults.
Alteration and Mineralization
Phyllic alteration is pervasive throughout and around the Buffalo Gulch deposit.
A rough alteration zoning may be present, but more work would be needed to
confirm and define the zoning. The upper portion of the deposit consists of very
soft clay rich material which may represent highly phyllic/argillic altered
gneiss. Below the soft clay rich material lies intensely phyllic altered gneiss.
This material is light colored and has little or no biotite remaining. Zones of
biotite gneiss were encountered during the core drilling program. These areas
are simply less altered material and occur as irregular small bodies
interspersed through the deposit area. In a couple of the deeper holes drilled
at Buffalo Gulch chloritization of the gneiss has occurred and may suggest a
zone of propylitic alteration.
In the oxidized portion of the deposit limonite is pervasive throughout the
material, but also occurs as: specs after sulfide grains, darker bands along
foliation, fracture filings, and as solution bands in more permeable crystalline
layers. Minor amounts of hematite are present as well. The limonite is probably
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after pyrite and arsenopyrite. Analytical data indicates an increase in arsenic
with increased gold values. Below the redox boundary pyrite is the most abundant
sulfide with some arsenopyrite and possibly some marcasite. The sulfides occur
mostly along foliation and as fracture filings, but also as finely disseminated
grains throughout the material.
Silification has occurred at depth, but is lacking (for the most part) in the
oxidized portion of the deposit. There are a few thin zones of silicic material
in the oxidized portion, as well as a few veins and the large quartz rich unit.
Silicification at depth has not changed original rock appearance, but exists as
silica flooding that has replaced individual mineral grains. The veining and
quartz rich material in the upper portions of the deposit is cryptocrystalline
quartz, which has wholly replaced or displaced the original material.
There is evidence that there has been movement along foliation plains during
shearing. There is also evidence to dilation along small fractures in the core.
These dilations often contain blebs of sulfides. Abundant fracturing was in
evidence throughout all the core drilled in 1996. This indicates structure is an
important control for the circulation and deposition of mineralizing fluids.
Analytical Results and Comparison
Results from the 1996 drilling program indicate that gold values from reverse
circulation drilling programs have validity. There is also evidence suggesting
there may be a zone of supergene enrichment or near the redox boundary. This
characteristic was only observed in a few of the reverse circulation drill
holes, which may indicated some carving during drilling of the reverse
circulation holes, thus down grading the deeper samples. Results for the top
portion of the 1996 core drill holes, where recoveries were poor, may not
represent the actual values of the entire interval stated because all the
material for that interval was not recovered.
Geotechnical Test Results
All of the core drilled in 1996 was logged using a geotechnical classification
developed by the Association of Consulting Engineers of Canada. Core was
measured to determine recovery, RQD (rock quality designation), hardness, degree
of breakage, degree of weathering, joints (angle, frequency and character), and
foliation (angles and frequency). This information was then used to select
representative samples for geotechnical testing.
Sixty one selected core samples were tested to determine percent moisture and
dry specific gravity. When the geotechnical samples are plotted on a two axis
graph using depth verses density, a rough linear trend is apparent in both the
oxidized and unoxidized material. The best fit line in the oxidized material is
steeper then in the unoxidized material, indicating that weathering has an
effect on density. The shallower highly weathered, highly clay altered, material
is less dense than the deeper less weathered material. It is apparent in the
oxidized material that rock densities generally increase with increased depth.
This effect is also true for the unoxidized material although less apparent.
Conclusions and Recommendations
Results from the 1996 core drilling program indicate the mineral deposit
estimate established from the reverse circulation drilling are valid. The core
drilling has also indicated there is a probability of adding ounces of gold to
the mineral deposit estimate by moving material out of the waste category and
into the ore category. Results from the core drilling program should be used to
recalculate ore mineralization for the individual blocks in which they were
drilled. If additional ounces of gold are inferred outside of these ore blocks,
they would have to be classified as probable ounces and not drill proven ounces.
There is also a probability of expanding the deposit in several areas where
previous drill coverage was not adequate to test the area. Geophysical methods
could be used to define these areas after which a limited
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reverse circulation and core drilling program should be initiated to test the
targets. Care should be exercised during such a program to insure sample
integrity. Additional ounces may also exist in a zone of supergene enrichment.
Although indicated, core drilling did not fully establish such a zone over the
entire deposit area.
A better understanding of the geology and genesis of the Buffalo Gulch deposit
was gained through the core drilling program. This knowledge may prove very
valuable in searching for similar mineralization in the region. It is
recommended that additional petrologic studies be conducted on selected core
samples to further the understanding of this deposit. Fluid inclusion studies on
the quartz may be helpful in establishing a pressure and temperature for mineral
formation characteristics are more important. The better understanding of the
deposit genesis has established a potential or sizable deposit of sulfide hosted
mineralization. Metallurgical tests should be conducted on the sulfide material
retrieved during the core drilling program to determine the feasibility of
defining such a deposit. If tests show it is feasible to retrieve gold from this
material, a drilling program to test the sulfide potential at Buffalo Gulch
should be initiated as soon as possible.
Geotechnical tests on the core have established a rock density of approximately
16 cubic feet per ton for the majority of the material in the Buffalo Gulch
deposit. These tests also indicate a general density increase with increased
depth. Increased density with increase depth might also be important if the zone
of supergene enrichment is of significant size. Clay alteration is less with
increasing depth and this could be very important in that less agglomeration
will be required as less altered material is exposed at depth. Most of the low
density clay rich material is at depths less then 50 feet. This material is at
the deepest portions of the oxide zone at the bottom of individual ore
intercepts, which would mean the material is more dense.
The knowledge gained from the core drilling program at Buffalo Gulch should be
used to explore the potential areas of South Buffalo. Such a program should also
employ some geophysical methods to help define potential drill targets. Gradient
Array SP is a geophysical method that has been successful in defining targets
similar to mineralization at Buffalo Gulch. This type of survey should be
attempted over about two square miles, including the Buffalo Gulch and South
Buffalo areas. More geochemistry and reconnaissance mapping should be completed
in the area to help define potential drill targets. This should be initiated
well before any drilling program. About 4000 feet of core should be drilled to
follow up on targets defined by the above mentioned work. Depending on results,
a follow up program, consisting of both core and reverse circulation drilling,
should be initiated to define the extent of mineralization encountered in the
first round of drilling.
The following table is a rough estimate of the costs of the above mentioned
programs by the Company.
Program Cost ($)
------- --------
Gradient array SP geophysical survey
covering 2 square miles ................................$50,000
Buffalo Gulch mapping and sampling .....................$50,000 minimum
Reconnaissance mapping and sampling ...................$162,000
Total ....$262,000
The Company estimated that a minimum of $300,000 will be required for the
permitting cost for additional drilling and other required permits to bring the
property into commercial production and for the geophysical program, geological
mapping and sampling at the Buffalo Gulch property. The Company intends to
identify potential joint venture partners in regard to the Buffalo Gulch
Property with a view to concluding a joint venture agreement thereon.
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Gallaugher Property
On September 5, 1996, the Company entered into an agreement (the "Gallaugher
Agreement") with Cliff and June Gallaugher ("Gallaughers") pursuant to which the
Company was granted an exclusive option to purchase six unpatented mining claims
located in the Elk City Mining District, Idaho County, Idaho.
Location and Access
The Gallaugher Property is accessed from Elk City, Idaho, which is located 60
miles east of Grangeville on State Highway 14. Access to the Gallaugher Property
is through Elk City turning north on USFS Road 443 and past the intersection
with the Erickson Ridge Road, which is the continuation of USFS 443, continue 1
mile east to the American River, at which point you are at the mid-point of the
Gallaugher Property. The Gallaugher Property contains several prospect pits and
portals with the main one being the Alamance Mine. Services including lodging,
fuel and groceries are available in Elk City and Grangeville. There is also a
small landing strip for lighter aircraft at Elk City and an airport with fuel at
Grangeville.
History
The Alamance Mine is reported as being a high grade underground mine on two
parallel gold bearing quartz veins. The main elements mine is on a quartz vein
reportedly 4 to 5 feet in width, traceable for 500 feet at the surface and
produced a small quantity of very rich ore in the early days of the camp. The
mine was discovered and worked at the turn of the century and worked
sporadically up until 1941. Allotta Resources had also optioned this property at
one point in time and reportedly drilled several holes in the location of the
veins but that information has not been located at this time.
Geology
The Gallaugher Property is underlined by Precambrian gneiss and schists with
quartzites which have been intruded by Cretaceous Tertiary granite rocks. The
rocks consist of biotite gneiss, biotite schists and biotite quartzite with
irregular layers of medium to coarse grain muscovite pegmatite which have been
highly deformed and intruded by the quartz monzonite Idaho batholith which is
Cretaceous in age. The property is located on the eastern side of the Elk City
graben and mineralization appears to be associated with the north striking
graben bounding fault as well as with quartz veins in tension gashes.
Mineralization
The mineralization consists of gold hosted in 2 major veins striking easterly
and dipping to the south. They are traceable on the surface for over 600 feet.
The historic grade according to one published report was $12 per ton in 1909
which would be equivalent to approximately 0.6 ounces per ton.
The Gallaugher Property is in the exploration stage of development, and there is
no assurance that a commercially viable ore deposit exists in any such
properties until further exploration work and a comprehensive evaluation based
upon unit cost, grade, recoveries and other factors conclude economic
feasibility.
The option may be exercised by quarterly payments over a five-year period,
totalling $150,000. The Company is required to pay $2,400 per quarter commencing
March 5, 1997 (paid), $3,600 per quarter commencing March 5, 1998 (paid to end
of 3rd quarter 1998), $4,800 per quarter commencing March 5, 1999, $6,000 per
quarter commencing March 5, 2000, $7,200 per quarter commencing March 5, 2001,
and a final payment of $54,000 due by March 5, 2002. A third party receives a
10% finder's fee deducted from all option payments made by the Company to the
optionor. In the event the Company places the claims into production, the
Gallaughers will transfer the claims to the Company and the Gallaughers will
receive $150,000 less all quarterly payments made. If the claims are not placed
into production by
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September 5, 2002, then the Company shall have no further interest in the claims
unless it pays the sum of $150,000 to the Gallaughers less all quarterly
payments made. Until the Company exercises its option, the Company will have all
rights of access and use of the claims to carry out certain activities,
including the removal of minerals for testing and evaluation. The Company is to
keep the claims in good standing by payment of all taxes and assessments. The
Company made an initial payment of $2,000 on the signing of the agreement and
has made the required quarterly payments to the end of the 3rd quarter of 1998.
As at December 31, 1997, the Company has expended $10,200 on the acquisition and
exploration costs of this property.
Eckert's Hill Property
The Eckert's Hill Property is located 5 miles Northwest of Cottonwood, Idaho and
consists of patented Reservation Lode claims totalling 320 acres. The Company
leased this property from certain unaffiliated individuals ("Lessors") pursuant
to an agreement dated June 28, 1993 (the "Eckert's Hill Agreement"). The
Company, as lessee, obtained the exclusive right to enter upon the property to
explore for, develop, mine, remove, process and sell all ores, minerals and
mineral substances of every nature and character in, under or upon the property
except to the extent such rights may be limited by a certain settlement
agreement dated February 15, 1993 between Fercott Gold USA, Inc. ("Fercott") and
the Lessors. Pursuant to such settlement agreement, Fercott obtained a limited
license to go upon the Eckert's Hill Property solely to remove an amount of
extracted ore necessary for testing purposes. The term of the Company's lease is
for a period of five years, after which time, the Company may extend the lease
for an additional term of five years. The term of the lease may not exceed
twenty years unless the Company is producing a commercial quantity of ore from
the property.
In order to maintain the lease, the Company made annual minimum rental payments
("Minimum Rental Payments") on the dates and in the amounts set forth below to
the Lessors:
Minimum Rental Payments Schedule
--------------------------------
Amount of Payment Date of Payment
----------------- ---------------
$13,000 June 28, 1993
$15,000 June 28, 1994
$ 7,500 June 28, 1995
$ 7,500 June 28, 1996
In addition, the Company made annual advance minimum royalty payments ("Advance
Minimum Royalty Payments") on the dates and in the amounts set forth below to
the Lessors:
Advance Minimum Royalty Payments Schedule
-----------------------------------------
Amount of Payment Date of Payment
----------------- ---------------
$15,000 November 1, 1993
$15,000 January 28, 1994
$22,500 June 28, 1995
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Advance Minimum Royalty Payments Schedule
-----------------------------------------
$22,500 ("Base Advance June 28, 1996
Minimum Royalty")
Adjusted Base Advance June 28, 1998 and every June 28
Minimum Royalty thereafter through the end of
the lease term
The Adjusted Base Advance Minimum Royalty is determined by adding to the Base
Advance Minimum Royalty the amount of three hundred dollars ($300) for every
full 1% that the United States Consumer Price Index ("CPI") for the previous
five years exceeds the CPI for June 1993. Finally, the Company is required to
pay to Lessors a non-participating production royalty of 2% of gross production
escalating to 4% for gross production realized after June 28, 1995. The
production royalty payment which would otherwise become due within one year
following an Advance Minimum Royalty Payment shall be credited against that
Advance Minimum Royalty Payment.
In the event that it is mutually determined by the Company and Lessors that
there is no commercially mineable ore on the Eckert's Hill Property, the Company
may elect to continue to lease the Plant site and required staging area
necessary to operate the Plant for an annual rental fee in the amount of $6,000
and an annual fee of $300 per acre affected by the Company's milling operations.
Both the annual rental payment and the annual surface use fee shall be adjusted
annually for inflation based upon CPI increases in the United States.
The Company also must pay into an escrow account the sum of $1.00 per ton for
each ton of ore or concentrate that is mined from lands other than the Eckert's
Hill Property and brought onto the Eckert's Hill Property for stockpiling or
milling. The escrowed monies shall be held by the escrow agent to provide an
additional source of funds to secure obligations under the lease, until the
parties mutually agree that the Company has performed all of its obligations
pursuant to any federal, state or local law or regulation and all of the terms
and conditions of the lease concerning protection of the environment.
The Company has further agreed to expend a minimum of $100,000 on mineral
exploration and development of the Eckert's Hill Property by June 28, 1996, and
has done so. Such work shall include only those funds expended to explore and
develop the property and its mineral resources as a mine, and shall not include
costs incurred to develop or improve the milling facility or any processing
facilities.
Pursuant to the lease, Lessors reserve the right to determine when and if they
desire to sell the Eckert's Hill Property; however, the Company shall have a
right of first refusal to purchase the Eckert's Hill Property.
The Eckert's Hill Property consists of patented mining claims totaling
approximately 330 acres located on the western edge of the Cottonwood Buttes
District in Idaho County, Idaho, approximately 174 miles north of Boise. Access
to the Eckert's Hill Property is gained from Cottonwood by traveling 1.5 miles
north on U.S. Highway 95, then north 1.5 miles on good gravel county roads.
The mineralized zone of the Eckert's Hill Property is a small hill that
protrudes above the Miocene Columbia River basalt flows. This window in the
basalts has exposed granodiorite and gabbros related to the Idaho Batholith. The
granodiorite stock intrudes into metamorphic greenschists which can be observed
four miles northeast of the property. The mineralization has primarily been
observed in quartz veins emplaced in the granodiorite.
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The mineralization consists of a 5-foot wide quartz vein striking N60(degrees)W
and dipping 68(degrees) to the northeast. The vein contains pyrite (up to 5%) in
small irregular masses and along fracture surfaces. Weak to moderate limonite
staining is common in the vein material near the surface and also in the
granodiorite adjacent to the vein. Unaltered granodiorite is located within one
foot of the vein. Unoxidized pyrite is found in freshly fractured vein material
obtained near the surface. The vein has been exposed by trenching and also has
been tested at a depth of 100 feet below the surface by a diamond drill, which
indicated a zone approximately 15 feet in width with a gold grade of 0.113
ounces of gold per ton. Good vein continuity is observed down dip, while
continuity of grade along strike appears to be erratic.
Ten thousand (10,000) tons of ore have been removed from the vein system on the
property. Three grab samples from the southwest end of the system assayed 1.18
ounces of gold per ton, 1.03 ounces of gold per ton and 1.41 ounces of gold per
ton, respectively.
Records on past prospecting and exploration activities are incomplete. Several
shafts and small adits have been developed in the past.
Prior to entering into the lease, the Company retained Mr. Struck to examine the
Eckert's Hill Property and evaluate property mineralization and geologic
potential. Mr. Struck concluded that the Eckert's Hill Property exhibits vein
structures and mineralization of sufficient magnitude to warrant acquisition of
the mineral rights and the commitment of additional exploration work. Mr. Struck
recommended a program of geological mapping and ground geophysics, in addition
to sampling, to determine the strike length and continuity of the vein system
and, depending upon the results of such program, a program of trenching and
limited drilling.
As of December 31, 1997, the Company has expended $656,454 on the work performed
on and acquisition costs of the Eckert's Hill Property. On December 26, 1993,
the Company entered into a construction contract with Silver Crystal, which was
amended April 10, 1994, by the terms of which Silver Crystal agreed to develop
and upgrade the pilot scale test facility on an existing mill facility
(hereinbefore described as the "Plant") located on the Eckert's Hill Property to
process ore using the Swisher-Br Process, for a price not to exceed $650,000.
The Company commenced a lawsuit against Mr. Swisher and Silver Crystal on
October 22, 1996 alleging, among other things, that Silver Crystal breached
certain agreements it had with the Company, which breaches include failing to
complete the Company's Eckert's Hill Plant in a timely way and within budget and
that Mr. Swisher has on numerous occasions, made false representations of
material facts, with knowledge of falsity, including making false claims
concerning gold value assayed or recovered on the Eckert's Hill vein system.
Subsequent to December 31, 1997, this lawsuit was settled. See Note 7 to the
Company's December 31, 1997 Financial Statements, Item 3 - Legal Proceedings and
Item 12 - Related Transactions for additional information.
The Company has given notice of its intent to cancel the Eckert Hill lease as at
June 28, 1998 and has six months from that date to move all equipment and
personal property from the site.
Tuxedo Property
The Tuxedo Property is located in western Silver Bow County, Montana,
approximately 8 miles northwest of Butte. The property consists of approximately
1,040 acres of fee surface and mineral rights, 80 acres of both patented and
unpatented mining claims, and 680 acres of fee surface rights. Pursuant to an
agreement dated December 28, 1993 and an addendum dated April 27, 1994, the
Company acquired from an unaffiliated third party the right to investigate and
the right to negotiate for all current and future mineral rights regarding
certain property located in Deer Lodge and Silver-Bow counties of Montana for
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a cash payment of $100,000. Pursuant to an assignment dated September 30, 1994
and an underlying purchase and sale agreement dated June 1, 1994 (the "Tuxedo
Agreements"), the Company acquired from an unaffiliated third party the mineral
rights to 1,380 acres in Silver-Bow County, Montana, for cash payment of
$43,000. The underlying vendor retains a 3% net smelter return on the property.
Pursuant to an assignment dated September 30, 1994 and an underlying exploration
agreement and option to lease mining claims dated May 24, 1994, the Company
acquired from an unaffiliated third party an option to lease 69 acres in
Silver-Bow County, Montana, for a cash payment of $25,000. Pursuant to an
agreement dated November 25, 1995, the Company was granted a leasehold interest
in certain minerals contained on a property near Silver-Bow County, Montana, in
consideration for the payment of a minimum royalty of $15,000 per year and a
production royalty of 3% of the net value of all minerals produced and sold
directly from the property. The property is strategically located near the
Anaconda and Butte Superfund sites to provide mine site clean-up for other
properties in this area.
The Tuxedo Property consists of a curved sulfide rich quartz vein traceable on
the top of a ridge for over one and one-half miles. The quartz vein shows a
width on the west end, where mining work has previously undertaken, of 12 to 14
feet in surface cuts. Historically, silver content in the vein ran between 5 and
20 ounces per ton. The Company contracted an independent geological engineer to
carry out a preliminary study of the geology and mineralization of the area as
well as to provide bulk samples from the vein for testing. Potentially
commercial gold results from a 1,000 pound bulk sample taken near the old
working on the west end of the Tuxedo Property have been confirmed in a 25 pound
bulk test using the Swisher-Br Process coupled with select ion exchange resins
and furnace ashing to the extractive media. The Company intends to conduct
additional mapping and complete sampling on the entire strike length of the
Tuxedo Property vein system.
The Company has kept 20 acres of the Tuxedo Property, while terminating a lease
for 680 acres in November, 1997. The Company is holding the Tuxedo interest for
future development. As at December 31, 1997, the Company has expended $205,383
on the acquisition and exploration costs of this property.
Dean Mine and Mill Sites
On October 9, 1996, the Company entered into an agreement (the "St. George
Agreement") with St. George Metals, Inc. ("St. George"), an unaffiliated third
party, to acquire all of St. George's interest in the mill site, mining property
and equipment known as the "Dean Mine and Mill Sites" located in the Battle
Mountain, Nevada area in consideration for the payment of $75,000 ($25,000 cash
and acceptance of $50,000 in prior option payments) and issuance of 75,000
shares. Pursuant to the terms of the agreement, the Company was to assume all
liabilities for the required reclamation and neutralization of existing cyanide
at the Dean Mill, the Dean Mine Property and various unpatented mining claims
and pay for the required transfer of all permits to the Company. The agreement
was conditional upon the Company entering into a satisfactory agreement with
Domingo A. Calzacorta relating to the lease of the Dean Mine Property. The
Company was unable to negotiate reasonable lease terms with Mr. Calzacorta
during 1997, and accordingly the Company has not issued the 75,000 shares of its
stock, and the parties have mutually agreed that the Company will retain the
data base and equipment acquired for the cash payments made and that the portion
of the Agreement related to the shares and property were rescinded. The Company
has re-evaluated the reclamation liability associated with the Dean Mine patent
claims. At this time the Company feels the reclamation responsibility will be
far greater than the $200,000 posted bond for said purposes. Consequently, the
Company has declined involvement in the Dean Mill site proper but has kept 16
unpatented mining claims on the Battle Mountain Gold Trend which are contiguous
to the Dean Mine site and which have minimal or no reclamation liability
associated with them.
The Dean Mine Property is located 18 miles southeast of the town of Battle
Mountain in Lander County, Nevada at the northern edge of the Shoshone Range.
The property is reached by county paved and
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improved gravel roads 17 miles southeast to the junction of Lewis and Dean
Canyons, and then by unimproved dirt roads.
The property is located in the productive Battle Mountain Gold belt in Nevada.
The key gold-bearing quartz breccia veins cut the Teritary-aged dacite prophyry
and the surrounding siliciastic sediments of the Ordovician Valmy Foundation and
Silurian Elder Formation. They have been cut locally and offset by north to
north-east trending, post mineral faults. Gold and silver mineralization occurs
in a series of quartz-sulfide fault/vein structures.
The Dean Mine was in production from the early 1880's to 1909, with additional
work periodically through 1957. There currently are 13 levels with over 3.5
miles of workings down to a depth of 980 feet. Total production based on
available records is 57,719 ounces of gold and 82,675 ounces of silver at grades
of 0.4 ounces of gold per ton and 0.6 ounces of silver per ton. Additional gold
and silver was recovered from 17,000 tons of material taken from slopes around
the old mine workings.
St. George metals has carried out an extensive program on the property since
1986, consisting of detailed surface and underground mapping, rock chip
sampling, soil sampling, and geochemical and geophysical studies. St. George
Metals has also conducted 41,837 feet of drilling in 76 holes, and has spent $12
million to date on exploration and development of the old mine. The Battle
Mountain trend is one of the more active gold exploration areas in the world,
with many large low grade deposits, including Placer Dome's Pipeline deposits.
To date, the Company has paid to St. George the sum of $75,000. The Company's
interest is now reduced to 16 unpatented claims on which the Company is paying
fees. The Company has been contracted by other companies in regard to
potentially establishing a joint venture on the unpatented claims. In general,
due to the failure of the Swisher-Br Process, the Dean Mine and Mill Property is
not viable to the Company. As at December 31, 1997, the Company has expended
$85,045 on the acquisition and exploration costs of this property.
Other Properties
S/S Ophir Property
The S/S Ophir Property is located 20 miles east of Grangeville, 2 miles north of
State Highway 14. The property consists of approximately 120 claims in Idaho
County in Township 29 North, Range 4 and 5 East, sections 5, 6, 7, 12, 13, 18,
19, 24, and 30, Boise Meridian. Each claim is approximately 20 acres in extent.
The property is near the Idaho suture zone and appears to host "black smoker"
type deposits. The mineralization consists of a stratabound massive sulphide
containing copper, cobalt and minor gold.
The S/S Ophir Property, a portion of Claim Block X, consists of 343 claims
located in the Nez Perce National Forest, approximately 152 miles north of Boise
in Idaho County. The property can be accessed from two locations on State
Highway 14, by traveling approximately 20 miles east of Grangeville, Idaho on
State Highway 14. The claims lie to the north of Highway 14. The claims were
purchased for consideration of $60,000 and 100,000 common shares of the Company,
upon VSE acceptance of the purchase agreement.
The S/S Ophir Property is an extensive claim block, with claims running from the
South Fork of the Clearwater River to Quartz Ridge, all located within the
Clearwater Mountains.
The mining claims located on the S/S Ophir Property are not located in the named
mining district. The claim block encompasses the historic Ophir Lode, Wickieup
Creek Deposit, Lucky Win Prospect and the Silver King Prospect. There is a short
adit at the Ophir Lode that had the following metals listed as
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products: copper, gold, silver, cobalt and iron. The Wickieup Creek Deposit
listed iron, manganese and phosphorous as products. The Lucky Win Prospect
listed uranium as a product, and the Silver King Prospect listed gold as a
product. Records detailing tonnages, dates of production and quantities produced
are not available.
The S/S Ophir Property is a combination of quartzite, schist, granodiorite and
magmatic rocks that are heavily iron stained in places. In other places the
mineralization occurs as finely disseminated sulfides in a quartz-rich
metamorphic unit, as well as massive sulfides emplaced on a fracture in the
quartzite unit at the Ophir Lode adit. The massive sulfides consist of pyrite,
chalcopyrite, minor bornite, minor galena and pyrrhotite in a gangue of white
quartz. Samples from the dump had very heavy limonite and hemetite staining on
exposed surfaces and fractures.
Due to the refractory nature of the massive sulfides, little work was conducted
on the S/S Ophir Property in the past other than the development of a short adit
and small prospect pits scattered up and down the hillside. More recent work on
the mineralized zone by IMD has shown values of up to 1.8% copper, 0.4% cobalt
and some gold and silver values.
Mr. Struck recommended the following plan of exploration with respect to the S/S
Ophir Property:
1. Additional research and review of existing literature including a
review of Idaho Bureau of Mines and Geology Reports, Idaho Geological
Survey Reports and Maps, USFS Mineral Exam Reports and Plans of
Operations, MSHA records and United States Bureau of Mines Production
Records; and
2. On-site reconnaissance level mapping and sampling to confirm historic
data and to provide a basis for the next level of property evaluation.
Pursuant to an agreement dated October 15, 1992 (the "SS Ophir Agreement"), the
Company acquired a 60% interest and a right of first refusal to acquire the
remaining 40% interest on this property from IMD, a company controlled by Mr.
Joseph Swisher (see Item 12 Related Transactions). This agreement was amended by
an amending agreement dated January 25, 1996, which agreement amended a total of
13 agreements between the Company and IMD.
The Company has commenced a brief geophysical program on the property, to be
followed by a preliminary drilling program if the sulphide rich zone in the area
of the adit has an indication of size. The expenditures as at December 31, 1997
on the SS Ophir Property total $138,089. These expenditures include, acquisition
costs, staking, assaying and geological consulting expenditures.
A lawsuit was brought against the Company on October 10, 1996 by Mr. Swisher and
IMD claiming, among other things, an aggregate amount of $1,920,000 or
alternatively, 800,000 shares of the Company, allegedly owing under the Golden
Eagle Amending Agreement to the plaintiffs. If the plaintiffs are successful in
their action, the Company may have been required to pay a cash settlement or
issue shares to the plaintiffs, and the Company's interest in the S/S Ophir
Property may have been adversely affected. See "Legal Proceedings." Subsequent
to December 31, 1997, this lawsuit was settled. See Note 7 to the Company's 1997
Financial Statements for additional information. Mineral Zone Property
On December 1, 1995, the Company entered into an agreement (the "Mineral Zone
Agreement") with IMD and Delbert Steiner, President and Director of the Company,
to acquire certain property known as the "Mineral Zone Property", located in the
Elk City Mining District, Idaho County, Idaho in consideration for the payment
of $1,710,000 over time.
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Location and Access
The property is accessed from Elk City, Idaho, which is located 60 miles each of
Grangeville on State Highway 14. Once in Elk City turn north on USFS Road 443
and travel 2 miles north to the southern boundary of the property. Services
including lodging, fuel and groceries are available in Elk City and Grangeville.
There is also a small landing strip for lighter aircraft at Elk City and an
airport with fuel at Grangeville.
History
The Mineral Zone Property was first discovered and mined in the late 1800's as a
high grade quartz vein system. The Mineral Zone Property was originally
developed and mined from narrow underground adits. It was mined sporadically
through the 1970's at which time a small open cut was developed over the
deposit. Some limited tonnage was mined at that time and then the Mineral Zone
Property was inactive until 1986 at which time Allotta Resources optioned the
Mineral Zone Property from Idaho Mining and Development. Allotta Resources
drilled approximately 21 core holes and 84 reverse circulation holes, totalling
25,000 feet and developed a small resource. At that time, the Mineral Zone
Property was optioned to Billiton, a subsidiary of Shell Oil. Billiton continued
with the reverse circulation drilling and developed a mineral inventory based on
this drilling. A total of 112 drill holes across the Mineral Zone Property were
used for calculation of geologic and grade models for the area.
The Company has initiated some limited mapping and sampling which has returned
assays as high as 2 ounces per ton. The Company is currently reviewing the
historical data base and reconstructing the geologic model to define priority
targets for future mapping and sampling, as well as drilling.
Geology
The Mineral Zone Property is underlined by Precambrian gneiss and schists with
quartzites which have been untruded by Cretaceous Tertiary granite rocks. The
rocks consist of biotite gneiss, biotite schists and quartzite with irregular
layers of medium to coarse grain muscovite pegmatite which have been highly
deformed and intruded by the quartz monzonite Idaho batholith which is
Cretaceous in age. In the vicinity of the Mineral Zone Property, the sericite
muscovite schist and gneiss rocks have been intruded by a dike of quartz
monzonite along a series of westerly striking faults. The Mineral Zone Property
is located on the eastern side of the Elk City Graben and mineralization appears
to be associated with the north striking graben bounding fault as well as with
quartz veins in tension gashes.
Mineralization
Gold mineralization occurs in a east/west striking steeply, self dipping quartz
filled fracture zone. The host rocks are generally barren on the hanging wall
side of the fault zone and consist of biotite gneiss and schist. The gold
mineralization occurs in a sheared and brachiated schist and gneiss up to 50
feet thick and in vein quartz and gouge. The rocks show strong argillican
sericite alternation with minor to moderate limonite staining. The rocks show
strong argillican sericite alternation with minor to moderate limonite staining.
The depth of oxide has been reported to be in excess of 400 feet. Preliminary
metallurgical work indicates an amenability to cyanide dissolution which would
help with the economics of the project.
A lawsuit was brought against the Company alleging, among other things, that
monies were owing by the Company to the plaintiffs under this agreement. See
"Legal Proceedings." Subsequent to December 31, 1997 the Company settled this
lawsuit, and has agreed to purchase the Mineral Zone Property based upon a price
to be determined from a mutually agreed upon qualified appraiser. Principal
payments of 3.5% of the purchase price must be paid on the earlier of six months
from the date of the agreement or upon obtaining the valuation report with an
additional 3.5% within six months of the valuation date. The
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remaining balance will be payable in quarterly instalments over the estimated
mine life commencing from the date of the commencement of commercial production,
if any. Interest on the principal balance commences six months from the date of
the valuation report and shall be paid on a quarterly basis.
As at December 31, 1997, the Company has expended $9,024 on the acquisition and
exploration costs of this property. Pursuant to the Global Settlement Agreement
the Company has until the end of September, 1998 to find an independent
appraiser to appraise the Mineral Zone Property for payment by the Company to
Mr. Steiner and Mr. Swisher, despite the initial agreement calling for the
Company to pay $1,700,000 for the Mineral Zone Property. See Notes 3 and 7 to
the Company's December 31, 1997 Financial Statements for additional information.
Mallard Property
Pursuant to an agreement dated February 28, 1990 and amended February 19, 1991
(the "Mallard Agreement"), the Company purchased from IMD, 31 unpatented
contiguous mining claims located in the Dixie Mining District, Idaho County,
Idaho ("Mallard Property") for $10,000 and 50,000 common shares of the Company.
See "Conflicts of Interest, Certain Relationships and Related Transactions."
The Mallard Property is located in the Nez Perce National Forest approximately
142 miles north of Boise, Idaho. The 31 unpatented contiguous mining claims are
described in Notices of Location recorded in the office of the county recorder
of Idaho County. Access to the Mallard Property is gained from Elk City by
traveling three miles west on Idaho State Highway 14 to the intersection of the
United States Forest Service Routes 222 and 522, then 25 miles south on route
222 (Red River Road). Crooked Creek borders the property to the east and Little
Mallard Creek flows east from the property. The Mallard Property is generally
covered with 5 to 15 feet of snow for five to seven months of the year. The area
is heavily timbered and parts are covered by thick underbrush. Overburden on the
property is not deep, but outcrops are scarce. There is no underground or
surface plant or equipment on the property.
The mineralization in the area of the Mallard Property generally occurs in
epithermal veins, quite different form the disseminated gold mineralization of
the Petsite or Orogrande deposits. These veins are commonly related to "mafic
dikes," which fill faults, particularly on the footwalls of later vein fillings.
The veins are quartz, typically containing pyrite and gold, with minor galena
sphalerite and chalcopyrite. Several large shear zones, along which past
producing mines are located, trench northwesterly through the area.
No hardrock mining has been carried out on the Mallard Property to date. Several
trenches and pits have been dug on the western portion of the property to
investigate quartz veins and shear zones. In 1989 the United States Bureau of
Mines, as part of an extensive mapping and sampling program conducted in the
area, open trenches to investigate a quartz vein showing on the high ground near
the extreme western edge of the Mallard Property. Trenches and pits have also
been dug downhill from this area to investigate a subcropping quartz vein which
parallels the edge of the lowland swamp. A small placer operation on the swamp
is reported by the operator to yield considerable course crystalline gold with
fine flower gold. The quartz from the main vein in this location is very fine to
sugary and white and is filled with patches and knots of pyrite and
arsenopyrite. As this vein zone has been exposed only in four small pits and one
trench, its width has not been clearly determined; however, unless the vein
occurs as a series of parallel narrow filings, its width is in excess of 10
feet. Representative samples taken from more than 100 feet apart along the
mineralized portion of the vein have proven to be of significant grade. The wall
rock alteration and morphology of the landscape in the area also indicates a
large linear alteration zone lying to the south of the exposed epithermal type
quartz veins.
In September 1992, Mr. Struck completed a report on the Mallard Property. Mr.
Struck concluded that mineralization occurred on the Mallard Property in two
distinct types. First, there is high grade, low to
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moderate tonnage gravel placer deposit. Second, there may be a low to moderate
tonnage, high grade lode deposit in the auriferous quartz veins on the property.
Accordingly, Mr. Struck recommended (i) a trenching program to establish the
depth and extent of the gravels as well as the precious metals contained in the
gravels, (ii) the mapping of the quartz veins for continuity along strike and
thickness, as well as sampling to determine grade, and (iii) if results are
satisfactory, trenching and drilling to define the extent of mineralization.
As of December 31, 1997 the Company has expended $47,945 in the acquisition and
exploration of the Mallard Property, and has performed only such assessments
necessary to maintain the claims in good standing. During 1997, the Company
determined that title to the Mallard Property is in question and no significant
work program is planned for this property. Accordingly, the Mallard Property has
been written down by $47,944 to a nominal carrying value.
Snowstorm Property
Pursuant to an agreement dated February 19, 1991 (the "Snowstorm Agreement"),
the Company purchased from Silver Crystal, a company controlled by Mr. Swisher,
an undivided 50% interest in 29 unpatented contiguous mining claims located in
the Elk City Mining District, Idaho County, Idaho ("Snowstorm Property"), and a
right of first refusal to acquire the remaining 50% interest therein for a total
cost of $5,000. See "Conflicts of Interest, Certain Relationships and Related
Transactions." Under the agreement, the Company is required to perform or cause
to be performed on the claims, and each of them, all such assessment work as may
be required under applicable state law and otherwise to maintain the claims in
good standing and against relocation by others. If the Company fails to perform
the annual assessment work, Silver Crystal, after providing written demand to
the Company to commence such assessment work within 60 days, may perform or
cause to be performed, such assessment work and deliver to the Company a
statement detailing the expenses incurred. If the Company fails to reimburse
Silver Crystal for the expenditures set forth in the statement, the Company,
upon written demand therefor, will be required to assign and transfer the claims
back to Silver Crystal. Subsequent to December 31, 1997 the annual assessment
requirement has been dropped pursuant to the terms of the Global Settlement
Agreement. For more information see Legal Proceedings and Note 7 to the
Company's December 31, 1997 Financial Statements.
The Snowstorm Property is located in the Nez Perce National Forest approximately
156 miles north of Boise, Idaho. The 29 unpatented contiguous mining claims are
described in Notices of Location recorded in the office of the county recorder
of Idaho County. Access to the Snowstorm Property is gained from Elk City by
traveling three miles west on Idaho State Highway 14 to the intersection with
United States Forest Service Routes 222 and 522, then five miles south on Route
222 (Red River Road). The property is generally covered with snow between
November and April. The area is heavily timbered, except for south-facing slopes
and the more open valley floor which are generally in dry-land grasses.
Outcroppings are restricted to road cuts, creek gorges and old workings. There
is no underground or surface plant or equipment on the property.
The Snowstorm Property is located in the Elk City Mining District. The property
encompasses the Mascot Mine and the Rand prospect. The Mascot Mine recorded
intermittent production between 1912 and 1938. Records indicate 101 to 500
ounces gold and less than 40 ounces silver from 101 to 500 tons or ore were
produced during this period. Zinc and copper are also listed as byproducts. The
old workings are caved, but it was reported that the quartz vein was sloped to a
depth of 80 feet and 200 feet along strike.
In September 1992, Mr. Struck completed a report on the Snowstorm Property. Mr.
Struck concluded that the mineralization on the property is associated with a
quartz vein that is reported to vary in
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thickness from five to eight feet. The vein was said to strike north 80(degrees)
east and dip 65(degrees) north and carry three inches of fault gouge along the
footwall. Quartz vein material located on the dump has open bugs and drusy
cavities with pyrite and minor arsenopyrite. Some fractures in the quartz were
heavily stained with limonite and minor hematite. Mr. Struck recommended a
program of mapping and sampling to determine continuity along strike and grade,
and, if the results are satisfactory, a program of trenching and drilling to
define the extent of mineralization.
As of December 31, 1997 the Company has expended $23,007, in the acquisition and
exploration of the Snowstorm Property, and has performed only such assessments
necessary to maintain the claims in good standing. During 1997, the Company
determined that title to the Snowstorm Property is in question and no
significant work program is planned for this property. Accordingly, the
Snowstorm Property has been written down by $23,006 to a nominal carrying value.
ITEM 3. LEGAL PROCEEDINGS
Civil Suit by Joe Swisher and IMD
A lawsuit was brought against the Company and Delbert Steiner, President and
Director of the Company, in the District Court of the First Judicial District of
the State of Idaho, in and for the County of Kootenai on October 10, 1996 by Mr.
Joseph Swisher and IMD and amended July 25, 1997. The two plaintiffs sued for:
(a) approximately $241,809 and accrued interest from the Company on account of
an amount alleged to be owing under a certain promissory note; (b) $240,720 or
alternatively 100,300 shares of the Company which was alleged to be owing under
a separate promissory note; (c) $1,920,000 plus interest or alternatively
800,000 shares of the Company which was alleged to be owing under an agreement
dated January 25, 1995 or alternatively an order determining that IMD is excused
from further performance under such agreement; (d) $1,205,600 or alternatively
504,000 shares of the Company alleged to be owing as a result of the plaintiffs
allegedly providing financing funds to the Company between 1993 and 1996; (e)
$201,899 plus interest from the Company which was alleged to be owing on account
of an agreement dated December 1, 1995 relating to the Mineral Zone Property;
(f) judgment against Delbert Steiner for $350,000 for an alleged breach of
fiduciary duty to IMD relating to the transactions set forth in items (b) and
(d) of the lawsuit; (g) a minimum of $227,500 from the Company and Delbert
Steiner for damages relating to an amount alleged to be owing under an agreement
dated March 3, 1993; (h) a minimum of $1,000,000 from Delbert Steiner and the
Company for damages relating to an alleged unjustified refusal of the Company to
deliver its common shares alleged as due under items (b), (c) and (d) of the
lawsuit which has allegedly wrongfully deprived IMD of the right to vote such
shares on matters which the Company's shareholders are entitled to vote on; (i)
a minimum of $1,000,000 from the Company for damages to IMD for the Company's
alleged breach of its contractual obligations to IMD which allegedly constitutes
a breach of the covenant of good faith and fair dealing made by the Company to
IMD when inducing IMD to enter each of the contracts in the lawsuit.
The Company commenced a lawsuit against Mr. Joseph Swisher and Silver Crystal in
the District Court in the Second Judicial District of the State of Idaho, in and
for the County of Nez Perce on October 22, 1996. The Company's lawsuit alleges
that Silver Crystal breached certain agreements it had with the Company, which
breaches include failing to complete the Company's Eckert's Hill Plant in a
timely way and within budget. The Company alleges that Mr. Swisher breached
certain contractual obligations he owed to the Company, including diverting to
his own personal gain a certain business opportunity properly belonging to the
Company. Furthermore, the Company alleges that Mr. Swisher, in both his
individual capacity as well as in his capacity as an officer and shareholder of
IMD, has made false representations of material facts, including statements
regarding his knowledge, ability, and qualifications to develop the Swisher-Br
Process. The Company is suing for damages and for an
Page 35
<PAGE>
injunction to prevent Mr. Swisher and Silver Crystal from unlawfully using the
Swisher-Br Process, over which the Company has an exclusive use license.
Subsequent to December 31, 1997, the Company settled all lawsuits with Mr.
Swisher and IMD. On April 29, 1998, the parties signed the Global Settlement
Agreement which causes all claims and counter-claims between the parties to be
dismissed. A copy of this agreement is filed as an exhibit to this report. In
full and final settlement of all existing and potential claims between and
amongst the parties, the Company will pay $50,000 to IMD within 2 business days
of the settlement and will deposit in trust a further $50,000. Both of these
payments have been made. The balance in trust will be released to IMD upon
delivery by IMD to the Company of certain quitclaim deeds to the Claim Block
properties. The Company has recorded a gain on the settlement of the lawsuit of
$223,946. Furthermore, the Company has now established a procedure for valuing
the Mineral Zone claim. In this regard, see Item 2 Description of Property and
Item 12 - Related Transactions for more information.
The settlement has been recorded as of December 31, 1997 and the $100,000 is
accrued within amounts payable to related parties in the financial statements.
See also Note 7 to the Company's December 31, 1997 financial statements. The
gain on debt settlement has been recorded as an extraordinary item in the
statement of operations for the year ended December 31, 1997. See also Note 8 to
the Company's December 31, 1997 Financial Statements.
Civil Suit Against Geoffrey Magnuson
The Company commenced a lawsuit against Geoffrey Magnuson, a former officer of
the Company, in the District Court of the Second Judicial District of the State
of Idaho, in and for the County of Nez Perce on September 26, 1997. The Company
sued for diversion of corporate assets, conversion of corporate property,
including but not limited to, books, records and geological data, breach of
fiduciary duty and slander, and sought as relief:
(a) an order compelling Mr. Magnuson to account for his alleged misconduct
in appropriating the Company's property and to pay to the Company the
amount of such damage to the Company's business and goodwill;
(b) an order mandating Mr. Magnuson to return all property belonging to
the Company and to pay to the Company the amount of any damage to the
Company.
Civil Suit by Gumprecht - Promissory Note
A lawsuit was brought against the Company, IMD and Mr. Joseph Swisher in the
District Court of the Second Judicial District of the State of Idaho, in and for
the Country of Idaho on October 17, 1997 by the plaintiffs, Thomas Gumprecht and
Bonnie Witrak (the "Plaintiffs"). The Plaintiffs brought the action to collect
on a promissory note dated October 19, 1995 entered into between the Plaintiffs
and the Company in the amount of $250,000. In connection with the execution of
the promissory note, the Company and Plaintiffs entered into a security
agreement which granted the Plaintiffs a security interest in certain assets.
The Plaintiffs sought possession of certain assets which included equipment
located at the Eckert's Hill Mine and Mill site and at the Golden Eagle site.
The Plaintiffs sought a judgment in the total amount of $308,000 for principal
and interest up to and including October 1, 1997.
Subsequent to December 31, 1997, the Company elected to allow a default to be
entered in the District Court of the Second Judicial District of the State of
Idaho, in and for the County of Idaho on January 30, 1998. On May 18, 1998 the
Court ordered the Company to pay the amount of $332,216.71 which included
interest through May 17, 1998. The Company is currently negotiating payment
terms of the judgment with the Plaintiffs.
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<PAGE>
Civil Suit by Gumprecht - Share Exchange
A lawsuit was initially brought against IMD and Mr. Joseph Swisher in the
District Court of the Second Judicial District of the State of Idaho, in and for
the County of Idaho by Thomas Gumprecht (the "Plaintiff") in 1996. On October 6,
1997 the Plaintiff filed an Amended Complaint which added the Company and
Delbert and Elli Steiner as defendants (with IMD and Joseph Swisher,
collectively the "Defendants"). The Plaintiff alleges that the Plaintiff made
various loans to Idaho Non-Metallic Mineral, a company owned in part by Mr.
Steiner and Mr. Swisher, in exchange for shares of Silver Crystal Mines and IMD.
The Plaintiff claims that prior to December 1991, the parties to the lawsuit had
an oral agreement to exchange the Plaintiff's shares in Silver Crystal and IMD
for 250,000 of the Company's shares which were owned by IMD. The Plaintiff is
seeking transfer of such shares. The Defendants deny that any such oral
agreement was made and have raised the statute of frauds and statute of
limitations as defenses to the Plaintiff's claims. The lawsuit remains in the
discovery phase and has not yet been set for trial. The Company is of the view
that the allegations are generally without merit and will continue to defend
such actions vigorously.
Civil Suit by Gumprecht - Derivative Action
Thomas Gumprecht and Kirke White (the "Plaintiffs") filed an Amended Complaint,
Shareholders Direct and Derivative Action in the District Court of the Second
Judicial District of the State of Idaho, in and for the County of Idaho on
August 5, 1997. While the Complaint names the Company as a defendant on several
pages, the Company is not named formally as a party to the Amended Complaint.
The lawsuit makes allegations against Mr. Steiner and the Company with respect
to the transfer of various funds and alleged agreements between the Company, Mr.
Steiner and the Plaintiffs set out more particularly as follows.
The Plaintiffs allege that Mr. Joseph Swisher was involved in the creation of
the Company, an allegation that the Company denies. The Plaintiffs further
allege that the Company paid Silver Crystal $800,000 for the construction of the
Eckert's Hill Mine and Mill site which the Company admits. The Plaintiffs allege
that such funds were diverted for the personal use of Mr. Joseph Swisher, which
the Company denies. These funds were utilized by the Company for an independent
metallurgical evaluation of the entire Swisher-Br Process, and for general and
administrative expenditures.
The Plaintiffs alleged that an agreement was made in August of 1995 by the
Company to exchange the Plaintiffs' stock in Silver Crystal for that of the
Company. The Company admits an offer was made to this effect but denies that
such offer was accepted and as a result no agreement was formed.
The Plaintiffs allege that Mr. Steiner solicited funds from the Plaintiffs while
acting as their attorney and deposited such funds into his attorney/client trust
account and/or his attorney general business account. The Plaintiffs allege such
funds were given to Mr. Steiner in exchange for stock in the Company which was
not delivered. The Plaintiffs allege that the solicitation of funds, the
depositing of such funds into Mr. Steiner's client accounts, the disbursement of
such funds without accounting, and the failure transfer stock to the Plaintiffs
exhibits negligence by failure to exhibit the care expected of a reasonably
prudent attorney acting in the same or similar circumstances in the same or
similar community. Mr. Steiner specifically denies soliciting funds from the
Plaintiffs and states that the disbursement of such funds was undertaken at the
instruction of the Plaintiff, Mr. Gumprecht. Mr. Steiner further denies the
remainder of the aforementioned allegations.
The Plaintiffs are seeking recission and restitution of funds, compensatory
damages, specific performance of the alleged contract, the formation of a
constructive trust in the Golden Eagle Mining properties and all Company stock
owned by Mr. Joseph Swisher and IMD, punitive damages for $1,000,000, and
several orders relating to the Golden Eagle Property, Silver Crystal Mines,
Inc., IMD and Mr. Swisher.
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<PAGE>
The Company is of the view that the allegations are generally without merit and
will continue to defend such actions vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the Company's security holders during the fourth
quarter of fiscal 1997.
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<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market in the United States for the
Company's common stock. The common shares of the Company are listed on the VSE,
Vancouver, British Columbia, Canada, under the classification of an "advanced"
Company and trade under the symbol "IDO".
The following table sets forth the volume and the high low sales prices (in
Canadian dollars) for the common stock of the Company regarding the quarterly
periods set forth therein, as reported by the VSE.
Quarter Ended Volume High Low
------------- ------ ---- ---
12/31/1997 367,439 $0.65 $0.18
9/30/1997 579,466 $0.90 $0.41
6/30/1997 103,050 $0.95 $0.60
3/31/1997 514,633 $1.40 $0.75
12/31/1996 296,685 $3.50 $1.20
9/30/1996 375,375 $4.45 $2.70
6/30/1996 463,479 $4.25 $1.70
3/31/1996 73,307 $2.05 $1.45
12/31/1995 127,280 $2.06 $0.85
9/30/1995 111,350 $2.30 $1.85
6/30/1995 104,035 $2.50 $2.00
3/31/1995 67,025 $2.50 $1.95
There are approximately 170 registered shareholders of the Company's common
stock, which includes some of the holders who purchased on the VSE and those
whose shares of the Company's common stock were acquired pursuant to private
sales, who together hold in total 7,104,208 of such stock as at December 31,
1997. A further 2,330,478 common shares had been allotted but not yet issued as
of December 31, 1997.
No dividends were paid with respect to the Company's common stock for 1997, and
the Company does not plan to declare dividends in the foreseeable future.
Unregistered Sales of Securities
The following information describes the securities the Company has sold within
the past three years without registering the securities under the Securities
Act.
Property Transactions
On March 24, 1997 and September 2, 1997 the Company issued common shares in its
capital to Idaho Gold as partial consideration for the acquisition of certain
resource properties from Idaho Gold, pursuant to an agreement dated December 11,
1995 between the Company and Idaho Gold. The particulars in regard to the number
of shares, resource properties and price were as follows:
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<PAGE>
<TABLE>
- -------------------------- ----------------------- ----------------------- ----------------------- -----------------------
Number of
Property Shares Issued Date Issued Price per Share (C) Total Proceeds (C)
- -------------------------- ----------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Buffalo Gulch 60,000 March 24, 1997 $1.15 $69,000
Buffalo Gulch 60,000 September 2, 1997 $1.15 $69,000
Deadwood 35,000 March 24, 1997 $1.15 $40,250
Deadwood 35,000 September 2, 1997 $1.15 $40,250
Friday 30,000 March 24, 1997 $1.15 $34,500
Friday 30,000 September 2, 1997 $1.15 $34,500
TOTAL 250,000 $287,500
- -------------------------- ----------------------- ----------------------- ----------------------- -----------------------
</TABLE>
Private Placement pursuant to May 1996 Offering Memorandum
On September 11, 1996 the VSE accepted for filing the Company's non-brokered
Private Placement of 477,950 units. The Private Placement was concluded in two
tranches, with each tranche having its own unique unit pricing and rights. The
shares and warrants comprising the units of the two tranches were issued
effective September 12, 1996. The tranches and the private placees were as
follows:
Private Placement - September 12, 1996 - 100,000 Units
Effective September 12, 1996 the Company issued by way of a private placement a
total of 100,000 Units at a price of C$2.00 per Unit, with each Unit consisting
of one common share and one non-transferable common share purchase warrant. Each
Warrant entitles the holder to purchase an additional common share for a term of
one years at a price of C$2.00 per share. The total offering price was
C$200,000. The private placee was as follows:
<TABLE>
Number of
Name Units Purchased Price per Unit(C) Total Proceeds(C)
- ---- --------------- ----------------- -----------------
<S> <C> <C> <C>
Delbert W. Steiner(1) 100,000 $2.00 $200,000
</TABLE>
(1) Delbert W. Steiner is the President, Chief Executive Officer and a Director
of the Company.
Private Placement - September 12, 1996 - 377,950 Units
Effective September 12, 1996 the Company issued by way of a private placement a
total of 377,950 Units at a price of $3.50 per Unit, with each Unit consisting
of two common shares and one non-transferable common share purchase warrant.
Each Warrant entitles the holder to purchase an additional common share for a
term of two years at a price of $1.75 per share during the first year and $2.75
per share during the second year. The total offering price was US$1,322,825. The
private placees were as follows:
<TABLE>
Number of
Name Units Purchased Price per Unit(C) Total Proceeds(C)
- ---- --------------- ----------------- -----------------
<S> <C> <C> <C>
J.T. Blackfield Partners(1) 377,950 $3.50 $1,322,835
</TABLE>
(1) Theodore Tomasovich, a director of the Company, is the President of J.T.
Blackfield Partners.
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<PAGE>
Options Exercised
On May 17, 1996 the Company issued 30,000 common shares in its capital pursuant
to the exercise of certain stock options. Delbert Steiner, Wilfried Struck and
Geoffrey Magnuson each exercised 10,000 stock options, to each purchase 10,000
common shares at a price of $1.32 per share, for a total of $39,520.
Warrants Exercised
On January 24, 1995 the Company issued 30,000 common shares in its capital
pursuant to the exercise of warrants at a price of $2.23 per share, for a total
of $66,900. The warrants were exercised by, and the shares issued to, the
warrant holder Mr. Joe Swisher, pursuant to an agreement between IMD and the
Company dated March 3, 1993, and amended August 31, 1994.
Share Issuance
On June 24, 1995 the Company issued 290,464 common shares in its capital to the
Tomasovich Family Trust at a price of $1.50 per share, for a total of $435,696.
Mr. Theodore Tomasovich is a director of the Company and Trustee of the Trust.
Taxation
The following summary discusses only the Canadian federal income tax
considerations generally applicable to a holder ("Holder") of one or more common
shares of the Company who for the purposes of the Income Tax Act (Canada) (the
"Act") is a non-resident of Canada who holds his common shares as capital
property. The summary deals with the provisions of the Act in force on December
31, 1997 and all specific proposals to amend the Act publicly announced by the
Minister of Finance (Canada) prior to December 31, 1997. It does not discuss all
the tax consequences that may be relevant to particular Holders in light of
their circumstances or to Holders subject to special rules. It is therefore not
intended to be, nor should it be construed to be, legal or tax advice to any
Holder of common shares of the Company and no opinion or representation with
respect to the Canadian income tax consequences to any such Holder or
prospective Holder is made. Holders and prospective Holders should therefore
consult their own tax advisers with respect to their particular circumstances.
Dividends
A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to
25%, or such lower rate as may be available under an applicable tax treaty, of
the gross amount of any dividend paid or deemed to be paid on his common shares.
Under the Canada-U.S. Income Tax Convention (1980) as it applied on December 31,
1997 (the "Treaty"), the rate of Part XIII Tax applicable to a dividend on
common shares paid to a Holder who is a resident of the United States is, if the
Holder is the beneficial owner of the dividend and is a company that owns at
least 10% of the voting stock of the Company, 5% and, in any other case, 15% of
the gross amount of the dividend. The Company will be required to withhold the
applicable amount of Part XIII Tax from each dividend so paid and remit the
withheld amount directly to the Receiver General for Canada for the account of
the Holder.
Disposition of Common Shares
A Holder who disposes of a common share, including by deemed disposition on
death, will not be subject to Canadian tax on any capital gain (or capital loss)
thereby realized unless the common share constituted "taxable Canadian property"
as defined by the Act. Generally, a common share of a public corporation will
not constitute taxable Canadian property of a Holder unless he held the common
share as capital property used by him in carrying on a business (other than an
insurance business) in Canada, or he or persons with whom he did not deal at
arm's length alone or together held or held options to acquire, at any time
within the five years preceding the disposition, 25% or more of the shares of
any class of the capital stock of the Company.
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<PAGE>
A Holder who is a resident of the United States and realizes a capital gain on a
disposition of a common share that was taxable Canadian property will
nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax
thereon unless (a) more than 50% of the value of the common shares is derived
from or from an interest in, Canadian real estate, including Canadian mineral
resource properties, (b) the common share formed part of the business property
of a permanent establishment that the Holder has or had in Canada within the 12
months preceding disposition, or (c) the Holder is an individual who (i) was a
resident of Canada at any time within the 10 years immediately, and for a total
of 120 months during any period of 20 consecutive years, preceding the
disposition, and (ii) owned the common shares when he ceased to be resident in
Canada.
A Holder who is subject to Canadian tax in respect of a capital gain realized on
a disposition of a common share must include three quarters of the capital gain
(taxable capital gain) in computing his taxable income earned in Canada. The
Holder may, subject to certain limitations, deduct three quarters of any capital
loss (allowable capital loss) arising on disposition of taxable Canadian
property from taxable capital gains realized in the year of disposition in
respect to taxable Canadian property and, to the extent not so deductible, from
such taxable capital gains realized in any of the three preceding years or any
subsequent year.
If the shares of the Canadian company represent taxable Canadian property to the
non-resident shareholder, the non-resident will be required to provide certain
information to the Canadian tax authority regarding the proceeds of the
disposition and the tax values of the shares. The non-resident must pay a
withholding tax equal to 33% of the estimated taxable gain on the transaction or
provide adequate security for such tax. If this amount is in excess of the final
tax liability, the excess is refunded upon the filing of appropriate tax returns
by the non-resident. In certain cases, the withholding tax can be reduced if the
gain is otherwise not subject to tax by way of operation of the Treaty.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Selected Financial Data
The selected financial data set forth below as of December 31, 1995, 1996 and
1997 and for each of the three years in the period ended December 31, 1997, are
derived from the audited financial statements of the Company included elsewhere
in this Form 10-KSB. Statements of Operations Data
<TABLE>
(in U.S. dollars) Year Ended December 31,
----------------------- ------------------- -------------------
1997 1996 1995
----------------------- ------------------- -------------------
<S> <C> <C> <C>
Operating expenses:
Write off of processing equipment 1,017,883 419,440 --
General and administrative 830,681 991,114 819,311
Abandonment of property rights 345,622 200,279 --
Loss on disposal of equipment 4,576
----------------------- ------------------- -------------------
2,194,186 1,610,833 823,887
----------------------- ------------------- -------------------
Other income (expense):
Net property option receipt 92,412 -- --
Interest income 5,627 8,316 3,204
Interest costs (58,502) (67,622) (42,645)
Less interest capitalized 27,346 24,103 12,450
Extraordinary items
Gain on settlement of lawsuit 223,946 -- --
Gain on settlement of debt 179,138 -- --
----------------------- ------------------- -------------------
</TABLE>
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<PAGE>
<TABLE>
(in U.S. dollars) Year Ended December 31,
----------------------- ------------------- -------------------
1997 1996 1995
----------------------- ------------------- -------------------
<S> <C> <C> <C>
Net loss $ 1,724,219 $ 1,646,036 $ 850,878
====================================================================================================================
Balance Sheet Data:
(in U.S. dollars) As at December 31,
----------------------- ------------------- -------------------
1997 1996 1995
----------------------- ------------------- -------------------
Working capital (deficit) (456,843) (856,616) (779,453)
Total assets 3,244,909 4,265,907 4,255,597
Long-term debt (Notes payable to shareholders,
noncurrent) 13,070 17,209 245,993
Notes payable to shareholders, due currently 254,150 529,194 444,007
Total shareholders' equity 2,642,123 3,122,190 2,904,196
----------------------- ------------------- -------------------
</TABLE>
This Form 10-KSB contains forward-looking statements. A forward looking
statement may contain words such as "will continue to be," "will be," "expect
to," "anticipates that," "to be" or "can impact." Management cautions that
forward-looking statements are subject to risks and uncertainties that could
cause the Company's actual results to differ materially from those projected in
forward-looking statements. Please refer also to the paragraph titled
"Forward-Looking Information" in Item 1.
Results of Operations
Fiscal 1997 Compared with 1996
The Company is in the exploration stage and has yet to generate revenue from
production; however, the Company has received some revenues from optioning
interests in certain of its properties to establish a joint venture
relationship. The Company continues to explore its mineral properties in an
effort to establish proven ore resources. The financial resources of its joint
venture partner will assist the Company in this regard.
In 1997 the Company received revenue of $165,000 from granting an option over
certain of its resource properties. Furthermore, general and administrative
expenses decreased by $160,433 from 1996, the decrease resulting primarily from:
(i) a decrease in office and general expenses ($65,223 vs $80,828); and (ii)
reduced executive remuneration expenses ($0 vs $351,685) as a result of the
Company not having to record any executive remuneration expenses as all shares
have already been earned out of escrow but not yet released. These decreases
were partially offset by increased wages and salary expenses ($266,284 vs
$157,831) and shareholder information expenses ($127,135 vs 68,741).
During 1997, the Company expended cash of $374,442, and cash equivalent share
issuances(2) of $185,250, for a total of $559,692 on its resource property
exploration, development and acquisition program as compared to $500,516 in
1996. The actual amount expended in 1996 was $683,816 which was reduced by
$183,300 of BLM claim rental fees which were accrued in earlier years and
reversed in 1996. See the schedule of non-cash investing and financing
activities included as part of the Consolidated Statement of Cash Flows in the
Company's December 31, 1997 Financial Statements. The 1997 increase was due to
significant property payments and exploration work performed on the Company's
Buffalo Gulch Property. The Company wrote off processing equipment and abandoned
certain property rights for a total charge of $1,363,505 in 1997.
- -----------
(2) For more information, please see the Consolidated Statement of Changes in
Shareholders' Equity in the Company's December 31, 1997 Financial
Statements.
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<PAGE>
The Company recorded income from two extraordinary items: (i) a gain on
settlement of certain lawsuits; and (ii) a gain on settlement of certain debts.
These two items provided extraordinary income of $403,084 in 1997. For more
information, please see Note 3 to the Company's December 31, 1997 Financial
Statements.
In regard to the Petsite Project, the Company's joint venture partner, Cyprus
Gold completed the following in order to maintain its rights to earn a 70%
interest in the Project: Cyprus made a required cash payment of $50,000 to the
Company, contributed certain of its unpatented mining claims to the joint
venture, completed $1,500,000 of cumulative exploration and development
expenditures and maintained the unpatented claims within the project during the
earn in period. Subsequent to December 31, 1997 Cyprus has advised the Company
that it had completed its requirements to earn its 70% interest in the project,
for more information see Item 2 Description of Property - Cyprus Joint Venture.
In regard to the Friday Property, the Company has completed the issuance of the
remaining 30,000 shares of the Company's stock to IGC, and has completed
exploration and development expenses, with Cyprus, which are in excess of the
$135,000 option requirement. As of December 31, 1997, $144,000 in advance
royalty payments to underlying royalty interests were made on behalf of the
Company by its joint venture partner, Cyprus, which is responsible for such
payments pursuant to their joint venture arrangement with the Company.
In regard to the Deadwood Project, during 1997 the Company granted Cyprus the
right to participate in a joint venture to earn up to an 80% interest in the
Deadwood Property. Cyprus paid the Company a total of $165,000 pursuant to this
option in 1997, of which $50,000 remains in trust. Furthermore, the Company has
completed the issuance of the remaining 35,000 shares of the Company's stock to
IGC as well as completed exploration and development expenses in the amount of
$24,838 (excluding acquisition costs) during the year. Cyprus has confirmed
expenditures of $239,408 to December 31, 1997, for a total of $264,246 spent on
the property.
In regard to the Buffalo Gulch Property, the Company has completed the issuance
of the remaining 60,000 shares of the Company's stock to IGC as well as
completed exploration and development expenses in the aggregate of $310,000
during the year. The Company is also responsible for the following certain
payments pursuant to three agreements underlying the Buffalo Gulch Property.
Black Bear Agreement - the Company has made the required quarterly payments of
$2,400 and minimum annual expenditure of $3,000 for 1997. Whiskey Jack Agreement
- - the Company has made the required quarterly payments of $600 for 1997. Gray
Estates Agreement - the Company has made the required quarterly advance royalty
payments of $6,000 for 1997.
All of the Company's resource properties continue to be explored on the basis of
independent engineering report recommendations and a determination as to whether
the properties contain resources has yet to be made. Management has obtained
independent valuations of the various resource properties and presently has
written down to net realizable value the Mallard and Snowstorm properties.
The net loss for the year was $1,724,219, and was only slightly larger (4.7%)
than the net loss for the year ended 1996.
Under U.S. generally accepted accounting principles, the Company must record
executive remuneration on the release of performance shares from escrow. The
Company issued 750,000 shares at the time of its initial public offering to the
original principal founders of the Company at a price of C$0.01 per share,
subject to the terms of an escrow agreement. The number of shares released from
escrow is calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company must seek
regulatory approval for each release. The Company completed
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<PAGE>
the entire amount of qualifying expenditures by December 31, 1996. During 1997,
the Company did not apply for release of any escrowed shares, and accordingly,
no executive remuneration expense was incurred and there was no corresponding
change in share capital. The executive remuneration is a deemed amount and would
be based upon the fair market value of the Company's common shares during 1997.
(See Note 5 to the Company's December 31, 1997 Financial Statements and Security
Ownership of Certain Beneficial Owners and Management - Shares of the Company
held in Escrow.)
Fiscal 1996 Compared with 1995
The Company is in the exploration stage and has yet to generate revenue from
production. The Company continues to explore its mineral properties in an effort
to establish whether the properties contain ore resources, and now has the
additional resources of a joint venture partner to assist in this regard.
In 1996, general and administrative expenses increased by $171,803 from 1995. A
large portion of this increase arises from executive remuneration expense
related to the Company's expenditures on exploration and development, which
qualified 187,500 performance shares to be released from escrow.
Under U.S. generally accepted accounting principles, the Company must record
executive remuneration on the release of performance shares from escrow. The
Company issued 750,000 shares at the time of its initial public offering to the
original principal founders of the Company at a price of C$0.01 per share,
subject to the terms of an escrow agreement. The number of shares released from
escrow is calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company must seek
regulatory approval for each release. During 1996, the Company expended
sufficient amounts on exploration and development to qualify for the release of
the total number of shares held in escrow and specifically qualified for a
release of 187,500 shares which resulted in $351,685 of executive remuneration
and a corresponding $351,685 increase in share capital attributable to the year.
The executive remuneration is a deemed amount and is based upon the fair market
value of the Company's common shares during 1996. Regulatory approval of this
release has yet to be requested or obtained.
The Company recorded a charge of $619,719, of which $419,440 was related to the
write off of processing equipment and $200,279 related to the abandonment of
property rights in 1996. As a result, the Company had a net loss of $1,646,036
for the year ended 1996 compared to $850,878 for 1995.
During 1996, the Company expended $500,516 on its resource property exploration,
development and acquisition program as compared to $615,778 in 1995, including
accrued BLM fees. The Company spent $131,274 on construction of the Plant, and a
further $308,163 on acquisition, filing, drilling, geological, geochemical and
metallurgical expenses. The Company invested $17,804 in the Friday Property,
$13,054 in the Deadwood Property, $171,399 in the Buffalo Gulch Property and
$2,000 on the Gallaugher Property in 1996, whereas there were no such
investments in 1995.
Liquidity and Capital Resources
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations and exploration activities, that if the market is
conducive to fund raising, the Company will raise and spend $500,000 on
exploration and development activities on the Buffalo Gulch, Mineral Zone and
Dixie projects in 1998. The Company requires approximately $500,000 for general
and administrative expenses for the ensuing twelve month period and $254,150 for
payments on its notes payable. For the immediate future, funding will be raised
by equity and debt financings, including , but not limited to private placements
and the exercise of stock options.
The remaining proceeds of private placements and the exercise of stock options
will be reserved for general working capital purposes and to reduce current
liabilities.
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The Company has $254,150 in payments on notes payable due in the next year of
which $250,000 represents a demand note payable to Mr. Gumprecht, which is
currently the subject of litigation. For more information, please see Item 3 -
Legal Proceedings - Gumprecht Promissory Note above. The remaining $4,150
represents the expected principal reduction of the Company's $17,220 note
payable. The Company anticipates repayment of these notes from the proceeds of
the private placement and the exercise of stock options.
As at December 31, 1997, the Company has a working capital deficiency of
$456,843. The Company anticipates improvement of this deficiency from the
proceeds of private placements and the exercise of stock options during 1998.
The Company may also seek a debt restructuring plan with its current debt
holders during 1998 in order to correct this deficiency.
The Company is dependent on the proceeds of equity and debt financing, including
private placements and the exercise of stock options, as well as the granting of
options on its properties and asset sales to fund its general and administrative
expenditures and its mineral exploration and development costs. Without such
proceeds, the Company may not continue as a going concern. (See Note 1 to the
Company's December 31, 1997 Financial Statements.) The Company will need further
funds to continue its operations and there is no reasonable assurance that such
funding will be available.
For the year ended December 31, 1997, the Company raised $759,060 from the
issuance of 1,763,233 units pursuant to the terms of an Offering Memorandum
dated November 12, 1997. Each unit consists of one common share of the Company's
stock and one non-transferable share purchase warrant. These shares have been
allotted but have not been issued as of December 31, 1997. The Company received
VSE approval subsequent to December 31, 1997. See Note 12 to the Company's 1997
Financial Statements. These funds were used for working capital purposes and
funding of exploration, development and claim maintenance of the Company's
properties. Subsequent to December 31, 1997, the Company received cash in the
amount of $360,000 from the issuance of convertible promissory notes to related
parties (see note 12 to the Company's December 31, 1997 Financial Statements).
Positive cash flow from the financing activities of the Company of $761,702,
$1,389,663 and $995,554 were recorded for the years ended December 31, 1997,
1996, 1995, respectively. The long-term debt decreased to $13,070 in 1997 from
$17,209 in 1996 and current liabilities decreased to $589,716 in 1997 from
$1,126,508 in 1996. Of the December 31, 1997 current liabilities, $254,150
represents the amounts due to notes payable to shareholders and $180,992
represent amounts payable to various related parties.
Negative cash flows from operating activities of ($520,517), ($581,006) and
($365,016) were recorded for the years ended December 31, 1997, 1996, and 1995,
respectively. The Company will continue recording negative cash flow from
operating activities unless significant revenue is generated from ore
production. The continued negative cash flow will have a material negative
impact on liquidity.
Investing activities consist of funds being expended on resource properties. The
net cash expended on investing activities decreased to ($429,442) in 1997 from
($708,816) in 1996. The 1997 and 1996 additions to resource properties were
primarily from cash except for the $185,250 in 1997 related to share issuances
to Idaho Gold Corp. in regard of the Friday, Deadwood and Buffalo Gulch
properties.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," which requires reporting of comprehensive income. Comprehensive income
is defined as the change in equity of a business enterprise arising from
non-owner sources. This Statement is effective for fiscal years beginning after
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December 15, 1997. Management does not believe that the implementation of SFAS
No. 130 will have a material impact on the presentation of the consolidated
financial statements.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments for an Enterprise and Related Information." This
Statement requires presentation of segment information in reports to
shareholders, including disclosures about the products and services an entity
provides and its major customers. This Statement is effective for fiscal years
beginning after December 15, 1997. Management does not believe that the
implementation of SFAS No. 131 will have a material impact on the presentation
of the consolidated financial statements.
Year 2000 Compliance
The year 2000 computer risks arise from the practice of some computers using
only two digits rather than four to indicate the year portion of the date. When
January 1, 2000 arrives, these computers will change from "99" to "00" and may
react as if it is the year 1900 rather than 2000.
The Company does not use any "in house" computer program packages for
information processing relating to mineral exploration on its portfolio of
properties. The Company uses "off the shelf" computer programs for accounting
purposes and does not anticipate these programs will be significantly affected
by the year 2000 computer issue. In any event, the Company is in the process of
preparing an inventory of all the computer products and services that it uses.
Once the inventory is completed, an assessment will be conducted and a plan
created so that any altering of computer code, testing and implementation
thereof will be completed by June 30, 1999. Furthermore, the Company will obtain
assurances from all of its program suppliers regarding the year 2000 computer
risks. If any of these programs are found to be subject to the year 2000
computer problems, the Company will endeavor to replace the affected programs by
June 30, 1999, ahead of the critical date and the cost of replacing any affected
programs is not anticipated to be material.
However, the Company is subject to the year 2000 computer risks to the extent
that third parties, including major banks, consultants and other suppliers, may
be unable to modify and test their computer programs prior to January 1, 2000.
ITEM 7. FINANCIAL STATEMENTS
The Financial statements are indexed under item 13(a)(1).
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth the name, age and position of each of Executive
Officer and Director of the Company.
<TABLE>
Name and Municipality Age Principal Occupation for
of Residence Previous Five Years
------------ --- -------------------
<S> <C> <C>
Delbert W. Steiner(1) 52 Mr. Steiner's principal occupation in the last five years is as
Lewiston, Idaho President of the Company since September 15, 1988 to June 27,
Director, President and CEO 1997 and from July 23, 1997 to the present and CEO of the
Company since June 24, 1996 to June 27, 1997 and July 23, 1997
to the present.
</TABLE>
<PAGE>
<TABLE>
Name and Municipality Age Principal Occupation for
of Residence Previous Five Years
------------ --- -------------------
<S> <C> <C>
Theodore Tomasovich(1) 51 Director of the Company since July 22, 1997. Mr. Tomasovich's
Los Angeles, CA principal occupation in the last five years was as President of
Director PYI Corporation, a real estate development company, from October
1988 to the present.
Jag Vyas(1) 55 Director of the Company since July 22, 1997. Mr. Vyas'
Coquitlam, B.C. principal occupation in the last five years was as a
Director self-employed accountant from 1991 to present.
Robert A. Young 49 Director of the Company since July 23, 1997. Mr. Young's
Vancouver, B.C. principal occupation in the last five years was as a partner in
Director Robert A. Young & Associates, a public relations company, from
1991 to present.
Roy Knickel 60 Director of the Company since September 15, 1989. Mr. Knickel's
Burnaby, B.C. principal occupation in the last five years is as the president
Director of Kroy Industries Limited, a private investment company, from
1970 to the present.
Wilfried J. Struck 39 VP, Mining and Exploration and Chief Operating Officer of the
Lewiston, Idaho Company since August 29, 1995. Mr. Struck's principal
VP, Mining and Exploration occupations in the last five years was as a self employed
and Chief Operating Officer consulting geological mining engineer from July, 1991 to August
29, 1995 and as C.O.O. of the Company from August 1995 to the
present.
Kenneth A. Scott 40 Chief Financial Officer of the Company since March 25, 1995.
Surrey, B.C. Mr. Scott's principal occupation in the last five years was as a
Chief Financial Officer partner in Staley, Okada, Chandler & Scott, Chartered
Accountants.
Lori Cox 40 Corporate Secretary of the Company since July 23, 1997. Ms.
Lewiston, Idaho Cox's principal occupation in the last five years as Public
Corporate Secretary Relations/Marketing at CellularOne from 1991 to 1995, at
Downtown Walla Walla Foundation from 1995 to 1996 and
at the Company from 1996 to June, 1998.
</TABLE>
(1) Member of the Company's Audit Committee.
Each Director is elected annually and holds office until the next annual meeting
and until his successor is duly elected, unless his office is earlier vacated in
accordance with the Bylaws of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file
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with the SEC initial reports of ownership on Form 3 and reports of changes in
ownership of common stock and other equity securities of the Company on Form 4
and/or Form 5. Officers, directors and greater-than-ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) reports on Forms 3, 4, and 5 as they are filed.
For the fiscal year ended December 31, 1997, and prior periods, Delbert W.
Steiner, Chairman, President and Chief Executive Officer, failed to file: (a) a
Form 3, Statement of Initial Beneficial Ownership; (b) Forms 4 or a Form 5 for
the fiscal year ended December 31, 1995 reporting an aggregate of 5
transactions; (c) Forms 4 or a Form 5 for the fiscal year ended December 31,
1996, reporting an aggregate of 36 transactions; and (4) Forms 4 or a Form 5 for
the fiscal year ended December 31, 1997, reporting an aggregate of 12
transactions.
For the fiscal year ended December 31, 1997, and prior periods, Kenneth A.
Scott, Chief Financial Officer, failed to file: (a) Form 3, Statement of Initial
Beneficial Ownership; (b) Forms 4 or a Form 5 for the fiscal year ended December
31, 1996, reporting 1 transaction; and (c) Forms 4 or a Form 5 for the fiscal
year ended December 31, 1997, reporting an aggregate of 6 transactions.
For the fiscal year ended December, 1997, and prior periods, Wilfried J. Struck,
Vice President, Mining and Exploration, failed to file: (a) Form 3, Statement of
Initial Beneficial Ownership; (b) Forms 4 or a Form 5 for the fiscal year ended
December 31, 1996, reporting an aggregate of 9 transactions; and (c) Forms 4 or
a Form 5 for the fiscal year ended December 31, 1997, reporting an aggregate of
11 transactions.
For the fiscal year ended December 31, 1997, Theodore Tomasovich, Director,
failed to file: (a) a Form 3, Statement of Initial Beneficial Ownership; and (b)
Form 4 or a Form 5 reporting 1 transaction.
For the fiscal year ended December, 1997, Jagdish Vyas, Director, failed to file
a Form 3, Statement of Initial Beneficial Ownership or a Form 4 or a Form 5
reporting 1 transaction.
For the fiscal year ended December, 1997, Robert A. Young, Director, failed to
file a form 3 or Forms 4 or a Form 5, reporting an aggregate of 4 transactions.
The Company has assisted the reporting officers, directors and
greater-than-ten-percent shareholders in bringing their Section 16(a) reports
current and has provided information to help the Company's officers, directors
and greater-than-ten-percent shareholders in complying with their reporting
obligations.
ITEM 10. EXECUTIVE COMPENSATION
The following compensation information relates to amounts paid to the Chief
Executive Officer for the preceding three (3) years. No other director or
executive officer received compensation in excess of $100,000 in 1997, 1996 or
1995.
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<TABLE>
- ---------------------- ------------------------------------- ---------------------------------------------- -----------
Annual Compensation Long Term Compensation
----------------------------------------------
------------------------------------ ---------
Awards Payouts
- ---------------------- ------------------------------------- ------------------------------------ --------- -----------
- ---------------------- --------- ------------------ -------- ---------- ----------- ------------- --------- -----------
Other Securities Restricted
Annual Under Shares or LTIP All Other
Name and Principal Year Compen-satiOptions Restricted Pay-Outs Compen-sation
Position Ending Salary Bonus Granted share Units
- ---------------------- --------- ------------------ -------- ---------- ----------- ------------- --------- -----------
- ---------------------- --------- ------------------ -------- ---------- ----------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Delbert W. Steiner 1997 US$69,000 - - 150,000 - - -
1996 US$24,129 - - N/A(1) - - -
1995 US$18,870 - - 70,000(2) - - -
- ---------------------- --------- ------------------ -------- ---------- ----------- ------------- --------- -----------
</TABLE>
(1) Reference should be made to "Directors and Officers' Options" for further
particulars.
(2) On May 17, 1996, Mr. Steiner acquired 10,000 shares on the partial exercise
of this option. Reference should be made to "Directors and Officers'
Options" for further particulars.
Pension Plans
The Company does not have any defined benefit pension plan which provides annual
benefits to any Executive Officers.
Compensation of Directors
None of the Directors receives Director's fees.
Executive Compensation
Other than the Chief Executive Officer, none of the Executive Officers of the
Company received any reportable salary or bonus during 1997. The following
describes the stock option regime currently followed by the Company.
Incentive stock options to purchase securities from the Company are granted to
Directors and employees on terms and conditions acceptable to the regulatory
authorities in Canada, namely the VSE. The Company has no formal written stock
option plan. Incentive stock options for up to 10% of the number of issued and
outstanding shares of the common stock may be granted from time to time,
provided that incentive stock options in favour of any one individual may not
exceed 5% of the issued and outstanding shares of common stock. No incentive
stock option granted under the stock option program is transferable by the
optionee other than by will or the laws of descent and distribution, and each
incentive stock option is exercisable during the lifetime of the optionee only
by such optionee. The exercise price of all incentive stock options granted
under the stock option program must be at least equal to the fair market value
of such shares of common stock on the date of grant, and the maximum term of
each incentive stock option may not exceed five years. The exercise prices for
incentive stock options are determined in accordance with VSE Guidelines and
reflect the average closing price of the Company's common stock for the ten
trading days on the VSE immediately preceding the day on which the Directors
grant and publicly announce the incentive stock options.
The following table sets forth as to each named Executive Officer certain
information concerning the grant of options during the year ended December 31,
1997:
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Option Grants in Last Fiscal Year
<TABLE>
Number of % of Total Options
Securities Granted to Employees
Underlying Options in Fiscal Year(1) Exercise or
Name Granted Base Price Expiration Date
----------------------------- --------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Delbert W. Steiner 150,000 22.7 $1.15 February 13, 2001
----------------------------- --------------------- ---------------------- --------------------- ---------------------
</TABLE>
(1) None of these options are in the money as at December 31, 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets for the total number of the Company's common shares and
the percentage of such beneficially owned as of December 31, 1997 by the
Directors and Officers, and with respect to shares owned by each person or group
known by the Company to be the beneficial owner of more than 5% of the shares.
<TABLE>
Name of Beneficial Owners Number of Shares Owned Percent of Class
------------------------- ---------------------- ----------------
<S> <C> <C>
Tomasovich Family Trust 544,376 7.66%
Delbert W. Steiner 418,901(1) 5.90%
Director, President and CEO
Theodore Tomasovich 544,376(3) 7.66%
Director
Jag Vyas 0 0%
Director
Roy Knickel 10,000(2) 0%
Director
Robert Young 15,000 0.21%
Director
Kenneth A. Scott 15,000 0.21%
Chief Financial Officer
Lori Cox 0 0%
Secretary
Wilfried J. Struck 52,500 .74%
Chief Operating Officer
</TABLE>
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<PAGE>
<TABLE>
Name of Beneficial Owners Number of Shares Owned Percent of Class
------------------------- ---------------------- ----------------
<S> <C> <C>
All Directors and Executive Officers 1,055,777 14.86%(4)
as a Group (8 persons)
</TABLE>
(1) Includes 247,500 shares subject to the Escrow Agreement (as described
below).
(2) Includes 7,500 shares subject to the Escrow Agreement.
(3) Indirect ownership resulting from Mr. Tomasovich being the Trustee of the
Tomasovich Family Trust. These shares are not included in the group total
line.
(4) Figures may vary slightly due to rounding error.
Securities of the Company held in Escrow
Escrow Shares
562,500 shares of the Company's common stock, issued at a price of C$0.01 per
share (the "Escrowed Shares") are held in escrow by Montreal Trust Company of
Canada pursuant to an escrow agreement dated July 10, 1990 (the "Escrow
Agreement"). The Escrowed Shares are subject to release from time to time at the
direction of the VSE, in accordance with the policies of the VSE then in effect.
The current VSE policies allow for the release of 7.5% of the original 750,000
Escrowed Shares for each C$100,000 of qualifying exploration and development
expenditures subject to an annual maximum of 25% of the original 750,00 Escrowed
Shares. In the case where the Company's general and administrative expenses are
less than 33% of the total expenditures, these release limits are increased to
15% for each C$100,000 of qualifying expenditures up to an annual maximum of 50%
of the original 750,000 Escrowed Shares. The Escrow Agreement provides that the
Escrowed shares may not be transferred except in accordance with Local Policy
Statement 3-07 of the British Columbia Securities Commission and with the
consent of the VSE. The holders of the Escrowed Shares (the "Escrow
Shareholders") are entitled under the Escrow Agreement to exercise all voting
rights attached to such Escrowed Shares, except in respect of resolutions to
cancel the Escrowed Shares, to receive dividends or to participate in the assets
and property of the Company on winding up and dissolution of the Company. If an
Escrow Shareholder ceases to be a principal of the Company, such shareholder is
required under the Escrow Agreement to transfer his Escrowed Shares to such
person or persons as the Company, with the approval of the VSE, determines, or
to transfer or surrender the Escrowed Shares to the Company for cancellation,
with such compensation or for no compensation, as the Company, with approval of
the VSE, determines. The Escrow Shareholders are required to surrender for
cancellation any of the Escrowed Shares which remain unreleased from escrow by
April 3, 2001, or earlier if there is a major reorganization of the Company and
the VSE requires the cancellation thereof as a condition of approval thereof, or
if the shares of the Company have been subject to a cease trade order for a
period of two consecutive years.
By December 31, 1996 the Company had met all of the expenditure requirements for
the release of the Escrowed Shares. During 1997 the Company did not request
release of such shares from the VSE. Notwithstanding the foregoing, during 1996,
the Company expended sufficient amounts on exploration and development to
qualify for a release of an additional 187,500 shares, although the Company has
not yet requested release of such shares from the VSE. During 1995, the Company
expended sufficient amounts on exploration and development to qualify for a
release of an additional 187,500 shares, although the Company has not yet
requested release of such shares from the VSE. As of December 31,
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<PAGE>
1997, there were 562,500 Escrowed shares subject to the Escrow Agreement, of
which 270,000, 247,500, 37,500 and 7,500 were owned by Peter Lepik, Del Steiner,
John Kennedy and Roy Knickel, respectively.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is subject to various conflicts of interest arising out of its
relationships with its Executive Officers, Directors and shareholders, including
conflicts related to the arrangements by which the Company acquired certain of
its assets, as described below. The Company believes that all of the
transactions described below were conducted as arm's-length transactions and
were in the best interest of the Company. The Company intends to continue to
exercise its best business judgment and discretion in resolving any such
conflicts between the Company and others with respect to these and all other
matters, and the Company believes that it will generally be able to resolve such
conflicts on an equitable basis.
Delbert W. Steiner, the President and a Director of the Company, was
"interested" as a principal shareholder and Director of IMD and as a minority
beneficial shareholder and Director of Silver Crystal in the transactions under
which the Company acquired the Petsite Property and the Mallard Property for
cash and shares of the Company's common stock and the Snowstorm Property for
cash. At the time of such transactions, Mr. Steiner owned 33.3% of the
outstanding shares of IMD, and IMD owned 87.5% of the outstanding shares of
Silver Crystal.
Pursuant to a series of agreements dated October 15, 1992 entered into by and
between the Company and IMD, the Company acquired from IMD specified, undivided
working interests in certain mining claims located in various counties in the
state of Idaho. According to the terms of those agreements, in order to complete
the various acquisitions, the Company must make certain annual cash payments and
issue shares from treasury to IMD upon the completion of certain events. The
Company's Transfer Agent advises that IMD currently owns 57,000 shares of the
Company's common stock, or approximately less than 0.8% of the 7,104,208 shares
issued and outstanding. Prior to December 1, 1991, Delbert W. Steiner, a
shareholder, the President and a Director of the Company, owned 33.3% of the
common stock of IMD and served as a Director and its President. Mr. Steiner sold
his interest in IMD on December 1, 1991 and resigned as a Director and its
President effective December 1, 1991. Mr. Steiner is currently a creditor of IMD
and holds a promissory note executed by IMD in favor of Mr. Steiner in the
amount of $250,000.
On February 8, 1996, the Company entered into an agreement to acquire an option
to purchase the remaining 40% undivided interest in Claim Blocks XI, XIV and XV,
which together comprise the Golden Eagle Property. Pursuant to this agreement,
the Company made an initial payment to IMD (the present owner of the claims) of
$50,000, and agreed to issue 100,000 shares of its stock to IMD within 60 days
following the date thereof and completion of document and title evaluation. In
addition, the Company (or, if applicable, a third-party joint venture partner
with which it may reach agreement concerning the property) was required to incur
expenditures in relation to exploration, development, construction, and/or
mining operations on the property in the amount of $30,000 in the first year
following the agreement and $50,000 in the second year. Finally, the Company was
required to pay IMD the sum of $500,000 from the proceeds of gold production
from the Golden Eagle Property, commencing on the fifth anniversary of the
agreement and payable in full within three years thereafter, with the unpaid
balance to bear interest at the rate of 8% per annum. The Company's obligations
in this regard have been altered pursuant to the terms of the Global Settlement
Agreement disclosed above. See Item 3 - Legal Proceedings for more information.
Pursuant to a series of agreements dated October 15, 1992 entered into by and
between the Company and Silver Crystal, the Company acquired from Silver Crystal
specified, undivided working interests in certain mining claims located in
various counties in the state of Idaho. Mr. Steiner resigned any positions he
held with Silver Crystal prior to December 31, 1991. Accordingly to the terms of
those
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agreements, in order to complete the various acquisitions, the Company must make
certain annual cash payments and issue shares from treasury to Silver Crystal
upon the completion of certain events. The Company is unaware of how many, if
any, shares of the Company's common stock are owned by Silver Crystal. Silver
Crystal is a public company which traded on the now defunct Spokane Stock
Exchange and is controlled by IMD. Joe Swisher, the President, a Director of the
controlling shareholder of IMD, is also the President and a Director of Silver
Crystal. See also Global Settlement Agreement - Joint Venture Agreement below.
Pursuant to an agreement dated March 3, 1993, and amended July 20, 1994, entered
into by and between IMD and Joseph Swisher, the President of IMD, on the one
hand, and the Company, on the other hand, the Company acquired: (i) an exclusive
license to use the Swisher-Br Process and the right to license same to selected
third parties (provided, however, that any licensing royalties, payments or
other consideration received from third parties shall be allocated 50% to the
Company and 50% to IMD and Mr. Swisher); (ii) the Plant; and (iii) certain
options to acquire mineralized property in the vicinity of the Plant. The
purchase price for such assets consisted of: (a) 600,000 shares of the Company's
common stock; (b) $80,000 payable on or before July 1, 1996; (c) a cash payment
of $84,175 due on demand; and (d) warrants to purchase an additional 300,000
shares of the Company's common stock at C$3.00 per share.
On December 26, 1993, the Company entered into a construction contract with
Silver Crystal, which was amended April 10, 1994, by the terms of which Silver
Crystal agreed to develop and upgrade the Plant for a price not to exceed
$650,000. In 1993, the Company paid to Silver Crystal an initial draw of $50,000
for chemicals, staging and preliminary engineering costs, with the balance
payable based on progress draws on the first day of each ensuing month
calculated in accordance with the work completed in the prior month. During the
years ended December 31, 1995 and 1994, the Company paid Silver Crystal $111,000
and $557,000, respectively. Also included in capitalized costs in 1995 are
consulting fees of $11,000 paid to a related party. Silver Crystal completed the
work contemplated by the construction contract during fiscal 1995, and the work
has been accepted and paid for by the Company.
The Company also had agreed to pay IMD $50,000 per year towards assessment work
requirements on the Company's mineral properties. In addition, Silver Crystal
and IMD are periodically reimbursed for direct costs incurred by them on behalf
of the Company. However, during 1997, the Company paid nil under this agreement,
as the agreement was terminated by the Company due to IMD's alleged failure to
perform, as disclosed in the discussion of lawsuits between the Company and IMD
included under "Legal Proceedings".
On March 23, 1994, the Company received partial funding for the construction of
the Plant by way of a private unsecured loan in the amount of $260,000 from the
Tomasovich Family Trust, which then held 294,201 shares of the Company's common
stock, or approximately 5.54% of the shares issued and outstanding. On May 14,
1994, the Company received additional funding in the amount of $140,000 from the
same source. Both of these debts were repaid by the issuance on May 24, 1995, of
290,464 shares of the common stock on the Company to the Tomasovich Family
Trust, which hold a total of 544,376 shares, or approximately 7.66% of the
shares issued and outstanding as at December 31, 1997.
On July 25, 1995 the Company received funding for construction of the Plant by
way of a private unsecured loan in the amount of $75,000 from the Tomasovich
Family Trust. The loan bears interest at the rate of prime plus 3.25% per annum
and is repayable in full on or before November 15, 1996. Subsequent to December
31, 1997 the outstanding loan amount was dealt with as part of a debt
restructuring plan, see Note 8 to the Company's December 31, 1997 Financial
Statements for more information.
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<PAGE>
Subsequent to December 31, 1997, the Company received funding by way of issuance
of convertible debt in the total amount of $360,000 to the Tomasovich Family
Trust. For more information, see below and Note 12 to the Company's December 31,
1997 Financial Statements.
Debt Settlement Agreements
Pursuant to a series of agreements dated September 30, 1997 entered into by the
Company and certain of its creditors, the Company issued shares in settlement of
certain debts owed to various parties including parties related to the Company.
All of the agreements were approved by the VSE on March 18, 1998.
The Company entered into a debt settlement agreement (the "Steiner Agreement")
dated September 30, 1997 with Mr. Delbert Steiner, President and a Director of
the Company, pursuant to which the Company issued shares in settlement of
certain debts owed to Mr. Steiner by the Company. The debts owed to Mr. Steiner
resulted from loans he made to the Company and interest thereon. The total
amount due and owing to Mr. Steiner by the Company at September 30, 1997 was
$135,672.37. Pursuant to the Steiner Agreement the parties settled for
$130,975.37. Mr. Steiner agreed to accept 247,781 common shares of the Company
deemed to be issued at a price of C$0.73 per share in settlement of the debt
owed.
The Company entered into a debt settlement agreement (the "Tomasovich
Agreement") dated September 30, 1997 with the Tomasovich Family Trust (the
"Trust"), Mr. Theodore Tomasovich being both Trustee of the Trust and a Director
of the Company, pursuant to which the Company issued shares in settlement of
debts owed to the Trust. As at September 30, 1997 the Company owed the Trust the
total amount of $40,774.34 representing a promissory note and interest. Pursuant
to the Tomasovich Agreement the parties agreed to the issuance of 77,137 common
shares of the Company deemed to be issued at a price of C$0.73 per share in
settlement of the debt owed.
The Company entered into a debt settlement agreement (the "Staley Agreement")
dated September 30, 1997 with Staley, Okada, Chandler & Scott ("Staley, Okada"),
Mr. Ken Scott being both a Partner of Staley, Okada and the Chief Financial
Officer of the Company, pursuant to which the Company issued shares in
settlement of certain debts owed to Staley, Okada. As at September 30, 1997 the
Company owed Staley, Okada the amount of C$47,016.99 representing amounts for
services rendered and interest thereon. Pursuant to the Staley Agreement the
parties agreed to the issuance of 64,407 common shares of the Company deemed to
be issued at a price of C$0.73 per share in settlement of the debt owed.
The Company entered into a debt settlement agreement (the "Young Agreement")
dated September 30, 1997 with Robert A. Young & Associates ("Young Inc."), Mr.
Robert A. Young being both a partner of Young Inc. and a Director of the
Company. At September 30, 1997 the Company issued shares in settlement of debts
owed to Young Inc. in the amount of C$28,700.00 comprised of expenses and
overhead relating to the Company's Vancouver office. Pursuant to the Young
Agreement the parties agreed to the issuance of 39,315 common shares of the
Company deemed to be issued at a price of C$0.73 per share in settlement of the
debt owed.
The Company entered into a debt settlement agreement (the "Struck Agreement")
dated September 30, 1997 with Mr. Wilfried Struck, V.P. Mining and Exploration
for the Company, pursuant to which the Company issued shares in settlement of
debts owed to Mr. Struck. As at September 30, 1997 the amount of $20,387.46 was
owed to Mr. Struck representing unpaid wages and interest thereon. Pursuant to
the Struck Agreement the parties agreed to the issuance of 38,569 common shares
of the Company deemed to be issued at a price of C$0.73 per share in settlement
of the debt owed.
In summary, a total of 467,209 common shares of the Company were deemed to be
issued to related parties at a price of C$0.73 for a total reduction in debt of
C$341,063.
Page 55
<PAGE>
Private Placement
On November 12, 1997 the Company announced a private placement of a maximum of
1,786,458 units (the "Units") at a price of C$0.60 of which 1,763,233 were
subscribed for, resulting in net proceeds to the Company of C$1,057,940. Each
Unit consists of one common share and one non-transferable share purchase
warrant. The Tomasovich Family Trust (the "Trust"), Theodore Tomasovich being
both Trustee of the Trust and a Director of the Company, subscribed for 927,062
Units. Bernd Struck, being the brother of Wilfried Struck, V.P., Mining and
Exploration of the Company, subscribed in both his personal capacity for 25,890
Units and in his capacity as beneficial owner of Cardinal Forest Consulting
Company Ltd. for 25, 889 Units. The VSE accepted the private placement on March
18, 1998.
Convertible Loan Agreement #1
On April 9, 1998 the Company entered into a Convertible Loan Agreement regarding
a promissory note dated January 23, 1998 with the Tomasovich Family Trust (the
"Trust"), Theodore Tomasovich being both Trustee of the Trust and a Director of
the Company. The Company borrowed $100,000 repayable to the Trust on or before
January 23, 2000 (the "Maturity Date") bearing interest at 9% per annum. After
June 17, 1998, the Trust may require the Company to convert all or any portion
of the principal amount of the loan advanced and then outstanding into units
("Units") at a conversion price of one Unit for each C$0.26 of indebtedness
until and including January 23, 1999 and at a conversion price of one Unit for
each C$0.31 of indebtedness during the period from January 24, 1999 until the
Maturity Date for a maximum of 546,154 units if the principal amount is
converted in its entirety by January 23, 1999 and a maximum of 458,064 units if
the principal amount is converted in its entirety between January 24, 1999 and
the Maturity Date. Each Unit consists of one common share and one
non-transferable common share purchase warrant with each warrant being
exercisable at a price of C$0.26 per share until January 23, 1999 and C$0.31 per
share from January 24, 1999 to the Maturity Date. The Convertible Loan Agreement
was accepted by the VSE on June 22, 1998.
Convertible Loan Agreement #2
On April 9, 1998 the Company entered into a Convertible Loan Agreement regarding
a promissory note dated March 31, 1998 with the Tomasovich Family Trust (the
"Trust"), Theodore Tomasovich being both Trustee of the Trust and a Director of
the Company. The Company borrowed $110,000 repayable to the Trust on or before
March 31, 2000 (the "Maturity Date") bearing interest at 9% per annum. After
June 17, 1998, the Trust may require the Company to convert all or any portion
of the principal amount of the loan advanced and then outstanding into units
("Units") at a conversion price of one Unit for each C$0.26 of indebtedness
until and including March 31, 1999 and at a conversion price of one Unit for
each C$0.31 of indebtedness during the period from April 1, 1999 until the
Maturity Date for a maximum of 600,769 units if the principal amount is
converted in its entirety by March 31, 1999 and a maximum of 508,871 units if
the principal amount is converted in its entirety between April 1, 1999 and the
Maturity Date. Each Unit consists of one common share and one non-transferable
common share purchase warrant with each warrant being exercisable at a price of
C$0.26 per share until March 31, 1999 and C$0.31 per share from April 1, 1999 to
the Maturity Date. The Convertible Loan Agreement was accepted by the VSE on
June 22, 1998.
Convertible Loan Agreement #3
On May 15, 1998 the Company as borrower, entered into a Convertible Loan
Agreement with the Tomasovich Family Trust as lender (the "Trust"), Theodore
Tomasovich being both Trustee of the Trust and a Director of the Company, for
$150,000 repayable on or before May 15, 2000 (the "Maturity Date") bearing
interest at 9% per annum. After June 17, 1998, the Trust may require the Company
to convert all or any portion of the principal amount of the loan advanced and
then outstanding into units ("Units") at a conversion price of one Unit for each
C$0.23 of indebtedness until and including May 15, 1999 and at a conversion
price of one Unit for each C$0.28 of indebtedness during the period from May 16,
1999 until the Maturity Date for a maximum of 932,608 units if the principal
amount is converted in its entirety by
Page 56
<PAGE>
May 15, 1999 and a maximum of 766,071 units if the principal amount is converted
in its entirety between May 16, 1999 and the Maturity Date. Each Unit consists
of one common share and one non-transferable common share purchase warrant with
each warrant being exercisable at a price of C$0.23 per share until May 15, 1999
and C$0.27 per share from May 16, 1999 to the Maturity Date. The Convertible
Loan Agreement was accepted by the VSE on June 22, 1998.
Global Settlement Agreement
On April 29, 1998 the Company, Delbert Steiner, President and a Director of the
Company, Elli Steiner spouse of Mr. Steiner, Theodore Tomasovich, individually
as a Director of the Company and in his capacity as Trustee of the Tomasovich
Family Trust (the "Trust") entered into an agreement (the "Global Settlement
Agreement") with Joe Swisher the President, a Director and the controlling
shareholder of IMD and the President and a Director of Silver Crystal, Barbara
Swisher, spouse of Mr. Swisher, IMD and Silver Crystal. (collectively the "IMD
Group") to settle numerous lawsuits and disagreements. See also note 7 to the
Company's December 31, 1997 Financial Statements.
In full and final settlement of all existing and potential claims between and
among the parties to the agreement, and to establish rights and obligations
under the Agreement, the Company agreed to pay IMD the sum of $100,00.00. The
obligations created under the agreement include the following:
Eckert Hill Mine and Millsite ("Eckert Hill")
The Company and IMD agreed to jointly undertake an inventory of Eckert Hill with
a view to allowing IMD to remove certain items (the "Items") and all chemicals
and reagents. The IMD Group agreed to assume the risk of any damage to the
property of the Company that may have occurred during the removal of the Items
and to provide insurance coverage for any person involved in the removal of the
Items.
Restriction on acquisition of the Company's shares
The IMD Group agreed that subsequent to the Agreement and for three years
thereafter, neither they nor any corporation or entity in which they own more
than a five percent equity interest or more than five percent of all issued and
outstanding shares of common stock, nor any entity in which they are an officer
or director shall acquire any shares of stock in the Company.
Swisher Br-Process
The Company agreed to transfer to IMD and Joe Swisher any ownership or licensing
interest in the Swisher Br-Process (the "Process"). IMD and Joe Swisher agree to
grant the Company a royalty of 2% of gross revenue paid quarterly from any use,
including licensing use of the Process generated by any member of the IMD Group.
Golden Eagle
As a full and final resolution of all issues between and among the parties to
the Global Settlement Agreement, IMD agreed to lease to the Company all of IMD's
interest in mineral rights in the Golden Eagle claim blocks ("Golden Eagle").
The initial term of the lease shall coincide with the remaining term of the
Cyprus Joint Venture. Under the lease IMD shall be entitled to a 40% share of
all benefits derived from Golden Eagle but will not be responsible for any
costs, risks, or debts of any kind created by the Company or by Cyprus via the
Joint Venture. IMD Group will retain ownership and possession of certain
buildings, machinery, and equipment located at Golden Eagle. The Company agrees
to allow IMD Group to retain all placer mining rights and rights of ingress and
egress to the Golden Eagle.
Page 57
<PAGE>
Joint Development Agreements
The Company entered into 4 joint development agreements dated April 29, 1998
which set forth in detail the ownership interests and the terms of the operating
agreement between the parties thereto. The agreements relate to certain claim
blocks as follows:
1. Joint Development Agreement between the Company and Silver Crystal
regarding L. Brown Bear, Snow Storm, Pegmatite, New Pematite (Claim Block
1);
2. Joint Development Agreement between the Company, Mr. Swisher and IMD
regarding S/S Ellie and S/S Ophir (Claim Block 3);
3. Joint Development Agreement between the Company, Mr. Swisher and IMD
regarding Cuddy Copper, IXL, New IXL (Claim Block 4); and
4. Joint Development Agreement between the Company, Mr. Swisher, and IMD
regarding Buster xtension, Coeur d'Alene, Sultan, Tonapah, Union D (Claim
Block 2).
Mineral Zone
The Company and the IMD Group agreed that the existing Letter of Agreement dated
December 1, 1995 ("Letter of Agreement") in which IMD and Delbert Steiner agreed
to sell to the Company the Mineral Zone property ("Mineral Zone") will be
voided. Under the Global Settlement Agreement the Company entered into a new
agreement (the "New Mineral Zone Agreement") to purchase Mineral Zone from IMD
and Mr. Steiner under the following conditions; within five months from the
execution of the Global Settlement Agreement the Company will have the property
appraised by a qualified appraiser; within six months from the execution of the
Global Settlement Agreement (the "Valuation Date") the Company shall pay Mr.
Steiner and IMD a payment equal to 3.5% of the purchase price (to be determined
by the foregoing appraisal formula); an additional 3.5% of the purchase price
shall be paid by the Company to Mr. Steiner and IMD six months from the
Valuation Date; from that date forward the principal balance shall bear interest
at the rate of 7% per annum. The New Mineral Zone Agreement is subject to VSE
approval.
In 1997, the Company paid or accrued a total of $69,000 in management fees to
Mr. Steiner, $39,168 in management fees to a former director and a company
controlled by a former director, and $50,296 in interest expense on notes
payable to directors. See Note 6 to the Company's of December 31, 1997 Financial
Statements for more information.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
1. The following documents are filed as part of this report:
(a) Financial statements are incorporated hereby reference:
Page
Report of Independent Accountants F-1
Consolidated Balance Sheets - December 31, 1997 and 1996 F-2
Consolidated Statement of Changes in Shareholder's Equity F-3
Consolidated Statements of Cash Flow F-7
Notes to Consolidated Financial Statements F-10
The Company's 1997 Annual Report to Shareholders is not to be deemed filed
as part of this report except for those parts thereof specifically
incorporated by reference herein.
Page 58
<PAGE>
(b) Exhibits.
An asterisk (*) beside the exhibit number indicates the subset of the
exhibits containing each management contract, compensatory plan, or
arrangement required to be identified separately in this report.
Exhibit
Number Exhibit Description
------ -------------------
3.2 Bylaws - Articles of Incorporation as Amended by special
Resolution June 24, 1996 (Canadian equivalent to U.S.
Bylaws)
10.1 Option to Purchase Interest in Mining Claims Dated February
8, 1996 between the Company and Idaho Mining and Development
Company, Inc.
10.2 Joint Venture agreement dated May 20, 1996 between the
Company and Cyprus Gold Exploration Corporation
10.3 Letter of Intent dated June 13, 1997 between the Company and
Cyprus Amax Minerals Company
10.4 Joint Venture Agreement dated effective June 13, 1997
between the Company and Cyprus Gold Exploration Corporation
- See Exhibit 4 to Exhibit 10.10, Global Settlement
Agreement
10.5 Agreement to Assign Interest regarding the Buffalo-Gulch
Claims dated December 11, 1995 between the Company and Idaho
Gold Corporation
10.6 Black Bear Option agreement dated August 1, 1996 between the
Company and Frank H. Piatt, John R. Heigis, and Thomas C.
Rich
10.7 Option and Purchase Agreement dated September 5, 1996,
between the Company and Cliff and June Gallaugher
10.8 Purchase Agreement dated October 9, 1996 between the Company
and St. George Metals Inc. regarding the Dean Mine and Mill
Site
10.9 Agreement to Assign Interest dated December 11, 1995 between
the Company and Idaho Gold Corporation regarding Deadwood
Claims
10.10 Global Settlement Agreement dated April 29, 1998 between the
Company, Delbert Steiner, Ellie Steiner, Theodore J.
Tomasovich, acting individually and as Trustee of the
Tomasovich Family Trust, and Jo Swisher and Barbara Swisher,
Idaho Mining and Development Company, and Silver Crystal
Mines, Inc.
10.11* Director's Stock Option Agreement dated October 30, 1995
between the Company and Delbert Steiner - See Attachment to
Exhibit 10.16, Amendment to Director's Stock Option
Agreement dated February 13, 1997 between the Company and
Delbert Steiner
10.12 Schedule to Director's Option Agreement dated October 30,
1995.
10.13* Employee's Stock Option agreement dated October 30, 1995
between the Company and Wilfried Struck - See Attachment to
Exhibit 10.18, Amendment to Employee's Stock Option
Agreement dated February 13, 1997 between the Company and
Wilfried Struck
Page 59
<PAGE>
Exhibit
Number Exhibit Description
------ -------------------
10.14 Schedule to Employee's Stock Option agreement dated October
30, 1995
10.15* Employee's Stock Option Agreement dated February 13, 1997
between the Company and Wilfried Struck
10.16* Amendment to Director's Stock Option Agreement dated
February 13, 1997 between the Company and Delbert Steiner
10.17 Schedule to Amendment to Director's Stock Option Agreement
dated February 13, 1997
10.18* Amendment to Employee's Stock Option Agreement dated
February 13, 1997 between the Company and Wilfried Struck
10.19 Schedule to Amendment to Employee's Stock Option Agreement
dated February 13, 1997
10.20* Employee's Stock Option Agreement dated May 17, 1996 between
the Company and Ken Scott
10.21 Schedule to Employee's stock Option agreement dated May 17,
1996
10.22* Amendment to Employee's Stock Option agreement dated
February 13, 1997 between the Company and Ken Scott 10.23
Schedule to Amendment to Employee's Stock Option Agreement
dated February 13, 1997
10.23 Schedule to Amendment to Employee's Stock Option Agreement
dated February 13, 1997
10.24* Director's Stock Option Agreement dated February 13, 1997
between the Company and Delbert Steiner
10.25 Schedule to Director's Stock Option agreement February 13,
1997
10.26* Employee's Stock Option Agreement dated February 13, 1997
between the Company and Robert Young
10.27* Schedule to Employee's Option Agreement dated February 13,
1997
10.28* Director's stock Option Agreement dated August 27, 1997
between the Company and Theodore Tomasovich
10.29* Schedule to August 27, 1997 Director's Stock Option
Agreement
10.30* Debt Settlement Agreement dated September 30, 1997 between
the Company and Wilfried Struck
10.31* Schedule to September 30, 1997 Debt Settlement Agreement
10.32 Subscription Agreement dated November 12, 1997 between the
Company and Michael Bousefield and Rosemarie Bousefield
10.33 Schedule to November 12, 1997 Subscription Agreement
10.34 Convertible Loan Agreement No. 1 dated April 9, 1998 between
the Tomasovich Family Trust and the Company regarding US
$100,000
10.35 Schedule to April 9, 1998 Convertible Loan Agreement
22.1 Notice of Annual and Extraordinary General Meeting and
Information Circular dated May 13, 1998
Page 60
<PAGE>
Exhibit
Number Exhibit Description
------ -------------------
99.1 Financial Statements for year ending December 31, 1997
2. Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the fourth quarter
of the fiscal year ended December 31,1997, nor were any such reports filed
during 1997.
Page 61
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 31st day of December, 1998.
IDAHO CONSOLIDATED METALS CORP.
By: /s/ Delbert W. Steiner
------------------------------------
Delbert W. Steiner
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 31st day of December, 1998.
Signature Title Date
- --------- ----- ----
/s/ Delbert W. Steiner
- ------------------------- Director, President and December 31, 1998
Delbert W. Steiner Chief Executive Officer
(Principal Executive Officer)
/s/ Kenneth A. Scott
- ------------------------- Chief Financial Officer December 31, 1998
Kenneth A. Scott (Principal Financial Officer
and Principal Accounting Officer)
/s/ Theodore Tomasovich
- ------------------------- Director December 31, 1998
Theodore Tomasovich
/s/ Robert A. Young
- ------------------------- Director December 24, 1998
Robert A. Young
Page 62
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
Number Exhibit Description
------ -------------------
3.2 Bylaws - Articles of Incorporation as Amended by special
Resolution June 24, 1996 (Canadian equivalent to U.S.
Bylaws)
10.1 Option to Purchase Interest in Mining Claims Dated February
8, 1996 between the Company and Idaho Mining and Development
Company, Inc.
10.2 Joint Venture agreement dated May 20, 1996 between the
Company and Cyprus Gold Exploration Corporation
10.3 Letter of Intent dated June 13, 1997 between the Company and
Cyprus Amax Minerals Company
10.4 Joint Venture Agreement dated effective June 13, 1997
between the Company and Cyprus Gold Exploration Corporation
- See Exhibit 4 to Exhibit 10.10, Global Settlement
Agreement
10.5 Agreement to Assign Interest regarding the Buffalo-Gulch
Claims dated December 11, 1995 between the Company and Idaho
Gold Corporation
10.6 Black Bear Option agreement dated August 1, 1996 between the
Company and Frank H. Piatt, John R. Heigis, and Thomas C.
Rich
10.7 Option and Purchase Agreement dated September 5, 1996,
between the Company and Cliff and June Gallaugher
10.8 Purchase Agreement dated October 9, 1996 between the Company
and St. George Metals Inc. regarding the Dean Mine and Mill
Site
10.9 Agreement to Assign Interest dated December 11, 1995 between
the Company and Idaho Gold Corporation regarding Deadwood
Claims
10.10 Global Settlement Agreement dated April 29, 1998 between the
Company, Delbert Steiner, Ellie Steiner, Theodore J.
Tomasovich, acting individually and as Trustee of the
Tomasovich Family Trust, and Jo Swisher and Barbara Swisher,
Idaho Mining and Development Company, and Silver Crystal
Mines, Inc.
10.11* Director's Stock Option Agreement dated October 30, 1995
between the Company and Delbert Steiner - See Attachment to
Exhibit 10.16, Amendment to Director's Stock Option
Agreement dated February 13, 1997 between the Company and
Delbert Steiner
10.12 Schedule to Director's Option Agreement dated October 30,
1995.
10.13* Employee's Stock Option agreement dated October 30, 1995
between the Company and Wilfried Struck - See Attachment to
Exhibit 10.18, Amendment to Employee's Stock Option
Agreement dated February 13, 1997 between the Company and
Wilfried Struck
10.14 Schedule to Employee's Stock Option agreement dated October
30, 1995
10.15* Employee's Stock Option Agreement dated February 13, 1997
between the Company and Wilfried Struck
10.16* Amendment to Director's Stock Option Agreement dated
February 13, 1997 between the Company and Delbert Steiner
10.17 Schedule to Amendment to Director's Stock Option Agreement
dated February 13, 1997
<PAGE>
10.18* Amendment to Employee's Stock Option Agreement dated
February 13, 1997 between the Company and Wilfried Struck
10.19 Schedule to Amendment to Employee's Stock Option Agreement
dated February 13, 1997
10.20* Employee's Stock Option Agreement dated May 17, 1996 between
the Company and Ken Scott
10.21 Schedule to Employee's stock Option agreement dated May 17,
1996
10.22* Amendment to Employee's Stock Option agreement dated
February 13, 1997 between the Company and Ken Scott 10.23
Schedule to Amendment to Employee's Stock Option Agreement
dated February 13, 1997
10.23 Schedule to Amendment to Employee's Stock Option Agreement
dated February 13, 1997
10.24* Director's Stock Option Agreement dated February 13, 1997
between the Company and Delbert Steiner
10.25 Schedule to Director's Stock Option agreement February 13,
1997
10.26* Employee's Stock Option Agreement dated February 13, 1997
between the Company and Robert Young
10.27* Schedule to Employee's Option Agreement dated February 13,
1997
10.28* Director's stock Option Agreement dated August 27, 1997
between the Company and Theodore Tomasovich
10.29* Schedule to August 27, 1997 Director's Stock Option
Agreement
10.30* Debt Settlement Agreement dated September 30, 1997 between
the Company and Wilfried Struck
10.31* Schedule to September 30, 1997 Debt Settlement Agreement
10.32 Subscription Agreement dated November 12, 1997 between the
Company and Michael Bousefield and Rosemarie Bousefield
10.33 Schedule to November 12, 1997 Subscription Agreement
10.34 Convertible Loan Agreement No. 1 dated April 9, 1998 between
the Tomasovich Family Trust and the Company regarding US
$100,000
10.35 Schedule to April 9, 1998 Convertible Loan Agreement
22.1 Notice of Annual and Extraordinary General Meeting and
Information Circular dated May 13, 1998
99.1 Financial Statements for year ending December 31, 1997
Exhibit 3.2
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 351563
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned Company on the
date stated:
Name of Company: IDAHO CONSOLIDATED METALS CORP.
Date resolution passed: June 24, 1996
Resolution:
"RESOLVED, as a Special Resolution, THAT:
(a) the authorized capital be increased from 20,000,000 common shares
without par value to 100,000,000 common shares without par value AND
THAT paragraph 2 of the Memorandum be altered to read as follows:
`2. The authorized capital of the Company consists of 100,000,000
common shares without par value.'
(b) the existing Articles of the Company as filed with the Registrar of
Companies be cancelled AND THAT the form of Articles attached hereto
and marked Schedule "A" be adopted as the Articles of the Company in
substitution for, and to the exclusion of, the existing Articles of
the Company."
The Memorandum as altered is attached.
Certified a true copy the 24th day of June, 1996.
(Signature) /s/ [Illegible]
--------------------------------
(Relationship to Company) Solicitor
<PAGE>
COMPANY ACT
IDAHO CONSOLIDATED METALS CORP.
ALTERED MEMORANDUM
(as altered by special resolution
passed June 24, 1996)
1. The name of the Company is Idaho Consolidated Metals Corp.
2. The authorized capital of the Company consists of 100,000,000 common shares
without par value.
<PAGE>
Schedule "A"
ARTICLES
- of -
IDAHO CONSOLIDATED METALS CORP.
TABLE OF CONTENTS
Part Page
1. Interpretation 1
2. Shares and Share Certificates 2
3. Issue of Shares 4
4. Share Registers 4
5. Transfer of Shares 5
6. Transmission of Shares 6
7. Alteration of Capital 7
8. Purchase and Redemption of Shares 9
9. Borrowing Powers 10
10. General Meetings 11
11. Proceedings at General Meetings 12
12. Votes of Members 15
13. Directors 17
14. Election and Removal of Directors 18
15. Powers and Duties of Directors 20
16. Disclosure of Interest of Directors 21
17. Proceedings of Directors 22
18. Executive and Other Committees 24
19. Officers 25
20. Indemnity and Protection of Directors,
Officers and Employees 26
21. Dividends and Reserve 27
22. Record Dates 29
<PAGE>
23. Documents, Records and Financial Statements 29
24. Notices 30
25. Seal 31
26. Prohibitions 32
- 2 -
<PAGE>
COMPANY ACT
ARTICLES
IDAHO CONSOLIDATED METALS CORP.
PART 1 - INTERPRETATION
1.1 In these Articles, unless the context otherwise requires:
(a) "Company Act" means the Company Act of the Province of British
Columbia from time to time in force and all amendments thereto and
includes all regulations and amendments thereto made pursuant to that
Act;
(b) "designated security" means a security of the Company that is not a
debt security and that:
(i) carries a voting right in all circumstances or under some
circumstances that have occurred and are continuing, or
(ii) carries a residual right to participate in the earnings of the
Company or, upon the liquidation or winding up of the Company, in
its assets;
(c) "Directors", "Board of Directors" or "Board" means the Directors or,
if the Company has only one Director, the Director of the Company for
the time being;
(d) "month" means calendar month;
(e) "registered address" of a Director means the address of the Director
recorded in the register of directors;
(f) "registered address" of a member means the address of the member
recorded in the register of members;
(g) "registered owner" or "registered holder" when used with respect to a
share in the capital of the Company means the person registered in the
register of members in respect of such share;
(h) "regulations" means the regulations made pursuant to the Company Act;
(i) "seal" means the common seal of the Company, if the Company has one.
- 1 -
<PAGE>
1.2 Expressions referring to writing shall be construed as including references
to printing, lithography, typewriting, photography and other modes of
representing or reproducing words in a visible form.
1.3 Words importing the singular include the plural and vice versa, words
importing male persons include female persons and words importing persons shall
include corporations.
1.4 The meaning of any words or phrases defined in the Company Act shall, if not
inconsistent with the subject or context, bear the same meaning in these
Articles.
1.5 The rules of construction contained in the Interpretation Act shall apply,
mutatis mutandis, to the interpretation of these Articles.
1.6 The provisions contained in Table A in the First Schedule to the Company Act
shall not apply to the Company.
PART 2 - SHARES AND SHARE CERTIFICATES
2.1 Every share certificate issued by the Company shall be in such form as the
Directors may approve from time to time and shall contain such statements as are
required by, and shall otherwise comply with, the Company Act.
2.2 Every member is entitled, without charge, to one certificate representing he
share or shares of each class held by him except that, in respect of a share or
shares held jointly by several members, the Company shall not be bound to issue
more than one certificate, and delivery of a certificate for a share to one of
several joint registered holders or to his duly authorized agent shall be
sufficient delivery to all. The Company shall not be bound to issue certificates
representing redeemable shares if such shares are to be redeemed within one
month of the date on which they were allotted.
2.3 Any share certificate may be sent by registered mail to the member entitled
thereto, and neither the Company nor any transfer agent shall be liable for any
loss occasioned to the member resulting from the loss or theft of any such share
certificate so sent.
2.4. If a share certificate:
(a) is worn out or defaced, the Directors may, upon production to the
Company of the certificate and upon such other terms, if any, as they
may think fit, order the certificate to be cancelled and issue a new
certificate in lieu thereof;
(b) is lost, stolen or destroyed, the Directors may, upon proof thereof to
their satisfaction and upon such indemnity, if any, being given as
they consider
- 2 -
<PAGE>
adequate, issue a new share certificate in lieu thereof to the person
entitled to such lost, stolen or destroyed certificate; or
(c) represents more than one share and the registered owner thereof
surrenders it to the Company with a written request that the Company
issue in his name two or more certificates each representing a
specified number of shares and in the aggregate representing the same
number of shares as the certificate so surrendered, the Directors
shall cancel the certificate so surrendered and issue in lieu thereof
certificates in accordance with such request.
2.5 If a member owns shares of a class or series represented by more than one
share certificate and surrenders the certificates to the Company with a written
request that the Company issue in his name one certificate representing in the
aggregate the same number of shares as the certificates so surrendered, the
Directors shall cancel the certificates so surrendered and issue in lieu thereof
a certificate in accordance with such request.
2.6 The Directors may from time to time determine the amount of a charge, not
exceeding an amount prescribed by the regulations or the Company Act, to be
imposed for each certificate issued pursuant to Articles 2.4 and 2.5.
2.7 Every share certificate shall be signed manually by at least one officer or
Director of the Company, or by or on behalf of a registrar, branch registrar,
transfer agent or branch transfer agent of the Company and any additional
signatures may be printed or otherwise mechanically reproduced and, in such
event, a certificate so signed is as valid as if signed manually,
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such
certificate to hold at the date of the issue of the certificate.
2.8 Except as required by law, statute or these Articles, no person shall be
recognized by the Company as holding any share upon any trust, and the Company
shall not be bound by or compelled in any way to recognize (even when having
notice thereof) any equitable, contingent, future or partial interest in any
share or in any fractional part of a share or (except as provided by law,
statute or these Articles or as ordered by a court of competent jurisdiction)
any other rights in respect of any share except an absolute right to the
entirety thereof in its registered holder.
PART 3 - ISSUE OF SHARES
3.1 Except as provided in the Company Act, the Memorandum of the Company and
these Articles, and subject to any direction to the contrary contained in a
resolution of the members authorizing any increase or alteration of capital the
shares of the Company shall be under the control of the Directors who may,
subject to the rights of the holders of issued shares of the Company, allot and
issue, or grant options in respect of shares authorized but not issued
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or issued and redeemed or purchased, at such times and to such persons,
including Directors, and in such manner and upon such terms and conditions, and
at such price or for such consideration, as the Directors in their absolute
discretion may determine.
3.2 If the Company is, or becomes, a company which is not a reporting company
and the Directors are required by the Company Act before allotting any shares to
offer them pro rata to the members, the Directors shall, before allotting any
shares, comply with the applicable provisions of the Company Act.
3.3 Subject to the provisions of the Company Act, the Company may pay a
commission or allow a discount to any person in consideration of his subscribing
or agreeing to subscribe, whether absolutely or conditionally, for its shares,
or procuring or agreeing to procure subscriptions, whether absolutely or
conditionally, for any such shares, but if the Company is not a specially
limited company, the rate of the commission and discount shall not in the
aggregate exceed 25% of the amount of the subscription price of such shares.
3.4 No share may be issued until it is fully paid and the Company shall have
received the full consideration therefor in cash, property or past services
actually performed for the Company. A document evidencing indebtedness of the
allottee is not property for the purpose of this Article. The value of property
or services for the purpose of this Article shall be the value determined by the
Directors by resolution to be, in all the circumstances of the transaction, no
greater than the fair market value thereof The full consideration received for a
share issued by way of dividend shall be the amount determined by the Directors
to be the amount of the dividend.
PART 4 - SHARE REGISTERS
4.1 The Company shall keep or cause to be kept a register of members, a register
of transfers and a register of allotments within British Columbia. all as
required by the Company Act, and may combine one or more of such registers. If
the Company's capital shall consist of more than one class of shares, a separate
register of members, register of transfers and register of allotments may be
kept in respect of each class of shares. The Directors may appoint a trust
company to keep the aforesaid registers or, if there is more than one class of
shares, the Directors may appoint a trust company. which need not be the same
trust company, to keep the registers for each class of shares. The Directors may
also appoint one or more trust companies, including the trust company which
keeps the said registers of its shares or of a class thereof, as transfer agent
for its shares or such class thereof, as the case may be, and the same or
another trust company or companies as registrar for its shares or such class
thereof, as the case may be. The Directors may terminate the appointment of any
such trust company at any time and may appoint another trust company in its
place.
4.2 Unless prohibited by the Company Act, the Company may keep or cause to be
kept within the Province one or more branch registers of members and may, if the
Company is,
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or becomes, a reporting company, cause to be kept outside the Province one or
more branch register of members.
4.3 The Company shall not at any time close its register of members.
PART 5 - TRANSFER OF SHARES
5.1 Subject to the provisions of the Memorandum of the Company and these
Articles and to restrictions on transfer, if any, contained in these Articles,
any member may transfer any of his shares by instrument of transfer executed by
or on behalf of such member and delivered to the Company or its transfer agent.
The instrument of transfer shall be in the form, if any, on the back of the
Company's share certificates or in such other form as the Directors may from
time to time approve. If the Directors so require, each instrument of transfer
shall be in respect of only one class of shares. Except to the extent that the
Company Act may otherwise provide, the transferor shall be deemed to remain the
holder of the shares until the name of the transferee is entered in the register
of members or a branch register of members in respect thereof.
5.2 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall constitute
a complete and sufficient authority to the Company, its Directors, officers and
agents to register in the name of the transferee as named in the instrument of
transfer the number of shares specified therein or, if no number is specified,
all the shares of the registered owner represented by share certificates
deposited with the instrument of transfer. If no transferee is named in the
instrument of transfer, the instrument of transfer shall constitute a complete
and sufficient authority to the Company, its Directors, officers and agents to
register, in the name of the person on whose behalf any certificate for the
shares to be transferred is deposited with the Company for the purpose of having
the transfer registered, the number of shares specified in the instrument of
transfer or, if no number is specified, all the shams represented by all share
certificates deposited with the instrument of transfer.
5.3 The Company and its Directors, officers and transfer agent or agents shall
not be bound to enquire into the title of the person named in the form of
transfer as transferee or, if no person is named therein as transferee, of the
person on whose behalf the certificate is deposited with the Company for the
purpose of having the transfer registered, or be liable to any claim by such
registered owner or by any intermediate owner or holder of the certificate or of
any of the shares represented thereby or any interest therein for registering
the transfer, and the transfer, when registered, shall confer upon the person in
whose name the shares have been registered a valid title to such shares.
5.4 Every instrument of transfer shall be executed by the transferor and left at
the registered office of the Company or at the office of its transfer agent or
registrar for registration together with the share certificate for the shares to
be transferred and such other
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evidence, if any, as the Directors, the transfer agent or registrar may require
to prove the title of the transferor or his right to transfer the shares and the
right of the transferee to have the transfer registered. All instruments of
transfer where the transfer is registered shall be retained by the Company or
its transfer agent or registrar and any instrument of transfer, where the
transfer is not registered, shall be returned to the person depositing the same
together with the share certificate which accompanied the same when tendered for
registration.
5.5 There shall be paid to the Company in respect of the registration of any
transfer such sum, if any, as the Directors may from time to time determine.
PART 6 - TRANSMISSION OF SHARES
6.1 In the case of the death of a member, the survivor or survivors where the
deceased was a joint registered holder of shares, and the legal personal
representative of the deceased member where he was the sole holder, shall be the
only persons recognized by the Company as having any title to his interest in
the shares. Before recognizing any legal personal representative the Directors
may require him to produce a certified copy of a grant of probate or letters of
administration, or grant of representation, will, order or other instrument or
other evidence of the death under which title to the shares is claimed to vest,
and such other documents as the Company Act requires.
6.2 Upon the death or bankruptcy of a member, his personal representative or
trustee in bankruptcy, as the case may be, although not a member, shall have the
same rights, privileges and obligations that attach to the shares formerly held
by the deceased or bankrupt member if the documents required by the Company Act
shall have been deposited at the Company's registered office.
6.3 Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall, upon such documents and evidence being produced to
the Company as the Company Act requires, or who becomes entitled to a share as a
result of an order of a Court of competent jurisdiction or a statute, have the
right either to be registered as a member in his representative capacity in
respect of such share or, if he is a personal representative or trustee in
bankruptcy, instead of being registered himself, to make such transfer of the
share as the deceased or bankrupt person could have made; but the Directors
shall as regards a transfer by a personal representative or trustee in
bankruptcy, have the same right, if any, to decline or suspend registration of a
transferee as they would have in the case of a transfer of a share by the
deceased or bankrupt person before the death or bankruptcy.
PART 7 - ALTERATION OF CAPITAL
7.1 The Company may by ordinary resolution amend its Memorandum to increase its
authorized capital by:
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(a) creating shares with par value or shares without par value, or both;
(b) increasing the number of shares with par value or shares without par
value, or both; or
(c) increasing the par value of a class of shares with par value, if no
shares of that class are issued.
7.2 The Company may by special resolution alter its Memorandum to:
(a) subdivide all or any of its unissued or fully paid issued shares with
par value into shares with smaller par value;
(b) subdivide all or any of its unissued or fully paid issued shares
without par value so that the number of those shares is increased;
(c) consolidate all or any of its shares with par value into shares of
larger par value;
(d) consolidate all or any of its shares without par value so that the
number of those shares authorized is reduced;
(e) change all or any of its unissued or fully paid issued shares with par
value into shares without par value;
(f) change all or any of its unissued shares without par value into shares
with par value;
(g) alter the name or designation of all or any of its issued or unissued
shares; or
(h) alter the provisions as to the maximum price or consideration at or
for which shares without par value may be issued,
but only to such extent, in such manner and with such consents of members
holding shares of a class or series which are the subject of or are affected by
such alteration as the Company Act provides.
7.3 The Company may alter its Memorandum or these Articles:
(a) by special resolution, to create, define and attach special rights or
restrictions to any shares, whether issued or unissued, and
(b) by special resolution and by otherwise complying with any applicable
provision of its Memorandum or these Articles, to vary or abrogate any
special rights or restrictions attached to any shares, whether issued
or unissued,
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and in each case by filing a certified copy of such resolution with the
Registrar but no right or special right attached to any issued shares shall be
prejudiced or interfered with unless all members holding shares of each class or
series whose right or special right is so prejudiced or interfered with consent
thereto in writing, or unless a separate resolution is consented thereto by the
members holding shares of each such class or series passed by a majority of 3/4
of the votes cast, or such greater majority as may be specified by the special
rights attached to the class or series, of the issued shares of such class or
series.
7.4 Notwithstanding such consent in writing or such separate resolution, no such
alteration shall be valid as to any part of the issued shares of any class or
series unless the holders of the rest of the issued shares of such class or
series either all consent thereto in writing or consent thereto by a separate
resolution passed by a majority of 3/4 of the votes cast.
7.5 If the Company is, or becomes, a reporting company, no resolution to create,
vary or abrogate any special right of conversion or exchange attaching to any
shares shall be submitted to any general meeting, class meeting or series
meeting of members unless, if so required by the Company Act, the Superintendent
of Brokers, the British Columbia Securities Commission, or other applicable
regulatory authority, as the case may be, has first consented to the resolution.
7.6 Unless these Articles otherwise provide, the provisions of these Articles
relating to general meetings shall apply, with the necessary changes and so far
as they are applicable, to a class meeting or series meeting but the quorum at a
class meeting or series meeting shall be one person holding or representing by
proxy one-third of the shares affected.
PART 8 - PURCHASE AND REDEMPTION OF SHARES
8.1 Subject to the special rights and restrictions attached to any shares, the
Company may, by a resolution of the Directors and in compliance with the Company
Act, purchase any of its shares at the price and upon the terms specified in
such resolution or redeem any shares that have a right of redemption attached to
them in accordance with the special rights and restrictions attaching thereto.
No such purchase or redemption shall be made if the Company is insolvent at the
time of the proposed purchase or redemption or if the proposed purchase or
redemption would render the Company insolvent.
8.2 Unless shares are to be purchased by the Company through a stock exchange or
the Company is purchasing the shares from a dissenting member pursuant to the
requirements of the Company Act or the Company is purchasing the shares from a
bona fide employee or bona fide former employee of the Company or of an
affiliate of the Company, the Company shall make its offer to purchase pro rata
to every member who holds shares of the class or series to be purchased.
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8.3 If the Company proposes at its option to redeem some but not all of the
shares of a particular class or series, the Directors may, subject to the
special rights and restrictions attached to the shares of such class or series,
decide the manner in which the shares to be redeemed shall be selected.
8.4 Subject to the provisions of the Company Act, the Company may reissue a
cancelled share that it has redeemed or purchased, or sell a share that it has
redeemed or purchased but not cancelled, but the Company may not vote or pay or
make any dividend or other distribution in respect of a share that it has
redeemed or purchased.
PART 9 - BORROWING POWERS
9.1 The Directors may from time to time in their discretion authorize the
Company to:
(a) borrow money in such amount, in such manner, on such security, from
such sources and upon such terms and conditions as they think fit;
(b) guarantee the repayment of money borrowed by any person or the
performance of any obligation of any person;
(c) issue bonds, debentures, notes and other debt obligations either
outright or as continuing security for any indebtedness or liability,
direct or indirect or obligations of the Company or of any other
person; and
(d) mortgage, charge (whether by way of specific or floating charge) or
give other security on the undertaking or on the whole or any part of
the property and assets of the Company, both present and future.
9.2 Any bonds, debentures, notes or other debt obligations of the Company may be
issued at a discount, premium or otherwise and with any special privileges as to
redemption, surrender, drawing, allotment of or conversion into or exchange for
shares or other securities, attending and voting at general meetings of the
Company, appointment of Directors or otherwise and may by their terms be
assignable free from any equities between the Company and the person to whom
they were issued or any subsequent holder thereof, all as the Directors may
determine.
9.3 The Company shall keep or cause to be kept within the Province of British
Columbia in accordance with the Company Act a register of its debentures and a
register of debentureholders, which registers may be combined, and, subject to
the provisions of the Company Act, may keep or cause to be kept one or more
branch registers of its debentureholders at such place or places as the
Directors may from time to time determine and
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the Directors may by resolution, regulation or other-wise make such provisions
as they think fit respecting the keeping of such branch registers.
9.4 Every bond, debenture, note or other debt obligation of the Company shall be
signed manually by at least one Director or officer of the Company or by or on
behalf of a trustee, registrar, branch registrar, transfer agent or branch
transfer agent for the bond, debenture, note or other debt obligation appointed
by the Company or under any instrument under which the bond, debenture, note or
other debt obligation is issued and any additional signatures may be printed or
otherwise mechanically reproduced thereon and, in such event, a bond, debenture,
note or other debt obligation so signed is as valid as if signed manually
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such bond,
debenture, note or other debt obligation to hold at the date of the issue
thereof.
9.5 If the Company is, or becomes, a reporting company, it shall keep or cause
to be kept a register of its indebtedness to every Director or officer of the
Company or an associate of any of them in accordance with the provisions of the
Company Act.
PART 10 - GENERAL MEETINGS
10.1 Subject to any extensions of time permitted under the Company Act, the
first annual general meeting of the Company shall be held within 15 months from
the date of incorporation and thereafter an annual general meeting shall be held
once in every calendar year at such time (not being more than 13 months after
the date that the last annual general meeting was held or was deemed to have
been held) and place as may be determined by the Directors.
10.2 If the Company is, or becomes, a company which is not a reporting company
and all the members entitled to attend and vote at an annual general meeting
consent in writing to the business required to be transacted at such meeting,
the meeting shall be deemed to have been held on the date specified in the
consent or in the resolutions consented to in writing dealing with such business
and the meeting need not be held.
10.3 The Directors may, whenever they think fit, convene a general meeting. A
general meeting, if requisitioned in accordance with the Company Act, shall be
convened by the Directors or, if not convened by the Directors, may be convened
by the requisitionists as provided in the Company Act.
10.4 If the Company is, or becomes, a reporting company, advance notice of any
general meeting at which Directors are to be elected shall be published in the
manner required by the Company Act.
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10.5 A notice convening a general meeting, specifying the place, date and hour
of the meeting and, in case of special business, the general nature of that
business, shall be given as provided in the Company Act and in the manner
provided in these Articles, or in such other manner (if any) as may be
prescribed by ordinary resolution, whether previous notice thereof has been
given or notice to such persons as are entitled by law or pursuant to these
Articles to receive such notice from the Company. Accidental omission to give
notice of a meeting to, or the non-receipt of notice of a meeting, by any member
shall not invalidate the proceedings at that meeting.
10.6 All the members of the Company entitled to attend and vote at a general
meeting may, by unanimous consent in writing given before, during or after the
meeting, or if they are present at the meeting by a unanimous vote, waive or
reduce the period of notice of such meeting and an entry in the minute book of
such waiver or reduction shall be sufficient evidence of the due convening of
the meeting.
10.7 Except as otherwise provided by the Company Act, where any special business
at a general meeting includes considering, approving, ratifying, adopting or
authorizing any document or the execution thereof or the giving of effect
thereto, the notice convening the meeting shall, with respect to such document,
be sufficient if it states that a copy of the document or proposed document is
or will be available for inspection by members at the registered office or
records office of the Company or at some other place in British Columbia
designated in the notice during usual business hours up to the date of such
general meeting.
PART 11 - PROCEEDINGS AT GENERAL MEETINGS
11.1 All business shall be deemed special business which is transacted at:
(a) an annual general meeting, with the exception of the conduct of and
voting at such meeting, consideration of the financial statements and
the respective reports of the Directors and the auditor, fixing or
changing the number of directors, the election of Directors, the
appointment of an auditor, fixing of the remuneration of the auditor
and such other business as by these Articles or the Company Act may be
transacted at a general meeting without prior notice thereof being
given to the members or any business which is brought under
consideration by the report of the Directors; and
(b) any other general meeting, with the exception of the conduct of and
voting at such meeting.
11.2 No business, other than election of the chairman or the adjournment or
termination of the meeting, shall be conducted at any general meeting unless the
required quorum of members, entitled to attend and vote, is present at the
commencement of the meeting, but a quorum need not be present throughout the
meeting.
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11.3 Except as provided in the Company Act and these Articles a quorum shall be
two persons present and being, or representing by proxy, members holding not
less than 10% of the shares entitled to be voted at the meeting. If there is
only one member the quorum is one person present and being, or representing by
proxy, such member. The Directors, the senior officers of the Company, the
solicitor of the Company and the auditor of the Company, if any, shall be
entitled to attend at any general meeting but no such person shall be counted in
the quorum or be entitled to vote at any general meeting unless he shall be a
member or proxyholder entitled to vote at such meeting.
11.4 If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if convened upon the requisition of members,
shall be terminated. In any other case the meeting shall stand adjourned to the
same day in the next week, at the same time and place, and, if at the adjourned
meeting a quorum is not present within half an hour from the time appointed for
the meeting, the person or persons present and being, or representing by proxy,
a member or members entitled to attend and vote at the meeting shall be a
quorum.
11.5 The Chairman of the Board or in his absence, or if there is no Chairman of
the Board, the President or in his absence a Vice-President, if any, shall be
entitled to preside as chairman at every general meeting of the Company.
11.6 If at any general meeting neither the Chairman of the Board nor the
President nor a Vice-President is present within 15 minutes after the time
appointed for holding the meeting or if any of them is present and none of them
is willing to act as chairman, the Directors present shall choose one of their
number to be chairman, or if all the Directors present decline to take the chair
or shall fail to so choose or if no Director is present, the members present
shall choose one of their number or any other person to be chairman.
11.7 The chairman of a general meeting may, with the consent of the meeting if a
quorum is present, and shall, if so directed by the meeting, adjourn the meeting
from time to time and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place. When a meeting is adjourned for 30 days
or more, notice, but not "advance notice", of the adjourned meeting shall be
given as in the case of the original meeting. Save as aforesaid, it shall not be
necessary to give any notice of an adjourned meeting or of the business to be
transacted at an adjourned meeting.
11.8 No motion proposed at a general meeting need be seconded and the chairman
may propose or-second a motion.
11.9 Subject to the provisions of the Company Act, every motion or question
submitted to a general meeting shall be decided on a show of hands, unless
(before or on the declaration of the result of the show of hands) a poll is
directed by the chairman or demanded by at least one member entitled to vote who
is present in person or by proxy. The chairman
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shall declare to the meeting the decision on every motion or question in
accordance with the result of the show of hands or the poll, and such decision
shall be entered in the record of proceedings of the Company. A declaration by
the chairman that a motion or question has been carried, or carried unanimously,
or by a particular majority, or lost, or not carried by a particular majority
and an entry to that effect in the record of the proceedings of the Company
shall be conclusive evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against that motion or
question.
11.10 The chairman of the meeting shall be entitled to vote any shares carrying
the right to vote held by him but in the case of an equality of votes, whether
on a show of hands or on a poll, the chairman shall not have a second or casting
vote in addition to the vote or votes to which he may be entitled as a member.
11.11 No poll may be demanded on the election of a chairman. A poll demanded on
a question of adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken as soon as, in the opinion of the chairman, is
reasonably convenient, but in no event later than 7 days after the meeting and
at such time and place and in such manner as the chairman of the meeting
directs. The result of the poll shall be deemed to be the resolution of and
passed at the meeting at which the poll was demanded. Any business other than
that upon which the poll has been demanded may be proceeded with pending the
taking of the poll. A demand for a poll may be withdrawn. In any dispute as to
the admission or rejection of a vote the decision of the chairman made in good
faith shall be final and conclusive.
11.12 Every ballot cast upon a poll and every proxy appointing a proxyholder who
casts a ballot upon a poll shall be retained by the Secretary for such period
and be subject to such inspection as the Company Act may provide.
11.13 On a poll a person entitled to cast more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the same way.
11.14 Unless the Company Act, the Memorandum or these Articles otherwise
provide, any action to be taken by a resolution of the members may be taken by
an ordinary resolution.
PART 12 - VOTES OF MEMBERS
12.1 Subject to any voting rights or restrictions attached to any class of
shares and the restrictions as to voting on joint registered holders of shares,
on a show of hands every member who is present in person and entitled to vote at
a general meeting or class meeting shall have one vote and on a poll every
member entitled to vote shall have one vote for each share of which he is the
registered holder and may exercise such vote either in person or by proxyholder.
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12.2 Any person who is not registered as a member but is entitled to vote at a
general meeting or class meeting in respect of a share, may vote the share in
the same manner as if he were a member but, unless the Directors have previously
admitted his right to vote at that meeting in respect of the share, he shall
satisfy the Directors of his right to vote the share before the time for holding
the meeting, or adjourned meeting, as the case may be, at which he proposes to
vote.
12.3 Any corporation, not being a subsidiary of the Company, which is a member
of the Company may by resolution of its directors or other governing body
authorize such person as it thinks fit to act as its representative at any
general meeting or class meeting and to speak and vote at any such meeting or to
sign resolutions of members. The person so authorized shall be entitled to
exercise in respect of and at any such meeting the same powers on behalf of the
corporation which he represents as that corporation could exercise if it were an
individual member of the Company personally present, including, without
limitation, the right, unless restricted by such resolution, to appoint a
proxyholder to represent such corporation, and he shall be counted for the
purpose of forming a quorum if present at the meeting. Evidence of the
appointment of any such representative may be sent to the Company by written
instrument, telegram, telex, telecopier or any method of transmitting legibly
recorded messages. Notwithstanding the foregoing, a corporation being a member
may appoint a proxyholder.
12.4 In the case of joint registered holders of a share the vote of the senior
who exercises a vote, whether in person or by proxyholder, shall be accepted to
the exclusion of the votes of the other joint registered holders; and for this
purpose seniority shall be determined by the order in which the names stand in
the register of members. Several legal personal representatives of a deceased
member whose shares are registered in his sole name shall for the purpose of
this Article be deemed joint registered holders.
12.5 A member of unsound mind entitled to attend and vote, in respect of whom an
order has been made by any court having jurisdiction, may vote, whether on a
show of hands or on a poll, by his committee, curator bonis, or other person in
the nature of a committee or curator bonis appointed by that court, and any such
committee, curator bonis or other person may appoint a proxyholder.
12.6 A member holding more than one share in respect of which he is entitled to
vote shall be entitled to appoint one or more proxyholders to attend, act and
vote for him on the same occasion. If such a member should appoint more than one
proxyholder for the same occasion he shall specify the number of shares each
proxyholder shall be entitled to vote. A member may also appoint one or more
alternate proxyholders to act in the place and stead of an absent proxyholder.
12.7 A form of proxy shall be in writing under the hand of the appointor or of
his attorney duly authorized in writing, or, if the appointor is a corporation,
either under the seal of the corporation or under the hand of a duly authorized
officer or attorney.
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12.8 Any person may act as proxyholder whether or not he is a member. The proxy
may authorize the proxyholder to act as such for the appointor for such period,
at such meeting or meetings and to the extent permitted by the Company Act.
12.9 A form of proxy and the power of attorney or other authority, if any, under
which it is signed or a notarially certified copy thereof shall be deposited at
the registered office of the Company or at such other place as is specified for
that purpose in the notice calling the meeting, or shall be deposited with the
chairman of the meeting. In addition to any other method of depositing proxies
provided for in these Articles, the Directors may from time to time by
resolution make regulations relating to the depositing of proxies at any place
or places and providing for particulars of such proxies to be sent to the
Company or any agent of the Company in writing or by letter, telegram, telex,
telecopier or any method of transmitting legibly recorded messages so as to
arrive before the commencement of the meeting or adjourned meeting at the
registered office of the Company or at the office of any agent of the Company
appointed for the purpose of receiving such particulars and also providing that
proxies so deposited may be acted upon as though the proxies themselves were
deposited as required by this Part, and votes given in accordance with such
regulations shall be valid and shall be counted.
12.10 Unless the Company Act or any other statute or law which is applicable to
the Company or to any class or series of its shares requires any other form of
proxy, a proxy, whether for a specified meeting or otherwise, shall be in the
following form, or in such other form that the Directors or the chairman of the
meeting shall approve:
(Name of Company)
The undersigned, being a member of the above Company, hereby
appoints ___________________________________ or failing him
_______________________________________ as proxyholder for the
undersigned to attend, act and vote for and on behalf of the
undersigned at the general meeting of the Company to be held on the
_______ day of __________ 19_ and at any adjournment thereof.
Signed this _______ day of _______________ 19__.
----------------------------------
(Signature of member)
12.11 A vote given in accordance with the terms of a proxy is valid
notwithstanding the previous death or incapacity of the member giving the proxy
or revocation of the proxy or of the authority under which the proxy was
executed or by transfer of the share or shares in respect of which the proxy is
given unless notification in writing of such death, incapacity, revocation or
transfer shall have been received at the registered office of the Company or by
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the chairman of the meeting or adjourned meeting for which the proxy is given
before the vote is taken.
12.12 Every proxy may be revoked by an instrument in writing:
(a) executed by the member giving the same or by his attorney authorized
in writing or, where the member is a corporation, by a duly authorized
officer or attorney of the corporation; and
(b) delivered either at the registered office of the Company at any time
up to and including the last business day preceding the day of the
meeting or adjourned meeting for which the proxy is given, or to the
chairman of the meeting on the day of the meeting or any adjournment
thereof before any vote in respect of which the proxy is given shall
have been taken, or in any other manner provided by law.
PART 13 - DIRECTORS
13.1 The subscribers to the Memorandum of the Company are the first Directors.
The Directors to succeed the first Directors may be appointed in writing by all
the subscribers or by resolution passed at a meeting of the subscribers or, if
not so appointed, they shall be elected by the members entitled to vote on the
election of Directors and the number of Directors shall be the same as the
number of Directors so appointed or elected. The number of Directors, excluding
additional Directors, may be fixed or changed from time to time by ordinary
resolution, whether previous notice thereof has been given or not, but
notwithstanding anything contained in these Articles the number of Directors
shall never be less than one or, if the Company is, or becomes, a reporting
company, less than three.
13.2 The remuneration of the Directors as such may from time to time be
determined by the Directors or, if the Directors shall so decide, by the
members. Such remuneration may be in addition to any salary or other
remuneration paid to any officer or employee of the Company as such who is also
a Director. The Directors shall be repaid such reasonable travelling,
accommodation and other expenses as they incur in and about the business of the
Company and if any Director shall perform any professional or other services for
the Company that in the opinion of the Directors are outside the ordinary duties
of a Director or shall otherwise be specially occupied in or about the Company's
business, he may be paid a remuneration to be fixed by the Board, or, at the
option of such Director, by the Company in general meeting, and such
remuneration may be either in addition to or in substitution for any other
remuneration that he may be entitled to receive. Unless otherwise determined by
ordinary resolution, the Directors on behalf of the Company may pay a gratuity,
pension or retirement allowance to any Director who has held any office or
appointment with the Company or to his spouse or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
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13.3 A Director shall not be required to hold a share in the capital of the
Company as qualification for his office but shall be qualified to become or act
as a Director as required by the Company Act.
PART 14 - ELECTION AND REMOVAL OF DIRECTORS
14.1 At each annual general meeting of the Company all the Directors shall
retire and the members entitled to vote at the meeting shall elect a Board of
Directors consisting of the number of Directors for the time being fixed
pursuant to these Articles. If the Company is, or becomes, a company that is not
a reporting company and all the members entitled to attend and vote at an annual
general meeting consent in writing to the business required to be transacted at
such meeting, the meeting shall be deemed for the purpose of this Part to have
been held on the date specified in the consent or in the resolutions consented
to in writing dealing with such business.
14.2 A retiring Director shall be eligible for re-election.
14.3 Where the Company fails to hold an annual general meeting or the members
fail to consent to the business required to be transacted at such meeting, the
Directors then in office shall be deemed to have been elected or appointed as
Directors on the last day on which the annual general meeting could have been
held pursuant to these Articles and they may continue to hold office until other
Directors are appointed or elected or until the day on which the next annual
general meeting is held.
14.4 If at any general meeting at which there should be an election of
Directors, the places of any of the retiring Directors are not filled by such
election, such of the retiring Directors who are not re-elected as may be
requested by the newly elected Directors shall, if willing to do so, continue in
office to complete the number of Directors for the time being fixed pursuant to
these Articles until further new Directors are elected at a general meeting
convened for the purpose. If any such election or continuance of Directors does
not result in the election or continuance of the number of Directors for the
time being fixed pursuant to these Articles such number shall be fixed at the
number of Directors actually elected or continued in office.
14.5 Any casual vacancy occurring in the Board of Directors may be filled by the
remaining Directors or Director.
14.6 The office of a Director shall be vacated if the Director:
(a) resigns his office by notice in writing delivered to the registered
office of the Company; or
(b) ceases to be qualified to act as a Director pursuant to the Company
Act.
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14.7 The Company may by special resolution remove any Director before the
expiration of his period of office and may by an ordinary resolution appoint
another person in his stead.
14.8 Notwithstanding anything contained in these Articles, the Company may at
any time by ordinary resolution, increase the number of Directors previously
fixed or determined and may, by ordinary resolution, elect such person or
persons to fill the vacancy or vacancies thereby created.
14.9 Between successive annual general meetings the Directors shall have power
to appoint one or more additional Directors but the number of additional
Directors shall not at any time exceed 1/3 of the number of Directors elected or
appointed at the last annual general meeting of the Company. Any additional
Director so appointed shall hold office only until the next following annual
general meeting of the Company but shall be eligible for election at such
meeting and so long as he is an additional Director the number of Directors
shall be increased accordingly.
14.10 Any Director may by instrument in writing, telegram, telex, telecopier or
any other method of transmitting legibly recorded messages delivered or sent to
the Company appoint any person to be his alternate to act in his place at
meetings of the Directors at which he is not present unless the Directors shall
have disapproved of the appointment of such person as an alternate and shall
have given notice to that effect to the Director appointing the alternate within
a reasonable time after delivery of such instrument to the Company. Every such
alternate shall be entitled to notice of meetings of the Directors and to attend
and vote as a Director at a meeting at which the person appointing him is not
personally present and, if he is a Director, to have a separate vote on behalf
of the Director by whom he was appointed in addition to his own vote. A Director
may at any time by instrument, telegram, telex, telecopier or any other method
of transmitting legibly recorded messages delivered or sent to the Company
revoke the appointment of an alternate appointed by him. The remuneration
payable to such an alternate shall be payable out of the remuneration of the
Director appointing him.
PART 15 - POWERS AND DUTIES OF DIRECTORS
15.1 The Directors shall manage, or supervise the management of, the affairs and
business of the Company and shall have authority to exercise all such powers of
the Company as are not, by the Company Act the Memorandum of the Company or
these Articles, required to be exercised by the Company in general meeting.
15.2 The Directors may from time to time by power of attorney or other
instrument under the seal of the Company appoint any person to be the attorney
of the Company for such purposes, and with such powers, authorities and
discretions (not exceeding, those vested in or exercisable by the Directors
under these Articles and excepting the powers of the Directors relating to the
constitution of the Board and of any of its committees and the appointment or
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removal of officers and the power to declare dividends) and for such period,
with such remuneration and subject to such conditions as the Directors may think
fit, and any such appointment may be made in favour of any of the Directors or
any of the members of the Company or in favour of any corporation, or of any of
the members, directors, nominees or managers of any corporation, firm or joint
venture and any such power of attorney may contain such provisions for the
protection or convenience of persons dealing with such attorney as the Directors
think fit. Any such attorney may be authorized by the Directors to sub-delegate
all or any of the powers, authorities and discretions for the time being vested
in him.
PART 16 - DISCLOSURE OF INTEREST OF DIRECTORS
16.1 A Director who is, in any way, directly or indirectly interested in an
existing or proposed contract or transaction with the Company or who holds any
office or possesses any property whereby, directly or indirectly, a duty or
interest might be created to conflict with his duty or interest as a Director
shall declare the nature and extent of his interest in such contract or
transaction or of the conflict or potential conflict with his duty and interest
as a director, as the case may be, in accordance with the provisions of the
Company Act.
16.2 A Director shall not vote in respect of any such contract or transaction
with the Company in which he is interested and if he shall do so his vote shall
not be counted, but he shall be counted in the quorum present at the meeting at
which such vote is taken. Subject to the provisions of the Company Act, the
foregoing prohibitions shall not apply to:
(a) any such contract or transaction relating to a loan to the Company,
which a Director or a specified corporation or a specified firm in
which he has an interest has guaranteed or joined in guaranteeing the
repayment of the loan or any part of the loan;
(b) any contract or transaction made or to be made with, or for the
benefit of a holding corporation or a subsidiary corporation of which
a Director is a director,
(c) any contract by a Director to subscribe for or underwrite shares or
debentures to be issued by the Company or a subsidiary of the Company,
or any contract arrangement or transaction in which a Director is,
directly or indirectly, interested if all the other Directors are
also, directly or indirectly interested in the contract, arrangement
or transaction;
(d) determining the remuneration of the Directors;
(e) purchasing and maintaining insurance to cover Directors against
liability incurred by them as Directors; or
(f) the indemnification of any Director or officer by the Company.
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The foregoing exceptions may from time to time be suspended or amended to any
extent approved by the Company in general meeting and permitted by the Company
Act, either generally or in respect of any particular contract or transaction or
for any particular period.
16.3 A Director may hold any office or appointment with the Company (except as
auditor of the Company) in conjunction with his office of Director for such
period and on such terms (as to remuneration or otherwise) as the Directors may
determine and no Director or intended Director shall be disqualified by his
office from contracting with the Company either with regard to his tenure of any
such other office or appointment or as vendor, purchaser or otherwise and,
subject to compliance with the provisions of the Company Act, no contract or
transaction entered into by or on behalf of the Company in which a Director is
in any way interested shall be liable to be voided by reason thereof.
16.4 Subject to compliance with the provisions of the Company Act, a Director or
his firm may act in a professional capacity for the Company (except as auditor
of the Company) and he or his firm shall be entitled to remuneration for
professional services as if he were not a Director.
16.5 A Director may be or become a director or officer or employee of, or
otherwise interested in, any corporation or firm in which the Company may be
interested as a member or otherwise, and, subject to compliance with the
provisions of the Company Act, such Director shall not be accountable to the
Company for any remuneration or other benefits received by him as director,
officer or employee of, or from his interest in, such other corporation or firm,
unless the Company in general meeting otherwise directs.
PART 17 - PROCEEDINGS OF DIRECTORS
17.1 The Chairman of the Board or, in his absence or if there is no Chairman of
the Board, the President shall preside as chairman at every meeting of the
Directors.
17.2 If at any meeting of Directors neither the Chairman of the Board nor the
President is present within 15 minutes after the time appointed for holding the
meeting or if either of them is present but is not willing to act as chairman or
if the Chairman of the Board, if any, and the President have advised the
Secretary that they will not be present at the meeting, the Directors present
shall choose one of their number to be chairman of the meeting.
17.3 The Directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings as they think fit. Questions arising at any
meeting shall be decided by a majority of votes. In case of an equality of votes
the chairman shall not have a second or casting vote.
17.4 A Director may participate in a meeting of the Board or of any committee of
Directors by means of telephone or other communications facility by means of
which all
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Directors participating in the meeting can hear each other and provided that all
such Directors agree to such participation. A meeting so held in accordance with
this Article shall be deemed to be an actual meeting of the Board and any
resolution passed at such meeting shall be as valid and effectual as if it had
been passed at a meeting where the Directors are physically present. A Director
participating in a meeting in accordance with this Article shall be deemed to be
present at the meeting and to have so agreed and shall be counted in the quorum
therefor and be entitled to speak and vote at the meeting.
17.5 A Director may at any time, and the Secretary or an Assistant Secretary
upon request of a Director shall, call a meeting of the Board.
17.6 Notice of a meeting of the Board shall be given to each Director and
alternate Director at least 48 hours before the time fixed for the meeting and
may be given orally, personally or by telephone, or in writing, personally or by
delivery through the post or by letter, telegram, telex, telecopier or any other
method of transmitting legibly recorded messages in common use. When written
notice of a meeting is given to a Director, it shall be addressed to him at his
registered address. Where the Board has established a fixed time and place for
the holding of its meetings, no notices of meetings to be held at such fixed
time and place need be given to any Director. A Director entitled to notice of a
meeting may waive or reduce the period of notice convening the meeting and may
give such waiver before, during or after the meeting.
17.7 For the first meeting of the Board to be held immediately following the
election of a Director at an annual general meeting of the Company or for a
meeting of the Board at which a Director is appointed to fill a vacancy on the
Board, no notice of such meeting shall be necessary to such newly appointed or
elected Director in order for the meeting to be properly constituted.
17.8 Any Director who may be absent temporarily from the Province may file at
the registered office of the Company a waiver of notice, which may be by letter,
telegram, telex, telecopier or any other method of transmitting legibly recorded
messages, of meetings of the Directors and may at any time withdraw the waiver,
and until the waiver is withdrawn, no notice of meetings of Directors shall be
sent to that Director, and any and all meetings of Directors, notice of which
has not been given to that Director shall, provided a quorum of the Directors is
present, be valid and effective.
17.9 The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and if not so fixed shall be a majority of the
Directors or, if the number of Directors is fixed at one, shall be one Director.
17.10 The continuing Directors may act notwithstanding any vacancy in their body
but, notwithstanding Article 17.9, if and so long as their number is reduced
below the number fixed pursuant to these Articles as the necessary quorum of
Directors, the continuing Directors may
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act for the purpose of increasing the number of Directors to that number or of
summoning a general meeting of the Company, but for no other purpose.
17.11 Subject to the provisions of the Company Act, all acts done by any meeting
of the Directors or of a committee of Directors, or by any person acting as a
Director, shall, notwithstanding that it be afterwards discovered that there was
some defect in the qualification, election or appointment of any such Directors
or of the members of such committee or person acting as aforesaid, or that they
or any of them were disqualified, be as valid as if every such person had been
duly elected or appointed and was qualified to be a Director.
17.12 A resolution consented to in writing, whether by document, telegram,
telex, telecopier or any method of transmitting legibly recorded messages or
other means, by all of the Directors for the time being in office without their
meeting together shall be as valid and effectual as if it had been passed at a
meeting of the Directors duly called and held, shall be deemed to relate back to
any date stated therein to be the effective date thereof and shall be filed in
the minute book of the Company accordingly. Any such resolution may consist of
one or several documents each duly signed by one or more Directors which
together shall be deemed to constitute one resolution in writing.
PART 18 - EXECUTIVE AND OTHER COMMITTEES
18.1 The Directors may by resolution appoint an Executive Committee consisting
of such member or members of the Board as they think fit, which Committee shall
have, and may exercise during the intervals between the meetings of the Board,
all the powers vested in the Board except the power to fill vacancies in the
Board, the power to change the membership of or fill vacancies in said Committee
or any other committee of the Board and such other powers, if any, as may be
specified in the resolution. The said Committee shall keep regular minutes of
its transactions and shall cause them to be recorded in books kept for that
purpose, and shall report the same to the Board of Directors at such times as
the Board of Directors may from time to time require. The Board shall have the
power at any time to revoke or override the authority given to or acts done by
the Executive Committee except as to acts done before such revocation or
overriding and to terminate the appointment or change the membership of such
Committee and to fill vacancies in it.
18.2 The Directors may by resolution appoint one or more other committees
consisting of such member or members of the Board as they think fit and may
delegate to any such committee between meetings of the Board such powers of the
Board (except the power to fill vacancies in the Board, the power to change the
membership of or fill vacancies in any committee of the Board, the power to
appoint or remove officers appointed by the Board and such other powers as may
be specified in the resolution) subject to such conditions as may be prescribed
in such resolution, and all committees so appointed shall keep regular minutes
of their transactions and shall cause them to be recorded in books kept for that
purpose, and shall report the same to the Board of Directors at such times as
the Board of Directors may from
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time to time require. The Directors shall also have power at any time to revoke
or override any authority given to or acts to be done by any such committee
except as to acts done before such revocation or overriding and to terminate the
appointment or change the membership of a committee and to fill vacancies in it.
18.3 Committees appointed under this Part may make rules for the conduct of
their business and may appoint such assistants as they may deem necessary. A
majority of the members of a committee shall constitute a quorum thereof
18.4 Committees appointed under this Part may meet and adjourn as they think
proper. Questions arising at any meeting of a committee shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes the chairman shall not have a second or casting vote. The
provisions of Article 17.12 shall apply mutatis mutandis to resolutions
consented to in writing by the members of a committee appointed under this Part.
PART 19 - OFFICERS
19.1 The Directors shall from time to time appoint a President and a Secretary
and such other officers, if any, as the Directors shall determine and the
Directors may at any time terminate any such appointment. No officer shall be
appointed unless he is qualified in accordance with the provisions of the
Company Act.
19.2 One person may hold more than one of such offices except that the offices
of President and Secretary shall be held by different persons unless the Company
has only one member. Any person appointed as the Chairman of the Board,
President or Managing Director shall be a Director. The other officers need not
be Directors.
19.3 The remuneration of the officers of the Company as such and the terms and
conditions of their tenure of office or employment shall from time to time be
determined by the Directors. Such remuneration may be by way of salary, fees,
wages, commission or participation in profits or any other means or all of these
modes and an officer may in addition to such remuneration be entitled to receive
after he ceases to hold such office or leaves the employment of the Company a
gratuity, pension or retirement allowance.
19.4 The Directors may decide what functions and duties each officer shall
perform and may entrust to and confer upon him any of the powers exercisable by
them upon such terms and conditions and with such restrictions as they think
fit and may from time to time revoke, withdraw, alter or vary all or any of such
functions, duties and powers. The Secretary shall, inter alia, perform the
functions of the secretary specified in the Company Act.
19.5 Every officer of the Company who holds any office or possesses any property
whereby, whether directly or indirectly, duties or interests might be created in
conflict with his
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duties or interests as an officer of the Company shall, in writing, disclose to
the President the fact and the nature, character and extent of the conflict.
PART 20 - INDEMNITY AND PROTECTION
OF DIRECTORS, OFFICERS AND EMPLOYEES
20.1 Subject to the provisions of the Company Act, the Directors may, with the
approval of the Court, cause the Company to indemnify a Director or former
Director of the Company or a director or former director of a corporation of
which the Company is or was a member, and the heirs and personal representatives
of any such person, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment actually and reasonably incurred
by him, including an amount paid to settle an action or satisfy a judgment in a
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a Director of the Company or a director
of such corporation, including any action or proceeding brought by the Company
or any such corporation. Each Director of the Company on being elected or
appointed shan be deemed to have contracted with the Company on the terms of the
foregoing indemnity.
20.2 Subject to the provisions of the Company Act, the Directors may cause the
Company to indemnify any officer, employee or agent of the Company or of a
corporation of which the Company is or was a member (notwithstanding that he is
also a Director) and his heirs and personal representatives against all costs,
charges and expenses whatsoever incurred by him and resulting from his acting as
an officer, employee or agent of the Company or such corporation. In addition
the Company shall indemnify the Secretary or an Assistant Secretary of the
Company (if he shall not be a full time employee of the Company and
notwithstanding that he is also a Director) and his heirs and personal
representatives against all costs, charges and expenses whatsoever incurred by
him and arising out of the functions assigned to the Secretary by the Company
Act or these Articles. Each such Secretary and Assistant Secretary on being
appointed shall be deemed to have contracted with the Company on the terms of
the foregoing indemnity.
20.3 For the purposes of Article 20.1, a civil, criminal or administrative
action or proceeding shall include a civil criminal, administrative or other
investigation or enquiry the subject of which concerns the acts or conduct of
the Director or former Director of the Company while a Director of the Company.
20.4 The failure of a Director or officer of the Company to comply with the
provisions of the Company Act, the Memorandum of the Company or these Articles
shall not invalidate any indemnity to which he is entitled under this Part.
20.5 The Directors may cause the Company to purchase and maintain insurance for
the benefit of any person who is or was serving as a Director, officer, employee
or agent of the Company or as a director, officer, employee or agent of any
corporation of which the Company
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is or was a member and his heirs or personal representatives against any
liability incurred by him as such Director, director, officer, employee or
agent.
PART 21 - DIVIDENDS AND RESERVE
21.1 The Directors may from time to time declare and authorize payment of such
dividends, if any, as they may deem advisable and need not give notice of such
declaration to any member. No dividend shall be paid otherwise than out of funds
or assets properly available for the payment of dividends and a declaration by
the Directors as to the amount of such funds or assets available for dividends
shall be conclusive. The Company may pay any such dividend wholly or in part by
the distribution of specific assets and in particular by paid up shares, bonds,
debentures or other securities of the Company or any other corporation or in any
one or more such ways as may be authorized by the Company or the Directors and
where any difficulty arises with regard to such a distribution the Directors may
settle the same as they think expedient, and in particular may fix the value for
distribution of such specific assets or any part thereof, and may determine that
cash payments in substitution for all or any part of the specific assets to
which any members are entitled shall be made to any members on the basis of the
value so fixed in order to adjust the rights of all parties and may vest any
such specific assets in trustees for the persons entitled to the dividend as may
seem expedient to the Directors.
21.2 Any dividend declared on shares of any class may be made payable on such
date as is fixed by the Directors.
21.3 Subject to the rights of members, if any, holding shares with special
rights as to dividends, all dividends on shares of any class shall be declared
and paid according to the number of such shares held.
2l.4 The Directors may, before declaring any dividend, set aside out of the
funds property available for the payment of dividends such sums as they think
proper as a reserve or reserves, which shall, at the discretion of the
Directors, be applicable for meeting contingencies or for equalizing dividends
or for any other purpose to which such funds of the Company may be properly
applied, and pending such application may, at the like discretion, either be
employed in the business of the Company or be invested in such investments as
the Directors may from time to time think fit. The Directors may also, without
placing the same in reserve, carry forward such funds which they think prudent
not to divide.
21.5 If several persons are registered as joint holders of any share, any one of
them may give an effective receipt for any dividend, interest or other moneys
payable in respect of the share.
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21.6 No dividend shall bear interest. Where the dividend to which a member is
entitled includes a fraction of a cent, such fraction shall be disregarded in
making payment thereof and such payment shall be deemed to be payment in full.
21.7 Any dividend, interest or other moneys payable in respect of shares may be
paid by cheque or warrant sent by mail directed to the registered address of the
holder, or in the case of joint holders, to the registered address of that one
of the joint holders who is first named on the register, or to such person and
to such address as the holder or joint holders may direct in writing. Every such
cheque or warrant shall be made payable to the order of the person to whom it is
sent. The mailing of such cheque or warrant shall, to the extent of the sum
represented thereby (plus the amount of any tax required by law to be deducted)
discharge all liability for the dividend, unless such cheque or warrant shall
not be paid on presentation or the amount of tax so deducted shall not be paid
to the appropriate taxing authority.
21.8 Notwithstanding anything contained in these Articles the Directors may from
time to time capitalize any undistributed surplus on hand of the Company and may
from time to time issue as fully paid and non-assessable any unissued shares or
any bonds, debentures or other debt obligations of the Company as a dividend
representing such undistributed surplus on hand or any part thereof.
21.9 A transfer of a share shall not pass the right to any dividend declared
thereon before the registration of the transfer in the register.
PART 22 - RECORD DATES
22.1 The Directors may fix in advance a date, which shall not be more than the
maximum number of days permitted by the Company Act preceding the date of any
meeting of members or any class or series thereof or of the payment of any
dividend or of the proposed taking of any other proper action requiring the
determination of members, as the record date for the determination of the
members entitled to notice of, or to attend and vote at, any such meeting and
any adjournment thereof, or entitled to receive payment of any such dividend or
for any other proper purpose and, in such case, notwithstanding anything
elsewhere contained in these Articles, only members of record on the date so
fixed shall be deemed to be members for the purposes aforesaid.
22.2 Where no record date is so fixed for the determination of members as
provided in the preceding Article the date on which the notice is mailed or on
which the resolution declaring the dividend is passed, as the case may be, shall
be the record date for such determination.
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PART 23 - DOCUMENTS, RECORDS AND FINANCIAL STATEMENTS
23.1 The Company shall keep at its records office or at such other place as the
Company Act may permit, the documents, copies, registers, minutes, and records
which the Company is required by the Company Act to keep at its records office
or such other place, as the case may be.
23.2 The Company shall cause to be kept proper books of account and accounting
records in respect of all financial and other transactions of the Company in
order properly to record the financial affairs and condition of the Company and
to comply with the Company Act.
23.3 Unless the Directors determine otherwise or unless otherwise determined by
an ordinary resolution, no member of the Company shall be entitled to inspect
the accounting records of the Company.
23.4 The Directors shall from time to time at the expense of the Company cause
to be prepared and laid before the Company in general meeting such financial
statements and reports as are required by the Company Act.
23.5 Every member shall be entitled to be furnished once gratis on demand with a
copy of the latest annual financial statement of the Company and, if so required
by the Company Act, a copy of each such annual financial statement and interim
financial statement shall be mailed to each member.
PART 24 - NOTICES
24.1 A notice, statement or report may be given or delivered by the Company to
any member either by delivery to him personally or by sending it by mail to him
to his address as recorded in the register of members. Where a notice, statement
or report is sent by mail, service or delivery of the notice, statement or
report shall be deemed to be effected by properly addressing and mailing the
notice, statement or report and to have been given on the day, Saturdays,
Sundays and holidays excepted, following the date of mailing. A certificate
signed by the Secretary or other officer of the Company or of any other
corporation acting in that behalf for the Company that the letter, envelope or
wrapper containing the notice, statement or report was so addressed and mailed
shall be conclusive evidence thereof.
24.2 A notice, statement or report may be given or delivered by the Company to
the joint holders of a share by giving or delivering it to the joint holder
first named in the register of members in respect of that share.
24.3 A notice, statement or report may be given or delivered by the Company to
the persons entitled to a share in consequence of the death, bankruptcy or
incapacity of a member
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by sending it through the mail addressed to them by name or by the title of
representatives of the deceased or incapacitated person or trustee of the
bankrupt, or by any like description, at the address, if any, supplied to the
Company for the purpose by the persons claiming to be so entitled or, until such
address has been so supplied, by giving it in a manner in which the same might
have been given if the death, bankruptcy or incapacity had not occurred.
24.4 Notice of every general meeting or meeting of members holding shares of a
class or series shall be given in a manner hereinbefore authorized to every
member holding at the time of the issue of the notice or the date fixed for
determining the members entitled to such notice, whichever is the earlier,
shares which confer the right to notice of and to attend and vote at any such
meeting. No other person except the auditor of the Company and the Directors of
the Company shall be entitled to receive notices of any such meeting.
PART 25 - SEAL
25.1 The Directors may provide a seal for the Company and, if they do so, shall
provide for the safe custody and use of the seal which shall not be affixed to
any instrument except in the presence of, or attested by the signatures of, the
following persons, namely:
(a) any two Directors, or
(b) any one of the Chairman of the Board, the President, the Managing
Director, a Director and a Vice-President together with any one of the
Secretary, the Treasurer, the Secretary-Treasurer, an Assistant
Secretary, an Assistant Treasurer and an Assistant
Secretary-Treasurer, or
(c) if the Company shall have only one member, the President or the
Secretary, or
(d) such person or persons as the Directors may from time to time by
resolution appoint, and any such resolution may be general in its
nature,
and the said Directors, officers, person or persons in whose presence the seal
is so affixed to an instrument shall sign such instrument. For the purpose of
certifying under seal true copies of any document or resolution the seal may be
affixed in the presence of any one of the foregoing persons.
25.2 To enable the seal of the Company to be affixed to any bonds, debentures,
share certificates, or other securities of the Company, whether in definitive or
interim form, on which facsimiles of any of the signatures of the Directors or
officers of the Company are, in accordance with the Company Act or these
Articles, printed or otherwise mechanically reproduced there may be delivered to
the firm or company employed to engrave, lithograph or print such definitive or
interim bonds, debentures, share certificates or other securities one or more
unmounted dies reproducing the Company's seal and the Chairman of the Board, the
- 28 -
<PAGE>
President, the Managing Director or a Vice-President and the Secretary,
Treasurer, Secretary-Treasurer, an Assistant Secretary, an Assistant Treasurer
or an Assistant Secretary-Treasurer may by a document authorize such firm or
company to cause the Company's seal to be affixed to such definitive or interim
bonds, debentures, share certificates or other securities by the use of such
dies. Bonds, debentures, share certificates or other securities to which the
Company's seal has been so affixed shall for all purposes be deemed to be under
and to bear the Company's seal lawfully affixed thereto.
25.3 The Company may have for use in any other province, state, territory or
country an official seal which shall have on its face the name of the province,
state, territory or country where it is to be used and all of the powers
conferred by the Company Act with respect thereto may be exercised by the
Directors or by a duly authorized agent of the Company.
PART 26 - PROHIBITIONS
26.1 If the Company is, or becomes, a company which is not a reporting company,
the number of persons who beneficially own designated securities of the Company
(counting any two or more joint registered owners as one beneficial owner) shall
be limited to 50, excluding persons that:
(a) are employed by the Company or an affiliate of it, or
(b) beneficially owned, directly or indirectly, designated
securities of the Company while employed by it or by an
affiliate of it and, at au times since ceasing to be so
employed, have continued to beneficially own, directly or
indirectly, at least one designated security of the Company.
26.2 If the Company is, or becomes, a company which is not a reporting company,
no designated securities of the Company, and no securities that are convertible
into or exchangeable for designated securities of the Company, shall be:
(a) offered for sale to the public; or
(b) transferred without the previous consent of the Directors
expressed by a resolution of the Board and the Directors shall
not be required to give any reason for refusing to consent to
any such proposed transfer.
- 29 -
Exhibit 10.1
OPTION TO PURCHASE INTEREST IN MINING CLAIMS
Agreement made and effective this 8th day of February, 1996, by and between
Idaho Mining & Development Co. of Cottonwood, Idaho 83522, hereinafter
"Optionor", and, Idaho Consolidated Metals Corporation with primary office at
504 Main, Suite 470, Lewiston, Idaho 83501, hereinafter "Optionee".
The parties hereto recognize Optionor currently owns or has a leasehold interest
in an undivided 40% interest in certain mining claims named the Golden Eagle
Mine, a complete list and description of which is attached hereto and made a
part hereof by reference, and Optionee is the undivided owner or leaseholder of
a 60% interest therein.
The parties further recognize that Optionee is interested in a joint venture
agreement with a third party mining company involving the entire property known
as the Golden Eagle.
The parties hereto agree upon the terms and condition hereinafter set forth.
1. Definitions. The following terms and expressions shall have the following
meanings:
(a) "Construction" includes the supply, construction, erection and or
installation of all reasonably required mining, milling and processing equipment
and plant or improvements to be used for mining and treatment of Minerals,
including open pit capital equipment, open pit preproduction stripping,
underground capital equipment, underground mine preparation, accommodation
facilities and buildings, ancillary equipment and buildings, engineering, office
and on-site administration.
(b) "Development" shall mean the activity, operations or work performed on
the Property in preparing for the removal of a deposit of Minerals, or expansion
of same, including sampling. metallurgical studies, site mapping and surveying,
environmental studies, design engineering, obtaining governmental permits, shaft
sinking underground drifting and drilling, site preparation, driving adits,
buildings and improvements, access roads, housing and permanent accommodation
facilities and engineering, office and on-site administration.
(c) "Expenditures" in relation to Exploration, Development, Construction
and or Mining means the aggregate of all reasonable direct or indirect expenses
of or incidental to any or all of the foregoing.
(d) "Exploration" shall mean the activity, operations or work performed for
the purpose of ascertaining the existence, location, quantity, quality or extent
of deposits of Minerals within the Property including drilling, assaying,
geological geophysical and geotechnical surveys, studies and mapping, surveying,
trenching, field support and engineering, on-site office and administration.
-1-
<PAGE>
(e) "Exploration and Evaluation Period" shall mean that period of time
commencing with the execution hereof and terminating five years from that date,
or such earlier date as Optionee may exercise its option to purchase as
described in this Agreement.
(f) "Minerals" means all minerals or substances of every nature and
character whatsoever within the limits of the Property; whether or not at the
time of execution of the Agreement any mineral was given any commercial
consideration by the parties, but excluding minerals not subject to mineral
location under the laws of the United states at the time each unpatented mining
claim comprising the Property was located, which latter excluded items shall not
be deemed the subject of this Agreement.
(g) "Mining" shall mean the activity, operation or the carrying on of
mining, extracting, producing and handling Minerals, and all other work
incidental thereto, as the same shall be performed with and upon the Minerals
including providing accommodation, transportation, milling, smelting, refining
and other processing of Minerals performed in connection with such mining,
extracting, producing and handling of Minerals.
(h) "Property" shall mean those unpatented mining claims identified on the
attached Exhibit A.
2. Title. Optionor hereby represents and covenants that (1) he owns the outright
right to mine the property by lease or actual ownership free and clear of all
liens and encumbrances, (2) he is in possession of a 40% interest in the subject
property (3) he has no knowledge of any adverse claim or encumbrance upon the
Property, (4) the Property is in good standing under all applicable laws and
regulations and all taxes, assessments and filings have been timely paid or
filed, (5) he has the full right and authority to enter into this Agreement.
Such covenants and warranties are continuing conditions of Optionee's
obligations hereunder and shall be expressed in any conveyance to Optionee made
pursuant to exercise of the option granted by this Agreement.
3. Initial Payment. As consideration for both the exploration rights and the
option to purchase granted hereby, Optionee has paid $50,000 to Optionor, the
receipt and sufficiency of which is hereby acknowledged by Optionor.
4. Work Program. Optionee shall incur the following Expenditures either by work
conducted by Optionee in regard to high grade structures on the property, or by
Optionee's third party joint venture partner in the event agreement is reached
herewith.
(i) First Year $30,000
------------------------------ -------
(ii) Second Year $50,000
------------------------------ -------
-2-
<PAGE>
The only Expenditure obligation required of the Optionee is that set forth
above. All work done on the subject mining claims shall be treated as beneficial
to the outstanding 40% interest currently being optioned under this agreement
for the purposes of Paragraph 4, expenditure requirements.
5. Patient Application. The parties recognize that 3 claims involved in this
option are currently subject to Patent Application No. IDI-28539. The patent
process requires that title to claims in the patent procedure remain with the
patent applicant. Optionor hereby agrees to sign a separate lease on those 3
claims at the time this option is exercised if the patent process is still going
on. Prior to the exercise of this option, Golden Eagle, Golden Eagle 2 and
Golden Eagle 3 shall be subject to all the terms and conditions hereof. After
the patent is issued; all mineral rights to the property shall go to Optionee
and Optionor will sign a separate Quitclaim deed therefor.
6. Option to Purchase. Optionor hereby grants to Optionee an exclusive option to
purchase the property for a total purchase price paid as follows: $50,000 upon
signing this Option and 100,000 shares of Optionee's public trading stock,
payable 60 days after the signing hereof and upon completion of document and
title evaluation. The parties recognize the property has at least 1,000,000 oz.
Of Au in the possible to probable category delineated by previous work and
independently confirmed. Consequently, Optionee will pay Optionor an additional
$500.000 from Au, production from the property commencing on the 5 year
anniversary of this Option to be paid within 3 years thereafter. The unpaid
balance to bear interest at 8% per annum.
The option hereby granted may be exercised any time prior to (5 years from date
signed), upon written notice delivered to Optionor 10 days before the closing of
the sale of the property as specified by Optionee in the notice; provided,
however, that Optionee shall have performed all of the requirements, duties and
obligations to be performed by it hereunder. At closing, Optionee shall deliver
to Optionor the any remaining stock owed and a promissory note evidencing the
payment of $500,000 as the value of existing ounces of Au. at signing hereof and
Optionor shall deliver to Optionee an executed, acknowledged deed or other
conveyance in proper form conveying the representative 40% undivided interest
held by Optionor.
7. Possession during Exploration and Evaluation Period. Optionee shall have a
complete right of access and use of the property as required for mining
purposes. Optionor shall have right to ingress and egress to the three claims in
Patent Application 101-28539.
8. Optionor's Covenants. Optionor covenants while the Agreement between the
parties hereto is in effect:
(a) Not to sell, transfer, encumber, suffer any lien upon, dispose of or
deal in the property or title thereto.
(b) To assist with Optionee in obtaining such permits and approval as
Optionee may require or consider advisable to comply with all regulatory or
governmental requirements which affect the
-3-
<PAGE>
property. In the event Optionee desires to apply for patent to any of the
unpatented mining claims, excepting Golden Eagle, and Golden Eagle 2 and 3,
currently subject of a patent application by Optionor, Optionor agrees to assist
and cooperate with Optionee in such application, which applications shall be
made in the name of Optionor.
(c) To notify Optionee of any knowledge, communication or notice relating
to the property.
(d) To keep all information and data concerning the property secret and
confidential and not to release any such information without prior written
consent of Optionee.
(e) That Optionee, so long as it performs all obligations and covenants on
its part to be performed, shall peaceably possess and enjoy the property without
interruption or disturbance from Optionor or any other person, firm or
corporation.
9. Optionee's Covenants. Optionee covenants:
(a) To keep the property in good standing by payment of all taxes and
assessments including payment of all state and federal filings and other
transfer fees necessary to maintain ownership in the properties.
(b) To furnish Optionor promptly with copies of surveys, assays, drill
logs, and other similar documents obtained by or for Optionee relating to the
property.
(c) To furnish Optionor annually with proposed programs of exploration work
and budgets therefor prior to their implementation.
(d) To pay and discharge all accounts, expenses, and charges incurred by it
in respect to work on the property as they become due and to keep the title free
of any lien.
(e) To hold harmless Optionor from all liabilities, loss of any and all
kinds and responsibility for environmental damages, charges, fines and penalties
of every king resulting from activities of Optionee.
(f) To timely prepare for submission (with contemporaneous copies to
Optionor) all reports, affidavits, estimates and other filings or documentation
of any and all types required to be submitted to local, state and federal
government agencies having jurisdiction over the property during the term of
this agreement.
10. Force Majeure. If Optionee is delayed or prevented from carrying out any
Exploration, Development, Mining, or work programs as a result of causes beyond
the reasonable control of Optionee (including without limiting the generality of
the foregoing, acts of God, strikes, lockouts or other labor or industrial
disturbances, restraints by, governmental agencies, interruptions by
-4-
<PAGE>
government or court orders, future orders of any regulatory body having
Jurisdiction, delays caused by inability to obtain necessary permits or delays
caused by environmental groups, entities or agencies, acts of the public enemy,
wars, riots, sabotage, blockages, embargoes, insurrections, failure or inability
to secure fuel, powers, materials, contractors or labor, depressed metal prices
or other economic conditions, epidemics, snowslides, landslides, lightning,
weather conditions materially preventing or impairing work, earthquakes, fires,
storms, floods, washouts or explosions), the period of all such delays resulting
from such causes or any of them shall be excluded in computing all periods of
time within which Optionee must perform work or make payments both before and
after exercise of the option to lease as well as the time within which Optionee
may exercise the option herein described; provided, however that under no
circumstances shall such option be extended beyond February 10, 200 1, and if
not exercised by that time, said option shall lapse and all rights of Optionee
to the Minerals and the Property shall be terminated.
11. Termination. The rights of Optionee granted hereby shall be subject to
termination as follows:
(a) Termination. Any and all rights of Optionee hereunder shall
automatically terminate without any action of Optionor in the following events:
(i) Optionee failing to perform at least the respective amounts of
work (value) on or before each of the date set forth in paragraph 4(i).
(ii) If Optionee has not exercised the option granted to it prior to
its expiration as hereinafter provided.
(iii) Nonrectification of substantial breach by Optionee of its
obligations hereunder within 60 days of written notice, except, however, no such
notice shall be required in the event of failure to make any payments as
required by the terms of this Agreement.
(b) Rights of Optionee on Termination. On termination, Optionee shall have
one year to remove equipment owned or leased by it, but Optionee shall have no
right to remove shaft and underground timbers and supports or framework
necessary to the use or maintenance of shafts or approaches to mines or
workings. After the removal period above provided any equipment remaining on the
Property shall become the property of the Optionor.
(c) Other Termination Rights/Duties. Optionee shall have the right at any
time to terminate in respect to any part or parts of the Property by written
notice given Optionor within the same period required for notice of termination
of the Agreement as herein provided. On termination Optionee shall leave the
Property or that part relinquished in a good and safe condition in accordance
with local, state and federal laws.
-5-
<PAGE>
12. Notices. Any notices due or to be delivered hereunder shall be deemed to
have been delivered when the same shall have been placed in the United States
mails, with sufficient postage affixed, certified, return receipt requested,
addressed to the other party at the address set forth in paragraph 1 above. No
change of address of any party shall be binding upon or effective as to any
other party until 15 days after written notice thereof shall have been delivered
to the other party.
13. If at any time prior to or after the exercise of this Option, Optionee
concludes that no further mineral development or mining is warranted, a
quitclaim deed or other conveyance back to Optionor will be provided upon
Optionor's request.
14. Entire Agreement. This Agreement shall be construed in accordance with the
laws of the State of Idaho except that all matters relating to unpatented mining
claims shall be governed by applicable federal law and regulation. This
Agreement constitutes the entire agreements between the parties. All other,
prior or contemporaneous agreements or understandings between the parties are
merged herein. No additions hereto or alterations hereof shall be binding upon
either party until and unless a memorandum in writing expressing such action
shall have been executed by both parties.
The parties hereto understand that this Agreement, is subject to approval of the
Vancouver Stock Exchange and will be submitted therefore.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
OPTIONOR: OPTIONEE
/s/ Joe Swisher /s/ Del Steiner
- ------------------------------ --------------------------------------
Joe Swisher, President Del Steiner, President
Idaho Mining & Development Co. Idaho Consolidated Metals Corporation
-6-
<PAGE>
May 14, 1997
Campney & Murphy
Barristers & Solicitors
2100 - 1111 W. Georgia Street
P.O. Box 48800
Vancouver, BC V7X 1K9
Attention: Ruth Chan
Dear Sir\Mesdames:
Re: IDAHO CONSOLIDATED METALS CORP.
Property Acquisition
This is to confirm that the Vancouver Stock Exchange has accepted for filing and
agreement dated February 8, 1996, whereby the Company can acquire from Idaho
Mining & Development Company Inc., a 40% interest in certain mining claims known
as the Golden Eagle Mines, located in Idaho County, Idaho. Consideration
consists of the payment of $50,000 US, the issuance of 100,000 common shares.
Should you have any questions, please contact the undersigned.
Yours truly,
/s/ Robert Kang
- -----------------------------------
Robert Kang, CA
Corporate Analyst -PLAC
Corporate Finance Services
RK\lrp
cc BC Securities Commission
Idaho Consolidated Metals Corp.
<PAGE>
Page 1 of 1
Golden Eagle Claim List
List of Claims Kept - Sorted by ICM Number
<TABLE>
<S> <C> <C> <C> <C> <C>
Claim Name BLM Serial # Second BLM Serial # Status Date
- ---------- ------------ ------------------- ------ ----
Eagle # 112 IMC 44040 keep 07/31/98
Eagle # 113 IMC 44041 keep 07/31/98
Eagle # 117 IMC 44045 keep 07/31/98
Eagle # 119 IMC 44047 keep 07/31/98
Eagle # 120 IMC 44049 keep 07/31/98
Eagle # 122 IMC 44051 keep 07/31/98
Eagle # 123 IMC 44052 keep 07/31/98
Eagle # 124 IMC 44053 keep 07/31/98
Eagle # 129 IMC 44058 keep 07/31/98
Eagle # 130 IMC 44059 keep 07/31/98
Eagle # 182 IMC 101740 keep 07/31/98
Eagle # 185 IMC 101743 keep 07/31/98
</TABLE>
<PAGE>
Page 1 of 4
Golden Eagle Claim List
List of Claims Dropped - Sorted by ICM Number
<TABLE>
<S> <C> <C> <C> <C> <C>
Claim Name BLM Serial # Second BLM Serial # Status Date
- ---------- ------------ ------------------- ------ ----
Eagle # 57 IMC 415 dropped 07/31/98
Eagle # 56 IMC 416 dropped 07/31/98
Eagle # 55 IMC 417 dropped 07/31/98
Golden Eagle # 28 IMC 418 dropped 07/31/98
Eagle # 54 IMC 420 IMC 175134 dropped 07/31/98
Eagle # 33 IMC 421 dropped 07/31/98
Eagle # 32 IMC 422 IMC 175128 dropped 07/31/98
Eagle # 30 IMC 423 IMC 175127 dropped 07/31/98
Golden Eagle # 19 IMC 424 dropped 07/31/98
Golden Eagle # 18 IMC 425 IMC 175124 dropped 07/31/98
Golden Eagle IMC 427 IMC 175119 dropped 07/31/98
Golden Eagle # 29 IMC 3996 dropped 07/31/98
Golden Eagle # 30 IMC 3997 dropped 07/31/98
Golden Eagle # 31 IMC 3998 dropped 07/31/98
Golden Eagle # 32 IMC 3999 dropped 07/31/98
Golden Eagle # 33 IMC 4000 dropped 07/31/98
Golden Eagle # 34 IMC 4001 dropped 07/31/98
Golden Eagle # 35 IMC 4002 dropped 07/31/98
Golden Eagle # 36 IMC 4003 dropped 07/31/98
Golden Eagle # 37 IMC 4004 dropped 07/31/98
Golden Eagle # 38 IMC 4005 dropped 07/31/98
Golden Eagle # 39 IMC 4006 dropped 07/31/98
Golden Eagle # 40 IMC 4007 dropped 07/31/98
Golden Eagle # 41 IMC 4008 dropped 07/31/98
Eagle # 58 IMC 4009 dropped 07/31/98
Eagle # 59 IMC 4010 dropped 07/31/98
Eagle # 60 IMC 4011 dropped 07/31/98
Eagle # 61 IMC 4012 dropped 07/31/98
Eagle # 62 IMC 4013 dropped 07/31/98
Eagle # 64 IMC 4015 dropped 07/31/98
Eagle # 65 IMC 4016 dropped 07/31/98
Eagle # 66 IMC 4017 dropped 07/31/98
Eagle # 67 IMC 4018 dropped 07/31/98
Eagle # 68 IMC 4019 dropped 07/31/98
Eagle # 71 IMC 4022 dropped 07/31/98
Eagle # 39 IMC 9325 IMC 175130 dropped 07/31/98
Eagle # 40 IMC 9326 IMC 175131 dropped 07/31/98
Eagle # 75 IMC 9327 IMC 175136 dropped 07/31/98
Eagle # 78 IMC 9330 dropped 07/31/98
Eagle # 79 IMC 9331 dropped 07/31/98
Eagle # 80 IMC 9332 dropped 07/31/98
Eagle # 81 IMC 9333 dropped 07/31/98
Eagle # 82 IMC 9334 dropped 07/31/98
Eagle # 83 IMC 9335 dropped 07/31/98
Eagle # 84 IMC 9336 dropped 07/31/98
Eagle # 85 IMC 9337 dropped 07/31/98
Eagle # 86 IMC 9338 dropped 07/31/98
Eagle # 87 IMC 9339 dropped 07/31/98
</TABLE>
<PAGE>
Page 2 of 4
Golden Eagle Claim List
List of Claims Dropped - Sorted by ICM Number
<TABLE>
<S> <C> <C> <C> <C> <C>
Claim Name BLM Serial # Second BLM Serial # Status Date
- ---------- ------------ ------------------- ------ ----
Eagle # 88 IMC 9340 dropped 07/31/98
Eagle # 89 IMC 9341 dropped 07/31/98
Eagle # 90 IMC 9342 dropped 07/31/98
Eagle # 91 IMC 9343 dropped 07/31/98
Eagle # 92 IMC 9344 dropped 07/31/98
Eagle # 93 IMC 9345 dropped 07/31/98
Eagle # 94 IMC 9346 dropped 07/31/98
Eagle # 95 IMC 9347 dropped 07/31/98
Eagle # 96 IMC 9348 dropped 07/31/98
Eagle # 97 IMC 9349 dropped 07/31/98
Eagle # 98 IMC 9350 dropped 07/31/98
Eagle # 99 IMC 9351 dropped 07/31/98
Eagle # 100 IMC 9352 dropped 07/31/98
Eagle # 101 IMC 9353 dropped 07/31/98
Eagle # 102 IMC 9354 dropped 07/31/98
Eagle # 103 IMC 9355 dropped 07/31/98
Eagle # 104 IMC 9356 dropped 07/31/98
Eagle # 105 IMC 9357 dropped 07/31/98
Eagle # 106 IMC 9358 dropped 07/31/98
Eagle # 107 IMC 9359 dropped 07/31/98
Eagle # 108 IMC 9360 dropped 07/31/98
Golden Eagle # 2 IMC 11110 IMC 175120 dropped 07/31/98
Golden Eagle # 3 IMC 11111 IMC 175121 dropped 07/31/98
Golden Eagle # 5 IMC 11113 dropped 07/31/98
Golden Eagle # 6 IMC 11114 dropped 07/31/98
Golden Eagle # 8 IMC 11116 dropped 07/31/98
Golden Eagle # 9 IMC 11117 dropped 07/31/98
Golden Eagle # 10 IMC 11118 dropped 07/31/98
Golden Eagle # 11 IMC 11119 dropped 07/31/98
Golden Eagle # 12 IMC 11120 dropped 07/31/98
Golden Eagle # 13 IMC 11121 dropped 07/31/98
Golden Eagle # 14 IMC 11122 dropped 07/31/98
Golden Eagle # 15 IMC 11123 dropped 07/31/98
Golden Eagle # 16 IMC 11124 dropped 07/31/98
Golden Eagle # 17 IMC 11125 dropped 07/31/98
Golden Eagle # 20F IMC 11126 dropped 07/31/98
Golden Eagle # 21F IMC 11127 IMC 175125 dropped 07/31/98
Golden Eagle # 22F IMC 11128 IMC 175126 dropped 07/31/98
Golden Eagle # 23 IMC 11129 dropped 07/31/98
Golden Eagle # 24 IMC 11130 dropped 07/31/98
Golden Eagle # 25 IMC 11131 dropped 07/31/98
Golden Eagle # 26 IMC 11132 dropped 07/31/98
Golden Eagle # 27 IMC 11133 dropped 07/31/98
Golden Eagle # 1 IMC 11134 dropped 07/31/98
Golden Eagle # 2 IMC 11135 dropped 07/31/98
Golden Eagle # 3 IMC 11136 dropped 07/31/98
Golden Eagle # 4 IMC 11137 dropped 07/31/98
Golden Eagle # 5 IMC 11138 dropped 07/31/98
</TABLE>
<PAGE>
Golden Eagle Claim List
List of Claims Dropped - Sorted by ICM Number
Page 3 of 4
<TABLE>
<S> <C> <C> <C> <C> <C>
Claim Name BLM Serial # Second BLM Serial # Status Date
- ---------- ------------ ------------------- ------ ----
Eagle # 6 IMC 11139 dropped 07/31/98
Eagle # 7 IMC 11140 dropped 07/31/98
Eagle # 9 IMC 11142 dropped 07/31/98
Eagle # 10 IMC 11143 dropped 07/31/98
Eagle # 12 IMC 11145 dropped 07/31/98
Eagle # 13 IMC 11146 dropped 07/31/98
Eagle # 15 IMC 11148 dropped 07/31/98
Eagle # 16 IMC 11149 dropped 07/31/98
Eagle # 18 IMC 11151 dropped 07/31/98
Eagle # 19 IMC 11152 dropped 07/31/98
Eagle # 21 IMC 11154 dropped 07/31/98
Eagle # 22 IMC 11155 dropped 07/31/98
Eagle # 23 IMC 11156 dropped 07/31/98
Eagle # 24 IMC 11157 dropped 07/31/98
Eagle # 25 IMC 11158 dropped 07/31/98
Eagle # 26 IMC 11159 dropped 07/31/98
Eagle # 27 IMC 11160 dropped 07/31/98
Eagle # 28 IMC 11161 dropped 07/31/98
Eagle # 29 IMC 11162 dropped 07/31/98
Eagle # 31 IMC 11163 dropped 07/31/98
Eagle # 34 IMC 11164 IMC 175129 dropped 07/31/98
Eagle # 35 IMC 11165 dropped 07/31/98
Eagle # 36 IMC 11166 dropped 07/31/98
Eagle # 37 IMC 11167 dropped 07/31/98
Eagle # 38 IMC 11168 dropped 07/31/98
Eagle # 41 IMC 11169 IMC 175132 dropped 07/31/98
Eagle # 42 IMC 11170 IMC 175133 dropped 07/31/98
Eagle # 43 IMC 11171 dropped 07/31/98
Eagle # 44 IMC 11172 dropped 07/31/98
Eagle # 45 IMC 11173 dropped 07/31/98
Eagle # 46 IMC 11174 dropped 07/31/98
Eagle # 47 IMC 11175 dropped 07/31/98
Eagle # 48 IMC 11176 dropped 07/31/98
Eagle # 49 IMC 11177 dropped 07/31/98
Eagle # 50 IMC 11178 dropped 07/31/98
Eagle # 51 IMC 11179 dropped 07/31/98
Eagle # 52 IMC 11180 dropped 07/31/98
Eagle # 53 IMC 11659 dropped 07/31/98
Golden Eagle # 19X IMC 13965 dropped 07/31/98
This Is It Placer IMC 29189 IMC 175152 dropped 07/31/98
Eagle # 109 IMC 44037 dropped 07/31/98
Eagle # 110 IMC 44038 dropped 07/31/98
Eagle # 111 IMC 44039 dropped 07/31/98
Eagle # 114 IMC 44042 dropped 07/31/98
Eagle # 115 IMC 44043 dropped 07/31/98
Eagle # 116 IMC 44044 dropped 07/31/98
Eagle # 118 IMC 44046 dropped 07/31/98
Eagle # 119A IMC 44048 dropped 07/31/98
</TABLE>
<PAGE>
Golden Eagle Claim List
List of Claims Dropped - Sorted by ICM Number
Page 4 of 4
<TABLE>
<S> <C> <C> <C> <C> <C>
Claim Name BLM Serial # Second BLM Serial # Status Date
- ---------- ------------ ------------------- ------ ----
Eagle # 121 IMC 44050 dropped 07/31/98
Eagle # 125 IMC 44054 dropped 07/31/98
Eagle # 126 IMC 44055 dropped 07/31/98
Eagle # 127 IMC 44056 dropped 07/31/98
Eagle # 128 IMC 44057 dropped 07/31/98
Eagle # 131 IMC 95654 dropped 07/31/98
Eagle # 132 IMC 95655 dropped 07/31/98
Eagle # 133 IMC 95656 IMC 175137 dropped 07/31/98
Eagle # 134 IMC 95657 dropped 07/31/98
Eagle # 135 IMC 95658 dropped 07/31/98
Eagle # 136 IMC 95659 dropped 07/31/98
Eagle # 137 IMC 95660 dropped 07/31/98
Eagle # 138 IMC 95661 dropped 07/31/98
Eagle # 139 IMC 95662 dropped 07/31/98
Eagle # 140 IMC 95663 dropped 07/31/98
Eagle # 141 IMC 95664 dropped 07/31/98
Eagle # 142 IMC 95665 dropped 07/31/98
Eagle # 143 IMC 95666 dropped 07/31/98
Eagle # 144 IMC 95667 dropped 07/31/98
Eagle # 145 IMC 95668 dropped 07/31/98
Eagle # 146 IMC 95669 dropped 07/31/98
Eagle # 147 IMC 95670 dropped 07/31/98
Eagle # 148 IMC 95671 dropped 07/31/98
Eagle # 149 IMC 95672 dropped 07/31/98
Eagle # 150 IMC 95673 dropped 07/31/98
Eagle # 151 IMC 95674 dropped 07/31/98
Eagle # 152 IMC 95675 dropped 07/31/98
Eagle # 153 IMC 95676 dropped 07/31/98
Eagle # 154 IMC 95677 dropped 07/31/98
Eagle # 155 IMC 95678 dropped 07/31/98
Eagle # 156 IMC 95679 dropped 07/31/98
Eagle # 157 IMC 95680 dropped 07/31/98
Eagle # 178 IMC 101736 dropped 07/31/98
Host Wheel Barrow # 1 IMC 123246 dropped 07/31/98
Host Wheel Barrow # 2 IMC 123247 dropped 07/31/98
Host Wheel Barrow # 3 IMC 123248 dropped 07/31/98
Golden Eagle # 4 IMC 175122 dropped 07/31/98
Golden Eagle # 7 IMC 175123 dropped 07/31/98
Eagle # 63 IMC 175135 dropped 07/31/98
We Found It # 3 IMC 177711 dropped 07/31/98
We Found It # 4 IMC 177712 dropped 07/31/98
</TABLE>
Exhibit 10.2
========================================================================
This is an accurate certified copy.
Date 10/4/96
Signed /s/ Geoffrey S. Magnuson
---------------------------------------
Geoffrey S. Magnuson Corporate Secretary
Idaho Consolidated Metals Corporation
========================================================================
JOINT VENTURE AGREEMENT
Dated May 20, 1996
BETWEEN
IDAHO CONSOLIDATED METALS CORPORATION
AND
CYPRUS GOLD EXPLORATION CORPORATION
<PAGE>
<TABLE>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS..................................................................................2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES: TITLE TO ASSETS..............................................6
2.1 Capacity of Participants.....................................................................6
2.2 Representations and Warranties...............................................................7
2.3 Representations and Warranties...............................................................8
2.4 Disclosures..................................................................................9
2.5 Record Title.................................................................................9
2.6 Joint Loss of Title..........................................................................9
ARTICLE 3 NAME, PURPOSES AND TERM......................................................................9
3.1 General......................................................................................9
3.2 Name........................................................................................10
3.3 Purposes....................................................................................10
3.4 Limitation..................................................................................10
ARTICLE 4 RELATIONSHIP OF THE PARTICIPANTS............................................................10
4.1 No Partnership..............................................................................10
4.2 U.S. Tax Elections and Allocations..........................................................11
4.3 Other Business Opportunities................................................................11
4.4 Waiver of Right to Partition................................................................12
4.5 Implied Covenants...........................................................................12
ARTICLE 5 CONTRIBUTIONS BY PARTICIPANTS...............................................................12
5.1 Participants' Initial Contributions.........................................................12
5.2 Failure to Make Initial Contributions.......................................................12
5.3 Obligations Prior to Earn-in................................................................13
5.4 Additional Cash Contributions...............................................................14
5.5 Earn-In.....................................................................................14
5.6 Additional Interest.........................................................................14
5.7 Reports.....................................................................................15
5.8 Development by ICMC.........................................................................15
ARTICLE 6 INTERESTS OF PARTICIPANTS:
DEFAULTS AND REMEDIES: FINANCING............................................................16
6.1 Participating Interests.....................................................................16
6.2 Changes in Participating Interests..........................................................18
6.3 Voluntary Reduction in Participation........................................................15
6.4 Default In Making Contributions.............................................................19
6.5 Conversion of Interest......................................................................20
6.6 Continuing Liabilities Upon Adjustments of Participating
Interests...................................................................................20
6.7 Financing by Cyprus.........................................................................21
</TABLE>
i
<PAGE>
<TABLE>
TABLE OF CONTENTS
(Continued)
Page
<S> <C> <C>
ARTICLE 7 MANAGEMENT COMMITTEE........................................................................22
7.1 Organization and Composition................................................................22
7.2 Decisions...................................................................................22
7.3 Meetings....................................................................................23
7.4 Action Without Meeting......................................................................23
7.5 Matters Requiring Approval..................................................................23
ARTICLE 8 MANAGER.....................................................................................24
8.1 Appointment.................................................................................24
8.2 Powers and Duties of Manager................................................................24
8.3 Standard of Care............................................................................27
8.4 Resignation; Deemed Offer to Resign.........................................................27
8.5 Payments to Manager.........................................................................28
8.6 Transactions With Affiliates................................................................28
8.7 Activities During Deadlock..................................................................28
ARTICLE 9 PROGRAMS AND BUDGETS........................................................................29
9.1 Initial Program and Budget..................................................................29
9.2 Operations Pursuant to Programs and Budget..................................................29
9.3 Presentation of Programs and Budget.........................................................29
9.4 Review and Approval of Proposed Programs and
Budgets.....................................................................................29
9.5 Election to Participate.....................................................................30
9.6 Deadlock on Proposed Program and Budgets....................................................30
9.7 Budget Overruns; Program Changes............................................................30
9.8 Emergency or Unexpected Expenditures........................................................30
ARTICLE 10 ACCOUNTS AND SETTLEMENTS....................................................................31
ARTICLE 11 DISPOSITION OF PRODUCTION...................................................................31
11.1 Taking in Kind..............................................................................31
11.2 Failure of Participant to Take In Kind......................................................31
ARTICLE 12 WITHDRAWAL AND TERMINATION..................................................................32
12.1 Termination by Expiration or Agreement......................................................32
12.2 Withdrawal..................................................................................32
12.3 Continuing Obligations......................................................................32
12.4 Disposition of Assets on Termination........................................................33
12.5 Right to Data after Termination.............................................................33
12.6 Continuing Authority........................................................................33
12.7 Non-Compete Covenants.......................................................................34
12.8 Mutual Withdrawal...........................................................................34
</TABLE>
ii
<PAGE>
<TABLE>
TABLE OF CONTENTS
(Continued)
Page
<S> <C> <C>
ARTICLE 13 SURRENDER OF PROPERTY.......................................................................35
13.1 Surrender of Property.......................................................................35
13.2 Reacquisition...............................................................................35
ARTICLE 14 TRANSFER OF INTEREST........................................................................35
14.1 General.....................................................................................35
14.2 Limitations on Free Transferability.........................................................35
14.3 Right of First Refusal......................................................................37
14.4 Exceptions to Right of First Refusal........................................................37
ARTICLE 15 CONFIDENTIALITY AND RELEASES................................................................38
15.1 General.....................................................................................38
15.2 Exceptions..................................................................................38
15.3 Duration of Confidentiality.................................................................39
15.4 Releases....................................................................................39
ARTICLE 16 AREA OFINTEREST.............................................................................39
16.1 Acquisitions in Area of Interest...........................................................39
ARTICLE 17 GENERAL PROVISIONS..........................................................................40
17.1 Notices.....................................................................................40
17.2 Waiver......................................................................................41
17.3 Modification................................................................................41
17.4 Force Majeure...............................................................................41
17.5 Economic Force Majeure......................................................................42
17.6 Governing Law...............................................................................42
17.7 Rule Against Perpetuities...................................................................43
17.8 Further Assurances..........................................................................43
17.9 Survival of Terms and Conditions............................................................43
17.10 Entire Agreement; Successors and Assigns....................................................43
17.11 Memorandum..................................................................................43
17.12 Funds.......................................................................................43
</TABLE>
iii
<PAGE>
JOINT VENTURE AGREEMENT
THIS AGREEMENT, made effective as of May 20, 1996 between IDAHO
CONSOLIDATED METALS CORPORATION ("ICMC") with an address of P.O. Box 1124,
Lewiston, Idaho 83501 and CYPRUS GOLD EXPLORATION CORPORATION ("Cyprus") with an
address of 9100 East Mineral Circle, P.O. Box 3299, Englewood, Colorado
80155-3299.
RECITALS
A. ICMC owns and/or controls one hundred percent (100%) interest in certain
unpatented mining claims, such claims being located in Idaho County, State of
Idaho, which are described in Exhibit A-1, attached hereto and made a part
hereof.
B. Cyprus owns and/or controls one hundred percent (100%) interest in
certain unpatented mining claims, such claims being located in Idaho County,
State of Idaho, which are described in Exhibit A-2, attached hereto and made a
part hereof.
C. The claims described in Exhibits A-1 and A-2 shall herein be
collectively referred to as the "Property".
D. Cyprus wishes to participate with ICMC in the exploration, evaluation,
development and mining of minerals within the Property and ICMC is willing to
grant such right to Cyprus.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, ICMC and Cyprus agree as follows:
1
<PAGE>
ARTICLE 1
DEFINITIONS
1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.
1.2 "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a Participant. For purposes of the
preceding sentence, 11control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust or otherwise.
1.3 "Agreement" means this Joint Venture Agreement, including all
amendments and modifications thereof, and all schedules and exhibits, which are
incorporated herein by this reference.
1.4 "Assets" means the Property, Products and all other real and personal
property, tangible and intangible, held for the benefit of the Participants
hereunder.
1.5 "Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program and a schedule of cash advances to be
made by the Participants.
1.6 "Commencement of Commercial Production" means the date upon which the
production and processing facilities developed under this Agreement achieve an
ore production and processing rate for a continuous thirty-day period equal to
at least seventy percent (70%) of the design rate established in a Feasibility
Study.
1.7 "Development" means all preparation for the removal and recovery of
Products, including the construction or installation of a mill or any other
improvements to be used for the mining, handling, milling, processing or other
beneficiation of
2
<PAGE>
Products, and all Exploration work conducted subsequent to. a decision to
commence Development as contemplated by a feasibility study.
1.8 "Earn-In" means the date upon which Cyprus earns its interest in the
Property pursuant to Section 5.5.
1.9 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.
1.10 "Exploration Expenditures" means the cost of evaluation of the
Property defined as further exploring and developing the Property, including
drilling, excavating and searching by recognized prospecting techniques,
sampling, assaying, testing and evaluating materials removed from the Property,
mapping, plotting, surveying, constructing and maintaining camps, roads, works
and structures necessary to carry out such evaluation, sampling or testing, all
studies including but not limited to a Feasibility Study required to develop a
mine and all work that may be required in preparing a mine for operating, the
cost or payments to maintain the Property, including costs to locate and/or
relocate the unpatented mining claims, Property acquisition costs, taxes and/or
fees to maintain Property and filings together with an allowance for overhead
and administrative expenses as described in Section 5.3(a).
1.11 "Feasibility Study" means a detailed study compiled by Manager or an
independent third party conducted to determine commercial feasibility and
viability of placing a prospective orebody or deposit into production and may
include, but not be limited to:
(a) such geophysical, geochemical, geological, aerial or other survey
as may be necessary to provide a reasonable estimate of the quality and
extent of the deposit;
(b) such technical or assay reports as may be necessary to evaluate
any proposed method of extraction and processing;
(c) the area required for optimum development of the orebody or
deposit;
3
<PAGE>
(d) a mine construction program setting forth the descriptions of the
work, permits, equipment, facilities, supplies and mines required to bring
the prospective orebody or deposits of Products into Commercial Production,
and the estimated costs thereof or a schedule of expenditures by year of
the costs necessary to bring the project into production;
(e) details of a proposed annual program for initial development of
the deposit;
(f) a plan for such reclamation of the Properties as is required by
law and the estimated costs hereof;
(g) conclusions and recommendations regarding the economic feasibility
and timing for bringing the prospective orebody or deposits of Products
into Commercial Production, taking into account items (a) through (e)
above;
(h) such other information as the Management Committee may deem
appropriate to allow banking or other financial institutions familiar with
the mining business to make a decision to loan funds sufficient to
construct the proposed mine with security based solely on the reserves and
mine described in a Feasibility Study.
1.12 "Initial Contribution" means that contribution each Participant has
made or agrees to make pursuant to Section 5.1.
1.13 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.
1.14 "Management Committee" means the committee established under Article
7.
1.15 "Manager" means Cyprus during the Earn-In phase or the person or
entity appointed under Article 8 to manage Operations, or any successor Manager.
4
<PAGE>
1.16 "Mining" means the mining, extracting, producing, handling, milling or
other processing of Products.
1.17 "Net Proceeds of Production Royalty" means certain amounts calculated
as provided in Exhibit C, which may be payable to a Participant under Section
6.4.
1.18 "Operations" means the activities carried out under this Agreement
after Earn-In.
1.19 "Participant" and "Participants" means the persons or entities that
have a Participating Interest.
1.20 "Participating Interest" means the percentage interest representing
the operating ownership interest of a Participant in Assets, and all other
rights and obligations arising under this Agreement, as such interest may from
time to time be adjusted hereunder. Participating Interests shall be calculated
to three decimal places and rounded to two (e.g., 1.519% rounded to 1.52%).
Decimals of .005 or more shall be rounded up to .01, decimals of less than .005
shall be rounded down. The initial Participating Interests of the Participants
are set forth in Section 6.1.
1.21 "Prime Rate" means the prime interest rate quoted as "Prime" by the
Wall Street Journal as said rate may change from day to day (which quoted rate
may not be the lowest rate averaged on a month-to-month basis at which a
financing institution loans funds).
1.22 "Production Decision" means a decision by the Management Committee to
commence Development and put the Property into production.
1.23 "Products" means all ores, minerals, and mineral resources produced
from the Property under this Agreement.
5
<PAGE>
1.24 "Program" means a description in reasonable detail of the activities
of the Venture which are to be conducted by the Manager during a period.
1.25 "Property" means those interests in property described in Exhibits A-1
and A-2.
1.26 "Simple Majority" means a decision by the Management Committee by
greater than 50% of the votes being entitled to be cast.
1.27 "Transfer" means sell, grant, assign, encumber, pledge or otherwise
commit or dispose of.
1.28 "Venture" means the business arrangement of the Participants under
this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES: TITLE TO ASSETS
2.1 Capacity of Participants. Each of the parties hereto represents and
warrants as follows:
(a) that it is a corporation duly incorporated and in good standing in
its state of incorporation and that it is qualified to do business and is
in good standing in those jurisdictions where necessary in order to carry
out the purposes of this Agreement;
(b) that it has the capacity to enter into and perform this Agreement
and all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this Agreement
have been properly taken;
(c) that it will not breach any other agreement or arrangement by
entering into or performing this Agreement; and
6
<PAGE>
(d) that this Agreement has been duly executed and delivered by it and
is valid and binding upon it in accordance with its terms.
2.2 Representations and Warranties. ICMC makes the following
representations and warranties effective the date hereof:
(a) ICMC has the full and exclusive right and power to act on behalf
of ICMC, and on behalf of any other interested person or entities, to enter
into this Agreement and to grant the rights granted to Cyprus hereunder.
(b) To the best of its knowledge and belief with respect to unpatented
mining claims set forth in Exhibit A-1 and that are included within the
Property, subject to the paramount title of the United States and except as
disclosed in writing to Cyprus: W the unpatented mining claims were
properly laid out and monumented; (ii) all required location and validation
work was properly performed; (iii) location notices and certificates were
properly recorded and filed with appropriate governmental agencies; (iv)
the claims are free and clear of defects, liens and encumbrances arising
by, through or under ICMC, except those of record or disclosed in writing
to Cyprus and defects, liens, and any such encumbrances that do not
materially affect Cyprus' rights under this Agreement; (v) ICMC has not
received notice from anyone asserting conflicting claims and (vi) the
unpatented mining claims are in good standing and compliance with all
federal and state regulations in force as of the effective date of this
Agreement. Nothing in this Section 2.2(b), however, shall be deemed to be a
representation or a warranty that any of the unpatented mining claims
contains a discovery of minerals.
(c) Except as otherwise provided herein, Cyprus may with ICMC's prior
written consent, such consent to not be unreasonably withheld, take all
action necessary (including judicial proceedings) to remove any cloud from
or cure any defect in ICMC's title to the Property. ICMC agrees to
cooperate with Cyprus in any such action taken and agrees to pay its
proportionate share of all costs and expenses (including attorney's fees)
incurred by Cyprus. Cyprus' share of such costs and expenses shall be
credited against Cyprus Earn-in obligations set forth in Section 5.3(a).
7
<PAGE>
(d) ICMC knows of no violation of any applicable federal, state,
regional, or county law or regulation relating to zoning, land use,
environmental protection, or otherwise with respect to the Property or
activities relating thereto; and,
(e) With respect to the Property, ICMC knows of no pending or
threatened actions, suits, claims or proceedings.
(f) With respect to certain of the Property acquired by ICMC pursuant
to an Option to Purchase Interest in Mining Claims Agreement with Idaho
Mining and Development Company dated February 8, 1996 and an agreement
being negotiated with Idaho Gold Corporation for the Friday, Friday
Fraction, Alaska No. 3 and Alaska No. 4 patented claims, MS 1834, patent
no. 41174 and the Regina patented claim, MS 1833, patent no. 39226, which
will become Property subject to this Agreement, ICMC shall be responsible
for all costs associated with such acquisitions except for the contribution
by Cyprus as set forth in Section 5.3(b) herein.
The representations and warranties set forth above shall survive the
execution and delivery of any documents of Transfer provided under this
Agreement.
2.3 Representations and Warranties. Cyprus makes the following
representations and warranties effective the date hereof:
(a) To the best of its knowledge and belief with respect to unpatented
mining claims that are set forth in Exhibit A-2 and included within the
Property, subject to the paramount title of the United States and except as
disclosed in writing to ICMC: (i) the unpatented mining claims were
properly laid out and monumented; (ii) all required location and validation
work was properly performed; (iii) location notices and certificates were
properly recorded and filed with appropriate governmental agencies; (iv)
the claims are free and clear of defects, liens and encumbrances arising
by, through or under Cyprus, except those of record or disclosed in writing
to ICMC and defects, liens, and any such encumbrances that do not
materially affect Cyprus' rights under this
8
<PAGE>
Agreement; (v) Cyprus has not received notice from any one asserting
conflicting claims; and (iv) the unpatented mining claims are in good
standing and compliance with all federal and state regulations in force as
of the effective date of this Agreement. Nothing in this Section 2.2(b),
however, shall be deemed to be a representation or a warranty that any of
the unpatented mining claims contains a discovery of minerals.
2.4 Disclosures. Each of the Participants represents and warrants that it
is unaware of any material facts or circumstances which have not been disclosed
in this Agreement, which would be disclosed to the other Participant in order to
prevent the representations in this Article 2 from being materially misleading.
2.5 Record Title. Title to the Assets shall be held by the Manager for the
benefit of the Venture after Cyprus has earned its interest.
2.6 Joint Loss of Title. Any failure or loss of title to the Assets, and
all costs of defending title, shall be charged to the Joint Account, except that
all costs and losses arising out of or resulting from breach of the
representations and warranties of ICMC shall be charged to ICMC and all such
costs and losses arising out of gross negligence by Cyprus or the Manager shall
be charged to Cyprus or the Manager as the case may be.
ARTICLE 3
NAME, PURPOSES AND TERM
3.1 General. ICMC and Cyprus hereby enter into this Agreement for the
purposes hereinafter stated, and they agree that all of their rights and all of
the Operations on or in connection with the Property shall be subject to and
governed by this Agreement.
9
<PAGE>
3.2 Name. The name of this Venture shall be the Petsite Venture. The
Manager shall accomplish any registration required by applicable assumed or
fictitious name statutes and similar statutes.
3.3 Purposes. This Agreement is entered into for the following purposes and
for no others, and shall serve as the exclusive means by which the Participants,
or either of them, accomplish such purposes:
(a) to conduct Exploration within the Property,
(b) to evaluate the possible Development of the Property,
(c) to engage in Development and Mining Operations on the Property, if
feasible.
(d) to engage in marketing Products, but only to the extent permitted
by Article 11, and
- -
(e) to perform any other activity necessary, appropriate, or
incidental to any of the foregoing.
3.4 Limitation. Unless the Participants otherwise agree in writing, the
Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.
ARTICLE 4
RELATIONSHIP OF THE PARTICIPANTS
4.1 No Partnership. Nothing contained in this Agreement shall be deemed to
constitute either Participant the partner of the other, nor, except as otherwise
herein expressly provided, to constitute either Participant the agent or legal
representative of the other, nor to create any fiduciary relationship between
them. It is not the intention of the Participants to create, nor shall this
Agreement be construed to create, any mining, commercial or other partnership.
Neither Participant shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other Participant, except as
otherwise expressly provided herein. The rights, duties,
10
<PAGE>
obligations and liabilities of the Participants shall be several and not joint
or collective. Each Participant shall be responsible only for its obligations as
herein set out and shall be liable only for its share of the costs and expenses
as provided herein, it being the express purpose and intention of the
Participants that their ownership of Assets and the rights acquired hereunder
shall be as tenants in common. Each Participant, its directors, officers,
employees, agents and attorneys shall be indemnified from and against any and
all losses, claims, damages and liabilities arising out of any act or any
assumption of liability by the indemnifying Participant, or any of its
directors, officers, employees, agents and attorneys done or undertaken, or
apparently done or undertaken, on behalf of the other Participant, except
pursuant to the authority expressly granted herein or as otherwise agreed in
writing between the Participants.
4.2 U.S. Tax Elections and Allocations. Each of the parties hereto agrees
and elects to be excluded from the application of all of the provisions of
Subchapter K of the Internal Revenue Code of 1986, as authorized by Treasury
Regulation ss.1.761-2. The parties hereto agree to execute or join in such
instruments as are necessary to make such election effective, and hereby
authorize and direct Manager to take such action as is necessary to effectuate
such purpose, including filing of the partnership tax return required by
Treasury Regulation ss. 1.761-2(b) (2). Each party shall be entitled to claim
all tax benefits, write-offs, and deductions with respect to all and any costs
which it has incurred.
4.3 Other Business Opportunities. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in and
receive full benefits from business activities, whether or not competitive with
the Operations, without consulting the other. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of either Participant. Unless otherwise agreed
in writing, no Participant shall have any obligation to mill, beneficiate or
otherwise treat any Products or any other Participant's share of Products in any
facility owned or controlled by such Participant.
11
<PAGE>
4.4 Waiver of Right to Partition. The Participants hereby waive and release
all rights of partition, or of sale in lieu thereof, or other division of
Assets, including any such right provided by statute.
4.5 Implied Covenants. There are no implied covenants contained in this
Agreement other than those of good faith and fair dealing.
ARTICLE 5
CONTRIBUTIONS BY PARTICIPANTS
5.1 Participants' Initial Contributions. ICMC, as its Initial Contribution,
hereby contributes the Property described in Exhibit A-1 to the purposes of this
Agreement. Cyprus, as its Initial Contribution, shall contribute the Property
described in Exhibit A-2 and the Exploration Expenditures and payment as
hereinafter set forth.
5.2 Failure to Make Initial Contributions. Cyprus' failure to make its
Initial Contribution in accordance with the provisions of this Article 5 shall
not be deemed to be a withdrawal of Cyprus from this Agreement and the
termination of its Interest hereunder, In the event Cyprus fails to make its
firm commitment and its Initial Contribution pursuant to this Article 5, ICMC
shall provide Cyprus written notice of such failure. If within thirty (30) days
of receipt of notice Cyprus does not cure such failure, then Cyprus shall be
deemed to have withdrawn from this Agreement. Additionally, at any time prior to
Earn-In, but only after Cyprus completes its firm commitment, Cyprus may provide
ICMC with sixty (60) days' written notice of Cyprus' decision to terminate its
interest in this Agreement. Upon such event, Cyprus shall have no further right,
title or interest in and to the Property or this Agreement. Cyprus' withdrawal
shall be effective sixty (60) days after such failure or notice, but such
withdrawal shall not relieve Cyprus of its reclamation or any other obligations
or liabilities resulting from its work on the Property. Cyprus shall be
responsible only for reclamation resulting directly from its work on the
Property, but shall not be responsible for reclamation liability incurred prior
to the effective date of this
12
<PAGE>
Agreement or for any liability incurred by ICMC as a result of conduct of mining
operations pursuant to Section 5.8 herein. Except as provided in this Section
5.2, Cyprus' withdrawal shall relieve Cyprus from any other obligation to make
contributions hereunder.
5.3 Obligations Prior to Earn-In. Prior to earning its interest in the
Property, and subject to the termination provisions contained herein, Cyprus
shall be required, but not obligated to make the following Exploration
Expenditures on or for the benefit of the Property to extend this Agreement into
the next period with the exception of a firm commitment to incur Three Hundred
Thousand Dollars ($300,000) in Exploration Expenditures by the first anniversary
date of this Agreement.
(a) Exploration Expenditures:
Minimum
Expenditure Cumulative
Date Amount Amount
---- ------ ------
By 1st anniversary date $300,000 $300,000
(Firm Commitment)
By 2nd anniversary Date 400,000 700,000
Ten percent (10%) of all Exploration Expenditures, except property
payments, taxes and/or fees to maintain the Property, to cover Cyprus'
overhead and administrative costs shall be charged by Cyprus and shall
qualify as Exploration Expenditures but shall be limited to five percent
(5%) on contracts in excess of One Hundred Thousand Dollars ($100,000).
All Exploration Expenditures shall be cumulative and any Exploration
Expenditures in excess of the minimum required in any period shall be
credited and applied toward any subsequent Exploration Expenditures.
(b) Payments:
Upon execution of this Agreement, Cyprus shall provide Fifty Thousand
Dollars ($50,000) to complete ICMCs acquisition of certain of the Property
described in Exhibit A-1 and being the claims subject to the Option to
Purchase Interest in Mining Claims Agreement dated February 8, 1996 between
Idaho Mining and Development Company and ICMC. This Fifty Thousand Dollar
($50,000) cash payment shall be credited against Cyprus' firm commitment of
13
<PAGE>
Three Hundred Thousand Dollars ($300,000) in Exploration Expenditures.
Additionally, Cyprus shall during the Earn-In period be responsible for
maintaining the unpatented lode claims which comprise the Property and may
relocate any of the unpatented claims which Cyprus believes may be
defective.
(c) Cyprus may terminate this Agreement at any time during the Earn-In
period for any reason or no reason after Cyprus completes the firm
commitment by providing ICMC sixty (60) days written notice of such
termination. Until Cyprus has earned its interest in the Property, Cyprus
shall have complete discretion in conducting exploration activities,
maintaining the Property and shall conduct operations according to its own
plans. Cyprus shall hold ICMC harmless from any liabilities resulting from
Cyprus' activities on the Property during the Earn-In period.
5.4 Additional Cash Contributions. At such time as Cyprus has earned its
fifty percent (50%) interest in the Property, pursuant to Section 5.5, the
Participants, subject to any election permitted by Sections 6.1, 6.2 and 6.3,
shall be obligated to contribute funds to adopted Programs and Budgets in
proportion to their respective Participating Interest.
5.5 Earn-In. Cyprus shall earn a fifty percent (50%) Participating Interest
in the Property upon completion of the Exploration Expenditures and payment set
forth under Section 5.3. Except as provided for in Section 6.2, subsequent to
Cyprus earning fifty percent (50%) interest in the Property, all expenditures
for the benefit of the Property shall be contributed by the Parties in
accordance to their Participating Interest. Immediately upon Cyprus satisfying
its Earn-In requirements under Section 5.3 (a) and (b), ICMC shall execute and
deliver to Cyprus such documents that are necessary to transfer an appropriate
percentage of interest in ICMC's interest In and to the Property to Cyprus.
5.6 Additional Interest. Within sixty (60) days after Cyprus completes its
requirements to earn fifty percent (50%) Participating Interest in the Property,
Cyprus, by providing written notice to ICMC, may elect to earn an additional
twenty percent
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(20%) Participating Interest in the Property, bringing its interest to seventy
percent (70%), by completing the following:
(a) Exploration Expenditures:
Minimum
Expenditure Cumulative
Date Amount Amount
---- ------ ------
By 3rd anniversary date $400,000 $1,100,000
(Firm Commitment)
By 4th anniversary Date 400,000 1,500,000
Ten percent (10%) of all Exploration Expenditures, except property
payments, taxes and/or fees to maintain the Property, to cover Cyprus'
overhead and administrative costs shall be charged by Cyprus and shall
qualify as Exploration Expenditures but shall be limited to five percent
(5%) on contracts in excess of One Hundred Thousand Dollars ($100,000).
All Exploration Expenditures shall be cumulative and any Exploration
Expenditures in excess of the minimum required in any period, including
Exploration Expenditures incurred in the first and second years of this
Agreement, shall be credited and applied toward any subsequent Exploration
Expenditures.
(b) Cyprus shall, during this Earn-In period, continue to be
responsible for maintaining the unpatented lode claims which comprise the
Property.
5.7 Reports. Cyprus shall, during the Earn-in period, provide ICMC with
copies of periodic reports describing its activities on the Property and shall
conduct a semi-annual review with ICMC to discuss the progress Cyprus has made
during the preceding period as well as the plans and programs being contemplated
for the next period.
5.8 Development by ICMC. Cyprus and ICMC acknowledge that a Mineral
Resource has been identified on certain of the Eagle and Golden Eagle Claims,
such claims being described in the attached Exhibit "F". For the purposes of
this Section 5.8, a Mineral Resource shall be defined as being equal to or less
than fifty thousand ounces (50,000 ozs.) of gold. ICMC may propose to develop
such Mineral Resource,
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shall do so at its sole risk, and shall be responsible for all costs to develop
such Mineral Resource, so long as in the opinion of Cyprus it does not interfere
with or adversely impact any Operations or planned Operations on the Property.
ICMC shall submit to Cyprus for Cyprus' approval, such approval not to be
unreasonably withheld, their detailed plans on each phase of mining activity.
ICMC hereby indemnities, defends and holds harmless Cyprus, its affiliates,
their successors and assigns and their respective directors, officers, employees
and shareholders from and against any and all past, present and future
obligations, liabilities, claims, damages, losses or expenses (including
interest and penalties, legal fees and other reasonable expenses of defending
any actions relating thereto) sustained in any way relating to all activities on
or pertaining to the Mineral Resource, including without limitation, reclamation
and environmental liabilities and obligations.
If at any time prior to Cyprus earning seventy percent (70%) interest in
the Property production from the Mineral Resource is projected to exceed fifty
thousand ounces (50,000 ozs.), ICMC shall provide Cyprus with a written notice
of the projected date production will exceed the fifty-thousand ounce (50,000
ounce) level, such notice to be provided to Cyprus at least sixty (60) days
prior to such projected date. Cyprus shall have the right, but not the
obligation, to participate in the production beyond the initial fifty thousand
ounces (50,000 ozs.) by providing its share of the production costs and
expenses.
Notwithstanding the above, at its sole election after vesting in a seventy
percent (70%) Participating Interest in the Property, Cyprus may require that
production of the Mineral Resource be terminated.
ARTICLE 6
INTERESTS OF PARTICIPANTS;
DEFAULTS AND REMEDIES; FINANCING
6.1 Participating Interests. The Participants shall have the following
Participating Interests upon Cyprus' completion of the obligations set forth in
Section 5.3:
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Cyprus - 50%
ICMC - 50%
Cyprus shall have no Participating Interest unless and until it has
completed the Exploration Expenditures set forth in Section 5.3 during the
Earn-in period. At such time as Cyprus completes the obligations set forth in
Section 5.3 and has earned its fifty percent (50%) Participating Interest in the
Property and determines it will not elect to earn an additional twenty percent
(20%) Participating Interest in the Property as set forth in Section 5.6, ICMC
and Cyprus shall have a period of sixty (60) days to either (a) elect to
participate in the Venture and contribute to each Program and Budget for their
entire respective Participating Interest, or (b) to elect to participate in the
Venture pursuant to Section 6.3(a), or (c) elect to withdraw from the Venture
and convert to a five percent (5%) Net Proceeds of Production as set out in
Exhibit C. In no event shall the cumulative Net Proceeds of Production payable
to the withdrawing party, whether one or more, exceed an aggregate of five
percent (5%). A Management Committee shall then be formed as provided for in
Section 7.1.
At Earn-in Cyprus and ICMC shall, irrespective of their actual expenditures
on or with respect to the Property, be deemed to have incurred expenditures as
follows:
Cyprus $700,000
ICMC $700,000
In the event Cyprus, pursuant to Section 5.6, elected to earn an additional
twenty percent (20%) Participating Interest in the Property, at such time as
Cyprus completes the obligations set forth in such Section 5.6 and has earned
its seventy percent (70%) Participating Interest in the Property, ICMC and
Cyprus shall have a period of ninety (90) days to either (a) elect to
participate in the Venture and contribute to each Program and Budget for their
entire respective Participating Interest, or (b) to elect to participate in the
Venture pursuant to Section 6.3(a), or (c) elect to withdraw from the venture
and convert to a five percent (5%) Net Proceeds of Production Royalty as set out
in Exhibit C. In no event shall the cumulative Net Proceeds of Production
Royalty payable to the withdrawing party, whether one or
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more, exceed an aggregate of five percent (5%). A Management Committee shall
then be formed as provided for in Section 7.1.
At Earn-In Cyprus and ICMC shall, irrespective of their actual expenditures
on or with respect to the Property, be deemed to have incurred expenditures as
follows:
Cyprus $1,500,000
ICMC $642,857
6.2 Changes in Participating Interests. A Participant's Participating
Interest shall be changed as follows:
(a) As provided in Section 6.5; or
(b) Upon an election by a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by its Participating Interest; or
(c) In the event of default by a Participant in making its agreed-upon
contribution to an adopted Program and Budget, followed by an election by
the other Participant to invoke Section 6.4(b); or
(d) Transfer by a Participant of less than all its Participating
Interest in accordance with Article 14; or
(e) Acquisition of less than all of the Participating Interest of the
other Participant, however arising.
(f) Pursuant to Section 5.6.
6.3 Voluntary Reduction in Participation. A Participant may elect, as
provided in Section 9.5, to limit its contributions to an adopted Program and
Budget as follows:
(a) To some lesser amount than its respective Participating Interest;
or
(b) Not at all.
If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating Interest, or not at all, the
Participating Interest of that Participant shall be recalculated at the time of
election by dividing: M the sum of (a) the agreed value of the Participant's
deemed expenditure under Section 6.1 and (b) the total of all of the
Participant's actual expenditures including the
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amount the Participant elects to contribute to the adopted Program and Budget;
by (ii) the sum of (a) and (b) above for all Participants; and then multiplying
the result by one hundred. The Participating Interest of the other Participant
shall thereupon become the difference between 100% and the recalculated
Participating Interest.
6.4 Default in Making Contributions.
(a) If a Participant defaults in making a contribution or cash call
required by an approved Program and Budget, the non-defaulting Participant
may advance the defaulted contribution on behalf of the defaulting
Participant and treat the same, together with any accrued interest, as a
demand loan bearing interest from the date of the advance at the Prime Rate
plus two percent (2%) compounded quarterly. The failure to repay said loan
upon demand shall be a default. Each Participant hereby grants to the other
a lien upon its interest in the Property and a security interest in its
rights under this Agreement and in its Participating Interest in other
Assets, and the proceeds therefrom, to secure any loan made hereunder,
including interest thereon, reasonable attorneys' fees and all other
reasonable costs and expenses incurred in recovering the loan with interest
and in enforcing. such lien or security interest, or both. A non-defaulting
Participant may elect the applicable remedy under this Section 6.4, or, to
the extent a Participant has a lien or security interest under applicable
law, it shall be entitled to its rights and remedies at law and in equity.
All such remedies shall be cumulative. The election of one or more remedies
shall not waive the election of any other remedies. Each Participant hereby
irrevocably appoints the other its attorney-in-fact to execute, file and
record all instruments necessary to perfect or effectuate the provisions
hereof.
(b) The Participants acknowledge that if a Participant defaults in
making a contribution, a cash call, in repaying a loan or any payment, as
required hereunder, it will be difficult to measure the damages resulting
from such default. In the event such default is not cured by the defaulting
Participant within thirty (30) days after receiving notice of such default,
as reasonable liquidated damages, the defaulting Participant shall be
deemed to
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have withdrawn from the Venture and to have automatically relinquished its
Participating Interest to the non-defaulting Participant; provided,
however, the defaulting Participant shall have the right to receive only
from five percent (5%) of Net Proceeds of Production Royalty, as set out in
Exhibit C, and not from any other source, an amount equal to the defaulting
Participant's actual expenditures contributed hereunder. Upon receipt of
such amount the defaulting Participant shall thereafter have no further
right, title, or interest under this Agreement or in the Assets.
6.5 Conversion of Interest. If at any time the Participating Interest
of a Participant is reduced to ten percent (10%) or less by an affirmative
election not to contribute all or some portion of its share pursuant to a
Program and Budget as provided in Article 9 and the resulting application of the
dilution formula in Section 6.3, the diluted Participant shall be deemed to have
withdrawn from the Venture and this Agreement shall terminate; provided,
however, the diluting Participant shall have the right to receive only from five
percent (5%) of Net Proceeds of Production Royalty, as set out in Exhibit C, and
not from any other source, an amount equal to one hundred and fifteen percent
(115%) of the diluting Participant's actual or deemed expenditures contributed
hereunder, whichever is greater. Upon receipt of such amount the diluting
Participant shall thereafter have no further right, title, or interest under
this Agreement or in the Assets.
6.6 Continuing Liabilities Upon Adjustments of Participating Interests.
Any reduction of a Participant's Participating Interest under this Section 6
shall not relieve such Participant of its share of any liability, whether it
accrued before or after such reduction, arising out of Operations conducted
prior to such reduction. For purposes of this Article 6, such Participant's
share of such liability shall be equal to its Participating Interest at the time
such liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of the other Participant's
Participating Interest shall be free of royalties, liens or other encumbrances
arising by, through or under such other Participant, other than those existing
at the time the Property was acquired or those to which both Participants
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have given their written consent. An adjustment to a Participating Interest need
not be evidenced during the term of this Agreement by the execution and
recording of appropriate instruments, but each Participant's Participating
Interest shall be shown in the books of the Manager. However, either
Participant, at any time upon the request of the other Participant, shall
execute and acknowledge instruments necessary to evidence such adjustment in
form sufficient for recording in the jurisdiction where the Property is located.
6.7 Financing by Cyprus. Within sixty (60) days after Cyprus completes its
requirements to earn an additional twenty percent (20%) Participating Interest
in the Property as set forth in Section 5.6, bringing its Participating Interest
to seventy percent (70%), and ICMC and Cyprus have elected to participate in the
Venture in proportion to their respective Participating Interest, ICMC may elect
in writing to have Cyprus fund ICMC's share of Exploration Expenditures until
the completion of a Feasibility Study. In such event, such expenditures by
Cyprus on behalf of ICMC shall be treated as a loan and shall bear interest at
the Prime Rate plus two percent (2%), compounded quarterly. Such loan shall be
secured by ICMC's interest in the Property and the Assets. Cyprus shall be
repaid from eighty-five percent (85%) of the proceeds received by ICMC from the
sale of its proportionate share of Products, after deduction of operating costs.
ICMC shall execute a document securing the loan with its interest in the
Property and the Assets and assigning to Cyprus such eighty-five percent (85%)
of the proceeds in form and content acceptable to the legal counsel of both
Cyprus and ICMC.
In the event a Feasibility Study is completed and Development is not
recommended and the Management Committee votes to continue Exploration, Cyprus
will continue to fund ICMC's share of Exploration Expenditures until the
completion of another Feasibility Study. Such additional expenditures by Cyprus
on behalf of ICMC shall also be treated as a loan and recouped by Cyprus as
previously set forth in this Section 6.7.
If the Management Committee, after completion of a Feasibility Study, votes
to suspend Operations on the Property for any reason, no additional interest
would
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accrue on the Exploration Expenditures provided by Cyprus on behalf of ICMC
until Operations are again commenced.
In the event a Feasibility Study recommends development, but for reasons
beyond the control of the Participants (e.g. government taking, Force Majeure,
etc.) the Property can never be developed, accrual of interest on the
Exploration Expenditures provided by Cyprus on behalf of ICMC would cease.
Repayment to Cyprus of such loan and any interest accrued would be repaid from
ICMC's share of any compensation that the Participants may be entitled to as a
result of the prohibition of Mining. If no compensation is received by the
Participants, the loan and its accrued interest would be forgiven when the
Participants agree to drop their interest in the Property, discontinue any
litigation which may have commenced and dissolve the Venture.
ARTICLE 7
MANAGEMENT COMMITTEE
7.1 Organization and Composition. After completion of Cyprus' Earn-in and
the election by ICMC and Cyprus to participate in the Venture as provided in
Section 6.1, the Participants shall establish a Management Committee to
determine overall policies, objectives, procedures, methods and actions under
this Agreement. The Management Committee shall consist of one member appointed
by ICMC and one member appointed by Cyprus. Each Participant may appoint one or
more alternates to act in the absence of a regular member. Any alternate so
acting shall be deemed a member. Appointments shall be made or changed by notice
in writing to the other Participant.
7.2 Decisions. Each Participant, acting through its appointed member(s)
shall have a vote equal to its Participating Interest in the Property. Decisions
of the Management Committee shall be decided by Simple Majority of the
Participating Interests. In the event of a deadlock, the Manager shall hold the
deciding vote.
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7.3 Meetings. The Management Committee shall. hold regular meetings at
least annually at mutually agreed places. The Manager shall give thirty (30)
days' written notice to the Participants of such regular meetings. Additionally,
either Participant may call a special meeting upon thirty (30) days' written
notice to the Manager and the other Participant. In case of emergency,
reasonable notice of a special meeting shall suffice. There shall be a quorum if
at least one member representing each Participant is present. The Management
Committee shall not transact any business at a meeting unless a quorum is
present at the commencement of the meeting. If a quorum is not present at the
commencement of the meeting or within one-half hour after the time fixed for the
commencement of the meeting, the meeting shall be adjourned to the same time and
day of the next week at the same place. If a quorum is not present at the
commencement of the adjourned meeting, one representative shall be deemed to
constitute a quorum. Each notice of a meeting shall include an itemized agenda
and detailed back-up information prepared by the Manager in the case of a
regular meeting, or by the Participant calling the meeting in the case of a
special meeting, but any matters may be considered with the consent of all
Participants. The Manager shall prepare minutes of all meetings and shall
distribute copies of such minutes to the Participants within thirty (30) days
after the meeting. The minutes, when signed by all Participants, shall be the
official record of the decisions made by the Management Committee and shall be
binding on the Manager and the Participants. If personnel employed in Operations
are required to attend a Management Committee meeting, reasonable costs incurred
in connection with such attendance shall be a Venture cost. All other costs
shall be paid by the Participants individually.
7.4 Action Without Meeting. In lieu of meetings, the Management Committee
may hold telephone conferences, so long as all decisions are immediately
confirmed in writing by the Participants.
7.5 Matters Requiring Approval. Except as otherwise delegated to the
Manager in Section 8.2, the Management Committee shall have exclusive authority
to determine all management matters related to this Agreement.
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ARTICLE 8
MANAGER
8.1 Appointment. Following completion of Cyprus' Earn-In as provided for in
Sections 5.5 or 5.6 Cyprus shall be the initial Manager.
8.2 Powers and Duties of Manager. Subject to the terms and provisions of
this Agreement, the Manager shall have the following powers and duties which
shall be discharged in accordance with adopted Programs and Budgets:
(a) The Manager shall manage, direct and control Operations.
(b) The Manager shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted
Programs and Budgets, and shall promptly advise the Management Committee if
it lacks sufficient funds to carry out its responsibilities under this
Agreement.
(c) The Manager shall: (i) purchase or otherwise acquire all material,
supplies, equipment, water, utility and transportation services required
for Operations, such purchases and acquisitions to be made on the best
terms available, taking into account all of the circumstances; (ii) obtain
such customary warranties and guarantees as are available in connection
with such purchases and acquisitions; and (iii) keep the Assets free and
clear of all liens and encumbrances, except for those existing at the time
of, or created concurrent with, the acquisition of such Assets, or
mechanic's or materialmen's liens which shall be released or discharged in
a diligent manner, or liens and encumbrances specifically approved by the
Management Committee.
(d) The Manager shall conduct such title examinations and cure such
title defects as may be advisable in the reasonable judgment of the
Manager.
(e) The Manager shall: (i) make or arrange for all payments required
by leases, licenses, permits, contracts and other agreements related to the
Assets; (ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's sales revenue
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or net income. If authorized by the Management Committee, the Manager shall
have the right to contest in the courts or otherwise, the validity or
amount of any taxes, assessments or charges if the Manager deems them to be
unlawful, unjust, unequal or excessive, or to undertake such other steps or
proceedings as the Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization thereof before the
Manager shall be required to pay them, but in no event shall the Manager
permit or allow title to the Assets to be lost as the result of the
nonpayment of any taxes, assessments or like charges; and (iii) shall do
all other acts reasonably necessary to maintain the Assets.
(f) The Manager shall: (i) apply for all necessary permits, licenses
and approvals; (ii) comply with applicable federal, provincial, municipal
and local laws and regulations; (iii) notify promptly the Management
Committee of any allegations of substantial violation thereof; and (iv)
prepare and file all reports or notices required for Operations. The
Manager shall not be in breach of this provision if a violation has
occurred in spite of the Manager's good faith efforts to comply, and the
Manager has timely cured or disposed of such violation through performance,
or payment of fines and penalties.
(g) The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings greater than $50,000 arising out of Operations.
The non-managing Participant shall have the right to participate, at its
own expanse, in such litigation or administrative proceedings. The
non-managing Participant's approval shall be required in advance of any
settlement involving payments, commitments or obligations, if the
non-managing Participant's share is in excess of Twenty-Five Thousand
Dollars ($25,000) in cash or value.
(h) The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit D.
(i) The Manager may dispose of Assets, whether by release,
abandonment, surrender or Transfer in the ordinary course of business,
except that Property may be released, abandoned or surrendered only as
provided in Article 13. However, without prior authorization from the
Management
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Committee, the Manager shall not: (i) dispose of Assets in any one
transaction having a value in excess of $250,000: (ii) enter into any sales
contracts or commitments for Product, except as permitted in Section 11.2;
(iii) begin a liquidation of the Venture; or (iv) dispose of all or a
substantial part of the Assets necessary to achieve the purposes of the
Venture.
(j) The Manager shall have the right to carry out its responsibilities
hereunder through agents, affiliates or independent contractors.
(k) The Manager shall be obligated to perform or cause to be performed
during the term of this Agreement all obligations required by law in order
to maintain the Property which obligations shall be included in Programs
and Budgets.
(1) The Manager shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in accordance
with customary cost accounting practices in the mining industry.
(m) The Manager shall keep the Management Committee advised of all
Operations by submitting in writing to the Management Committee: (i)
monthly progress reports which include statements of expenditures and
comparisons of such expenditures to the adopted Budget; (ii) periodic
summaries of data acquired; (iii) copies of reports concerning Operations;
(iv) a detailed final report within forty-five (45) days after completion
of each Program and Budget, which shall include comparisons between actual
and budgeted expenditures and comparisons between the objectives and
results of Programs; and (v) such other reports as the Management Committee
may reasonably request. At all reasonable times the Manager shall provide
the Management Committee or the representative of any Participant, upon the
request of any member of the Management Committee, access to, and the right
to inspect and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical, accounting and
financial records, and other information acquired in Operations. In
addition, the Manager shall allow the non-managing Participant, at the
latter's sole risk and expense, and subject to reasonable safety
regulations, to inspect the Assets and Operations at all reasonable times,
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so long as the inspecting Participant does not unreasonably interfere with
Operations.
(n) The Manager shall undertake all `other activities reasonably
necessary to fulfill the foregoing.
The Manager shall not be in default of any duty under this Section 8.2 if
its failure to perform results from the failure of the non-managing Participant
to perform acts or to contribute amounts required of it by this Agreement.
8.3 Standard of Care. The Manager shall conduct all Operations in a good,
workmanlike and efficient manner, in accordance with all applicable laws, sound
mining and other applicable industry standards and practices, and in accordance
with the terms and provisions of leases, licenses, permits, contracts and other
agreements pertaining to Assets. The Manager shall not be liable to the
non-managing Participant for any act or omission resulting in damage or loss
except to the extent caused by or attributable to the Manager's willful
misconduct or gross negligence.
8.4 Resignation; Deemed Offer to Resign. The Manager may resign upon thirty
(30) days prior notice to the other Participant. If any of the following shall
occur, the Manager shall be deemed to have offered to resign, which offer shall
be accepted by the other Participant, if at all, within ninety (90) days
following such deemed offer:
(a) The Participating interest of the Manager becomes less than fifty
percent (50%); or
(b) The Manager fails to perform a material obligation imposed upon it
under this Agreement and such failure continues for a period of thirty (30)
days after written notice from the other Participant demanding performance;
or
(c) The Manager fails to pay or contest in good faith its bills within
thirty (30) days after receiving written notice that they are due; or
(d) A receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for a substantial part of its assets is appointed and
such appointment is neither made ineffective nor discharged within sixty
(60) days
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after receiving written notice of the making thereof, or such appointment
is consented to, requested by, or acquiesced in by the Manager; or
(e) The Manager commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or
consents to the entry of an order for relief in an involuntary case under
any such law or to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other similar
official of any substantial part of its assets; or makes a general
assignment for the benefit of creditors; or fails generally to pay its or
Venture debts as such debts become due; or takes corporate or other action
in furtherance of any of the foregoing; or
(f) Entry is made against the Manager of a judgment, decree or order
for relief affecting a substantial part of its assets by a court of
competent jurisdiction in an involuntary case commenced under any
applicable bankruptcy, insolvency or other similar law of any jurisdiction
now or hereafter in effect.
8.5 Payments to Manager. The Manager shall be compensated for its services
and reimbursed for its costs hereunder in accordance with the Accounting
Procedure.
8.6 Transactions With Affiliates. If the Manager engages Affiliates to
provide services hereunder, it shall do so on terms no more favorable than would
be the case with unrelated persons in arm's-length transactions.
8.7 Activities During Deadlock. If the Management Committee for any reason
fails to adopt a Program and Budget, subject to the contrary direction of the
Management Committee and to the receipt of necessary funds, the Manager shall
continue Operations at levels comparable with the last adopted Program and
Budget. For purposes of determining the required contributions of the
Participants and their respective Participating Interests, the last adopted
Program and Budget shall be deemed extended.
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ARTICLE 9
PROGRAMS AND BUDGETS
9.1 Initial Program and Budget. The initial Program and Budget will be
provided by the Management Committee within ninety (90) days of the Management
Committee being formed.
9.2 Operations Pursuant to Programs and Budgets. Except as otherwise
provided in Sections 7.2 and 9.7, Operations shall be conducted, expenses shall
be incurred, and Assets shall be acquired only pursuant to approved Programs and
Budgets.
9.3 Presentation of Programs and Budgets. Proposed Programs and Budgets
shall be prepared by the Manager for a period of up to one year. Each adopted
Program and Budget, regardless of length, shall be reviewed at least once a year
at the annual meeting of the Management Committee. During the period encompassed
by any Program and Budget, and at least two months prior to its expiration, a
proposed Program and Budget for the succeeding period shall be prepared by the
Manager and submitted to the Management Committee.
9.4 Review and Approval of Proposed Programs and Budgets. Within thirty
(30) days after submission of a proposed Program and Budget to the Management
Committee, the Management Committee shall:
(a) Approve the proposed Program and Budget; or
(b) Propose modifications of the proposed Program and Budget; or
(c) Reject the proposed Program and Budget.
If the Management Committee makes the elections pursuant to Section 9.4(b)
or (c), then the Manager will review the modifications and/or any
recommendations of the Management Committee and will resubmit a Program and
Budget within thirty (30) days.
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9.5 Election to Participate. By written notice to the, Management Committee
within thirty (30) days after approving a Program and Budget except as provided
for in Section 6.1, a Participant may elect to contribute to such Program and
Budget in an amount equal to its Participating Interest or a lesser amount as
provided for in Section 6.3. If a Participant fails to so notify the Management
Committee, the Participant shall be deemed to have elected not to contribute to
such Program and Budget and the provisions of Section 6.3 shall apply. Subject
to Section 9.6 if a Participant elects not to participate in the Program and
Budget and the other Participant elects to contribute to the Program and Budget
the provisions of Section 6.2 shall apply.
9.6 Deadlock on Proposed Programs and Budgets. If the Participants, acting
through the Management Committee, fail to approve a Program and Budget by the
beginning of the period to which the proposed Program and Budget applies, the
provisions of Section 8.7 shall apply.
9.7 Budget Overruns; Program Changes. The Manager shall immediately notify
the Management Committee of any material departure from an adopted Program and
Budget. If the Manager exceeds an adopted Budget by more than ten percent (10%),
then such excess over ten percent (10%), shall be for the sole account of the
Manager, not creditable to the calculation of Participating Interests, unless
such excess amount is directly caused by an emergency or unexpected expenditure
made pursuant to Section 9.8 or is otherwise authorized by the approval of the
Management Committee. Budget overruns of ten percent (10%) or less shall be
borne by the Participants in proportion to their respective Participating
Interests as of the time the overrun occurs.
9.8 Emergency or Unexpected Expenditures. In case of emergency, the Manager
may take any reasonable action it deems necessary to protect life, limb or
property, to protect the Assets or to comply with law or government regulation.
The Manager may also make reasonable expenditures for unexpected events which
are beyond its reasonable control and which do not result from a breach by it of
its
30
<PAGE>
standard of care. The Manager shall promptly notify the Participants of the
emergency or unexpected expenditures, and the Manager shall be reimbursed for
all resulting costs by the Participants in proportion to their respective
Participating Interests at the time the emergency or unexpected expenditures are
incurred.
ARTICLE 10
ACCOUNTS AND SETTLEMENTS
Matters of accounts and settlements shall be governed by the provisions in
Exhibit "B" (Accounting Procedures) attached hereto.
ARTICLE 11
DISPOSITION OF PRODUCTION
11.1 Taking in Kind. Each Participant shall take in kind or separately
dispose of its share of all Products in accordance with its Participating
Interest. Any extra expenditure incurred in the taking in kind or separate
disposition by any Participant of its proportionate share of Products shall be
borne by such Participant. Nothing in this Agreement shall be construed as
providing, directly or indirectly, for any joint or cooperative marketing or
selling of Products or permitting the processing of Products of any parties
other than the Participants at any processing facilities constructed by the
Participants pursuant to this Agreement. The Manager shall give the Participants
notice at least ten (1 0) days in advance of the delivery date upon which their
respective shares of Products will be available.
11.2 Failure of Participant to Take in Kind. If a Participant fails to take
in kind, the Manager shall have the right, but not the obligation, for a period
of time consistent with the minimum needs of the industry, but not to exceed one
year, to purchase the Participant's share for its own account or to sell such
share as agent for the Participant at not less than the prevailing market price
in the area. Subject to the terms of any such contracts of sale then
outstanding, during any period that the
31
<PAGE>
Manager is purchasing or selling a Participant's share of production, the
Participant may elect by notice to the Manager to take in kind. The Manager
shall be entitled to deduct from proceeds of any sale by it for the account of a
Participant reasonable expenses incurred in such a sale.
ARTICLE 12
WITHDRAWAL AND TERMINATION
12.1 Termination by Expiration or Agreement. This Agreement shall terminate
as expressly provided in this Agreement, unless earlier terminated by written
agreement.
12.2 Withdrawal. A Participant may elect to withdraw as a Participant from
this Agreement by giving forty-five (45) days written notice to the other
Participant of the effective date of withdrawal. Upon such withdrawal, this
Agreement shall terminate, and the withdrawing Participant shall be deemed to
have transferred to the remaining Participant, without cost and free and clear
of royalties owing to the withdrawing Participant, liens or other encumbrances
arising by, through or under such withdrawing Participant, all of its
Participating Interest in the Assets and in this Agreement. Any withdrawal under
this Section 12.2 shall not relieve the withdrawing Participant of its share of
liabilities to third parties (whether such accrues before or after such
withdrawal) including environmental liabilities arising out of Operations
conducted prior to such withdrawal. For purposes of this Section 12.2, the
withdrawing Participant's share of such liabilities shall be equal to its
Participating Interest at the time such liability was incurred.
12.3 Continuing Obligations. On termination of this Agreement under Section
12.1 or 12.2, the Participants shall remain liable for continuing obligations
hereunder until final settlement of all accounts and for any liability, whether
it accrues before or after termination, if it arises out of Operations during
the term of the Agreement.
32
<PAGE>
12.4 Disposition of Assets on Termination. Promptly after termination under
Section 12.1, the Manager shall take all action necessary to wind up the
activities of the Venture, and all costs and expenses incurred in connection
with the termination of the Venture shall be expenses chargeable to the Venture.
Any Participant that has a negative Joint Account balance when the Venture is
terminated for any reason shall contribute to the Assets of the Venture an
amount sufficient to raise such balance to zero. The Assets shall first be paid,
applied, or distributed in satisfaction of all liabilities of the Venture to
third parties and then to satisfy any debts, obligations, or liabilities owed to
the Participants. Before distributing any funds or Assets to Participants, the
Manager shall have the right to segregate amounts which, in the Manager's
reasonable judgment, are necessary to discharge continuing obligations or to
purchase for the account of Participants, bonds or other securities for the
performance of such obligations. The foregoing shall not be construed to include
the repayment of any Participant's contributions or Joint Account balance.
Thereafter, any remaining cash and all other Assets, including property shall be
distributed (in undivided interests unless otherwise agreed) to the
Participants, first in the ratio and to the extent of their respective Joint
Accounts and then in proportion to their respective Participating Interests,
subject to any dilution, reduction, or termination of such Participating
Interests as may have occurred pursuant to the terms of this Agreement. No
Participant shall receive a distribution of any interest in Products or proceeds
from the sale thereof if such Participant's Participating Interest therein has
been terminated pursuant to this Agreement.
12.5 Right to Data after Termination. After termination of this Agreement
pursuant to Section 12.1, each Participant shall be entitled to copies of all
information acquired hereunder before the effective date of termination not
previously furnished to it, but a terminating or withdrawing Participant shall
not be entitled to any such copies in respect to a later termination or
withdrawal.
12.6 Continuing Authority. On termination of this Agreement under Section
12.1 or the deemed withdrawal of a Participant pursuant to Section 6.4 or 6.5,
the Manager shall have the power and authority, subject to control of the
Management
33
<PAGE>
Committee, if any, to do all things on behalf of the Participants which are
reasonably necessary or convenient to: (a) wind up Operations and (b) complete
any transaction and satisfy any obligation, unfinished or unsatisfied, at the
time of such termination or withdrawal, if the transaction or obligation arises
out of Operations prior to such termination or withdrawal. The Manager shall
have the power and authority to grant or receive extensions of time or change
the method of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Participants and the Venture, mortgage
Assets, and take any other reasonable action in any matter with respect to which
the former Participants continue to have, or appear or are alleged to have, a
common interest or a common liability.
12.7 Non-Compete Covenants. A Participant that withdraws pursuant to
Section 12.2, or is deemed to have withdrawn pursuant to Section 5.2, 6.4, or
6.5, shall not directly or indirectly acquire any interest in property within
the Area of Interest for two (2) years after the effective date of withdrawal.
If a withdrawing Participant, or an Affiliate of a withdrawing Participant,
breaches this Section 12.7, such Participant or Affiliate shall be obligated to
offer to convey to the nonwithdrawing Participant, without cost, any such
property or interest so acquired. Such offer shall be made in writing and can be
accepted by the non-withdrawing Participant at any time within forty-five (45)
days after it is received by such nonwithdrawing Participant.
12.8 Mutual Withdrawal. If a Participant elects to withdraw from this
Agreement pursuant to Section 12.2, the other Participant may also elect to
withdraw as a Participant by giving written notice thereof to the other
Participant within thirty (30) days after receipt of the first Participant's
notice of withdrawal, in which event the Participants shall be deemed to have
agreed to terminate the Venture as of the first date of withdrawal pursuant to
Section 12.1.
34
<PAGE>
ARTICLE 13
SURRENDER OF PROPERTY
13.1 Surrender of Property. The Management Committee may authorize the
Manager to surrender part or all of the Property. If the Management Committee
authorizes any such surrender over the objection of a Participant, the
Participant that desires to surrender shall assign to the objecting Participant,
without cost to the objecting Participant, all of the surrendering Participant's
interest in the Property to be surrendered, and the surrendered Property shall
cease to be part of the Property.
13.2 Reacquisition. If any Property is surrendered under the provisions of
this Article 13, then, unless this Agreement is earlier terminated, neither
Participant nor any Affiliate thereof shall acquire any interest in such
Property or a right to acquire such Property for a period of two years following
the date of such surrender. If a Participant reacquires any Property in
violation of this Section 13.2, the other Participant may elect by notice to the
reacquiring Participant within forty-five (45) days after it has actual notice
of such reacquisition, to have such Property made subject to the terms of this
Agreement. In the event such an election is made, the reacquired properties
shall thereafter be treated as Property, and the costs of reacquisition shall be
borne pro rata by the Participants and shall be included for purposes of
calculating the Participants' respective Participating Interests.
ARTICLE 14
TRANSFER OF INTEREST
14.1 General. A Participant shall have the right to Transfer to any
third party all or any part of its interest in or to this Agreement, its
Participating Interest, or the Assets solely as provided in this Article 14.
14.2 Limitations on Free Transferability. The Transfer right of a
Participant in Section 14.1 shall be subject to the
following terms and conditions:
35
<PAGE>
(a) No transferee of all or any part of the interest of a Participant
in this Agreement, any Participating Interest, or the Assets shall have the
rights of a Participant unless and until the transferring Participant has
provided to the other Participant notice of the Transfer, and except as
provided in Sections 14.2(e) and 14.2(f), the transferee, as of the
effective date of the Transfer, has committed in writing to be bound by
this Agreement to the same extent as the transferring Participant;
(b) No Transfer permitted by this Article 14 shall relieve the
transferring Participant of its share of any liability, whether accruing
before or after such Transfer, which arises out of Operations conducted
prior to such Transfer;
(c) In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act and be
treated as one Participant;
(d) Except as provided in Section 14.4(c), no Participant shall
transfer any interest in this Agreement or the Assets except by Transfer of
part or all of its Participating Interest;
(e) From the date of execution of this Agreement, if the Transfer is
the grant of a security interest by mortgage, deed of trust, pledge, lien
or other encumbrance of any interest in this Agreement, any Participating
Interest or the Assets to secure a loan or other indebtedness of a
Participant in a bona fide transaction, such security interest shall be
subordinate to the terms of this Agreement and the rights and interests of
the other Participant hereunder. Upon any foreclosure or other enforcement
of rights in the security interest the acquiring third party shall be
deemed to have assumed the position of the encumbering Participant with
respect to this Agreement and the other Participant, and it shall comply
with and be bound by the terms and conditions of this Agreement; and
(f) If a sale or other commitment or disposition of Products or
proceeds from the sale of Products by a Participant upon distribution to it
pursuant to Article 11 creates in a third party a security interest in
Products or
36
<PAGE>
proceeds therefrom prior to such distribution, such sales, commitment or
disposition shall be subject to the terms and conditions of this Agreement.
14.3 Right of First Refusal. Except as otherwise provided in Sections 14.2
and 14.4, if either Participant receives an offer to Transfer or otherwise
dispose of all or a part of its Participating Interest in the Property to a
third party, prior to accepting such offer the transferring Participant shall
first offer the interest to the nontransferring Participant at the same terms
and conditions as set forth in the third party offer. The non-transferring
Participant may accept the offer by written notice to the transferring
Participant given within sixty (60) days of receipt of the transferring
Participant's offer. If the non-transferring Participant does not accept the
offer, then the transferring Participant may sell or otherwise dispose of its
interest under terms and conditions not less favorable to it than those set
forth in the third party offer, provided that the sale or other disposition is
effectuated within one hundred and eighty (180) days from the effective date of
the third party offer.
14.4 Exceptions to Right of First Refusal. Section 14.3 shall not apply to
the following:
(a) Transfer by a Participant of all or any part of its interest in
this Agreement, any Participating Interest, or the Assets to an Affiliate,
to Amax Gold, Inc. or Amax Gold Exploration, Inc.;
(b) Incorporation of a Participant, or corporate merger,
consolidation, amalgamation or reorganization of a Participant by which the
surviving entity shall possess substantially all of the stock, or all of
the property rights and interests, and be subject to substantially all of
the liabilities and obligations of that Participant;
(c) The grant by a Participant of a security interest in any interest
in this Agreement, any Participating Interest, or the Assets by mortgage,
deed of trust, pledge, lien or other encumbrance which shall be subordinate
as set forth above; or
37
<PAGE>
(d) A sale or other commitment or disposition of Products or proceeds
from sale of Products by a Participant upon distribution to it pursuant to
Article 11.
ARTICLE 15
CONFIDENTIALITY AND RELEASES
15.1 General. The financial terms of this Agreement and all information
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section 15.2,
shall not be disclosed to any third party or the public without the prior
written consent of the other Participant, which consent shall not be
unreasonably withheld.
15.2 Exceptions. The consent required by Section 15.1 shall not apply to a
disclosure:
(a) To an Affiliate, consultant, contractor or subcontractor that has
a bona fide need to be informed;
(b) To any third party to whom the disclosing Participant contemplates
a Transfer of all or any part of its interest in or to this Agreement, its
Participating Interest, or the Assets; or
(c) Which the disclosing Participant is required by pertinent law or
regulation or the rules of any stock exchange to disclose; provided that in
any case to which this Section 15.2 is applicable, the disclosing
Participant shall give written notice to the other Participant prior to
the making of any such disclosure.
(d) As necessary to administer or enforce this Agreement.
As to any disclosure pursuant to Section 15.2(a) or (b), only such
confidential information as such third party shall have a legitimate
business need to know shall be disclosed and such third party shall first
agree in writing to protect the confidential information from further
disclosure to the same extent as the Participants are obligated under this
Article 15.
38
<PAGE>
15.3 Duration of Confidentiality. The provisions of this Article 15 shall
apply during the term of this Agreement and for two (2) years following a
termination pursuant to Section 12.1 or following withdrawal pursuant to Section
12.2, and shall continue to apply to any Participant who withdraws, who is
deemed to have withdrawn, or who Transfers its Participating Interest, for two
years following the date of such occurrence.
15.4 Releases. There shall be no public release by either party of any
information concerning the Property, the Operations or the Venture without the
prior written consent of the other party (such consent not to be unreasonably
withheld or delayed) unless such information is required by a lawful authority
of or other regulatory body having jurisdiction in which case the party making
such required disclosure shall first deliver a copy thereof to the other party
and allow the other party twenty-four (24) hours to comment on the nature and
extent of such required disclosure.
ARTICLE 16
AREA OF INTEREST
16.1 Acquisitions in Area of Interest. If at any time during the
subsistence of this Agreement any Participant or any non-Participant that has a
production royalty interest as provided for herein,'(in this section only called
the "Acquiring Party") stakes or otherwise acquires any right to or interest in
any properties within the exterior boundaries of the area depicted on Exhibit E
attached hereto and made a part hereof, ("Area of Interest"), the Acquiring
Party shall forthwith give notice to the other parties of such acquisition, the
total cost thereof and all details in the possession of that Participant with
respect to the details of the acquisition, the nature of the property and the
known mineralization. Each other Participant may, within thirty (30) days of
receipt of the Acquiring Party's notice, elect, by notice to the Acquiring
Party, to require that the properties and the right or interest acquired be
included in and thereafter form part of the Property for all purposes of this
Agreement.
39
<PAGE>
If the election aforesaid is made, the other Participants shall reimburse
the Acquiring Party for that portion of the cost of acquisition which is
equivalent to their respective Participating Interests.
If no other Participant makes the election aforesaid within that period of
thirty (30) days, the right or interest acquired shall not form part of the
Property and the Acquiring Party shall be solely entitled thereto.
Notwithstanding the provisions of this Article 16, should either Cyprus or
ICMC or their Affiliates control any properties within the Area of Interest on
the effective date of this Agreement and such properties are not included in
Exhibits A-1 or A-2, such properties shall be considered Property and become
subject to this Agreement.
ARTICLE 17
GENERAL PROVISIONS
17.1 Notices. All notices, payments and other required communications
("Notices") to the Participants shall be in writing, and shall be addressed
respectively as follows:
If to ICMC:
Idaho Consolidated Metals Corporation
P.O. Box 1124
Lewiston, Idaho 83501
Attn: President
Fax: (208) 746-6678
If to Cyprus:
Cyprus Gold Exploration Corporation
9100 East Mineral Circle
P.O. Box 3299
Englewood, Colorado 80155-3299
Attn: Exploration Manager, North America
Fax: (303) 643-5943
40
<PAGE>
With a copy to:
Cyprus Gold Exploration Corporation 91 00 E. Mineral Circle
P.O. Box 3299
Englewood, CO 80155-3299
Attn: Land Management Department
Fax: (303) 643-5250
All Notices shall be given (i) by personal delivery to the Participant, or
00 by electronic communication or facsimile, with a confirmation sent by
registered or certified mail return receipt requested, (iii) by registered or
certified mail return receipt requested or (iv) by express mail. All Notices
shall be effective and shall be deemed delivered (i) if by personal delivery on
the date of delivery if delivered during normal business hours, and, if not
delivered during normal business hours, on the next business day following
delivery, (ii) if by electronic communication or facsimile on the next business
day following receipt of the electronic communication or facsimile, and (iii) if
solely by mail on the next business day after actual receipt. A Participant may
change its address by Notice to the other Participant.
17.2 Waiver. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Participant's right thereafter to enforce any
provision or exercise any right.
17.3 Modification. No modification of this Agreement shall be valid unless
made in writing and duly executed by the Participants.
17.4 Force Majeure. Except for the obligation to make payments when due
hereunder, the obligations of a Participant 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,
lack of satisfactory market, labor disputes (however arising and whether or not
employee demands are reasonable or within the power of the Participant to
grant); acts of God;
41
<PAGE>
laws, regulations, orders, proclamations, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain on reasonably acceptable terms any public or private license, permit
or other authorization; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective violation of federal,
provincial or local environmental standards; acts of war or conditions arising
out of or attributable to war, whether declared or undeclared; riot, civil
strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood,
sink holes; drought or other adverse weather condition; delay or failure by
suppliers or transporters of materials, parts, supplies, services or equipment
or by contractors' or subcontractors' shortage of, or inability to obtain,
labor, transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; or any
other cause whether similar or dissimilar to the foregoing. The affected
Participant shall promptly give notice to the other Participant of the
suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and the expected duration thereof and this Agreement shall be
extended by the total period of such delays or suspension. The affected
Participant shall resume performance as soon as reasonably possible. During the
period of suspension the obligations of the Participants to advance funds
pursuant to Section 9.2 shall be reduced to levels consistent with Operations.
17.5 Economic Force Majeure. If, at any time after the Management Committee
reaches a determination, in its reasonable judgment, that the minerals
encompassed within the Property cannot be profitably mined under the terms and
conditions of this Agreement as it is then in effect, the Management Committee
may declare that a condition of Force Majeure exists as provided in Section
17.4, above; provided, that in no event shall a condition of Force Majeure
declared pursuant to this Section 16.5 be in effect for more than five (5)
consecutive years.
17.6 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Idaho.
42
<PAGE>
17.7 Rule Against Perpetuities. Any right or option to acquire any interest
in real or personal property under this Agreement must be exercised, if at all,
so as to vest such interest in the acquirer within twenty-one (21) years after
the effective date of this Agreement.
17.8 Further Assurances. Each of the Participants agrees to take from time
to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
17.9 Survival of Terms and Conditions. The following Sections shall survive
the termination of this Agreement to the full extent necessary for their
enforcement and the protection of the Participant in whose favor they run:
Sections 2.2, 4.3, 6.4, 6.6, 12.2, 12.3, 12.4, 12.5, 12.6, 12.7, 13.2, 17.6 and
Exhibit "B".
17.10 Entire Agreement; Successors and Assigns. This Agreement contains the
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the Participants. In the event of any
conflict between this Agreement and any Exhibit attached hereto, the terms of
this Agreement shall be controlling.
17.11 Memorandum. At the request of either Participant, a Memorandum or
short form of this Agreement, as appropriate, which shall not disclose financial
information contained herein, shall be prepared and recorded by Manager. This
Agreement shall not be recorded.
17.12 Funds. All references to dollar amounts contained in this Agreement
are references to United States dollars.
43
<PAGE>
IN WITNESS WHEREOF, this Agreement has been, executed by the parties hereto
effective as of the day and year first above written.
CYPRUS GOLD EXPLORATION CORPORATION
By: /s/ D. Watkins
-------------------------
Title: President
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Delbert Steiner
--------------------------
Title: Pres. & CEO
Tax ID#: 82-0465571
44
<PAGE>
EXHIBIT "A-1"
Attached to and made part of that certain Joint Venture Agreement
dated the 20th day of May, 1996 between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation.
The following unpatented mining claims located in Idaho County, State of Idaho.
<TABLE>
<S> <C> <C> <C>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
- ---------- ---------- ---------- ----------
Petsite #1 175109 Surprise #15 82187
Petsite #2 175110 Surprise #16 82188
Petsite #3 175111 Surprise No. 17 82189
Petsite #4 175112 Surprise No. 18 82190
Petsite #5 175113 Lost Wheelbarrow #1 123246
Petsite #6 175114 Lost Wheelbarrow #2 123247
Petsite #7 16203 Lost Wheelbarrow #3 123248
Petsite Fraction 175115 This Is It Placer 29189
Toronto #1 175116 This Is It Placer 175152
Toronto No. 2 16193 Eagle #1 11134
Badger 16195 Eagle #2 11135
Side Hill Gouger 175117 Eagle #3 11136
Ville Maria 175118 Eagle #4 11137
Frog 7 18660 Eagle #5 11138
Frog 9 18661 Eagle #6 11139
Frog 10 18662 Eagle #7 11140
Frog 12 18664 Eagle #9 11142
Frog 16 18667 Eagle #10 11143
Frog 18 18669 Eagle #12 11145
Frog 19 18670 Eagle #13 11146
Frog 20 18671 Eagle #15 11148
Frog 21 18672 Eagle #16 11149
Frog 22 18673 Eagle #18 11151
Frog 23 18674 Eagle #19 11152
Frog 24 18675 Eagle #21 11154
Frog 26 18677 Eagle #22 11155
Frog 33 18681 Eagle #23 11156
Frog 35 18683 Eagle #24 11157
Frog 55 82197 Eagle #25 11158
Frog 56 82198 Eagle #26 11159
Frog 57 82199 Eagle #27 11160
Frog 58 82200 Eagle #28 11161
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C> <C>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
---------- ---------- ---------- ----------
Eagle #29 11162 Eagle #64 4015
Eagle #30 423 Eagle #65 4016
Eagle #30 175127 Eagle #66 4017
Eagle #31 11163 Eagle #67 4018
Eagle #32 175128 Eagle #68 4019
Eagle #33 421 Eagle #71 4022
Eagle #34 175129 Eagle #75 175136
Eagle #34 11164 Eagle #78 9330
Eagle #35 11165 Eagle #79 9331
Eagle #36 11166 Eagle #80 9332
Eagle #37 11167 Eagle #81 9333
Eagle #38 11168 Eagle #82 9334
Eagle #39 9325 Eagle #83 9335
Eagle #39 175130 Eagle #84 9336
Eagle #40 9326 Eagle #85 9337
Eagle #40 175131 Eagle #86 9338
Eagle #41 11169 Eagle #87 9339
Eagle #41 175132 Eagle #88 9340
Eagle #42 11170 Eagle #89 9341
Eagle #42 175133 Eagle #90 9342
Eagle #43 11171 Eagle #91 9343
Eagle #44 11172 Eagle #92 9344
Eagle #45 11173 Eagle #93 9345
Eagle #46. 11174 Eagle #94 9346
Eagle #47 11175 Eagle #95 9347
Eagle #48 11176 Eagle #96 9348
Eagle #49 11177 Eagle #97 9349
Eagle #50 11178 Eagle #98 9350
Eagle #51 11179 Eagle #99 9351
Eagle #52 11180 Eagle #100 9352
Eagle #53 11659 Eagle #101 9353
Eagle #54 420 Eagle #102 9354
Eagle #54 175134 Eagle #103 9355
Eagle #55 417 Eagle #104 9356
Eagle #56 416 Eagle #105 9357
Eagle #57 415 Eagle #106 9358
Eagle #58 4009 Eagle #107 9359
Eagle #59 4010 Eagle #108 9360
Eagle #60 4011 Eagle #109 44037
Eagle #61 4012 Eagle #110 44038
Eagle #62 4013 Eagle #111 44039
Eagle #63 175135 Eagle #112 44040
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C> <C>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
---------- ---------- ---------- ----------
Eagle #113 44041 Eagle #154 95677
Eagle #114 44042 Eagle #155 95678
Eagle #115 44043 Eagle #156 95679
Eagle #116 44044 Eagle #157 95680
Eagle #117 44045 Eagle #178 101736
Eagle #118 44046 Eagle #182 101740
Eagle #119 44047 Eagle #185 101743
Eagle #119A 44048 Golden Eagle 175119
Eagle #120 44049 Golden Eagle #2 175120
Eagle #121 44050 Golden Eagle #3 175121
Eagle #122 44051 Golden Eagle #4 175122
Eagle #123 44052 Golden Eagle #5 11113
Eagle #124 44053 Golden Eagle #6 11114
Eagle #125 44054 Golden Eagle #7 175123
Eagle #126 44055 Golden Eagle #8 11116
Eagle #127 44056 Golden Eagle #9 11117
Eagle #128 44057 Golden Eagle #10 11118
Eagle #129 44058 Golden Eagle #11 11119
Eagle #130 44059 Golden Eagle #12 11120
Eagle #131 95654 Golden Eagle #13 11121
Eagle #132 95655 Golden Eagle #14 11122
Eagle #133 175137 Golden Eagle #15 11123
Eagle #134 95657 Golden Eagle #16 11124
Eagle #135 95658 Golden Eagle #17 11125
Eagle #136 95659 Golden Eagle #18 175124
Eagle #137 95660 Golden Eagle #18 425
Eagle #138 95661 Golden Eagle #19 424
Eagle #139 95662 Golden Eagle #19X 13965
Eagle #140 95663 Golden Eagle #20F 11126
Eagle #141 95664 Golden Eagle #21F 11127
Eagle #142 95665 Golden Eagle #21F 175125
Eagle #143 95666 Golden Eagle #22F 11128
Eagle #144 95667 Golden Eagle #22F 175126
Eagle #145 95668 Golden Eagle #23 11129
Eagle #146 95669 Golden Eagle #24 11130
Eagle #147 95670 Golden Eagle #25 11131
Eagle #148 95671 Golden Eagle #26 11132
Eagle #149 95672 Golden Eagle #27 11133
Eagle #150 95673 Golden Eagle #28 418
Eagle #151 95674 Golden Eagle #29 3996
Eagle #152 95675 Golden Eagle #30 3997
Eagle #153 95676 Golden Eagle #31 3998
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
BLM
Claim Name Serial No.
---------- ----------
Golden Eagle #32 3999
Golden Eagle #33 4000
Golden Eagle #34 4001
Golden Eagle #35 4002
Golden Eagle #36 4003
Golden Eagle #37 4004
Golden Eagle #38 4005
Golden Eagle #39 4006
Golden Eagle #40 4007
Golden Eagle $41 4008
</TABLE>
4
<PAGE>
EXHIBIT "A-2"
Attached to and made part of that certain Joint Venture Agreement
dated the 20th day of May, 1996 between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation.
The following unpatented mining claims located in Idaho County, State of Idaho.
<TABLE>
<S> <C> <C> <C>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
- ---------- ---------- ---------- ----------
PT 1 177154 PT 35 177188
PT 2 177155 PT 36 177189
PT 3 177156 PT 37 177190
PT 4 177157 PT 38 177191
PT 5 177158 PT 39 177192
PT 6 177159 PT 40 177193
PT 7 177160 PT 41 177194
PT 8 177161 PT 42 177195
PT 9 177162 PT 43 177196
PT 10 177163 PT 44 177197
PT 11 177164 PT 45 177198
PT 12 177165 PT 46 177199
PT 13 177166 PT 47 177200
PT 14 177167 PT 48 177201
PT 15 177168 PT 49 177202
PT 16 177169 PT 50 177203
PT 17 177170 PT 51 177204
PT 18 177171 PT 52 177205
PT 19 177172 PT 53 177206
PT 20 177173 PT 54 177207
PT 21 177174 PT 55 177208
PT 22 177175 PT 56 177209
PT 23 177176 PT 57 177210
PT 24 177177 PT 58 177211
PT 25 177178 PT 59 177212
PT 26 177179 PT 60 177213
PT 27 177180 PT 61 177214
PT 28 177181 PT 62 177215
PT 29 177182 PT 63 177216
PT 30 177183 PT 64 177217
PT 31 177184 PT 65 177218
PT 32 177185 PT 66 177219
PT 33 177186 PT 67 177220
PT 34 177187 PT 68 177519
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C> <C>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
PT 69 177520 PT 111 177562
PT 70 177521
PT 71 177522
PT 72 177523
PT 73 177524
PT 74 177525
PT 75 177526
PT 76 177527
PT 77 177528
PT 78 177529
PT 79 177530
PT 80 177531
PT 81 177532
PT 82 177533
PT 83 177534
PT 84 177535
PT 85 177536
PT 86 177537
PT 87 177538
PT 88 177539
PT 89 177540
PT 90 177541
PT 91 177542
PT 92 177543
PT 93 177544
PT 94 177545
PT 95 177546
PT 96 177547
PT 97 177548
PT 98 177549
PT 99 177550
PT 100 177551
PT 101 177552
PT 102 177553
PT 103 177554
PT 104 177555
PT 105 177556
PT 106 177557
PT 107 177558
PT 108 177559
PT 109 177560
PT 110 177561
</TABLE>
2
<PAGE>
EXHIBIT "B"
Attached to and made part of that certain Joint Venture Agreement
dated May 20, 1996, by and between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation
ACCOUNTING PROCEDURES
The purpose of these Accounting Procedures is to establish equitable
methods for determining charges and credits applicable to Operations under the
captioned Agreement (the "Agreement"). It is the intent of the Manager and any
Participant that is not acting as the Manager ("the non-Manager") that neither
of them shall gain nor lose by reason of their duties and responsibilities as
the Manager or the non-Manager but that the Manager should be reimbursed for the
value of services provided hereunder. If any method proves unfair or inequitable
to the Manager or the non-Manager, the Participants shall meet and in good faith
endeavor to agree upon changes deemed necessary to correct the unfairness or
inequity. In the event of a conflict between the provisions of these Accounting
Procedures and those of the Agreement, the provisions of the Agreement shall
control.
ARTICLE 1
GENERAL PROVISIONS
1.1 Definitions. The definitions set forth in the Agreement shall apply to
these Accounting Procedures and shall have the same meanings as used herein.
Additional terms used in these Accounting Procedures are set forth below shall
have the following meanings:
(a) "Material" shall mean personal property, including but not limited
to supplies and non-depreciable equipment, acquired and held for use in
Operations.
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(b) "Outsider" shall mean participants other than "Participant" to the
Agreement and their affiliates.
(c) Personal Expenses" shall mean travel and other reasonable
reimbursable expenses of employees of the Manager or its Affiliates.
(d) "Technical Employees" shall mean those employees having special
and specific engineering, geological, legal, or other professional skills,
and whose primary function in Operations is the handling of specific
matters for the benefit of Operations.
1.2 Accounting Records.
(a) The Manager shall maintain accounting records for the Joint
Account in accordance with generally accepted accounting principles
consistently applied and used in the mining industry.
(b) The Manager shall take advantage of and credit the Venture with
all cash and trade discounts, freight allowances and equalizations, annual
volume or other allowances, credits, salvages, commissions, insurance
discount dividends and retroactive premium adjustments, and any other
benefits which accrue to the Manager wholly or in part because of
Operations.
1.3 Statements, Billings and Adjustments.
(a) The Manager shall promptly submit to the Management Committee
monthly statements of account reflecting in reasonable detail the charges
and credits to the Joint Account during the preceding month.
(b) On the basis of the adopted Program and Budget, the Manager shall
submit to each Participant prior to the last day of each month, a billing
for estimated cash requirements for the next month. Within ten (10) days
after receipt
2
<PAGE>
of each billing, each Participant shall advance to the Manager its
proportionate share of the estimated amount. Time is of the essence of
payment of such billings. The Manager shall at all times maintain a cash
balance approximately equal to the rate of disbursement for up to
forty-five (45) days.
(c) A Participant that fails to meet cash calls in the amount and at
the times specified in Section 1.3(b) shall be in default, and the amount
of the defaulted cash call shall bear interest from the date due at an
annual rate equal to two (2) percentage points over the Prime Rate, but in
no event shall said rate of interest exceed the maximum permitted by law.
The non-defaulting Participant shall have those rights, remedies and
elections specified in Section 6.4 of the Agreement.
(d) Payment of bills shall not prejudice the right of the non-Manager
to protest or question the correctness thereof; however, all bills and
statements rendered during any calendar year shall be presumed conclusively
to be true and correct after twelve (12) months following the end of any
such calendar year unless, within the said twelve-month period, the
non-Manager takes written exception thereto and makes claim on the Manager
for adjustment. No adjustment favorable to the Manager shall be made unless
it is made within the same prescribed period or in connection with an
adjustment in favor of the non-Manager. The provisions of this paragraph
shall not prevent adjustments resulting from a physical inventory of the
Assets.
1.4 Advances and Payments.
(a) As provided for in this Exhibit "B", the non-Manager shall advance
its share of the estimated cash outlay for the succeeding month's
operation. If the non-Manager's advances exceed its share of actual
expenditures, subsequent cash calls will be adjusted downward or the
Manager will refund to the non-Manager excess funds that are not necessary
for subsequent Operations.
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<PAGE>
(b) The Manager shall base its estimates of cash advance requirements
on the latest information available and shall take into account cash on
hand which may be applied to satisfy such requirements in order to reduce
the amounts to be advanced. It is the intent of the Participants to provide
adequate funds for the Operations and to maintain bank balances at minimum
levels.
(c) If the Manager does not request the non-Manager to advance its
share of estimated cash requirements, the non-Manager shall pay its share
of expenditures within thirty (30) days following receipt of the Manager's
billing.
(d) Except as provided in Section 6.4 of the Agreement, all payments
shall be made on or before the due date by wire transfer in immediately
available funds to bank accounts designated by the Manager. If not so paid,
the unpaid balance shall bear interest after the due date at the rate of
Prime Rate plus two percent (2%) for each thirty (30) day period or portion
thereof until such amount is paid, plus attorneys' fees, court costs, and
other costs related to the collection of the unpaid amounts.
(e) Funds received by the Manager from the non-Manager Participant
shall be segregated or maintained by the Manager as a separate fund, and
may not be commingled with the Manager's own funds, except with the consent
of the non-Manager Participant.
1.5 Audits. Upon notice in writing to the Manager, the non-Manager shall
have the right to audit the accounts and records relating to the accounting made
under this Agreement for any calendar year within the twelve (12) month period
following the end of such calendar year; provided, however, the making of an
audit shall not extend the time for the taking of written exception to and the
adjustments of accounts pursuant to Section 1.3(d). The non-Manager may arrange
for audits by its own staff or outside professional and qualified independent
auditors. Audits shall be conducted in a manner so as to cause the minimum
inconvenience to the Manager. The Manager shall bear no portion of non-Manager's
audit costs unless agreed to by the Manager in advance of such audit.
Notwithstanding the above in the event the non-Manager
4
<PAGE>
does not audit the accounts and records relating to the accounting made under
this Agreement the Manager shall have conducted annually an audit of the
accounts and records relating to the accounting made under this Agreement. Such
audit shall be for the account of the Venture. If the non-Manager does have an
audit performed as provided herein, the Manager shall not be required to perform
an additional audit.
ARTICLE 2
CHARGEABLE COSTS
Subject to the provisions of the Agreement, the Manager shall charge the
Joint Account with all costs incurred by it as necessary and proper for the
conduct of Operations or maintenance of the Assets. Such costs shall be
reasonable and comparable with similar projects in the area. Except as otherwise
provided in the Agreement, the Manager shall charge the Joint Account with: (1)
exploration expenditures made for the exploration activities within the
Property, (2) expenditures made for engineering, environmental, planning,
Development and construction related to the Property and for the equipment and
facilities necessary for Operations, including all working capital and
sustaining capital for ongoing Operations and for the expansion and updating of
Operations, and (3) costs and expenses of mining, processing, reclamation,
restoration, worker's compensation and other claims upon closing of the mines,
and any other costs following the mine closing. Such costs include, but are not
limited to the following:
2.1 Property Payments. Property payments, rentals, royalties and other
payments out of production (unless such royalties or other payments shall burden
the ownership interests of only one Participant) and fees, paid by the Manager
for Operations including permits, fees, and other charges which are assessed by
various governmental agencies. Such costs also include acquisition of easements,
rights of way, and surface rights.
5
<PAGE>
2.2 Labor.
(a) Salaries and wages of the Manager's employees directly engaged in
and the conduct of and for the benefit of Operations, whether temporarily
or permanently assigned. The proportion of salaries and wages charged will
be prorated proportionate to the time spent by employees for the benefit of
Operations. Salaries and wages shall include everything constituting gross
pay to employees as reflected on the Manager's payroll, including travel
time and overtime.
(b) The Manager's cost of holidays, rest days, vacations, disability
benefits, sickness, and other customary allowances and reasonable expenses
which are paid or reimbursed under the Manager's usual practice. Such
amounts may be charged either on a "percentage assessment" of salaries and
wages, or on a cash basis.
(c) Costs of expenditures or contributions made pursuant to
assessments imposed by governmental authority which are applicable to the
Manager's cost of salaries and wages.
(d) Personal Expenses of employees whose salaries and wages are
chargeable to the Joint Account under Section 2.2 (a), but only to the
extent that such Personal Expenses are incurred in connection with their
efforts while directly engaged in the conduct of and for the benefit of
Operations.
(e) The Manager's actual costs of established plans for employees'
group life insurance, hospitalization, medical, dental, pension,
retirement, stock purchase, profit sharing, thrift, bonus, and other
benefit plans of a similar nature applicable to the Manager's labor cost
chargeable to the Joint Account.
(f) If a percentage assignment is used for Section 2.2(b) and (e), the
rate shall be based on actual cost experience for the previous year. Such
rate
6
<PAGE>
shall be determined during the first quarter of each year and shall be
applied in current year operations.
(g) Relocation costs of employees permanently or temporarily assigned
and directly engaged in the conduct of Operations. Such costs shall include
transportation of employees' families and their personal and household
effects and all other relocation costs in accordance with the Manager's
usual practice.
2.3 Material. Material purchased or furnished by the Manager for use in
Operations as provided under Article 3. So far as is reasonably practical, and
consistent with efficient and economical operations, only such Material shall be
purchased or transferred for use in Operations as may be required for immediate
use.
2.4 Transportation.
(a) Transportation of material and other related costs such as
expediting, crating, freight, and unloading at destination.
(b) Transportation of employees as required in the conduct of
Operations.
2.5 Services.
(a) The cost of consultants, contract labor, services, equipment, and
utilities procured from Outsiders.
(b) Technical or research services, such as, but not limited to,
laboratory analysis, drafting, geophysical and geological interpretation,
engineering, reserve studies and related computer services, and data
processing, which may be delegated to and performed by the specialized
staffs of one of the Participants or their Affiliate. Such professional
services shall be on a cost of service basis and charges shall not exceed
the cost of comparable quality services by qualified Outsiders.
7
<PAGE>
Charges to the Joint Account for services directly benefiting Operations
shall be in addition to any charges allowed under Sections 2.11 and 2.12.
(c) In the event the Manager from time to time utilizes skilled
personnel of the Participants or their Affiliates for performance of
services either within the Property or elsewhere for the benefit of
Operations, whose time in full or in part is not otherwise charged
hereunder, a proper proportion of the direct and indirect salary, employee
benefits, and travel expenses of such personnel shall be charged to the
Joint Account, provided such work is pursuant to written authorization by
the Manager. Such professional services shall be on a cost of service basis
and charges shall not exceed the cost of comparable quality services by
qualified Outsiders.
(d) Use of the Manager's and the non-Manager's separately owned
equipment and facilities for benefit of Operations. Such use shall be
charged to the Joint Account at rates commensurate with the Manager's
actual and full costs of ownership and operation and such rates shall
include cost of maintenance, repairs, other operating expense, insurance,
taxes (other than income taxes), depreciation, and other overhead. These
charges shall not exceed the prevailing commercial rates in the area.
(e) Data processing and computer services acquired for the benefit of
Operations may be contracted through Outsiders, or by arrangement for
computer services from one of the Participants, or their Affiliates, even
though such facilities are not physically located within the Property.
Charges to the Joint Account under this provision for services directly
benefiting Operations shall be in addition to any charges allowed under
Section 2.11 and 2.12. Such professional services shall be on a cost of
service basis and charges shall not exceed the cost of comparable quality
services by qualified Outsiders.
(f) Any technical services, skilled personnel, equipment, facilities
or data processing services provided to Operations by the non-Manager, at
the request
8
<PAGE>
of the Manager, shall be charged on the same basis as provided in Sections
2.5 (b), (c) (d) and (e) above. The non-Manager shall bill the Manager in
accordance with Section 1.4 (c) of the Accounting Procedures. The Manager
may audit the records of the non-Manager with regard to such services in
accordance with the procedure set forth in Section 1.5.
2.6 Repair and Replacement of Property. All costs or expenses (net of the
recoveries from insurance for which the premiums have been charged to the Joint
Account, if any) necessary for the repair or replacement of property resulting
from damages or losses incurred by fire, flood, storm, theft, accident, or any
other cause, excepting the Manager's gross negligence or willful misconduct. The
Manager shall furnish to the non-Manager written notice of damages or losses in
excess of Fifteen Thousand Dollars ($15,000) as soon as practicable. Such costs
and expenses include the costs to combat and control the actions of the hazard.
2.7 Insurance.
(a) Premiums paid for Workers' Compensation or Employer's Liability
Insurance required to be carried for Operations. In the event Operations
are conducted in a state or province in which the Manager may act as
self-insurer for Workers' Compensation or Employer's Liability under the
applicable state's or province's law, the Manager may, at its election,
provided that it is allowed by the laws of the Province, include the risk
under its self-insurance program and in that event, the Manager shall
include a charge at the Manager's cost equal to the Standard Workers'
Compensation rate during any one contract year. Premiums paid for an
insurance program covering such property, business interruption, casualty,
and fidelity risks as are deemed prudent by the Manager based on sound
business judgment, which judgment shall be subject to review and revision
by the Management Committee. Premiums paid for other insurance as requested
by the Management Committee. Each Participant may procure and maintain, at
its own cost and expense, such other insurance as it may determine to be
necessary to protect its interests, and any such
9
<PAGE>
insurance so procured and maintained shall inure solely to the benefit of
the Participant procuring the same.
(b) Actual expenditures incurred in the investigation, defense, and
settlement of all losses, claims, damages, judgments, and other expenses
for the benefit of Operations, excepting those resulting from the Manager's
gross negligence or willful misconduct.
2.8 Litigation and Claims. All costs or expenses of handling, investigation
and settling litigation or claims arising by reason of Operations or necessary
to protect or recover property, including, but not limited to, attorneys' fees,
court costs, cost of investigation or procuring evidence and amounts paid in
settlement or satisfaction of any such litigation or claims. In the event
actions or claims affecting Operations shall be handled by the legal staff of
one of the Participants, a charge commensurate with the cost of providing such
service is chargeable to the Joint Account.
2.9 Taxes. All taxes (except taxes based on or determined with reference to
income), fees, and governmental assessments of every kind and nature. If the
Manager is required hereunder to pay ad valorem taxes based in whole or in part
upon separate valuations of each Participant's Interest, then notwithstanding
anything to the contrary herein, charges to the Joint Account shall be made and
paid by the Participants hereto in accordance with the percentage of tax value
generated by each Participant's Interest.
2.10 Fines. All fines resulting from non-compliance with applicable laws,
rules, and regulations, except to the extent that such fines were due to the
gross negligence or willful misconduct of the Manager.
2.11 Direct Administrative Costs. The net cost of maintaining and operating
any offices (excepting the corporate headquarters office), suboffices, camps,
warehouses, housing, and other facilities directly serving Operations shall be
charged to the Joint Account. If such facilities serve operations in addition to
Operations the
10
<PAGE>
net costs shall be allocated to all operations served on an equitable basis
mutually agreed to by the Participants.
2.12 Manager's Management Fee. A charge to reimburse the Manager for
overhead and other general and administrative services of the Manager's
corporate headquarters office equal to the following percentages applied to
costs and expenses determined on a monthly basis under the provisions of
Paragraphs 2 through 7, 11 and 13 through 15 of this Article 2:
(a) Ten percent (10%) of all cash expenditures incurred prior to
Development, but only five percent (5%) on contracts greater than One
Hundred Thousand Dollars ($100,000).
(b) Five percent (5%) of all cash expenditures incurred following
commencement of Development.
Notwithstanding the above, such Manager's fees shall not be charged on the
overhead of any contractors or agents. The overhead rates set out above shall be
reviewed annually at the request of either party. If a detailed analysis of the
Manager's actual cost experiences establishes that higher or lower overhead
expenses were incurred or are likely to be incurred, and if higher, are
reasonable in the circumstances, then the rates shall be amended by the
Management Committee. Such amendment shall be on the basis that the Manager
neither profits nor loses as a result thereof.
2.13 Storage of Production Inventories. Each Participant will bear the cost
incurred for handling and storage of merchantable ore or concentrates as
follows:
(a) Personal property taxes on ore or concentrates in storage for a
Participant within the Property shall be charged to such Participant.
11
<PAGE>
(b) The cost of loading out such ore in storage for a Participant from
the Property shall be charged to such Participant.
(c) Cost associated with providing storage of ore or concentrates
within the Property will be charged on a pro rata basis determined by the
Participants.
(d) Other costs arising out of storage or handling of ore or
concentrates shall be charged to the Participant owning such Materials.
2.14 Project Assets. The cost of all capital expenses of the Assets which
are normally depreciable, depletable, or amortizable, including but not limited
to land acquisition, exploration, development, pre-mine development and
stripping, machinery, equipment, plant, buildings, rail facilities and
equipment, improvements, camp and port facilities, townsites and other
infrastructure, whether incurred or acquired prior to or after Commencement of
Commercial Production.
2.15 Other Necessary Expenses. Any other chargeable expenditures not
covered or dealt with in the foregoing provisions which are necessary and proper
for the conduct of Operations.
ARTICLE 3
PRICING OF JOINT ACCOUNT MATERIAL PURCHASES
TRANSFERS, AND DISPOSITION
The Manager is responsible for Joint Account Material and shall make proper
and timely charges and credits for all Material movements affecting the
Property. The Manager shall provide all Material for use within the Property,
however, at the Manager's option, such Material may be supplied by the
non-Manager.
3.1 Purchases. Material purchased shall be charged at the price paid by the
Manager after deduction of all discount received. In case of Material found to
be
12
<PAGE>
defective or returned to vendor for any other reason, credit shall be passed to
the Joint Account when adjustment has been received by the Manager.
3.2 Transfer and Dispositions. Material furnished to the Property and
Material transferred from the Property or disposed of by the Manager, unless
otherwise agreed to by the Participants, shall be priced at its current fair
market value.
3.3 Premium Prices. Whenever Material is not readily obtainable at
published or listed prices because of national emergencies, strikes, or other
unusual causes over which the Manager has no control, the Manager may charge the
Joint Account for the required Material at the Manager's actual cost incurred In
providing such Material, in making it suitable for use, and in moving it to the
Property.
3.4 Warranty of Material. The Manager shall not be held responsible for
defects in Material furnished for Operations. In the event Material is
defective, credit shall not be passed to the Joint Account until the adjustment
has been received by the Manager from the manufacturer or its agents.
ARTICLE 4
DISPOSAL OF SURPLUS MATERIAL
4.1 Distribution Generally. The disposition of major items of surplus
Material shall be decided upon by the Manager. The Manager may purchase, but
shall be under no obligation to purchase, the interests of the non-Manager in
surplus Material.
4.2 Purchase by Participants. Surplus Material purchased by either the
Manager or the non-Manager shall be credited by the Manager to the Joint Account
at its fair market value.
4.3 Distribution to Participants. Division of Material in kind, if made
between the Manager and the non-Manager, shall be in proportion to their
respective
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<PAGE>
interests in such Material. Each Participant will thereupon be charged
individually with the value of the Material received or receivable by each
Participant, and corresponding credits will be made by the Manager to the Joint
Account. Such credits shall appear in the monthly statement of operations.
4.4 Sales. Sales to Outsiders of Material from the Property shall be
credited by the Manager to the Joint Account at the net amount collected by the
Manager from vendee, which shall be priced on the basis of the best available
market price. Any claim by vendee for defective Materials or otherwise shall be
charged back to the Joint Account if and when paid by the Manager.
ARTICLE 5
INVENTORIES
5.1 Periodic Inventories. The Manager shall take physical inventory of
Joint Account Material at reasonable intervals in accordance with generally
accepted accounting principles but not less than once a year. The non-Manager
may be represented when any inventory shall bind the non-Manager to accept the
inventory taken by the Manager.
5.2 Reconciliation. Reconciliation of inventories with the Joint Account
shall be made by the Manager, and a list of overages and shortages shall be
furnished to the non-Manager within ninety (90) days following the taking of
inventory. Inventory adjustments shall be made by the Manager to the Joint
Account for overages and shortages, but the Manager shall be hold accountable to
the non-Manager only for shortages due to the lack of reasonable diligence.
5.3 Special Inventories. Whenever there is a sale or change of Interest in
the Mineral Rights, the Property or the Assets, a special inventory may be taken
by the Manager, provided the seller or purchaser or such Interest requests such
inventory and agrees to bear all of the expense thereof. In such cases, both the
seller and the purchaser shall be entitled to be represented. A special
inventory shall be required
14
<PAGE>
when there is a change in the Manager. The cost of the latter inventory will be
charged to the Joint Account when the change in the Manager does not come about
as the result of a sale of the former Manager's Interest.
5.4 Expenses. The expense incurred by the Manager in conducting periodic
inventories shall be charged to the Joint Account.
15
<PAGE>
EXHIBIT "C"
Attached to and made part of that certain Joint Venture Agreement
dated May 20, 1996, by and between
Idaho Consolidated Metals Corporation
and Cyprus Gold Exploration Corporation.
NET PROCEEDS OF PRODUCTION ROYALTY
1 Obligation.
1.01 If any party becomes entitled to an interest in Net Proceeds pursuant to
the Agreement (an "Owner"), the Manager shall separately calculate, as at the
end of each calendar quarter subsequent to commencement of commercial
operations, Net Proceeds.
1.02 Interest in Net Proceeds Each Participant shall within sixty (60) days of
the end of each calendar quarter, as and when any Net Proceeds are available for
distribution:
(a) severally pay or cause to be paid to each Owner that percentage of the
Net Proceeds to which that Owner is entitled under the Agreement;
(b) deliver to each Owner a statement indicating:
i. the Gross Receipts during the calendar quarter;
ii. the deductions therefrom made in the order itemized in subsection
3.01 of this Exhibit C;
iii. the amount of Net Proceeds remaining; and
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<PAGE>
iv. the amount of the Net Proceeds to which that Owner is entitled;
provided, however, that until such time as there are Net Proceeds available, the
Manager shall deliver to each Owner within sixty (60) days of the end of each
calendar quarter commencing with the first calendar quarter following the
commencement of commercial operations, a statement indicating the Gross Receipts
during the calendar quarter less the deductions therefrom made in the order
itemized in subsection 3.01 of this Exhibit C.
1.03 Nothing contained in the Agreement or this Exhibit C shall be construed as:
(a) imposing on a Participant any obligation with respect to the payments
of amounts due hereunder to an Owner from any other Participant; or
(b) conferring on any Owner any right to or interest in any Property or
Assets except the right to receive payments pursuant to the Net
Proceeds Interest Royalty from each Participant to the Agreement as
and when due.
2. Definitions. Capitalized terms used but not defined herein shall have the
meanings given thereto in the Agreement.
2.01 "Costs" means, all items of outlay and expense whatsoever, direct or
indirect, with respect to Operations including loans made by one Participant for
the benefit of another Participant, recorded by the Manager in accordance with
the Agreement; without limiting generality, the following categories of Costs
shall have the following meanings:
(a) "Construction Costs" means those Costs recorded by the Manager during
the period of Development, including, without limiting generality, the
Manager's fee contemplated in Section 2.12 of Exhibit B;
2
<PAGE>
(b) "Distribution Costs" means all costs of:
i. transporting ore or concentrates from a mine or a concentrating
plant to a smelter, refinery or other place of delivery
designated by the purchase and, in the case of concentrates
tolled, of transporting the metal from a smelter to the place of
delivery designated by the purchaser;
ii. handling, warehousing and insuring the concentrates and metal;
and
iii. in the case of concentrates tolled, of smelting and refining,
including any penalties thereon or in connection therewith.
(c) "Exploration Costs" means those Costs, including Exploration
Expenditures, pertaining to all activities directed toward
ascertaining the existence, location, quantity, quality or commercial
value of deposits of Products, and specifically includes the
preparation of a Feasibility Study.
(d) "Interest Costs" means interest computed quarterly and not in advance
calculated as follows:
i. If financing for Development of the Property has been obtained
from a third party lender, at the interest rates provided for
therein.
ii. If such third party financing is not in effect, as follows:
(1) the average of the opening and closing monthly outstanding
balances for each month during the quarter of the net unrecovered
amounts of all costs in the classes enumerated paragraphs 2.01
(a), (b), (c), (d), (e) (f) and (g) of this Exhibit C;
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<PAGE>
multiplied by:
(2) Prime Rate plus two percent;
multiplied by:
(3) the number of days in the quarter;
divided by:
(4) the number of days in the year;
(e) "Marketing Costs" means such reasonable charge actually incurred for
marketing of ores and concentrates sold or of concentrates tolled as
is consistent with generally accepted industry marketing practices;
and
(f) "Operating Costs" means those Costs recorded by the Manager subsequent
to the commencement of commercial production, including, without
limiting generality, the Manager's fee contemplated in Section 2.12 of
Exhibit B and additional costs of capital; and
(g) "Taxes and Royalties" means all taxes (other than income taxes),
royalties or other charges or imposts provided for pursuant to any law
or legal obligation imposed by any government if paid by the
Participant and any other royalties payable to third parties.
2.02 Wherever used in this Exhibit C, "Gross Receipts" means the aggregate of
all receipts, recoveries or amounts received by or credited to a Participant in
connection with its participation under the Agreement including, without
limiting the generality of the foregoing:
(a) the receipts from the sale of that Participant's proportionate share
of the ores, concentrates or other materials derived from Products
produced from the Property;
(b) all proceeds received from the sale of the Property or Assets
subsequent to the effective date of the Agreement;
4
<PAGE>
(c) all insurance recoveries (including amounts received to settle claims)
in respect of loss of, or damage to any portion of the Property or
Assets subsequent to the effective date of the Agreement;
(d) all amounts received as compensation for the expropriation or forcible
taking of any portion of the Property or Assets subsequent to the
effective date of the Agreement;
(e) the fair market value, at the Property, of those Assets, if any,
purchased for the Joint Account, that are transferred from the
Property for use by a Participant elsewhere subsequent to the
effective date of the Agreement; and
(f) the amount of any negative balance remaining after the reallocation of
negative balances pursuant to subsection 3.03 of this Exhibit C;
to the extent that those receipts, recoveries or amounts have not been applied
by the Participant as a recovery of any of the classes of Costs itemized in
subsection 3.01 of this Exhibit C.
3. Net Proceeds Calculation.
3.01 "Net Proceeds" means the Gross Receipts minus deductions therefrom of the
then net unrecovered amounts of the following classes of Costs made in the
following itemized order:
(a) Marketing Costs;
(b) Distribution Costs;
(c) Operating Costs;
5
<PAGE>
(d) Taxes and Royalties;
(e) Interest Costs;
(f) Construction Costs; and
(g) Exploration Costs;
it being understood that the deductions in respect of the Costs referred to in
paragraphs 3.01 (a), (b), (d) and (e) of this Exhibit C shall be based on those
Costs as recorded by that Participant and the deductions in respect of the Costs
referred to in paragraphs 3.01 (c), (f) and (g) of this Exhibit C shall be based
on that Participant's proportionate share of those Costs as recorded by the
Manager.
3.02 For greater certainty in calculating Net Proceeds at any time, each of the
classes of Costs shall constitute a separate pool from which all Costs deducted
on any previous quarterly calculation shall be removed and to which, in the case
of all classes of Costs, Costs of those classes recorded since the commencement
of commercial production (in the case of the first quarterly calculation) or
since the date of the last quarterly calculation (in the case of any calculation
subsequent to the first quarterly calculation) shall be added.
3.03 If the application of credits to a pool of Costs results in a negative
balance in that pool of Costs, the amount of any negative balance from a Cost
pool shall be applied to reduce the balance then remaining in pools itemized in
subsection 3.01 of this Exhibit C in the order itemized.
4. Adjustments and Verification.
4.01 Payment of any Net Proceeds of Production Royalty by a Participant in the
Agreement shall not prejudice the right of that Participant to protest the
correctness of the statement supporting the payment; provided, however, that all
statements
6
<PAGE>
presented to the Owner by that Participant for any quarter shall conclusively be
presumed to be true and correct upon the expiration of twelve 0 2) months
following the end of the quarter to which the statement relates, unless within
that twelve (12) month period that Participant gives notice to the Owner making
claim on the Owner for an adjustment to the statement which will be reflected in
subsequent payment of the Net Proceeds of Production Royalty.
4.02 The Participant shall not adjust any statement in favor of itself after the
expiration of twelve (12) months following the end of the quarter to which the
statement relates.
4.03 The Owner shall be entitled upon notice to any Participant to have an
auditor selected by the Owner review all appropriate records and perform an
audit and provide the Owner with an opinion that any statement delivered
pursuant to subsection 1.01 of this Exhibit C in respect of any quarterly period
failing within the twelve (112) month period immediately preceding the date of
the Owner notice has been prepared in accordance with this Agreement.
4.04 The time for giving the audit opinion contemplated in subsection 4.03 of
this Exhibit C shall not extend the time for the taking of exception to and
making claim on the Owner for adjustment as provided in subsection 4.01 of this
Exhibit C.
4.05 The cost of the auditor's opinion referred to in subsection 4.03 of this
Exhibit C shall be solely for the account of the Owner requesting the auditor's
opinion unless the auditors opinion confirms that the Owner received less than
ninety-seven percent (97%) of the Net Proceeds of Production Royalty due to it
during the year in question, in which event the Participant shall reimburse the
Owner for the reasonable costs of the audit.
7
<PAGE>
EXHIBIT "D"
Attached to and made part of that certain Joint Venture Agreement
dated May 20, 1996, by and between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation
INSURANCE
The Manager shall, at all times while conducting Operations, comply fully
with the applicable worker's compensation laws and purchase, or with the
unanimous consent of the Management Committee provide through self-insurance,
protection for the Participants comparable to that provided under standard form
insurance policies for (i) comprehensive public liability and property damage
with combined limits of Two Million Dollars for bodily injury and property
damage; (ii) automobile insurance with combined limits of Two Million Dollars;
and (iii) adequate and reasonable insurance against risk of fire and other risks
ordinarily insured against in similar operations. If the Manager elects to
self-insure, it shall charge to the Joint Account an amount equal to the premium
it would have paid had it secured and maintained a policy or policies of
insurance on a competitive bid basis in the amount of such coverage. Each
Participant may self-insure or purchase for its own account such additional
insurance as it deems necessary.
<PAGE>
EXHIBIT "E"
Area of Interest of the Petsite Venture
Idaho County, Idaho
[Map of Idaho County, Idaho]
Includes: Sections 1, 2, 3, 4, 11, 12, 13, 14, 23, 24, 25, 26, Township
27 North, Range 7 East Sections 6, 7, 18, 19, 30, Township 27
North, Range 8 East Sections 25, 26, 27, 28, 33, 34, 35, 36,
Township 28 North, Range 7 East Sections 30, 31, Township 28
North, Range 8 East, Boise Meridian
<PAGE>
EXHIBIT "F"
Attached to and made part of that certain Joint Venture Agreement
dated the 20th day of May, 1996 between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation.
<TABLE>
<S> <C> <C> <C>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
- ---------- ---------- ---------- ----------
Eagle #30 423 Golden Eagle #6 11114
Eagle #30 175127 Golden Eagle #7 175123
Eagle #34 11164 Golden Eagle #12 11120
Eagle #34 175129 Golden Eagle #15 11123
Eagle #39 9325 Golden Eagle #16 11124
Eagle #39 175130 Golden Eagle #18 425
Eagle #40 9326 Golden Eagle #18 175124
Eagle #40 175131 Golden Eagle #22F 11128
Eagle #41 11169 Golden Eagle #22F 175126
Eagle #41 175132 Golden Eagle #25 11131
Eagle #42 11170 Golden Eagle #26 11132
Eagle #42 175133 Golden Eagle #27 11133
Eagle #43 11171
Eagle #50 11178
Eagle #54, 420
Eagle #54 175134
Eagle #98 9350
Eagle #99 9351
Eagle #109 44037
Eagle #110 44038
Eagle #115 44043
Eagle #116 44044
Eagle 0117 44045
Eagle #122 44051
Golden Eagle 175119
Golden Eagle #3 175121
Golden Eagle #4 175122
Golden Eagle #5 11113
1
</TABLE>
Exhibit 10.3
Cyprus Amax Minerals Company
9100 East Mineral Circle
Post Office Box 3299
Englewood, Colorado 80155-3299
CYPRUS AMAX (303) 643-5778
Minerals Company Fax: (303) 643-6943
- --------------------------------------------------------------------------------
Steven E. Parry
Exploration Manager - North America
June 13, 1997
Del Steiner, President/CEO
Idaho Consolidated Metals Corporation
P.O. Box 1124
Lewiston, ID 83501
RE: Binding Letter of Intent
Deadwood Project
Idaho County, Idaho
Dear Del:
I very much appreciate that you and Wilf Struck came to Cyprus Amax's offices on
June 12, 1997 to negotiate terms for a joint venture agreement between Idaho
Consolidated Metals Corporation ("ICMC") and Cyprus Gold Exploration Corporation
("Cyprus") pertaining to the Deadwood Project. As a result of our discussions,
we were able to reach agreement on mutually beneficial terms for inclusion in a
joint venture agreement.
The following outlines the terms we agreed upon as well as other provisions to
be included in a joint venture agreement:
Type of Agreement: Joint Venture Agreement
Initial Earn-in Interests: Cyprus 60%
ICMC 40%
Cyprus must complete certain requirements in order to earn its interest in the
project and to establish a joint venture. Cyprus will contribute to the venture
all mineral and surface interest presently under its control and any future
interests acquired within the area of interest described in a subsequent section
of this outline.
ICMC's initial contribution to the joint venture will be all the mineral and/or
surface interests controlled by ICMC in the project area and all relevant data
in its possession.
Cyprus' Requirements to Earn a 60% Interest in the Venture:
Claim Maintenance: Cyprus agrees to pay future BLM and county claim
maintenance and filing fees while this agreement is in effect and Cyprus is
earning its interest in the venture.
<PAGE>
Del Steiner, President/CEO
June 13, 1997
Page 2
Lease Maintenance: Cyprus agrees to maintain in good standing to the best
of its ability all existing leases/options presently held by ICMC within
the area of interest while this agreement is in effect and Cyprus is
earning its interest in the venture.
Reimbursement of 1997 Lease Costs: Cyprus agrees to reimburse ICMC for the
lease costs incurred on the Joyce Mines & Thunderbird Resources - Amir
Mines agreement during 1997.
Payment Requirements: $115,000 upon execution of a formal joint venture
agreement. $50,000 of the initial $115,000 payment will be immediately
tendered to Cyprus via a direct bank transfer of funds to be held by Cyprus
pending proof of acquisition of the Golden Eagle claim group pursuant to
the Petsite Joint Venture Agreement.
On the 6 month anniversary date of a formal joint venture agreement Cyprus must
purchase $100,000 in shares of ICMC common stock to keep the agreement in good
standing.
Expenditure Requirements: Cyprus will be required to expend $1,150,000 on
or for the benefit of the property pursuant to the following schedule:
Amount Cumulative Date
------ ---------- ----
$250,000 $250,000 On or before the 1st anniversary date.
$400,000 $650,000 On or before the 2nd anniversary date.
$500,000 $1,150,000 On or before the 3rd anniversary date.
Of the first year's expenditure requirement, a minimum of $125,000 must be
work on the ground. Any exploration expenditures over and above the minimum
expenditure requirements in any given year of the agreement may be credited
to subsequent year's expenditure requirements.
Cyprus' Requirements to Earn an Additional 20% Interest (80% total) in the Joint
Venture:
Cyprus may elect, after completing the initial earn-in requirements and earning
a 60% joint venture interest in the project, to earn an additional 20%
interest (for a total project interest of 80%) by completing the following
requirements:
Claim Maintenance: Cyprus agrees to continue to maintain ICMC's unpatented
lode claims and pay BLM and county claim maintenance and filing fees while
this agreement is in effect and Cyprus is earning its interest in the
venture.
Lease Maintenance: Cyprus agrees to maintain in good standing to the best
of its ability all existing leases/options presently held by ICMC within
the area of interest while this agreement is in effect and Cyprus is
earning its interest in the venture.
<PAGE>
Del Steiner, President/CEO
June 13, 1997
Page 3
Expenditure Requirements: Cyprus will be required to expend an additional
$1,350,000 on or for the benefit of the claims pursuant to the following
schedule:
Amount Cumulative Date
------ ---------- ----
$600,000 $1,750,000 On or before the 4th anniversary date
$750,000 $2,500,00 On or before the 5th anniversary date.
Any exploration expenditures over and above the minimum expenditure requirements
in any given year of the agreement may be credited to subsequent year's
requirements.
Should permitting or other serious delays, that are out of the control of
Cyprus, be encountered during the exploration and/or development of the project,
the delays will be added to the earn-in period and extend the expenditure
deadlines.
Financing of ICMC's Cash Requirements by Cyprus: Cyprus will extend a similar
financing arrangement to ICMC as the one that exists in the Petsite Joint
Venture Agreement. After Cyprus completes the requirements of the earn-in to the
80% joint venture interest level, ICMC may elect to have Cyprus finance its
share of additional exploration expenditures until the completion of a
feasibility study. These expenditures, on behalf of ICMC, will be treated as a
loan bearing interest at the Prime Rate plus two percent compounded quarterly.
Cyprus will be repaid these funds out of 85% of the proceeds received by ICMC
from the sale of its share of products, after deduction of operating costs.
Please refer to the Petsite Joint Venture Agreement for complete details of the
financing arrangement (Article 6.7, page 21).
Dilution: The agreement will include normal dilution provisions. In the event
either party's interest is diluted to ten percent (10%) or less as a result of
its election not to participate in programs and budgets, such party shall revert
to a five percent (5%) Net Proceeds Interest Royalty.
Default: In the event a party defaults in funding its respective interest for a
program and budget for which it has elected to participate, such party shall be
deemed to have withdrawn from the venture. The defaulting party will revert to a
five percent (5%) Net Proceeds Interest Royalty and receive such for only so
long as it takes to recoup the actual expenditures it made during the term of
the agreement. Thereafter, the defaulting party will no longer have an interest
in the claims or the agreement.
Area of Interest: If either party to this agreement acquires surface or mineral
interests during the term of this agreement and within the Area of Interest
described below, all such acquisitions shall be considered a party of the Joint
Venture's property. The area of mutual interest will be defined as follows:
o All lands south of the South Fork of the Clearwater River within Sections
30 and 31; Township 29 North; Range 8 East; Boise Meridian.
o Sections 5, 6, 7, 8, 17, 18, 19, 20; Township 28 North; Range 8 East; Boise
Meridian.
<PAGE>
Del Steiner, President/CEO
June 13, 1997
Page 4
o Sections 13, 24; Township 28 North; Range 7 East; Boise Meridian.
Cyprus will also work to obtain a lease on the "Wagner Group" of unpatented lode
claims and the RL claim group owned by Arctic Fox, Inc., under terms favorable
to joint venture and, upon approval of the terms and conditions by senior Cyprus
management, fund the cost of these property acquisitions as part of the
expenditure requirements previously discussed in this proposal.
Termination: Cyprus may terminate the agreement at any time by providing written
notice of such intent. Should Cyprus terminate the agreement prior to earn-in,
Cyprus would retain no interest in the project and will deliver copies of all
information developed on the property by Cyprus to ICMC.
Upon ICMC's acceptance of this offer by execution of this letter in the space
indicated below, this letter will become a binding obligation of ICMC, and,
subject to Cyprus' satisfactory due diligence, to be completed within 90 days of
the date of this letter, and approval of Cyprus' senior management, a binding
obligation of Cyprus.
Sincerely,
/s/ S.E. Parry
S.E. Parry
Exploration Manager, North America
SEP:HB:amb
cc: H. Bihr
W.R. Stanley
AGREED TO AND ACCEPTED this 13th day of June, 1997.
Idaho Consolidated Metals Corporation
By: /s/ Del Steiner
----------------------------------
Del Steiner, President and CEO
Exhibit 10.5
AGREEMENT TO ASSIGN INTEREST - BUFFALO GULCH CLAIMS
This Agreement is dated as of the 11th day of December, 1995 and is made
between:
IDAHO GOLD CORPORATION
OF THE FIRST PART
AND:
IDAHO CONSOLIODATED METALS CORP.
OF THE SECOND PART
--------------------------------------------------
This is an accurate certified copy.
Date 10/4/96
Signed: /s/ Geoffrey S. Magnuson
------------------------------
Geoffrey S. Magnuson, Corporate Secretary
Idaho Consolidated Metals Corporation
--------------------------------------------------
WHEREAS:
A. Idaho Gold Corporation ("Idaho Gold") has the right to acquire certain
mining interests known as the Buffalo Gulch Claims as more particularly
described in Schedule "A" hereto (the "Mining Properties");
B. Idaho Consolidated Metals Corp. ("ICMC") wishes to acquire Idaho Gold's
interest in the Mining Properties together with all geological information
(including core or drill cuttings), metallurgical lab and field test
results, mine design and reserve calculations and pre-feasibility and
feasibility studies relating to the Mining Interests and in the possession
or under the control of Idaho Gold (the "Data");
NOW THEREFORE this Agreement witnesses that in consideration of the mutual
covenants and agreements herein contained and subject to the terms and
conditions hereafter set out, the parties hereto agree as follows:
1. "Closing Date" and "Closing" - The term "Closing Date" as used throughout
this Agreement shall mean July 19, 1996 or such other date as is agreed to
by the parties. The term "Closing" as used throughout this Agreement shall
mean the completion of the transactions herein contemplated which shall
occur at 10:00 a.m. Vancouver time on the Closing Date or such other time
on the Closing Date as agreed to by the parties.
2. Purchase and Sale of Assigned Interests - Upon and subject to the terms and
conditions set forth in this Agreement, Idaho Gold agrees to sell, assign
and transfer to ICMC, and ICMC agrees to purchase from Idaho Gold, on the
Closing Date all interest of
<PAGE>
- 2 -
Idaho Gold in and to the Mining Properties and the Data (collectively, the
"Assigned Interests"), subject to the reservation by Idaho Gold of a net
smelter return royalty (the "Royalty") on the Mining Properties on the
terms specified in Schedule "B" hereto.
3. Consideration for Assigned Interests - As consideration for the transfer of
the Assigned Interests, ICMC:
a) will issue to Idaho Gold 120,000 common shares in the capital of ICMC,
60,000 of which shares will be issued to Idaho Gold on the Closing
Date and the balance of which will be issued to Idaho Gold one year
after the Closing Date;
b) will incur expenditures (as defined in clause 3(f)(ii) below) of not
less than US$310,000 in the aggregate on or before the fifth
anniversary of the Closing Date on the exploration and development of
the Mining Properties, with the following amounts being incurred by
the dates indicated below:
i) USS30,000 on or before the first anniversary of the Closing Date;
ii) an aggregate of US$70,000 on or before the second anniversary of
the Closing Date;
iii) an aggregate of US$150,000 on or before the third anniversary of
the Closing Date; and
iv) an aggregate of US$230,000 on or before the fourth anniversary of
the Closing Date;
c) will replace all bonds relating to the Mining Properties currently
lodged by or on behalf of Idaho Gold with any regulatory authorities;
d) will be solely responsible for all costs of environmental compliance
associated with its exploration and mining operations on the Mining
Properties or with the termination thereof, and all costs incurred in
connection with environmental compliance, reclamation and long-term
care and monitoring of the Mining Properties arising out of activities
at any time by any person and its predecessors in ownership of the
Mining Properties;
e) will consent to the reservation by Idaho Gold of the Royalty, and
f) subject to paragraph 4, will grant to Idaho Gold an option (the
"Option") to acquire a 49% working interest in the Mining Properties
upon the following terms:
i) the term of the Option will be five years from the Closing Date;
<PAGE>
- 3 -
ii) Idaho Gold may exercise the Option by delivering a notice (the
"Option Notice") to ICMC to that effect and, within 30 days after
delivery of the Option Notice, a payment to ICMC equal to 115% of
ICMC's expenditures on the Mining Properties from January 1, 1996
to the date of delivery of such payment. "Expenditures" shall
mean all cash, expenses, obligations and liabilities, other than
for personal injury or property damage, of whatever kind or
nature spent or incurred directly or indirectly in connection
with the exploration, development or equipping of the Mining
Properties for commercial production including an overhead fee
not to exceed 8% of all expenditures (other than the overhead
fee),
iii) if Idaho Gold exercises the Option, ICMC and Idaho Gold will
enter into a joint venture agreement which will provide that (A)
each party will fund its proportionate share of ongoing
expenditures on the Mining Properties or have its interest
diluted; (B) a management committee will approve all operations
and activities of the joint venture and will consist of two
members from each of ICMC and Idaho Gold, with ICMC to hold the
casting vote so long as it retains not less than a 51% interest
in the joint venture; (C ) ICMC will have the right to be
operator of the joint venture so long as it retains not less than
a 51% interest in the joint venture;
iv) during the term of the Option, ICMC shall keep the Mining
Properties free and clear of all liens and encumbrances arising
from its operations and in good standing by the doing and filing,
or payment in lieu thereof, of all necessary assessment work and
payment of all taxes and other charges required to be paid and by
the doing of all other acts and things and the making of all
other payments required to be made;
v) ICMC will, as of January 1, 1996 and during the term of the
Option, assume, observe and perform each and every covenant and
agreement made or given by Idaho Gold or its predecessor in title
to be observed and performed under those contracts and agreements
listed in Schedule "C" hereto, including the making of all cash
and share payments and the performance of all work commitments on
the Mining Properties. ICMC may re-negotiate any of the contracts
and agreements listed in Schedule "C" to decrease or eliminate
the payment obligations thereunder,
vi) if, during the term of the Option, ICMC elects to relinquish one
or more of the Mining Properties, it will so notify Idaho Gold
and, if within 60 days of receipt of such notice, Idaho Gold
provides a notice to ICMC to the effect that Idaho Gold wants the
particular Mining Property re-transferred to it, ICMC will assign
that Mining Property, in good standing, to Idaho Gold upon
receipt from Idaho Gold of US$1.00. Notwithstanding the
foregoing, ICMC may not elect to relinquish any part of the
Mining Properties during
<PAGE>
- 4 -
the first year of the term of the Option;
vii) if ICMC should fail to make any of the payments or carry out any
of the obligations referred to in clauses (iv) or (v) above, it
shall be deemed to have made an election to relinquish the Mining
Property(ies) involved;
viii)an election or deemed election to relinquish one or more of the
Mining Properties will not relieve ICMC of its obligations
pursuant to paragraph 3(d); and
ix) if Idaho Gold exercises the Option, the Royalty will be
terminated.
4. Right to Acquire Option - ICMC will have the right to acquire Idaho Gold's
right to the Option by payment to Idaho Gold of Cdn.$300,000 at any time up
to 21 days after receipt by ICMC of the Option Notice from Idaho Gold.
5. Assignments by ICMC - ICMC agrees that it will not transfer or assign any
part of its interest in the Assigned Interests without the prior written
consent of Idaho Gold. It shall be a condition precedent to any assignment
that the assignee of the interest being transferred agrees in writing to be
bound by the terms of this Agreement, the Option and the Royalty.
6. Closing - On the Closing Date, the parties will table the following
documents and instruments and take the following steps:
a) ICMC will table for delivery to Idaho Gold a share certificate for
60,000 common shares in the capital of ICMC registered in the name of
Idaho Gold;
b) ICMC will table for delivery to Idaho Gold evidence satisfactory to
Idaho Gold that the bonds referred to in paragraph 3(c) have been
replaced by ICMC;
c) Idaho Gold will table for delivery to ICMC duly executed transfers, as
prepared by ICMC's solicitors, sufficient to convey to ICMC the
Assigned Interests to ICMC;
d) each party will execute and table for delivery to the other the Option
agreement;
e) ICMC will execute and table for delivery to Idaho Gold an agreement
reserving the Royalty to Idaho Gold; and
f) each party will execute and table for delivery to the other party all
such other documents and instruments reasonably required to
effectively consummate the transactions contemplated herein.
"Closing" will occur upon all documents set out above being tabled as
required
<PAGE>
- 5 -
and the closing conditions being satisfied or waived by the parties.
7. Joint Condition Precedent to Closing - The respective obligations of each
of the parties hereto to complete the Closing shall be subject to receipt
of all governmental and third party approvals and consents required for the
completion of the purchase and sale transaction. This condition may be
waived by ICMC and Idaho Gold acting together. ICMC hereby acknowledges
that Arctic Fox Ltd. and Gray Estates Company have not consented to the
transfer contemplated herein and that such consent may not be received by
Closing, if at all. Idaho Gold and ICMC hereby waive the receipt of the
consent by Arctic Fox Ltd. and Gray Estates Company as a condition
precedent to the completion of the purchase and sale transaction
contemplated herein.
8. Time of Essence - Time is and will be of the essence of each and every
provision of this Agreement.
9. Entire Agreement - This Agreement contains the whole agreement between
Idaho Gold and ICMC in respect of the subject matter hereof and supersedes
and replaces the letter of understanding dated December 11, 1995 and all
prior negotiations, communications and correspondence. There are no
warranties, representations, terms, conditions or collateral agreements,
express or implied, statutory or otherwise, other than as expressly set out
in this Agreement.
10. Enurement - This Agreement will enure to the benefit of and be binding upon
Idaho Gold and ICMC and their respective successors, liquidators and
permitted assigns.
11. Governing Law - This Agreement shall be construed and interpreted in
accordance with the laws of Idaho.
12. Notices - AU notices, payments and other required communications
("Notices") to the parties shall be in writing and shall be addressed
respectively as follows:
If to Idaho Gold:
c/o Bema Gold Corporation
1400 - 510 Burrard Street
Vancouver, B.C. V6C 3AS
Fax No.: 604-681-6209
Attention: Mr. Roger Richer
If to ICMC:
ICMC
P.O. Box 1124
Lewiston, Idaho 83501
Fax No.:208-746-6678
<PAGE>
- 6 -
Attention: Mr. [Illegible]
All Notices shall be given:
i) by personal delivery to the party by leaving a copy at the place
specified for notice with a receptionist or an apparently
responsible individual, or
ii) by electronic facsimile communication.
All Notices shall be effective and shall be deemed delivered:
iii) if by personal delivery on the date of delivery if delivered
during normal business hours, and if not delivered during normal
business hours, on the next business day following delivery, and
iv) if by electronic communication, on the next business day
following receipt of the electronic communication, provided that
a positive transmission report is generated by the sender's
facsimile machine.
13. Regulatory Approval - The obligations of the parties hereto is subject to
the acceptance for filing of this Agreement by the Vancouver Stock
Exchange.
14. Counterparts - This Agreement shall be executed in counterparts with the
same effect as if both parties had signed the same [document], and both
such counterparts will be construed together and will constitute one and
the same instrument. The execution of this Agreement will not become
effective until counterparts hereof have been executed by both parties
hereto and an executed copy delivered to each party hereto. Such delivery
may be made by facsimile transmission [of the] execution page or pages
hereof to the other party by the party signing the particular counterpart,
provided that forthwith after such facsimile transmission, an originally
[executed execution] page or pages is forwarded by prepaid express courier
to the other [party by the] party signing the particular counterpart.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of
the day and year first above written.
IDAHO GOLD CORPORATION
Per: /s/ [Illegible]
----------------------------
<PAGE>
- 7 -
IDAHO CONSOLIDATED METALS CORP.
Per: /s/ [Illegible] Vice President
----------------------------
<PAGE>
SCHEDULE "A"
BUFFALO GULCH CLAIMS
Claim BLM # IMC #
Name
A 46 95056
A 48 95058
A 49 95059
A 50 95060
A 53 95063
A 54 95064
A 55 95065
A 56 95066
A 58 95068
A 65 95075
A 66 95076
A 67 95077
A 68 95078
A 69 95079
A 70 95080
A 71 95081
A 72 95082
A 73 95083
A 74 95084
A 75 95085
A 80 95090
A 81 95091
A 82 95092
A 83 95093
A 84 95094
A 85 95095
A 86 95096
A 87 95097
A 88 95098
A 89 95099
A 90 95100
A 91 95101
A 92 95102
A 93 95103
A 94 95104
A 95 95105
A 96 95106
A 97 95107
A 98 95108
A 99 95109
Black Bear 1 72588 297158
Black Bear 2 72589 297159
Black Bear 3 72590 297160
Black Bear 4 72591 297161
Black Bear 5 72592 297162
Black Bear 6 72593 297163
EC 1 85868
EC 2 85869
EC 3 85870
EC 4 85871
EC 5 85872
EC 6 85873
EC 7 85874
EC 8 85875
EC 9 85876
EC 10 85877
EC 12 85879
EC 14 85881
EC 16 85883
EC 18 85885
EC 20 85887
EC 22 85889
EC 24 85891
EC 57 85892
EC 58 85893
EC 120 85894
EC 121 85895
EC 125 85897
EC 126 85898
Whiskey Jack 1 121621
Whiskey Jack 2 121622
Whiskey Jack 3 121623
Whiskey Jack 4 121624
<PAGE>
SCHEDULE "B" - BUFFALO GULCH CLAIMS
NET SMELTER RETURNS
1. The royalty which may be payable to Idaho Gold Corporation (hereinafter
called the "Payee") pursuant to paragraph 3(d) of the Assignment of
Interests Agreement by Idaho Consolidated Metals Corp. (hereinafter called
the "Payor") will be 3% of 100% of the Net Smelter Revenue ( as hereinafter
defined) and will be calculated and paid to the Payee in accordance with
the terms of this Schedule "B". Terms having defined meanings in the
Agreement and used herein will have the same meanings in this Schedule as
assigned to them in the Assignment of Interests Agreement unless otherwise
specified or the context otherwise requires.
2. The Net Smelter Revenue will be calculated on a calendar quarterly basis
and will, subject to paragraph 7 of this Schedule "B", be equal to Gross
Revenue less Permissible Deductions for such quarter.
3. The following words will have the following meanings:
(a) "Gross Revenue" means the aggregate of the following amounts received
in each quarterly period following the commencement of commercial
production from the Mining Properties:
(i) the revenue received by the Payor from arm's length purchasers of
all Product;
(ii) the fair market value of all Product sold by the Payor in such
period to persons not dealing at arm's length with the Payor; and
(iii) any proceeds of insurance on Product;
(b) "Ore" means all materials from the Mining Properties, the nature and
composition of which justifies either:
(i) mining or removing from place and shipping and selling such
material, or delivering such material to a processing plant for
physical or chemical treatment; or
(ii) leaching such material in place;
(c) "Permissible Deductions" means the aggregate of the following charges
(to the extent that they are not deducted by any purchaser in
computing
<PAGE>
2
payment) that are paid in each quarterly period:
(i) sales charges levied by any sales agent on the sale of Product,
(ii) transportation costs for Product from the Mining Properties to
the place of beneficiation, processing or treatment and thence to
the place of delivery of Product to a purchaser thereof,
including shipping, freight, handling and forwarding expenses;
(iii)all costs, expenses and charges of any nature whatsoever which
are either paid or incurred by the Payor in connection with
refinement or beneficiation of Product after leaving the
Property, including all weighing, sampling, assaying and
representation costs, metal losses, any umpire charges and any
penalties charged by the processor, refinery or smelter, and
(iv) all insurance costs on Product, and any government royalties,
production taxes, severance taxes and sales and other taxes
levied on Ore, Product or on the production or value thereof
(other than any Federal or Provincial taxes levied on the income
or profit of the Payor);
(d) "Product" means:
(i) all Ore shipped and sold prior to treatment, and
(ii) all concentrates, precipitates and products produced from Ore.
4. The payment on account of the royalty for each calendar quarter will be
calculated and paid within 60 days after the end of each calendar quarter.
Smelter settlement sheets, if any, and a statement setting forth
calculations in sufficient detail to show the payment's derivation (the
"Statement") must be submitted with the payment.
5. In the event that final amounts required for the calculation of the payment
on account of the royalty are not available within the time period referred
to in section 4 of the Schedule "B", then provisional amounts will be
estimated and such payment will be paid on the basis of this provisional
calculation. Positive or negative adjustments will be made to the payment
on account of the royalty for the succeeding quarter.
6. All payments on account of the royalty will be considered final and in full
satisfaction of all obligations of the Payor with respect thereto, unless
the Payee delivers to the Payor a written notice (the "Objection Notice")
describing and setting forth a specific objection to the calculation
thereof within 60 days after
<PAGE>
3
receipt by the Payee of the Statement. If the Payee objects to a particular
Statement as herein provided, the Payee will, for a period of 60 days after
the Payor's receipt of such Objection Notice, have the right, upon
reasonable notice and at reasonable times, to have the Payor's accounts and
records relating to the calculation of the payment in question audited by
the auditors of the Payee. If such audit determines that there has been a
deficiency or an excess in the payment made to the Payee, such deficiency
or excess will be resolved by adjusting the next quarterly payment due
hereunder. The payee will pay all the costs and expenses of such audit
unless a deficiency of 5% or more of the amount due is determined to exist.
The Payor will pay the costs and expenses of such audit if a deficiency of
5% or more of the amount due is determined to exist. Failure on the part of
the Payee to made a claim against the Payor for adjustment in such 60 day
period by delivery of an Objection Notice will conclusively establish the
correctness and sufficiency of the Statement and payment on account of the
royalty for such quarter.
7. All profits and losses resulting from the Payor engaging in any commodity
futures trading, option trading, metals trading, gold loans or any
combination thereof, and any other hedging transactions with respect to
Product which is a precious metal (collectively, "Hedging Transactions")
are specifically excluded from calculations of the payments on account of
the royalty pursuant to this Schedule "B" (it being the intent of the
parties that the Payor will have the unrestricted right to market and sell
Product to third parties in any manner it chooses and that the Payee will
not have any right to participate in such marketing activities or to share
in any profits or losses therefrom. All Hedging Transactions by the Payor
and all profits or losses associated therewith, if any, will be solely for
the Payor's account. The amount of Net Smelter Revenue derived from all
Product subject to Hedging Transactions by the Payor will be determined
pursuant to the provisions of this paragraph 7 and not paragraph 2. As to
precious metals subject to Hedging Transactions by the Payor, Net Smelter
Revenue will be determined without reference to Hedging Transactions and
will be determined by using, for gold, the quarterly average price of gold,
which will be calculated by dividing the sum of all London Bullion Market
Association P.M. Gold Fix prices reported for the calendar quarter in
question by the number of days for which such prices were quoted. Any
Product subject to Hedging Transactions will be deemed to be sold, and
revenues received therefrom, only on the date of the final settlement of
the amount of refined Product allocated to the account of the Payor by a
third party refinery in respect of such transactions. Furthermore, the
Payor will have no obligation to fulfill any futures contracts, forward
sales, gold loans or other Hedging Transactions which the Payor may hold
with Product.
8. If the royalty becomes payable to two or more parties, those parties will
appoint, and will deliver to the Payor a document executed by all of those
parties appointing, a single agent or trustee of all such parties to whom
the
<PAGE>
4
Payor will make all payments on account of the royalty. The Payor will have
no responsibility as to the division of the royalty payments amount such
parties, and if the Payor makes a payment or payments on account of the
royalty in accordance with the provisions of this paragraph 8, it will be
conclusively deemed that such payment or payments have been received by the
Payee. All charges of the agent or trustee will be borne solely by the
parties receiving payments on account of the royalty.
9. Notwithstanding the foregoing, the royalty payable shall be limited to
US$3,000,000.
Exhibit 10.6
===================================================
This is an accurate certified copy.
Date 10/4/96
Signed /s/ Geoffrey S. Magnuson
Geoffrey S. Magnuson Corporate Secretary
Idaho Consolidated Metals Corporation
===================================================
BLACK BEAR AGREEMENT
Dated: August 1, 1996
OPTION AGREEMENT
between
Frank H. Piatt, John R. Heigis
Thomas C. Rich
and
Idaho Consolidated Metals Corporation
<PAGE>
Black Bear Agreement
Dated: August 1, 1996
OPTION AGREEMENT
THIS AGREEMENT is dated August 1, 1996.
BETWEEN:
FRANK H. PIATT, JOHN R. HEIGIS, THOMAS CAT RICH;
(hereinafter called the "Owner")
OF THE FIRST PART
AND:
IDAHO CONSOLIDATED METALS CORPORATION, a body corporate incorporated
under the laws of the Province of British Columbia having a place of
business at 504 Main, Suite 470, Lewiston, Idaho, U.S.A.
(hereinafter called the "Optionee")
OF THE SECOND PART
OPTION TERM AND PROPERTY DESCRIPTION
1. The Owner hereby options to the Optionee all of the property described in
Schedule "A" together with, except as may be expressly provided in Schedule "A",
all:
(a) tailings, dumps and mine wastes;
(b) surface rights, easements and rights of way incident thereto;
(c) mining and water rights incident thereto; and
(d) improvements, fixtures, personal property, mining machinery and tooks
thereon useful or convenient for mining and related uses.
herein defined as "Mining Property".
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
TITLE
2.1 The Owner represents that it is in exclusive possession of and bears full
mining privileges to the, Mining Property, subject to the rules and regulations
of the State of Idaho. Owner warrants and shall defend title to all of the
Mining Property for which Owner warrants in Subsections (2) and (3) hereof.
2.2 Owner represents that the mining claims have been properly acquired and
maintained and that any required validation work has been property performed
assessment work and proof of assessment work duly performed and filed or
otherwise properly carried out under the provisions of the applicable
legislation.
2.3 Owner warrants that the Mining Property is free and clear of all liens and
encumbrances, including any leases, rights or licences granted to third persons
by, through or under Owner, except taxes not yet payable and those liens and
encumbrances, if any, specifically described in Schedule "A".
2.4 Owner shall not create, permit or suffer any liens or encumbrances on the
Mining Property unless expressly subordinated to Optionee's rights hereunder. If
the Mining Property or any interest therein should be subject to lien or
encumbrance, Optionee, at its option, may discharge the same and thereby be
subrogated to all the rights of the holder thereof, and may recover any amounts
so paid from any amounts otherwise due to Owner.
2.5 Owner shall at Optionee's request take all action necessary to cure any
defect in or remove any cloud on title to the Mining Property, including
participation in judicial proceedings and recordation of any unrecorded
documents. If after notice or demand Owner fails to do so, Optionee may take
such action in Owner's name and recover its reasonable costs and expenses,
including attorney's fees, from amounts otherwise due to Owner.
2.6 Owner shall provide Optionee with all data and information related to title
to the Mining Property and copies of all unrecorded documents related thereto.
2.7 Neither the Optionee's execution of this Agreement nor its failure to
disapprove Owner's title shall constitute an admission of or estoppel as to the
validity of Owner's title.
OPTION PAYMENTS
3. The Owner shall receive $4,500.00 on the execution of this Agreement (receipt
of which is hereby acknowledged). The Optionee agrees to pay to the Owner the
sum of $1,200.00 per quarter commencing July 1, 1996 (July I payment has been
made) in order to keep this option in good standing. This payment shall continue
for one (1) year. At the end of the first year, the Optionee can
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
elect to proceed with either of the following two options.
OPTION I - The Optionee can elect to purchase the property and the Owner
agrees to transfer all right, fide and interest in the property to the
Optionee for a total price of $90,000.
OPTION II - The Optionee agrees to pay to the Owner the sum of $2,400 per
quarter for a year total of $9,600 and a cumulative total of $9,600. In the
second year, the quarterly payment will increase by $1,200 to $3,600. This
will give a total for the second year of $14,400 and a cumulative total of
$24,000. In the third year, the quarterly payments will increase by S 1,200
to $4,800 for a year total of $19,200 and a cumulative total of $43,200. In
year four, the quarterly payments will increase by $1,200 to $6,000 per
quarter for a year total of $24,000 and a cumulative total of $67,200. In
year five, the quarter payments will increase by $1,200 to $7,200 per
quarter for a year total of $28,800, and a cumulative total of $96,000. At
the end of year five, the Optionee will make a final payment of $24,000 for
a cumulative total of $120,000. The Owner agrees to transfer all right,
title and interest in the property to the Optionee. Schedule B has the
payment schedule listed for the first year and for the two options as well.
In the event that the Optionee places the property into production the Owner
agrees to transfer all right, title and interest in the property to the Optionee
and the owner shall be entitled to receive $120,000.00 less all quarterly
payments made to the date when the property is placed in production. In the
event the property is not placed into production by July 1, 2002 then the
Optionee shall have no further interest in the property unless the Optionee
elects to pay to sum of S 120,000 to the Owners less all quarterly payments made
on or before July 1, 2002.
WORK COMMITMENT
4. The Optionee agrees to expend a total of $3,000.00 on the property on or
before July 1, 1997 and to expend a minimum of $3,000.00 per year each and every
year thereafter so as to maintain its interest in the property.
METHOD OF PAYMENT
5. All payments due Owner shall be deemed received by Owner if sent certified
mail to Thomas Cat Rich, Box 24 1, Kooskia, ID 83539. Optionee shall not be
liable for distribution of payments from such account and Owner shall bear all
charges of financial institution.
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
EXCLUSIVE POSSESSION
6. Optionee shall have exclusive possession and quiet enjoyment of the Mining
Property while this Agreement is in effect.
ADVERSE CLAIMS
7.1 If Owner should own less than the entire ownership interest described in the
Mining Property, all payments shall be payable to Owner only in the proportion
to Owner's actual ownership. If production from the Mining Property or any part
thereof should be subject to any royalty or interest in production other than
those expressly reserved to Owner herein, Optionee may credit all costs and
expenses it incurs by reason of such royalty or interests against amounts
otherwise due to Owner.
7.2 Optionee shall have no obligation to protect or defend if any third person
asserts any claims to the Mining Property for any reason except Optionee's
failure to perform obligations expressly required by this Agreement.
7.3 If any third person asserts any claim to the Mining Property or to any
amounts payable by Optionee, Optionee may deposit any amounts payable by
Optionee, Optionee may deposit any amounts otherwise due Owner in escrow until
the dispute is finally resolved. Optionee may credit all costs and expenses
including attorney's fees, it incurs by reason of such claim against all amounts
otherwise due Owner.
TAXES
8. Optionee shall pay all taxes on the Mining Property accruing while this
Agreement is in effect but apportioned appropriately for fractions of years. All
taxes shall be paid before delinquent, but neither party shall be under any
obligation to pay any tax while contesting it in good faith.
ASSESSMENT WORK
9.1 Optionee shall perform:
(a) assessment work (unless deferred or excused) or make payments in lieu
of assessment work to necessary parties for the benefit of the leased state
land included in this Agreement according to the laws and statutes of the
State of Idaho;
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Black Bear Agreement
Dated: August 1, 1996
(b) no additional work commitments above and beyond those judged necessary
by the Optionee.
9.2 Owner agrees that all contiguous property are to be treated as a whole
pursuant to any limitations or rulings by the State of Idaho and that any
assessment work conducted on any part of any property can be applied to the
necessary assessment work for any or all those lumped properties when such work
is required by state law.
EXPLORATION AND MINING RIGHTS
10.1 Owner grants Optionee unrestricted access to the Mining Property and the
exclusive rights:
(a) to explore, develop and mine, and to extract, remove, store and dispose
of any and all ores, minerals, air, water, waste and other materials from
the Mining Property by means of underground or surface mining operations in
or on the Mining Property or other property and to deposit on the Mining
Property materials from the Mining Property or other property,
(b) to carry on mining, milling, treatment, processing, beneficiating,
smelting and refining operations on or in the Mining Property with respect
to ores, minerals and other materials from the Mining Property or other
property, including existing tailings, wastes and dumps;
(c) to use any part of the Mining Property for stockpiles, tailings, wastes
or dumps, and for any other purpose incident to the underground or
surfacing mining on the Mining Property or other property,
(d) to erect or construct, use and maintain on the Mining Property such
roads, facilities, building structures, machinery and equipment as Optionee
may require for the conduct of its operations on the Mining Property or
other property,
(e) to continue to keep this Agreement in effect and use the Mining
Property for mining, milling, treatment, processing, beneficiation,
smelting, refining or storage of ores, minerals and other materials from
other property with such use being deemed the conduct of development and
mining operations by the Optionee, and
(f) to stockpile or to sell or otherwise dispose of ores, minerals and
other materials in such forms at such times and on such terms as Optionee
along may determine.
10.2 Optionee shall conduct its operations in a good and workmanlike manner in
substantial compliance with the then generally accepted understanding of
applicable laws and regulations in the
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
mining industry.
RIGHT OF WAY
11. While this Agreement is in effect, Optionee shall have non-exclusive rights
of way upon, over, into and through the Mining Property and other property now
or hereafter owned, leased or otherwise controlled by Owner to construct,
improve, and maintain such pipelines, communication lines, electrical power or
transmission lines, roads, railroads, tramways, flumes, tunnels, drifts and
other facilities as may be necessary or convenient for Optionee's operations in
the vicinity of the Mining Property.
LIABILITY AND INDEMNITY
12.1 Optionee shall keep the Mining Property free of liens for labour performed
and materials furnished for Optionee. Subject to the limitations in this
section, Optionee shall hold Owner harmless from all liability to third persons
caused by Optionee's operations on the Mining Property which result in injury to
or death of persons or livestock or damage to personal property or liability for
violation of applicable laws or regulations.
12.2 In no event shall Optionee's liability for damage or economic loss to
Owner's property, whether resulting from Optionee's negligence or otherwise,
exceed the fair market value of the affected property (not including its value
for mining or related purposes).
12.3 Within a reasonable time after termination of this Agreement Optionee shall
begin and diligently pursue to completion any reclamation of Owner's real
property then required by applicable laws and regulations by reason of Optionees
operations. Optionee's liability with respect to disturbance of real property
shall be limited to compliance with such laws and regulations.
12.4 The payments and the performance of assessment work as herein expressly
required are in lieu of any obligation of Optionee express or implied, to
explore, develop or mine the Mining Property or to make any other efforts or
expenditures in connection therewith.
12.5 The obligations and limitations of liability in this section shall survive
termination of this Agreement.
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
RIGHT TO INSPECT
13. At reasonable times Owner may at Owner's risk and expense enter the Mining
Property to make reasonable inspections
RIGHT TO DATA
14.1 Upon execution of this Agreement, Owner shall make available to Optionee
for copying and general use all geological geophysical and engineering data and
maps, logs of drill holes, cuttings and cores, logging results, assay, sampling
and similar data concerning the Mining Property in Owner's possession or
control.
14.2 The Optionee shall provide to the owner, geological reports of the
Optionees exploration and development of the Mining Property on an ongoing
basis.
14.3 Upon request by Owner made within sixty (60) days after termination of this
agreement, Optionee shall deliver to Owner a final report of its activities on
the Mining Property together with copies or summaries of all assay results and
electric and drill hole logs and copies of drill hole location maps including
interpretations and evaluations thereof which Optionee has obtained as a result
of work on the Mining Property under this Agreement. Optionee shall have no
liability on account of any such data relied on acted on by Owner.
DEFAULT RECTIFICATION
15.1 Default by Optionee in performance of any obligation arising hereunder
shall not work a forfeiture or termination of this Agreement, nor cause the
termination or reversion of the estate created hereby, nor be grounds for
cancellation hereof in whole or in part.
15.2 If Optionee commits a default, Owner shall give Optionee notice specifying
the default with particularity. Owner's sole remedy shall be recovery of actual
compensatory damages plus interest at the prevailing U.S. Treasury note rate for
$10,000.00 notes held for ninety (90) days and the payment of the alleged
default itself interest on which accrues from the date Optionee receives notice
of default. If Optionee by notice to Owner disputes the existence of the
default, no interest shall accrue if Optionee, within thirty (30) days after the
default is finally determined, initiates and diligently pursues to completion
efforts to cure and default.
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Black Bear Agreement
Dated: August 1, 1996
AFTER-ACQUIRED RIGHTS
16. If Owner acquires any right or interest within one (1) mile of the
boundaries of the Mining Property while this Agreement is in effect:
(a) Owner shall promptly notify Optionee;
(b) such right or interest shall automatically become part of the Mining
Property for all purposes of this Agreement; and
(c) Owner shall sign, acknowledge and deliver to Optionee an amendment to
this Agreement so as to include such right or interest.
TERMINATION
17.1 Optionee may terminate this Agreement at any time by giving Owner notice of
termination in recordable form.
17.2 Upon termination or surrender, all rights and obligations of the parties
with respect to the affected acreage shall terminate except for:
(a) Optionee's obligation to provide data and a report; and
(b) any outstanding quarterly payments; and
(c) any rights or obligations which expressly survive termination.
REMOVAL OF PROPERTY AND EQUIPMENT
18. Optionee may, within one (1) year after termination of this Agreement,
remove from Owner's real property all fixtures and personal property, including
ores, tailings, dumps and wastes and improvements which it has erected or placed
thereon except mine supports in place. Owner shall not be responsible for any
such property of Optionee. Optionee may post watchmen on the Mining Property
during such period.
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
FORCE MAJEURE
19.1 If Optionee shall be prevented by Force Majeure from timely performance of
any acts or obligations hereunder, the failure, if any, shall be excused and the
period for performance shall be extended for a period equal to the duration of
the Force Majeure. Optionee shall promptly give Owner notice of commencement and
termination of Force Majeure. Optionee shall use reasonable diligence to remove
Force Majeure but shall not be required against its will to institute legal
proceedings, adjust any labour dispute or challenge the validity of any law,
regulation, action or inaction of government.
19.2 "Force Majeure" includes any cause beyond Optionee's reasonable control,
whether or not foreseeable, including but not limited to law, regulations,
action or inaction of government, inability to obtain any public or private
license, permit or authorization which may be required for operations in
connection with the Mining Property or other property, including removal and
disposal of waters, wastes and tailings and reclamation, mining casualty, damage
to or destruction of mine or mill plans or facility, fire, explosion, inclement
weather, flood, civil commotion, labour dispute, inability to obtain workmen or
material, delay in transportation, economic conditions and acts of God.
ARBITRATION
20. Any dispute arising out of or related to the negotiation, existence,
performance, breach or termination of this Agreement shall be finally determined
by arbitration. The exclusive place of arbitration shall be Lewiston, Idaho.
Either party may compel arbitration by notice to the other. Within forty-five
(45) days of the notice the parties shall select one arbitrator. If they fail to
agree, the presiding Judge (or senior Judge in point of service if there is no
presiding Judge) of the State Court for the place of arbitration shall appoint
one arbitrator from a list of three (3) persons submitted by each party. The
arbitrator shall follow the procedural rules of the American Arbitration
Association and shall apply the substantive law of the state where the Mining
Property is located. The arbitrator shall issue his decision within six (6)
months of his selection. Costs of arbitration shall be borne equally.
NOTICE PROVISIONS
21. All notices and other communications to either party shall be in writing and
delivered personally or sent by prepaid mail. All notices of default or
arbitration and demands for performance or assurance, if delivered personally to
Optionee, shall be delivered to Optionee's Land Administrator and, if mailed to
either party, shall be sent by certified or registered mail shall be effective
on the next business day after the date of the actual delivery. Until a change
of address is so given, notices shall
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Black Bear Agreement
Dated: August 1, 1996
be addressed to Optionee and Owner, respectively as set out herein.
If to the Owners:
Frank H. Piatt
P.O. Box 1814
Lewiston, ID 83501
John R. Heigis
P.O. Box 536
Juliaetta, ID 83535
Thomas Cat Rich
Box 241
Kooskia, Idaho 83539
If to the Optionee:
Idaho Consolidated Metals Corporation
504 Main, Ste 470
P.O. Box 1124
Lewiston, ID 83501
FURTHER ASSURANCES
22. The parties agree to execute any and all further documents and agreements as
may be reasonably required to carry out the spirit and intent of this Agreement.
REGISTRATION OF DOCUMENTS
23. The parties may register their interests as they appear and the parties
agree to cooperate fully with each other in any requirements for such
registration.
APPOINTMENT OF ATTORNEY
24. The owner hereby appoints the optionee his true and lawful attorney for any
purpose related to
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Black Bear Agreement
Dated: August 1, 1996
the carrying out of any terms or provisions of this Agreement and without
limiting the generality of the foregoing for the purpose of any necessary
applications or filings to any governmental body or agency.
RIGHT OF FIRST REFUSAL
25.1 In the event that the owner receives a bona fide offer in lawful money of
the United States, which it is willing to accept for the purchase of all its
interest in said lands, from a person, firm or corporation ready, willing and
able to purchase same, the owner shall immediately give written notice thereof
to the optionee hereto, including in the said notice and name and address of the
offeror, the price offered and all other pertinent terms and conditions of the
offer. The optionee, for a period of thirty (30) days following receipt of said
notice, shall have the prior and preferred right and option to purchase the
owner's interest at the price and according to the terms and conditions
specified in said offer. The optionee shall give written notice to the owner
within said thirty (30) day period, to purchase the interest being sold. If,
however, such right and option is not exercised by the optionee giving written
notice thereof within thirty (30) days after the receipt of the above-mentioned
notice, the owner may accept the offer and complete said sale to the offeror in
accordance with said offer within sixty (60) days after the expiration of the
said thirty (30) day period; provided that if the owner fails to accept said
offer or to complete said sale within said sixty (60) day period, the preferred
right and option of the optionee hereunder shall be considered as revived and
the owner shall not complete said sale to said offeror unless and until said
offer has again been presented to the optionee, as hereinabove provided, and
said optionee has again failed to elect to purchase on the terms and conditions
of said offer.
25.2 A party who wishes to dispose of its entire interest by merger,
reorganization, consolidation or sale of all its assets, or a sale or transfer
of its interest to a subsidiary or parent company, or subsidiary of a parent
company, or to any company in which any one party owns a majority of the stock,
where the transferee assumes the obligations hereunder of such party and thereby
becomes a party to this Agreement shall not be bound by the provisions of the
right of first refusal.
25.3 An assignment shall not operate to relieve the assigned interest or the
assignor from any liability or obligation which accrued prior to such
assignment.
COMPLIANCE WITH LAW
26. The optionee shall be responsible for the compliance with all governmental
rules and regulations as may from time to time be in effect including without
limiting the generality of the foregoing, rules and regulations made pursuant to
any mining, pollution and environmental requirements of the State
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Black Bear Agreement
Dated: August 1, 1996
of Idaho or other regulatory authority. The optionee shall be responsible for
the posting of any bonds necessary for the reclamation and restoration of the
property as required by any governmental agency and further the optionee agrees
to obtain the consents, licenses and permits required which may be necessary for
the carrying out of its operations. The owner agrees to cooperate with the
optionee in the obtaining of such consents, licenses and permits.
BUYOUT PROVISIONS
27. The optionee shall have the right to buyout all of the owner's right, title
and interest in and to the property described in Schedule "A" attached hereto,
together with all ancillary rights appurtenant thereto for the sum of
$120,000.00 less all payments made to the date of buyout in accordance with
paragraph 3 hereof.
REGULATORY APPROVAL
28. The owners hereby acknowledge that this agreement is subject to Vancouver
Stock Exchange regulatory approval and the optionee hereby agrees to obtain such
approval on or before December 31, 1996, failing which approval, this Agreement
shall be of no further force and effect unless this time is extended by mutual
agreement of the parties. The owners agree to cooperate in the obtaining of such
approval.
CONFIDENTIALITY
29. The owners hereby acknowledge that the optionee is a publicly held
corporation traded on the Vancouver Stock Exchange and subject to the rules and
regulations of the Superintendent of Brokers for British Columbia and they
hereby agree not to release information about the property without obtaining the
prior approval of the optionee, such approval not to be unreasonably withheld.
RIGHT TO ASSIGN
30. The owners hereby acknowledge that the optionee shall have the right to
assign their interest herein to the wholly owned subsidiary of the optionee and
further, that the optionee shall have the right to assign their interest herein
to third parties with the owners' consent, such consent not to be unreasonably
withheld.
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<PAGE>
Black Bear Agreement
Dated: August 1, 1996
UNITED STATES CURRENCY
31. All sums of money referred to in the Agreement shall be expressed in United
States currency.
DEVOLUTION PROVISIONS
32. All covenants, conditions and terms of this Agreement shall be of benefit to
and run with the Mining Property and shall bind and inure to the benefit of the
parties hereto, their respective successors and assigns. The only relationship
between Owner and Optionee is that of lessor/lessee. Nothing herein shall be
construed to create, expressly or by implication a partnership, joint
enterprise, relationship of master and servant or principal and agent, or the
like, between parties.
HEADINGS
33. The headings used in this Agreement are for convenience only and are to be
disregarded in construing this Agreement.
ENTIRE AGREEMENT
34. This Agreement contains the entire agreement of the parties. There are no
other conditions, agreements, representations, warranties or understandings,
express or implied.
The parties have executed this Agreement the day and year above written
Signed, Sealed and Delivered by )
FRANK H. PIATT in the )
presence of: )
)
/s/ Thomas Cat Rich )
- ---------------------------------)
Name )
)
P.O. Box 241 ) /s/ Frank H. Piatt
- ---------------------------------) ---------------------------------
Address ) FRANK H. PIATT
)
Kooskia, Ida 83539 ) 8-5-96
- ---------------------------------)
)
- ---------------------------------)
)
Logging Constr. Mining )
- ---------------------------------)
Occupation )
- 13 -
<PAGE>
Black Bear Agreement
Dated: August 1, 1996
Signed, Sealed and Delivered by )
JOHN R. HEIGIS in the )
presence of: )
)
/s/ Thomas Cat Rich )
- ---------------------------------)
Name )
)
P.O. Box 241 ) /s/ John R. Heigis
- ---------------------------------) ---------------------------------
Address ) JOHN R. HEIGIS
)
Kooskia, Ida 83539 ) 8-5-96
- ---------------------------------)
)
- ---------------------------------)
)
Logging Constr. & Mining )
- ---------------------------------)
Occupation )
Signed, Sealed and Delivered by )
THOMAS CAT RICH in the )
presence of: )
)
/s/ Frank H. Piatt )
- ---------------------------------)
Name )
)
P.O. Box 1814 ) /s/ Thomas Cat Rich
- ---------------------------------) ---------------------------------
Address ) THOMAS CAT RICH
)
Lewiston, Ida ) 8-5-96
- ---------------------------------)
83501 )
- ---------------------------------)
)
)
- ---------------------------------)
Occupation )
SIGNED ON BEHALF OF IDAHO )
CONSOLIDATED METALS CORP. )
by its duly authorized signatories)
)
/s/ [Illegible] ) /s/ Thomas Cat Rich
- ---------------------------------)
Authorized Signatory )
)
) 8-5-96
/s/ [Illegible] )
- ---------------------------------)
Authorized Signatory )
- 14 -
<PAGE>
Black Bear Agreement
Dated: August 1, 1996
SCHEDULE "A"
- 15 -
<PAGE>
Black Bear Agreement
Dated: August 1, 1996
SCHEDULE "A"
PROPERTY
This is Schedule "A" to that certain Agreement dated August 1, 1996 made between
Frank H. Piatt, John A. Heigis, Thomas Cat Rich and Idaho Consolidated Metals
Corporation.
<TABLE>
IMC BLM Date of
No. No. Claim Name Location Record Date
- --- --- ---------- -------- -----------
<S> <C> <C> <C> <C>
297158 72588 Black Bear Group No. 1 March 16/82 March 22/82
297159 72589 Black Bear Group No. 2 March 16/82 March 22/82
297160 72590 Black Bear Group No. 3 March 17/82 March 22/82
297161 72591 Black Bear Group No. 4 March 17/82 March 22/82
297162 72592 Black Bear Group No. 5 March 18/82 March 22/82
297163 72593 Black Bear Group No. 6 March 18/82 March 22/82
</TABLE>
all located in the Elk City Mining District, T 29N Range 8E, County of Idaho,
State of Idaho, United States of America.
- 16 -
<PAGE>
Black Bear Agreement
Dated: August 1, 1996
SCHEDULE "B"'
- 17 -
<PAGE>
Idaho Consolidated Metals Corporation
Black Bear Claims - Payment Schedule
File: BB2.wb2
Revised: 07/21/96
Printed: 08/05/96
First Year
Payments Comments
-------- --------
Upon Signing $4,500
July 1, 1996 $1,200 Paid
Aug. 5, 1996 $400 Paid Payment to complete the quarter
Nov. 1, 1996 $1,200
Feb. 1, 1996 $1,200
May 1, 1996 $1,200
Total $9,700
Option I
August 1, 1997 $90,000
Option II
Year Qtrly payment Yearly Total Cumulative Totals Comments
1997 $2,400 $9,600 $9,600 Quarterly payments
starting August 1, 1997
1998 $3,600 $14,400 $24,000
1999 $4,800 $19,200 $43,200 Payment to complete the
quarter
2000 $6,000 $24,000 $67,200
2001 $7,200 $28,800 $96,000
2002 $24,000 $120,000 Final payment at the
end of Year 5,
August 1, 20[?]
Note: At the end of year 1, Idaho Consolidated Metals can select either Option I
or Option II
Exhibit 10.7
=====================================================
This is an accurate certified copy.
Date 10/4/96
Signed /s/ Geoffrey S. Magnuson
Geoffrey S. Magnuson Corporate Secretary
Idaho Consolidated Metals Corporation
=====================================================
GALLAUGHER AGREEMENT
DATED: SEPTEMBER 5,1996
OPTION AND PURCHASE AGREEMENT
BETWEEN
CLIFF AND JUNE GALLAUGHER
AND
IDAHO CONSOLIDATED METALS CORPORATION
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
THIS AGREEMENT is made and is effective on this 5th day of September, 1996,
by and between the parties hereinafter named, for the term and upon and under
the terms and conditions hereinafter set forth.
1. Parties. The parties to this Agreement, and their addresses for all
purposes hereof, are: (a) OPTIONOR: Cliff Gallaugher, whose address is 2125
Little Canyon Road, Peck, Idaho 83545; and, (b) OPTIONEE: Idaho Consolidated
Metals Corporation, P.O. Box 1124, Lewiston, ID 83501.
2. Definitions. The following terms and expressions shall have the
following meanings:
(a) "Construction' includes the supply, construction, erection and or
installation of all reasonably required mining, milling and processing equipment
and plant or improvements to be used for mining and treatment of Minerals,
including open pit capital equipment, open pit reproduction stripping,
underground capital equipment, underground mine preparation, accommodation
facilities and buildings, ancillary equipment and buildings, engineering, office
and on-site administration.
(b) "Development" shall mean the activity, operations or work performed on
the Property in preparing for the removal of a deposit of Minerals, or expansion
of same, including sampling, metallurgical studies, site mapping and surveying.
environmental studies, design engineering. obtaining governmental permits, shaft
sinking, underground drifting and drilling, site preparation, driving adits,
buildings and improvements, access roads, housing and permanent accommodation
facilities and engineering, office and on-site administration.
(c) "Expenditures" in relation to Exploration, Development, Construction
and or Mining means the aggregate of all reasonable direct or indirect expenses
of or incidental to any or all of the foregoing.
(d) "Exploration" shall mean the activity, operations or work performed for
the purpose of ascertaining the existence, location, quantity, quality, or
extent of deposits of Minerals within the Property including drilling, assaying,
geological, geophysical and geochemical surveys, studies and mapping, surveying,
trenching, field support and engineering, on-site office and administration.
(e) "Exploration and Evaluation Period" shall mean that period of time
commencing with the execution hereof and terminating on March 5, 1997, or such
earlier date as Optionee may exercise its option to purchase as described in
this agreement.
2
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
(f) "Minerals" means all minerals or substances of every nature and
character whatsoever within the limits of the Property; whether or not at the
time of execution of the Agreement any mineral was given any commercial
consideration by the parties, but excluding minerals not subject to mineral
location under the laws of the United States at the time each unpatented mining
claims comprising the Property was located, which latter excluded items shall
not be deemed the subject of this Agreement.
(g) "Mining" shall mean the activity, operation or the carrying on of
mining, extracting, producing and handling Minerals, and all other work
incidental thereto, as the same shall be performed with and upon the Minerals
including providing accommodation, transportation, milling, smelting, refining
and other processing of Minerals performed in connection with such mining,
extracting, producing and handling of Minerals.
(h) "Property" shall mean the six unpatented mining claims located in
Section 13 & 24, Township 29N, Range 8 East, B.M., in the Elk City Mining
District, located in the County of Idaho, State of Idaho, to wit:
UNPATENTED ICMC NUMBERS
---------- ------------
1. Quartz Lode Noisy Rock Amended ICMC 41990
2. June Day #1 Lode ICMC 33116
3. June Day #2 Lode ICMC 33117
4. Noisy Rock Placer ICMC 60992
5. Rare Find Group #2 Amended ICMC 41988
6. Rare Find Group #3 ICMC 41989
3. Title. Optionor hereby represents and covenants that (1) he owns the
right to mine the Property for Minerals, free and clear of all liens and
encumbrances, (2) he is in possession of the Property, (3) he has no knowledge
of any adverse claim or encumbrance upon the Property. (4) the Property is in
good standing under all applicable laws and regulations and all taxes,
assessments and filings have been timely paid or filed, (5) he has the full
right and authority to enter into this Agreement Such covenants and warranties
are continuing conditions of Optionee's obligations hereunder and shall be
expressed in any conveyance to Optionee made pursuant to exercise of the option
granted by this Agreement.
4. Initial Payment. As consideration for both the exploration rights and
the option to purchase granted hereby, Optionee shall pay a total of $2000 upon
execution.
(a) Both parties acknowledge that Mr. Dave Cuddy is to receive a 10%
finder's fee from any and all payments from Optionee to Optionor.
5. Option to Purchase. Optionor hereby grants to Optionee an exclusive
option to
3
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
purchase the property. At the end of the six month period, the Optionee can
elect to proceed WI either of the following two options.
OPTION I - The Optionee can elect to purchase the property and the Owner
agrees to transfer all right, title and interest in the property to the
Optionee for a total price of $100,000.
OPTION II - The Optionee agrees to pay to the Owner the sum of $2,400 per
quarter for a year total of $9,600 and a cumulative total of $9,600. In the
second year, the quarterly payment will increase by $1,200 to $3,600. This
will give a total for the second year of $14,400 and a cumulative total of
$24,000. In the third year, the quarterly payments will increase by $1,200
to $4,800 for a year total of $19,200 and a cumulative total of $43,200. In
year four, the quarterly payments will increase by $1,200 to $6,000 per
quarter for a year total of $24,000 and a cumulative total of $67,200. In
year five, the quarter payments will increase by $1,200 to $7,200 per
quarter for a year total of $28,800, and a cumulative total of $96,000. At
the end of year five, the Optionee will make a final payment of $54,000 for
a cumulative total of $150,000. The Owner agrees to transfer all right,
title and interest in the property to the Optionee. Schedule A has the
payment schedule listed for the six month evaluation period and for the two
purchase options as well.
In the event that the Optionee places the property into production the Owner
agrees to transfer all right title and interest in the property to the Optionee
and the owner shall be entitled to receive $150,000.00 less all quarterly
payments made to the date when the property is placed in production. In the
event the property is not placed into production by September 5, 2002 then the
Optionee shall have no further interest in the property unless the Optionee
elects to pay the sum of $150,000 to the Owners less all quarterly payments made
on or before July 1, 2002.
6. Possession During Exploration and Evaluation Period. Prior to exercise
of the option as herein described, Optionee shall have all rights of access and
use of the Property as may reasonably be required in conjunction with those
activities to be carried out during the Exploration and Evaluation Period as
described herein. Such rights of Optionee will include the following:
(a) Sole, exclusive and quiet possession of the Property with the right to
initiate and carry out all activities contemplated by the Exploration and
Evaluation Period as herein described, including the right to suspend such
operations during the months of October through April should access to the mine
or circumstances of weather prohibit on-site operations during such period, with
the right to recommence such operations after such temporary suspension.
(b) To carry out the above in any manner that Optionee, in its reasonable
discretion, considers advisable.
4
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
(c) To remove Minerals from the Property to the extent Optionee may
reasonably believe desirable for testing and evaluation.
7. Encumbrance by Optionee. Optionee, during the Exploration and Evaluation
Period, shall have no rights whatsoever to encumber the Property, nor cause any
encumbrance of the Property to come into existence, except with the prior
written approval of Optionor. Optionee acknowledges that any violation of this
provision would cloud Optionor's title and or rights to the Property and agrees
to indemnify and hold harmless Optionor for any and all violations hereof,
including the costs of removal of any cloud or claim, including, but not limited
to, Optionees reasonable attorney's fees incurred in the course thereof.
8. Optionor's Covenants. Optionor covenants while the Agreement between the
parties hereto is in effect:
(a) Not to sell, transfer, encumber, suffer any lien upon, dispose of or
deal in the Property or title thereto.
(b) To assist with Optionee in obtaining such permits and approvals as
Optionee may require or consider advisable to comply with all regulatory or
governmental requirements which affect the Property. In the event Optionee
desires to apply for patent to any of the unpatented mining claims, Optionor
agrees to assist and cooperate with Optionee in such application, which
application shall be made in the name of Optionor.
(c) To notify Optionee of any knowledge, communication or notice relating
to the Property.
(d) To keep all information and data concerning the Property secret and
confidential and not to release any such information without prior written
consent of Optionee.
(e) That Optionee, so long as it performs all obligations and covenants on
its part to be performed, shall peaceably possess and enjoy the Property without
interruption or disturbance from Optionor or any other person, firm or
corporation.
9. Optionee's Covenants. Optionee covenants:
(a) To keep the Property in good standing by payment of all taxes and
assessments.
(b) To furnish Optionor promptly with copies of surveys, assays, drill
logs, and other similar documents obtained by or for Optionee relating to the
Property.
(c) To furnish Optionor annually with proposed programs of exploration work
and budgets therefor prior to their implementation.
5
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
(d) To permit authorized representatives of Optionor to have access to the
Property at their own risk at all reasonable times and to the records maintained
by Optionee in connection with work carried out on the Property.
(e) To pay and discharge all accounts, expenses, and charges incurred by it
in respect to work on the Property as they become due and to keep the title free
of any lien.
(f) To hold harmless and indemnify Optionor from all liabilities, loss of
any and all kinds and responsibility for environmental damages, charges, fines
and penalties of every kind resulting from activities of Optionee.
(g) To obtain all required permits and satisfy all requirements of all
governmental agencies and political subdivisions including but not limited to
Federal, State, County and any water, fire, or other agency having requirements
that may affect Optionee's exploration program.
(h) To timely prepare for submission (with contemporaneous copies to
Optionor) all reports, affidavits, estimates and other filings or documentation
of any and all types required to be submitted to any governmental agencies
having jurisdiction over the Property during the term of this Agreement.
10. Force Majeure. If Optionee is delayed or prevented from carrying out
any Exploration, Development, Mining, or work programs as a result of causes
beyond the reasonable control of Optionee (including without limiting the
generality of the foregoing, acts of God, strikes, lockouts or other labor or
industrial disturbances, restraints by governmental agencies, interruptions by
government or court orders, future orders of any regulatory body having
jurisdiction, delays caused by inability to obtain necessary permits or delays
caused by environmental groups, entities or agencies, acts of the public enemy,
wars, riots, sabotage, blockages, embargoes, insurrections, failure or inability
to secure fuel, powers, materials, contractors or labor, depressed metal prices
or other economic conditions, epidemics, snowslides, landslides, lightning,
weather conditions materially preventing or impairing work, earthquakes, fires,
storms, floods, washouts or explosions), the period of all such delays resulting
from such causes or any of them shall be excluded in computing all periods of
time within which Optionee must perform work or make payments both before and
after exercise of the option to lease as well as the time within which Optionee
may exercise the option herein described; provided, however that under no
circumstances shall such option be extended beyond September 5, 1997. and if not
exercised by that time, said option shall lapse and all rights of Optionee to
the Minerals and the Property shall be terminated.
11. Termination. The rights of Optionee granted hereby shall be subject to
termination as follows:
(a) Termination. Any and all rights of Optionee hereunder shall
automatically terminate without any action of Optionor in the following events:
6
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
(i) If Optionee has not exercised the option granted to it prior to
its expiration as hereinafter provided.
(ii) Nonrectification of substantial breach by Optionee of its
obligations hereunder within 60 days of written notice, except, however, no
such notice shall be required in the event of failure to make any payments
as required by the terms of this Agreement.
(b) Rights of Optionee on Termination. On termination, Optionee shall have
one year to remove equipment owned or leased by it, but Optionee shall have no
right to remove shaft and underground timbers and supports or framework
necessary to the use or maintenance of shafts or approaches to mines or
workings. After the removal period above provided any equipment remaining on the
Property shall become the property of the Optionor.
(c) Other Termination Rights/Duties. Optionee shall have the right at any
time to terminate in respect to any part or parts of the Property by written
notice given Optionor within the same period required for notice of termination
of the Agreement as herein provided. On termination Optionee shall leave the
Property or that part relinquished in a good and safe condition in accordance
with local, state and federal laws.
12. Notices. Any notices due or to be delivered hereunder shall be deemed
to have been delivered when the same shall have been placed in the United States
mails, with sufficient postage affixed, certified, return receipt requested,
addressed to the other party at the address set forth in paragraph I above. No
change of address of any party shall be binding upon or effective as to any
other party until 15 days after written notice thereof shall have been delivered
to the other party.
13. Entire Agreement. This Agreement shall be construed in accordance with
the laws of the State of Idaho except that all matters relating to unpatented
mining claims shall be governed by applicable federal law and regulation. This
Agreement constitutes the entire agreements between the parties. All other,
prior or contemporaneous agreements or understandings between the parties are
merged herein. No additions hereto or alterations hereof shall be binding upon
either party until and unless a memorandum in writing expressing such action
shall have been executed by both parties.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
7
<PAGE>
GALLAUGHER AGREEMENT
Dated September 5, 1996
OPTIONOR: OPTIONEE
/s/ Cliff Gallaugher /s/ Del Steiner
- ------------------------------- ----------------------------------
Cliff Gallaugher Del Steiner, President
Idaho Consolidated Metals Corporation
/s/ June Gallaugher
- -------------------------------
June Gallaugher
8
<PAGE>
SCHEDULE A
Idaho Consolidated Metals Corporation
Buster Property Offer
GAL1.WB3
Revised: 09/04/96
Printed: 09/04/96
Six month option to Purchase $2,000 Non-refundable
Option I
- --------
Purchase $100,000 Purchase at the end of the 6 month period
Option II
Year Qtrly payment Yearly Total Cumulative Totals Comments
1997 $2,400 $9,600 $9,600 Quarterly payments
1998 $3,600 $14,400 $24,000
1999 $4,800 $19,200 $43,200
2000 $6,000 $24,000 $67,200
2001 $7,200 $28,800 $96,000
2002 $54,000 $150,000 Final payment at the
end of Year 5, March 5,
2002
Note: At the end of the six-month period, Idaho Consolidated Metals can select
either Option I or Option II.
Exhibit 10.8
PURCHASE AGREEMENT
The parties hereto, St. George Metals, Inc., 125 NationsBank Center,
Richmond, Virginia 86303, (hereinafter the "Seller") and Idaho Consolidated
Metals Corporation, P.0. Box 1124, Lewiston, Idaho, (hereinafter the
"Purchaser"), agree to the sale by Seller and the purchase by Buyer of the below
referenced mining equipment and property on the following terms:
1. Consideration. In consideration of the sum of $25,000 cash at closing
paid by the Purchaser to the Seller, and Purchaser's commitment to deliver
75,000 shares of Purchaser's common stock to Seller at closing or as soon
thereafter as possible, subject to approval by the Vancouver Stock Exchange as
provided for in Section 12 below, the Seller grants to the Purchaser all of
Seller's interest in the mill site, mining property and equipment known as the
Dean Mine Mill Site in the Battle Mountain, Nevada area which is owned or leased
by the Seller, whatever the same may be. A list and description of assets to be
purchased is attached as Exhibit A and made a part hereof by reference.
2. Closing Date. Subject to satisfaction of the condition provided for in
Section 6 below, this Purchase will close at 12 noon on October 15, 1996. If the
approval provided for in Section 12 has not been received by the closing date,
this transaction shall nevertheless be consummated, and Purchaser will deliver
the shares of its stock to Seller as provided for in Section I above as soon as
it is able to obtain the regulatory approval required under Section 12.
3. Purchase Price. The total cash purchase price for this property is
$75,000 which represented Seller's original offer of sale to Purchaser. Seller
acknowledges that Purchaser has paid $50,000 of said price pursuant to the terms
of an Option Agreement dated August 2, 1995 as extended. The balance of $25,000
will be paid in cash at closing together with a total of 75,000 shares of
Purchaser's stock which will be authorized prior to closing and delivered to
Seller at closing or as soon thereafter as Purchaser is able to obtain the
approval of the Vancouver Stock Exchange.
4. Warranties. All equipment and property shall be purchased in "as is"
condition and Seller makes no warranties as to fitness for Purchaser's use.
<PAGE>
5. Special Conditions. Purchaser will assume all liabilities for the
required reclamation and neutralization of existing cyanide at the Mill Site
area and pay for the required transfer of all permits to Purchaser. Further this
agreement, with respect to reclamation liabilities includes the Dean Mine
property and various unpatented mining claims, (see Exhibit A). The Purchaser
will assume all reclamation liabilities for the Dean Mine property and claims.
Purchaser agrees to cooperate fully with Seller in Seller's efforts to obtain a
release of the cash bond it has posted with the Nevada Department of
Environmental Protection (NDEP) in the principal amount of $220,000 and the
substitution in lieu thereof of Purchaser's arrangements satisfactory to NDEP.
6. Obligations. Purchaser shall also assume any and all payment obligations
commencing after the date of closing representing any payment due to Domingo A.
Calzacorta. Purchaser is aware of the understandings between various persons and
Domingo A. Calzacorta relating to the Dean Mine property and Purchaser has
agreed to assume all obligations related thereto and to deal directly with
Domingo A. Calzacorta by agreement collateral to this Purchase Agreement. This
sale is contingent upon Purchaser entering into a satisfactory written agreement
with Domingo A. Calzacorta relating to the lease of the Dean Mine property.
7. Possession. Purchaser has the right of possession at closing of and to
the property in Exhibit A attached hereto and made a part hereof by reference.
8. Transfer Documents. The required documents of transfer including
quitclaim deeds, bill of sale and any other required documents, including
reclamation bond documentation, shall be prepared expeditiously by a mutually
acceptable lawyer.
9. Documentation. Any required Bulk Sales Affidavits or other U.C.C.
documentation is waived between the parties.
10. Notices. Any notices due or to be delivered hereunder shall be deemed
to have been delivered when the same shall have been placed in the United States
mails, with sufficient postage affixed, certified, return receipt requested,
addressed to the other party at the address set forth above. No change of
address of any party shall be binding
-2-
<PAGE>
upon or effective as to any other party until 15 days after written notice
thereof shall have been delivered to the other party.
11. Entire Agreement. This Agreement shall be construed in accordance with
the laws of the State of Nevada except that all matters relating to unpatented
mining claims shall be governed by applicable federal law and regulation. This
Agreement constitutes the entire agreements between the parties. All other,
prior or contemporaneous agreements or understandings between the parties are
merged herein. No additions hereto or alterations hereof shall be binding upon
either party until and unless a memorandum in writing expressing such action
shall have been executed by both parties.
12. Approval. The parties hereto understand that this Purchase Agreement is
subject to approval of the Vancouver Stock Exchange which request will be
submitted by Purchaser as soon as practical and prosecuted by Purchaser in good
faith in order that such approval may be obtained as soon as possible.
In witness whereof, the parties have signed and acknowledged this Purchase
Agreement this 9th day of October, 1996.
Seller:
St. George Metals Inc.
By: /s/ C.B. Robertson, III
----------------------------------------
C.B. Robertson, III
Chairman of the Board
Purchaser:
Idaho Consolidated Metals Corporation
By: /s/ Del Steiner
----------------------------------------
Del Steiner, President and CEO
-3-
<PAGE>
Exhibit A
MERRILL-CROWE PLANT:
Filter, (Autojet) U.S. Filter, Model 500/400, max temp. 250 degrees, 75 psi
with 18 leaves.
Nash CI-203 Vacuum Pump, 1750 RPM plus one spare pump.
Baldor 15 HP Plant Pump, 3450 RPM Berkley pump B2ZPL.
Baldor 15 HP Precipitation Pump w/Berkley B2ZPL Pump.
BEF Model 25-06-0101 Zinc Dust Screw Feeder, Hilix Feeder, water level
controller, 21"H x 21"L x 14"W, mixing cone 18" diameter x 30' high.
Two Shriver Filter Presses, size 30, 32 frames 100 psi max.
Barton Pneumatic Controller 335A
Barton Pneumatic transmitter 274A
Speed Air, model 3z922A, 3/4 HP, Air Compressor
Steel Surge Tank, 8'x 7'
Diotomaceous Earth Mixing Tank, 8'x 4'x 6'w/ Baldor 1 1/2 HP Motor Mixer,
850 RPM 1440 gal
8'x 4'x 42" Mixing Tank w/Flo-bin stand
Recirculation Tank: plastic 48' x 33" x 36' 325 gallons, Baldor 1 1/2 HP
motor @ 3450 RPM. Grundos Pump, Type CR2- U4, Model 250, 1-1/2 HP, 300 psi
Steel Deaeration Tower: 1000 gallon, 4'x 12'
Merrill-Crowe building with installation of M-C
Smelting Furnace with all necessary equipment.
Miscellaneous Equipment:
Pumps, Classifier (screw type)
18' Sweco Screen (may not be on site)
Fences
AA machine
LAND:
560 Acres MU Site Area
Bateman Mill Site Claims (10) with Well
All maps & flat files in old office in Battle Mountain, (F & H Mine Supply)
2 drafting tables
Light table
File Cabinets
Exhibit 10.9
AGREEMENT TO ASSIGN INTEREST - DEADWOOD CLAIMS
This Agreement is dated as of the 11th day of December, 1995 and is made
between:
IDAHO GOLD CORPORATION
OF THE FIRST PART
AND:
IDAHO CONSOLIDATED METALS CORP.
OF THE SECOND PART
--------------------------------------------
This is an accurate certified copy.
Date 10/4/96
Signed ----------------------------
Geoffrey S. Magnuson, Corporate Secretary
Idaho Consolidated Metals Corporation
--------------------------------------------
WHEREAS:
A. Idaho Gold Corporation ("Idaho Gold") owns or has the right to acquire
certain mining interests known as the Deadwood Claims as more particularly
described in Schedule "A" hereto (the "Mining Properties");
B. Idaho Consolidated Metals Corp. ("ICMC") wishes to acquire Idaho Gold's
interest in the Mining Properties together with all geological information
(including core or drill cuttings), metallurgical lab and field test
results, mine design and reserve calculations and pre-feasibility and
feasibility studies relating to the Mining Interests and in the possession
or under the control of Idaho Gold (the "Data");
NOW THEREFORE this Agreement witnesses that in consideration of the mutual
covenants and agreements herein contained and subject to the terms and
conditions hereafter set out, the parties hereto agree as follows:
1. "Closing Date" and "Closing" - The term "Closing Date" as used throughout
this Agreement shall mean July 19, 1996 or such other date as is agreed to
by the parties. The term "Closing' as used throughout this Agreement shall
mean the completion of the transactions herein contemplated which shall
occur at 10:00 a.m. Vancouver time on the Closing Date or such other time
on the Closing Date as agreed to by the parties.
2. Purchase and Sale of Assigned Interests - Upon and subject to the terms and
conditions set forth in this Agreement, Idaho Gold agrees to sell, assign
and transfer to ICMC, and ICMC agrees to purchase from Idaho Gold, on the
Closing Date all interest of
<PAGE>
- 2 -
Idaho Gold in and to the Mining Properties and the Data (collectively, the
"Assigned Interests"), subject to the reservation by Idaho Gold of a net
smelter return royalty (the "Royalty") on the Mining Properties on the
terms specified in Schedule "B" hereto.
3. Consideration for Assigned Interests - As consideration for the transfer of
the Assigned Interests, ICMC:
a) will issue to Idaho Gold 70,000 common shares in the capital of ICMC,
35,000 of which shares will be issued to Idaho Gold on the Closing
Date and the balance of which will be issued to Idaho Gold one year
after the Closing Date,
b) will incur expenditures (as defined in clause 3(0(ii) below) of not
less than US$135,000 in the aggregate on or before the fifth
anniversary of the Closing Date on the exploration and development of
the Mining Properties, with the following amounts being incurred by
the dates indicated below:
i) US$15,000 on or before the first anniversary of the Closing
Date;
ii) an aggregate of US$30,000 on or before the second anniversary of
the Closing Date;
iii) an aggregate of US$65,000 on or before the third anniversary of
the Closing Date; and
iv) an aggregate of US$100,000 on or before the fourth anniversary
of the Closing Date;
c) will replace all bonds relating to the Mining Properties currently
lodged by or on behalf of Idaho Gold with any regulatory authorities;
d) will be solely responsible for all costs of environmental compliance
associated with its exploration and mining operations on the Mining
Properties or with the termination thereof, and all costs incurred in
connection with environmental compliance, reclamation and long-term
care and monitoring of the Mining Properties arising out of activities
at any time by any person and its predecessors in ownership of the
Mining Properties;
e) will consent to the reservation by Idaho Gold of the Royalty, and
f) subject to paragraph 4, will grant to Idaho Gold an option (the
"Option") to acquire a 49% working interest in the Mining Properties
upon the following terms:
i) the term of the Option will be five years from the Closing Date;
<PAGE>
- 3 -
ii) Idaho Gold may exercise the Option by delivering a notice (the
"Option Notice") to ICMC to that effect and, within 30 days after
delivery of the Option Notice, a payment to ICMC equal to 115% of
ICMC's expenditures on the Mining Properties from January 1, 1996
to the date of delivery of such payment. "Expenditures" shall
mean all cash, expenses, obligations and liabilities, other than
for personal injury or property damage, of whatever kind or
nature spent or incurred directly or indirectly in connection
with the exploration, development or equipping of the Mining
Properties for commercial production including an overhead fee
not to exceed 8% of all expenditures (other than the overhead
fee);
iii) if Idaho Gold exercises the Option, ICMC and Idaho Gold will
enter into a joint venture agreement which will provide that (A)
each party will fund its proportionate share of ongoing
expenditures on the Mining Properties or have its interest
diluted; (B) a management committee will approve all operations
and activities of the joint venture and will consist of two
members from each of ICMC and Idaho Gold, with ICMC to hold the
casting vote so long as it retains not less than a 51% interest
in the joint venture; (C ) ICMC will have the right to be
operator of the joint venture so long as it retains not less than
a 51 % interest in the joint venture;
iv) during the term of the Option, ICMC shall keep the Mining
Properties free and clear of all liens and encumbrances arising
from its operations and in good standing by the doing and filing,
or payment in lieu thereof of all necessary assessment work and
payment of all taxes and other charges required to be paid and by
the doing of all other acts and things and the making of all
other payments required to be made;
v) ICMC will, as of January 1, 1996 and during the term of the
Option, assume, observe and perform each and every covenant and
agreement made or given by Idaho Gold or its predecessor in title
to be observed and performed under those contracts and agreements
listed in Schedule "C' hereto, including the making of all cash
and share payments and the performance of all work commitments on
the Mining Properties. ICMC may re-negotiate any of the contracts
and agreements listed in Schedule "C" to decrease or eliminate
the payment obligations thereunder,
vi) if, during the term of the Option, ICMC elects to relinquish one
or more of the Mining Properties, it will so notify Idaho Gold
and, if, within 60 days of receipt of such notice, Idaho Gold
provides a notice to ICMC to the effect that Idaho Gold wants the
particular Mining Property re-transferred to it, 1CMC will assign
that Mining Property, in good standing, to Idaho Gold upon
receipt from Idaho Gold of US$1.00. Notwithstanding the
foregoing, ICMC may not elect to relinquish any part of the
Mining Properties during
<PAGE>
- 4 -
the first year of the term of the Option;
vii) if ICMC should fail to make any of the payments or carry out any
of the obligations referred to in clauses (iv) or (v) above, it
shall be deemed to have made an election to relinquish the
h1ining Property(ies) involved;
viii)an election or deemed election to relinquish one or more of the
Mining Properties will not relieve ICMC of its obligations
pursuant to paragraph 3(d);
ix) if Idaho Gold exercises the Option, the Royalty will be
terminated.
4. Right to Acquire Option - ICMC will have the right to acquire Idaho Gold's
right to the Option by payment to Idaho Gold of Cdn.$100,000 at any time up
to 21 days after receipt by ICMC of the Option Notice from Idaho Gold.
5. Assignments by ICMC - ICMC agrees that it will not transfer or assign any
part of its interest in the Assigned Interests without the prior written
consent of Idaho Gold. It shall be a condition precedent to any assignment
that the assignee of the interest being transferred agrees in writing to be
bound by the terms of this Agreement, the Option and the Royalty.
6. Closing - On the Closing Date, the parties will table the following
documents and instruments and take the following steps:
a) ICMC will table for delivery to Idaho Gold a share certificate for
35,000 common shares in the capital of ICMC registered in the name of
Idaho Gold;
b) ICMC will table for delivery to Idaho Gold evidence satisfactory to
Idaho Gold that the bonds referred to in paragraph 3(c) have been
replaced by ICMC;
c) Idaho Gold will table for delivery to ICMC duly executed transfers, as
prepared by ICMC's solicitors, sufficient to convey to ICMC the
Assigned Interests to ICMC;
d) each party will execute and table for delivery to the other the Option
agreement;
e) ICMC will execute and table for delivery to Idaho Gold an agreement
reserving the Royalty to Idaho Gold; and
f) each party will execute and table for delivery to the other party all
such other documents and instruments reasonably required to
effectively consummate the transactions contemplated herein.
"Closing" will occur upon all documents set out above being tabled as
required
<PAGE>
- 5 -
and the closing conditions being satisfied or waived by the parties.
7. Joint Condition Precedent to Closing - The respective obligations of each
of the parties hereto to complete the Closing shall be subject to receipt
of all governmental and third party approvals and consents required for the
completion of the purchase and sale transaction. This condition may be
waived by ICMC and Idaho Gold acting together.
8. Acknowledgment and Agreement - ICMC hereby acknowledges receipt of a copy
of the letter dated June 6, 1996 from Woodburn and Wedge, Attorneys to
Idaho Gold, addressed to Arctic Fox Ltd. and Gray Estates Company
discussing the history of the Mining Properties. ICMC agrees with the
analysis set out in that letter and, more specifically, agrees that neither
Arctic Fox Ltd. nor Gray Estates Company has an operating right of first
refusal with respect to the Mining Properties,
9. Time of Essence - Time is and will be of the essence of each and every
provision of this Agreement.
10. Entire Agreement - This Agreement contains the whole agreement between
Idaho Gold and ICMC in respect of the subject matter hereof and supersedes
and replaces the letter of understanding dated December 11, 1995 and all
prior negotiations, communications and correspondence. There are no
warranties, representations, terms, conditions or collateral agreements,
express or implied, statutory or otherwise, other than as expressly set out
in this Agreement.
11. Enurement - This Agreement will enure to the benefit of and be binding upon
Idaho Gold and ICMC and their respective successors, liquidators and
permitted assigns.
12. Governing Law - This Agreement shall be construed and interpreted in
accordance with the laws of Idaho.
13. Notices - All notices, payments and other required communications
("Notices") to the parties shall be in writing and shall be addressed
respectively as follows:
If to Idaho Gold:
c/o Bema Gold Corporation
1400 - 510 Burrard Street
Vancouver, B.C. V6C 3A8
Fax No.: 604-681-6209
Attention: Mr. Roger Richer
If to ICMC:
ICMC
P.O. Box 1124
<PAGE>
- 6 -
Lewiston, Idaho 83501
Fax No.: 208-746-6678
Attention: Mr. Wilf Struck
All Notices shall be given:
i) by personal delivery to the party by leaving a copy at the place
specified for notice with a receptionist or an apparently
responsible individual, or
ii) by electronic facsimile communication.
All Notices shall be effective and shall be deemed delivered:
iii) if by personal delivery, on the date of delivery if delivered
during normal business hours, and, if not delivered during normal
business hours, on the next business day following delivery, and
iv) if by electronic communication, on the next business day
following receipt of the electronic communication, provided that
a positive transmission report is generated by the sender's
facsimile machine.
14. Regulatory Approval - The obligations of the parties hereto is subject to
the acceptance for filing of this Agreement by the Vancouver Stock
Exchange.
15. Counterparts - This Agreement may be executed in counterparts with the same
effect as if both parties had signed the same document, and both such
counterparts will be construed together and will constitute one and the
same instrument. The execution of this Agreement will not become effective
until counterparts hereof have been executed by both parties hereto and an
executed copy delivered to each party hereto. Such delivery may be made by
facsimile transmission of the execution page or pages hereof to the other
party by the party signing the particular counterpart, provided that
forthwith after such facsimile transmission, an originally executed
execution page or pages is forwarded by prepaid express courier to the
other party by the party signing the particular counterpart.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of
the day and year first above written.
IDAHO GOLD CORPORATION
Per: /s/ [Illegible]
---------------------------------
<PAGE>
- 7 -
IDAHO CONSOLIDATED METALS CORP.
Per: /s/ [Illegible]
--------------------------------- Vice President
<PAGE>
SCHEDULE "A"
DEADWOOD CLAIMS
Claim BLM # IMC #
Name
Black Lady 1 28654
Black Lady 2 28655
Hidden Valley 1 28656
Hidden Valley 2 28657
Hidden Valley 3 28658
Jon 1 28982
Jon 2 28983
Jon 3 28984
Jon 4 28985
Jon 5 28986
Jon 6 28987
Jon 7 28988
Jon 11 28989
Jon 12 28990
Jon 13 28991
Jon 14 28992
Jon 15 28993
Jon 16 28994
Jon 17 28995
Jon 18 28996
Jon 25 28997
Jon 26 28998
RL 9A 105324 321519
RL 10 105325 321432
RL 11 105326 321433
RL 11A 105327 321520
RL 22 105338 321444
RL 24 105340 321446
RL 25 105341 321447
RL 26 105342 321448
RL 27 105343 321449
RL 28 105344 321450
RL 28A 105345 321521
RL 29 105346 321451
RL 30 105347 321452
RL 30A 105348 321522
RL 31 105349 321463
Spec 10 28969
Spec 11 28970
Spec 12 28971
Spec 13 28972
Spec 23 28973
Spec 24 28974
Spec 25 28975
Spec 26 28976
Spec 27 28977
Spec 28 28978
Spec 29 28979
Spec 30 28980
Spec 34 28981
Tip Top 1 28662
Zenith 28661
<PAGE>
SCHEDULE "B" - DEADWOOD CLAIMS
NET SMELTER RETURNS
1. The royalty which may be payable to Idaho Gold Corporation (hereinafter
called the "Payee") pursuant to paragraph 3(d) of the Assignment of
Interests Agreement by Idaho Consolidated Metals Corp. (hereinafter called
the "Payor") will be 3 % of 100% of the Net Smelter Revenue ( as
hereinafter defined) and will be calculated and paid to the Payee in
accordance with the terms of this Schedule "B". Terms having defined
meanings in the Agreement and used herein will have the same meanings in
this Schedule as assigned to them in the Assignment of Interests Agreement
unless otherwise specified or the context otherwise requires.
2. The Net Smelter Revenue will be calculated on a calendar quarterly basis
and will, subject to paragraph 7 of this Schedule "B", be equal to Gross
Revenue less Permissible Deductions for such quarter.
3. The following words will have the following meanings:
(a) "Gross Revenue" means the aggregate of the following amounts received
in each quarterly period following the commencement of commercial
production from the Mining Properties:
(i) the revenue received by the Payor from arm's length purchasers of
all Product;
(ii) the fair market value of all Product sold by the Payor in such
period to persons not dealing at arm's length with the Payor; and
(iii) any proceeds of insurance on Product;
(b) "Ore" means all materials from the Mining Properties, the nature and
composition of which justifies either:
(i) mining or removing from place and shipping and selling such
material, or delivering such material to a processing plant for
physical or chemical treatment; or
(ii) leaching such material in place;
(c) "Permissible Deductions' means the aggregate of the following charges
(to the extent that they are not deducted by any purchaser in
computing
<PAGE>
2
payment) that are paid in each quarterly period:
(i) sales charges levied by any sales agent on the sale of Product,
(ii) transportation costs for Product from the Mining Properties to
the place of beneficiation, processing or treatment and thence to
the place of delivery of Product to a purchaser thereof,
including shipping, freight, handling and forwarding expenses;
(iii)all costs, expenses and charges of any nature whatsoever which
are either paid or incurred by the Payor in connection with
refinement or beneficiation of Product after leaving the
Property, including all weighing, sampling, assaying and
representation costs, metal losses, any umpire charges and any
penalties charged by the processor, refinery or smelter, and
(iv) all insurance costs on Product, and any government royalties,
production taxes, severance taxes and sales and other taxes
levied on Ore, Product or on the production or value thereof
(other than any Federal or Provincial taxes levied on the income
or profit of the Payor);
(d) "Product" means:
(i) all Ore shipped and sold prior to treatment, and
(ii) all concentrates, precipitates and products produced from Ore.
4. The payment on account of the royalty for each calendar quarter will be
calculated and paid within 60 days after the end of each calendar quarter.
Smelter settlement sheets, if any, and a statement setting forth
calculations in sufficient detail to show the payment's derivation (the
"Statement") must be submitted with the payment.
5. In the event that final amounts required for the calculation of the payment
on account of the royalty are not available within the time period referred
to in section 4 of the Schedule "B", then provisional amounts will be
estimated and such payment will be paid on the basis of this provisional
calculation. Positive or negative adjustments will be made to the payment
on account of the royalty for the succeeding quarter.
6. All payments on account of the royalty will be considered final and in full
satisfaction of all obligations of the Payor with respect thereto, unless
the Payee delivers to the Payor a written notice (the "Objection Notice")
describing and setting forth a specific objection to the calculation
thereof within 60 days after
<PAGE>
3
receipt by the Payee of the Statement. If the Payee objects to a particular
Statement as herein provided, the Payee will, for a period of 60 days after
the Payor's receipt of such Objection Notice, have the right, upon
reasonable notice and at reasonable times, to have the Payor's accounts and
records relating to the calculation of the payment in question audited by
the auditors of the Payee. If such audit determines that there has been a
deficiency or an excess in the payment made to the Payee, such deficiency
or excess will be resolved by adjusting the next quarterly payment due
hereunder. The payee will pay all the costs and expenses of such audit
unless a deficiency of 5% or more of the amount due is determined to exist.
The Payor Will pay the costs and expenses of such audit if a deficiency of
5% or more of the amount due is determined to exist. Failure on the part of
the Payee to make a claim against the Payor for adjustment in such 60 day
period by delivery of an Objection Notice will conclusively establish the
correctness and sufficiency of the Statement and payment on account of the
royalty for such quarter.
7. All profits and losses resulting from the Payor engaging in any commodity
futures trading, option trading, metals trading, gold loans or any
combination thereof, and any other hedging transactions with respect to
Product which is a precious metal (collectively, "Hedging Transactions")
are specifically excluded from calculations of the payments on account of
the royalty pursuant to this Schedule "B" (it being the intent of the
parties that the Payor will have the unrestricted right to market and sell
Product to third parties in any manner it chooses and that the Payee will
not have any right to participate in such marketing activities or to share
in any profits or losses therefrom. All Hedging Transactions by the Payor
and all profits or losses associated therewith, if any, will be solely for
the Payor's account. The amount of Net Smelter Revenue derived from all
Product subject to Hedging Transactions by the Payor will be determined
pursuant to the provisions of this paragraph 7 and not paragraph 2. As to
precious metals subject to Hedging Transactions by the Payor, Net Smelter
Revenue will be determined without reference to Hedging Transactions and
will be determined by using, for gold, the quarterly average price of gold,
which will be calculated by dividing the sum of all London Bullion Market
Association P.M. Gold Fix prices reported for the calendar quarter in
question by the number of days for which such prices were quoted. Any
Product subject to Hedging Transactions will be deemed to be sold, and
revenues received therefrom, only on the date of the final settlement of
the amount of refined Product allocated to the account of the Payor by a
third party refinery in respect of such transactions. Furthermore, the
Payor will have no obligation to fulfill any futures contracts, forward
sales, gold loans or other Hedging Transactions which the Payor may hold
with Product.
8. If the royalty becomes payable to two or more parties, those parties will
appoint, and will deliver to the Payor a document executed by all of those
parties appointing, a single agent or trustee of all such parties to whom
the
<PAGE>
4
Payor will make all payments on account of the royalty. The Payor will have
no responsibility as to the division of the royalty payments amount such
parties, and if the Payor makes a payment or payments on account of the
royalty in accordance with the provisions of this paragraph 8, it will be
conclusively deemed that such payment or payments have been received by the
Payee. All charges of the agent or trustee will be borne solely by the
parties receiving payments on account of the royalty.
9. Notwithstanding the foregoing, the royalty payable shall be limited to
US$2,000,000.
Exhibit 10.10
GLOBAL SETTLEMENT AGREEMENT
This global settlement agreement is made and entered into this 29th day of
April, 1998, by Idaho Consolidated Metals Corporation, Inc., Delbert Steiner and
Elli Steiner, Theodore J. Tomasovich, individually and acting in his capacity as
trustee of the Tomasovich Family Trust, AND BETWEEN Joe Swisher, Barbara
Swisher, Idaho Mining and Development Company (IMD) and Silver Crystal Mines,
Inc., hereinafter collectively referred to as "IMD Group."
WHEREAS, the parties to this agreement are currently involved in numerous
lawsuits, disagreements and contractual relationships which the parties have
collectively determined should be terminated, resolved, dismissed with prejudice
and/or revised as hereinafter set forth in order that the parties may pursue
their respective business interests free of the uncertainties, inhibitions,
risks, costs and aggravations of the aforementioned lawsuits, disagreements and
contractual relationships; and,
WHEREAS, each of the parties having been duly advised by counsel of their
choice and being fully aware by their own judgment of the costs, losses and
benefits of restructuring their legal and business relationships as and to the
extent hereinafter provided,
NOW, THEREFORE, in consideration of the covenants and promises hereinafter
specified, the parties agree as follows:
1. Except as hereinafter specified, in the following identified lawsuits
all claims and counterclaims shall be dismissed with prejudice:
a) Nez Perce County Civil Case No. 96-01908
b) Nez Perce County Civil Case No. 97-00128
c) Idaho County Civil Case No. 31318
<PAGE>
Concurrently with the execution of this agreement, each of the parties to
the foregoing actions shall execute a stipulation for dismissal with prejudice
of each of the above actions, and cause the same to be immediately filed with
the Court for entry of an order consistent with the terms of this agreement and
said stipulation. The sole exception to the dismissal with prejudice shall be
those claims by or against Delbert and Elli Steiner personally, which shall be
dismissed without prejudice. The stipulation shall specifically provide that
each party shall pay their own attorney fees and costs, and shall have no claim
against the other party to recover such costs and fees. The stipulation shall
also specify that the dismissal with prejudice will bar either party from
bringing an action on any additional claims or defenses which could have been
brought by the parties on any of the underlying agreements or causes of action,
including but not limited to any potential shareholder derivative actions
against ICMC, its officers or directors.
This settlement agreement is intended to fully and finally resolve any and
all claims between ICMC, Tomasovich, Tomasovich Family Trust and the IMD Group
which were or could have been raised in the above listed actions. The parties
recognize that this settlement agreement cannot and does not affect the
following lawsuits:
a. Gumprecht & Witrak v. ICMC et al., Idaho County Case No. CV 31150
b. Gumprecht v. IMD/Steiner, et. al., Idaho County Case No. CV 30534
c. Gumprecht & White v. Steiner, et al., Idaho County Case No. CV 30968
d. ICMC v. Magnuson, Nez Perce County Case No. CV 97-01749
Nothing in this agreement shall be considered to release any claims,
cross-claims or defenses the parties to this agreement would be entitled to
raise in the four lawsuits specifically excluded from this settlement agreement.
<PAGE>
2. In full and final settlement of all existing and potential claims
between and among the parties to this agreement, ICMC shall pay to IMD the sum
of $100,000.00, to be paid as follows:
a. $50,000 by cashier's check or wire transfer to be delivered
within two business days of the execution of this settlement
agreement, the stipulations of dismissal, and the lease agreement
described in paragraph 7 below, AND
b. $50,000 to be held in trust by Clark and Feeney on behalf of ICMC
and paid to IMD upon IMD's delivery of signed quitclaim deeds to
the various mining claims more fully described in Paragraph 8
below.
3. Excepting those rights and obligations created by this agreement, IMD,
Joe Swisher, Barbara Swisher and Silver Crystal Mines, Inc. do hereby release
and discharge ICMC and Theodore J. Tomasovich, both individually and as trustee
of the Tomasovich Family Trust, from all claims, demands, and causes of action
that IMD, Joe Swisher, Barbara Swisher and Silver Crystal Mines, Inc., ever had,
now have, or may have in the future, known and unknown, or that anyone claiming
by or through them may have or claim to have arising out of any agreements or
alleged acts or omissions of ICMC or Theodore J. Tomasovich, both individually
and as trustee of the Tomasovich Family Trust occurring prior to the date of
this agreement, including but not limited to any potential shareholder
derivative actions against ICMC.
Excepting those rights and obligations created by this agreement, ICMC and
Theodore J. Tomasovich, both individually and as trustee of the Tomasovich
Family Trust, do hereby release and discharge IMD, Joe Swisher, Barbara Swisher
and Silver Crystal Mines, Inc. from all claims, demands, and causes of action
that ICMC and Theodore J. Tomasovich, both individually and as trustee of the
Tomasovich Family Trust, ever had, now have, or may have in the future, known
and unknown, or that anyone claiming by or through them may have or claim to
have arising out of any agreements or alleged acts or omissions of those persons
or entities herein collectively referred to as the IMD Group occurring prior to
the date of this agreement.
4. Upon execution of this agreement, the referenced lease, and the
stipulations for dismissal, an authorized representative of ICMC will accompany
an authorized representative of IMD to the Eckert Hill mine and millsite in
Cottonwood, Idaho, to inventory and allow IMD to remove certain items of
personal property from that site, which are identified in the following
subparagraphs. Because the lease on Eckert Hill expires on June 28, 1998,
removal must be completed no later than June 15, 1998.
a. IMD will be entitled to remove all of the equipment and materials
located at the Eckert Hill site not specifically excluded in
subparagraphs 7(b) and (c), including but not limited to those
items listed on Exhibit 1 attached hereto which are not also
subject to the Gumprecht and Witrak security interest, which list
is attached as Exhibit 2. No representation is made as to any
items or property being located on such site; should the parties
discover that items are missing, they agree to report those items
as a theft to the Idaho County Sheriff's Department and to make a
claim for loss from the insurer. IMD agrees to remove all
chemicals and reagents from the Eckert Hill site. This commitment
shall not be construed to impose any liability for environmental
cleanup or any other liabilities therefrom at the Eckert Hill
site for IMD Group.
<PAGE>
b. IMD shall not remove from Eckert Hill any items which were
subject to the alleged security interest of Thomas Gumprecht and
Bonnie Witrak, which are specifically described in the document
attached hereto as Exhibit 2. The IMD Group will cooperate in
granting to Gumprecht and Witrak access to all items listed in
Exhibit 2 wherever they may be located, including but not limited
to those items located at the Golden Eagle mine site or at
Golden.
c. IMD shall not remove the following items which are the property
of ICMC:
1. Main plant building, permanent fixtures and attachments
thereto, including but not limited to the electrical system.
To the extent that any items listed on Exhibit 1 are
permanent fixtures or attachments, the parties agree to
trade those items for other property located at such site to
the extent such property is available. Pumps listed on
Exhibit 1 are not permanent fixtures.
2. An unassembled metal building of approximately 80 feet by
110 feet and the hardware for that building.
3. Forklift.
4. One-ton Plastic batch system.
The IMD Group shall assume the risk of any damage to said personal property
incurred during removal or afterward, and specifically agrees to reimburse ICMC
promptly for any damage caused to the buildings or premises during the course of
removal of the property. IMD will be permitted to remove the lumber and
galvanized steel from the trailer cover and any unused lumber, miscellaneous
plumbing parts and pipe, set materials or galvanized steel on site. IMD will
provide insurance coverage for any persons employed by it to assist in the
removal of the above equipment, and will indemnify ICMC from any claims
whatsoever relating to said activity.
<PAGE>
5. IMD, Silver Crystal Mines, Inc., Joe Swisher and Barbara Swisher agree
that subsequent to the execution of this agreement and for a period of three
years thereafter, neither they nor any corporation or entity in which they own
more than a five percent equity interest or more than five percent of all issued
and outstanding shares of common stock, nor any entity in which they are an
officer or director shall acquire any shares of stock in ICMC Corporation.
6. ICMC agrees to transfer to IMD and Joe Swisher any ownership or
licensing interest it has of any kind whatsoever in that certain process
generally referred to as the Swisher-Br Process, and further acknowledges and
agrees that ICMC's interest in said process shall be limited to the royalty
interest more specifically set forth below. IMD and Joe Swisher represent and
warrant that they are the owners of the Swisher-Br Process and that such process
at present has not been licensed for use by any person or entity other than IMD
and Swisher.
IMD and Swisher agree to grant to ICMC a royalty of 2% of gross revenue
from any use of the process, which shall include licensing use of the process.
This royalty will be paid on any revenues generated by use of the process by any
member of the IMD Group, any entity in which members of IMD Group hold an
ownership interest, joint ventures in which members of the IMD Group are
participating, and/or third parties.
The royalty will be paid to ICMC on a quarterly basis. ICMC shall have the
right to hire, at its own expense, an independent auditor to examine the records
relating to monies received from the Swisher-Br process at any reasonable time
upon not less than 10 days notice.
7. As a full and final resolution of all issues between and among the
parties relating to the Golden Eagle claim blocks, ICMC and IMD shall enter into
the mining lease (attached as Exhibit 3) by which ICMC will lease from IMD all
of IMD's interest in the mineral rights on the Golden Eagle claim blocks which
are specifically listed in that lease. So long as the Cyprus Joint Venture is in
effect, the initial term of that lease shall coincide with the remaining term of
the Cyprus Joint Venture. The lease shall contain the following provisions:
<PAGE>
a. During the term of the Cyprus Joint Venture, IMD shall be
entitled to a 40% share of all benefits (defined as all funds
received by ICMC less costs assessed by Cyprus against these
claims) derived from the Golden Eagle claim blocks.
b. The parties acknowledge that ICMC is presently involved in a
joint venture with Cyprus on these and a number of other claims
in which the various members of the IMD group do not have an
interest. A copy of that Joint Venture agreement is attached as
Exhibit 4. In the event Cyprus sells or assigns its interest in
that joint venture, all references to Cyprus shall be deemed to
include that corporation's assignees.
c. IMD Group will not participate in the Cyprus Joint Venture except
as otherwise previously established and through their 40% sharing
in benefits from the Golden Eagle claim blocks.
d. IMD Group will not be responsible for any costs, risks, or debts
of any kind created by Cyprus or ICMC via the Joint Venture or
the lease of mineral rights on the Golden Eagle claim properties
to ICMC.
e. IMD Group will retain ownership and possession of all buildings,
machinery, and equipment located at the Golden Eagle Mine, with
the exception of those items subject to the Gumprecht and Witrak
security interest listed in paragraph 4(b) above. IMD Group
agrees to indemnify and hold harmless ICMC and Cyprus from any
and all claims or actions relating to those buildings, including
but not limited to the U.S. Forest Service.
f. Subject to confirmation and approval by Cyprus, ICMC agrees to
allow IMD Group to retain all placer mining rights and rights of
ingress and egress to the Golden Eagle Claim property, so long as
the activities do not interfere with the development of the lode
systems and access necessary to that development; however, placer
mining will not be interfered with unless compensation based on
value contained in the placer deposit is made.
g. IMD Group further agrees to:
(1) Provide ICMC and Cyprus with copies of placer permits and
proof of bonding prior to commencement of any placer mining
on the Golden Eagle claim properties;
(2) For any mining operations conducted by IMD Group, IMD Group
agrees to provide liability insurance in the amount $1
million with ICMC included as a loss payee, and to hold
Cyprus and ICMC harmless for any such operations on the
property;
(3) Perform all reclamation necessary in areas disturbed by IMD
Group after the execution of the lease agreement
h. ICMC and Cyprus will properly bond all mining operations
conducted by Cyprus or ICMC on the properties, hold IMD Group
harmless from any such operations, and will be responsible for
reclamation of areas disturbed by ICMC or Cyprus.
i. ICMC will be responsible for performing all assessment work,
maintenance fees, payments or transfer fees during the lease,
including reimbursing IMD for small miner transfer fees.
Upon termination of the Cyprus joint venture, ICMC will have the option to
renew the lease for an additional five year term upon payment of $10,000 in
accordance with the lease agreement attached as Exhibit 4.
It is understood that IM&D has patent applications pending for the Golden
Eagle, Golden Eagle 2 and Golden Eagle 3 properties. If approved, IM&D will have
exclusive ownership of the surface. However, IM&D will not use such surface
rights in a manner which would violate any of the foregoing agreements and will
provide users of such property under the terms of the above-mentioned agreements
the right of ingress and egress and such other access to the property as may be
reasonable and necessary to carry out the terms intended in the foregoing
agreements.
8. With regard to the claims which are identified in Exhibit 5, ICMC, IMD,
and Silver Crystal, Inc. shall enter into the operating agreements attached as
Exhibits 6 through 9, which set forth in detail the ownership interests and the
terms of the operating agreement between the parties thereto. The parties to
these operating agreements agree that they will promptly take whatever actions
are necessary to perfect title to said claims in names of ICMC and IMD in the
percentage ownership listed. On any of such claims which ICMC or Cyprus have
already relocated, ICMC shall quitclaim to IMD its percentage interest as
listed.
<PAGE>
This agreement shall have no effect whatsoever on the parties' ability to
locate mining claims open to relocation on properties other than those listed,
even if said properties were previously held by one of the parties to this
agreement.
9. The parties acknowledge that there is an existing Letter of Agreement
dated December 1, 1995, in which IMD and Del Steiner agree to sell and ICMC
agrees to purchase the Mineral Zone Mining property located in the Elk City
Mining District in Idaho County, Idaho. By virtue of this agreement and the
stipulation to dismiss the actions specified, the parties agree that agreement
will be voided. ICMC shall enter into a new agreement to purchase the Mineral
Zone property from IMD and Delbert Steiner, with the purchase price to be
determined as follows:
a. Not later that five months from the execution of this Global
Settlement Agreement, ICMC will retain the services of a
qualified appraiser and request an immediate appraisal of the
Mineral Zone property.
b. In the event IMD does not agree with the valuation of ICMC's
appraiser, it will immediately retain its own appraiser and
obtain a valuation of the property.
c. If the appraisers retained by the parties are unable to agree on
a valuation, those two appraisers will appoint a third qualified
appraiser to value the property. In the event the three
appraisers are not able to agree on a valuation, the two values
which are closest to one another shall be averaged to reach the
purchase price.
Within six months from the execution of this agreement, or immediately upon
determination of the purchase price if that should occur more than six months
from the signing of this agreement (the "Valuation Date"), ICMC shall pay to
Steiner and IMD a payment equal to 3-1/2% of the purchase price as determined by
the foregoing formula, to be applied toward the principal balance. Upon receipt
of that payment, IMD and Steiner shall deliver a deed to ICMC for those claims.
Six months from the Valuation Date, ICMC shall make a payment of an addition
3-1/2% of the purchase price, to be applied toward the principal balance. From
that date forward, the principal balance shall bear interest at the rate of 7%
per annum. Payments of interest only will be required quarterly until production
commences on said property. Once the property is in production, then principal
and interest shall be amortized by payment in equal quarterly installments based
on the projected years of mine life. During the first twelve (12) months
following the execution of the new Mineral Zone agreement, ICMC shall have the
right with 30 days notice to IMD and Del Steiner to terminate the agreement to
purchase the property based on ICMC's own internal assessment of the value of
the property and production therefrom. If ICMC terminates the agreement, it will
execute a quitclaim deed on said claims back to IMD and Steiner in the event
ICMC elects to terminate.
All remaining provisions of the December 1, 1995 Letter of Agreement which
are not inconsistent with the terms set forth in this paragraph shall be
incorporated into the new agreement on the Mineral Zone property. This purchase
and sale of the Mineral Zone property will not be binding until such time as it
has been approved by the Vancouver Stock Exchange. ICMC agrees to use best
efforts to obtain said approval, and all parties to the Mineral Zone agreement
will fully cooperate in making reasonable revisions or restructuring which are
required by the VSE. Should the VSE fail to approve said agreement within one
year, ICMC shall have an additional year in which to seek such approval, which
will be pursued with diligence. In the event the VSE subsequently refuses to
approve the new Mineral Zone Agreement, the remaining portions of this Global
Settlement Agreement shall survive and remain in full force and effect.
Provided, if approval from the VSE is not received within the time permitted or
any extension thereof, all interest in the property will revert to IMD and
Steiner.
10. All parties shall concurrently execute any and all documents necessary
to effectuate this agreement, including any quitclaim deeds or notices of
abandonment which are required.
11. Any controversy or difference of opinion related to this Joint Venture
which cannot be mutually resolved by the parties shall be settled by arbitration
in accordance with the rules then in effect of the American Arbitration
Association and the decision of the arbitrator shall be binding.
12. Should either party find it necessary to enforce any term or condition
contained within this Agreement in a court of law or through arbitration, the
prevailing party herein shall be entitled to an award of reasonable attorney's
fees and costs to be taxed as part of any judgment awarded.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year in this instrument first above written.
IDAHO CONSOLIDATED METALS CORPORATION
By:_____________________________________________
President
------------------------------------------------
Secretary
------------------------------------------------
DELBERT STEINER
------------------------------------------------
ELLI STEINER
------------------------------------------------
THEODORE J. TOMASOVICH, individually, and as
Trustee of the Tomasovich Family Trust
IMD GROUP:
------------------------------------------------
JOE SWISHER
------------------------------------------------
BARBARA SWISHER
IDAHO MINING AND DEVELOPMENT COMPANY
By:_____________________________________________
Joe Swisher, President
SILVER CRYSTAL MINES, INC.
By:_____________________________________________
Joe Swisher, President
<PAGE>
STATE OF IDAHO )
) ss.
County of _____________ )
On this ____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared Delbert Steiner and Lori Cox,
known and identified to me to be the President and Secretary, respectively, of
IDAHO CONSOLIDATED METALS CORPORATION, an Idaho corporation, the corporation
that executed the within instrument, and acknowledged to me that they executed
the same for and on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
STATE OF IDAHO )
) ss
County of _____________ )
On this _____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared DELBERT STEINER known or
identified to me to be the person(s) whose names are subscribed to the within
instrument and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
<PAGE>
STATE OF IDAHO )
) ss
County of _____________ )
On this _____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared ELLI STEINER known or
identified to me to be the person(s) whose names are subscribed to the within
instrument and acknowledged to me that she executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
STATE OF CALIFORNIA )
) ss
County of _____________ )
On this _____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared THEODORE J. TOMASOVICH, known
or identified to me to be the person whose names are subscribed to the within
instrument and acknowledged to me that he executed the same individually and as
Trustee of Tomasovich Family Trust..
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
<PAGE>
STATE OF IDAHO )
) ss
County of _____________ )
On this _____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared JOE SWISHER known or
identified to me to be the person(s) whose names are subscribed to the within
instrument and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
STATE OF IDAHO )
) ss
County of _____________ )
On this _____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared BARBARA SWISHER known or
identified to me to be the person(s) whose names are subscribed to the within
instrument and acknowledged to me that she executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
<PAGE>
STATE OF IDAHO )
) ss.
County of _____________ )
On this ____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared _______________________ and
____________________________, known and identified to me to be the President and
Secretary, respectively, of IDAHO MINING AND DEVELOPMENT COMPANY, an Idaho
corporation, the corporation that executed the within instrument, and
acknowledged to me that they executed the same for and on behalf of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
STATE OF IDAHO )
) ss.
County of _____________ )
On this ____ day of April, 1998, before me, the undersigned, a notary
public in and for said state, personally appeared __________________________ and
____________________________, known and identified to me to be the President and
Secretary, respectively, of SILVER CRYSTAL MINES, INC., an Idaho corporation,
the corporation that executed the within instrument, and acknowledged to me that
they executed the same for and on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------------------------
Notary public in and for said State
Residing at:____________________________________
Commission expires:_____________________________
<PAGE>
EXHIBIT I
TO SETTLEMENT AGREEMENT
PARAGRAPH 4(A)
November 4, 1997 Letter from IMD to ICMC
<PAGE>
[Logo]
IDAHO MINING AND DEVELOPMENT CO.
IDAHO COUNTY, IDAHO
ROUTE 1, BOX 119
COTTONWOOD, IDAHO 83522
(208) 962-7190
November 4, 1997
Directors and Officers
Idaho Consolidated Metals Corp.
P.O. Box 1124
Lewiston, Idaho 83501
Certified Mail: P 441 447 670
Dear Sirs:
Idaho Mining and Development Co., Jean and Joe Swisher hereby make formal demand
for the attached items and equipment located at the Eckert Hill mine and
millsite located north of Cottonwood, Idaho.
The items listed are owned exclusively by the persons making this demand. These
items and equipment have been held behind a locked gate with security patrols by
Idaho Consolidated Metals Corp. since July of 1996.
1) Ten (10) ton per day impact mill with electrical motor, skid mounted.
2) Ingersol Rand wheel mounted wagon drill and drill steel.
3) Four (4) sets electric trailer axles.
4) Small wheel mounted shop compressor.
5) One (1) large G.E. transformer (not in circuit) 220/110 volts, serial no.
8530888.
6) One large G.E. rectifier down to 1 volt capacity (not in circuit).
7) Two (2) 800 gallon polyurathane tanks (new).
8) Seven (7) tons used and new grinding balls (not in circuit)
9) Two (2) wood stoves.
10) One (1) rectangular 35 ton feed hopper with conveyor (in circuit).
11) One (1) Three inch (3") Teel trash pump, new, 3600 rpm (in circuit).
12) Three (3) electric motors 230/460 volts, 1750 rpm, 3 hp.
13) Four (4) 230/460 volt electric motors, 1750 rpm, 3 phase, 7.5 hp.
14) Fifty (50) lbs. welding rod.
15) One (1) large counter in electrowinning building.
16) Tables and chairs in electrowinning building.
<PAGE>
Directors and Officers, ICMC
Page 2
November 4, 1997
17) Lincoln welder and Wisconsin V-4 gasoline engine.
18) Four (4) transformers, 480/230 volt, located main building and
pump/polyurathane tank building.
19) One (1) chemical pump, Americana serial & model no. 381082 (new).
20) One (1) 12 volt electric charger.
21) One (1) lab pulverizer (red) in electrowinning building and power unit.
22) One (1) Syncrogen U.S. electric 3 hp motor and unit, serial no. 727191.
23) One (1) 5 hp, Marathon motor 230/460 volts, serial no. 77503.
24) One (1) 5 hp, Marathon motor 230/460 volts, serial no. 77502.
25) One (1) 1/3 hp oxidant pump.
26) Five (5) hard hats.
27) Four (4) chains and four (4) binders.
28) Welding gloves and welding glasses.
29) One (1) 1/2 inch drill motor.
30) Electric test equipment.
31) Box of `O' rings.
32) Large set of open end wrenches.
33) Two (2) grease guns.
34) One (1) large pipe wrench.
35) One (1) extension ladder.
36) One (1) Westinghouse 7 1/2 hp. 230/260 volt motor, serial no. 680B640659.
37) One (1) Marathon electric motor, 230/460 volts, 3 hp, 1750 rpm, 3 phase,
8.4/4.2 amps.
38) One (1) Marathon electric motor, 230/460 volts, 1730 rpm, 3 hp., 8.4/4.2
amps, 3 phase.
39) Three (3) Westinghouse electric motors, 230/460 volts, 7.5 hp, 22/11 amps,
3 phase, 1750 rpm.
40) One (1) induction motor, 220/440 volts, 1 hp, 3.6/1.8 amps, 1735 rpm.
41) One (1) Dayton motor, 3 phase, 5.2/2.6 amp, 230/460 volts, 1 hp, 1755 rpm.
42) One (1) Teel centrifugal pump, 3600 rpm, sucture and discharge 3 inch.
43) One (1) pulley, 9 1/2 diam., 4 grooves. 44) Two (2) pulleys, 20 1/2 diam.,
3 grooves.
45) Fuses, six (6) 70 amp.
<PAGE>
Directors and Officers, ICMC
Page 3
November 4, 1997
46) Fuses, three (3) 225 amp.
47) Fuses, three (3) 3 2/10 amp.
48) Fuses, six (6) 100 amp.
49) Fuses, three (3) 5 amp.
50) Fuses, twelve (12) Res 30 amp.
51) Fuses, three (3) Frs 30 amp.
52) Fuses, three (36) Frs-r 30 amp.
53) Fuses, eight (8) Nos 20 amp.
54) Fuses, three (3) Frs 8 amp.
55) Three (3) large U bolt ground clamps.
56) Five (5) small U bolt ground clamps.
57) One (1) large ground clamp.
58) Sixteen (16) small ground clamps.
59) Two (2) box ground clamps.
60) Fuses, one (1) Res 200 amp.
61) Fuses, three (3) Res 60 amp.
62) Fuses, two (2) Frs 60 amp.
63) Fuses, ten (10) Res 30 amp.
64) Fuses, one (1) Frs 30 amp.
65) Fuses, two (2) 20 amp.
66) Fuses, seven (7) Res 15 amp.
67) Fuses, one (1) Frs 8 amp.
68) Fuses, one (1) Res 5 amp.
69) Fuses, one (1) Frs 3 2/10 amp.
70) Fuses, one (1) Crs 3 2/10 amp.
71) Fuse links
72) One (1) fusebox, 2 amp.
73) One (1) 4 amp.
74) Two (2) fusebox, 5 amp.
75) One (1) fusebox, 20 amp.
76) One (1) fusebox, 30 amp.
77) Six (6) buss reducers.
78) One (1) 40 amp circuit breaker.
79) 76 STD IND light, 120 volt, AC/DC.
80) One (1) methane sensor.
81) Two (2) switches in a box.
82) One (1) Cutler Homer box.
83) One (1) load buzzer, 120 volt, 6 hz, 18 amps.
84) One (1) contact kit.
85) [illegible]
<PAGE>
Directors and Officers, ICMC
Page 4
November 4, 1997
86) Eleven (11) 3/8 inch straight liquid tight connectors.
87) Five (5) breakers, 20 amp.
88) One (1) starter, 110 volts.
89) One (1) magnetic switch.
90) One (1) on/off switch.
91) One (1) coil for magnetic switch.
92) One (1) set of track rollers.
93) One (1) World Energy Series motor, 3 phase, 2 hp, 60 hz, 1155 rpm, 7.2/3.6
amps, 230460 volts.
94) One (1) Century motor, 3 phase, 10 hp, 60 cycle: 1750 rpm, 208-270/440
volts, 28.6-27/13.5 amps 50 cycle: 1460 rpm, 220/440 volts, 30/15 amps. 95)
One (1) G.E. 3 phase motor, 10 hp, 60 cycle, 1750 rpm, 220 volt, 26.4/13.2
amp.
96) One (1) Century motor, 3 phase, 60 cycle, 1140 rpm, 14 amp, 5 hp, 220 volt
97) One (1) Holt & O'Donnell motor, 3 phase, 15 hp, 60 cycle, 1750 rpm, 19.2
amp, 440 volt.
98) One (1) G.E. motor, 3 phase, 5 hp, 60 cycle, 440 volt, 865 rpm, 7.47 amp.
99) One (1) Marathon electric with pump attached, 3 phase, 60 cycle, 3445 rpm,
230/460 volt, 36/18 amp.
100) Three (3) Teel industrial pumps, 1/2 hp, 60 Hz, 3450 rpm, 11.5 amp, 115
volt.
101) One (1) Teel effluent pump, 1/2 hp, 60 Hz, 115 volt, 11.5 amp, 3450 rpm.
102) One (1) MAC pump, 1/8 hp, 60-50 Hz, 2.3/1.3 amp, 115/230 volt, 3450/2850
rpm.
103) One (1) Wagner pump, 1/2 hp, 115/230 volt, 7.4/3.7 amp, 60-50 Hz, 1725 rpm.
104) One (1) Dayton pump, 115 volt, 6.0/4.2 amp, 1725/1140 rpm, 60 Hz, 1/3 hp.
105) One (1) U.S. electric motor with Banjo pump, 3 phase, 5 hp, 60 Hz, 1715
rpm, 14.4/17.2 amp, 230/460 volt.
106) One (1) Deko motor, 3 phase Goltz, 8.6/4.3 amp, 230/460 volt, 1750 rpm.
107) One (1) Baldor motor, 3 phase, 1140 rpm, 230/460 volt, 9.6/4.8 amp, 60 Hz,
3 hp.
<PAGE>
Directors and Officers, ICMC
Page 5
November 4, 1997
108) Two (2) G.E. motor, 3 phase, 3 hp, 220/440 volt, 1725/1435 rpm, 60/50
cycle: 8.45/4.25 amp 9.8/4.9 amp.
109) One (1) Allis Chalmers 3 phase motor, 1 hp, 60 cycle, 1740 rpm, 2/1.5 amp,
220/440 volt.
110) One (1) Fair Bank Morse motor, 3 phase, 5 hp, 60 cycle, 1740 rpm, 13.8/6.9
amp, 220/440 volt.
111) One (1) Varidrive motor, 3 phase, 1 hp, 60 cycle motor: 1800 rpm, 4/2 amp;
gear ratio 7.29 rpm min, 140/280 max
112) One (1) Dayton DC motor, 3/4 hp at 2500 rpm, amp dc arm 6.9, volts dc arm
102.
113) One (1) U.S. electric uniclosed motor, 3 phase, 230/460 volt, 60 cycle,
63.0/31.5 amp, 1760 rpm.
114) One (1) Balder motor, 3 hp, 1750 rpm; volts: 180A/200/100F; amps:
13.2A/.45/.9F.
115) One (1) Century pump motor with attached pump, 3 phase, 10 hp, 60 cycle,
3500 rpm, 26/13 amp, 230/460 volt.
116) One (1) Century pump motor with attached pump, 1 hp, 60 cycle, 3450 rpm,
230/460 volt, 6.5/13 amp.
117) One (1) World Power series motor, 3 phase, 1 hp, 1145 rpm, 3.6/1.8 amp,
230/460 volt with attached SKK gear motor, 1 hp, 60 cycle, output 45, ratio
1:2573.
118) Two (2) Dayton motors, 3 phase, 1725/1425 rpm, 208-220/440 volt, 2.2/1 amp,
60-50 Hz, both with attached pumps with capacity charts.
119) One (1) Louis Allis Co. motor, 3 phase, 1 hp. 230/460 volt, 3.7/1.7 amp,
1745 rpm.
120) One (1) GM Delco 3 phase motor, 1 hp, 3.7/1.7 amp, 1745 rpm, 230/460 volt.
121) Two (2) G.E. motors, 3 phase, 10 hp. 60-50 cycle, 1740/1450 rpm, 220/440
volt, 26.3/13.2 and 28.8/14.4 amp.
122) Four (4) screw type 1 1/2 inch white plastic vales.
123) Eight (8) 1/2 inch white plastic 90 degree elbows.
124) Six (6) 3/4 inch 90 degree white plastic elbows.
125) One (1) 90 degree white plastic 1 inch elbow.
126) Eight (8) 1 1/2 inch 90 degree white plastic elbows.
127) One (1) white plastic 2 inch 90 degree elbow.
128) One (1) 3 inch white plastic 90 degree elbow.
129) Two (2) 45 degree 1/2 inch white plastic elbows.
130) Four (4) 45 degree white plastic 3/4 inch elbows.
131) Nine (9) 2 inch 45 degree white plastic elbows.
<PAGE>
Directors and Officers, ICMC
Page 6
November 4, 1997
132) Three (3) regular 2 inch white plastic valves.
133) One (1) 2 inch screw type white plastic valve.
134) Two (2) 1/2 inch female white plastic couplers.
135) Four (4) 3/4 inch white plastic female couplers.
136) Seven (7) white plastic 1 inch female couplers.
137) Two (2) 1 1/2 inch white plastic female couplers.
138) Eighteen (18) 2 inch white plastic female couplers.
139) Two (2) 1/2 inch white plastic male couplers.
140) Fifteen (15) 3/4 inch white plastic male couplers.
141) Three (3) 1 inch white plastic male couplers.
142) One (1) white plastic 1 1/4 inch male coupler.
143) Four (4) 1 1/2 inch white plastic male couplers.
144) Two (2) 2 inch white plastic male couplers.
145) One (1) 3 inch white plastic male coupler.
146) Eleven (11) 1/2 inch plain white plastic couplers.
147) Two (2) 3/4 inch white plastic plain couplers.
148) One (1) white plastic 1 inch plain coupler.
149) Three (3) 1 1/2 inch plain white plastic couplers.
150) Five (5) white plastic 2 inch plain couplers.
151) Three (3) 3 inch plain white plastic couplers.
152) One (1) 1/2 inch to 1/4 inch white plastic reducer.
153) Six (6) 1 inch to 3/4 inch white plastic reducer.
154) One (1) 1 1/4 inch to 1 inch white plastic reducer.
155) One (1) 1 1/2 inch to 1 1/4 inch white plastic reducer.
156) One (10) 1 1/2 inch to 1 inch white plastic reducer.
157) Nine (9) 2 inch to 1 1/2 inch white plastic reducer.
158) Eight (8) 2 inch to 1 inch white plastic reducer.
159) Four (4) 2 inch to 1 inch female white plastic reducer.
160) Three (3) 3/4 inch white plastic T's.
161) Two (2) 1 inch white plastic T's.
162) Three (3) 1 1/2 inch white plastic T's.
163) One (1) 2 inch to 1/2 inch white plastic reducing T.
164) One (1) 2 inch white plastic four way pipe.
165) Two (2) 3/4 inch white plastic plug.
166) One (1) 3/4 inch pipe plug.
167) Two (1) 1 inch white plastic plug.
168) Two (2) 1 1/4 inch white plastic plug.
169) One (1) 1 1/2 inch white plastic plug.
170) Two (2) 3/4 inch pipe with 90 degree female threads on one end.
171) [illegible]
<PAGE>
Directors and Officers, ICMC
Page 7
November 4, 1997
172) Five (5) 1 inch pipes with 90 degree female threads on one end.
173) Three (3) 2 inch pipe with 90 degree female threads on one end.
174) Three (3) 1 inch to 3/4 inch 90 degree female reducers.
175) Two (2) 3/4 inch 90 degree male to female white plastic pipe.
176) Two (2) 6 inch 90 degree white plastic elbows.
177) One (1) 4 inch 45 degree white plastic elbow.
178) One (1) 6 inch 45 degree white plastic elbow.
179) One (1) 4 inch white plastic four way pipe.
180) Three (3) 4 inch white plastic couplers.
181) Four (4) 6 inch white plastic couplers.
182) One (1) 4 inch to 2 inch white plastic reducer.
183) One (4) 4 inch white plastic T.
184) Four (4) 3/4 inch female gray pipe valves.
185) One (1) 1 1/2 inch female gray pipe valve.
186) Three (3) 2 inch female gray pipe valves.
187) Twenty six (26) 2 inch plain gray pipe valves.
188) One (1) 3/4 inch 90 degree gray pipe elbow.
189) Seventy three (73) 2 inch 90 degree gray pipe elbows.
190) Two (2) 1 inch 45 degree gray pipe elbows.
191) Eighteen (18) 2 inch 45 degree gray pipe elbows.
192) One (1) 1/2 inch gray male coupler.
193) Seven (7) 2 inch gray male couplers.
194) Two (2) 3/4 inch gray Ts.
195) Two 92) 1 inch gray T's.
196) Eighteen (18) 2 inch gray T's.
197) Two (1) 1 inch gray unions.
198) Two (2) 2 inch gray unions.
199) Nine (9) 1 inch gray couplers.
200) Sixty (60) 2 inch gray couplers.
201) Three (3) 1 inch to 3/4 inch gray reducers.
202) Twenty (20) 2 inch to 1 1/2 inch gray female reducers.
203) Two (2) 6 inch to 2 inch gray reducers.
204) Three (3) 2 inch to 1 1/2 inch male/female reducers.
205) Thirty two (32) pair gray flanges.
206) Thirty three (33) 2 inch 20 foot gray pipe.
207) One (1) 1 1/2 inch pipe to hose.
208) Four (4) gray (schedule 80) valves with white (schedule 40) pipe.
209) Seven (7) gray (schedule 80) valves with 4 inch screw caps.
210) Thirty (30) plastic electrical wall reciprocals.
211) Twenty (20) plastic [illegible] .
<PAGE>
Directors and Officers, ICMC
Page 8
November 4, 1997
212) Twelve (12) two way electrical switches.
213) One (1) Industrial electric sump pump, 2 inch diaphragm pump with motor,
serial no. HR-F5-21.
214) One (1) Great Lakes mobile home (office trailer) and contents with cover.
215) One (1) magnetic switch, 90-100 volt, 50 Hz.
216) One (1) on/off switch.
217) One (1) roll of heavy duty electrical wiring on spool.
218) One (1) coil for magnetic switch.
219) Two (2) 50 gallon barrels containing reagents (unpaid for).
220) Angle drive unit (gears).
221) Pallets.
222) Misc. conduit.
223) 4 inch flex piping.
224) Two (2) shovels.
225) One (1) rake.
226) Other misc. plumbing parts.
227) 8' x 12' storage building.
228) Two (2) tank stands.
229) One (1) portable toilet.
230) Roofing tin.
231) One (1) single cell agitation apparatus (for reagents) with electric motor.
232) Misc. scrap metal.
233) One (1) single cell mixing tank with agitator.
234) Misc. pipe.
235) Six (6) 55 gallon drums.
236) One (1) 250 gallon fuel tank with hose and nozzle.
237) One (1) porcelain sink with storage cabinet.
238) Wall shelves (10' x 20' x 12").
239) One (1) 110 portable heater.
240) Two (2) catch bins.
241) 4' x 10' counter with shelving and storage underneath.
242) One (1) carbon electrowinning plate.
243) Misc. 6" stove pipe.
244) Gasoline and diesel lockable faucets.
245) Six (6) wooden pallets.
246) Misc. hand tools.
<PAGE>
Directors and Officers, ICMC
Page 9
November 4, 1997
247) Two (2) shovels.
248) Two (2) pipe wrenches.
249) Other misc. electrical parts.
Plus other items upon inspection of premises.
As previously stated, this is a formal demand for the aforementioned listed
items and equipment located at the Eckert Hill mine and millsite located north
of Cottonwood, Idaho.
Cordially,
/s/ Joe Swisher
Joe Swisher
President
JS/b
cc: Robert Covington, III
Thomas Paul Clark
<PAGE>
EXHIBIT 2
TO SETTLEMENT AGREEMENT
PARAGRAPH 4(b)
List of items in which Gumprecht and Witrak
held security interest
<PAGE>
IDAHO MINING & DEVELOPMENT COMPANY APPRAISAL
Cottonwood, Idaho
September 27, 1990 and Updated
<TABLE>
<S> <C> <C>
*1 only 36" x 36" Reciprocating Feeder, shop made $ 6,500.00
*1 only 18" x 36" Union Iron Works Jaw Crusher, blake type, plain bearing, with
40 HP motor 10,000.00
*1 only 36S Telsmith Cone Crusher, with 30 HP motor 28,000.00
1 only Fabricated Steel Ore Bin, approximately 30 Ton capacity 5,250.00
1 only 24" x 50' Channel Frame Conveyor, complete with 10 HP electric drive
6,250.00
1 only 5' x 42" Union Iron Works Conical Ball Mill, scoop feed, trunnion
overflow discharge, steel liners with 30 HP electric motor through a
Western Gear reducer, all mounted on a structural steel base
32,500.00
1 only 54" x 22' Akins Spiral Classifier, with 10 HP motor 7,500.00
2 only 12" dia. x 12' high Steel Agitator Tanks, open top with two 5 HP Denver
agitator drives with shafts and 3' dia. propellers @ $15,000.00 each
30,000.00
5 only 7,000 gallon Solution Storage Tanks @ $3,500.00 each 17,500.00
1 only 10" dia. x 10' Filter Tank, on stand with winch for dumping 12,250.00
1 Lot PVC Piping from Ball Mill to Filter Tanks to Storage Tanks and other
miscellaneous hardware 8,550.00
6 only 750 gallon Polyuranthane Tanks, with filters, pumps, and connecting 11,100.00
plumbing of PVC pipe @ $1,850.00 each
**1 only Building housing the 24 x 30 Plastic Tanks 11,500.00
1 only 10,000 gallons Makeup Water Storage Tank 11,250.00
1 only 190 KW General Motors Diesel Generator Set on Skid and including 17,500.00
Generator Building
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
**1 only Electro Winning Building with (2) only 20' x 24' additions 35,000.00
**1 set Special Floor Liners installed in Building 2,850.00
1 only Water Heater in Building 350.00
8 only Solution Chambers, Filter Pumps, Heaters and all Plumbing, Plates and 23,000.00
Hangers @ $2,875.00 each
1 only D.C. Power Supply in Building 3,500.00
1 Lot Electrical Wiring, Switch Gear and Controls 11,325.00
1 Lot Lab Equipment, Including chemicals, ore preparation equipment, glassware
23,500.00
1 only Model 303 Atomic Absorption Machine 12,000.00
1 Lot Foundations, Cement Work and Site Preparation 10,250.00
1 only Flygt Submersible Pump, 10 HP 3,500.00
2 only 1,000 gallon Plastic Cone Tanks @ $3,000.00 each 6,000.00
1 only Portable 600 CFM Worthington Compressor, diesel powered 7,500.00
1 only Steam Generator 3,250.00
1 only Ion Exchange and Stripping Unit, complete with all tanks and accessory
equipment 27,000.00
3 only 15' x 8' Denver Thickener Mechanism with rubber lined tank, shaft, rakes, 225,000.00
3 HP/440 volt motor and reducer, manual lifters and launders @ $75,000.00
each
TOTAL $609,675.00
</TABLE>
* The above items were not personally inspected by Eugene W. Brower
** Only have value for use on this Site.
<PAGE>
HELENA SILVER MINING, INC.
Clinton, Montana
May 12, 1993
<TABLE>
<S> <C> <C>
1 only 2'6" x 4' Single Deck Vibrating Scalping Screen $ 3,000.00
1 only 8" X 12" Jaw Crusher with Plain Bearing (no name) with 30 HP electric
drive motor and extra sheave to drive above screen
7,500.00
1 only 12' x 10' Flat Under Conveyor, channel frame and electric drive (appears 1,500.00
to be all part of Crusher frame)
1 only 18" x 20' Channel Frame Conveyor with 5 HP electric motor and Dodge shaft
model reducer 2,250.00
1 only 16" x 15" Double Roll Crusher with 20 HP electric motor and Jones 8,500.00
Parallel Shaft gear reducer with chain drive and enclosed gear drive
between rollers
1 only 12" x 5' Belt feeder (to Ball Mill from Course Ore Bin) channel frame
(heavy duty), new vari drive and 2 HP electric motor
4,250.00
1 only 5' x 4' Denver Type "A" Ball Mill, scoop feed, overflow discharge, spare
gear (85%), 50 HP electric motor and V-flat drive to pinion shaft, manual
clutch on pinion shaft, shaft, steel liners (75 to 80%)
35,000.00
1 1/2Tons New 2" Grinding Balls @ $450.00 per ton 675.00
1 only 9" x 16" Denver Duplex Mineral Jig with electric motor 3,750.00
1 only 27" x 15' Simplex Rake Classifier with electric drive 750.00
1 bank of 6 Denver #18 Sub A Flotation Cells with wood tanks and 2 bearing shaft
assembly, 3 - 3.5 HP Westinghouse electric motor drive (1
motor per 2 cells)(Very old - salvage for parts) LOT
1,000.00
</TABLE>
<PAGE>
PAGE #2
<TABLE>
<S> <C> <C>
1 bank of 4 Denver #21 Sub A Flotation Cells, complete with 2 - 7.5 HP electric motor
drives, complete units, S/N 14211 @ $4,200.00 each
16,800.00
3 only Clarkson Reagent Feeders, Model E-1 @ $450.00 each 1,350.00
1 only 2-cell Reagent Mixer with electric powered agitator, (shop made) 1,250.00
1 only 2" Denver Sand Pump with 5 HP electric motor 3,750.00
1 only 12' x 8' Denver Thickener with open type worm drive, rake assembly and 22,500.00
electric power, wood stove tank, manual lift
1 only 2" Simplex Diaphram Pump for underflow of thickener with 3/4 HP electric 1,500.00
motor
1 only 4' dia. X 3.5' Denver Drum Filter, knife discharge, agitator tank, 6,500.00
electric drive
1 only Robusch Vacuum Pump, S/N 2682, with 30 HP electric motor drive 2,500.00
1 only Filter package consisting of filtrate pump and receiver, vacuum receiver, 3,500.00
all valves and gauges
1 only 20 HP Quincy Air Compressor, mounted on horizontal air receiver 1,200.00
1 only 12' x 10' Channel frame Conveyor (discharge from drum filter) with 1,200.00
electric drive
1 only 17' x 30' Wood frame Conveyor (to concrete bin) with electric drive 1,200.00
1 only 18' x 12' Channel frame Conveyor with electric drive (load out under 1,575.00
concentrate bin)
1 only 2 Ton Jet Electric Chain Hoist with pendent control on trolley (in shop) 1,250.00
1 only 2 Ton Beebe Electric Chain Hoist with pendent control on trolley (in Mill 1,250.00
Building)
1 only 4' x 3' Horizontal Centrifugal Fire Pump with surge tank and electric 2,750.00
drive
</TABLE>
<PAGE>
PAGE #3
<TABLE>
<S> <C> <C>
1 only 1 1/2" x 1" Jacuzzi Centrifugal Motor Pump with electric drive, 5 HP 1,200.00
1 only 2" x 1 1/2" Century Centrifugal Water Pump with 1.5 HP electric motor 600.00
3 only 100KW Single phase Transformers with primary of 4,160 volt, secondary 480 2,700.00
volt (on pole for incoming power)
@ $ 900.00 each
1 Lot Electric starters, push button controls, in building transformers,
lighting fixtures and infra-red heater, wiring and conduit (all this
materials is in very good condition and extremely well done)
LOT VALUE
50,000.00
1 Office Building consists of 4 main rooms, toilet, storage closets, with 21,500.00
baseboard heaters (this unit is movable)
1 Assay Office Building with 1 storage cabinet, toilet, exhaust hoods, work 12,500.00
bench, baseboard heat (this building is movable)
1 Mill Building. Wood frame construction, designed to handle equipment 5,000.00
described above with ore bits, shop area and insulated overall and with
heating system. (Not movable-salvage)
TOTAL $234,500.00
Cottonwood Value $609,925.00
Helena Silver Mining Value $234,500.00
GRAND TOTAL $844,425.00
</TABLE>
<PAGE>
ADDITIONAL EQUIPMENT AT
GOLDEN EAGLE AND COTTONWOOD PLANT SITES
MAY 20, 1993
<TABLE>
<S> <C> <C>
1 only 8' x 16' Wilfrey Concentrating Table (Reconditioned) $18,250
1 only 4' x 3' Denver Ball Mill (Reconditioned) 100% w/power $35,000
1 only 4' x 30' Trommel w/ Power Unit mounted on
8' x 50' Fruehauf Trailer (Reconditioned) $65,000
1 only 24' x 8' Belt Feeder-- heavy duty & HP electric motor $6,500
1 only Allis Chalmers Steel Ore Bin w/ Shaker Feeder and 15 HP electric motor-- $8,500
40 ton capacity
1 only Reconditioned GMC 671 Power Unit with duel clutches $8,250
1 only 12" x 20" Denver type Jaw Crusher w/ Roller Bearings (90%) $15,000
1 only 20,000 gallon Storage Tank $22,000
1 only Reconditioned (like new) Model 303 Atomic Absorption Unit $9,500
1 only 3" Simplex Diaphragm Pump w/3/4HP electric motor $1,500
1 only 24" x 24" Deriver Duplex Mineral Jig w/ electric motor (New diaphragms $6,000
and reconditioned)
1 only 12' x 20' Heavy Rail. 4' Pass Ore Grizzly $6,250
1 only 190 HP Allis Chalmers Power Plant w/ gear and clutch assemblies $10,600
(reconditioned 1993)
1 only Used Elmco Horizontal Vacuum Bell Extractor, 36" wide x 45' long. With $45,000
electric drive vacuum pump and drive, filtrate pump and drive. All
wetted parts stainless steel
Total Additional Equipment-- GE and Cottonwood $257,250
Cottonwood, Idaho Value $609,925
Helena Silver Mining-- Clinton, Montana $234,500
REVISED GRAND TOTAL [Illegible]
-------------------
</TABLE>
<PAGE>
IDAHO CONSOLIDATED METALS
- ------------CORPORATION----------
LETTER OF UNDERSTANDING
Idaho Consolidated Metals Corporation of Lewiston, Idaho (hereinafter "the
Company") and Dr. Thomas Gumphrecht and Dr. Bonnie Witrak, husband and wife,
(hereinafter "the Doctors") have entered into a financial agreement. Said
agreement to be formalized by note and collateral list once the entire financing
package being sought as a bridge loan mechanism is in place. The parties hereto
are aware a large private placement financing is being done by the Company under
the auspices of Section 505, Reg. D of the Securities Exchange Commission, in
which financing is being sought by several professional groups who specialize in
financing for entities with the business development of the Company. The Company
is bridging operating expenses and acquisition costs of the Dean Mine in Nevada
pending conclusion of the entire 505 Reg D placement.
As part of the arrangement, the Doctors have agreed to loan to the Company
the amount of $250,000. Said amount to be used in concluding the larger amount
necessary for the bridge financing to meet the Company's needs.
The Company hereby agrees to collateralize said $250,000 package with the
plant and equipment located at Cottonwood, Idaho, referred to as the Eckert's
Hill or Cottonwood Plant. The attached list of equipment with the salvage value
of approximately $1,200,000 represents the actual collateral used herefore.
The Company further agrees to maximize the Doctors return on this timely
investment based on the degree of help and benefit said loan provides to the
Company.
All of the terms required to accomplish the formalities for this agreement
shall be formalized as mentioned above and shall include said before mentioned
consideration and will include but not be limited to all costs to the Doctors
for use of the funds, along with payment of a reasonable return therefore. In
the event any financial difficulty or other difficulty is encountered by the
Company which could affect the collateral for the Doctors, they shall have
priority in the collateral based on this Letter of Understanding in the event
the formal required documents are not yet in place.
IN WITNESS WHEREOF the parties have executed this Agreement this 19th day
of October, 1995.
"The Company"
By /s/ Del Steiner
Del Steiner, President and CEO for Idaho
Consolidated Metals Corporation
APPROVED:
/s/ Dr. Thomas Gumprecht
- -------------------------------------
Dr. Thomas Gumprecht
/s/ Dr. Bonnie Witrak
- -------------------------------------
Dr. Bonnie Witrak
<PAGE>
EXHIBIT 3
TO SETTLEMENT AGREEMENT
PARAGRAPH 7
Lease agreement on Golden Eagle claim blocks
<PAGE>
EXPLORATION AND MINING LEASE AGREEMENT
THIS AGREEMENT, entered into this 29TH day of April, 1998, by and between
IDAHO MINING AND DEVELOPMENT COMPANY, a corporation, hereinafter called
"Lessor", and IDAHO CONSOLIDATED METALS CORPORATION, a foreign corporation,
hereinafter called "Lessee".
W I T N E S S E T H:
Lessor is the co-owner in control of two hundred nine (209) unpatented
claims as more fully set forth in the attached Exhibit A situated in the
Orogrande Mining District, Idaho County, Idaho, including the surface and
subsurface thereof, and all ores and minerals thereon and thereunder.
This Agreement will set forth all of the terms and conditions under which
Lessor grants to Lessee a lease in reference to the Claims, for the purposes,
and for the term, hereinafter provided.
The parties hereto understand Lessee shall immediately assign this lease to
an existing Joint Venture with Cyprus Gold discussed further herein. The parties
intend for this Lease to conform to the terms of the Cyprus Joint Venture and if
there is a conflict, the Cyprus document shall control for so long, as the Joint
Venture between Cyprus Gold and Lessee is in effect.
IN CONSIDERATION of the covenants and agreements hereinafter set forth and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by Lessor, the above parties agree to the following:
SECTION 1. LEASE
Lessor hereby grants, leases and demises the claims unto Lessee, its
successors and assigns, for the term and for the purposes hereinafter provided,
including, but without being limited to all ores, minerals, and mineral rights,
and all water and water rights, in, upon and under the Claims, and all right,
title and interest which may be acquired by or for Lessor, or any of them, in or
pertaining to the Claims or any part thereof, during the term of this Agreement,
except those specific reservations contained in Sections 11 and 12 of this
agreement.
SECTION 2. TITLE TO CLAIMS
Lessor covenants and represents that Lessor is the co-owner and controller
of the claims as set forth in the attached Exhibit A and has provided Lessee all
of Lessor's title information and
Exploration and Mining Lease Agreement
Page 1
<PAGE>
related documents. Lessor does not make title representation beyond those
specifically disclosed thereby.
Lessor further covenants and represents that all of the unpatented Claims
have been located in compliance with the laws of the state in which the Claims
lie, and with all laws of the United States of America governing location of the
Claims, and that Lessor has performed all assessment work or paid or knows all
maintenance fees have been paid, required by law to maintain title to the
unpatented Claims in Lessor to the date hereof.
Lessor shall cooperate and do everything, in his power to put title in a
marketable state. Expense to be borne by ICMC.
SECTION 3. TERM
The term of this Lease is for an initial period to coincide with the term
of that certain J.V. entered into on June 13,1997 by and between CYPRUS GOLD
EXPLORATION CORPORATION, a division of CYPRUS AMAX MINERALS COMPANY, and IDAHO
CONSOLIDATED METALS CORPORATION, (hereinafter "the Cyprus J.V.")
At the conclusion of the Cyprus J.V., Lessee shall be entitled to lease the
property for an additional 5 year period by meeting the additional conditions
and terms specified herein extendable for an additional 5 years. In the event
Lessee puts the property into production, the lease shall last for the life of
the mine.
a. Consideration: During the Cyprus J.V. term of the Lease, Lessor shall be
entitled to: during the term of the Lease, Lessor shall be entitled to a 40%
share of all benefits (defined as all funds received by ICMC less costs assessed
by Cyprus against these claims) derived from the Golden Eagle claims blocks.
(See Exhibit "A")
b. Payments: All payments to be made by Lessee to Lessor hereunder may be
made by Lessee's check or draft mailed or delivered to Lessor at Lessor's
address for notice purposes, or as set forth below, or for the account of Lessor
at such bank or banks, or elsewhere, in one of the United States, as Lessor may
designate from time to time by written notice to Lessee. Such bank or banks
Exploration and Mining Lease Agreement
Page 2
<PAGE>
shall be deemed the agent of Lessor for the purpose of receiving, collecting and
receipting, for such payments.
SECTION 4. PURPOSES
The purposes of this Agreement are to convey to Lessee, its successors and
assigns, the right to enter into and upon the Claims, and each and every part
thereof, so long as this Agreement remains in effect, and to explore for,
develop, mine, remove, leach in place, treat, produce, ship and sell, for its
own account, all ores and minerals which are or may be found therein or thereon.
Lessee and its assignee are hereby granted the right to make any use or
uses of the Claims consistent with the foregoing purposes, including, but not
limited to, the full right, authority and privilege of placing and using therein
excavations, openings, shafts, ditches and drains, and of constructing,
erecting, maintaining, using, and at its election, removing, any and all
buildings, structures, plants, machinery, equipment, railroads, roadways,
pipelines, electrical power lines and facilities, stockpiles, waste piles,
tailings ponds and facilities, settling, ponds, and all other improvements,
property and fixtures as may be necessary, convenient, or suitable for mining,
removing, beneficiating, concentrating, smelting, extracting, leaching, refining
and shipping of ores, minerals or products thereof, or for any activities
incidental thereto, or to any of the rights or privileges of Lessee hereunder.
Lessee and its assignee are further granted the right, insofar as Lessor
lawfully may grant the right, to divert streams, to remove lateral and subjacent
supports, to cave, subside or destroy the surface or any part thereof, to
deposit earth, rocks, waste, lean ore and materials on any parts of the Claims
where it will not interfere with mining, to leach the same, and to commit waste
the extent necessary, usual or customary in carrying out any or all of the above
rights, privileges and purposes; IT IS PROVIDED, however, that if any of the
mining operations hereunder result in damage to Lessor's buildings or personal
property existing on the Claims on the date this Agreement is executed, Lessor
shall be reimbursed for the reasonable value of the same.
Lessee or its assignee shall explore, conduct geological and geophysical
investigations, drilling, or otherwise seek, in the manner and to the extent
that they, in their sole discretion, deems
Exploration and Mining Lease Agreement
Page 3
<PAGE>
advisable, to locate and develop ores, minerals, and metals In commercial
quantities in and upon the Claims.
SECTION 5. DEFINITIONS
The following defined terms, wherever used in this Agreement, shall have
the meaning set forth below:
a. "Lessor" shall mean all persons individually and collectively, having an
interest in the Claims and executing this Agreement, or a counterpart hereof,
other than Lessee.
b. "Ore" shall mean material from the Claims, the nature and composition of
which, in the sole judgment of Lessee, justifies either (1) mining, or removing
from place during the term of this Agreement, and shipping and selling the same,
or delivering the same to a processing plant for physical or chemical treatment,
or (2) leaching in place during the term of this Agreement.
c. "Waste" shall mean earth, rock or material mined or removed from place
in the Claims during the term of this Agreement, but which is not ore as defined
above.
d. "Product" shall mean the following:
1. all ore mined or removed from place in the Claims during term
hereof and shipped and sold by Lessee prior to treatment, and
2. all concentrates, precipitates, and mill products produced by or
for Lessee from ore mined or removed from place in the Claims, or
from ore leached in place in the Claims, during the term of this
Agreement.
SECTION 6. BOUNDARY INTERESTS
If any mining interests are located or acquired by Lessor, within the
Cyprus J.V. area of influence as designated by the Cyprus J.V., or are adjudged
to be owned by Lessor by a court of competent jurisdiction, prior to the
expiration of this Agreement, Lessor forthwith shall notify Lessee in writing,
describing each such Boundary Interest. With respect to any other interests
owned, located or acquired by Lessor, within the J.V. area of influence, limited
to the Petsite, Eagle and Golden Eagle mining claim blocks, Lessee shall have
the right at its option to elect to have any or all of these Interests made
apart of the Claims as though specifically described in the description
Exploration and Mining Lease Agreement
Page 4
<PAGE>
of the claims in this Agreement. Any Boundary Interests included within this
Agreement shall be subject to the right of the Lessee to explore, develop and
mine the same.
If Lessee elects to have any Boundary Interests made a part of the Claims
hereunder, it shall mail or deliver to Lessor, within sixty (60) days after
receipt of each such notice from Lessor, written notice of such election.
Lessee's election shall be effective upon mailing, or delivering, the above
notice to Lessor.
Any additional undivided interest in the Claims originally subject to this
Agreement acquired by Lessor shall become subject to all terms and conditions of
this Agreement upon the giving by Lessee of the above-described notice of
election. Lessee shall have no obligations to Lessor or others concerning any
other Boundary Interests, except to perform annual assessment work or pay fees,
in the manner set forth hereunder, on all unpatented mining claims wholly owned
by Lessor within the Boundary Interests which Lessee elects to include as part
of the Claims, all subject to the hereafter provisions concerning assessment
work.
SECTION 7. ANNUAL ASSESSMENT WORK
Lessee's assignee shall perform all annual assessment work, and if
required, pay maintenance fees and other costs required by law to hold the
unpatented claims listed under Exhibit A hereto for each assessment year, as
defined by statute, and ending upon the date the Cyprus J.V. expires. Lessee
shall then perform assessment work for any additional term or terms of this
Agreement in accordance with State and Federal regulations.
If this Agreement expires or is terminated after the first day of July in
any assessment year, Lessee shall perform the required assessment work or pay
the maintenance fees for the claims listed under Exhibit A hereof, and shall
have the right to enter onto the unpatented claims at any time or times during
the remainder of said assessment year to perform or complete the above-required
assessment work for said assessment year, without payment or other obligation or
Lessor or others.
Lessee shall provide documentation to Lessor of all payments, filings, or
other related claim maintenance documentation provided to Lessee by Cyprus
pursuant to the required of the Cyprus J.V.
Exploration and Mining Lease Agreement
Page 5
<PAGE>
SECTION 8. PATENT PROCEEDINGS
Lessee recognizes Lessor has a current patent application In place for
three (3) of the unpatented mining claims. They are Golden Eagle, Golden Eagle 2
and Golden Eagle 3. Lessor shall have all rights necessary to perfect said
patent. Lessor upon perfection of patent shall have exclusive ownership of all
surface rights subject only to lease of mineral estate and rights of Lessee to
ingress and egress for purpose of mineral exploration and development. Along
those lines enumerated in paragraph 7 (f) and (g) of the Global Settlement
Agreement signed between the parties. Said agreement is attached hereto and made
a part thereof SECTION 9. EXCLUSION OF A PORTION OR PORTIONS OF THE CLAIMS
At any time during the term of this Agreement, Lessee may exclude from the
provisions of this Agreement any unpatented claim or claims covered hereby by
giving notice of the same in writing to Lessor, but in such event this Agreement
shall be deemed to continue in full force and effect as to any and all remaining
Claims. Upon and after the giving of such notice:
1. the term "Claims" as used herein shall not include the claims so
dropped and excluded;
2. Lessee shall surrender possession of such excluded claims to Lessor
and shall execute and deliver to Lessor such instruments as may be
reasonably necessary to evidence the relinquishment by Lessee of any
interest in such claims, and Lessee shall have no further obligations
with respect to such Claims except as otherwise provided in Section 11
hereof (relating to assessment work). Relinquishment or exclusion of
any of the Claims by Lessee shall not reduce consideration to Lessor
required hereunder.
3. Lessee has agreed that Lessor shall have certain placer mining rights
as enumerated in the Global Settlement Agreement paragraphs 7(f) and
(g) as attached and made a part hereof.
SECTION 10. TAXES
Lessee shall pay promptly before delinquency all taxes, if any, and
assessments, general, special, ordinary and extraordinary, that may be levied or
assessed during the term of this Agreement
Exploration and Mining Lease Agreement
Page 6
<PAGE>
upon the Claims subject to this Agreement, and upon all ore and Product
therefrom. All such taxes for the year in which this Agreement is executed, and
for the year in which this Agreement terminates, shall be prorated between
Lessor and Lessee. Lessee always shall have the right to contest in the courts
or otherwise, in its own name or in the name of Lessor, the validity or amount
of any such taxes or assessments, if it deems the same unlawful, unjust, unequal
or excessive, or to take such other steps or proceedings as it may deem
necessary to secure a cancellation, reduction, readjustment or equalization
thereof, before it shall be required to pay the same. Lessee shall not permit or
suffer the Claims or any part thereof to be conveyed, or title lost to Lessor,
as the result of nonpayment of such taxes or assessments. Lessee shall, upon
request, furnish to Lessor duplicate receipts for all such taxes and assessments
when paid.
Lessee shall not be liable for any taxes levied on or measured by income,
or taxes applicable to Lessor, based upon payments under this Agreement.
Nothing, in the foregoing shall be construed to obligate Lessee to pay such
portion of any tax as is based upon the value of improvements, structures, or
personal property made, placed or used on any part or parts of the Claims by or
for Lessor or by an owner or lessee of surface rights other than Lessee. If
Lessor receives tax bills or claims which are the responsibility of Lessee
hereunder, the same shall be promptly forwarded to Lessee for appropriate
action.
SECTION 11. REPORTS, INSPECTION
a. Annual Reports
Lessee shall deliver, each year during the term hereof, to Lessor
requesting the same, copies of such maps, cross sections, and other engineering
data concerning the quality and location of ore and material mined from the
Claims as Lessee customarily prepares or obtain for its own records, which
information shall not require preparation of special records or reports by
Lessee. This information shall be furnished, if requested, on or before the
second day of June in each year during the term hereof, and the data contained
therein shall be stated as it existed at the close of the preceding calendar
year.
Lessee shall not be required to disclose its own current estimates and
calculations of the grade and tonnage of ore reserves.
Exploration and Mining Lease Agreement
Page 7
<PAGE>
Lessor is familiar with and agrees to adhere to all information disclosure
requirements set out in the Cyprus J.V.
b. Quarterly Reports of Production
On or before the first day of each January, April, July and October during
the term hereof, Lessee shall deliver to Lessor detailed statements for the
preceding calendar quarter, showing separately the respective quantity and
average analysis of Product produced from the Claims during such quarter.
Lessee shall deliver to Lessor the quarterly statements required under
Section 3, above, showing, calculation of Lessee's payments from Cyprus, if any,
for calculation of payments to Lessor.
c. Reports on Termination
Upon termination of this Agreement, Lessee shall deliver to Lessor a report
of all exploration conducted by Lessee or its assignee, on or in that part of
the Claims as to which this Agreement is being terminated. This report shall
show the location of all such exploration work, the results thereof, the
character of any ore encountered, and Lessee's analysis of such ore; it is
provided, however, that in its above reports upon termination, Lessee shall not
be required to disclose information concerning, or which might tend to reveal
processes, techniques or equipment developed by or for Lessee, or with which it
may be experimenting, or any processes, techniques or equipment which it is
under obligation to any other person or company not to reveal.
d. Inspection
Lessor and its authorized agents, at Lessor's risk and expense, at all
reasonable times, may enter upon the Claims to inspect the same, and to measure
the quantity and quality of ore mined therefrom or remaining therein, provided
that Lessor shall not unreasonably or unnecessarily hinder or interrupt Lessee's
operations. Lessor shall indemnify and save harmless Lessee, its successors and
assigns, from and against all liability, claims and causes of action for injury
to or death of persons, or damage to property, including, without limitation,
the person or property of Lessor and its agents, and third parties, in any
manner resulting, wholly or in part, from the exercise of the foregoing rights
by Lessor or its authorized agents.
Exploration and Mining Lease Agreement
Page 8
<PAGE>
e. Audit
Lessor, or its authorized agents, shall have the right to audit and inspect
Lessee's accounts and records used in calculating; payments to Lessor hereunder,
which right may be exercised, as to each quarterly payment, at any reasonable
time during a period of one (1) year from and after the date on which the
quarterly payment was paid by Lessee.
SECTION 12. MANNER OF MINING
All of Lessee's operations hereunder shall be conducted in a careful and
workmanlike manner, in accordance with accepted practices of the mineral
industry, without committing any unusual permanent waste or injury to any mine
in the Claims, or interference with the subsequent operation thereof, if not
reasonably necessary in Lessee's operations.
Lessee shall have no obligation, express or implied, to open or develop any
mine or mines in the Claims. Whenever Lessee deems it necessary or advisable,
Lessee may discontinue or resume exploration, development, mining and production
operations from time to time during the term hereof, so long as it meets its
obligations hereunder to pay taxes and advance royalty or production royalty.
Nothing herein shall require Lessee to develop a separate shaft or shafts
in the Claims or prevent Lessee from exercising the cross-mining rights
hereinafter provided.
SECTION 13. CROSS-MINING
a. For the purpose of enabling Lessee to conduct with greater economy and
convenience, the mining and removing of ore from the Claims, Lessee is hereby
granted the right, if it so desires, to mine and remove ore, product and
materials from the Claims through or by means of shafts, openings or pits which
may be made in or upon adjoining or nearby property owned or controlled by
Lessee or Lessee's assignee.
b. Lessee or Lessee's assignee, may, if it so desires, use the Claims and
any shafts, openings and pits therein for the mining, removal, treatment and
transportation of ores and materials from adjoining or nearby property, or for
any purpose connected therewith.
c. For the purpose of enabling Lessee to conduct, to the best advantage of
the parties hereto, and with greater economy and convenience, the mining,
removal, handling and disposition
Exploration and Mining Lease Agreement
Page 9
<PAGE>
of ore and Product from the Claims, and from other lands in which Lessee or its
affiliated companies may be conducting mining operations, the operations of
Lessee, and the said operations on other lands, may be conducted upon the Claims
and upon any and all such other lands as a single mining operation, to the same
extent as if all such properties constituted a single tract of land. Nothing
herein shall relieve Lessee from its obligations for payments or reports as set
forth in this Agreement.
SECTION 14. STOCKPILING, WASTE
a. Stockpiling on Other Lands
Lessee shall have the right, at any time during the term hereof, to
stockpile any ore or Product mined or produced from the Claims at such place or
places as Lessee may elect, either upon the Claims or upon any other lands owned
or controlled by Lessee, its successors or assigns. The rights and liens of the
Lessor in and to any such ore or Product stockpiled on other lands shall not be
divested by the removal thereof from the Claims, but shall be the same in all
respects as though such materials had been stockpiled on the Claims. If such
other lands are now owned by Lessee, Lessee shall obtain from the owners thereof
a properly executed instrument under which the owners of said other lands agree
to recognize the interests and liens of Lessor on ore and Product stockpiled on
said other lands.
The stockpiling of ore or Product from the Claims on other lands shall not
be deemed a removal or shipment thereof requiring payment of royalty thereon.
The tax covenants set forth in this Agreement shall apply to ore and
Product from the Claims stockpiled on other lands.
b. Stockpiling on the Claims
Lessee shall have the right, at any time during the term hereof, to
stockpile on the Claims any ore or materials mined or produced by Lessee or its
affiliated companies from other lands. Lessor agrees to recognize the rights and
interests of others in such ores and materials stockpiled on the Claims, and to
permit the removal thereof by Lessee at any time during the term of this
Agreement, or by the owners thereof for a reasonable time after termination of
this Agreement, all without liability or expense to Lessor.
Exploration and Mining Lease Agreement
Page 10
<PAGE>
All stockpiles on the Claims shall be so placed as not to interfere with
mining operations on the Claims.
SECTION 15. MIXING
After ore and Product from the Claims have been sampled, where necessary,
and weighed, or measured by volumetric survey, truck factors, or other industry
practices, in such manner as will permit the computation of royalty to be paid
hereunder, Lessee may mix the same with ores, materials or products from other
lands.
SECTION 16. TREATMENT
Lessee shall have the right, but shall not be required, to beneficiate,
concentrate, smelt, refine, leach, and otherwise treat, in any manner, any ore,
Product and materials mined or produced from the Claims and from other lands.
Such treatment shall be conducted in a careful and workmanlike manner. It is
provided, however, that any tailings or residue remaining on the Claims for a
period of one (1) year after the date on which this Agreement has expired, or
has been terminated by Lessee as to all of the Claims, shall be deemed abandoned
by Lessee and thereupon shall become the property of Lessor.
SECTION 17. LESSOR'S LIEN
Lessor shall at all times have, possess, and hold a lien upon all ore and
Product mined from the Claims and shipped therefrom but not sold to a bona fide
purchaser, and upon all improvements placed upon the Claims by Lessee, as
security for any unpaid balance of money due hereunder and as security for the
performance by the Lessee of each and all of Lessee's covenants hereunder. This
lien may be enforced against any such property in like manner as liens conferred
by chattel mortgages, or as any other lien security may be enforced under the
laws of the State of Idaho. Nothing herein contained, however, is intended or
shall be construed to prevent the sale, shipment and removal of ore or Product
in the usual course of business, nor to prevent the removal of tools, machinery,
equipment or other property at any time when Lessee is not in default. This lien
shall not apply to ore or Product sold to third parties.
Exploration and Mining Lease Agreement
Page 11
<PAGE>
SECTION 18. TITLE TO PREMISES; Protecting TITLE
Lessee accepts Lessor's title to the claims "as is" on the date of
execution of this Agreement. Lessee or its assignee has the right as outlined in
paragraph 2.3 of the Cyprus J.V. to protect, perfect or otherwise deal with
title as deemed necessary by the current or future condition of title. Nothing
herein shall be construed to transfer title of the claim to Lessee beyond the
lease rights herein set forth.
SECTION 19. INSURANCE; INDEMNITY
During the Cyprus J.V. term of this Agreement, the terms and conditions
concerning insurance, liability and indemnity shall apply specifically to
Exhibit D. In the event Lessee opts to continue this Lease, then the hereinafter
clauses shall become the agreement between Lessor and Lessee.
SECTION 20. EXTRA TERMS UPON ELECTION TO EXTEND
Lessee shall pay the sum of Ten Thousand Dollars ($ 10,000) to initiate the
first 5 years lease extension if Cyprus terminates.
Lessee shall be required to do a minimum of $100,000 per year of
exploration and development work on the property.
Lessor shall be provided accountings and reports for the work and have the
right of inspection.
Lessor may elect in the event Lessee fails to do $100,000 worth of work per
year of this Lease to give Lessee notice of termination hereof by mailing the
same pursuant to this Lease.
Lessee may elect to extend the Lease for an additional 5 year period by
paying Lessor an additional $ 10,000. The work commitments would remain the
same.
In the event Lessor elects to participate in production ICMC shall advance
40% of the pre-production costs as a loan to Lessor to be repaid by Lessor from
profits from actual production together with interest at the rate of prime rate
+ 2% as published in The Wall Street Journal per annum until Lessor's 40% share
of pre-production costs is paid in full. Pre-production costs commence upon the
delineation of an inferred resource as defined by the Canadian Mining and
Metallurgy Ad Hoc Committee Report of September, 1996. In the event profit from
production is
Exploration and Mining Lease Agreement
Page 12
<PAGE>
inadequate to repay Lessor's share of pre-production costs, the obligation of
Lessor to pay pre-production cost is forgiven.
In the event Lessor does not elect to participate in production, ICMC shall
have the right to proceed to production and Lessor's ownership percentage shall
decrease to 5% net smelter return. This provision shall not be interpreted to
reduce or diminish the work requirements of ICMC herein.
SECTION 21. TERMINATION, REMOVAL OF PROPERTY
a. Termination of Lessors
In the event of any default by Lessee in the performance of its obligations
hereunder, Lessor shall give to Lessee written notice specifying the default. If
the default is not cured within thirty (30) days after Lessee has received the
notice, or if Lessee has not within that time begun action to cure the default
and does not thereafter diligently prosecute such action to completion, in no
case to exceed ninety days (90). Lessor may terminate this Agreement by
delivering to Lessee written notice of such termination, subject to Lessee's
right to remove its property and equipment from the Claims, as hereinafter
provided. Lessor shall have no right to terminate this Agreement except as set
forth in this paragraph.
b. Termination by Lessee
Lessee shall have the right to terminate this Agreement at any time upon
thirty (30) days' written notice delivered to Lessor. Upon such termination, all
right, title and interest of Lessee under this Agreement shall terminate,
subject to the following Paragraph (c), and Lessee shall not be required to make
further payments, or to perform any further obligations hereunder, including
work commitments, concerning the Claims, except payments or obligations which
have been accrued hereunder pursuant to the express provisions of this
Agreement, and which have not been paid or performed.
c. Removal of Property
Upon any termination of this Agreement, whether by expiration of the term
hereof or by act of either party, Lessee shall have a period of six (6) months
from and after the effective date of termination in which to remove from the
Claims all of its machinery, buildings, structures, facilities, equipment and
other property of every nature and description erected, placed or situated
Exploration and Mining Lease Agreement
Page 13
<PAGE>
thereon, except supports placed in shafts, drifts or openings in the Claims. Any
property of Lessee not so removed at the end of said six (6) month period shall
become the property of Lessor. In the event of force majeure, as hereinafter set
forth, the terms and conditions of this paragraph shall be appropriately
extended.
Upon expiration of said removal period, Lessee shall place the Claims in a
safe and orderly condition, with all shafts, caves and openings fenced or
protected as may be required by law or by regulation of any duly constituted
governmental authority having jurisdiction in the Claims.
SECTION 22. ASSIGNMENT
a. By Lessor
During the Cyprus J.V. term, all right to assign, sell, or convey shall be
controlled by the terms thereof.
If, at any time during the additional term hereof, Lessor intends to sell,
assign, transfer or convey the Claims or any part thereof, Lessor shall deliver
to Lessee at least thirty (30) days prior written notice, describing all of the
terms of the proposed sale, assignment, transfer or conveyance. Lessee shall
have the exclusive right, during the above thirty (30) day period, at its
election, to purchase the Claims described in said notice, for a sum of money
equal in value to the consideration which would be received by Lessor under the
terms set forth in the written notice. If Lessee elects to purchase the Claims
described in the notice, Lessee shall so notify Lessor within the thirty (30)
day period. If Lessee has not notified Lessor of its above election within the
thirty (30) day period, Lessor shall have the right for an additional thirty
(30) day period, and after the expiration of the above notice, to sell, assign,
transfer or convey its interest in the Claims as described in said notice, upon
the terms and conditions set forth in said notice, but all subject, however, to
this Agreement, and all rights of Lessee, its successors and assigns, hereunder,
and in and to the Claims.
b. By Lessee
Upon prior written consent of Lessor, Lessee shall have the right at any
time after the Cyprus J.V. to assign its rights hereunder, to contract with
others to mine and to treat ore, Product and materials from the Claims, and to
sublet the same for all purposes of this Agreement, with the same rights and
privileges as are granted herein to Lessee; it is provided, however, that any
such
Exploration and Mining Lease Agreement
Page 14
<PAGE>
assignment, contract or sub-lease shall not operate as a release or discharge of
Lessee from the performance of its obligations hereunder until and unless Lessor
has consented thereto in writing. The written consent of Lessor shall not be
unreasonably withheld.
c. Binding Effect
All covenants, conditions and provisions of this Agreement, including the
obligation to payments as required hereunder, shall run with the land, and shall
inure to the benefit of, and be binding upon, the parties hereto, and their
respective heirs, executors, administrators, successors and assigns.
SECTION 23. FORCE MAJEURE
Lessee shall not be liable for failure to perform any of its obligations
hereunder during periods in which performance is prevented by any cause
reasonably beyond Lessee's control, which causes hereinafter are called "force
majeure." For purposes of this Agreement, the term "force majeure" shall
include, but shall not be limited to, fires, floods, windstorms, and other
damage from the elements, strikes, riots, action of government authority and
acts of God. The duration of this Agreement shall be extended for a period equal
to the period for which performance is suspended by reason of force majeure. All
periods of force majeure shall be deemed to begin at the time Lessee stops
performance hereunder by reason of force majeure. Lessee shall notify Lessor of
the beginning and ending date of each such period.
SECTION 24. DISPUTES NOT TO INTERRUPT OPERATIONS
Subject to the above right of Lessor to terminate this Agreement, disputes
or differences between the parties hereto shall not interrupt performance of
this Agreement or the continuation of operations hereunder. In the event of any
dispute or difference, operations may be continued, and settlements and payments
may be made hereunder, in the same manner as prior to such dispute or
difference, until the matters in dispute have been finally determined between
the parties, and thereupon such payments or restitutions shall be made as may be
required under the terms of the settlement or final determination of the
dispute.
Exploration and Mining Lease Agreement
Page 15
<PAGE>
SECTION 25. ARBITRATION
a. Right to Arbitration
Any and all matters of dispute or difference that may arise between the
Lessee and the Lessor with respect to any act or thing done or to be done
pursuant to the provisions of this Agreement, excepting the payment of royalty,
taxes and assessments as aforesaid, shall be arbitrated in the following manner.
b. Procedure
Subject to the rules of the American Arbitration Association.
SECTION 26. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
properly given upon delivering the same to the party to be notified, or upon
mailing the notice, by registered or certified mail, return receipt requested,
to the party to be notified, at the address hereinafter set forth, respectively,
or such other address within the United States of America as the party to be
notified may have designated prior thereto by written notice to the other.
LESSOR: Idaho Mining and Development Company
c/o Joe Swisher
Rt. I Box 119
Cottonwood, ID 83522
LESSEE: Idaho Consolidated Metals Corporation
c/o Del Steiner
P.0. Box 1124
Lewiston, DD 83501
COPY TO: Cyprus Gold Exploration Corporation
c/o William R. Stanley
1320 Freeport Blvd., Suite 106
Sparks, NV 89431
Routine or regular reports and statements hereunder may be sent by regular
mail addressed as above. If, after proper mailing thereof, any of such reports
are not received when due, the addressee will notify Lessee in accordance with
the above provisions for notice, and Lessee shall
Exploration and Mining Lease Agreement
Page 16
<PAGE>
have reasonable time to secure the delivery of the statement or report, or a
duplicate thereof, without being in default hereunder.
SECTION 27. CONSTRUCTION OF AGREEMENT
This Agreement, and the rights and obligations of the parties hereunder
shall be governed by the law of the state in which the Claims are located.
Section headings in this Agreement are for convenience only, and shall not
be considered a part of this Agreement, or used in its interpretation.
SECTION 28. RECORDING
If requested by Lessee, the parties hereto shall execute a memorandum or
short recording counterpart of this Agreement, which counterpart shall be in
form sufficient to constitute notice of this Agreement to third parties under
the law of the state in which the Claims are located, but which counterpart
shall not contain the amounts or rates of royalty hereunder, or other terms of
this Agreement which Lessee may elect not to disclose of record. The execution
and recording of the above recording counterpart shall not limit, decrease, or
increase, or in any manner affect any of the terms of this Agreement, or any
rights, interest or obligations of the parties hereto.
SECTION 29. CONSENT OF REGULATORY AUTHORITIES
This Agreement is specifically subject to the approval of the Regulatory
Authorities of the Province of British Columbia.
IN WITNESS WHEREOF, the parties hereto have caused this Exploration and
Mining Lease Agreement to be properly executed, all as of the day and year first
above written.
LESSOR:
IDAHO MINING AND DEVELOPMENT COMPANY
By /s/ Joe Swisher
--------------------------------------
President
LESSEE:
IDAHO CONSOLIDATED METALS CORPORATION
By /s/ Del Steiner
--------------------------------------
President
Exploration and Mining Lease Agreement
Page 17
<PAGE>
APPROVAL:
CYPRUS GOLD EXPLORATION CORPORATION
By
---------------------------------------
STATE OF IDAHO )
) ss.
COUNTY OF Nez Perce
The foregoing instrument was acknowledged before the this 29th day of
April, 1998, by Joe Swisher, President of Idaho Mining and Development Company,
a corporation, on behalf of said corporation.
/s/ [NOT LEGIBLE]
------------------------------------------
NOTARY PUBLIC for the State of Idaho
Residing at:
------------------------------
My Commission expires:
--------------------
STATE OF IDAHO )
) ss.
COUNTY OF Nez Perce
The foregoing instrument was acknowledged before the this 29th day of
April, 1998, by Del Steiner, President of Idaho Consolidated Metals Corporation,
a corporation, on behalf of said corporation.
/s/ [NOT LEGIBLE]
------------------------------------------
NOTARY PUBLIC for the State of Idaho
Residing at:
------------------------------
My Commission expires:
--------------------
Exploration and Mining Lease Agreement
Page 18
<PAGE>
EXHIBIT A
<PAGE>
Page 1 of 3
04/29/98
Golden Eagle Claim List
<TABLE>
BLM Serial # Second BLM Serial #
<S> <C> <C> <C>
Eagle # 57 IMC 415
Eagle # 56 IMC 416
Eagle # 55 IMC 417
Golden Eagle # 28 IMC 418
Eagle # 54 IMC 420 IMC 175134
Eagle # 33 IMC 421
Eagle # 32 IMC 422 IMC 175128
Eagle # 30 IMC 423 IMC 175127
Golden Eagle # 19 IMC 424
Golden Eagle # 18 IMC 425 IMC 175124
Golden Eagle # IMC 427 IMC 175119
Golden Eagle # 29 IMC 3996
Golden Eagle # 30 IMC 3997
Golden Eagle # 31 IMC 3998
Golden Eagle # 32 IMC 3999
Golden Eagle # 33 IMC 4000
Golden Eagle # 34 IMC 4001
Golden Eagle # 35 IMC 4002
Golden Eagle # 36 IMC 4003
Golden Eagle # 37 IMC 4004
Golden Eagle # 38 IMC 4005
Golden Eagle # 39 IMC 4006
Golden Eagle # 40 IMC 4007
Golden Eagle # 41 IMC 4008
Eagle # 58 IMC 4009
Eagle # 59 IMC 4010
Eagle # 60 IMC 4011
Eagle # 61 IMC 4012
Eagle # 62 IMC 4013
Eagle # 64 IMC 4015
Eagle # 65 IMC 4016
Eagle # 66 IMC 4017
Eagle # 67 IMC 4018
Eagle # 68 IMC 4019
Eagle # 71 IMC 4022
Eagle # 39 IMC 9325 IMC 175130
Eagle # 40 IMC 9326 IMC 175131
Eagle # 75 IMC 9327 IMC 175136
Eagle # 78 IMC 9330
Eagle # 79 IMC 9331
Eagle # 80 IMC 9332
Eagle # 81 IMC 9333
Eagle # 82 IMC 9334
Eagle # 83 IMC 9335
Eagle # 84 IMC 9336
Eagle # 85 IMC 9337
Eagle # 86 IMC 9338
Eagle # 87 IMC 9339
Eagle # 88 IMC 9340
Eagle # 89 IMC 9341
Eagle # 90 IMC 9342
Eagle # 91 IMC 9343
Eagle # 92 IMC 9344
Eagle # 93 IMC 9345
Eagle # 94 IMC 9346
Eagle # 95 IMC 9347
Eagle # 96 IMC 9348
Eagle # 97 IMC 9349
Eagle # 98 IMC 9350
Eagle # 99 IMC 9351
Eagle # 100 IMC 9352
Eagle # 101 IMC 9353
Eagle # 102 IMC 9354
Eagle # 103 IMC 9355
Eagle # 104 IMC 9356
Eagle # 105 IMC 9357
Eagle # 106 IMC 9358
Eagle # 107 IMC 9359
Eagle # 108 IMC 9360
Golden Eagle # 2 IMC 11110 IMC 175120
Golden Eagle # 3 IMC 11111 IMC 175121
Golden Eagle # 5 IMC 11113
Golden Eagle # 6 IMC 11114
Golden Eagle # 8 IMC 11116
Golden Eagle # 9 IMC 11117
Golden Eagle # 10 IMC 11118
Golden Eagle # 11 IMC 11119
</TABLE>
<PAGE>
Page 2 of 3
04/29/98
Golden Eagle Claim List
<TABLE>
BLM Serial # Second BLM Serial #
<S> <C> <C> <C>
Golden Eagle # 12 IMC 11120
Golden Eagle # 13 IMC 11121
Golden Eagle # 14 IMC 11122
Golden Eagle # 15 IMC 11123
Golden Eagle # 16 IMC 11124
Golden Eagle # 17 IMC 11125
Golden Eagle # 20F IMC 11126
Golden Eagle # 21F IMC 11127 IMC 175125
Golden Eagle # 22F IMC 11128 IMC 175126
Golden Eagle # 23 IMC 11129
Golden Eagle # 24 IMC 11130
Golden Eagle # 25 IMC 11131
Golden Eagle # 26 IMC 11132
Golden Eagle # 27 IMC 11133
Eagle # 1 IMC 11134
Eagle # 2 IMC 11135
Eagle # 3 IMC 11136
Eagle # 4 IMC 11137
Eagle # 5 IMC 11138
Eagle # 6 IMC 11139
Eagle # 7 IMC 11140
Eagle # 9 IMC 11142
Eagle # 10 IMC 11143
Eagle # 12 IMC 11145
Eagle # 13 IMC 11146
Eagle # 15 IMC 11148
Eagle # 16 IMC 11149
Eagle # 18 IMC 11151
Eagle # 19 IMC 11152
Eagle # 21 IMC 11154
Eagle # 22 IMC 11155
Eagle # 23 IMC 11156
Eagle # 24 IMC 11157
Eagle # 25 IMC 11158
Eagle # 26 IMC 11159
Eagle # 27 IMC 11160
Eagle # 28 IMC 11161
Eagle # 29 IMC 11162
Eagle # 31 IMC 11163
Eagle # 34 IMC 11164 IMC 175129
Eagle # 35 IMC 11165
Eagle # 36 IMC 11166
Eagle # 37 IMC 11167
Eagle # 38 IMC 11168
Eagle # 41 IMC 11169
Eagle # 42 IMC 11170 IMC 175133
Eagle # 43 IMC 11171
Eagle # 44 IMC 11172
Eagle # 45 IMC 11173
Eagle # 46 IMC 11174
Eagle # 47 IMC 11175
Eagle # 48 IMC 11176
Eagle # 49 IMC 11177
Eagle # 50 IMC 11178
Eagle # 51 IMC 11179
Eagle # 52 IMC 11180
Eagle # 53 IMC 11659
Golden Eagle # 19X IMC 13965
Eagle # 109 IMC 44037
Eagle # 110 IMC 44038
Eagle # 111 IMC 44039
Eagle # 112 IMC 44040
Eagle # 113 IMC 44041
Eagle # 114 IMC 44042
Eagle # 115 IMC 44043
Eagle # 116 IMC 44044
Eagle # 117 IMC 44045
Eagle # 118 IMC 44046
Eagle # 119 IMC 44047
Eagle # 119A IMC 44048
Eagle # 120 IMC 44049
Eagle # 121 IMC 44050
Eagle # 122 IMC 44051
Eagle # 123 IMC 44052
Eagle # 124 IMC 44053
Eagle # 125 IMC 44054
Eagle # 126 IMC 44055
</TABLE>
<PAGE>
Page 3 of 3
04/29/98
Golden Eagle Claim List
<TABLE>
BLM Serial # Second BLM Serial #
<S> <C> <C> <C>
Eagle # 127 IMC 44056
Eagle # 128 IMC 44057
Eagle # 129 IMC 44058
Eagle # 130 IMC 44058
Eagle # 131 IMC 95654
Eagle # 132 IMC 95655
Eagle # 133 IMC 95656 IMC 175137
Eagle # 134 IMC 95657
Eagle # 135 IMC 95658
Eagle # 136 IMC 95659
Eagle # 137 IMC 95660
Eagle # 138 IMC 95661
Eagle # 139 IMC 95662
Eagle # 140 IMC 95663
Eagle # 141 IMC 95664
Eagle # 142 IMC 95665
Eagle # 143 IMC 95666
Eagle # 144 IMC 95667
Eagle # 145 IMC 95668
Eagle # 146 IMC 95669
Eagle # 147 IMC 95670
Eagle # 148 IMC 95671
Eagle # 149 IMC 95672
Eagle # 150 IMC 95673
Eagle # 151 IMC 95674
Eagle # 152 IMC 95675
Eagle # 153 IMC 95676
Eagle # 154 IMC 95677
Eagle # 155 IMC 95678
Eagle # 156 IMC 95679
Eagle # 157 IMC 95680
Eagle # 178 IMC 101736
Eagle # 182 IMC 101740
Eagle # 185 IMC 101743
Golden Eagle # 4 IMC 175122
Golden Eagle # 7 IMC 175123
Eagle # 63 IMC 175135
We Found It # 3 IMC 177711
We Found It # 4 IMC 177712
</TABLE>
<PAGE>
EXHIBIT 4
TO SETTLEMENT AGREEMENT
PARAGRAPH 7(b)
Cyprus Joint Venture Agreement
June 13, 1997
<PAGE>
JOINT VENTURE AGREEMENT
Dated Effective June 13, 1997
BETWEEN
IDAHO CONSOLIDATED METALS CORPORATION
AND
CYPRUS GOLD EXPLORATION CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS ................................................................................... 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS................................................... 7
2.1 Capacity of Participants........................................................... 7
2.2 Representations and Warranties..................................................... 8
2.3 Remedies for Breach of Representations and Warranties of
Title to the Property.............................................................. 9
2.4 Disclosures........................................................................ 11
2.5 Record Title....................................................................... 11
2.6 Joint Loss of Title................................................................ 11
ARTICLE 3 NAME, PURPOSES AND TERM........................................................................... 12
3.1 General............................................................................ 12
3.2 Name............................................................................... 12
3.3 Purposes........................................................................... 12
3.4 Limitation......................................................................... 12
ARTICLE 4 RELATIONSHIP OF THE PARTICIPANTS.................................................................. 13
4.1 No Partnership..................................................................... 13
4.2 U.S. Tax Elections and Allocations................................................. 13
4.3 Other Business Opportunities....................................................... 14
4.4 Waiver of Right to Partition....................................................... 14
4.5 Implied Covenants.................................................................. 14
ARTICLE 5 CONTRIBUTIONS BY PARTICIPANTS..................................................................... 14
5.1 Participants' Initial Contributions................................................ 14
5.2 Failure to Make Initial Contributions.............................................. 15
5.3 Obligations Prior to Earn-in....................................................... 15
5.4 Additional Cash Contributions...................................................... 17
5.5 Earn-In............................................................................ 17
5.6 Additional Interest................................................................ 17
5.7 Reports............................................................................ 18
ARTICLE 6 INTERESTS OF PARTICIPANTS; DEFAULTS AND REMEDIES;
FINANCING................................................................................... 19
6.1 Participating Interests............................................................ 19
6.2 Changes in Participating Interests................................................. 20
6.3 Voluntary Reduction in Participation............................................... 21
6.4 Default in Making Contributions.................................................... 21
6.5 Conversion of Interest............................................................. 22
</TABLE>
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(Continued)
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6.6 Continuing Liabilities Upon Adjustments of Participating
Interests ......................................................................... 23
6.7 Financing by Cyprus ............................................................... 23
ARTICLE 7 MANAGEMENT COMMITTEE.............................................................................. 25
7.1 Organization and Composition....................................................... 25
7.2 Decisions.......................................................................... 25
7.3 Meetings........................................................................... 25
7.4 Action Without Meeting............................................................. 26
7.5 Matters Requiring Approval......................................................... 26
ARTICLE 8 MANAGER ................................................................................... 26
8.1 Appointment........................................................................ 26
8.2 Powers and Duties of Manager....................................................... 26
8.3 Standard of Care................................................................... 30
8.4 Resignation; Deemed Offer to Resign................................................ 30
8.5 Payments to Manager................................................................ 31
8.6 Transactions With Affiliates....................................................... 31
8.7 Activities During Deadlock......................................................... 31
ARTICLE 9 PROGRAMS AND BUDGETS.............................................................................. 32
9.1 Initial Program and Budget......................................................... 32
9.2 Operations Pursuant to Programs and Budgets........................................ 32
9.3 Presentation of Programs and Budgets............................................... 32
9.4 Review and Approval of Proposed Programs and
Budgets............................................................................ 32
9.5 Election to Participate............................................................ 33
9.6 Deadlock on Proposed Programs and Budgets.......................................... 33
9.7 Budget Overruns; Program Changes................................................... 33
9.8 Emergency or Unexpected Expenditures............................................... 33
ARTICLE 10 ACCOUNTS AND SETTLEMENTS......................................................................... 34
ARTICLE 11 DISPOSITION OF PRODUCTION........................................................................ 34
11.1 Taking in Kind..................................................................... 34
11.2 Failure of Participant to Take in Kind............................................. 34
ARTICLE 12 WITHDRAWAL AND TERMINATION....................................................................... 35
12.1 Termination by Expiration or Agreement............................................. 35
12.2 Withdrawal......................................................................... 35
12.3 Continuing Obligations............................................................. 35
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(Continued)
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12.4 Disposition of Assets on Termination............................................... 36
12.5 Right to Data after Termination.................................................... 36
12.6 Continuing Authority............................................................... 37
12.7 Non-Compete Covenants.............................................................. 37
12.8 Mutual Withdrawal.................................................................. 37
ARTICLE 13 SURRENDER OF PROPERTY............................................................................ 38
13.1 Surrender of Property.............................................................. 38
13.2 Reacquisition...................................................................... 38
ARTICLE 14 TRANSFER OF INTEREST............................................................................. 39
14.1 General............................................................................ 39
14.2 Limitations on Free Transferability................................................ 39
14.3 Right of First Refusal............................................................. 40
14.4 Exceptions to Right of First Refusal............................................... 40
ARTICLE 15 CONFIDENTIALITY AND RELEASES..................................................................... 41
15.1 General............................................................................ 41
15.2 Exceptions......................................................................... 41
15.3 Duration of Confidentiality........................................................ 42
15.4 Releases........................................................................... 42
ARTICLE 16 AREA OF INTEREST................................................................................. 43
16.1 Acquisitions in Area of Interest................................................... 43
ARTICLE 17 GENERAL PROVISIONS............................................................................... 44
17.1 Notices............................................................................ 44
17.2 Waiver............................................................................. 45
17.3 Modification....................................................................... 45
17.4 Force Majeure...................................................................... 45
17.5 Economic Force Majeure............................................................. 46
17.6 Governing Law...................................................................... 46
17.7 Rule Against Perpetuities.......................................................... 46
17.8 Further Assurances................................................................. 47
17.9 Survival of Terms and Conditions................................................... 47
17.10 Entire Agreement; Successors and Assigns........................................... 47
17.11 Memorandum......................................................................... 47
17.12 Funds.............................................................................. 47
</TABLE>
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JOINT VENTURE AGREEMENT
THIS AGREEMENT, made effective as of June 13, 1997 between IDAHO
CONSOLIDATED METALS CORPORATION ("ICMC") with an address of P.O. Box 1124,
Lewiston, Idaho 83501 and CYPRUS GOLD EXPLORATION CORPORATION ("Cyprus") with an
address of 9100 East Mineral Circle, P.O. Box 3299, Englewood, Colorado
80155-3299.
RECITALS
A. An Option Agreement dated July 11, 1985 ("Friday Properties Agreement")
was entered into among Joyce Mines, Inc. ("Joyce"), Thunderbird Resources Inc.
("Thunderbird") and Amir Mines Ltd. ("Amir") whereby Joyce and Thunderbird
granted to Amir the option to acquire certain mining claims.
B. The Friday Properties Agreement was amended by an Agreement dated
September 18, 1985 among Joyce, Thunderbird and Amir.
C. An Agreement dated June 26, 1986 ("Assignment Agreement") was entered
into among Joyce, Amir and Amir Mines (U.S.) Inc. ("Amir U.S.") whereby Amir
assigned its interest in the Friday Properties Agreement to Amir U.S.
D. Amir U.S. changed its name to Idaho Gold Corporation ("Idaho Gold") on
March 15, 1988.
E. The Friday Properties Agreement was further amended by an Amendment to
Option Agreement dated September 5, 1997 among Arctic Fox Ltd. as successor in
interest to Joyce, ICMC, Idaho Gold and Cyprus.
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F. An Option Agreement dated April 15, 1986 ("Orogrande Agreement") was
entered into among Joyce, Normine Resources (U.S.), Inc. ("Normine U.S.") and
Normine Resources Ltd. ("Normine") whereby Joyce granted to Normine U.S. the
option to acquire certain mining claims.
G. By an agreement of merger dated August 31, 1988 Normine U.S. was merged
into Idaho Gold.
H. The Orogrande Agreement was amended by a First Amendment to Option
Agreement dated September 5, 1997 among Arctic Fox Ltd., as successor in
interest to Joyce, ICMC, Idaho Gold and Cyprus.
I. ICMC entered into an agreement with Idaho Gold dated July 9, 1996
("Idaho Gold Agreement"), attached hereto as Exhibit "E", whereby ICMC was
granted the right to acquire one hundred percent (100%) interest in certain
mining claims located in Idaho County, Idaho, such mining claims described in
Exhibit "A-1", attached hereto and made a part hereof.
J. ICMC and Idaho Gold amended the Idaho Gold Agreement on August 4, 1997.
K. The Friday Properties Agreement as amended, the Assignment Agreement,
the Orogrande Agreement as amended and the Idaho Gold Agreement shall sometimes
herein be collectively referred to as the "Underlying Agreements."
L. Cyprus located certain mining claims known as the Deal claims being more
fully described in Exhibit "A-2", attached hereto and made a part hereof.
M. The claims described in Exhibits "A-1" and "A-2" shall hereinafter be
referred to as the "Property".
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N. Cyprus wishes to participate with ICMC in the exploration, evaluation,
development and mining of minerals within the Property and ICMC is willing to
grant such right to Cyprus.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, ICMC and Cyprus agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.
1.2 "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a Participant. For purposes of the
preceding sentence, " control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust or otherwise.
1.3 "Agreement" means this Joint Venture Agreement, including all
amendments and modifications thereof, and all schedules and exhibits, which are
incorporated herein by this reference.
1.4 "Assets" means the Property, Products and all other real and personal
property, tangible and intangible, held for the benefit of the Participants
hereunder.
1.5 "Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program and a schedule of cash advances to be
made by the Participants.
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1.6 "Commencement of Commercial Production" means the date upon which the
production and processing facilities developed under this Agreement achieve an
ore production and processing rate for a continuous thirty-day period equal to
at least seventy percent (70%) of the design rate established in a Feasibility
Study.
1.7 "Development" means all preparation for the removal and recovery of
Products, including the construction or installation of a mill or any other
improvements to be used for the mining, handling, milling, processing or other
beneficiation of Products, and all Exploration work conducted subsequent to a
decision to commence Development as contemplated by a feasibility study.
1.8 "Earn-In" means the date upon which Cyprus earns its interest in the
Property pursuant to Section 5.5.
1.9 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.
1.10 "Exploration Expenditures" means the cost of evaluation of the
Property defined as further exploring and developing the Property, including
drilling, excavating and searching by recognized prospecting techniques,
sampling, assaying, testing and evaluating materials removed from the Property,
mapping, plotting, surveying, constructing and maintaining camps, roads, works
and structures necessary to carry out such evaluation, sampling or testing, all
studies including but not limited to a Feasibility Study required to develop a
mine and all work that may be required in preparing a mine for operating, the
cost or payments to maintain the Property, including costs to locate and/or
relocate the unpatented mining claims, costs to maintain the Underlying
Agreements through which the Property is acquired and costs reimbursed by Cyprus
to ICMC for maintaining the Orogrande Agreement and the Friday Properties
Agreement, Property acquisition costs, taxes and/or fees to maintain Property
and filings together with an allowance for overhead and administrative expenses
as described in Section 5.3(a).
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1.11 "Feasibility Study" means a detailed study compiled by Manager or
an independent third party conducted to determine commercial feasibility and
viability of placing a prospective orebody or deposit into production and may
include, but not be limited to:
(a) such geophysical, geochemical, geological, aerial or other survey
as may be necessary to provide a reasonable estimate of the quality and
extent of the deposit;
(b) such technical or assay reports as may be necessary to evaluate
any proposed method of extraction and processing;
(c) the area required for optimum development of the orebody or
deposit;
(d) a mine construction program setting forth the descriptions of the
work, permits, equipment, facilities, supplies and mines required to bring
the prospective orebody or deposits of Products into Commercial Production,
and the estimated costs thereof or a schedule of expenditures by year of
the costs necessary to bring the project into production;
(e) details of a proposed annual program for initial development of
the deposit;
(f) a plan for such reclamation of the Properties as is required by
law and the estimated costs hereof;
(g) conclusions and recommendations regarding the economic feasibility
and timing for bringing the prospective orebody or deposits of Products
into Commercial Production, taking into account items (a) through (e)
above;
(h) such other information as the Management Committee may deem
appropriate to allow banking or other financial institutions familiar with
the mining business to make a decision to loan funds sufficient to
construct the proposed mine with security based solely on the reserves and
mine described in a Feasibility Study.
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1.12 "Initial Contribution " means that contribution each Participant has
made or agrees to make pursuant to Section 5.l.
1.13 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.
1.14 "Management Committee" means the committee established under Article
7.
1.15 "Manager" means Cyprus during the Earn-in phase or the person or
entity appointed under Article 8 to manage Operations, or any successor Manager.
1.16 "Mining" means the mining, extracting, producing, handling, milling or
other processing of Products.
1.17 "Net Proceeds of Production Royalty" means certain amounts calculated
as provided in Exhibit C, which may be payable to a Participant under Section
6.4.
1.18 "Operations" means the activities carried out under this Agreement
after Earn-In.
1.19 "Participant" and "Participants" means the persons or entities that
have a Participating Interest.
1.20 "Participating Interest" means the percentage interest representing
the operating ownership interest of a Participant in Assets, and all other
rights and obligations arising under this Agreement, as such interest may from
time to time be adjusted hereunder. Participating Interests shall be calculated
to three decimal places and rounded to two (e.g., 1.519% rounded to 1.52%).
Decimals of .005 or more shall be rounded up to .01, decimals of less than .005
shall be rounded down. The initial Participating Interests of the Participants
are set forth in Section 6.l.
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1.21 "Prime Rate" means the prime interest rate quoted as "Prime" by the
Wall Street Journal as said rate may change from day to day (which quoted rate
may not be the lowest rate averaged on a month-to-month basis at which a
financing institution loans funds).
1.22 "Products" means all ores, minerals, and mineral resources produced
from the Property under this Agreement.
1.23 "Program" means a description in reasonable detail of the activities
of the Venture which are to be conducted by the Manager during a period.
1.24 "Property" means those interests in property described in Exhibits
"A-1 and "A-2".
1.25 "Simple Majority" means a decision by the Management Committee by
greater than 50% of the votes being entitled to be cast.
1.26 "Transfer" means sell, grant, assign, encumber, pledge or otherwise
commit or dispose of.
1.27 "Venture" means the business arrangement of the Participants under
this Agreement.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES: TITLE TO ASSETS
2.1 Capacity of Participants. Each of the parties hereto represents and
warrants as follows:
(a) that it is a corporation duly incorporated and in good standing in
its state or country of incorporation and that it is qualified to do
business and is in good standing in those jurisdictions where necessary in
order to carry out the purposes of this Agreement;
(b) that it has the capacity to enter into and perform this Agreement
and all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this Agreement
have been properly taken;
(c) that it will not breach any other agreement or arrangement by
entering into or performing this Agreement; and
(d) that this Agreement has been duly executed and delivered by it and
is valid and binding upon it in accordance with its terms.
2.2 Representations and Warranties. ICMC makes the following
representations and warranties effective the date hereof:
(a) ICMC has the full and exclusive right and power to act on behalf of
ICMC, and on behalf of any other interested person or entities, to enter into
this Agreement and to grant the rights granted to Cyprus hereunder.
(b) To the best of its knowledge and belief with respect to unpatented
mining claims that are included within Exhibit "A-1", subject to the paramount
title of the United States and except as disclosed in writing to Cyprus: (i) the
unpatented mining claims were properly laid out and monumented; (ii) all
required location and validation work was properly performed; (iii) location
notices and certificates were properly recorded and filed with appropriate
governmental agencies; (iv) the claims are free and clear of defects, liens and
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encumbrances arising by, through or under ICMC, except those of record or
disclosed in writing to Cyprus and listed on Exhibit "A-1" and defects,
liens, and any such encumbrances that do not materially affect Cyprus'
rights under this Agreement; (v) ICMC has not received notice from anyone
asserting conflicting claims; (vi) ICMC is in exclusive possession of the
claims included within Exhibit "A-1", has the right to acquire 100%
interest in the such claims and the unpatented mining claims are in good
standing and compliance with all federal and state regulations in force as
of the effective date of this Agreement. Nothing in this Section 2.2(b),
however, shall be deemed to be a representation or a warranty that any of
the unpatented mining claims contains a discovery of minerals.
(c) ICMC knows of no violation of any applicable federal, state,
regional, or county law or regulation relating to zoning, land use,
environmental protection, or otherwise with respect to the mining claims
listed in Exhibit "A-1" or activities relating thereto; and,
(d) With respect to the mining claims listed on Exhibit "A-1", ICMC
knows of no pending or threatened actions, suits, claims or proceedings.
(e) The Underlying Agreements are in good standing and in full force
and effect as of the effective date of this Agreement.
The representations and warranties set forth above shall survive the
execution and delivery of any documents of Transfer provided under this
Agreement.
2.3 Remedies for Breach of Representations and Warranties of Title to the
Property.
(a) Defect in Title: Right to Cure. If the representations and
warranties to any part of the claims listed on Exhibit "A-1" or the
Underlying Agreements are defective or less than as represented in Section
2.2, Cyprus shall have the right, but not the obligation to undertake to
cure such defects or to defend or to initiate litigation to defend such
defects. Cyprus shall have
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the right to collect from ICMC or to credit against any and all
payments and/or Exploration Expenditures payable under this Agreement
100% of any and all costs incurred by Cyprus in connection with any
action to cure or defend the Property.
(b) Less Interest: Third Party Claims.
(i) In the event it is determined that ICMC controls less than the
full undivided interest therein, ICMC's interest hereunder shall
bear the same proportion to 100% as its total actual interest
bears to the full undivided whole.
(ii) If ICMC fails to satisfy and discharge any mortgage, lien, tax
levy or encumbrance (an "Encumbrance") chargeable solely or in
part to ICMC on the claims listed on Exhibit "A-1" or the
Underlying Agreements, or suffers or permits any Encumbrance to
be imposed upon such, Cyprus at its option may, but shall not be
obligated to, pay for and discharge any Encumbrance and set off
any such payment by withholding and retaining from any payments
due ICMC any amounts so paid by Cyprus, without prejudice to any
right of Cyprus to recover from ICMC or against the claims listed
on Exhibit "A-1" or the Underlying Agreements the amount of such
payment in any manner or by any remedy whatsoever, and Cyprus
shall have all of the rights and remedies against ICMC which the
mortgagor, lienor or creditor had immediately prior to the time
of such payment. Upon the request of Cyprus, ICMC shall promptly
make, execute, acknowledge and deliver to Cyprus any and all
instruments (in form and substance satisfactory to Cyprus) that
Cyprus in its sole judgment may deem necessary or desirable to
fully effectuate the provisions of this Section 2.3.
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(iii)If any person or entity not a party hereto asserts to have a
claim of ownership in the claims listed on Exhibit "A-1" or the
Underlying Agreements, or a claim to a share in the production
from the claims listed on Exhibit "A-1" (an "Adverse Claim"),
Cyprus, at its sole discretion, after written notice to ICMC, may
suspend its obligation to make payments as provided herein, and
in lieu thereof, may deposit in an interest-bearing account
payments equivalent to payments which may otherwise become due
ICMC. Such deposit or deposits shall remain in such
interest-bearing account until the claim or controversy is
resolved or settled by final court decision, by arbitration,
negotiation or otherwise. If Cyprus is required or elects to make
any payments to such persons or entities not a party hereto as a
result of, or in settlement of, any such Adverse Claim, either by
way of contract, settlement, compromise, final court judgment, or
otherwise, Cyprus may recover from, or credit against, any
payments thereafter becoming due ICMC hereunder, the amount of
such payments and all other costs and expenses (including
reasonable attorney's fees) paid or incurred by Cyprus as a
result of any such Adverse Claim.
2.4 Disclosures. Each of the Participants represents and warrants that it
is unaware of any material facts or circumstances which have not been disclosed
in this Agreement, which would be disclosed to the other Participant in order to
prevent the representations in this Article 2 from being materially misleading.
2.5 Record Title. Title to the Assets shall be held by the Manager for the
benefit of the Venture after Cyprus has earned its interest.
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2.6 Joint Loss of Title. Any failure or loss of title to the Assets, and
all costs of defending title, shall be charged to the Joint Account, except that
all costs and losses arising out of or resulting from breach of the
representations and warranties of ICMC shall be charged to ICMC and all such
costs and losses arising out of gross negligence by Cyprus or the Manager shall
be charged to Cyprus or the Manager as the case may be.
ARTICLE 3
NAME, PURPOSES AND TERM
3.1 General. ICMC and Cyprus hereby enter into this Agreement for the
purposes hereinafter stated, and they agree that all of their rights and all of
the Operations on or in connection with the Property shall be subject to and
governed by this Agreement.
3.2 Name. The name of this Venture shall be the Orogrande Venture. The
Manager shall accomplish any registration required by applicable assumed or
fictitious name statutes and similar statutes.
3.3 Purpose . This Agreement is entered into for the following purposes and
for no others, and shall serve as the exclusive means by which the Participants,
or either of them, accomplish such purposes:
(a) to conduct Exploration within the Property,
(b) to evaluate the possible Development of the Property,
(c) to engage in Development and Mining Operations on the Property, if
feasible.
(d) to engage in marketing Products, but only to the extent permitted
by Article 11, and
(e) to perform any other activity necessary, appropriate, or
incidental to any of the foregoing.
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3.4 Limitation. Unless the Participants otherwise agree in writing, the
Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.
ARTICLE 4
RELATIONSHIP OF THE PARTICIPANTS
4.1 No Partnership. Nothing contained in this Agreement shall be deemed to
constitute either Participant the partner of the other, nor, except as otherwise
herein expressly provided, to constitute either Participant the agent or legal
representative of the other, nor to create any fiduciary relationship between
them. It is not the intention of the Participants to create, nor shall this
Agreement be construed to create, any mining, commercial or other partnership.
Neither Participant shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other Participant, except as
otherwise expressly provided herein. The rights, duties, obligations and
liabilities of the Participants shall be several and not joint or collective.
Each Participant shall be responsible only for its obligations as herein set out
and shall be liable only for its share of the costs and expenses as provided
herein, it being the express purpose and intention of the Participants that
their ownership of Assets and the rights acquired hereunder shall be as tenants
in common. Each Participant, its directors, officers, employees, agents and
attorneys shall be indemnified from and against any and all losses, claims,
damages and liabilities arising out of any act or any assumption of liability by
the indemnifying Participant, or any of its directors, officers, employees,
agents and attorneys done or undertaken, or apparently done or undertaken, on
behalf of the other Participant, except pursuant to the authority expressly
granted herein or as otherwise agreed in writing between the Participants.
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4.2 U.S. Tax Elections and Allocations. Each of the parties hereto agrees
and elects to be excluded from the application of all of the provisions of
Subchapter K of the Internal Revenue Code of 1986, as authorized by Treasury
Regulation ss. 1.761-2. The parties hereto agree to execute or join in such
instruments as are necessary to make such election effective, and hereby
authorize and direct Manager to take such action as is necessary to effectuate
such purpose, including filing of the partnership tax return required by
Treasury Regulation ss.1.761-2(b)(2). Each party shall be entitled to claim all
tax benefits, write-offs, and deductions with respect to all and any costs which
it has incurred.
4.3 Other Business Opportunities. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in and
receive full benefits from business activities, whether or not competitive with
the Operations, without consulting the other. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of either Participant. Unless otherwise agreed
in writing, no Participant shall have any obligation to mill, beneficiate or
otherwise treat any Products or any other Participant's share of Products in any
facility owned or controlled by such Participant.
4.4 Waiver of Right to Partition. The Participants hereby waive and Release
all rights of partition, or of sale in lieu thereof, or other division of
Assets, including any such right provided by statute.
4.5 lmplied Covenants. There are no implied covenants contained in this
Agreement other than those of good faith and fair dealing.
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ARTICLE 5
CONTRIBUTIONS BY PARTICIPANTS
5.1 Participants' Initial Contributions. ICMC, as its Initial Contribution,
hereby contributes the mining claims described in Exhibit "A-1" to the purposes
of this Agreement. Cyprus, as its Initial Contribution, shall contribute the
mining claims described in Exhibit "A-2", the Exploration Expenditures and
payments as hereinafter set forth.
5.2 Failure to Make Initial Contributions. Cyprus' failure to make its
Initial Contribution in accordance with the provisions of this Article 5 shall
not be deemed to be a withdrawal of Cyprus from this Agreement and the
termination of its Interest hereunder. In the event Cyprus fails to make its
Initial Contribution pursuant to this Article 5, ICMC shall provide Cyprus
written notice of such failure. If within thirty (30) days of receipt of notice
Cyprus does not cure such failure, then Cyprus shall be deemed to have withdrawn
from this Agreement. Additionally, at any time prior to Earn-In, Cyprus may
provide ICMC with sixty (60) days' written notice of Cyprus' decision to
terminate its interest in this Agreement. Upon such event, Cyprus shall have no
further right, title or interest in and to the Property or this Agreement.
Cyprus' withdrawal shall be effective sixty (60) days after such failure or
notice, but such withdrawal shall not relieve Cyprus of its reclamation or any
other obligations or liabilities resulting from its work on the Property. Cyprus
shall be responsible only for reclamation resulting directly from its work on
the Property, but shall not be responsible for reclamation liability incurred
prior to the effective date of this Agreement or for any liability incurred by
ICMC as a result of conduct of mining operations pursuant to Section 5.8 herein.
Except as provided in this Section 5.2, Cyprus' withdrawal shall relieve Cyprus
from any other obligation to make contributions hereunder. 5.3 Obligations Prior
to Earn-In. Prior to earning its interest in the Property, and subject to the
termination provisions contained herein, Cyprus shall be required,
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but not obligated to make the following Exploration Expenditures on or for the
benefit of the Property to extend this Agreement into the next period.
(a) Exploration Expenditures:
Minimum Expenditure Cumulative
Date Amount Amount
---- ------ ------
By lst anniversary date $250,000 $250,000
By 2nd anniversary date $400,000 $650,000
By 3rd anniversary date $500,000 $1,150,000
Of the first year's Exploration Expenditure, a minimum of One Hundred and
Twenty-five Thousand Dollars ($125,000) must be work on the ground.
Ten percent (10%) of all Exploration Expenditures, except property
payments, taxes and/or fees to maintain the Property, to cover Cyprus' overhead
and administrative costs shall be charged by Cyprus and shall qualify as
Exploration Expenditures but shall be limited to five percent (5%) on contracts
in excess of One Hundred Thousand Dollars ($100,000).
All Exploration Expenditures shall be cumulative and any Exploration
Expenditures in excess of the minimum required in any period shall be credited
and applied toward any subsequent Exploration Expenditures.
(b) Payments:
(i) Upon execution of this Agreement, Cyprus shall pay ICMC
Sixty-Five Thousand Dollars ($65,000). Upon receiving proof to
Cyprus' satisfaction that ICMC has completed the acquisition of
the Eagle/Golden Eagle claim group pursuant to the Petsite Joint
Venture Agreement dated May 20, 1996 between Cyprus and ICMC,
Cyprus shall to ICMC Fifty Thousand ($50,000).
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(ii) On the six (6) month anniversary date of this Agreement Cyprus
shall purchase One Hundred Thousand Dollars ($100,000) in
treasury shares of ICMC common stock to keep this Agreement in
good standing. The purchase price per treasury share of ICMC
common stock shall be fixed at the average closing price for the
previous thirty (30) trading days prior to the six (6) month
anniversary date of this Agreement.
Cyprus shall during the Earn-In period be responsible for
maintaining the Underlying Agreements in good standing and for
maintaining the unpatented lode claims which comprise the Property and
may relocate any of the unpatented claims which Cyprus believes may be
defective. Additionally, Cyprus agrees to reimburse ICMC for the lease
costs incurred in 1997 by ICMC pursuant to the Friday Properties
Agreement and the Orogrande Agreement.
(c) Cyprus may terminate this Agreement at any time during the
Earn-In period for any reason or no reason by providing ICMC sixty
(60) days written notice of such termination. Until Cyprus has earned
its interest in the Property, Cyprus shall have complete discretion in
conducting exploration activities, maintaining the Property and shall
conduct operations according to its own plans. Cyprus shall hold ICMC
harmless from any liabilities resulting from Cyprus' activities on the
Property during the Earn-In period.
5.4 Additional Cash Contributions. At such time as Cyprus has earned its
sixty percent (60%) interest in the Property, pursuant to Section 5.5, the
Participants, subject to any election permitted by Sections 6.1, 6.2 and 6.3,
shall be obligated to contribute funds to adopted Programs and Budgets in
proportion to their respective Participating Interest.
5.5 Earn-In. Cyprus shall earn a sixty percent (60%) Participating Interest
in the Property upon completion of the Exploration Expenditures set forth in
Section 5.3 (a) and payments set forth under Section 5.3 (b) (i) and (ii).
Except as
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provided for in Section 6.2, subsequent to Cyprus earning sixty percent (60%)
interest in the Property, all expenditures for the benefit of the Property shall
be contributed by the Parties in accordance to their Participating Interest.
Immediately upon Cyprus satisfying its Earn-In requirements under Section 5.3
(a) and 5.3 (b) (i) and (ii), ICMC shall execute and deliver to Cyprus such
documents that are necessary to transfer an appropriate percentage of interest
in ICMC's interest in and to the Property to Cyprus.
5.6 Additional Interest Within sixty (60) days after Cyprus completes its
requirements to earn sixty percent (60%) Participating Interest in the Property,
Cyprus, by providing written notice to ICMC, may elect to earn an additional
twenty percent (20%) Participating Interest in the Property, bringing its
interest to eighty percent (80%), by completing the following:
(a) Exploration Expenditures:
Total
Minimum Expenditure Cumulative
Date Amount Amount
---- ------ ------
By 4th anniversary date $600,000 $1,750,000
By 5th anniversary date $750,000 2,500,000
Ten percent (10%) of all Exploration Expenditures, except property
payments, taxes and/or fees to maintain the Property, to cover Cyprus'
overhead and administrative costs shall be charged by Cyprus and shall
qualify as Exploration Expenditures but shall be limited to five percent
(5%) on contracts in excess of One Hundred Thousand Dollars ($100,000).
All Exploration Expenditures shall be cumulative and any Exploration
Expenditures in excess of the minimum required in any period, including
Exploration Expenditures incurred in the first, second and third years of
this Agreement, shall be credited and applied toward any subsequent
Exploration Expenditures.
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(b) Cyprus shall, to the best of its ability, during this Earn-in
period continue to be responsible for maintaining the Underlying Agreements
and for maintaining the unpatented lode claims which comprise the Property.
5.7 Reports. Cyprus shall, during the Earn-in period, provide ICMC with
copies of periodic reports describing its activities on the Property and shall
conduct an annual review with ICMC to discuss the progress Cyprus has made
during the preceding period as well as the plans and programs being contemplated
for the next period.
ARTICLE 6
INTERESTS OF PARTICIPANTS:
DEFAULTS AND REMEDIES: FINANCING
6.1 Participating Interests. The Participants shall have the following
Participating Interests upon Cyprus' completion of the obligations set forth in
Section 5.3:
Cyprus - 60%
ICMC - 40%
Cyprus shall have no Participating Interest unless and until it has
completed the Exploration Expenditures set forth in Section 5.3 (a) and payments
provided for in 5.3 (b) (i) and (ii) during the Earn-In period. At such time as
Cyprus completes the obligations set forth in Section 5.3 and has earned its
sixty percent (60%) Participating Interest in the Property and determines it
will not elect to earn an additional twenty percent (20%) Participating Interest
in the Property as set forth in Section 5.6, ICMC and Cyprus shall have a period
of sixty (60) days to either (a) elect to participate in the Venture and
contribute to each Program and Budget for their
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entire respective Participating Interest, or (b) to elect to participate in the
Venture pursuant to Section 6.3(a), or (c) elect to withdraw from the Venture
and convert to a five percent (5%) Net Proceeds of Production as set out in
Exhibit C. In no event shall the cumulative Net Proceeds of Production payable
to the withdrawing party, whether one or more, exceed an aggregate of five
percent (5%). A Management Committee shall then be formed as provided for in
Section 7.1.
At Earn-In Cyprus and ICMC shall, irrespective of their actual expenditures
on or with respect to the Property, be deemed to have incurred expenditures as
follows:
Cyprus $1,150,000
LCMC $ 766,667
In the event Cyprus, pursuant to Section 5.6, elected to earn an additional
twenty percent (20%) Participating Interest in the Property, at such time as
Cyprus completes the obligations set forth in such Section 5.6 and has earned
its eighty percent (80%) Participating Interest in the Property, ICMC and Cyprus
shall have a period of ninety (90) days to either (a) elect to participate in
the Venture and contribute to each Program and Budget for their entire
respective Participating Interest, or (b) to elect to participate in the Venture
pursuant to Section 6.3(a), or (c) elect to withdraw from the venture and
convert to a five percent (5%) Net Proceeds of Production Royalty as set out in
Exhibit C. In no event shall the cumulative Net Proceeds of Production Royalty
payable to the withdrawing party, whether one or more, exceed an aggregate of
five percent (5%). A Management Committee shall then be formed as provided for
in Section 7.1.
At Earn-in Cyprus and ICMC shall, irrespective of their actual expenditures
on or with respect to the Property, be deemed to have incurred expenditures as
follows:
Cyprus $2,500,000
ICMC $ 625,000
6.2 Changes in Participating Interests. A Participant's Participating
Interest, shall be changed as follows:
(a) As provided in Section 6.5; or
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(b) Upon an election by a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by its Participating Interest; or
(c) In the event of default by a Participant in making its agreed-upon
contribution to an adopted Program and Budget, followed by an election by
the other Participant to invoke Section 6.4(b); or
(d) Transfer by a Participant of less than all its Participating
Interest in accordance with Article 14; or
(e) Acquisition of less than all of the Participating Interest of the
other Participant, however arising.
(f) Pursuant to Section 5.6.
6.3 Voluntary Reduction in Participation. A Participant may elect, as
provided in Section 9.5, to limit its contributions to an adopted Program and
Budget as follows:
(a) To some lesser amount than its respective Participating Interest; or
(b) Not at all.
If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating Interest, or not at all, the
Participating Interest of that Participant shall be recalculated at the time of
election by dividing: (i) the sum of (a) the agreed value of the Participant's
deemed expenditure under Section 6.1 and (b) the total of all of the
Participant's actual expenditures including the amount the Participant elects to
contribute to the adopted Program and Budget; by (ii) the sum of (a) and (b)
above for all Participants; and then multiplying the result by one hundred. The
Participating Interest of the other Participant shall thereupon become the
difference between 100% and the recalculated Participating Interest.
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6.4 Default in Making Contributions.
(a) If a Participant defaults in making a contribution or cash call
required by an approved Program and Budget, the non-defaulting Participant
may advance the defaulted contribution on behalf of the defaulting
Participant and treat the same, together with any accrued interest, as a
demand loan bearing interest from the date of the advance at the Prime Rate
plus two percent (2%) compounded quarterly. The failure to repay said loan
upon demand shall be a default. Each Participant hereby grants to the other
a lien upon its interest in the Property and a security interest in its
rights under this Agreement and in its Participating Interest in other
Assets, and the proceeds therefrom, to secure any loan made hereunder,
including interest thereon, reasonable attorneys' fees and all other
reasonable costs and expenses incurred in recovering the loan with interest
and in enforcing such lien or security interest, or both. A non-defaulting
Participant may elect the applicable remedy under this Section 6.4, or, to
the extent a Participant has a lien or security interest under applicable
law, it shall be entitled to its rights and remedies at law and in equity.
All such remedies shall be cumulative. The election of one or more remedies
shall not waive the election of any other remedies. Each Participant hereby
irrevocably appoints the other its attorney-in-fact to execute, file and
record all instruments necessary to perfect or effectuate the provisions
hereof.
(b) The Participants acknowledge that if a Participant defaults in
making a contribution, a cash call, in repaying a loan or any payment, as
required hereunder, it will be difficult to measure the damages resulting
from such default. In the event such default is not cured by the defaulting
Participant within thirty (30) days after receiving notice of such default,
as reasonable liquidated damages, the defaulting Participant shall be
deemed to have withdrawn from the Venture and to have automatically
relinquished its Participating Interest to the non-defaulting Participant;
provided, however, the defaulting Participant shall have the right to
receive only from five percent (5%) of Net Proceeds of Production Royalty,
as set out in Exhibit C, and not
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from any other source, an amount equal to the defaulting Participant's actual
expenditures contributed hereunder. Upon receipt of such amount the defaulting
Participant shall thereafter have no further right, title, or interest under
this Agreement or in the Assets.
6.5 Conversion of Interest. If at any time the Participating Interest of a
Participant is reduced to ten percent (10%) or less by an affirmative election
not to contribute all or some portion of its share pursuant to a Program and
Budget as provided in Article 9 and the resulting application of the dilution
formula in Section 6.3, the diluted Participant shall be deemed to have
withdrawn from the Venture and this Agreement shall terminate; provided,
however, the diluting Participant shall have the right to receive only from five
percent (5%) of Net Proceeds of Production Royalty, as set out in Exhibit C, and
not from any other source, an amount equal to one hundred and fifteen percent
(115%) of the diluting Participant's actual or deemed expenditures contributed
hereunder,' whichever is greater. Upon receipt of such amount the diluting
Participant shall thereafter have no further right, title, or interest under
this Agreement or in the Assets.
6.6 Continuing Liabilities Upon Adjustments of Participating Interests. Any
reduction of a Participant's Participating Interest under this Section 6 shall
not relieve such Participant of its share of any liability, whether it accrued
before or after such reduction, arising out of Operations conducted prior to
such reduction. For purposes of this Article 6, such Participant's share of such
liability shall be equal to its Participating Interest at the time such
liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of the other Participant's
Participating Interest shall be free of royalties, liens or other encumbrances
arising by, through or under such other Participant, other than those existing
at the time the Property was acquired or those to which both Participants have
given their written consent. An adjustment to a Participating Interest need not
be evidenced during the term of this Agreement by the execution and recording of
appropriate instruments, but each Participant's Participating Interest shall be
shown
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in the books of the Manager. However, either Participant, at any time upon the
request of the other Participant, shall execute and acknowledge instruments
necessary to evidence such adjustment in form sufficient for recording in the
jurisdiction where the Property is located.
6.7 Financing by Cyprus. Within sixty (60) days after Cyprus completes its
requirements to earn an additional twenty percent (20%) Participating Interest
in the Property as set forth in Section 5.6, bringing its Participating Interest
to eighty percent (80%), and ICMC and Cyprus have elected to participate in the
Venture in proportion to their respective Participating Interest, ICMC may elect
in writing to have Cyprus fund ICMC's share of Exploration Expenditures until
the completion of a Feasibility Study. In such event, such expenditures by
Cyprus on behalf of ICMC shall be treated as a loan and shall bear interest at
the Prime Rate plus two percent (2%), compounded quarterly. Such loan shall be
secured by ICMC's interest in the Property and the Assets. Cyprus shall be
repaid from eighty-five percent (85%) of the proceeds received by ICMC from the
sale of its proportionate share of Products, after deduction of operating costs.
ICMC shall execute a document securing the loan with its interest in the
Property and the Assets and assigning to Cyprus such eighty-five percent (85%)
of the proceeds in form and content acceptable to the legal counsel of both
Cyprus and ICMC.
In the event a Feasibility Study is completed and Development is not
recommended and the Management Committee votes to continue Exploration, Cyprus
will continue to fund ICMC's share of Exploration Expenditures until the
completion of another Feasibility Study. Such additional expenditures by Cyprus
on behalf of ICMC shall also be treated as a loan and recouped by Cyprus as
previously set forth in this Section 6.7.
If the Management Committee, after completion of a Feasibility Study, votes
to suspend Operations on the Property for any reason, no additional interest
would accrue on the Exploration Expenditures provided by Cyprus on behalf of
ICMC until Operations are again commenced.
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In the event a Feasibility Study recommends Development, but for reasons
beyond the control of the Participants (e.g. government taking, Force Majeure,
etc.) the Property can never be developed, accrual of interest on the
Exploration Expenditures provided by Cyprus on behalf of ICMC would cease.
Repayment to Cyprus of such loan and any interest accrued would be repaid from
ICMC's share of any compensation that the Participants may be entitled to as a
result of the prohibition of Mining. If no compensation is received by the
Participants, the loan and its accrued interest would be forgiven when the
Participants agree to drop their interest in the Property, discontinue any
litigation which may have commenced and dissolve the Venture.
ARTICLE 7
MANAGEMENT COMMITTEE
7.1 Organization and Composition. After completion of Cyprus' Earn-In and
the election by ICMC and Cyprus to participate in the Venture as provided in
Section 6.1, the Participants shall establish a Management Committee to
determine overall policies, objectives, procedures, methods and actions under
this Agreement. The Management Committee shall consist of one member appointed
by ICMC and one member appointed by Cyprus. Each Participant may appoint one or
more alternates to act in the absence of a regular member. Any alternate so
acting shall be deemed a member. Appointments shall be made or changed by notice
in writing to the other Participant.
7.2 Decision . Each Participant, acting through its appointed member(s)
shall have a vote equal to its Participating Interest in the Property. Decisions
of the Management Committee shall be decided by Simple Majority of the
Participating Interests. In the event of a deadlock, the Manager shall hold the
deciding vote.
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7.3 Meetings. The Management Committee shall hold regular meetings at least
annually at mutually agreed places. The Manager shall give thirty (30) days'
written notice to the Participants of such regular meetings. Additionally,
either Participant may call a special meeting upon thirty (30) days' written
notice to the Manager and the other Participant. In case of emergency,
reasonable notice of a special meeting shall suffice. There shall be a quorum if
at least one member representing each Participant is present. The Management
Committee shall not transact any business at a meeting unless a quorum is
present at the commencement of the meeting. If a quorum is not present at the
commencement of the meeting or within one-half hour after the time fixed for the
commencement of the meeting, the meeting shall be adjourned to the same time and
day of the next week at the same place. If a quorum is not present at the
commencement of the adjourned meeting, one representative shall be deemed to
constitute a quorum. Each notice of a meeting shall include an itemized agenda
and detailed back-up information prepared by the Manager in the case of a
regular meeting, or by the Participant calling the meeting in the case of a
special meeting, but any matters may be considered with the consent of all
Participants. The Manager shall prepare minutes of all meetings and shall
distribute copies of such minutes to the Participants within thirty (30) days
after the meeting. The minutes, when signed by all Participants, shall be the
official record of the decisions made by the Management Committee and shall be
binding on the Manager and the Participants. If personnel employed in Operations
are required to attend a Management Committee meeting, reasonable costs incurred
in connection with such attendance shall be a Venture cost. All other costs
shall be paid by the Participants individually.
7.4 Action Without Meeting. In lieu of meetings, the Management Committee
may hold telephone conferences, so long as all decisions are immediately
confirmed in writing by the Participants.
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7.5 Matters Requiring Approval. Except as otherwise delegated to the
Manager in Section 8.2, the Management Committee shall have exclusive authority
to determine all management matters related to this Agreement.
ARTICLE 8
MANAGER
8.1 Appointment. Following completion of Cyprus' Earn-In as provided for in
Sections 5.5 or 5.6 Cyprus shall be the initial Manager.
8.2 Powers and Duties of Manager. Subject to the terms and provisions of
this Agreement, the Manager shall have the following powers and duties which
shall be discharged in accordance with adopted Programs and Budgets:
(a) The Manager shall manage, direct and control Operations.
(b) The Manager shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted
Programs and Budgets, and shall promptly advise the Management Committee if
it lacks sufficient funds to carry out its responsibilities under this
Agreement.
(c) The Manager shall: (i) purchase or otherwise acquire all material,
supplies, equipment, water, utility and transportation services required
for Operations, such purchases and acquisitions to be made on the best
terms available, taking into account all of the circumstances; (ii) obtain
such customary warranties and guarantees as are available in connection
with such purchases and acquisitions; and (iii) keep the Assets free and
clear of all liens and encumbrances, except for those existing at the time
of, or created concurrent with, the acquisition of such Assets, or
mechanic's or materialmen's liens which shall be released or discharged in
a diligent manner, or liens and encumbrances specifically approved by the
Management Committee.
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(d) The Manager shall conduct such title examinations and cure such
title defects as may be advisable in the reasonable judgment of the
Manager.
(e) The Manager shall: (i) make or arrange for all payments required
by leases, licenses, permits, contracts and other agreements related to the
Assets; (ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's sales revenue
or net income. If authorized by the Management Committee, the Manager shall
have the right to contest in the courts or otherwise, the validity or
amount of any taxes, assessments or charges if the Manager deems them to be
unlawful, unjust, unequal or excessive, or to undertake such other steps or
proceedings as the Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization thereof before the
Manager shall be required to pay them, but in no event shall the Manager
permit or allow title to the Assets to be lost as the result of the
nonpayment of any taxes, assessments or like charges; and (iii) shall do
all other acts reasonably necessary to maintain the Assets.
(f) The Manager shall: (i) apply for all necessary permits, licenses
and approvals; (ii) comply with applicable federal, provincial, municipal
and local laws and regulations; (iii) notify promptly the Management
Committee of any allegations of substantial violation thereof; and (iv)
prepare and file all reports or notices required for Operations. The
Manager shall not be In breach of this provision if a violation has
occurred in spite of the Manager's good faith efforts to comply, and the
Manager has timely cured or disposed of such violation through performance,
or payment of fines and penalties.
(g) The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings greater than $50,000 arising out of Operations.
The non-managing Participant shall have the right to participate, at its
own expense, in such litigation or administrative proceedings. The
non-managing Participant's approval shall be required in advance of any
settlement involving payments,
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commitments or obligations, if the non-managing Participant's share is in
excess of Twenty-Five Thousand Dollars ($25,000) in cash or value.
(h) The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit D.
(i) The Manager may dispose of Assets, whether by release,
abandonment, surrender or Transfer in the ordinary course of business,
except that Property may be released, abandoned or surrendered only as
provided in Article 13. However, without prior authorization from the
Management Committee, the Manager shall not: (i) dispose of Assets in any
one transaction having a value in excess of $250,000: (ii) enter into any
sales contracts or commitments for Product, except as permitted in Section
11.2; (iii) begin a liquidation of the Venture; or (iv) dispose of all or a
substantial part of the Assets necessary to achieve the purposes of the
Venture.
(i) The Manager shall have the right to carry out its responsibilities
hereunder through agents, affiliates or independent contractors.
(k) The Manager shall be obligated to perform or cause to be performed
during the term of this Agreement all obligations required by law in order
to maintain the Property which obligations shall be included in Programs
and Budgets.
(l) The Manager shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in accordance
with customary cost accounting practices in the mining industry.
(m) The Manager shall keep the Management Committee advised of all
Operations by submitting in writing to the Management Committee: (i)
monthly progress reports which Include statements of expenditures and
comparisons of such expenditures to the adopted Budget; (ii) periodic
summaries of data acquired; (iii) copies of reports concerning Operations;
(iv) a detailed final report within forty-five (45) days after completion
of each Program and Budget, which shall include comparisons between actual
and budgeted expenditures and comparisons between the objectives and
results of Programs; and (v) such other reports as the Management Committee
may
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reasonably request. At all reasonable times the Manager shall provide the
Management Committee or the representative of any Participant, upon the
request of any member of the Management Committee, access to, and the right
to inspect and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical, accounting and
financial records, and other information acquired in Operations. In
addition, the Manager shall allow the non-managing Participant, at the
latter's sole risk and expense, and subject to reasonable safety
regulations, to inspect the Assets and Operations at all reasonable times,
so long as the inspecting Participant does not unreasonably interfere with
Operations.
(n) The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing. The Manager shall not be in default of
any duty under this Section 8.2 if its failure to perform results from the
failure of the non-managing Participant to perform acts or to contribute
amounts required of it by this Agreement.
8.3 Standard of Care. The Manager shall conduct all Operations in a good,
workmanlike and efficient manner, in accordance with all applicable laws, sound
mining and other applicable industry standards and practices, and in accordance
with the terms and provisions of leases, licenses, permits, contracts and other
agreements pertaining to Assets. The Manager shall not be liable to the
non-managing Participant for any act or omission resulting in damage or loss
except to the extent caused by or attributable to the Manager's willful
misconduct or gross negligence.
8.4 Resignation: Deemed Offer to Resign. The Manager may resign upon thirty
(30) days prior notice to the other Participant. If any of the following shall
occur, the Manager shall be deemed to have offered to resign, which offer shall
be .accepted by the other Participant, if at all, within ninety (90) days
following such deemed offer:
(a) The Participating Interest of the Manager becomes less than fifty
percent (50%); or
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(b) The Manager fails to perform a material obligation imposed upon it
under this Agreement and such failure continues for a period of thirty (30)
days after written notice from the other Participant demanding performance;
or
(c) The Manager fails to pay or contest in good faith its bills within
thirty (30) days after receiving written notice that they are due; or
(d) A receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for a substantial part of its assets is appointed and
such appointment is neither made ineffective nor discharged within sixty
(60) days after receiving written notice of the making thereof, or such
appointment is consented to, requested by, or acquiesced in by the Manager;
or
(e) The Manager commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or
consents to the entry of an order for relief in an involuntary case under
any such law or to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other similar
official of any substantial part of its assets; or makes a general
assignment for the benefit of creditors; or fails generally to pay its or
Venture debts as such debts become due; or takes corporate or other action
in furtherance of any of the foregoing; or
(f) Entry is made against the Manager of a judgment, decree or order
for relief affecting a substantial part of its assets by a court of
competent jurisdiction in an involuntary case commenced under any
applicable bankruptcy, insolvency or other similar law of any jurisdiction
now or hereafter in effect.
8.5 Payments to Manager. The Manager shall be compensated for its services
and reimbursed for its costs hereunder in accordance with the Accounting
Procedure.
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8.6 Transactions With Affiliates. If the Manager engages Affiliates to
provide services hereunder, it shall do so on terms no more favorable than would
be the case with unrelated persons in arm's-length transactions.
8.7 Activities During Deadlock. If the Management Committee for any reason
fails to adopt a Program and Budget, subject to the contrary direction of the
Management Committee and to the receipt of necessary funds, the Manager shall
continue Operations at levels comparable with the last adopted Program and
Budget. For purposes of determining the required contributions of the
Participants and their respective Participating Interests, the last adopted
Program and Budget shall be deemed extended.
ARTICLE 9
PROGRAMS AND BUDGETS
9.1 Initial Program and Budget. The initial Program and Budget will be
provided by the Manager to the Management Committee within ninety (90) days of
the Management Committee being formed.
9.2 Operations Pursuant to Programs and Budgets. Except as otherwise
provided in Sections 7.2 and 9.7, Operations shall be conducted, expenses shall
be incurred, and Assets shall be acquired only pursuant to approved Programs and
Budgets.
9.3 Presentation of Programs and Budgets. Proposed Programs and Budgets
shall be prepared by the Manager for a period of up to one year. Each adopted
Program and Budget, regardless of length, shall be reviewed at least once a year
at the annual meeting of the Management Committee. During the period encompassed
by any Program and Budget, and at least two months prior to its expiration, a
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proposed Program and Budget for the succeeding period shall be prepared by the
Manager and submitted to the Management Committee.
9.4 Review and Approval of Proposed Programs and Budgets. Within thirty
(30) days after submission of a proposed Program and Budget to the Management
Committee, the Management Committee shall:
(a) Approve the proposed Program and Budget; or
(b) Propose modifications of the proposed Program and Budget; or
(c) Reject the proposed Program and Budget.
If the Management Committee makes the elections pursuant to Section 9.4(b)
or (c), then the Manager will review the modifications and/or any
recommendations of the Management Committee and will resubmit a Program and
Budget within thirty (30) days.
9.5 Election to Participate. By written notice to the Management Committee
within thirty (30) days after approving a Program and Budget, except as provided
for in Section 6.1, a Participant may elect to contribute to such Program and
Budget in an amount equal to its Participating Interest or a lesser amount as
provided for in Section 6.3. If a Participant fails to so notify the Management
Committee, the Participant shall be deemed to have elected not to contribute to
such Program and Budget and the provisions of Section 6.3 shall apply. Subject
to Section 9.6 if a Participant elects not to participate in the Program and
Budget and the other Participant elects to contribute to the Program and Budget
the provisions of Section 6.'2 shall apply.
9.6 Deadlock on Proposed Programs and Budgets. If the Participants, acting
through the Management Committee, fail to approve a Program and Budget by the
beginning of the period to which the proposed Program and Budget applies, the
provisions of Section 8.7 shall apply.
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9.7 Budget Overruns: Program Changes. The Manager shall immediately notify
the Management Committee of any material departure from an adopted Program and
Budget. If the Manager exceeds an adopted Budget by more than ten percent (10%),
then such excess over ten percent (10%), shall be for the sole account of the
Manager, not creditable to the calculation of Participating Interests, unless
such excess amount is directly caused by an emergency or unexpected expenditure
made pursuant to Section 9.8 or is otherwise authorized by the approval of the
Management Committee. Budget overruns of ten percent (10%) or less shall be
borne by the Participants in proportion to their respective Participating
Interests as of the time the overrun occurs.
9.8 Emergency or Unexpected Expenditures. In case of emergency, the Manager
may take any reasonable action it deems necessary to protect life, limb or
property, to protect the Assets or to comply with law or government regulation.
the Manager may also make reasonable expenditures for unexpected events which
are beyond its reasonable control and which do not result from a breach by it of
its standard of care. The Manager shall promptly notify the Participants of the
emergency or unexpected expenditures, and the Manager shall be reimbursed for
all resulting costs by the Participants in proportion to their respective
Participating Interests at the time the emergency or unexpected expenditures are
incurred.
ARTICLE 10
ACCOUNTS AND SETTLEMENTS
Matters of accounts and settlements shall be governed by the provisions in
Exhibit "B" (Accounting Procedures) attached hereto.
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ARTICLE 11
DISPOSITION OF PRODUCTION
11.1 Taking in Kind. Each Participant shall take in kind or separately
dispose of its share of all Products in accordance with its Participating
Interest. Any extra expenditure incurred in the taking in kind or separate
disposition by any Participant of its proportionate share of Products shall be
borne by such Participant. Nothing in this Agreement shall be construed as
providing, directly or indirectly, for any joint or cooperative marketing or
selling of Products or permitting the processing of Products of any parties
other than the Participants at any processing facilities constructed by the
Participants pursuant to this Agreement. The Manager shall give the Participants
notice at least ten (10) days in advance of the delivery date upon which their
respective shares of Products will be available.
11.2 Failure of Participant to Take in Kind. If a Participant fails to take
in kind, the Manager shall have the right, but not the obligation, for a period
of time consistent with the minimum needs of the industry, but not to exceed one
year, to purchase the Participant's share for its own account or to sell such
share as agent for the Participant at not less than the prevailing market price
in the area. Subject to the terms of any such contracts of sale then
outstanding, during any period that the Manager is purchasing or selling a
Participant's share of production, the Participant may elect by notice to the
Manager to take in kind. The Manager shall be entitled to deduct from proceeds
of any sale by it for the account of a Participant reasonable expenses incurred
in such a sale.
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ARTICLE 12
WITHDRAWAL AND TERMINATION
12.1 Termination by Expiration or Agreement. This Agreement shall terminate
as expressly provided in this Agreement, unless earlier terminated by written
agreement.
12.2 Withdrawal. A Participant may elect to withdraw as a Participant from
this Agreement by giving forty-five (45) days written notice to the other
Participant of the effective date of withdrawal. Upon such withdrawal, this
Agreement shall terminate, and the withdrawing Participant shall be deemed to
have transferred to the remaining Participant, without cost and free and clear
of royalties owing to the withdrawing Participant, liens or other encumbrances
arising by, through or under such withdrawing Participant, all of its
Participating Interest in the Assets and in this Agreement. Any withdrawal under
this Section 12.2 shall not relieve the withdrawing Participant of its share of
liabilities to third parties (whether such accrues before or after such
withdrawal) including environmental liabilities arising out of Operations
conducted prior to such withdrawal. For purposes of this Section 12.2, the
withdrawing Participant's share of such liabilities shall be equal to its
Participating Interest at the time such liability was incurred.
12.3 Continuing Obligations. On termination of this Agreement under Section
12.1 or 12.2, the Participants shall remain liable for continuing obligations
hereunder until final settlement of all accounts and for any liability, whether
it accrues before or after termination, if it arises out of Operations during
the term of the Agreement.
12.4 Disposition of Assets on Termination. Promptly after termination under
Section 12.1, the Manager shall take all action necessary to wind up the
activities of the Venture, and all costs and expenses incurred in connection
with the termination of the Venture shall be expenses chargeable to the Venture.
Any Participant that has a negative Joint Account balance when the Venture is
terminated for any reason shall
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contribute to the Assets of the Venture an amount sufficient to raise such
balance to zero. The Assets shall first be paid, applied, or distributed in
satisfaction of all liabilities of the Venture to third parties and then to
satisfy any debts, obligations, or liabilities owed to the Participants. Before
distributing any funds or Assets to Participants, the Manager shall have the
right to segregate amounts which, in the Manager's reasonable judgment, are
necessary to discharge continuing obligations or to purchase for the account of
Participants, bonds or other securities for the performance of such obligations.
The foregoing shall not be construed to include the repayment of any
Participant's contributions or Joint Account balance. Thereafter, any remaining
cash and all other Assets, including property shall be distributed (in undivided
interests unless otherwise agreed) to the Participants, first in the ratio and
to the extent of their respective Joint Accounts and then in proportion to their
respective Participating Interests, subject to any dilution, reduction, or
termination of such Participating Interests as may have occurred pursuant to the
terms of this Agreement. No Participant shall receive a distribution of any
interest in Products or proceeds from the sale thereof if such Participant's
Participating Interest therein has been terminated pursuant to this Agreement.
12.5 Right to Data after Termination. After termination of this Agreement
pursuant to Section 12.1, each Participant shall be entitled to copies of all
information acquired hereunder before the effective date of termination not
previously furnished to it, but a terminating or withdrawing Participant shall
not be entitled to any such copies in respect to a later termination or
withdrawal.
12.6 Continuing Authority. On termination of this Agreement under Section
12.1 or the deemed withdrawal of a Participant pursuant to Section 6.4 or 6.5,
the Manager shall have the power and authority, subject to control of the
Management Committee, if any, to do all things on behalf of the Participants
which are reasonably necessary or convenient to: (a) wind up Operations and (b)
complete any transaction and satisfy any obligation, unfinished or unsatisfied,
at the time of such termination or withdrawal, if the transaction or obligation
arises out of Operations prior to such
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termination or withdrawal. The Manager shall have the power and authority to
grant or receive extensions of time or change the method of payment of an
already existing liability or obligation, prosecute and defend actions on behalf
of the Participants and the Venture, mortgage Assets, and take any other
reasonable action in any matter with respect to which the former Participants
continue to have, or appear or are alleged to have, a common interest or a
common liability.
12.7 Non-Compete Covenants. A Participant that withdraws pursuant to
Section 12.2, or is deemed to have withdrawn pursuant to Section 5.2, 6.4, or
6.5, shall not directly or indirectly acquire any interest in property within
the Area of Interest for two (2) years after the effective date of withdrawal.
If a withdrawing Participant, or an Affiliate of a withdrawing Participant,
breaches this Section 12.7, such Participant or Affiliate shall be obligated to
offer to convey to the non-withdrawing Participant, without cost, any such
property or interest so acquired. Such offer shall be made in writing and can be
accepted by the non-withdrawing Participant at any time within forty-five (45)
days after it is received by such non-withdrawing Participant.
12.8 Mutual Withdrawal. If a Participant elects to withdraw from this
Agreement pursuant to Section 12.2, the other Participant may also elect to
withdraw as a Participant by giving written notice thereof to the other
Participant within thirty-(30) days after receipt of the first Participant's
notice of withdrawal, in which event the Participants shall be deemed to have
agreed to terminate the Venture as of the first date of withdrawal pursuant to
Section 12. 1.
ARTICLE 13
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SURRENDER OF PROPERTY
13.1 Surrender of Property. The Management Committee may authorize the
Manager to surrender part or all of the Property. If the Management Committee
authorizes any such surrender over the objection of a Participant, the
Participant that desires to surrender shall assign to the objecting Participant,
without cost to the objecting Participant, all of the surrendering Participant's
interest in the Property to be surrendered, and the surrendered Property shall
cease to be part of the Property.
13.2 Reacquisition. If any Property is surrendered under the provisions of
this Article 13, then, unless this Agreement is earlier terminated, neither
Participant nor any Affiliate thereof shall acquire any interest in such
Property or a right to acquire such Property for a period of two years following
the date of such surrender. If a Participant reacquires any Property in
violation of this Section 13.2, the other Participant may elect by notice to the
reacquiring Participant within forty-five (45) days after it has actual notice
of such reacquisition, to have such Property made subject to the terms of this
Agreement. In the event such an election is made, the reacquired properties
shall thereafter be treated as Property, and the costs of reacquisition shall be
borne pro rata by the Participants and shall be included for purposes of
calculating the Participants' respective Participating Interests.
ARTICLE 14
TRANSFER OF INTEREST
14.1 General. A Participant shall have the right to Transfer to any third
party all or any part of its interest in or to this Agreement, its Participating
Interest, or the Assets solely as provided in this Article 14.
14.2 Limitations on Free Transferability. The Transfer right of a
Participant in Section 14.1 shall be subject to the following terms and
conditions:
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<PAGE>
(a) No transferee of all or any part of the interest of a Participant
in this Agreement, any Participating Interest, or the Assets shall have the
rights of a Participant unless and until the transferring Participant has
provided to the other Participant notice of the Transfer, and except as
provided in Sections 14.2(e) and 14.2(f), the transferee, as of the
effective date of the Transfer, has committed in writing to be bound by
this Agreement to the same extent as the transferring Participant;
(b) No Transfer permitted by this Article 14 shall relieve the
transferring Participant of its share of any liability, whether accruing
before or after such Transfer, which arises out of Operations conducted
prior to such Transfer;
(c) In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act and be
treated as one Participant;
(d) Except as provided in Section 14.4 (c), no Participant shall
transfer any interest in this Agreement or the Assets except by Transfer of
part or all of its Participating Interest;
(e) From the date of execution of this Agreement, if the Transfer is
the grant of a security interest by mortgage, deed of trust, pledge, lien
or other encumbrance of any interest in this Agreement, any Participating
Interest or the Assets to secure a loan or other indebtedness of a
Participant in a bona fide transaction, such security interest shall be
subordinate to the terms of this Agreement and the rights and interests of
the other Participant hereunder. Upon any foreclosure or other enforcement
of rights in the security interest the acquiring third party shall be
deemed to have assumed the position of the encumbering Participant with
respect to this Agreement and the other Participant, and it shall comply
with and be bound by the terms and conditions of this Agreement; and
(f) If a sale or other commitment or disposition of Products or
proceeds from the sale of Products by a Participant upon distribution to it
pursuant to Article 11 creates in a third party a security interest in
Products or
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<PAGE>
proceeds therefrom prior to such distribution, such sales, commitment or
disposition shall be subject to the terms and conditions of this Agreement.
14.3 Right of First Refusal. Except as otherwise provided in Sections 14.2
and 14.4, if either Participant receives an offer to Transfer or otherwise
dispose of all or a part of its Participating Interest in the Property to a
third party, prior to accepting such offer the transferring Participant shall
first offer the interest to the non-transferring Participant at the same terms
and conditions as set forth in the third party offer. The non-transferring
Participant may accept the offer by written notice to the transferring
Participant given within sixty (60) days of receipt of the transferring
Participant's offer. If the non-transferring Participant does not accept the
offer, then the transferring Participant may sell or otherwise dispose of its
interest under terms and conditions not less favorable to it than those set
forth in the third party offer, provided that the sale or other disposition is
effectuated within one hundred and eighty (180) days from the effective date of
the third party offer.
14.4 Exceptions to Right of First Refusal. Section 14.3 shall not apply to
the following:
(a) Transfer by a Participant of all or any part of its interest in this
Agreement, any Participating Interest, or the Assets to an Affiliate, to Amax
Gold, Inc. or Amax Gold Exploration, Inc.;
(b) Incorporation of a Participant, or corporate merger, consolidation,
amalgamation or reorganization of a Participant by which the surviving entity
shall possess substantially all of the stock, or all of the property rights and
interests, and be subject to substantially all of the liabilities and
obligations of that Participant;
(c) The grant by a Participant of a security interest in any interest in
this Agreement, any Participating Interest, or the Assets by mortgage, deed of
trust, pledge, lien or other encumbrance which shall be subordinate as set forth
above; or
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<PAGE>
(d) A sale or other commitment or disposition of Products or proceeds
from sale of Products by a Participant upon distribution to it pursuant to
Article 11.
ARTICLE 15
CONFIDENTIALITY AND RELEASES
15.1 General. The financial terms of this Agreement and all information
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section 15.2,
shall not be disclosed to any third party or the public without the prior
written consent of the other Participant, which consent shall not be
unreasonably withheld.
15.2 Exceptions. The consent required by Section 15.1 shall not apply to a
disclosure:
(a) To an Affiliate, consultant, contractor or subcontractor that has
a bona fide need to be informed;
(b) To any third party to whom the disclosing Participant contemplates
a Transfer of all or any part of its interest in or to this Agreement, its
Participating Interest, or the Assets; or
(c) Which the disclosing Participant is required by pertinent law or
regulation or the rules of any stock exchange to disclose; provided that in
any case to which this Section 15.2 is applicable, the disclosing
Participant shall give written notice to the other Participant prior to the
making of any such disclosure.
(d) As necessary to administer or enforce this Agreement.
As to any disclosure pursuant to Section 15.2(a) or (b), only such
confidential information as such third party shall have a legitimate
business need to know shall be disclosed and such third party shall first
agree in writing
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<PAGE>
to protect the confidential information from further disclosure to the same
extent as the Participants are obligated under this Article 15.
15.3 Duration of Confidentiality. The provisions of this Article 15 shall
apply during the term of this Agreement and for two (2) years following a
termination pursuant to Section 12.1 or following withdrawal pursuant to Section
12.2, and shall continue to apply to any Participant who withdraws, who is
deemed to have withdrawn, or who Transfers its Participating Interest, for two
years following the date of such occurrence.
15.4 Releases. There shall be no public release by either party of any
information concerning the Property, the Operations or the Venture without the
prior written consent of the other party (such consent not to be unreasonably
withheld or delayed) unless such information is required by a lawful authority
of or other regulatory body having jurisdiction in which case the party making
such required disclosure shall first deliver a copy thereof to the other party
and allow the other party forty-eight (48) hours to comment on the nature and
extent of such required disclosure.
ARTICLE 16
AREA OF INTEREST
16.1 Acquisitions in Area of Interest. If at any time during the
subsistence of this Agreement any Participant or any non-Participant that has a
production royalty interest as provided for herein, (in this section only called
the "Acquiring Party") stakes or otherwise acquires any right to or interest in
any properties within the area described as all lands south of the South Fork of
the Clearwater River within Sections 30 and 31, Township 29 North, Range 8 East,
Boise Meridian, Sections 5, 6, 7, 8, 17, 18, 19 and 20, Township 28 North, Range
8 East, Boise Meridian and Sections 13 and 24, Township 28 North, Range 7 East,
Boise Meridian, ("Area of Interest"),
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<PAGE>
the Acquiring Party shall forthwith give notice to the other parties of such
acquisition, the total cost thereof and all details in the possession of that
Participant with respect to the details of the acquisition, the nature of the
property and the known mineralization. Each other Participant may, within thirty
(30) days of receipt of the Acquiring Party's notice, elect, by notice to the
Acquiring Party, to require that the properties and the right or interest
acquired be included in and thereafter form part of the Property for all
purposes of this Agreement.
If the election aforesaid is made, the other Participants shall reimburse
the Acquiring Party for that portion of the cost of acquisition which is
equivalent to their respective Participating Interests.
If no other Participant makes the election aforesaid within that period of
thirty (30) days, the right or interest acquired shall not form part of the
Property and the Acquiring Party shall be solely entitled thereto.
Notwithstanding the provisions of this Article 16, should either Cyprus or
ICMC or their Affiliates control any properties within the Area of Interest on
the effective date of this Agreement and such properties are not included in
Exhibit A, such properties shall be considered Property and become subject to
this Agreement.
ARTICLE 17
GENERAL PROVISIONS
17.1 Notices. All notices, payments and other required communications
("Notices") to the Participants shall be in writing, and shall be addressed
respectively as follows:
If to ICMC:
Idaho Consolidated Metals Corporation
P.O. Box 1124
Lewiston, Idaho 83501
Attn: President
Fax: (208) 746-6678
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<PAGE>
If to Cyprus:
Cyprus Gold Exploration Corporation
9100 East Mineral Circle
P.O. Box 3299
Englewood, Colorado 80155-3299
Attn: Exploration Manager, North America
Fax: (303) 643-5943
With a copy to:
Cyprus Gold Exploration Corporation
9100 E. Mineral Circle
P.O. Box 3299
Englewood, CO 80155-3299
Attn: Land Management Department
Fax: (303) 643-5250
All Notices shall be given (i) by personal delivery to the Participant, or
(ii) by electronic communication or facsimile, with a confirmation sent by
registered or certified mail return receipt requested, (iii) by registered or
certified mail return receipt requested or (iv) by express mail. All Notices
shall be effective and shall be deemed delivered (i) if by personal delivery on
the date of delivery if delivered during normal business hours, and, if not
delivered during normal business hours, on the next business day following
delivery, (ii) if by electronic communication or facsimile on the next business
day following receipt of the electronic communication or facsimile, and (iii) if
solely by mail on the next business day after actual receipt. A Participant may
change its address by Notice to the other Participant.
17.2 Waiver. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon
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<PAGE>
a breach hereof shall not constitute a waiver of any provision of this Agreement
or limit the Participant's right thereafter to enforce any provision or exercise
any right.
17.3 Modification. No modification of this Agreement shall be valid unless
made in writing and duly executed by the Participants.
17.4 Force Majeure. Except for the obligation to make payments when due
hereunder, the obligations of a Participant 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,
lack of satisfactory market, labor disputes (however arising and whether or not
employee demands are reasonable or within the power of the Participant to
grant); acts of God; laws, regulations, orders, proclamations, instructions or
requests of any government or governmental entity; judgments or orders of any
court; inability to obtain on reasonably acceptable terms any public or private
license, permit or other authorization; curtailment or suspension of activities
to remedy or avoid an actual or alleged, present or prospective violation of
federal, provincial or local environmental standards; acts of war or conditions
arising out of or attributable to war, whether declared or undeclared; riot,
civil strife, insurrection or rebellion; fire, explosion, earthquake, storm,
flood, sink holes; drought or other adverse weather condition; delay or failure
by suppliers or transporters of materials, parts, supplies, services or
equipment or by contractors' or subcontractors' shortage of, or inability to
obtain, labor, transportation, materials, machinery, equipment, supplies,
utilities or services; accidents; breakdown of equipment, machinery or
facilities; or any other cause whether similar or dissimilar to the foregoing.
The affected Participant shall promptly give notice to the other Participant of
the suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and the expected duration thereof and this Agreement shall be
extended by the total period of such delays or suspension. The affected
Participant shall resume performance as soon as reasonably possible. During the
period of suspension the obligations of the Participants to
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advance funds pursuant to Section 9.2 shall be reduced to levels consistent with
Operations.
17.5 Economic Force Majeure. If, at any time after the Management Committee
reaches a determination, in its reasonable judgment, that the minerals
encompassed within the Property cannot be profitably mined under the terms and
conditions of this Agreement as it is then in effect, the Management Committee
may declare that a condition of Force Majeure exists as provided in Section
17.4, above; provided, that in no event shall a condition of Force Majeure
declared pursuant to this Section 16.5 be in effect for more than five (5)
consecutive years.
17.6 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Idaho.
17.7 Rule Against Perpetuities. Any right or option to acquire any interest
in real or personal property under this Agreement must be exercised, if at all,
so as to vest such interest in the acquirer within twenty-one (21) years after
the effective date of this Agreement.
17.8 Further Assurances. Each of the Participants agrees to take from time
to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
17.9 Survival of Terms and Conditions. The provisions of this Agreement and
the attached Exhibits shall survive the termination of this Agreement to the
full extent necessary for their enforcement and the protection of the
Participant in whose favor they run.
17.10 Entire Agreement: Successors and Assigns. This Agreement contains the
entire understanding of the Participants and supersedes all prior
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agreements and understandings between the Participants relating to the subject
matter hereof. This Agreement shall be binding upon and inure to the benefit of
the respective successors and permitted assigns of the Participants. In the
event of any conflict between this Agreement and any Exhibit attached hereto,
the terms of this Agreement shall be controlling.
17.11 Memorandum. At the request of either Participant, a Memorandum or
short form of this Agreement, as appropriate, which shall not disclose financial
information contained herein, shall be prepared and recorded by Manager. This
Agreement shall not be recorded.
17.12 Funds. All references to dollar amounts contained in this Agreement
are references to United States dollars.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
effective as of the day and year first above written.
CYPRUS GOLD EXPLORATION CORPORATION
By: /s/ [Not Legible]
--------------------------------
Title: President
Tax ID#:
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Del Steiner
--------------------------------
Title: Pres./CEO
Tax ID#:
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EXHIBIT "A-1"
Attached to and made part of that certain Joint Venture Agreement
dated the 13th day of June, 1997 between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation.
The following unpatented mining claims located in Idaho County, State of Idaho.
<TABLE>
BLM BLM
Claim Name Serial No. Claim Name Serial No.
---------- ---------- ---------- ----------
<S> <C> <C> <C>
Black Lady 1 28654 RL 22 105338
Black Lady 2 28655 RL 24 105340
Hidden Valley 1 28656 RL 25 105341
Hidden Valley 2 28657 RL 26 105342
Hidden Valley 3 28658 RL 27 105343
Jon 1 28982 RL 28 105344
Jon 2 28983 RL 28A 105345
Jon 3 28984 RL 29 105346
Jon 4 28985 RL 30 105347
Jon 5 28986 RL 30A 105348
Jon 6 28987 RL 31 105349
Jon 7 28988 Spec 10 28969
Jon 11 28989 Spec 11 28970
Jon 12 28990 Spec 12 28971
Jon 13 28991 Spec 13 28972
Jon 14 28992 Spec 23 28973
Jon 15 28993 Spec 24 28974
Jon 16 28994 Spec 25 28975
Jon 17 28995 Spec 26 28976
Jon 18 28996 Spec 27 28977
Jon 25 28997 Spec 28 28978
Jon 26 28998 Spec 29 28979
RL 9A 105324 Spec 30 28980
RL 10 105325 Spec 34 28981
RL 11 105326 Tip Top 1 28662
RL 11A 105327
</TABLE>
-1-
<PAGE>
BLM
Claim Name Serial No.
- ---------- ----------
RL 21 105337
RL 23 105339
RL 40 105358
RL 42 105360
RL 43 105361
RL 44 105362
RL 45 105363
RL 58 105376
RL 60 105378
RL 61 105379
CNTL #1 100371
CNTL #2 100372
CNTL #3 100373
CNTL #4 100374
CNTL #5 100375
CNTL #6 100376
CNTL #7 100377
CNTL #8 100378
CNTL #9 100379
CNTL #20 100390
Z-14 111509
Z-15 111510
Z-16 111511
Z-17 111512
Z-21A 124313
Z-22 124314
Z-22A 124315
Z-23 111517
Z-25 111519
Z-27 111521
Z-28 111522
Z-29 111523
Z-30 111524
Z-31 111525
Z-32 111526
Z-33 111527
Z-34 111528
-2-
<PAGE>
EXHIBIT "A-2"
Attached to and made part of that certain Joint Venture Agreement
dated the 13th day of June , 1997 between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation.
The following unpatented mining claims located in Idaho County, State of Idaho.
BLM
Claim Name Serial No Reception Number
- ---------- --------- ----------------
Deal 1 IMC 179335 393990
Deal 2 IMC 179336 393991
Deal 3 IMC 179337 393992
Deal 4 IMC 179338 393993
Deal 5 IMC 179339 393994
Deal 6 IMC 179340 393995
Deal 7 IMC 179341 393996
Deal 8 IMC 179342 393997
Deal 9 IMC 179343 393998
Deal 10 IMC 179344 393999
Deal 11 IMC 179345 394000
Deal 12 IMC 179346 394001
Deal 13 IMC 179347 394002
Deal 14 IMC 179348 394003
Deal 15 IMC 179349 394004
Deal 16 IMC 179350 394005
Deal 17 IMC 179351 394006
Deal 18 IMC 179352 394007
Deal 19 IMC 179353 394008
Deal 20 IMC 179354 394009
Deal 21 IMC 179355 394010
Deal 22 IMC 179356 394011
Deal 23 IMC 179357 394012
Deal 24 IMC 179358 394013
Deal 25 IMC 179359 394014
Deal 26 IMC 179360 394015
Deal 27 IMC 179361 394016
Deal 28 IMC 179362 394017
Deal 29 IMC 179363 394018
Deal 30 IMC 179364 394019
Deal 31 IMC 179365 394020
Deal 32 IMC 179366 394021
Deal 33 IMC 179367 394022
Deal 34 IMC 179368 394023
Deal 35 IMC 179369 394024
-1-
<PAGE>
BLM
Claim Name Serial No Reception Number
- ---------- --------- ----------------
Deal 36 IMC 179370 394025
Deal 37 IMC 179371 394026
Deal 38 IMC 179372 394027
Deal 39 IMC 179373 394028
Deal 40 IMC 179374 394029
Deal 41 IMC 179375 394030
Deal 42 IMC 179376 394031
Deal 43 IMC 179377 394032
Deal 44 IMC 179378 394033
Deal 45 IMC 179379 394034
Deal 46 IMC 179380 394035
Deal 47 IMC 179381 394036
Deal 48 IMC 179382 394037
Deal 49 IMC 179383 394038
Deal 50 IMC 179384 394039
Deal 51 IMC 179385 394040
Deal 52 IMC 179386 394041
Deal 53 IMC 179387 394042
Deal 54 IMC 179388 394043
Deal 55 IMC 179389 394044
Deal 56 IMC 179390 394045
Deal 57 IMC 179391 394046
Deal 58 IMC 179392 394047
Deal 59 IMC 179393 394048
Deal 60 IMC 179394 394049
Deal 61 IMC 179395 394050
Deal 62 IMC 179396 394051
Deal 63 IMC 179397 394052
Deal 64 IMC 179398 394053
Deal 65 IMC 179399 394054
Deal 66 IMC 179400 394055
Deal 67 IMC 179401 394056
Deal 68 IMC 179402 394057
Deal 69 IMC 179403 394058
Deal 70 IMC 179404 394059
Deal 71 IMC 179405 394060
Deal 72 IMC 179406 394061
Deal 73 IMC 179407 394062
Deal 74 IMC 179408 394063
-2-
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EXHIBIT "B"
Attached to and made part of that certain Joint Venture Agreement
dated June 13, 1997, by and between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation
ACCOUNTING PROCEDURES
The purpose of these Accounting Procedures is to establish equitable methods for
determining charges and credits applicable to Operations under the captioned
Agreement (the "Agreement"). It is the intent of the Manager and any Participant
that is not acting as the Manager ("the non-Manager") that neither of them shall
gain nor lose by reason of their duties and responsibilities as the Manager or
the non-Manager but that the Manager should be reimbursed for the value of
services provided hereunder. If any method proves unfair or inequitable to the
Manager or the non-Manager, the Participants shall meet and in good faith
endeavor to agree upon changes deemed necessary to correct the unfairness or
inequity. In the event of a conflict between the provisions of these Accounting
Procedures and those of the Agreement, the provisions of the Agreement shall
control.
ARTICLE 1
GENERAL PROVISIONS
1.1 Definitions. The definitions set forth in the Agreement shall apply to
these Accounting Procedures and shall have the same meanings as used herein.
Additional terms used in these Accounting Procedures are set forth below shall
have the following meanings:
(a) "Material" shall mean personal property, including but not limited to
supplies and non-depreciable equipment, acquired and held for use in Operations.
(b) "Outsider" shall mean participants other than "Participant" to the
Agreement and their affiliates.
(c) "Personal Expenses" shall mean travel and other reasonable reimbursable
expenses of employees of the Manager or its Affiliates.
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(d) "Technical Employees" shall mean those employees having special and
specific engineering, geological, legal, or other professional skills, and whose
primary function in Operations is the handling of specific matters for the
benefit of Operations.
1.2 Accounting Records.
(a) The Manager shall maintain accounting records for the Joint Account in
accordance with generally accepted accounting principles consistently applied
and used in the mining industry.
(b) The Manager shall take advantage of and credit the Venture with all
cash and trade discounts, freight allowances and equalizations, annual volume or
other allowances, credits, salvages, commissions, insurance discount dividends
and retroactive premium adjustments, and any other benefits which accrue to the
Manager wholly or in part because of Operations.
1.3 Statements, Billings and Adjustments.
(a) The Manager shall promptly submit to the Management Committee monthly
statements of account reflecting in reasonable detail the charges and credits to
the Joint Account during the preceding month.
(b) On the basis of the adopted Program and Budget, the Manager shall
submit to each Participant prior to the last day of each month, a billing for
estimated cash requirements for the next month. Within ten (10) days after
receipt of each billing, each Participant shall advance to the Manager its
proportionate share of the estimated amount. Time is of the essence of payment
of such billings. The Manager shall at all times maintain a cash balance
approximately equal to the rate of disbursement for up to forty-five (45) days.
(c) A Participant that fails to meet cash calls in the amount and at the
times specified in Section 1.3(b) shall be in default, and the amount of the
defaulted cash call shall bear interest from the date due at an annual rate
equal to two (2) percentage points over the Prime Rate, but in no event shall
said rate of interest exceed the maximum permitted by law.
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The non-defaulting Participant shall have those rights, remedies and elections
specified in Section 6.4 of the Agreement.
(d) Payment of bills shall not prejudice the right of the non-Manager to
protest or question the correctness thereof; however, all bills and statements
rendered during any calendar year shall be presumed conclusively to be true and
correct after twelve (12) months following the end of any such calendar year
unless, within the said twelve-month period, the non-Manager takes written
exception thereto and makes claim on the Manager for adjustment. No adjustment
favorable to the Manager shall be made unless it is made within the same
prescribed period or in connection with an adjustment in favor of the
non-Manager. The provisions of this paragraph shall not prevent adjustments
resulting from a physical inventory of the Assets.
1.4 Advances and Payments.
(a) As provided for in this Exhibit "B", the non-Manager shall advance its
share of the estimated cash outlay for the succeeding month's operation. If the
non-Manager's advances exceed its share of actual expenditures, subsequent cash
calls will be adjusted downward or the Manager will refund to the non-Manager
excess funds that are not necessary for subsequent Operations.
(b) The Manager shall base its estimates of cash advance requirements on
the latest information available and shall take into account cash on hand which
may be applied to satisfy such requirements in order to reduce the amounts to be
advanced. It is the intent of the Participants to provide adequate funds for the
Operations and to maintain-bank balances at minimum levels.
(c) If the Manager does not request the non-Manager to advance its share of
estimated cash requirements, the non-Manager shall pay its share of expenditures
within thirty (30) days following receipt of the Manager's billing.
(d) Except as provided in Section 6.4 of the Agreement, all payments shall
be made on or before the due date by wire transfer in immediately available
funds to bank accounts designated by the Manager. If not so paid, the unpaid
balance shall bear interest after
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the due date at the rate of Prime Rate plus two percent (2%) for each thirty
(30) day period or portion thereof until such amount is paid, plus attorneys'
fees, court costs, and other costs related to the collection of the unpaid
amounts.
(e) Funds received by the Manager from the non-Manager Participant shall be
segregated or maintained by the Manager as a separate fund, and may not be
commingled with the Manager's own funds, except with the consent of the
non-Manager Participant.
1.5 Audits. Upon notice in writing to the Manager, the non-Manager shall
have the right to audit the accounts and records relating to the accounting made
under this Agreement for any calendar year within the twelve (12) month period
following the end of such calendar year; provided, however, the making of an
audit shall not extend the time for the taking of written exception to and the
adjustments of accounts pursuant to Section 1.3(d). The non-Manager may arrange
for audits by its own staff or outside professional and qualified independent
auditors. Audits shall be conducted in a manner so as to cause the minimum
inconvenience to the Manager. The Manager shall bear no portion of non-Manager's
audit costs unless agreed to by the Manager in advance of such audit.
Notwithstanding the above, in the event the non-Manager does not audit the
accounts and records relating to the accounting made under this Agreement the
Manager shall have conducted annually an audit of the accounts and records
relating to the accounting made under this Agreement. Such audit shall be for
the account of the Venture. If the non-Manager does have an audit performed as
provided herein, the Manager shall not be required to perform an additional
audit.
ARTICLE 2
CHARGEABLE COSTS
Subject to the provisions of the Agreement, the Manager shall charge the
Joint Account with all costs incurred by it as necessary and proper for the
conduct of Operations or maintenance of the Assets. Such costs shall be
reasonable and comparable with similar projects in the area. Except as otherwise
provided in the Agreement, the Manager shall charge the Joint Account with: (1)
exploration expenditures made for the exploration activities within the
Property, (2) expenditures made for engineering, environmental, planning,
Development and construction related to the Property and for the equipment and
facilities necessary for Operations, including all working capital and
sustaining capital for ongoing Operations and for
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the expansion and updating of Operations, and (3) costs and expenses of mining,
processing, reclamation, restoration, worker's compensation and other claims
upon closing of the mines, and any other costs following the mine closing. Such
costs include, but are not limited to the following:
2.1 Property Payments. Property payments, rentals, royalties and other
payments out of production (unless such royalties or other payments shall burden
the ownership interests of only one Participant) and fees, paid by the Manager
for Operations including permits, fees, and other charges which are assessed by
various governmental agencies. Such costs also include acquisition of easements,
rights of way, and surface rights.
2.2 Labor.
(a) Salaries and wages of the Manager's employees directly engaged in and
the conduct of and for the benefit of Operations, whether temporarily or
permanently assigned. The proportion of salaries and wages charged will be
prorated proportionate to the time spent by employees for the benefit of
Operations. Salaries and wages shall include everything constituting gross pay
to employees as reflected on the Manager's payroll, including travel time and
overtime.
(b) The Manager's cost of holidays, rest days, vacations, disability
benefits, sickness, and other customary allowances and reasonable expenses which
are paid or reimbursed under the Manager's usual practice. Such amounts may be
charged either on a "percentage assessment" of salaries and wages, or on a cash
basis.
(c) Costs of expenditures or contributions made pursuant to assessments
imposed by governmental authority which are applicable to the Manager's cost of
salaries and wages.
(d) Personal Expenses of employees whose salaries and wages are, chargeable
to the Joint Account under Section 2.2(a), but only to the extent that such
Personal Expenses are incurred in connection with their efforts while directly
engaged in the conduct of and for the benefit of Operations.
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(e) The Manager's actual costs of established plans for employees' group
life insurance, hospitalization, medical, dental, pension, retirement, stock
purchase, profit sharing, thrift, bonus, and other benefit plans of a similar
nature applicable to the Manager's labor cost chargeable to the Joint Account.
(f) If a percentage assignment is used for Section 2.2 (b) and (e), the
rate shall be based on actual cost experience for the previous year. Such rate
shall be determined during the first quarter of each year and shall be applied
in current year operations.
(g) Relocation costs of employees permanently or temporarily assigned and
directly engaged in the conduct of Operations. Such costs shall include
transportation of employees' families and their personal and household effects
and all other relocation costs in accordance with the Manager's usual practice.
2.3 Material. Material purchased or furnished by the Manager for use in
Operations as provided under Article 3. So far as is reasonably practical, and
consistent with efficient and economical operations, only such Material shall be
purchased or transferred for use in Operations as may be required for immediate
use.
2.4 Transportation.
(a) Transportation of material and other related costs such as expediting,
crating, freight, and unloading at destination.
(b) Transportation of employees as required in the conduct-of Operations.
2.5 Services.
(a) The cost of consultants, contract labor, services, equipment, and
utilities procured from Outsiders.
(b) Technical or research services, such as, but not limited to, laboratory
analysis, drafting, geophysical and geological interpretation, engineering,
reserve studies and related computer services, and data processing, which may be
delegated to and performed by
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the specialized staffs of one of the Participants or their Affiliate. Such
professional services shall be on a cost of service basis and charges shall not
exceed the cost of comparable quality services by qualified Outsiders. Charges
to the Joint Account for services directly benefitting Operations shall be in
addition to any charges allowed under Sections 2.11 and 2.12.
(c) In the event the Manager from time to time utilizes skilled personnel
of the Participants or their Affiliates for performance of services either
within the Property or elsewhere for the benefit of Operations, whose time in
full or in part is not otherwise charged hereunder, a proper proportion of the
direct and indirect salary, employee benefits, and travel expenses of such
personnel shall be charged to the Joint Account, provided such work is pursuant
to written authorization by the Manager. Such professional services shall be on
a cost of service basis and charges shall not exceed the cost of comparable
quality services by qualified Outsiders.
(d) Use of the Manager's and the non-Manager's separately owned equipment
and facilities for benefit of Operations. Such use shall be charged to the Joint
Account at rates commensurate with the Manager's actual and full costs of
ownership and operation and such rates shall include cost of maintenance,
repairs, other operating expense, insurance, taxes (other than income taxes),
depreciation, and other overhead. These charges shall not exceed the prevailing
commercial rates in the area.
(e) Data processing and computer services acquired for the benefit of
Operations may be contracted through Outsiders, or by arrangement for computer
services from one of the Participants, or their Affiliates, even though such
facilities are not physically located within the Property. Charges to the Joint
Account under this provision for services directly benefiting Operations shall
be in addition to any charges allowed under Section 2.11 and 2.12. Such
professional services shall be on a cost of service basis and charges shall not
exceed the cost of comparable quality services by qualified Outsiders.
(f) Any technical services, skilled personnel, equipment, facilities or
data processing services provided to Operations by the non-Manager, at the
request of the Manager, shall be charged on the same basis as provided in
Sections 2.5 (b), (c) (d) and (e) above. The non-Manager shall bill the Manager
in accordance with Section 1.4 (c) of the Accounting
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Procedures. The Manager may audit the records of the non-Manager with regard to
such services in accordance with the procedure set forth in Section 1.5.
2.6 Repair and Replacement of Property. All costs or expenses (net of the
recoveries from insurance for which the premiums have been charged to the Joint
Account, if any) necessary for the repair or replacement of property resulting
from damages or losses incurred by fire, flood, storm, theft, accident, or any
other cause, excepting the Manager's gross negligence or willful misconduct. The
Manager shall furnish to the non-Manager written notice of damages or losses in
excess of Fifteen Thousand Dollars ($15,000) as soon as practicable. Such costs
and expenses include the costs to combat and control the actions of the hazard.
2.7 Insurance.
(a) Premiums paid for Workers' Compensation or Employer's Liability
Insurance required to be carried for Operations. In the event Operations are
conducted in a state or province in which the Manager may act as self-insurer
for Workers' Compensation or Employer's Liability under the applicable state's
or province's law, the Manager may, at its election, provided that it is allowed
by the laws of the Province, include the risk under its self-insurance program
and in that event, the Manager shall include a charge at the Manager's cost
equal to the Standard Workers' Compensation rate during any one contract year.
Premiums paid for an insurance program covering such property, business
interruption, casualty, and fidelity risks as are deemed prudent by the Manager
based on sound business judgment, which judgment shall be subject to review and
revision by the Management Committee. Premiums paid for other insurance as
requested by the Management Committee. Each Participant may procure and
maintain, at its own cost and expense, such other insurance as it may determine
to be necessary to protect its interests, and any such insurance so procured and
maintained shall inure solely to the benefit of the Participant procuring the
same.
(b) Actual expenditures incurred in the investigation, defense, and
settlement of all losses, claims, damages, judgments, and other expenses for the
benefit of Operations, excepting those resulting from the Manager's gross
negligence or willful misconduct.
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2.8 Limitation and Claims. All costs or expenses of handling, investigation
and settling litigation or claims arising by reason of Operations or necessary
to protect or recover property, including, but not limited to, attorneys' fees,
court costs, cost of investigation or procuring evidence and amounts paid in
settlement or satisfaction of any such litigation or claims. In the event
actions or claims affecting Operations shall be handled by the legal staff of
one of the Participants, a charge commensurate with the cost of providing such
service is chargeable to the Joint Account.
2.9 Taxes. All taxes (except taxes based on or determined with reference to
income), fees, and governmental assessments of every kind and nature. If the
Manager is required hereunder to pay ad valorem taxes based in whole or in part
upon separate valuations of each Participant's Interest, then notwithstanding
anything to the contrary herein, charges to the Joint Account shall be made and
paid by the Participants hereto in accordance with the percentage of tax value
generated by each Participant's Interest.
2.10 Fines. All fines resulting from non-compliance with applicable laws,
rules, and regulations, except to the extent that such fines were due to the
gross negligence or willful misconduct of the Manager.
2.11 Direct Administrative Costs. The net cost of maintaining and operating
any offices (excepting the corporate headquarters office), suboffices, camps,
warehouses, housing, and other facilities directly serving Operations shall be
charged to the Joint Account. If such facilities serve operations in addition to
Operations, the net costs shall be allocated to all operations served on an
equitable basis mutually agreed to by the Participants.
2.12 Manager's Management Fee. A charge to reimburse the Manager for
overhead and other general and administrative services of the Manager's
corporate headquarters office equal to the following percentages applied to
costs and expenses determined on a monthly basis under the provisions of
Paragraphs 2 through 7, 11 and 13 through 15 of this Article 2:
(a) Ten percent (10%) of all cash expenditures incurred prior to
Development,, but only five percent (5%) on contracts greater than One Hundred
Thousand Dollars ($100,000).
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(b) Five percent (5%) of all cash expenditures incurred following
commencement of Development.
Notwithstanding the above, such Manager's fees shall not be charged on the
overhead of any contractors or agents. The overhead rates set out above shall be
reviewed annually at the request of either party. If a detailed analysis of the
Manager's actual cost experiences establishes that higher or lower overhead
expenses were incurred or are likely to be incurred, and if higher, are
reasonable in the circumstances, then the rates shall be amended by the
Management Committee. Such amendment shall be on the basis that the Manager
neither profits nor loses as a result thereof.
2.13 Storage of Production Inventories. Each Participant will bear the cost
incurred for handling and storage of merchantable ore or concentrates as
follows:
(a) Personal property taxes on ore or concentrates in storage for a
Participant within the Property shall be charged to such Participant.
(b) The cost of loading out such ore in storage for a Participant from the
Property shall be charged to such Participant.
(c) Cost associated with providing storage of ore or concentrates within
the Property will be charged on a pro rata basis determined by the Participants.
(d) Other costs arising out of storage or handling- of ore or concentrates
shall be charged to the Participant owning such Materials.
2.14 Project Assets. The cost of all capital expenses of the Assets which
are normally depreciable, depletable, or amortizable, including but not limited
to land acquisition, exploration, development, pre-mine development and
stripping, machinery, equipment, plant, buildings, rail facilities and
equipment, improvements, camp and port facilities, townsites and other
infrastructure, whether incurred or acquired prior to or after Commencement of
Commercial Production.
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2.15 Other Necessary Expenses. Any other chargeable expenditures not
covered or dealt with in the foregoing provisions which are necessary and proper
for the conduct of Operations.
ARTICLE 3
PRICING OF JOINT ACCOUNT MATERIAL PURCHASES.
TRANSFERS, AND DISPOSITION
The Manager is responsible for Joint Account Material and shall make proper
and timely charges and credits for all Material movements affecting the
Property. The Manager shall provide all Material for use within the Property,
however, at the Manager's option, such Material may be supplied by the
non-Manager.
3.1 Purchases. Material purchased shall be charged at the price paid by the
Manager after deduction of all discount received. In case of Material found to
be defective or returned to vendor for any other reason, credit shall be passed
to the Joint Account when adjustment has been received by the Manager.
3.2 Transfer and Dispositions. Material furnished to the Property and
Material transferred from the Property or disposed of by the Manager, unless
otherwise agreed to by the Participants, shall be priced at its current fair
market value.
3.3 Premium Prices. Whenever Material is not readily obtainable at
published or listed prices because of national emergencies, strikes, or other
unusual causes over which the Manager has no control, the Manager may charge the
Joint Account for the required Material at the Manager's actual cost incurred in
providing such Material, in making it suitable for use, and in moving it to the
Property.
3.4 Warranty of Material. The Manager shall not be held responsible for
defects in Material furnished for Operations. In the event Material is
defective, credit shall not be passed to the Joint Account until the adjustment
has been received by the Manager from the manufacturer or its agents.
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ARTICLE
DISPOSAL OF SURPLUS MATERIAL
4.1 Distribution Generally. The disposition of major items of surplus
Material shall be decided upon by the Manager. The Manager may purchase, but
shall be under no obligation to purchase, the interests of the non-Manager in
surplus Material.
4.2 Purchase by Participants. Surplus Material purchased by either the
Manager or the non-Manager shall be credited by the Manager to the Joint Account
at its fair market value.
4.3 Distribution to Participants. Division of Material in kind, if made
between the Manager and the non-Manager, shall be in proportion to their
respective interests in such Material. Each Participant will thereupon be
charged individually with the value of the Material received or receivable by
each Participant, and corresponding credits will be made by the Manager to the
Joint Account. Such credits shall appear in the monthly statement of operations.
4.4 Sales. Sales to Outsiders of Material from the Property shall be
credited by the Manager to the Joint Account at the net amount collected by the
Manager from vendee, which shall be priced on the basis of the best available
market price. Any claim by vendee for defective Materials or otherwise shall be
charged back to the Joint Account if and when paid by the Manager.
ARTICLE 5
INVENTORIES
5.1 Periodic Inventories. The Manager shall take physical inventory of
Joint Account Material at reasonable intervals in accordance with generally
accepted accounting principles but not less than once a year. The non-Manager
may be represented when any inventory-shall bind the non-Manager to accept the
inventory taken by the Manager.
5.2 Reconciliation. Reconciliation of inventories with the Joint Account
shall be made by the Manager, and a list of overages and shortages shall be
furnished to the non-
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Manager within ninety (90) days following the taking of inventory. Inventory
adjustments shall be made by the Manager to the Joint Account for overages and
shortages, but the Manager shall be held accountable to the non-Manager only for
shortages due to the lack of reasonable diligence.
5.3 Special Inventories. Whenever there is a sale or change of Interest in
the Mineral Rights, the Property or the Assets, a special inventory may be taken
by the Manager, provided the seller or purchaser or such Interest requests such
inventory and agrees to bear all of the expense thereof. In such cases, both the
seller and the purchaser shall be entitled to be represented. A special
inventory shall be required when there is a change in the Manager. The cost of
the latter inventory will be charged to the Joint Account when the change in the
Manager does not come about as the result of a sale of the former Manager's
Interest.
5.4 Expenses. The expense incurred by the Manager in conducting periodic
inventories shall be charged to the Joint Account.
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EXHIBIT "C"
Attached to and made part of that certain Joint Venture Agreement
dated June 13 , 1997, by and between
Idaho Consolidated Metals Corporation
and Cyprus Gold Exploration Corporation.
NET PROCEEDS OF PRODUCTION ROYALTY
1 Obligation.
1.01 If any party becomes entitled to an interest in Net Proceeds pursuant to
the Agreement (an "Owner"), the Manager shall separately calculate, as at the
end of each calendar quarter subsequent to commencement of commercial
operations, Net Proceeds.
1.02 Interest in Net Proceeds. Each Participant shall within sixty (60) days of
the end of each calendar quarter, as and when any Net Proceeds are available for
distribution:
(a) severally pay or cause to be paid to each Owner that percentage of the
Net Proceeds to which that Owner is entitled under the Agreement;
(b) deliver to each Owner a statement indicating:
i. the Gross Receipts during the calendar quarter;
ii. the deductions therefrom made in the order itemized in subsection
3.01 of this Exhibit C;
iii. the amount of Net Proceeds remaining; and
iv. the amount of the Net Proceeds to which that Owner is entitled;
provided, however, that until such time as there are Net Proceeds available, the
Manager shall deliver to each Owner within sixty (60) days of the end of each
calendar quarter commencing with the first calendar quarter following the
commencement of commercial operations, a
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statement indicating the Gross Receipts during the calendar quarter less the
deductions therefrom made in the order itemized in subsection 3.01 of this
Exhibit C.
1.03 Nothing contained in the Agreement or this Exhibit C shall be construed as:
(a) imposing on a Participant any obligation with respect to the payments
of amounts due hereunder to an Owner from any other Participant; or
(b) conferring on any Owner any right to or interest in any Property or
Assets except the right to receive payments pursuant to the Net
Proceeds Interest Royalty from each Participant to the Agreement as
and when due.
2 Definitions. Capitalized terms used but not defined herein shall have the
meanings given thereto in the Agreement.
2.01 "Costs" means, all items of outlay and expense whatsoever, direct or
indirect, with respect to Operations including loans made by one Participant for
the benefit of another Participant, recorded by the Manager in accordance with
the Agreement; without limiting generality, the following categories of Costs
shall have the following meanings:
(a) "Construction Costs" means those Costs recorded by the Manager during
the period of Development, including, without limiting generality, the
Manager's fee contemplated in Section 2.12 of Exhibit B;
(b) "Distribution Costs" means all costs of:
i. transporting ore or concentrates from a mine or a concentrating
plant to a smelter, refinery or other place of delivery
designated by the purchase and, in the case of concentrates
tolled, of transporting the metal from a smelter to the place of
delivery designated by the purchaser;
ii. handling,, warehousing and insuring the concentrates and metal;
and
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iii. in the case of concentrates tolled, of smelting and refining,
including any penalties thereon or in connection therewith.
(c) "Exploration Costs" means those Costs, including Exploration
Expenditures, pertaining to all activities directed toward
ascertaining the existence, location, quantity, quality or commercial
value of deposits of Products, and specifically includes the
preparation of a Feasibility Study.
(d) "Interest Costs" means interest computed quarterly and not in advance
calculated as follows:
i. If financing for Development of the Property has been obtained
from a third party lender, at the interest rates provided for
therein.
ii. If such third party financing is not in effect, as follows:
(1) the average of the opening and closing monthly outstanding
balances for each month during the quarter of the net unrecovered
amounts of all costs in the classes enumerated paragraphs 2.01
(a), (b), (c), (d), (e) (f) and (g) of this Exhibit C;
multiplied by:
(2) Prime Rate plus two percent;
multiplied by:
(3) the number of days in the quarter;
divided by:
(4) the number of days in the year;
(e) "Marketing Costs" means such reasonable charge actually incurred for
marketing of ores and concentrates sold or of concentrates tolled as
is consistent with generally accepted industry marketing practices;
and
(f) "Operating Costs" means those Costs recorded by the Manager subsequent
to the commencement of commercial production, including, without
limiting
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generality, the Manager's fee contemplated in Section 2.12 of Exhibit
B and additional costs of capital; and
(g) "Taxes and Royalties" means all taxes (other than income taxes),
royalties or other charges or imposts provided for pursuant to any law
or legal obligation imposed by any government if paid by the
Participant and any other royalties payable to third parties.
2.02 Wherever used in this Exhibit C, "Gross Receipts" means the aggregate of
all receipts, recoveries or amounts received by or credited to a Participant in
connection with its participation under the Agreement including, without
limiting the generality of the foregoing:
(a) the receipts from the sale of that Participant's proportionate share
of the ores, concentrates or other materials derived from Products
produced from the Property;
(b) all proceeds received from the sale of the Property or Assets
subsequent to the effective date of the Agreement;
(c) all insurance recoveries (including amounts received to settle claims)
in respect of loss of, or damage to any portion of the Property or
Assets subsequent to the effective date of the Agreement;
(d) all amounts received as compensation for the expropriation or forcible
taking of any portion of the Property or Assets subsequent to the
effective date of the Agreement;
(e) the fair market value, at the Property, of those Assets, if any,
purchased for the Joint Account, that are transferred from the
Property for use by a Participant elsewhere subsequent to the
effective date of the Agreement; and
(f) the amount of any negative balance remaining after the reallocation of
negative balances pursuant to subsection 3.03 of this Exhibit C;
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to the extent that those receipts, recoveries or amounts have not been applied
by the Participant as a recovery of any of the classes of Costs itemized in
subsection 3.01 of this Exhibit C.
3 Net Proceeds Calculation.
3.01 "Net Proceeds" means the Gross Receipts minus deductions therefrom of the
then net unrecovered amounts of the following classes of Costs made in the
following itemized order:
(a) Marketing Costs;
(b) Distribution Costs;
(c) Operating Costs;
(d) Taxes and Royalties;
(e) Interest Costs;
(f) Construction Costs; and
(g) Exploration Costs;
it being understood that the deductions in respect of the Costs referred to in
paragraphs 3.01 (a), (b), (d) and (e) of this Exhibit C shall be based on those
Costs as recorded by that Participant and the deductions in respect of the Costs
referred to in paragraphs 3.01 (c), (f) and (g) of this Exhibit C shall be based
on that Participant's proportionate share of those Costs as recorded by the
Manager.
3.02 For greater certainty in calculating Net Proceeds at any time, each of the
classes of Costs shall constitute a separate pool from which all Costs deducted
on any previous quarterly calculation shall be removed and to which, in the case
of all classes of Costs, Costs of those classes recorded since the commencement
of commercial production (in the case of the first
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quarterly calculation) or since the date of the last quarterly calculation (in
the case of any calculation subsequent to the first quarterly calculation) shall
be added.
3.03 If the application of credits to a pool of Costs results in a negative
balance in that pool of Costs, the amount of any negative balance from a Cost
pool shall be applied to reduce the balance then remaining in pools itemized in
subsection 3.01 of this Exhibit C in the order itemized.
4 Adjustments and Verification.
4.01 Payment of any Net Proceeds of Production Royalty by a Participant in the
Agreement shall not prejudice the right of that Participant to protest the
correctness of the statement supporting the payment; provided, however, that all
statements presented to the Owner by that Participant for any quarter shall
conclusively be presumed to be true and correct upon the expiration of twelve
(12) months following the end of the quarter to which the statement relates,
unless within that twelve (12) month period that Participant gives notice to the
Owner making claim on the Owner for an adjustment to the statement which will be
reflected in subsequent payment of the Net Proceeds of Production Royalty.
4.02 The Participant shall not adjust any statement in favor of itself after the
expiration of twelve (12) months following the end of the quarter to which the
statement relates.
4.03 The Owner shall be entitled upon notice to any Participant to have an
auditor selected by the Owner review all appropriate records and perform an
audit and provide the Owner with an opinion that any statement delivered
pursuant to subsection 1.01 of this Exhibit C in respect of any quarterly period
falling within the twelve (12) month period immediately preceding the date of
the Owner notice has been prepared in accordance with this Agreement.
4.04 The time for giving the audit opinion contemplated in subsection 4.03 of
this Exhibit C shall not extend the time for the taking of exception to and
making claim on the Owner for adjustment as provided in subsection 4.01 of this
Exhibit C.
4.05 The cost of the auditor's opinion referred to in subsection 4.03 of this
Exhibit C shall be solely for the account of the Owner requesting the auditor's
opinion unless the auditors
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<PAGE>
opinion confirms that the Owner received less than ninety-seven percent (97%) of
the Net Proceeds of Production Royalty due to it during the year in question, in
which event the Participant shall reimburse the Owner for the reasonable costs
of the audit.
-7-
<PAGE>
EXHIBIT "D"
Attached to and made part of that certain Joint Venture Agreement
dated June 13, 1997, by and between
Idaho Consolidated Metals Corporation and
Cyprus Gold Exploration Corporation
INSURANCE
The Manager shall, at all times while conducting Operations, comply fully
with the applicable worker's compensation laws and purchase, or with the
unanimous consent of the Management Committee provide through self-insurance,
protection for the Participants comparable to that provided under standard form
insurance policies for (i) comprehensive public liability and property damage
with combined limits of Two Million Dollars for bodily injury and property
damage; (ii) automobile insurance with combined limits of Two Million Dollars;
and (iii) adequate and reasonable insurance against risk of fire and other risks
ordinarily insured against in similar operations. If the Manager elects to
self-insure, it shall charge to the Joint Account an amount equal to the premium
it would have paid had it secured and maintained a policy or policies of
insurance on a competitive bid basis in the amount of such coverage. Each
Participant may self-insure or purchase for its own account such additional
insurance as it deems necessary.
-1-
<PAGE>
MEMORANDUM OF
JOINT VENTURE AGREEMENT
THIS MEMORANDUM OF JOINT VENTURE AGREEMENT (the "Memorandum") is made
and entered into and made effective as of this 4th day of December, 1997 (the
"Effective Date"), by and between IDAHO CONSOLIDATED METALS CORPORATION, a
British Columbia corporation, with an address of P.O. Box 1124, Lewiston, Idaho
("ICMC"), and CYPRUS GOLD EXPLORATION CORPORATION, a Delaware corporation, with
an address of 9100 East Mineral Circle, Englewood, Colorado 80112 ("Cyprus").
RECITALS
A. ICMC and Cyprus entered into a Joint Venture Agreement made effective
May 20, 1996, as amended by that certain First Amendment to Joint Venture
Agreement made effective October 7, 1997 (collectively, the "Joint Venture
Agreement), pursuant to which the parties jointly shall conduct exploration work
and evaluate possible mine development, construction and operations on
properties and interests located within the Area of interest, as defined
therein.
B. The parties desire to confirm their rights and obligations under, and to
place of record a notice of, the Joint Venture Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby confessed and acknowledged, and in consideration
of the mutual promises and covenants herein contained, the parties hereto have
agreed and do hereby agree as follows:
1. Defined Terms. The defined terms used in this Memorandum shall have the
meaning given them in the Joint Venture Agreement.
2. Term. The Joint Venture Agreement shall continue in effect until
terminated as expressly provided therein.
3. Initial Contributions; Initial Participating Interests. Subject to the
provisions of the Joint Venture Agreement: (a) ICMC contributed to the purposes
of the Joint Venture Agreement, as its Initial Contribution, the Assets
described in Exhibit A attached thereto; and (b) Cyprus contributed to the
purposes of the Joint Venture Agreement, as its Initial Contribution, the Assets
described in Exhibit A attached thereto and its commitment to fund Operations in
the amount and within the time specified in the Joint Venture Agreement. As
evidenced by that certain Deed and Assignment dated October 7, 1997, Cyprus
completed the performance of all of its obligations required under the Joint
Venture Agreement to earn its initial Participating Interest in the Property;
and by virtue of such Deed and Assignment, ICMC and Cyprus have remised,
released, assigned, sold and conveyed all of their right, title and interest in
and to the Property
1
<PAGE>
unto themselves and their successors and assigns as tenants-in-common as their
interests may appear, to hold the entire undivided interest thereto, subject to
the Joint Venture Agreement. The Property so held is more particularly described
on Exhibit A attached to this Memorandum and by this reference incorporated
herein. As of the date of such Deed and Assignment, the Participating interests
of the Participants were: Cyprus - 50%; ICMC - 50%.
4. Additional Contributions. Subject to certain elections permitted by the
Joint Venture Agreement, Cyprus and ICMC shall be obligated to contribute funds
to adopted Programs and Budgets in proportion to their respective Participating
Interests.
5. Changes in Participating Interests. The Participating Interests shall be
eliminated or changed, in each case in accordance with the provisions of the
Joint Venture Agreement: (a) upon withdrawal or deemed withdrawal of a
Participant; (b) upon an election by either Participant to contribute less to an
adopted Program and Budget than the percentage reflected by its Participating
Interest, or to contribute nothing to such Program and Budget; (c) in the event
of default by either Participant in making its agreed-upon contribution to an
adopted Program and Budget, followed by an election by the other Participant to
invoke certain remedies provided for in the Joint Venture Agreement; (d) upon
Transfer by either Participant of less than all of its Participating Interest;
(e) upon acquisition by either Participant of less than all of the Participating
Interest of the other Participant; or (f) upon Cyprus' election to earn an
additional twenty percent (20%) Participating Interest in the Property.
Participating Interests which are subject to change shall be recalculated in
accordance with the dilution formula set forth in the Joint Venture Agreement. A
Participant whose Participating Interest is reduced through application of such
formula to ten percent (10%) or less shall be deemed to have withdrawn from the
Venture, and such Participant shall have the right to receive a royalty on
production in the amount of five percent (5%) of Net Proceeds, if any,
calculated in accordance with the Joint Venture Agreement. Any reduction or
elimination of a Participant's Participating Interest shall not relieve the
Participant of its share of any liability, whether such liability accrued before
or after such reduction, arising out of Operations conducted prior to such
reduction. Such Participant's share of such liability shall be equal to its
Participating Interest at the time such liability was incurred.
6. Management. Subject to the terms of the Joint Venture Agreement, after
Cyprus has contributed the full amount of its Initial Contribution and has
elected to participate in the Venture, the Participants shall establish a
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee shall consist
of one member appointed by ICMC and one member appointed by Cyprus. Each
Participant, acting through its appointed member shall have a vote equal to its
Participating Interest in the Property. Decisions of the Management Committee
shall be decided by Simple Majority of the Participating Interests. In the event
of a deadlock, the Manager shall hold the deciding vote. Cyprus shall be the
initial Manager of the Venture with overall management responsibility for
Operations.
7. Defaults and Remedies. The Joint Venture Agreement describes certain
events the occurrence of which shall constitute a default, and which if not
cured within the times and in
2
<PAGE>
the manner specified shall entitle the non-defaulting Participant to the
remedies specified. By way of example, and without limitation, if a Participant
defaults in making a contribution or a cash call, or in repaying a loan or any
payment required under the Joint Venture Agreement, it will be difficult to
measure the damages resulting from such default. As to any such default not
cured by the defaulting Participant within thirty (30) days after receiving
notice thereof, as reasonable liquidated damages, the defaulting Participant
shall be deemed to have withdrawn from the Venture and to have automatically
relinquished its Participating Interest to the non-defaulting Participant;
provided, however, the defaulting Participant shall have the right to receive
only from five percent (5%) of Net Proceeds of Production Royalty, calculated in
accordance with the Joint Venture Agreement, and not from any other source, an
amount equal to the defaulting Participant's actual expenditures under the Joint
Venture Agreement.
8. Disposition of Production. Subject to the terms of the Joint Venture
Agreement, each Participant shall take in kind or separately dispose of its
share of all Products in accordance with its Participating Interest. Any extra
expenditure incurred in the taking in kind or separate disposition by any
Participant of its proportionate share of Products shall be borne by such
Participant.
9. Withdrawal and Termination. Subject to the terms of the Joint Venture
Agreement, a Participant may elect to withdraw as a Participant from the Joint
Venture Agreement by giving forty-five (45) days written notice to the other
Participant of the effective date of withdrawal. Upon such withdrawal, the Joint
Venture Agreement shall terminate, and the withdrawing Participant shall be
deemed to have transferred to the remaining Participant all of its Participating
Interest, including all of its Participating Interest in the Assets and in the
Joint Venture Agreement, without cost and free and clear of all royalties, liens
or other encumbrances arising by, through or under such withdrawing Participant.
Any withdrawal under the Joint Venture Agreement shall not relieve the
withdrawing Participant of its share of liabilities to third parties (whether
such liability accrues before or after such withdrawal) including environmental
liabilities arising out of Operations conducted prior to such withdrawal. For
purposes of this Section, the withdrawing Participant's share of such
liabilities shall be equal to its Participating Interest at the time such
liability was incurred. On termination of the Joint Venture Agreement by
termination, expiration or withdrawal of a Participant, the Participant shall
remain liable for continuing obligations thereunder until final settlement of
all accounts and for any liability, whether it accrues before or after
termination, if it arises out of Operations during the term of the Agreement.
10. Area of Interest. The Joint Venture Agreement describes an Area of
Interest surrounding the Property. Subject to the terms of the Joint Venture
Agreement, any Participant or non-Participant that has a production royalty as
provided for in the Joint Venture Agreement shall notify the other Participant
that it has staked or otherwise acquired any right or interest within the Area
of Interest. The party receiving notice shall elect, within thirty (30) days of
receipt of such notice, whether to require that such right or interest be
included in the Property for all purposes of the Joint Venture Agreement. If the
Participant receiving such notice shall elect to include such right or interest
in the Property, it shall reimburse the Acquiring Participant for that portion
of the acquisition cost equivalent to its Participating Interest. Furthermore,
any
3
<PAGE>
property within the Area of Interest which was owned by ICMC or Cyprus on the
effective date of the Joint Venture Agreement, but not included in Exhibit A,
shall be considered Property subject to the Joint Venture Agreement.
11. Non-Compete Covenant. Subject to the terms of the Joint Venture
Agreement, neither a Participant that withdraws or is deemed to have withdrawn
from the Venture shall directly or indirectly acquire any interest in property
within the Area of Interest for two (2) years after the effective date of
withdrawal. A Participant who breaches this covenant shall offer to convey to
the other Participant, without cost, any such property or interest so acquired.
12. Transfer of Interest; Preemptive Right. The Transfer by one Participant
to any third party of an interest in its Participating Interest, including an
interest in the Joint Venture Agreement or the Assets, shall be made solely as
provided in the Joint Venture Agreement and shall be subject to a preemptive
right of the other Participant as and to the extent provided in the Joint
Venture Agreement.
13. Relationship of the Participants. Nothing contained in this Memorandum
or the Joint Venture Agreement shall be deemed to constitute either Participant
the partner of the other, or, except as otherwise expressly provided, to
constitute either Participant the agent or legal representative of the other, or
to create any fiduciary relationship between them. The Participants do not
intend to create, and the Joint Venture Agreement shall not be construed to
create, any mining, commercial or other partnership. Neither Participant shall
have any authority to act for or assume any obligation or responsibility on
behalf of the other Participant, except as otherwise expressly provided in the
Joint Venture Agreement The rights, duties, obligations and liabilities of the
Participants shall be several and not joint or collective. Each Participant
shall be responsible only for its obligations as set out in the Joint Venture
Agreement, and shall be liable only for its share of the costs and expenses as
provided in the Joint Venture Agreement, and it is the express intention of the
Participants that their ownership of Assets and the rights acquired thereunder
shall be as tenants in common.
14. Entire Agreement; Successors and Assigns. The Joint Venture Agreement,
together with the Exhibits which are attached thereto and incorporated therein,
contains the entire understanding of the Participants and supersedes all prior
agreements and understandings between the Participants relating to the subject
matter thereof. No modification of this Memorandum or the Joint Venture
Agreement shall be valid unless made in writing and duly executed by both
Participants. The Joint Venture Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the Participants.
15. Additional Terms. The Joint Venture Agreement contains additional
provisions pertaining to representations and warranties of the Participants;
indemnities; matters pertaining to meetings of the Management Committee and the
authority of the Manager to act on behalf of the Participants and the Venture;
the preparation, presentation and approval of Programs and Budgets; the
confidentiality of, and rights of the Participants in, various kinds of data and
information pertaining to the Venture; the surrender and reacquisition of all or
portions of the Property; the resolution of disputes between the Participants;
force majeure; and various other
4
<PAGE>
provisions. Reference is made to the Joint Venture Agreement for such other
terms and conditions as govern the Joint Venture Agreement, which provisions,
terms and conditions are by this reference incorporated herein. Nothing in this
Memorandum shall limit or affect the rights and duties of the parties under the
Joint Venture Agreement. Information regarding the Joint Venture Agreement can
be obtained from ICMC or Cyprus at the addresses set forth above.
16. Conflicting Terms. In the event of any conflict or discrepancy between
the terms and conditions set forth in this Memorandum and the Joint Venture
Agreement, the terms and conditions of the Joint Venture Agreement shall
control.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Joint
Venture Agreement as of the date first above written.
IDAHO CONSOLIDATED METALS CYPRUS GOLD EXPLORATION CORPORATION
By: /s/ Del Steiner By /s/ S.E. Parry
-------------------------------- ----------------------------------
Title: CEO Title: Vice President
ACKNOWLEDGMENT
STATE OF Idaho )
) ss.
COUNTY OF Nez Perce )
On the 1st day of December, 1997, personally appeared before me Del
Steiner, the Pres/CEO of Idaho Consolidated Metals Corporation, the corporation
that executed the foregoing instrument, who duly acknowledged to me that said
corporation executed the same.
/s/ Trudy R. Weed
----------------------------------
Notary Public
Residing at: Lewiston Id
My Commission Expires:9-21-02
5
<PAGE>
STATE OF Colorado )
) ss.
COUNTY OF Arapahaoe )
On the 4th day of December, 1997, personally appeared before me S.E. Parry,
the Vice President of Cyprus Gold Exploration Corporation, the corporation that
executed the foregoing instrument, who duly acknowledged to me that said
corporation executed the same.
/s/ Alice L. Evans
----------------------------------
Notary Public
Residing at: Englewood, CO
My Commission Expires: My Commission Expires April 3, 1999
6
<PAGE>
EXHIBIT A
To
MEMORANDUM OF
JOINT VENTURE AGREEMENT
By And Between
IDAHO CONSOLIDATED METALS CORPORATION
And
CYPRUS GOLD EXPLORATION CORPORATION
The Petsite Joint Venture Property
The Following Patented and Unpatented Mining Claims Located in Idaho County,
State of Idaho:
7
<PAGE>
EXHIBIT A
Patented Claims
Claim Name Patent No. Mineral Survey No.
- ---------- ---------- ------------------
Friday Fraction 41174 1834
Friday 41174 1834
Regina 39226 1833
Alaska 3 41174 1834
Alaska 4 41174 1834
Key West 272863 2335
Western Star No. 1 272863 2335
Western Star No. 2 272863 2335
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 1 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 000415 Eagle #57 266787 34 T28N R7E
IMC 000416 Eagle #56 266786 3 T27N R7E
IMC 000417 Eagle #55 266785 3 T27N R7E
IMC 000418 Golden Eagle #28 266890 34 T28N R7E
IMC 000420 Eagle #54 266784 3 T27N R7E
IMC 000421 Eagle #33 261027 3 T27N R7E
IMC 000422 Eagle #32 261026 3 T27N R7E
IMC 000423 Eagle #30 260866 3 T27N R7E
IMC 000424 Golden EagLE #19 259576 27 T28N R7E
IMC 000425 Golden Eagle #18 259527 27 T28N R7E
IMC 000427 Golden Eagle 363345 34 T28N R7E
IMC 003996 Golden Eagle #29 270737 34 T28N R7E
IMC 003997 Golden Eagle #30 270738 34 T28N R7E
IMC 003998 Golden Eagle #31 270739 34 T28N R7E
IMC 003999 Golden Eagle #32 270740 34 T28N R7E
IMC 004000 Golden Eagle #33 270741 34 T28N R7E
IMC 004001 Golden Eagle #34 270742 34 T28N R7E
IMC 004002 Golden Eagle #35 270743 34 T28N R7E
IMC 004003 Golden Eagle #36 270744 34 T28N R7E
IMC 004004 Golden Eagle #37 270745 35 T28N R7E
IMC 004005 Golden Eagle #38 270746 34 T28N R7E
IMC 004006 Golden Eagle #39 270747 34 T28N R7E
IMC 004007 Golden Eagle #40 270748 34 T28N R7E
IMC 004008 Golden Eagle #41 270749 34 T28N R7E
IMC 004009 Eagle #58 270750 34 T28N R7E
IMC 004010 Eagle #59 270751 34 T28N R7E
IMC 004011 Eagle #60 270752 33 T28N R7E
IMC 004012 Eagle #61 270753 33 T28N R7E
IMC 004013 Eagle #62 270754 33 T28N R7E
IMC 004015 Eagle #64 270756 33 T28N R7E
IMC 004016 Eagle #65 270757 33 T28N R7E
IMC 004017 Eagle #66 270758 33 T28N R7E
IMC 004018 Eagle #67 270759 3 T27N R7E
IMC 004019 Eagle #68 270760 4 T27N R7E
IMC 004022 Eagle #71 270763 4 T27N R7E
IMC 009325 Eagle #39 277358 3 T27N R7E
IMC 009326 Eagle #40 277359 3 T27N R7E
IMC 009327 Eagle #75 276360 3 T27N R7E
IMC 009330 Eagle #78 276363 3 T27N R7E
IMC 009331 Eagle #79 276399 35 T28N R7E
IMC 009332 Eagle #80 276400 35 T28N R7E
IMC 009333 Eagle #81 276401 35 T28N R7E
IMC 009334 Eagle #82 276402 35 T28N R7E
IMC 009335 Eagle #83 276403 35 T28N R7E
IMC 009336 Eagle #84 276404 35 T28N R7E
IMC 009337 Eagle #85 276405 26 T28N R7E
IMC 009338 Eagle #86 276406 26 T28N R7E
IMC 009339 Eagle #87 276407 26 T28N R7E
IMC 009340 Eagle #88 276408 26 T28N R7E
IMC 009341 Eagle #89 276409 26 T28N R7E
IMC 009342 Eagle #90 276410 26 T28N R7E
IMC 009343 Eagle #91 276411 35 T28N R7E
IMC 009344 Eagle #92 276412 35 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 2 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 009345 Eagle #93 276413 35 T28N R7E
IMC 009346 Eagle #94 276414 35 T28N R7E
IMC 009347 Eagle #95 276415 35 T28N R7E
IMC 009348 Eagle #96 276416 35 T28N R7E
IMC 009349 Eagle #97 276417 35 T28N R7E
IMC 009350 Eagle #98 276418 34 T28N R7E
IMC 009351 Eagle #99 276419 34 T28N R7E
IMC 009352 Eagle #100 276420 27 T28N R7E
IMC 009353 Eagle #101 276421 27 T28N R7E
IMC 009354 Eagle #102 276422 26 T28N R7E
IMC 009355 Eagle #103 276423 26 T28N R7E
IMC 009356 Eagle #104 276424 27 T28N R7E
IMC 009357 Eagle #105 276425 27 T28N R7E
IMC 009358 Eagle #106 276426 27 T28N R7E
IMC 009359 Eagle #107 276427 27 T28N R7E
IMC 009360 Eagle #108 276427 27 T28N R7E
IMC 011113 Golden Eagle #5 257336 27 T28N R7E
IMC 011114 Golden Eagle #6 257337 27 T28N R7E
IMC 011116 Golden Eagle #8 257339 28 T28N R7E
IMC 011117 Golden Eagle #9 257340 27 T28N R7E
IMC 011118 Golden Eagle #10 257341 27 T28N R7E
IMC 011119 Golden Eagle #11 257342 34 T28N R7E
IMC 011120 Golden Eagle #12 257745 27 T28N R7E
IMC 011121 Golden Eagle #13 257746 27 T28N R7E
IMC 011122 Golden Eagle #14 258953 27 T28N R7E
IMC 011123 Golden Eagle #15 258687 34 T28N R7E
IMC 011124 Golden Eagle #16 258588 34 T28N R7E
IMC 011125 Golden Eagle #17 259068 27 T28N R7E
IMC 011126 Golden Eagle #20F 263226 27 T28N R7E
IMC 011127 Golden Eagle #21F 263227 27 T28N R7E
IMC 011128 Golden Eagle #22F 263228 27 T28N R7E
IMC 011129 Golden Eagle #23 263229 27 T28N R7E
IMC 011130 Golden Eagle #24 263230 27 T28N R7E
IMC 011131 Golden Eagle #25 263231 27 T28N R7E
IMC 011132 Golden Eagle #26 263232 27 T28N R7E
IMC 011133 Golden Eagle #27 263233 27 T28N R7E
IMC 011134 Eagle #1 257739 33 T28N R7E
IMC 011135 Eagle #2 257740 33 T28N R7E
IMC 011136 Eagle #3 257741 33 T28N R7E
IMC 011137 Eagle #4 257742 33 T28N R7E
IMC 011138 Eagle #5 257754 33 T28N R7E
IMC 011139 Eagle #6 259069 34 T28N R7E
IMC 011140 Eagle #7 257878 34 T28N R7E
IMC 011142 Eagle #9 258690 33 T28N R7E
IMC 011143 Eagle #10 258691 33 T28N R7E
IMC 011145 Eagle #12 258693 33 T28N R7E
IMC 011146 Eagle #13 259694 33 T28N R7E
IMC 011148 Eagle #15 258696 33 T28N R7E
IMC 011149 Eagle #16 258697 33 T28N R7E
IMC 011151 Eagle #18 258699 33 T28N R7E
IMC 011152 Eagle #19 258700 33 T28N R7E
IMC 011154 Eagle #21 258702 33 T28N R7E
IMC 011155 Eagle #22 258703 33 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 3 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 011156 EAGLE #23 259577 33 T28N R7E
IMC 011157 EAGLE #24 259578 33 T28N R7E
IMC 011158 EAGLE #25 256955 34 T28N R7E
IMC 011159 EAGLE #26 258956 34 T28N R7E
IMC 011160 EAGLE #27 258957 33 T28N R7E
IMC 011161 EAGLE #28 259963 26 T28N R7E
IMC 011162 EAGLE #29 259964 26 T28N R7E
IMC 011163 EAGLE #31 261025 34 T28N R7E
IMC 011164 EAGLE #34 261028 3 T27N R7E
IMC 011165 EAGLE #35 261149 34 T28N R7E
IMC 011166 EAGLE #36 261150 34 T28N R7E
IMC 011167 EAGLE #37 261151 34 T28N R7E
IMC 011168 EAGLE #38 261152 3 T27N R7E
IMC 011169 EAGLE #41 261360 2 T27N R7E
IMC 011170 EAGLE #42 261361 2 T27N R7E
IMC 011171 EAGLE #43 261362 2 T27N R7E
IMC 011172 EAGLE #44 261363 35 T28N R7E
IMC 011173 EAGLE #45 261364 35 T28N R7E
IMC 011174 EAGLE #46 261365 35 T28N R7E
IMC 011175 EAGLE #47 261366 35 T28N R7E
IMC 011176 EAGLE #48 262505 34 T28N R7E
IMC 011177 EAGLE #49 262506 34 T28N R7E
IMC 011178 EAGLE #50 262507 3 T27N R7E
IMC 011179 EAGLE #51 262508 3 T27N R7E
IMC 011180 EAGLE #52 264269 34 T28N R7E
IMC 011659 EAGLE #53 264548 34 T28N R7E
IMC 013965 GOLDEN EAGLE #19X 279162 27 T28N R7E
IMC 029189 THIS IS IT PLACER 192179 27 T28N R7E
IMC 044037 EAGLE #109 281781 2 T27N R7E
IMC 044038 EAGLE #110 281782 2 T27N R7E
IMC 044039 EAGLE #111 281783 2 T27N R7E
IMC 044040 EAGLE #112 281784 2 T27N R7E
IMC 044041 EAGLE #113 281785 2 T27N R7E
IMC 044042 EAGLE #114 281786 3 T27N R7E
IMC 044043 EAGLE #115 281787 2 T27N R7E
IMC 044044 EAGLE #116 281788 2 T27N R7E
IMC 044045 EAGLE #117 281789 2 T27N R7E
IMC 044046 EAGLE #118 281790 3 T27N R7E
IMC 044047 EAGLE #119 281791 2 T27N R7E
IMC 044048 EAGLE #119A 281792 2 T27N R7E
IMC 044049 EAGLE #120 281793 2 T27N R7E
IMC 044050 EAGLE #121 281794 2 T27N R7E
IMC 044051 EAGLE #122 281795 2 T27N R7E
IMC 044052 EAGLE #123 281796 2 T27N R7E
IMC 044053 EAGLE #124 281797 2 T27N R7E
IMC 044954 EAGLE #125 281798 3 T27N R7E
IMC 044055 EAGLE #126 281799 3 T27N R7E
IMC 044056 EAGLE #127 281800 2 T28N R7E
IMC 044057 EAGLE #128 281801 2 T27N R7E
IMC 044058 EAGLE #129 281802 2 T27N R7E
IMC 044059 EAGLE #130 281803 2 T27N R7E
IMC 095654 EAGLE #131 313996 35 T28N R7E
IMC 095655 EAGLE #132 313997 35 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 4 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 095657 EAGLE #134 313999 35 T28N R7E
IMC 095658 EAGLE #135 314000 35 T28N R7E
IMC 095659 EAGLE #136 314001 35 T28N R7E
IMC 095660 EAGLE #137 314002 26 T28N R7E
IMC 095661 EAGLE #138 314003 26 T28N R7E
IMC 095662 EAGLE #139 314004 26 T28N R7E
IMC 095663 EAGLE #140 314005 26 T28N R7E
IMC 095664 EAGLE #141 314006 26 T28N R7E
IMC 095665 EAGLE #142 314007 26 T28N R7E
IMC 095666 EAGLE #143 314008 26 T28N R7E
IMC 095667 EAGLE #144 314009 26 T28N R7E
IMC 095668 EAGLE #145 314010 27 T28N R7E
IMC 095669 EAGLE #146 314011 27 T28N R7E
IMC 095670 EAGLE #147 314012 27 T28N R7E
IMC 095671 EAGLE #148 314013 27 T28N R7E
IMC 095672 EAGLE #149 314014 27 T28N R7E
IMC 095673 EAGLE #150 314015 27 T28N R7E
IMC 095674 EAGLE #151 314016 27 T28N R7E
IMC 095675 EAGLE #151 314017 28 T28N R7E
IMC 095676 EAGLE #153 314018 27 T28N R7E
IMC 095677 EAGLE #154 314019 28 T28N R7E
IMC 095678 EAGLE #155 313995 28 T28N R7E
IMC 095679 EAGLE #156 314020 28 T28N R7E
IMC 095680 EAGLE #157 314021 28 T28N R7E
IMC 101736 EAGLE #178 317838 28 T28N R7E
IMC 101740 EAGLE #182 317842 2 T27N R7E
IMC 101743 EAGLE #185 317845 2 T27N R7E
IMC 123246 LOST WHEELBARROW #1 336122 7 T27N R8E
IMC 123247 LOST WHEELBARROW #2 336123 7 T27N R8E
IMC 123248 LOST WHEELBARROW #3 336124 6 T27N R8E
IMC 175109 PETSITE #1 379469 12 T27N R7E
IMC 175110 PETSITE #2 379470 12 T27N R7E
IMC 175111 PETSITE #3 379471 12 T27N R7E
IMC 175112 PETSITE #4 379472 12 T27N R7E
IMC 175113 PETSITE #5 379473 12 T27N R7E
IMC 175114 PETSITE #6 379474 12 T27N R7E
IMC 175115 PETITE FRACTION 379478 12 T27N R7E
IMC 175116 TORONTO #1 379475 12 T27N R7E
IMC 175117 SIDE HILL GOUGER 379476 12 T27N R7E
IMC 175118 VILLA MARIAA 379477 12 T27N R7E
IMC 175119 GOLDEN EAGLE 379479 34 T28N R7E
IMC 175120 GOLDEN EAGLE #2 379480 34 T28N R7E
IMC 175121 GOLDEN EAGLE #3 379481 27 T28N R7E
IMC 175122 GOLDEN EAGLE #4 379482 27 T28N R7E
IMC 175123 GOLDEN EAGLE #7 379483 27 T28N R7E
IMC 175124 GOLDEN EAGLE #18 379489 27 T28N R7E
IMC 175125 GOLDEN EAGLE #21F 379490 27 T28N R7E
IMC 175126 GOLDEN EAGLE #22F 379491 27 T28N R7E
IMC 175127 EAGLE #30 379498 3 T27N R7E
IMC 175128 EAGLE #32 379499 3 T27N R7E
IMC 175129 EAGLE #34 379500 3 T27N R7E
IMC 175130 EAGLE #39 379501 3 T27N R7E
IMC 175131 EAGLE #40 379502 3 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 5 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 175132 Eagle #4` 379503 2 T27N R7E
IMC 175133 Eagle #42 379504 2 T27N R7E
IMC 175134 eagle #54 379505 3 T27N R7E
IMC 175135 EAGLE #63 379506 33 T28N R7E
IMC 175136 EAGLE #75 379507 3 T27N R7E
IMC 175137 EAGLE #133 379508 2 T27N R7E
IMC 175152 THIS IS IT PLACER 379497 27 T28N R7E
IMC 177154 PT 1 384163 12 T27N R7E
IMC 177155 PT 2 374164 12 T27N R7E
IMC 177156 PT 3 384165 12 T27N R7E
IMC 177157 PT 4 384166 12 T27N R7E
IMC 177158 PT 5 384167 1 T27N R7E
IMC 177159 PT 6 384168 1 T27N R7E
IMC 177160 PT 7 384169 1 T27N R7E
IMC 177161 PT 8 384170 1 T27N R7E
IMC 177162 PT 9 384171 1 T27N R7E
IMC 177163 PT 10 384172 1 T27N R7E
IMC 177164 PT 11 384173 1 T27N R7E
IMC 177165 PT 12 384174 1 T27N R7E
IMC 177167 PT 14 384176 388287 7 T27N R7E
IMC 177168 PT 15 384177 388288 13 T27N R7E
IMC 177169 PT 16 384178 388289 13 T27N R7E
IMC 177170 PT 17 384179 388290 13 T27N R7E
IMC 177171 PT 18 384180 388291 13 T27N R7E
IMC 177172 PT 19 384181 13 T27N R7E
IMC 177173 PT 20 384182 13 T27N R7E
IMC 188184 PT 21 384183 13 T27N R7E
IMC 177175 PT 22 384184 13 T27N R7E
IMC 177176 PT 23 384185 13 T27N R7E
IMC 177177 PT 24 384186 13 T27N R7E
IMC 177178 PT 25 384187 13 T27N R7E
IMC 177179 PT 26 384188 13 T27N R7E
IMC 177180 PT 27 384189 13 T27N R7E
IMC 177181 PT 28 384190 13 T27N R7E
IMC 177182 PT 29 384191 13 T27N R7E
IMC 177183 PT 30 384192 13 T27N R7E
IMC 177184 PT 31 384193 13 T27N R7E
IMC 177185 PT 32 384194 13 T27N R7E
IMC 177186 PT 33 384195 24 T27N R7E
IMC 177187 PT 34 384196 24 T27N R7E
IMC 177188 PT 35 384197 24 T27N R7E
IMC 177189 PT 36 384198 24 T27N R7E
IMC 177190 PT 37 384199 24 T27N R7E
IMC 177191 PT 38 384200 24 T27N R7E
IMC 177192 PT 39 384201 24 T27N R7E
IMC 177193 PT 40 384202 18 T27N R8E
IMC 177194 PT 41 384203 18 T27N R8E
IMC 177195 PT 42 384204 18 T27N R8E
IMC 177196 PT 43 384205 18 T27N R8E
IMC 177197 PT 44 384206 18 T27N R8E
IMC 177198 PT 45 384207 18 T27N R8E
IMC 177199 PT 46 384208 18 T27N R8E
IMC 177200 PT 47 384209 18 T27N R8E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 6 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 177201 PT 48 384210 18 T27N R8E
IMC 177202 PT 49 384211 18 T27N R8E
IMC 177204 PT 51 384212 18 T27N R8E
IMC 177204 PT 51 384213 18 T27N R8E
IMC 177205 PT 52 384214 18 T27N R8E
IMC 177206 PT 53 384215 18 T27N R8E
IMC 177207 PT 54 384216 18 T27N R8E
IMC 177208 PT 55 384217 19 T27N R8E
IMC 177209 PT 56 384218 19 T27N R8E
IMC 177210 PT 57 384219 19 T27N R8E
IMC 177211 PT 58 384220 19 T27N R8E
IMC 177212 PT 59 384221 19 T27N R8E
IMC 177213 PT 60 384222 19 T27N R8E
IMC 177214 PT 61 384223 19 T27N R8E
IMC 177215 PT 62 384224 19 T27N R8E
IMC 177216 PT 63 384225 19 T27N R8E
IMC 177217 PT 64 384226 19 T27N R8E
IMC 177218 PT 65 384227 12 T27N R7E
IMC 177219 PT 66 384228 12 T27N R7E
IMC 177220 PT 67 384229 12 T27N R7E
IMC 177519 PT 68 385924 11 T27N R7E
IMC 177520 PT 69 385925 11 T27N R7E
IMC 177521 PT 70 385926 11 T27N R7E
IMC 177522 PT 71 385927 388292 11 T27N R7E
IMC 177523 PT 72 385928 388293 11 T27N R7E
IMC 177524 PT 73 385929 11 T27N R7E
IMC 177525 PT 74 385930 388294 12 T27N R7E
IMC 177526 PT 75 385931 11 T27N R7E
IMC 177527 PT 76 385932 388295 12 T27N R7E
IMC 177528 PT 77 385933 11 T27N R7E
IMC 177529 PT 78 385934 388296 12 T27N R7E
IMC 177530 PT 79 385935 11 T27N R7E
IMC 177531 PT 80 385936 388297 12 T27N R7E
IMC 177532 PT 81 385937 13 T27N R7E
IMC 177533 PT 82 385938 388298 13 T27N R7E
IMC 177534 PT 83 385939 13 T27N R7E
IMC 177535 PT 84 385940 388299 13 T27N R7E
IMC 177536 PT 85 385941 13 T27N R7E
IMC 177537 PT 86 385942 13 T27N R7E
IMC 177538 PT 87 385943 13 T27N R7E
IMC 177539 PT 88 385944 13 T27N R7E
IMC 177540 PT 89 385945 13 T27N R7E
IMC 177541 PT 90 385946 13 T27N R7E
IMC 177542 PT 91 385947 13 T27N R7E
IMC 177543 PT 92 385948 13 T27N R7E
IMC 177544 PT 93 385949 13 T27N R7E
IMC 177545 PT 94 385950 13 T27N R7E
IMC 177546 PT 95 385951 13 T27N R7E
IMC 177547 PT 96 385952 13 T27N R7E
IMC 177548 PT 97 385953 388300 13 T27N R7E
IMC 177549 PT 98 385954 13 T27N R7E
IMC 177550 PT 99 385955 13 T27N R7E
IMC 177551 PT 100 385956 13 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 7 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 177552 PT 101 389957 13 T27N R7E
IMC 177553 PT 102 385958 13 T27N R7E
IMC 177554 PT 103 385959 13 T27N R7E
IMC 177555 PT 104 385960 2 T27N R7E
IMC 177556 PT 105 385961 2 T27N R7E
IMC 177557 PT 106 385962 2 T27N R7E
IMC 177558 PT 107 385963 2 T27N R7E
IMC 177559 PT 108 385964 2 T27N R7E
IMC 177560 PT 109 385965 12 T27N R7E
IMC 177561 PT 110 385966 1 T27N R7E
IMC 177562 PT 111 385967 1 T27N R7E
IMC 178013 BOX OF RAIN 1 388912 1 T27N R7E
IMC 178014 BOX OF RAIN 2 388913 2 T27N R7E
1 T27N R7E
IMC 178015 BOX OF RAIN 3 388914 35 T28N R7E
2 T27N R7E
1 T27N R7E
IMC 178016 BOX OF RAIN 4 388915 36 T28N R7E
35 T28N R7E
IMC 178017 BOX OF RAIN 5 388916 36 T28N R7E
35 T28N R7E
IMC 178018 BOX OF RAIN 6 388917 36 T28N R7E
35 T28N R7E
IMC 178019 BOX OF RAIN 7 388918 36 T28N R7E
35 T28N R7E
IMC 178020 BOX OF RAIN 8 388919 36 T28N R7E
35 T28N R7E
IMC 178021 BOX OF RAIN 388920 36 T28N R7E
35 T28N R7E
IMC 178022 BOX OF RAIN 10 388921 36 T28N R7E
35 T28N R7E
IMC 178023 BOX OF RAIN 11 388922 35 T28N R7E
IMC 178024 BOX OF RAIN 12 388923 35 T28N R7E
IMC 178025 BOX OF RAIN 13 388924 35 T28N R7E
IMC 178026 BOX OF RAIN 14 388925 35 T28N R7E
IMC 178027 BOX OF RAIN 15 388926 35 T28N R7E
IMC 178028 BOX OF RAIN 16 388927 35 T28N R7E
IMC 178029 BOX OF RAIN 17 388928 35 T28N R7E
IMC 178030 BOX OF RAIN 18 388929 35 T28N R7E
2 T27N R7E
IMC 178031 BOX OF RAIN 19 388930 2 T27N R7E
IMC 178032 BOX OF RAIN 20 388931 2 T27N R7E
IMC 178033 BOX OF RAIN 21 388932 35 T28N R7E
2 T27N R7E
IMC 178034 BOX OF RAIN 22 388933 35 T28N R7E
IMC 178035 BOX OF RAIN 23 388934 35 T28N R7E
IMC 178036 BOX OF RAIN 24 388935 35 T28N R7E
IMC 178037 BOX OF RAIN 25 388936 35 T28N R7E
IMC 178038 BOX OF RAIN 26 388937 35 T28N R7E
IMC 178039 BOX OF RAIN 27 388938 35 T28N R7E
IMC 178040 BOX OF RAIN 28 388939 35 T28N R7E
2 T27N R7E
IMC 178041 BOX OF RAIN 29 388940 2 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 8 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 178042 PT 112 388874 12 T27N R7E
IMC 178043 PT 113 388875 12 T27N R7E
IMC 178044 PT 114 388876 12 T27N R7E
IMC 178045 PT 115 388877 12 T27N R7E
IMC 178046 PT 116 388878 12 T27N R7E
IMC 178047 PT 117 388879 12 T27N R7E
IMC 178048 PT 118 388880 12 T27N R7E
IMC 178049 PT 119 388881 12 T27N R7E
IMC 178050 PT 120 388882 12 T27N R7E
IMC 178051 PT 121 388883 12 T27N R7E
IMC 178052 PT 122 388884 12 T27N R7E
IMC 178053 PT 123 388885 13 T27N R7E
12 T27N R7E
IMC 178054 PT 124 388886 13 T27N R7E
IMC 178055 PT 125 388887 12 T27N R7E
IMC 178056 PT 126 388888 12 T27N R7E
7 T27N R8E
IMC 178057 PT 127 388889 12 T27N R7E
IMC 178058 PT 128 388890 12 T27N R7E
7 T27N R8E
IMC 178059 PT 129 388891 12 T27N R7E
IMC 178060 PT 130 388892 12 T27N R7E
7 T27N R8E
IMC 178061 PT 131 388893 12 T27N R7E
IMC 178062 PT 132 388894 12 T27N R7E
7 T27N R8E
IMC 178063 PT 133 388895 12 T27N R7E
IMC 178064 PT 134 388896 12 T27N R7E
7 T27N R8E
IMC 178065 PT 135 388897 12 T27N R7E
IMC 178066 PT 136 388898 12 T27N R7E
7 T27N R8E
IMC 178067 PT 137 388899 12 T27N R7E
IMC 178068 PT 138 388900 13 T27N R7E
12 T27N R7E
IMC 178069 PT 139 388901 13 T27N R7E
IMC 178070 PT 140 388902 7 T27N R8E
IMC 178071 PT 141 388903 7 T27N R8E
IMC 178072 PT 142 388904 7 T27N R8E
IMC 178073 PT 143 388905 7 T27N R8E
IMC 178074 PT 144 388906 7 T27N R8E
IMC 178075 PT 145 388907 7 T27N R8E
IMC 178076 PT 146 388908 7 T27N R8E
IMC 178077 PT 147 388909 7 T27N R8E
IMC 178078 PT 148 388910 18 T27N R8E
IMC 178079 PT 149 388911 1 T27N R7E
IMC 179302 PT 150 393865 24 T27N R7E
IMC 179303 PT 151 393866 24 T27N R7E
IMC 179304 PT 152 393867 24 T27N R7E
IMC 179305 PT 153 393868 24 T27N R7E
IMC 179306 PT 154 393869 24 T27N R7E
IMC 179307 PT 155 393870 24 T27N R7E
IMC 179308 PT 156 393871 24 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 9 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 179309 PT 157 393872 24 T27N R7E
IMC 179310 PT 158 393873 24 T27N R7E
IMC 179311 PT 159 383874 25 T27N R7E
24 T27N R7E
IMC 179312 PT 160 393875 25 T27N R7E
24 T27N R7E
IMC 179313 PT 161 393876 25 T27N R7E
IMC 179314 PT 162 383977 25 T27N R7E
IMC 170315 PT 163 393878 25 T27N R7E
IMC 179316 PT 164 393879 25 T27N R7E
IMC 179317 PT 165 393880 24 T27N R8E
29 T27N R7E
IMC 179318 PT 166 393881 24 T27N R7E
19 T27N R8E
IMC 179319 PT 167 393882 19 T27N R8E
IMC 179320 PT 168 393883 24 T27N R7E
19 T27N R8E
IMC 179321 PT 169 393884 19 T27N R8E
IMC 179322 PT 170 393885 30 T27N R8E
25 T27N R7E
24 T27N R7E
19 T27N R8E
IMC 179323 PT 171 393886 30 T27N R8E
19 T27N R8E
IMC 179324 PT 172 393887 30 T27N R8E
25 T27N R7E
IMC 179325 PT 173 393888 30 T27N R7E
25 T27N R7E
IMC 179326 PT 174 393889 24 T27N R7E
IMC 179327 LARRY 393890 1 T27N R7E
IMC 179328 MOE 393891 1 T27N R7E
IMC 179329 SHEMP 393892 1 T27N R7E
IMC 179330 CURLY 393893 1 T27N R7E
IMC 179334 PT 175 393989 24 T27N R7E
IMC 179972 BOX OF RAIN 30 396344 1 T27N R7E
IMC 179973 BOX OF RAIN 31 396345 36 T28N R7E
IMC 179974 BOX OF RAIN 32 395346 3 T27N R7E
2 T27N R7E
IMC 179975 BOX OF RAIN 33 396347 2 T27N R7E
IMC 179976 BOX OF RAIN 34 396348 2 T27N R7E
IMC 179977 BOX OF RAIN 35 396349 35 T28N R7E
IMC 179978 BOX OF RAIN 36 396350 35 T28N R7E
IMC 179979 BOX OF RAIN 37 396351 36 T28N R7E
35 T28N R7E
IMC 179980 BOX OF RAIN 38 396352 35 T28N R7E
IMC 179981 BOX OF RAIN 39 396353 36 T28N R7E
35 T28N R7E
IMC 179982 PT 176 396255 1 T27N R7E
IMC 179983 PT 177 396256 1 T27N R7E
IMC 179984 PT 178 396257 1 T27N R7E
IMC 179985 PT 179 396258 1 T27N R7E
IMC 179986 PT 180 396259 1 T27N R7E
IMC 179987 PT 181 396260 1 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 10 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 179988 PT 182 396261 1 T27N R7E
IMC 179989 PT 183 396262 1 T27N R7E
IMC 179990 PT 184 396263 1 T27N R7E
IMC 179991 PT 185 396264 1 T27N R7E
IMC 179992 PT 186 396265 1 T27N R7E
IMC 179993 PT 187 396266 36 T28N R7E
1 T27N R7E
IMC 179994 PT 188 396267 36 T28N R7E
IMC 179995 PT 189 396268 36 T28N R7E
IMC 179996 PT 190 396269 36 T28N R7E
IMC 179997 PT 191 396270 36 T28N R7E
IMC 179998 PT 192 396271 36 T28N R7E
IMC 179999 PT 193 396272 36 T28N R7E
IMC 180000 PT 194 396273 36 T28N R7E
IMC 180001 PT 195 396274 36 T28N R7E
IMC 180002 PT 196 396275 36 T28N R7E
IMC 180003 PT 197 396276 36 T28N R7E
IMC 180004 PT 198 396277 36 T28N R7E
IMC 180005 PT 199 396278 36 T28N R7E
IMC 180006 PT 200 396279 36 T28N R7E
IMC 180007 PT 201 396280 36 T28N R7E
IMC 180008 PT 202 396281 36 T28N R7E
IMC 180009 PT 203 396282 36 T28N R7E
IMC 180010 PT 204 396283 36 T28N R7E
IMC 180011 PT 205 396284 36 T28N R7E
IMC 180012 PT 206 396285 36 T28N R7E
</TABLE>
Total Number of Claims: 467
<PAGE>
FIRST AMENDMENT TO
JOINT VENTURE AGREEMENT
THIS FIRST AMENDMENT TO JOINT VENTURE AGREEMENT is made effective as of
October 7, 1997, between IDAHO CONSOLIDATED METALS CORPORATION, a British
Columbia corporation, with an address of P.O. Box 1124, Lewiston, Idaho, 8301
(hereinafter referred to "ICMC"), and CYPRUS GOLD EXPLORATION CORPORATION, a
Delaware corporation, with offices at 9100 East Mineral Circle, Englewood,
Colorado 80112 (hereinafter referred to as "Cyprus").
RECITALS
A. ICMC and Cyprus entered into that certain Joint Venture Agreement
effective May 20, 1996 (the "Petsite Joint Venture Agreement"), pursuant to
which, among other things, ICMC and Cyprus each contributed to the joint venture
established therein certain patented and unpatented mining claims and agreements
and other interests in respect thereof, which mining claims, agreements and
interests are defined in the Petsite Joint Venture Agreement as the "Property."
B. Since the effective date of the Petsite Joint Venture Agreement, each
party has acquired or located certain additional patented and unpatented mining
claims and agreements and other interests in respect thereof, which the parties
have agreed to include within the definition of "Property" for all purposes
under the Petsite Joint Venture Agreement.
C. ICMC and Cyprus desire to amend the Petsite Joint Venture Agreement to
conform the definition of "Property" therein to the mining claims, agreements
and interests actually held by the parties subject to the Petsite Joint Venture
Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. All defined terms used in this First Amendment shall have the
meaning given to them in the Petsite Joint Venture Agreement.
2. "Property" Defined. Exhibits A-1 and A-2 to the Petsite Joint Venture
Agreement are deleted in their entirety, and in their place are inserted the new
Exhibit A attached to this First Amendment and by this reference incorporated
herein. Exhibit A describes the patented and unpatented mining claims and the
agreements and other interests in respect thereof which ICMC and Cyprus hold as
tenants in common, subject to the Petsite Joint Venture Agreement.
3. Acknowledgment. ICMC and Cyprus each acknowledge their acquisition of an
interest in those certain unpatented mining claims known as the CNTL #1 through
#9 and
1
<PAGE>
the CNTL #20 (Idaho BLM Nos. 100371 through 100379, inclusive, and No. 100390)
by virtue of that certain Amendment to Friday Option Agreement dated September
5, 1997 by and between ICMC, Cyprus, Arctic Fox Ltd., and Idaho Gold
Corporation, and by virtue of that certain First Amendment to Orogrande/Deadwood
Option Agreement dated September 5, 1997 by and between the same parties. ICMC
and Cyprus further acknowledge that the CNTL claims fall within the Area of
Interest described in the Petsite Joint Venture Agreement, but that ICMC and
Cyprus have agreed to hold these claims subject to that certain Joint Venture
Agreement between them dated June 13, 1997, in respect of the Orogrande and
Deadwood Properties. ICMC and Cyprus agree that their mutual agreement to
exclude the CNTL claims from the definition of "Property" in the Petsite Joint
Venture Agreement shall not be deemed or construed to constitute any waiver,
default or failure of performance under the Petsite Joint Venture Agreement.
4. Ratification. Except as specifically amended herein, the Petsite Joint
Venture Agreement remains in full force and effect. ICMC and Cyprus confirm that
as of the effective date of this First Amendment, all of the obligations of ICMC
and Cyprus under the Petsite Joint Venture Agreement have been fully performed
and that neither ICMC nor Cyprus are in default thereof.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Joint Venture Agreement on the day and year first above written.
IDAHO CONSOLIDATED METALS CORPORATION CYPRUS GOLD EXPLORATION CORPORATION
By: /s/ Del Steiner By: /s/ S.E. Parry
--------------------------------- --------------------------
Title: Pres./CEO Title: Vice President
--------------------------------- --------------------------
2
<PAGE>
EXHIBIT A
to
FIRST AMENDMENT TO
JOINT VENTURE AGREEMENT
between
IDAHO CONSOLIDATED METALS CORPORATION
and
CYPRUS GOLD EXPLORATION CORPORATION
The Petsite Joint Venture Property
The Following Patented and Unpatented Mining Claims Located in Idaho
County, State of Idaho:
<PAGE>
EXHIBIT A
Patented Claims
Claim Name Patent No. Mineral Survey No.
- ---------- ---------- ------------------
Friday Fraction 41174 1834
Friday 41174 1834
Regina 39226 1833
Alaska 3 41174 1834
Alaska 4 41174 1834
Key West 272863 2335
Western Star No. 1 272863 2335
Western Star No. 2 272863 2335
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 1 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 000415 EAGLE #57 266787 34 T28N R7E
IMC 000416 EAGLE #56 266786 3 T27N R7E
IMC 000417 EAGLE #55 266785 3 T27N R7E
IMC 000418 GOLDEN EAGLE #28 266890 34 T28N R7E
IMC 000420 EAGLE #54 266784 3 T27N R7E
IMC 000421 EAGLE #33 261027 3 T27N R7E
IMC 000422 EAGLE #32 261026 3 T27N R7E
IMC 000423 EAGLE #30 260866 3 T27N R7E
IMC 000424 GOLDEN EAGLE #19 259576 27 T28N R7E
IMC 000425 GOLDEN EAGLE #18 259527 27 T28N R7E
IMC 000427 GOLDEN EAGLE 363345 34 T28N R7E
IMC 003996 GOLDEN EAGLE #29 270737 34 T28N R7E
IMC 003997 GOLDEN EAGLE #30 270738 34 T28N R7E
IMC 003998 GOLDEN EAGLE #31 270739 34 T28N R7E
IMC 003999 GOLDEN EAGLE #32 270740 34 T28N R7E
IMC 004000 GOLDEN EAGLE #33 270741 34 T28N R7E
IMC 004001 GOLDEN EAGLE #34 270742 34 T28N R7E
IMC 004002 GOLDEN EAGLE #35 270743 34 T28N R7E
IMC 004003 GOLDEN EAGLE #36 270744 34 T28N R7E
IMC 004004 GOLDEN EAGLE #37 270745 35 T28N R7E
IMC 004005 GOLDEN EAGLE #38 270746 34 T28N R7E
IMC 004006 GOLDEN EAGLE #39 270747 34 T28N R7E
IMC 004007 GOLDEN EAGLE #40 270748 34 T28N R7E
IMC 004008 GOLDEN EAGLE #41 270749 34 T28N R7E
IMC 004009 EAGLE #58 270750 34 T28N R7E
IMC 004010 EAGLE #59 270751 34 T28N R7E
IMC 004011 EAGLE #60 270752 33 T28N R7E
IMC 004012 EAGLE #61 270753 33 T28N R7E
IMC 004013 EAGLE #62 270754 33 T28N R7E
IMC 004015 EAGLE #64 270756 33 T28N R7E
IMC 004016 EAGLE #65 270757 33 T28N R7E
IMC 004017 EAGLE #66 270758 33 T28N R7E
IMC 004018 EAGLE #67 270759 3 T27N R7E
IMC 004019 EAGLE #68 270760 4 T27N R7E
IMC 004022 EAGLE #71 270763 4 T27N R7E
IMC 009325 EAGLE #39 277358 3 T27N R7E
IMC 009326 EAGLE #40 277359 3 T27N R7E
IMC 009327 EAGLE #75 276360 3 T27N R7E
IMC 009330 EAGLE #78 276363 3 T27N R7E
IMC 009331 EAGLE #79 276399 35 T28N R7E
IMC 009332 EAGLE #80 276400 35 T28N R7E
IMC 009333 EAGLE #81 276401 35 T28N R7E
IMC 009334 EAGLE #82 276402 35 T28N R7E
IMC 009335 EAGLE #83 276403 35 T28N R7E
IMC 009336 EAGLE #84 276404 35 T28N R7E
IMC 009337 EAGLE #85 276405 26 T28N R7E
IMC 009338 EAGLE #86 276406 26 T28N R7E
IMC 009339 EAGLE #87 276407 26 T28N R7E
IMC 009340 EAGLE #88 276408 26 T28N R7E
IMC 009341 EAGLE #89 276409 26 T28N R7E
IMC 009342 EAGLE #90 276410 26 T28N R7E
IMC 009343 EAGLE #91 276411 35 T28N R7E
IMC 009344 EAGLE #92 276412 35 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 2 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 009345 EAGLE #93 276413 35 T28N R7E
IMC 009346 EAGLE #94 276414 35 T28N R7E
IMC 009347 EAGLE #95 276415 35 T28N R7E
IMC 009348 EAGLE #96 276416 35 T28N R7E
IMC 009349 EAGLE #97 276417 35 T28N R7E
IMC 009350 EAGLE #98 276418 34 T28N R7E
IMC 009351 EAGLE #99 276419 34 T28N R7E
IMC 009352 EAGLE #100 276420 27 T28N R7E
IMC 009353 EAGLE #101 276421 27 T28N R7E
IMC 009354 EAGLE #102 276422 26 T28N R7E
IMC 009355 EAGLE #103 276423 26 T28N R7E
IMC 009356 EAGLE #104 276424 27 T28N R7E
IMC 009357 EAGLE #105 276425 27 T28N R7E
IMC 009358 EAGLE #106 276426 27 T28N R7E
IMC 009359 EAGLE #107 276427 27 T28N R7E
IMC 009360 EAGLE #108 276427 27 T28N R7E
IMC 011113 GOLDEN EAGLE #5 257336 27 T28N R7E
IMC 011114 GOLDEN EAGLE #6 257337 27 T28N R7E
IMC 011116 GOLDEN EAGLE #8 257339 28 T28N R7E
IMC 011117 GOLDEN EAGLE #9 257340 27 T28N R7E
IMC 011118 GOLDEN EAGLE #10 257341 27 T28N R7E
IMC 011119 GOLDEN EAGLE #11 257342 34 T28N R7E
IMC 011120 GOLDEN EAGLE #12 257745 27 T28N R7E
IMC 011121 GOLDEN EAGLE #13 257746 27 T28N R7E
IMC 011122 GOLDEN EAGLE #14 258953 27 T28N R7E
IMC 011123 GOLDEN EAGLE #15 258687 34 T28N R7E
IMC 011124 GOLDEN EAGLE #16 258588 34 T28N R7E
IMC 011125 GOLDEN EAGLE #17 259068 27 T28N R7E
IMC 011126 GOLDEN EAGLE #20F 263226 27 T28N R7E
IMC 011127 GOLDEN EAGLE #21F 263227 27 T28N R7E
IMC 011128 GOLDEN EAGLE #22F 263228 27 T28N R7E
IMC 011129 GOLDEN EAGLE #23 263229 27 T28N R7E
IMC 011130 GOLDEN EAGLE #24 263230 27 T28N R7E
IMC 011131 GOLDEN EAGLE #25 263231 27 T28N R7E
IMC 011132 GOLDEN EAGLE #26 263232 27 T28N R7E
IMC 011133 GOLDEN EAGLE #27 263233 27 T28N R7E
IMC 011134 EAGLE #1 257739 33 T28N R7E
IMC 011135 EAGLE #2 257740 33 T28N R7E
IMC 011136 EAGLE #3 257741 33 T28N R7E
IMC 011137 EAGLE #4 257742 33 T28N R7E
IMC 011138 EAGLE #5 257754 33 T28N R7E
IMC 011139 EAGLE #6 259069 34 T28N R7E
IMC 011140 EAGLE #7 257878 34 T28N R7E
IMC 011142 EAGLE #9 258690 33 T28N R7E
IMC 011143 EAGLE #10 258691 33 T28N R7E
IMC 011145 EAGLE #12 258693 33 T28N R7E
IMC 011146 EAGLE #13 259694 33 T28N R7E
IMC 011148 EAGLE #15 258696 33 T28N R7E
IMC 011149 EAGLE #16 258697 33 T28N R7E
IMC 011151 EAGLE #18 258699 33 T28N R7E
IMC 011152 EAGLE #19 258700 33 T28N R7E
IMC 011154 EAGLE #21 258702 33 T28N R7E
IMC 011155 EAGLE #22 258703 33 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 3 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 011156 EAGLE #23 259577 33 T28N R7E
IMC 011157 EAGLE #24 259578 33 T28N R7E
IMC 011158 EAGLE #25 256955 34 T28N R7E
IMC 011159 EAGLE #26 258956 34 T28N R7E
IMC 011160 EAGLE #27 258957 33 T28N R7E
IMC 011161 EAGLE #28 259963 26 T28N R7E
IMC 011162 EAGLE #29 259964 26 T28N R7E
IMC 011163 EAGLE #31 261025 34 T28N R7E
IMC 011164 EAGLE #34 261028 3 T27N R7E
IMC 011165 EAGLE #35 261149 34 T28N R7E
IMC 011166 EAGLE #36 261150 34 T28N R7E
IMC 011167 EAGLE #37 261151 34 T28N R7E
IMC 011168 EAGLE #38 261152 3 T27N R7E
IMC 011169 EAGLE #41 261360 2 T27N R7E
IMC 011170 EAGLE #42 261361 2 T27N R7E
IMC 011171 EAGLE #43 261362 2 T27N R7E
IMC 011172 EAGLE #44 261363 35 T28N R7E
IMC 011173 EAGLE #45 261364 35 T28N R7E
IMC 011174 EAGLE #46 261365 35 T28N R7E
IMC 011175 EAGLE #47 261366 35 T28N R7E
IMC 011176 EAGLE #48 262505 34 T28N R7E
IMC 011177 EAGLE #49 262506 34 T28N R7E
IMC 011178 EAGLE #50 262507 3 T27N R7E
IMC 011179 EAGLE #51 262508 3 T27N R7E
IMC 011180 EAGLE #52 264269 34 T28N R7E
IMC 011659 EAGLE #53 264548 34 T28N R7E
IMC 013965 GOLDEN EAGLE #19X 279162 27 T28N R7E
IMC 029189 THIS IS IT PLACER 192179 27 T28N R7E
IMC 044037 EAGLE #109 281781 2 T27N R7E
IMC 044038 EAGLE #110 281782 2 T27N R7E
IMC 044039 EAGLE #111 281783 2 T27N R7E
IMC 044040 EAGLE #112 281784 2 T27N R7E
IMC 044041 EAGLE #113 281785 2 T27N R7E
IMC 044042 EAGLE #114 281786 3 T27N R7E
IMC 044043 EAGLE #115 281787 2 T27N R7E
IMC 044044 EAGLE #116 281788 2 T27N R7E
IMC 044045 EAGLE #117 281789 2 T27N R7E
IMC 044046 EAGLE #118 281790 3 T27N R7E
IMC 044047 EAGLE #119 281791 2 T27N R7E
IMC 044048 EAGLE #119A 281792 2 T27N R7E
IMC 044049 EAGLE #120 281793 2 T27N R7E
IMC 044050 EAGLE #121 281794 2 T27N R7E
IMC 044051 EAGLE #122 281795 2 T27N R7E
IMC 044052 EAGLE #123 281796 2 T27N R7E
IMC 044053 EAGLE #124 281797 2 T27N R7E
IMC 044954 EAGLE #125 281798 3 T27N R7E
IMC 044055 EAGLE #126 281799 3 T27N R7E
IMC 044056 EAGLE #127 281800 2 T28N R7E
IMC 044057 EAGLE #128 281801 2 T27N R7E
IMC 044058 EAGLE #129 281802 2 T27N R7E
IMC 044059 EAGLE #130 281803 2 T27N R7E
IMC 095654 EAGLE #131 313996 35 T28N R7E
IMC 095655 EAGLE #132 313997 35 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 4 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 095657 EAGLE #134 313999 35 T28N R7E
IMC 095658 EAGLE #135 314000 35 T28N R7E
IMC 095659 EAGLE #136 314001 35 T28N R7E
IMC 095660 EAGLE #137 314002 26 T28N R7E
IMC 095661 EAGLE #138 314003 26 T28N R7E
IMC 095662 EAGLE #139 314004 26 T28N R7E
IMC 095663 EAGLE #140 314005 26 T28N R7E
IMC 095664 EAGLE #141 314006 26 T28N R7E
IMC 095665 EAGLE #142 314007 26 T28N R7E
IMC 095666 EAGLE #143 314008 26 T28N R7E
IMC 095667 EAGLE #144 314009 26 T28N R7E
IMC 095668 EAGLE #145 314010 27 T28N R7E
IMC 095669 EAGLE #146 314011 27 T28N R7E
IMC 095670 EAGLE #147 314012 27 T28N R7E
IMC 095671 EAGLE #148 314013 27 T28N R7E
IMC 095672 EAGLE #149 314014 27 T28N R7E
IMC 095673 EAGLE #150 314015 27 T28N R7E
IMC 095674 EAGLE #151 314016 27 T28N R7E
IMC 095675 EAGLE #151 314017 28 T28N R7E
IMC 095676 EAGLE #153 314018 27 T28N R7E
IMC 095677 EAGLE #154 314019 28 T28N R7E
IMC 095678 EAGLE #155 313995 28 T28N R7E
IMC 095679 EAGLE #156 314020 28 T28N R7E
IMC 095680 EAGLE #157 314021 28 T28N R7E
IMC 101736 EAGLE #178 317838 28 T28N R7E
IMC 101740 EAGLE #182 317842 2 T27N R7E
IMC 101743 EAGLE #185 317845 2 T27N R7E
IMC 123246 LOST WHEELBARROW #1 336122 7 T27N R8E
IMC 123247 LOST WHEELBARROW #2 336123 7 T27N R8E
IMC 123248 LOST WHEELBARROW #3 336124 6 T27N R8E
IMC 175109 PETSITE #1 379469 12 T27N R7E
IMC 175110 PETSITE #2 379470 12 T27N R7E
IMC 175111 PETSITE #3 379471 12 T27N R7E
IMC 175112 PETSITE #4 379472 12 T27N R7E
IMC 175113 PETSITE #5 379473 12 T27N R7E
IMC 175114 PETSITE #6 379474 12 T27N R7E
IMC 175115 PETITE FRACTION 379478 12 T27N R7E
IMC 175116 TORONTO #1 379475 12 T27N R7E
IMC 175117 SIDE HILL GOUGER 379476 12 T27N R7E
IMC 175118 VILLA MARIAA 379477 12 T27N R7E
IMC 175119 GOLDEN EAGLE 379479 34 T28N R7E
IMC 175120 GOLDEN EAGLE #2 379480 34 T28N R7E
IMC 175121 GOLDEN EAGLE #3 379481 27 T28N R7E
IMC 175122 GOLDEN EAGLE #4 379482 27 T28N R7E
IMC 175123 GOLDEN EAGLE #7 379483 27 T28N R7E
IMC 175124 GOLDEN EAGLE #18 379489 27 T28N R7E
IMC 175125 GOLDEN EAGLE #21F 379490 27 T28N R7E
IMC 175126 GOLDEN EAGLE #22F 379491 27 T28N R7E
IMC 175127 EAGLE #30 379498 3 T27N R7E
IMC 175128 EAGLE #32 379499 3 T27N R7E
IMC 175129 EAGLE #34 379500 3 T27N R7E
IMC 175130 EAGLE #39 379501 3 T27N R7E
IMC 175131 EAGLE #40 379502 3 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 5 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 175132 EAGLE #4` 379503 2 T27N R7E
IMC 175133 EAGLE #42 379504 2 T27N R7E
IMC 175134 EAGLE #54 379505 3 T27N R7E
IMC 175135 EAGLE #63 379506 33 T28N R7E
IMC 175136 EAGLE #75 379507 3 T27N R7E
IMC 175137 EAGLE #133 379508 2 T27N R7E
IMC 175152 THIS IS IT PLACER 379497 27 T28N R7E
IMC 177154 PT 1 384163 12 T27N R7E
IMC 177155 PT 2 374164 12 T27N R7E
IMC 177156 PT 3 384165 12 T27N R7E
IMC 177157 PT 4 384166 12 T27N R7E
IMC 177158 PT 5 384167 1 T27N R7E
IMC 177159 PT 6 384168 1 T27N R7E
IMC 177160 PT 7 384169 1 T27N R7E
IMC 177161 PT 8 384170 1 T27N R7E
IMC 177162 PT 9 384171 1 T27N R7E
IMC 177163 PT 10 384172 1 T27N R7E
IMC 177164 PT 11 384173 1 T27N R7E
IMC 177165 PT 12 384174 1 T27N R7E
IMC 177167 PT 14 384176 388287 7 T27N R7E
IMC 177168 PT 15 384177 388288 13 T27N R7E
IMC 177169 PT 16 384178 388289 13 T27N R7E
IMC 177170 PT 17 384179 388290 13 T27N R7E
IMC 177171 PT 18 384180 388291 13 T27N R7E
IMC 177172 PT 19 384181 13 T27N R7E
IMC 177173 PT 20 384182 13 T27N R7E
IMC 188184 PT 21 384183 13 T27N R7E
IMC 177175 PT 22 384184 13 T27N R7E
IMC 177176 PT 23 384185 13 T27N R7E
IMC 177177 PT 24 384186 13 T27N R7E
IMC 177178 PT 25 384187 13 T27N R7E
IMC 177179 PT 26 384188 13 T27N R7E
IMC 177180 PT 27 384189 13 T27N R7E
IMC 177181 PT 28 384190 13 T27N R7E
IMC 177182 PT 29 384191 13 T27N R7E
IMC 177183 PT 30 384192 13 T27N R7E
IMC 177184 PT 31 384193 13 T27N R7E
IMC 177185 PT 32 384194 13 T27N R7E
IMC 177186 PT 33 384195 24 T27N R7E
IMC 177187 PT 34 384196 24 T27N R7E
IMC 177188 PT 35 384197 24 T27N R7E
IMC 177189 PT 36 384198 24 T27N R7E
IMC 177190 PT 37 384199 24 T27N R7E
IMC 177191 PT 38 384200 24 T27N R7E
IMC 177192 PT 39 384201 24 T27N R7E
IMC 177193 PT 40 384202 18 T27N R8E
IMC 177194 PT 41 384203 18 T27N R8E
IMC 177195 PT 42 384204 18 T27N R8E
IMC 177196 PT 43 384205 18 T27N R8E
IMC 177197 PT 44 384206 18 T27N R8E
IMC 177198 PT 45 384207 18 T27N R8E
IMC 177199 PT 46 384208 18 T27N R8E
IMC 177200 PT 47 384209 18 T27N R8E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 6 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 177201 PT 48 384210 18 T27N R8E
IMC 177202 PT 49 384211 18 T27N R8E
IMC 177204 PT 51 384212 18 T27N R8E
IMC 177204 PT 51 384213 18 T27N R8E
IMC 177205 PT 52 384214 18 T27N R8E
IMC 177206 PT 53 384215 18 T27N R8E
IMC 177207 PT 54 384216 18 T27N R8E
IMC 177208 PT 55 384217 19 T27N R8E
IMC 177209 PT 56 384218 19 T27N R8E
IMC 177210 PT 57 384219 19 T27N R8E
IMC 177211 PT 58 384220 19 T27N R8E
IMC 177212 PT 59 384221 19 T27N R8E
IMC 177213 PT 60 384222 19 T27N R8E
IMC 177214 PT 61 384223 19 T27N R8E
IMC 177215 PT 62 384224 19 T27N R8E
IMC 177216 PT 63 384225 19 T27N R8E
IMC 177217 PT 64 384226 19 T27N R8E
IMC 177218 PT 65 384227 12 T27N R7E
IMC 177219 PT 66 384228 12 T27N R7E
IMC 177220 PT 67 384229 12 T27N R7E
IMC 177519 PT 68 385924 11 T27N R7E
IMC 177520 PT 69 385925 11 T27N R7E
IMC 177521 PT 70 385926 11 T27N R7E
IMC 177522 PT 71 385927 388292 11 T27N R7E
IMC 177523 PT 72 385928 388293 11 T27N R7E
IMC 177524 PT 73 385929 11 T27N R7E
IMC 177525 PT 74 385930 388294 12 T27N R7E
IMC 177526 PT 75 385931 11 T27N R7E
IMC 177527 PT 76 385932 388295 12 T27N R7E
IMC 177528 PT 77 385933 11 T27N R7E
IMC 177529 PT 78 385934 388296 12 T27N R7E
IMC 177530 PT 79 385935 11 T27N R7E
IMC 177531 PT 80 385936 388297 12 T27N R7E
IMC 177532 PT 81 385937 13 T27N R7E
IMC 177533 PT 82 385938 388298 13 T27N R7E
IMC 177534 PT 83 385939 13 T27N R7E
IMC 177535 PT 84 385940 388299 13 T27N R7E
IMC 177536 PT 85 385941 13 T27N R7E
IMC 177537 PT 86 385942 13 T27N R7E
IMC 177538 PT 87 385943 13 T27N R7E
IMC 177539 PT 88 385944 13 T27N R7E
IMC 177540 PT 89 385945 13 T27N R7E
IMC 177541 PT 90 385946 13 T27N R7E
IMC 177542 PT 91 385947 13 T27N R7E
IMC 177543 PT 92 385948 13 T27N R7E
IMC 177544 PT 93 385949 13 T27N R7E
IMC 177545 PT 94 385950 13 T27N R7E
IMC 177546 PT 95 385951 13 T27N R7E
IMC 177547 PT 96 385952 13 T27N R7E
IMC 177548 PT 97 385953 388300 13 T27N R7E
IMC 177549 PT 98 385954 13 T27N R7E
IMC 177550 PT 99 385955 13 T27N R7E
IMC 177551 PT 100 385956 13 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 7 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 177552 PT 101 389957 13 T27N R7E
IMC 177553 PT 102 385958 13 T27N R7E
IMC 177554 PT 103 385959 13 T27N R7E
IMC 177555 PT 104 385960 2 T27N R7E
IMC 177556 PT 105 385961 2 T27N R7E
IMC 177557 PT 106 385962 2 T27N R7E
IMC 177558 PT 107 385963 2 T27N R7E
IMC 177559 PT 108 385964 2 T27N R7E
IMC 177560 PT 109 385965 12 T27N R7E
IMC 177561 PT 110 385966 1 T27N R7E
IMC 177562 PT 111 385967 1 T27N R7E
IMC 178013 BOX OF RAIN 1 388912 1 T27N R7E
IMC 178014 BOX OF RAIN 2 388913 2 T27N R7E
1 T27N R7E
IMC 178015 BOX OF RAIN 3 388914 35 T28N R7E
2 T27N R7E
1 T27N R7E
IMC 178016 BOX OF RAIN 4 388915 36 T28N R7E
35 T28N R7E
IMC 178017 BOX OF RAIN 5 388916 36 T28N R7E
35 T28N R7E
IMC 178018 BOX OF RAIN 6 388917 36 T28N R7E
35 T28N R7E
IMC 178019 BOX OF RAIN 7 388918 36 T28N R7E
35 T28N R7E
IMC 178020 BOX OF RAIN 8 388919 36 T28N R7E
35 T28N R7E
IMC 178021 BOX OF RAIN 388920 36 T28N R7E
35 T28N R7E
IMC 178022 BOX OF RAIN 10 388921 36 T28N R7E
35 T28N R7E
IMC 178023 BOX OF RAIN 11 388922 35 T28N R7E
IMC 178024 BOX OF RAIN 12 388923 35 T28N R7E
IMC 178025 BOX OF RAIN 13 388924 35 T28N R7E
IMC 178026 BOX OF RAIN 14 388925 35 T28N R7E
IMC 178027 BOX OF RAIN 15 388926 35 T28N R7E
IMC 178028 BOX OF RAIN 16 388927 35 T28N R7E
IMC 178029 BOX OF RAIN 17 388928 35 T28N R7E
IMC 178030 BOX OF RAIN 18 388929 35 T28N R7E
2 T27N R7E
IMC 178031 BOX OF RAIN 19 388930 2 T27N R7E
IMC 178032 BOX OF RAIN 20 388931 2 T27N R7E
IMC 178033 BOX OF RAIN 21 388932 35 T28N R7E
2 T27N R7E
IMC 178034 BOX OF RAIN 22 388933 35 T28N R7E
IMC 178035 BOX OF RAIN 23 388934 35 T28N R7E
IMC 178036 BOX OF RAIN 24 388935 35 T28N R7E
IMC 178037 BOX OF RAIN 25 388936 35 T28N R7E
IMC 178038 BOX OF RAIN 26 388937 35 T28N R7E
IMC 178039 BOX OF RAIN 27 388938 35 T28N R7E
IMC 178040 BOX OF RAIN 28 388939 35 T28N R7E
2 T27N R7E
IMC 178041 BOX OF RAIN 29 388940 2 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 8 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 178042 PT 112 388874 12 T27N R7E
IMC 178043 PT 113 388875 12 T27N R7E
IMC 178044 PT 114 388876 12 T27N R7E
IMC 178045 PT 115 388877 12 T27N R7E
IMC 178046 PT 116 388878 12 T27N R7E
IMC 178047 PT 117 388879 12 T27N R7E
IMC 178048 PT 118 388880 12 T27N R7E
IMC 178049 PT 119 388881 12 T27N R7E
IMC 178050 PT 120 388882 12 T27N R7E
IMC 178051 PT 121 388883 12 T27N R7E
IMC 178052 PT 122 388884 12 T27N R7E
IMC 178053 PT 123 388885 13 T27N R7E
12 T27N R7E
IMC 178054 PT 124 388886 13 T27N R7E
IMC 178055 PT 125 388887 12 T27N R7E
IMC 178056 PT 126 388888 12 T27N R7E
7 T27N R8E
IMC 178057 PT 127 388889 12 T27N R7E
IMC 178058 PT 128 388890 12 T27N R7E
7 T27N R8E
IMC 178059 PT 129 388891 12 T27N R7E
IMC 178060 PT 130 388892 12 T27N R7E
7 T27N R8E
IMC 178061 PT 131 388893 12 T27N R7E
IMC 178062 PT 132 388894 12 T27N R7E
7 T27N R8E
IMC 178063 PT 133 388895 12 T27N R7E
IMC 178064 PT 134 388896 12 T27N R7E
7 T27N R8E
IMC 178065 PT 135 388897 12 T27N R7E
IMC 178066 PT 136 388898 12 T27N R7E
7 T27N R8E
IMC 178067 PT 137 388899 12 T27N R7E
IMC 178068 PT 138 388900 13 T27N R7E
12 T27N R7E
IMC 178069 PT 139 388901 13 T27N R7E
IMC 178070 PT 140 388902 7 T27N R8E
IMC 178071 PT 141 388903 7 T27N R8E
IMC 178072 PT 142 388904 7 T27N R8E
IMC 178073 PT 143 388905 7 T27N R8E
IMC 178074 PT 144 388906 7 T27N R8E
IMC 178075 PT 145 388907 7 T27N R8E
IMC 178076 PT 146 388908 7 T27N R8E
IMC 178077 PT 147 388909 7 T27N R8E
IMC 178078 PT 148 388910 18 T27N R8E
IMC 178079 PT 149 388911 1 T27N R7E
IMC 179302 PT 150 393865 24 T27N R7E
IMC 179303 PT 151 393866 24 T27N R7E
IMC 179304 PT 152 393867 24 T27N R7E
IMC 179305 PT 153 393868 24 T27N R7E
IMC 179306 PT 154 393869 24 T27N R7E
IMC 179307 PT 155 393870 24 T27N R7E
IMC 179308 PT 156 393871 24 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 9 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 179309 PT 157 393872 24 T27N R7E
IMC 179310 PT 158 393873 24 T27N R7E
IMC 179311 PT 159 383874 25 T27N R7E
24 T27N R7E
IMC 179312 PT 160 393875 25 T27N R7E
24 T27N R7E
IMC 179313 PT 161 393876 25 T27N R7E
IMC 179314 PT 162 383977 25 T27N R7E
IMC 170315 PT 163 393878 25 T27N R7E
IMC 179316 PT 164 393879 25 T27N R7E
IMC 179317 PT 165 393880 24 T27N R8E
29 T27N R7E
IMC 179318 PT 166 393881 24 T27N R7E
19 T27N R8E
IMC 179319 PT 167 393882 19 T27N R8E
IMC 179320 PT 168 393883 24 T27N R7E
19 T27N R8E
IMC 179321 PT 169 393884 19 T27N R8E
IMC 179322 PT 170 393885 30 T27N R8E
25 T27N R7E
24 T27N R7E
19 T27N R8E
IMC 179323 PT 171 393886 30 T27N R8E
19 T27N R8E
IMC 179324 PT 172 393887 30 T27N R8E
25 T27N R7E
IMC 179325 PT 173 393888 30 T27N R7E
25 T27N R7E
IMC 179326 PT 174 393889 24 T27N R7E
IMC 179327 LARRY 393890 1 T27N R7E
IMC 179328 MOE 393891 1 T27N R7E
IMC 179329 SHEMP 393892 1 T27N R7E
IMC 179330 CURLY 393893 1 T27N R7E
IMC 179334 PT 175 393989 24 T27N R7E
IMC 179972 BOX OF RAIN 30 396344 1 T27N R7E
IMC 179973 BOX OF RAIN 31 396345 36 T28N R7E
IMC 179974 BOX OF RAIN 32 395346 3 T27N R7E
2 T27N R7E
IMC 179975 BOX OF RAIN 33 396347 2 T27N R7E
IMC 179976 BOX OF RAIN 34 396348 2 T27N R7E
IMC 179977 BOX OF RAIN 35 396349 35 T28N R7E
IMC 179978 BOX OF RAIN 36 396350 35 T28N R7E
IMC 179979 BOX OF RAIN 37 396351 36 T28N R7E
35 T28N R7E
IMC 179980 BOX OF RAIN 38 396352 35 T28N R7E
IMC 179981 BOX OF RAIN 39 396353 36 T28N R7E
35 T28N R7E
IMC 179982 PT 176 396255 1 T27N R7E
IMC 179983 PT 177 396256 1 T27N R7E
IMC 179984 PT 178 396257 1 T27N R7E
IMC 179985 PT 179 396258 1 T27N R7E
IMC 179986 PT 180 396259 1 T27N R7E
IMC 179987 PT 181 396260 1 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 10 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 179988 PT 182 396261 1 T27N R7E
IMC 179989 PT 183 396262 1 T27N R7E
IMC 179990 PT 184 396263 1 T27N R7E
IMC 179991 PT 185 396264 1 T27N R7E
IMC 179992 PT 186 396265 1 T27N R7E
IMC 179993 PT 187 396266 36 T28N R7E
1 T27N R7E
IMC 179994 PT 188 396267 36 T28N R7E
IMC 179995 PT 189 396268 36 T28N R7E
IMC 179996 PT 190 396269 36 T28N R7E
IMC 179997 PT 191 396270 36 T28N R7E
IMC 179998 PT 192 396271 36 T28N R7E
IMC 179999 PT 193 396272 36 T28N R7E
IMC 180000 PT 194 396273 36 T28N R7E
IMC 180001 PT 195 396274 36 T28N R7E
IMC 180002 PT 196 396275 36 T28N R7E
IMC 180003 PT 197 396276 36 T28N R7E
IMC 180004 PT 198 396277 36 T28N R7E
IMC 180005 PT 199 396278 36 T28N R7E
IMC 180006 PT 200 396279 36 T28N R7E
IMC 180007 PT 201 396280 36 T28N R7E
IMC 180008 PT 202 396281 36 T28N R7E
IMC 180009 PT 203 396282 36 T28N R7E
IMC 180010 PT 204 396283 36 T28N R7E
IMC 180011 PT 205 396284 36 T28N R7E
IMC 180012 PT 206 396285 36 T28N R7E
</TABLE>
Total Number of Claims: 467
<PAGE>
DEED AND ASSIGNMENT
THIS DEED AND ASSIGNMENT is made and entered into this 7th day of October,
1997, by and between Idaho Consolidated Metals Corporation, a British Columbia
corporation, with an address of P.O. Box 1124, Lewiston, Idaho, 83501
(hereinafter referred to as "ICMC"), and Cyprus Gold Exploration Corporation, a
Delaware corporation, with offices at 9100 East Mineral Circle, Englewood,
Colorado 80112 (hereinafter referred to as "Cyprus").
WITNESSETH
WHEREAS, ICMC and Cyprus entered into that certain Joint Venture Agreement
dated May 20, 1996, as amended by that certain First Amendment to Joint Venture
Agreement dated October 7, 1997 (the "Joint Venture Agreement"), pursuant to
which, among other things, ICMC and Cyprus each contributed to the joint venture
established therein those certain patented and unpatented mining claims and
agreements and other interests in respect thereof (the "Property") more
particularly described on Exhibit A attached hereto and by this reference
incorporated herein;
WHEREAS, Cyprus completed the performance of all of its obligations
required under Section 5.3 of the Joint Venture Agreement in order for Cyprus to
earn its initial Participating Interest in the Property in accordance with
Section 5.5 of the Joint Venture Agreement;
WHEREAS, ICMC and Cyprus desire to enter into this Deed and Assignment to
acknowledge Cyprus' performance of all such obligations, and to effect the
parties' transfer of all their right, title and interest in and to the Property
to themselves, to be held by the parties as tenants in common as their interests
may appear, subject to the Joint Venture Agreement.
NOW, THEREFORE, for and in consideration of Cyprus' performance,
satisfactory to ICMC, of all of its obligations under Section 5.3 of the Joint
Venture Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by ICMC and Cyprus, ICMC and
Cyprus have remised, which is hereby acknowledged by ICMC and Cyprus, ICMC and
Cyprus have remised, released, assigned, sold and conveyed, and by these
presents do remise, release, assign, sell and convey, all of their right, title
and interest in and to the Property unto themselves and their successors and
assigns as tenants in common as their interests may appear, to hold the entire
undivided interest thereto, subject to the Joint Venture Agreement.
TO HAVE AND TO HOLD the same, together with any appurtenances and
privileges thereunto belonging, or in anywise thereunto appertaining, unto ICMC
and Cyprus and their successors and assigns. Each of ICMC and Cyprus, for itself
and its successors and assigns, do covenant and agree that it shall and will
warrant and forever defend the Property remised, released, assigned, sold and
conveyed hereunder by it in the quiet and peaceable possession of ICMC and
Cyprus and their successors and assigns
1
<PAGE>
against any and all and every person or persons lawfully claiming or to claim
the whole or any part thereof, by, through or under it, to warrant and forever
defend.
IN WITNESS WHEREOF, ICMC and Cyprus have executed and delivered this Deed
and Assignment as of the date first written above.
IDAHO CONSOLIDATED METALS CORPORATION CYPRUS GOLD EXPLORATION CORPORATION
By: /s/ Del Steiner By: /s/ S.E. Parry
--------------------------------- --------------------------
Title: Pres./CEO Title: Vice President
--------------------------------- --------------------------
ACKNOWLEDGEMENT
STATE OF Idaho )
) ss.
COUNTY OF Nez Perce )
On the 1st day of December, 1997, personally appeared before me Del
Steiner, the Pres/CEO of Idaho Consolidated Metals Corporation, the corporation
that executed the foregoing instrument, who duly acknowledged to me that said
corporation executed the same.
/s/ Trudy R. Weed
----------------------------------------
Notary Public
Residing at Lewiston, Id.
My Commission Expires: 9-21-02
STATE OF Colorado )
) ss.
COUNTY OF Arapahoe )
On the 4th day of December, 1997, personally appeared before me S.E. Parry,
the Vice President of Cyprus Gold Exploration Corporation, the corporation that
executed the foregoing instrument, who duly acknowledged to me that said
corporation executed the same.
/s/ Alice L. Evans
----------------------------------------
Notary Public
Residing at Englewood, Co.
My Commission Expires: My Commission Expires April 3, 1999
2
<PAGE>
EXHIBIT A
to
DEED AND ASSIGNMENT
between
IDAHO CONSOLIDATED METALS CORPORATION
and
CYPRUS GOLD EXPLORATION CORPORATION
The Petsite Joint Venture Property
The following Patented and Unpatented Mining Claims Located in Idaho County,
State of Idaho:
<PAGE>
EXHIBIT A
Patented Claims
Claim Name Patent No. Mineral Survey No.
- ---------- ---------- ------------------
Friday Fraction 41174 1834
Friday 41174 1834
Regina 39226 1833
Alaska 3 41174 1834
Alaska 4 41174 1834
Key West 272863 2335
Western Star No. 1 272863 2335
Western Star No. 2 272863 2335
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 1 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 000415 EAGLE #57 266787 34 T28N R7E
IMC 000416 EAGLE #56 266786 3 T27N R7E
IMC 000417 EAGLE #55 266785 3 T27N R7E
IMC 000418 GOLDEN EAGLE #28 266890 34 T28N R7E
IMC 000420 EAGLE #54 266784 3 T27N R7E
IMC 000421 EAGLE #33 261027 3 T27N R7E
IMC 000422 EAGLE #32 261026 3 T27N R7E
IMC 000423 EAGLE #30 260866 3 T27N R7E
IMC 000424 GOLDEN EAGLE #19 259576 27 T28N R7E
IMC 000425 GOLDEN EAGLE #18 259527 27 T28N R7E
IMC 000427 GOLDEN EAGLE 363345 34 T28N R7E
IMC 003996 GOLDEN EAGLE #29 270737 34 T28N R7E
IMC 003997 GOLDEN EAGLE #30 270738 34 T28N R7E
IMC 003998 GOLDEN EAGLE #31 270739 34 T28N R7E
IMC 003999 GOLDEN EAGLE #32 270740 34 T28N R7E
IMC 004000 GOLDEN EAGLE #33 270741 34 T28N R7E
IMC 004001 GOLDEN EAGLE #34 270742 34 T28N R7E
IMC 004002 GOLDEN EAGLE #35 270743 34 T28N R7E
IMC 004003 GOLDEN EAGLE #36 270744 34 T28N R7E
IMC 004004 GOLDEN EAGLE #37 270745 35 T28N R7E
IMC 004005 GOLDEN EAGLE #38 270746 34 T28N R7E
IMC 004006 GOLDEN EAGLE #39 270747 34 T28N R7E
IMC 004007 GOLDEN EAGLE #40 270748 34 T28N R7E
IMC 004008 GOLDEN EAGLE #41 270749 34 T28N R7E
IMC 004009 EAGLE #58 270750 34 T28N R7E
IMC 004010 EAGLE #59 270751 34 T28N R7E
IMC 004011 EAGLE #60 270752 33 T28N R7E
IMC 004012 EAGLE #61 270753 33 T28N R7E
IMC 004013 EAGLE #62 270754 33 T28N R7E
IMC 004015 EAGLE #64 270756 33 T28N R7E
IMC 004016 EAGLE #65 270757 33 T28N R7E
IMC 004017 EAGLE #66 270758 33 T28N R7E
IMC 004018 EAGLE #67 270759 3 T27N R7E
IMC 004019 EAGLE #68 270760 4 T27N R7E
IMC 004022 EAGLE #71 270763 4 T27N R7E
IMC 009325 EAGLE #39 277358 3 T27N R7E
IMC 009326 EAGLE #40 277359 3 T27N R7E
IMC 009327 EAGLE #75 276360 3 T27N R7E
IMC 009330 EAGLE #78 276363 3 T27N R7E
IMC 009331 EAGLE #79 276399 35 T28N R7E
IMC 009332 EAGLE #80 276400 35 T28N R7E
IMC 009333 EAGLE #81 276401 35 T28N R7E
IMC 009334 EAGLE #82 276402 35 T28N R7E
IMC 009335 EAGLE #83 276403 35 T28N R7E
IMC 009336 EAGLE #84 276404 35 T28N R7E
IMC 009337 EAGLE #85 276405 26 T28N R7E
IMC 009338 EAGLE #86 276406 26 T28N R7E
IMC 009339 EAGLE #87 276407 26 T28N R7E
IMC 009340 EAGLE #88 276408 26 T28N R7E
IMC 009341 EAGLE #89 276409 26 T28N R7E
IMC 009342 EAGLE #90 276410 26 T28N R7E
IMC 009343 EAGLE #91 276411 35 T28N R7E
IMC 009344 EAGLE #92 276412 35 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 2 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 009345 EAGLE #93 276413 35 T28N R7E
IMC 009346 EAGLE #94 276414 35 T28N R7E
IMC 009347 EAGLE #95 276415 35 T28N R7E
IMC 009348 EAGLE #96 276416 35 T28N R7E
IMC 009349 EAGLE #97 276417 35 T28N R7E
IMC 009350 EAGLE #98 276418 34 T28N R7E
IMC 009351 EAGLE #99 276419 34 T28N R7E
IMC 009352 EAGLE #100 276420 27 T28N R7E
IMC 009353 EAGLE #101 276421 27 T28N R7E
IMC 009354 EAGLE #102 276422 26 T28N R7E
IMC 009355 EAGLE #103 276423 26 T28N R7E
IMC 009356 EAGLE #104 276424 27 T28N R7E
IMC 009357 EAGLE #105 276425 27 T28N R7E
IMC 009358 EAGLE #106 276426 27 T28N R7E
IMC 009359 EAGLE #107 276427 27 T28N R7E
IMC 009360 EAGLE #108 276427 27 T28N R7E
IMC 011113 GOLDEN EAGLE #5 257336 27 T28N R7E
IMC 011114 GOLDEN EAGLE #6 257337 27 T28N R7E
IMC 011116 GOLDEN EAGLE #8 257339 28 T28N R7E
IMC 011117 GOLDEN EAGLE #9 257340 27 T28N R7E
IMC 011118 GOLDEN EAGLE #10 257341 27 T28N R7E
IMC 011119 GOLDEN EAGLE #11 257342 34 T28N R7E
IMC 011120 GOLDEN EAGLE #12 257745 27 T28N R7E
IMC 011121 GOLDEN EAGLE #13 257746 27 T28N R7E
IMC 011122 GOLDEN EAGLE #14 258953 27 T28N R7E
IMC 011123 GOLDEN EAGLE #15 258687 34 T28N R7E
IMC 011124 GOLDEN EAGLE #16 258588 34 T28N R7E
IMC 011125 GOLDEN EAGLE #17 259068 27 T28N R7E
IMC 011126 GOLDEN EAGLE #20F 263226 27 T28N R7E
IMC 011127 GOLDEN EAGLE #21F 263227 27 T28N R7E
IMC 011128 GOLDEN EAGLE #22F 263228 27 T28N R7E
IMC 011129 GOLDEN EAGLE #23 263229 27 T28N R7E
IMC 011130 GOLDEN EAGLE #24 263230 27 T28N R7E
IMC 011131 GOLDEN EAGLE #25 263231 27 T28N R7E
IMC 011132 GOLDEN EAGLE #26 263232 27 T28N R7E
IMC 011133 GOLDEN EAGLE #27 263233 27 T28N R7E
IMC 011134 EAGLE #1 257739 33 T28N R7E
IMC 011135 EAGLE #2 257740 33 T28N R7E
IMC 011136 EAGLE #3 257741 33 T28N R7E
IMC 011137 EAGLE #4 257742 33 T28N R7E
IMC 011138 EAGLE #5 257754 33 T28N R7E
IMC 011139 EAGLE #6 259069 34 T28N R7E
IMC 011140 EAGLE #7 257878 34 T28N R7E
IMC 011142 EAGLE #9 258690 33 T28N R7E
IMC 011143 EAGLE #10 258691 33 T28N R7E
IMC 011145 EAGLE #12 258693 33 T28N R7E
IMC 011146 EAGLE #13 259694 33 T28N R7E
IMC 011148 EAGLE #15 258696 33 T28N R7E
IMC 011149 EAGLE #16 258697 33 T28N R7E
IMC 011151 EAGLE #18 258699 33 T28N R7E
IMC 011152 EAGLE #19 258700 33 T28N R7E
IMC 011154 EAGLE #21 258702 33 T28N R7E
IMC 011155 EAGLE #22 258703 33 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 3 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 011156 EAGLE #23 259577 33 T28N R7E
IMC 011157 EAGLE #24 259578 33 T28N R7E
IMC 011158 EAGLE #25 256955 34 T28N R7E
IMC 011159 EAGLE #26 258956 34 T28N R7E
IMC 011160 EAGLE #27 258957 33 T28N R7E
IMC 011161 EAGLE #28 259963 26 T28N R7E
IMC 011162 EAGLE #29 259964 26 T28N R7E
IMC 011163 EAGLE #31 261025 34 T28N R7E
IMC 011164 EAGLE #34 261028 3 T27N R7E
IMC 011165 EAGLE #35 261149 34 T28N R7E
IMC 011166 EAGLE #36 261150 34 T28N R7E
IMC 011167 EAGLE #37 261151 34 T28N R7E
IMC 011168 EAGLE #38 261152 3 T27N R7E
IMC 011169 EAGLE #41 261360 2 T27N R7E
IMC 011170 EAGLE #42 261361 2 T27N R7E
IMC 011171 EAGLE #43 261362 2 T27N R7E
IMC 011172 EAGLE #44 261363 35 T28N R7E
IMC 011173 EAGLE #45 261364 35 T28N R7E
IMC 011174 EAGLE #46 261365 35 T28N R7E
IMC 011175 EAGLE #47 261366 35 T28N R7E
IMC 011176 EAGLE #48 262505 34 T28N R7E
IMC 011177 EAGLE #49 262506 34 T28N R7E
IMC 011178 EAGLE #50 262507 3 T27N R7E
IMC 011179 EAGLE #51 262508 3 T27N R7E
IMC 011180 EAGLE #52 264269 34 T28N R7E
IMC 011659 EAGLE #53 264548 34 T28N R7E
IMC 013965 GOLDEN EAGLE #19X 279162 27 T28N R7E
IMC 029189 THIS IS IT PLACER 192179 27 T28N R7E
IMC 044037 EAGLE #109 281781 2 T27N R7E
IMC 044038 EAGLE #110 281782 2 T27N R7E
IMC 044039 EAGLE #111 281783 2 T27N R7E
IMC 044040 EAGLE #112 281784 2 T27N R7E
IMC 044041 EAGLE #113 281785 2 T27N R7E
IMC 044042 EAGLE #114 281786 3 T27N R7E
IMC 044043 EAGLE #115 281787 2 T27N R7E
IMC 044044 EAGLE #116 281788 2 T27N R7E
IMC 044045 EAGLE #117 281789 2 T27N R7E
IMC 044046 EAGLE #118 281790 3 T27N R7E
IMC 044047 EAGLE #119 281791 2 T27N R7E
IMC 044048 EAGLE #119A 281792 2 T27N R7E
IMC 044049 EAGLE #120 281793 2 T27N R7E
IMC 044050 EAGLE #121 281794 2 T27N R7E
IMC 044051 EAGLE #122 281795 2 T27N R7E
IMC 044052 EAGLE #123 281796 2 T27N R7E
IMC 044053 EAGLE #124 281797 2 T27N R7E
IMC 044954 EAGLE #125 281798 3 T27N R7E
IMC 044055 EAGLE #126 281799 3 T27N R7E
IMC 044056 EAGLE #127 281800 2 T28N R7E
IMC 044057 EAGLE #128 281801 2 T27N R7E
IMC 044058 EAGLE #129 281802 2 T27N R7E
IMC 044059 EAGLE #130 281803 2 T27N R7E
IMC 095654 EAGLE #131 313996 35 T28N R7E
IMC 095655 EAGLE #132 313997 35 T28N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 4 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 095657 EAGLE #134 313999 35 T28N R7E
IMC 095658 EAGLE #135 314000 35 T28N R7E
IMC 095659 EAGLE #136 314001 35 T28N R7E
IMC 095660 EAGLE #137 314002 26 T28N R7E
IMC 095661 EAGLE #138 314003 26 T28N R7E
IMC 095662 EAGLE #139 314004 26 T28N R7E
IMC 095663 EAGLE #140 314005 26 T28N R7E
IMC 095664 EAGLE #141 314006 26 T28N R7E
IMC 095665 EAGLE #142 314007 26 T28N R7E
IMC 095666 EAGLE #143 314008 26 T28N R7E
IMC 095667 EAGLE #144 314009 26 T28N R7E
IMC 095668 EAGLE #145 314010 27 T28N R7E
IMC 095669 EAGLE #146 314011 27 T28N R7E
IMC 095670 EAGLE #147 314012 27 T28N R7E
IMC 095671 EAGLE #148 314013 27 T28N R7E
IMC 095672 EAGLE #149 314014 27 T28N R7E
IMC 095673 EAGLE #150 314015 27 T28N R7E
IMC 095674 EAGLE #151 314016 27 T28N R7E
IMC 095675 EAGLE #151 314017 28 T28N R7E
IMC 095676 EAGLE #153 314018 27 T28N R7E
IMC 095677 EAGLE #154 314019 28 T28N R7E
IMC 095678 EAGLE #155 313995 28 T28N R7E
IMC 095679 EAGLE #156 314020 28 T28N R7E
IMC 095680 EAGLE #157 314021 28 T28N R7E
IMC 101736 EAGLE #178 317838 28 T28N R7E
IMC 101740 EAGLE #182 317842 2 T27N R7E
IMC 101743 EAGLE #185 317845 2 T27N R7E
IMC 123246 LOST WHEELBARROW #1 336122 7 T27N R8E
IMC 123247 LOST WHEELBARROW #2 336123 7 T27N R8E
IMC 123248 LOST WHEELBARROW #3 336124 6 T27N R8E
IMC 175109 PETSITE #1 379469 12 T27N R7E
IMC 175110 PETSITE #2 379470 12 T27N R7E
IMC 175111 PETSITE #3 379471 12 T27N R7E
IMC 175112 PETSITE #4 379472 12 T27N R7E
IMC 175113 PETSITE #5 379473 12 T27N R7E
IMC 175114 PETSITE #6 379474 12 T27N R7E
IMC 175115 PETITE FRACTION 379478 12 T27N R7E
IMC 175116 TORONTO #1 379475 12 T27N R7E
IMC 175117 SIDE HILL GOUGER 379476 12 T27N R7E
IMC 175118 VILLA MARIAA 379477 12 T27N R7E
IMC 175119 GOLDEN EAGLE 379479 34 T28N R7E
IMC 175120 GOLDEN EAGLE #2 379480 34 T28N R7E
IMC 175121 GOLDEN EAGLE #3 379481 27 T28N R7E
IMC 175122 GOLDEN EAGLE #4 379482 27 T28N R7E
IMC 175123 GOLDEN EAGLE #7 379483 27 T28N R7E
IMC 175124 GOLDEN EAGLE #18 379489 27 T28N R7E
IMC 175125 GOLDEN EAGLE #21F 379490 27 T28N R7E
IMC 175126 GOLDEN EAGLE #22F 379491 27 T28N R7E
IMC 175127 EAGLE #30 379498 3 T27N R7E
IMC 175128 EAGLE #32 379499 3 T27N R7E
IMC 175129 EAGLE #34 379500 3 T27N R7E
IMC 175130 EAGLE #39 379501 3 T27N R7E
IMC 175131 EAGLE #40 379502 3 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 5 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 175132 EAGLE #4` 379503 2 T27N R7E
IMC 175133 EAGLE #42 379504 2 T27N R7E
IMC 175134 EAGLE #54 379505 3 T27N R7E
IMC 175135 EAGLE #63 379506 33 T28N R7E
IMC 175136 EAGLE #75 379507 3 T27N R7E
IMC 175137 EAGLE #133 379508 2 T27N R7E
IMC 175152 THIS IS IT PLACER 379497 27 T28N R7E
IMC 177154 PT 1 384163 12 T27N R7E
IMC 177155 PT 2 374164 12 T27N R7E
IMC 177156 PT 3 384165 12 T27N R7E
IMC 177157 PT 4 384166 12 T27N R7E
IMC 177158 PT 5 384167 1 T27N R7E
IMC 177159 PT 6 384168 1 T27N R7E
IMC 177160 PT 7 384169 1 T27N R7E
IMC 177161 PT 8 384170 1 T27N R7E
IMC 177162 PT 9 384171 1 T27N R7E
IMC 177163 PT 10 384172 1 T27N R7E
IMC 177164 PT 11 384173 1 T27N R7E
IMC 177165 PT 12 384174 1 T27N R7E
IMC 177167 PT 14 384176 388287 7 T27N R7E
IMC 177168 PT 15 384177 388288 13 T27N R7E
IMC 177169 PT 16 384178 388289 13 T27N R7E
IMC 177170 PT 17 384179 388290 13 T27N R7E
IMC 177171 PT 18 384180 388291 13 T27N R7E
IMC 177172 PT 19 384181 13 T27N R7E
IMC 177173 PT 20 384182 13 T27N R7E
IMC 188184 PT 21 384183 13 T27N R7E
IMC 177175 PT 22 384184 13 T27N R7E
IMC 177176 PT 23 384185 13 T27N R7E
IMC 177177 PT 24 384186 13 T27N R7E
IMC 177178 PT 25 384187 13 T27N R7E
IMC 177179 PT 26 384188 13 T27N R7E
IMC 177180 PT 27 384189 13 T27N R7E
IMC 177181 PT 28 384190 13 T27N R7E
IMC 177182 PT 29 384191 13 T27N R7E
IMC 177183 PT 30 384192 13 T27N R7E
IMC 177184 PT 31 384193 13 T27N R7E
IMC 177185 PT 32 384194 13 T27N R7E
IMC 177186 PT 33 384195 24 T27N R7E
IMC 177187 PT 34 384196 24 T27N R7E
IMC 177188 PT 35 384197 24 T27N R7E
IMC 177189 PT 36 384198 24 T27N R7E
IMC 177190 PT 37 384199 24 T27N R7E
IMC 177191 PT 38 384200 24 T27N R7E
IMC 177192 PT 39 384201 24 T27N R7E
IMC 177193 PT 40 384202 18 T27N R8E
IMC 177194 PT 41 384203 18 T27N R8E
IMC 177195 PT 42 384204 18 T27N R8E
IMC 177196 PT 43 384205 18 T27N R8E
IMC 177197 PT 44 384206 18 T27N R8E
IMC 177198 PT 45 384207 18 T27N R8E
IMC 177199 PT 46 384208 18 T27N R8E
IMC 177200 PT 47 384209 18 T27N R8E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 6 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 177201 PT 48 384210 18 T27N R8E
IMC 177202 PT 49 384211 18 T27N R8E
IMC 177204 PT 51 384212 18 T27N R8E
IMC 177204 PT 51 384213 18 T27N R8E
IMC 177205 PT 52 384214 18 T27N R8E
IMC 177206 PT 53 384215 18 T27N R8E
IMC 177207 PT 54 384216 18 T27N R8E
IMC 177208 PT 55 384217 19 T27N R8E
IMC 177209 PT 56 384218 19 T27N R8E
IMC 177210 PT 57 384219 19 T27N R8E
IMC 177211 PT 58 384220 19 T27N R8E
IMC 177212 PT 59 384221 19 T27N R8E
IMC 177213 PT 60 384222 19 T27N R8E
IMC 177214 PT 61 384223 19 T27N R8E
IMC 177215 PT 62 384224 19 T27N R8E
IMC 177216 PT 63 384225 19 T27N R8E
IMC 177217 PT 64 384226 19 T27N R8E
IMC 177218 PT 65 384227 12 T27N R7E
IMC 177219 PT 66 384228 12 T27N R7E
IMC 177220 PT 67 384229 12 T27N R7E
IMC 177519 PT 68 385924 11 T27N R7E
IMC 177520 PT 69 385925 11 T27N R7E
IMC 177521 PT 70 385926 11 T27N R7E
IMC 177522 PT 71 385927 388292 11 T27N R7E
IMC 177523 PT 72 385928 388293 11 T27N R7E
IMC 177524 PT 73 385929 11 T27N R7E
IMC 177525 PT 74 385930 388294 12 T27N R7E
IMC 177526 PT 75 385931 11 T27N R7E
IMC 177527 PT 76 385932 388295 12 T27N R7E
IMC 177528 PT 77 385933 11 T27N R7E
IMC 177529 PT 78 385934 388296 12 T27N R7E
IMC 177530 PT 79 385935 11 T27N R7E
IMC 177531 PT 80 385936 388297 12 T27N R7E
IMC 177532 PT 81 385937 13 T27N R7E
IMC 177533 PT 82 385938 388298 13 T27N R7E
IMC 177534 PT 83 385939 13 T27N R7E
IMC 177535 PT 84 385940 388299 13 T27N R7E
IMC 177536 PT 85 385941 13 T27N R7E
IMC 177537 PT 86 385942 13 T27N R7E
IMC 177538 PT 87 385943 13 T27N R7E
IMC 177539 PT 88 385944 13 T27N R7E
IMC 177540 PT 89 385945 13 T27N R7E
IMC 177541 PT 90 385946 13 T27N R7E
IMC 177542 PT 91 385947 13 T27N R7E
IMC 177543 PT 92 385948 13 T27N R7E
IMC 177544 PT 93 385949 13 T27N R7E
IMC 177545 PT 94 385950 13 T27N R7E
IMC 177546 PT 95 385951 13 T27N R7E
IMC 177547 PT 96 385952 13 T27N R7E
IMC 177548 PT 97 385953 388300 13 T27N R7E
IMC 177549 PT 98 385954 13 T27N R7E
IMC 177550 PT 99 385955 13 T27N R7E
IMC 177551 PT 100 385956 13 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 7 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
Original Recording Amendment Recording Map Location Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 177552 PT 101 389957 13 T27N R7E
IMC 177553 PT 102 385958 13 T27N R7E
IMC 177554 PT 103 385959 13 T27N R7E
IMC 177555 PT 104 385960 2 T27N R7E
IMC 177556 PT 105 385961 2 T27N R7E
IMC 177557 PT 106 385962 2 T27N R7E
IMC 177558 PT 107 385963 2 T27N R7E
IMC 177559 PT 108 385964 2 T27N R7E
IMC 177560 PT 109 385965 12 T27N R7E
IMC 177561 PT 110 385966 1 T27N R7E
IMC 177562 PT 111 385967 1 T27N R7E
IMC 178013 BOX OF RAIN 1 388912 1 T27N R7E
IMC 178014 BOX OF RAIN 2 388913 2 T27N R7E
1 T27N R7E
IMC 178015 BOX OF RAIN 3 388914 35 T28N R7E
2 T27N R7E
1 T27N R7E
IMC 178016 BOX OF RAIN 4 388915 36 T28N R7E
35 T28N R7E
IMC 178017 BOX OF RAIN 5 388916 36 T28N R7E
35 T28N R7E
IMC 178018 BOX OF RAIN 6 388917 36 T28N R7E
35 T28N R7E
IMC 178019 BOX OF RAIN 7 388918 36 T28N R7E
35 T28N R7E
IMC 178020 BOX OF RAIN 8 388919 36 T28N R7E
35 T28N R7E
IMC 178021 BOX OF RAIN 388920 36 T28N R7E
35 T28N R7E
IMC 178022 BOX OF RAIN 10 388921 36 T28N R7E
35 T28N R7E
IMC 178023 BOX OF RAIN 11 388922 35 T28N R7E
IMC 178024 BOX OF RAIN 12 388923 35 T28N R7E
IMC 178025 BOX OF RAIN 13 388924 35 T28N R7E
IMC 178026 BOX OF RAIN 14 388925 35 T28N R7E
IMC 178027 BOX OF RAIN 15 388926 35 T28N R7E
IMC 178028 BOX OF RAIN 16 388927 35 T28N R7E
IMC 178029 BOX OF RAIN 17 388928 35 T28N R7E
IMC 178030 BOX OF RAIN 18 388929 35 T28N R7E
2 T27N R7E
IMC 178031 BOX OF RAIN 19 388930 2 T27N R7E
IMC 178032 BOX OF RAIN 20 388931 2 T27N R7E
IMC 178033 BOX OF RAIN 21 388932 35 T28N R7E
2 T27N R7E
IMC 178034 BOX OF RAIN 22 388933 35 T28N R7E
IMC 178035 BOX OF RAIN 23 388934 35 T28N R7E
IMC 178036 BOX OF RAIN 24 388935 35 T28N R7E
IMC 178037 BOX OF RAIN 25 388936 35 T28N R7E
IMC 178038 BOX OF RAIN 26 388937 35 T28N R7E
IMC 178039 BOX OF RAIN 27 388938 35 T28N R7E
IMC 178040 BOX OF RAIN 28 388939 35 T28N R7E
2 T27N R7E
IMC 178041 BOX OF RAIN 29 388940 2 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 8 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 178042 PT 112 388874 12 T27N R7E
IMC 178043 PT 113 388875 12 T27N R7E
IMC 178044 PT 114 388876 12 T27N R7E
IMC 178045 PT 115 388877 12 T27N R7E
IMC 178046 PT 116 388878 12 T27N R7E
IMC 178047 PT 117 388879 12 T27N R7E
IMC 178048 PT 118 388880 12 T27N R7E
IMC 178049 PT 119 388881 12 T27N R7E
IMC 178050 PT 120 388882 12 T27N R7E
IMC 178051 PT 121 388883 12 T27N R7E
IMC 178052 PT 122 388884 12 T27N R7E
IMC 178053 PT 123 388885 13 T27N R7E
12 T27N R7E
IMC 178054 PT 124 388886 13 T27N R7E
IMC 178055 PT 125 388887 12 T27N R7E
IMC 178056 PT 126 388888 12 T27N R7E
7 T27N R8E
IMC 178057 PT 127 388889 12 T27N R7E
IMC 178058 PT 128 388890 12 T27N R7E
7 T27N R8E
IMC 178059 PT 129 388891 12 T27N R7E
IMC 178060 PT 130 388892 12 T27N R7E
7 T27N R8E
IMC 178061 PT 131 388893 12 T27N R7E
IMC 178062 PT 132 388894 12 T27N R7E
7 T27N R8E
IMC 178063 PT 133 388895 12 T27N R7E
IMC 178064 PT 134 388896 12 T27N R7E
7 T27N R8E
IMC 178065 PT 135 388897 12 T27N R7E
IMC 178066 PT 136 388898 12 T27N R7E
7 T27N R8E
IMC 178067 PT 137 388899 12 T27N R7E
IMC 178068 PT 138 388900 13 T27N R7E
12 T27N R7E
IMC 178069 PT 139 388901 13 T27N R7E
IMC 178070 PT 140 388902 7 T27N R8E
IMC 178071 PT 141 388903 7 T27N R8E
IMC 178072 PT 142 388904 7 T27N R8E
IMC 178073 PT 143 388905 7 T27N R8E
IMC 178074 PT 144 388906 7 T27N R8E
IMC 178075 PT 145 388907 7 T27N R8E
IMC 178076 PT 146 388908 7 T27N R8E
IMC 178077 PT 147 388909 7 T27N R8E
IMC 178078 PT 148 388910 18 T27N R8E
IMC 178079 PT 149 388911 1 T27N R7E
IMC 179302 PT 150 393865 24 T27N R7E
IMC 179303 PT 151 393866 24 T27N R7E
IMC 179304 PT 152 393867 24 T27N R7E
IMC 179305 PT 153 393868 24 T27N R7E
IMC 179306 PT 154 393869 24 T27N R7E
IMC 179307 PT 155 393870 24 T27N R7E
IMC 179308 PT 156 393871 24 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 9 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 179309 PT 157 393872 24 T27N R7E
IMC 179310 PT 158 393873 24 T27N R7E
IMC 179311 PT 159 383874 25 T27N R7E
24 T27N R7E
IMC 179312 PT 160 393875 25 T27N R7E
24 T27N R7E
IMC 179313 PT 161 393876 25 T27N R7E
IMC 179314 PT 162 383977 25 T27N R7E
IMC 170315 PT 163 393878 25 T27N R7E
IMC 179316 PT 164 393879 25 T27N R7E
IMC 179317 PT 165 393880 24 T27N R8E
29 T27N R7E
IMC 179318 PT 166 393881 24 T27N R7E
19 T27N R8E
IMC 179319 PT 167 393882 19 T27N R8E
IMC 179320 PT 168 393883 24 T27N R7E
19 T27N R8E
IMC 179321 PT 169 393884 19 T27N R8E
IMC 179322 PT 170 393885 30 T27N R8E
25 T27N R7E
24 T27N R7E
19 T27N R8E
IMC 179323 PT 171 393886 30 T27N R8E
19 T27N R8E
IMC 179324 PT 172 393887 30 T27N R8E
25 T27N R7E
IMC 179325 PT 173 393888 30 T27N R7E
25 T27N R7E
IMC 179326 PT 174 393889 24 T27N R7E
IMC 179327 LARRY 393890 1 T27N R7E
IMC 179328 MOE 393891 1 T27N R7E
IMC 179329 SHEMP 393892 1 T27N R7E
IMC 179330 CURLY 393893 1 T27N R7E
IMC 179334 PT 175 393989 24 T27N R7E
IMC 179972 BOX OF RAIN 30 396344 1 T27N R7E
IMC 179973 BOX OF RAIN 31 396345 36 T28N R7E
IMC 179974 BOX OF RAIN 32 395346 3 T27N R7E
2 T27N R7E
IMC 179975 BOX OF RAIN 33 396347 2 T27N R7E
IMC 179976 BOX OF RAIN 34 396348 2 T27N R7E
IMC 179977 BOX OF RAIN 35 396349 35 T28N R7E
IMC 179978 BOX OF RAIN 36 396350 35 T28N R7E
IMC 179979 BOX OF RAIN 37 396351 36 T28N R7E
35 T28N R7E
IMC 179980 BOX OF RAIN 38 396352 35 T28N R7E
IMC 179981 BOX OF RAIN 39 396353 36 T28N R7E
35 T28N R7E
IMC 179982 PT 176 396255 1 T27N R7E
IMC 179983 PT 177 396256 1 T27N R7E
IMC 179984 PT 178 396257 1 T27N R7E
IMC 179985 PT 179 396258 1 T27N R7E
IMC 179986 PT 180 396259 1 T27N R7E
IMC 179987 PT 181 396260 1 T27N R7E
</TABLE>
<PAGE>
<TABLE>
Date 11/07/1997
Time: 10:07:39
Page 10 of 10
County: IDAHO, State: IDAHO
EXHIBIT A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Original Recording Amendment Recording Map Location Reference
BLM SERIAL # Claim Name Book Page Book Page Sec Twshp Rnge
- ------------ ---------- ---- ---- ---- ---- --- ----- ----
IMC 179988 PT 182 396261 1 T27N R7E
IMC 179989 PT 183 396262 1 T27N R7E
IMC 179990 PT 184 396263 1 T27N R7E
IMC 179991 PT 185 396264 1 T27N R7E
IMC 179992 PT 186 396265 1 T27N R7E
IMC 179993 PT 187 396266 36 T28N R7E
1 T27N R7E
IMC 179994 PT 188 396267 36 T28N R7E
IMC 179995 PT 189 396268 36 T28N R7E
IMC 179996 PT 190 396269 36 T28N R7E
IMC 179997 PT 191 396270 36 T28N R7E
IMC 179998 PT 192 396271 36 T28N R7E
IMC 179999 PT 193 396272 36 T28N R7E
IMC 180000 PT 194 396273 36 T28N R7E
IMC 180001 PT 195 396274 36 T28N R7E
IMC 180002 PT 196 396275 36 T28N R7E
IMC 180003 PT 197 396276 36 T28N R7E
IMC 180004 PT 198 396277 36 T28N R7E
IMC 180005 PT 199 396278 36 T28N R7E
IMC 180006 PT 200 396279 36 T28N R7E
IMC 180007 PT 201 396280 36 T28N R7E
IMC 180008 PT 202 396281 36 T28N R7E
IMC 180009 PT 203 396282 36 T28N R7E
IMC 180010 PT 204 396283 36 T28N R7E
IMC 180011 PT 205 396284 36 T28N R7E
IMC 180012 PT 206 396285 36 T28N R7E
</TABLE>
Total Number of Claims: 467
<PAGE>
EXHIBIT 5
TO SETTLEMENT AGREEMENT
PARAGRAPH 8
List of claims subject to operating agreement
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITTMENT
__________IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 1
L. Brown Bear
SnowStorm
Pegmatite
New Pegmatite
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITTMENT
__________IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 2
Buster Extension
Coeur d'Alene
Sultan
Tonapah
Union D
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITTMENT
__________IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 3
L. Mellard
S/S Ellie
S/S Ophir
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITTMENT
__________IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 4
Cuddy Copper
IXL
New IXL
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
EXHIBITS 6, 7, 8, and 9
TO SETTLEMENT AGREEMENT
PARAGRAPHS
Joint Development agreements
<PAGE>
JOINT DEVELOPMENT AGREEMENT
This agreement made and entered into this 29th day of April 1998 by and
between Silver Crystal, hereafter S.C., and Idaho Consolidated Metals
Corporation, hereinafter ICMC.
Whereas, the parties to this joint development agreement are or intend to
be co-owners of the mining properties (a list of which is attached hereto and
made a part hereof as Exhibit A).
Whereas, the properties have been co-owned in the past and the intent of
this agreement is to establish the parties' respective fights and
responsibilities for future orderly exploration and development of any potential
mineable ore reserves on the various properties.
Whereas, ICMC shall be the operator of the joint development of the
properties with responsibilities standard to the mining industry including
without limitations those found in that certain lease between the parties on the
Golden Eagle Property entered into on April 29, 1998.
Therefore, this agreement witnesseth that in consideration of the promises
and of the mutual covenants, conditions, representations and warranties herein
set out, the parties hereto agree as follows:
Title. Title has been maintained on the properties to the best of S.C.'s ability
in accordance with past agreements between the parties.
1. Neither party represents title warranties to the other.
2. A procedure utilizing a statutory title preservation procedure known as
the "Small Miners Exemption" has been used to protect title to several of
the properties. Both parties are fully aware of the procedure. and its
implications to clear property title for future exploration and
development.
3. S.C. agrees to provide quitclaim deed to all "Small Miner's Exemption"
properties from the exempt holder thereof reflected in Exhibit A attached.
a.) S.C. agrees to assist ICMC with whatever steps are necessary to
get title into a marketable condition if possible cost to be borne by
ICMC.
4. ICMC, as operator, agrees to record deeds, relocate claims and/or
generally take whatever action is necessary to get or keep title in a
marketable condition costs to be borne by ICMC.
JOINT DEVELOPMENT AGREEMENT - 1
<PAGE>
5. Neither party represents to the other title can be maintained without
further action of documentation and some property may be lost. The parties
agree and hereby hold harmless each other for property lost due to
conditions beyond the party's control
Ownership:
1. S.C. owns a undivided 50% (5/10) of the mining claims subject to this
agreement. A list of which is Exhibit A attached hereto and made a part
hereof by reference. in the event of an inadvertent document failure this
clause is controlling.
2. ICMC shall own an undivided 50% (5/10) of the mining claims subject to
this agreement. In the event of an inadvertent document failure this clause
is controlling.
Powers, Duties, and Obligations.
1. ICMC shall take whatever action is necessary concerning title promptly
and at ICMC's expenses. The obligation and responsibility to use good faith
in pursing marketable title shall be the obligation and responsibility of
ICMC.
2. Evaluation of all geological data on the properties shall commence
immediately under the direction and at the sole expense of ICMC for the
purpose of establishing a sound two year evaluation and exploration program
and for the purpose of determining the merit of each property. S.C. agrees
to provide copies of all documents containing geological data in its
possession to ICMC. All copying costs to be paid by ICMC.
3. ICMC shall have the power to make decisions as to whether a property has
merit and whether it should be "dropped" or maintained.
(A.) In the event a property is scheduled to be "dropped" it is
the obligation of ICMC to give S.C. 30 day notice prior to notice of
abandonment to the Bureau of Land Management (BLM). S.C. may elect to
keep the entire property at its own expense.
(1) ICMC agrees to provide or sign any documents required
upon said election by S.C. in order to transfer the interest
of ICMC to S.C..
4. ICMC shall be responsible for all reclamation, remediation and bonding
costs associated with operations on the claims.
JOINT DEVELOPMENT AGREEMENT - 2
<PAGE>
Expenditure, Fees, and Maintenance.
1. ICMC as "operator" shall be required to pay all Fees and Maintenance
requirements and other costs to keep the properties in good standing with
both the State of Idaho and the BLM. ICMC shall be required to pay all
reclamation, remediation and bonding costs associated with operations on
the claims.
2. ICMC shall be required to do $37,500 worth of exploration work on this
block of properties In year one (September 1, 1998 to September 1, 1999) of
the agreement.
A.) ICMC shall be required to do $75,000 worth of exploration work in
year two (September 1, 1999 and September 1, 2000) and each year
thereafter to maintain this agreement in good standing.
3. ICMC shall record an annual report of expenditures and progress of
all work on these properties. S.C. shall at all reasonable times have
the night to admit and inspection of all work on these properties.
S.C. shall at all reasonable times have the night to admit and
inspection of a work on site.
4. In the event ICMC fails to meet these work commitments S.C. at
their election may require ICMC to quitclaim deed their interest to
S.C. or other party at S.C.'s request.
5. The parties are familiar with the "Force Majeure" concept as
described in the Golden Eagle Mining Lease and it shall apply to this
agreement.
Option for Participation or Dilution of Interest Upon Production
In the event ICMC shall make a bona fide election to take the
properties into production the following rights and obligations shall
apply.
1. ICMC shall give notice of its decision to take the property into
production.
2. Therefore S.C. shall have the fight to elect within 60 days of
receipt of the notice of decision to participate in production.
3. In the event S.C. elects to participate in production ICMC shall
advance 50% of the pre-production costs as a loan to S.C. to be repaid
by S.C. from profits from actual production together with interest at
the rate of prime rate +2% as published in The Wall Street Journal per
annum until S.C.'s 50% share of pre-production cost is paid in full.
Pre-production costs commence upon the delineation of an inferred
resource as defined by the Canadian Mining and Metallurgy Ad Hoc
Committee Report of September, 1996. in the event profit from
production is inadequate to repay S.C. share of pre-production cost,
the obligation of S.C. to pay pre-production cost is forgiven.
JOINT DEVELOPMENT AGREEMENT - 3
<PAGE>
4. In the event S.C. does not elect to participate in production, ICMC
shall have the right to proceed to production and S.C.'s ownership
percentage shall decrease to 5% net smelter return. This provision
shall not be interpreted to reduce or diminish the work requirements
of ICMC herein.
First Right of Refusal.
1. Each party shall have a standard first right of refusal in the
event the other shall chose to alienate their interest.
Exploration Year. The parties recognize exploration and development is seasonal.
For the purpose of this agreement the "exploration year" shall be September 1 to
September 1 commencing September 1, 1998
Arbitration. Any conflicts that arise under this agreement shall be submitted to
arbitration. The parties agree the arbitration shall be by the rules established
by the American Arbitration Association.
Notices. By Registered Mail.
Idaho Consolidated Metal Corporation
P O Box 1124
Lewiston, ID 38501
Idaho Mining and Development
Route 1, Box 119
Cottonwood, ID 83522
THE PARTIES AGREE THIS DOCUMENT MIGHT BE SUBJECT TO VANCOUVER STOCK
EXCHANGE APPROVAL.
JOINT DEVELOPMENT AGREEMENT - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year in this instrument first above written.
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Del Steiner
---------------------------------------
President
/s/ Lori A. Cox
- --------------------------------
Secretary
SILVER CRYSTAL MINES, INC.
By: /s/ Joe Swisher
---------------------------------------
Joe Swisher, President
JOINT DEVELOPMENT AGREEMENT - 5
<PAGE>
4/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITMENT
______________- IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 1
L. Brown Bear
SnowStorm
Pegmatite
New Pegmatite
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
JOINT DEVELOPMENT AGREEMENT
This agreement made and entered into this 29th day of April 1998 by and
between Idaho Mining & Development Company, Joe Swisher, etc., hereinafter IM&D
and Idaho Consolidated Metals Corporation hereinafter ICMC.
Whereas, the parties to this joint development agreement are or intend to
be co-owners of the mining properties (a list of which is attached hereto and
made a part hereof as exhibit A).
Whereas, the properties have been co-owned in the past and the intent of
this agreement is to establish the parties' respective rights and
responsibilities for future orderly exploration and development of any potential
mineable ore reserves on the various properties.
Whereas, ICMC shall be the operator of the joint development of the
properties with responsibilities standard to the mining industry including
without limitations those found in that certain lease between the parties on the
Golden Eagle Property entered into on April 29, 1998.
Therefore, this agreement witnesseth that in consideration of the promises
and of the mutual covenants, conditions, representations and warranties herein
set out, the parties hereto agree as follows:
Title. Title has been maintained on the properties to the best of IM&D's ability
in accordance with past agreements between the parties.
1. Neither party represents title warranties to the other.
2. A procedure utilizing a statutory title preservation procedure known as
the "Small Miners Exemption" has been used to protect title to several of
the properties. Both parties are fully aware of the procedure and its
implications to clear property title for future exploration and
development.
3. IM&D agrees to provide quitclaim deed to all "Small Miner's Exemption"
properties from the exempt holder thereof reflected in Exhibit A attached.
a.) IM&D agrees to assist ICMC with whatever steps are necessary to
get title into a marketable condition if possible cost to be borne by
ICMC.
4. ICMC, as operator, agrees to record deeds, relocate claims and/or
generally take whatever action is necessary to get or keep title in a
marketable condition costs to be borne by ICMC.
JOINT DEVELOPMENT AGREEMENT - 1
<PAGE>
5. Neither party represents to the other title can be maintained without
further action or documentation and some property may be lost. The parties
agree and hereby hold harmless each other for property lost due to
conditions beyond the party's control.
Ownership:
1. IM&D owns a undivided 40% (4/10) of the mining claims subject to this
agreement. A list of which is Exhibit A attached hereto and made a part
hereof by reference. In the event of an inadvertent document failure this
clause is controlling.
2. ICMC shall own an undivided 60% (6/10) of the mining claims subject to
this agreement. In the event of an inadvertent document failure this clause
is controlling.
Powers, Duties, and Obligations.
1. ICMC shall take whatever action is necessary concerning title promptly
and at ICMC's expenses. The obligation and responsibility to use good faith
in pursing marketable title shall be the obligation and responsibility of
ICMC.
2. Evaluation of all geological data on the properties shall commence
immediately under the direction and at the sole expense of ICMC for the
purpose of establishing a sound two year evaluation and exploration program
and for the purpose of determining the merit of each property. IM&D agrees
to provide copies of all documents containing geological data in its
possession to ICMC. All copying costs to be paid by ICMC.
3. ICMC shall have the power to make decisions as to whether a property has
merit and whether it should be "dropped" or maintained.
(A.) In the event a property is scheduled to be "dropped" it is
the obligation of ICMC to give IM&D 30 day notice prior to notice of
abandonment to the Bureau of Land Management (BLM). IM&D may elect to
keep the entire property at its own expense.
(1) ICMC agrees to provide or sign any documents required
upon said election by IM&D in order to transfer the interest
of ICMC to IM&D.
4. ICMC shall be responsible for all reclamation, remediation and bonding
costs associated with operations on the claims.
JOINT DEVELOPMENT AGREEMENT - 2
<PAGE>
Expenditure, Fees, and Maintenance.
1. ICMC as "operator" shall be required to pay all Fees and Maintenance
requirements and other costs to keep the properties in good standing with
both the State of Idaho and the BLM. ICMC shall be required to pay all
reclamation, remediation and bonding costs associated with operations on
the claims.
2. ICMC shall be required to do $37,500 worth of exploration work on this
block of properties in year one (September 1, 1998 to September 1, 1999) of
the agreement.
A.) ICMC shall be required to do $75,000 worth of exploration work in
year two (September 1, 1999 and September 1, 2000) and each year
thereafter to maintain this agreement in good standing.
3. ICMC shall record an annual report of expenditures and progress of all
work on these properties. IM&D shall at all reasonable times have the right
to admit and inspection of all work on these properties. IM&D shall at all
reasonable times have the right to admit and inspection of all work on
site.
4. In the event ICMC fails to meet these work commitments IM&D at their
election may require ICMC to quitclaim deed their interest to IM&D or other
party at IM&D's request.
5. The parties are familiar with the "Force Majeure" concept as described
in the Golden Eagle Mining Lease and it shall apply to this agreement.
Option for Participation or Dilution of Interest Upon Production
In the event ICMC shall make a bona fide election to take the properties
into production the following rights and obligations shall apply.
1. ICMC shall give notice of its decision to take the property into
production.
2. Therefore IM&D shall have the right to elect within 60 days of receipt
of the notice of decision to participate in production.
3. In the event IM&D elects to participate in production ICMC shall advance
40% of the pre-production costs as a loan to IM&D to be repaid by IM&D from
profits from actual production together with interest at the rate of prime
rate +2% as published in The Wall Street Journal per annum until IM&D's 40%
share of pre-production cost is paid in full. Pre-production costs commence
upon the delineation of an inferred resource as defined by the Canadian
Mining and Metallurgy Ad Hoc Committee Report of September, 1996. In the
event profit from production is inadequate to repay IM&D
JOINT DEVELOPMENT AGREEMENT - 3
<PAGE>
share of pre-production cost, the obligation of IM&D to pay pre-production
cost is forgiven.
4. In the event IM&D does not elect to participate in production, ICMC
shall have the right to proceed to production and IM&D's ownership
percentage shall decrease to 5% net smelter return. This provision shall
not be interpreted to reduce or diminish the work requirements of ICMC
herein.
First Right of Refusal.
1. Each party shall have a standard first right of refusal in the event the
other shall chose to alienate their interest.
Exploration Year. The parties recognize exploration and development is seasonal.
For the purpose of this agreement the "exploration year" shall be September 1 to
September 1 commencing September 1, 1998.
Arbitration. Any conflicts that arise under this agreement shall be submitted to
arbitration. The parties agree the arbitration shall be by the rules established
by the American Arbitration Association.
Notices. By Registered Mail.
Idaho Consolidated Metal Corporation
P O Box 1124
Lewiston, ID 38501
Idaho Mining and Development
Route 1, Box 119
Cottonwood, ID 83522
THE PARTIES AGREE TIES DOCUMENT MIGHT BE SUBJECT TO VANCOUVER STOCK
EXCHANGE APPROVAL.
JOINT DEVELOPMENT AGREEMENT - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year in this instrument first above written.
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Del Steiner
-------------------------------------
President
/s/ Lori A. Cox
- -------------------------------
Secretary
IDAHO MINING AND DEVELOPMENT COMPANY
By: /s/ Joe Swisher
-------------------------------------
Joe Swisher, President
JOINT DEVELOPMENT AGREEMENT - 5
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITMENT
___________ IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 3
L. Mallard
S/S Ellie
S/S Ophir
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
JOINT DEVELOPMENT AGREEMENT
This agreement made and entered into this 29th day of April 1998 by and
between Idaho Mining & Development Company, Joe Swisher, etc., hereinafter IM&D
and Idaho Consolidated Metals Corporation hereinafter ICMC.
Whereas, the parties to this joint development agreement are or intend to
be co-owners of the mining properties (a list of which is attached hereto and
made a part hereof as exhibit A).
Whereas, the properties have been co-owned in the past and the intent of
this agreement is to establish the parties' respective rights and
responsibilities for future orderly exploration and development of any potential
mineable ore reserves on the various properties.
Whereas, ICMC shall be the operator of the joint development of the
properties with responsibilities standard to the mining industry including
without limitations those found in that certain lease between the parties on the
Golden Eagle Property entered into on April 29, 1998.
Therefore, this agreement witnesseth that in consideration of the promises
and of the mutual covenants, conditions, representations and warranties herein
set out, the parties hereto agree as follows:
Title. Title has been maintained on the properties to the best of IM&D's ability
in accordance with past agreements between the parties.
1. Neither party represents title warranties to the other
2. A procedure utilizing a statutory title preservation procedure known as
the "Small Miners Exemption" has been used to protect title to several of
the properties. Both parties are fully aware of the procedure and its
implications to clear property title for future exploration and
development.
3. IM&D agrees to provide quitclaim deed to all "Small Miner's Exemption"
properties from the exempt holder thereof reflected in Exhibit A attached.
a.) IM&D agrees to assist ICMC with whatever steps are necessary to
get title into a marketable condition if possible cost to be borne by
ICMC.
4. ICMC, as operator, agrees to record deeds, relocate claims and/or
generally take whatever action is necessary to get or keep title in a
marketable condition costs to be borne by ICMC.
JOINT DEVELOPMENT AGREEMENT - 1
<PAGE>
5. Neither party represents to the other title can be maintained without
further action or documentation and some property may be lost. The parties
agree and hereby hold harmless each other for property lost due to
conditions beyond the party's control.
Ownership:
1. IM&D owns a undivided 40% (4/10) of the mining claims subject to this
agreement. A list of which is Exhibit A attached hereto and made a part
hereof by reference. in the event of an inadvertent document failure this
clause is controlling.
2. ICMC shall own an undivided 60% (6/10) of the mining claims subject to
this agreement. In the event of an inadvertent document failure this clause
is controlling.
Powers, Duties, and Obligations.
1. ICMC shall take whatever action is necessary concerning title promptly
and at ICMC's expenses. The obligation and responsibility to use good faith
in pursing marketable title shall be the obligation and responsibility of
ICMC.
2. Evaluation of all geological data on the properties shall commence
immediately under the direction and at the sole expense of ICMC for the
purpose of establishing a sound two year evaluation and exploration program
and for the purpose of determining the merit of each property. IM&D agrees
to provide copies of all documents containing geological data in its
possession to ICMC. All copying costs to be paid by ICMC.
3. ICMC shall have the power to make decisions as to whether a property has
merit and whether it should be "dropped" or maintained.
(A.) In the event a property is scheduled to be "dropped" it is
the obligation of ICMC to give IM&D 30 day notice prior to notice of
abandonment to the Bureau of Land Management (BLM). IM&D may elect to
keep the entire property at its own expense.
(1) ICMC agrees to provide or sign any documents required
upon said election by IM&D in order to transfer the interest
of ICMC to IM&D
4. ICMC shall be responsible for all reclamation, remediation and bonding
costs associated with operations on the claims.
JOINT DEVELOPMENT AGREEMENT - 2
<PAGE>
Expenditure, Fees, and Maintenance
1. ICMC as "operator" shall be required to pay all Fees and Maintenance
requirements and other costs to keep the properties in good standing with
both the State of Idaho and the BLM. ICMC shall be required to pay all
reclamation, remediation and bonding costs associated with operations on
the claims.
2. ICMC shall be required to do $37,500 worth of exploration work on this
block of properties in year one (September 1, 1998 to September 1, 1999) of
the agreement.
A.) ICMC shall be required to do $75,000 worth of exploration work in
year two (September 1, 1999 and September 1, 2000) and each year
thereafter to maintain this agreement in good standing.
3. ICMC shall record an annual report of expenditures and progress of all
work on these properties. IM&D shall at all reasonable times have the right
to admit and inspection of all work on these properties. IM&D shall at all
reasonable times have the right to admit and inspection of all work on
site.
4. In the event ICMC fails to meet these work commitments IM&D at their
election may require ICMC to quitclaim deed their interest to IM&D or other
party at IM&D's request.
5. The parties are familiar with the "Force Majeure" concept as described
in the Golden Eagle Mining Lease and it shall apply to this agreement.
Option for Participation or Dilution of Interest Upon Production
In the event ICMC shall make a bona fide election to take the properties
into production the following rights and obligations shall apply.
1. ICMC shall give notice of its decision to take the property into
production
2. Therefore IM&D shall have the right to elect within 60 days of receipt
of the notice of decision to participate in production.
3. In the event IM&D elects to participate in production ICMC shall advance
40% of the pre-production costs as a loan to IM&D to be repaid by IM&D from
profits from actual production together with interest at the rate of prime
rate + 2% as published in The Wall Street Journal per annum until IM&D's
40% share of pre-production cost is paid in full. Pre-production costs
commence upon the delineation of an inferred resource as defined by the
Canadian Mining and Metallurgy Ad Hoc Committee Report of September, 1996.
In the event profit from production is inadequate to repay IM&D
JOINT DEVELOPMENT AGREEMENT - 3
<PAGE>
share of pre-production cost, the obligation of IM&D to pay pre-production
cost is forgiven
4. In the event IM&D does not elect to participate in production, ICMC
shall have the right to proceed to production and IM&D's ownership
percentage shall decrease to 5% net smelter return. This provision shall
not be interpreted to reduce or diminish the work requirements of ICMC
herein.
First Right of Refusal.
1. Each party shall have a standard first right of refusal in the event the
other shall chose to alienate their interest.
Exploration Year. The parties recognize exploration and development is seasonal.
For the purpose of this agreement the "exploration year" shall be September 1 to
September 1 commencing September 1, 1998.
Arbitration. Any conflicts that arise under this agreement shall be submitted to
arbitration. The parties agree the arbitration shall be by the rules established
by the American Arbitration Association.
Notices. By Registered Mail.
Idaho Consolidated Metal Corporation
P O Box 1124
Lewiston, ID 38501
Idaho Mining and Development
Route 1, Box 119
Cottonwood, ID 83522
THE PARTIES AGREE THIS DOCUMENT MIGHT BE SUBJECT TO VANCOUVER STOCK
EXCHANGE APPROVAL.
JOINT DEVELOPMENT AGREEMENT - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands die day and
year in this instrument first above written.
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Del Steiner
-------------------------------------
President
/s/ Lori A. Cox
- -----------------------------------
Secretary
IDAHO MINING AND DEVELOPMENT COMPANY
By: /s/ Joe Swisher
-------------------------------------
Joe Swisher, President
JOINT DEVELOPMENT AGREEMENT - 5
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCK FOR
ANNUAL WORK COMMITMENT
__________ IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 4
Cuddy Copper
IXL
New IXL
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
<PAGE>
JOINT DEVELOPMENT AGREEMENT
This agreement made and entered into this 29 day of April 1998 by and
between Idaho Mining & Development Company, Joe Swisher, etc., hereinafter IM&D
and Idaho Consolidated Metals Corporation hereinafter ICMC.
Whereas, the parties to this joint development agreement are or intend to
be co-owners of the mining properties (a list of which is attached hereto and
made a part hereof as exhibit A).
Whereas, the properties have been co-owned in the past and the intent of
this agreement is to establish the parties' respective rights and
responsibilities for future orderly exploration and development of any potential
mineable ore reserves on the various properties.
Whereas, ICMC shall be the operator of the joint development of the
properties with responsibilities standard to the mining industry including
without limitations those found in that certain lease between the parties on the
Golden Eagle Property entered into on April 29, 1998.
Therefore, this agreement witnesseth that in consideration of the promises
and of the mutual covenants, conditions, representations and warranties herein
set out, the parties hereto agree as follows:
Title. Title has been maintained on the properties to the best of IM&D's ability
in accordance with past agreements between the parties.
1. Neither party represents title warranties to the other.
2. A procedure utilizing a statutory title preservation procedure known as
the "Small Miners Exemption" has been used to protect title to several of
the properties. Both parties are fully aware of the procedure and its
implications to clear property title for future exploration and
development.
3. IM&D agrees to provide quitclaim deed to all "Small Miner's Exemption"
properties from the exempt holder thereof reflected in Exhibit A attached.
a.) IM&D agrees to assist ICMC with whatever steps are necessary to
get title into a marketable condition if possible cost to be borne by
ICMC.
4. ICMC, as operator, agrees to record deeds, relocate claims and/or
generally take whatever action is necessary to get or keep title in a
marketable condition costs to be borne by ICMC.
JOINT DEVELOPMENT AGREEMENT - 1
<PAGE>
5. Neither party represents to the other title can be maintained without
further action or documentation and some property may be lost. The parties
agree and hereby hold harmless each other for property lost due to
conditions beyond the party's control.
Ownership:
1. IM&D owns a undivided 40% (4/10) of the mining claims subject to this
agreement. A list of which is Exhibit A attached hereto and made a part
hereof by reference. In the event of an inadvertent document failure this
clause is controlling.
2. ICMC shall own an undivided 60% (6/10) of the mining claims subject to
this agreement. In the event of an inadvertent document failure this clause
is controlling.
Powers, Duties, and Obligations.
1. ICMC shall take whatever action is necessary concerning title promptly
and at ICMC's expenses. The obligation and responsibility to use good faith
in pursing marketable title shall be the obligation and responsibility of
ICMC.
2. Evaluation of all geological data on the properties shaft commence
immediately under the direction and at the sole expense of ICMC for the
purpose of establishing a sound two year evaluation and exploration program
and for the purpose of determining the merit of each property. IM&D agrees
to provide copies of all documents containing geological data in its
possession to ICMC. All copying costs to be paid by ICMC.
3. ICMC shall have the power to make decisions as to whether a property has
merit and whether it should be "dropped" or maintained.
(A.) In the event a property is scheduled to be "dropped" it is
the obligation of ICMC to give IM&D 30 day notice prior to notice of
abandonment to the Bureau of Land Management (BLM). IM&D may elect to
keep the entire property at its own expense.
(1) ICMC agrees to provide or sign any documents required
upon said election by IM&D in order to transfer the interest
of ICMC to IM&D.
4. ICMC shall be responsible for all reclamation, remediation and bonding
costs associated with operations on the claims
JOINT DEVELOPMENT AGREEMENT - 2
<PAGE>
Expenditure, Fees, and Maintenance
1. ICMC as "operator" shall be required to pay all Fees and Maintenance
requirements and other costs to keep the properties in good standing with
both the State of Idaho and the BLM. ICMC shall be required to pay all
reclamation, remediation and bonding costs associated with operations on
the claims.
2. ICMC shall be required to do $37,500 worth of exploration work on this
block of properties in year one (September 1, 1998 to September 1, 1999) of
the agreement.
A.) ICMC shall be required to do $75,000 worth of exploration work -in
year two (September 1, 1999 and September 1, 2000) and each year
thereafter to maintain this agreement in good standing.
3. ICMC shall record an annual report of expenditures and progress of all
work on these properties. IM&D shall at all reasonable times have the right
to admit and inspection of all work on these properties. IM&D shall at all
reasonable times have the right to admit and inspection of all work on
site.
4. In the event ICMC fails to meet these work commitments IM&D at their
election may require ICMC to quitclaim deed their interest to IM&D or other
party at IM&D's request.
5. The parties are familiar with the "Force Majeure" concept as described
in the Golden Eagle Mining Lease and it shall apply to this agreement.
Option for Participation or Dilution of Interest Upon Production
In the event ICMC shall make a bona fide election to take the properties
into production the following rights and obligations shall apply.
1. ICMC shall give notice of its decision to take the property into
production
2. Therefore IM&D shall have the night to elect within 60 days of receipt
of the notice of decision to participate in production.
3. In the event IM&D elects to participate in production ICMC shall advance
40% of the pre-production costs as a loan to IM&D to be repaid by IM&D from
profits from actual production together with interest at the rate of prime
rate +2% as published in The Wall Street Journal per annum until IM&D's 40%
share of pre-production cost is paid in full. Pre-production costs commence
upon the delineation of an inferred resource as defined by the Canadian
Mining and Metallurgy Ad Hoc Committee Report of September, 1996. In the
event profit from production is inadequate to repay IM&D
JOINT DEVELOPMENT AGREEMENT - 3
<PAGE>
share of pre-production cost, the obligation of IM&D to pay pre-production
cost is forgiven.
4. In the event IM&D does not elect to participate in production, ICMC
shall have the right to proceed to production and IM&D's ownership
percentage shall decrease to 5% net smelter return. This provision shall
not be interpreted to reduce or diminish the work requirements of ICMC
herein.
First Right of Refusal.
1. Each party shall have a standard first right of refusal in the event the
other shall chose to alienate their interest.
Exploration Year. The parties recognize exploration and development is seasonal.
For the purpose of this agreement the "exploration year" shall be September 1 to
September 1 commencing September 1, 1998.
Arbitration. Any conflicts that arise under this agreement shall be submitted to
arbitration. The parties agree the arbitration shall be by the rules established
by the American Arbitration Association.
Notices. By Registered Mail.
Idaho Consolidated Metal Corporation
P O Box 1124
Lewiston, ID 38501
Idaho Mining and Development
Route 1, Box 119
Cottonwood, ID 83522
THE PARTIES AGREE TIES DOCUMENT MIGHT BE SUBJECT TO VANCOUVER STOCK
EXCHANGE APPROVAL.
JOINT DEVELOPMENT AGREEMENT - 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year in this instrument first above written.
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Del Steiner
-------------------------------------
President
/s/ Lori A. Cox
- ------------------------------------
Secretary
IDAHO MINING AND DEVELOPMENT COMPANY
By: /s/ Joe Swisher
-------------------------------------
Joe Swisher, President
JOINT DEVELOPMENT AGREEMENT - 5
<PAGE>
04/29/98
LIST OF CLAIMS SEPARATED INTO BLOCKS FOR
ANNUAL WORK COMMITMENT
__________ IMD SETTLEMENT AGREEMENT
File: claimlist.wb3
BLOCK 2
Buster Extension
Coeur d'Alene
Sultan
Tonapah
Union D
A DETAILED LIST OF THE CLAIMS WITHIN THESE BLOCKS,
INCLUDING IMC NUMBERS, WILL BE PROVIDED
Exhibit 10.12
SCHEDULE TO DIRECTOR'S OPTION AGREEMENT
October 30, 1995
In addition to the Director's Option Agreement dated October 30, 1995, between
the Company and Delbert Steiner, the Company on the same date granted options to
purchase Common shares in the capital stock of the Company on identical terms to
the option granted to Mr. Steiner to the following individuals in the following
amounts:
Name of Optionee No. of Shares
---------------- -------------
E. Roy Knickel 50,000
Peter Lepik 30,000
Exhibit 10.14
SCHEDULE TO EMPLOYEE'S OPTION AGREEMENT
October 30, 1995
In addition to the Employee's Option Agreement dated October 30, 1995, between
the Company and Wilfried Struck, the Company on the same date granted options to
purchase Common shares in the capital stock of the Company on identical terms to
the option granted to Mr. Struck to Geoffrey Magnuson in the amount of 40,000
Shares.
Exhibit 10.15
EMPLOYEE'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 13TH DAY OF FEBRUARY, 1997 (THE "AGREEMENT
DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(the "Company")
AND:
WILFRIED J. STRUCK
1000 Erickson Ridge Road
PO Box 572 Elk City, ID 83525;
(the "Employee")
WHEREAS the Employee is a bona-fide employee of the Company, and the Company
would like to grant to the Employee an option to purchase common shares of the
Company on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Employee shall have
and be entitled to and the Company hereby grants to the Employee an option (the
"Option") to purchase a total of 50,000 common shares without par value in the
capital stock of the Company from treasury at the price of $1.15 per share. Only
one-half of the common shares held under the Option may be exercised during any
six month period.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Employee giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, in
favour of the Company for the full amount of the purchase price of the shares
then being purchased. Provided such written notice and payment are received by
the Company prior to 5:00 p.m. local time on the Termination Date at its address
first above written, the Company covenants and agrees to issue and deliver to
the Employee, forthwith thereafter, a share certificate for the number of shares
so purchased registered in the Employee's name.
<PAGE>
3. This is an Option only and does not impose upon the Employee any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Employee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Employee only by the Employee himself.
5. This Option shall terminate 30 days after the Employee ceases to be an
employee of the Company save and except where the Employee ceases to be an
employee of the Company as a result of.
(a) termination for cause; or
(b) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Employee ceases to be
an employee of the Company.
6. If the Employee should die while still an employee of the Company, the Option
may then be exercised by the Employee's legal heirs or personal representatives
to the same extent as if the Employee were alive and an employee of the Company
for a period of one year after the Employee's death but only for such shares as
the Employee was entitled to purchase pursuant to the Option at the date of the
Employee's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and, if the Employee is an insider (as that term is
defined in the Securities Act, S.B.C. 1985, c. 83 as amended) of the Company, by
the members of the Company. In the event such approvals are not obtained, this
Agreement shall be null and void and of no further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Employee and the exercise price thereof
shall be adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Employee and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
-2-
<PAGE>
10. The Company hereby covenants and agrees to and with the Employee that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Employee in the event the Employee exercises the
Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by WILFRIED J. STRUCK in the )
presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Wilfried J. Struck
------------------------- ) --------------------------------
) WILFRIED J. STRUCK
Address of )
Witness: 3433 7th Street )
------------------------- )
Lewiston, Id 83501 )
- ---------------------------------- )
)
Occupation )
of Witness: Corporate Secretary )
------------------------- )
Exhibit 10.16
AMENDMENT TO
DIRECTOR'S STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 13th day of February, 1997.
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
DELBERT STEINER
3555 Country Club Drive
Lewiston, ID
83501;
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. The Director and the Company entered into a Director's Option Agreement made
as of the 30th day of October, 1995 (the "Option Agreement"), a copy of which is
attached hereto, pursuant to which the Director was granted an option (the
"Option") to purchase all or any portion of 70,000 common shares in the capital
of the Company exercisable at a price of $1.80 per share, on or before the 30th
day of October, 1999;
B. The Director exercised 10,000 of his options on the 17th day of May, 1996, so
that there remains a balance of 60,000 common shares held under option pursuant
to the Option Agreement;
C. The Employee and the Company wish to amend the Option Agreement, as to
exercise price only, from a price of $1.80 per share to a price of $1.15 per
share, upon the terms and conditions hereinafter set forth;
<PAGE>
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained, the parties
hereto covenant and agree as follows:
1. Paragraph I commencing on page I of the Option Agreement be deleted in its
entirety and replaced as follows:
"From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Employee shall
have and be entitled to and the Company hereby grants to the Employee an
Option (the "Option") to purchase all or any portion of 60,000 common
shares without par value in the capital stock of the Company from treasury
at the price of $1.15 per share."
2. Save and except as herein amended, the Option Agreement shall be and remains
in full force and effect on the terms set forth therein.
IN WITNESS WHEREOF the parties have hereunto caused these
presents to be executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by DELBERT STEINER the )
presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Delbert Steiner
------------------------- ) --------------------------------
) DELBERT STEINER
Address of )
Witness: 3433 7th Street )
------------------------- )
Lewiston, Id 83501 )
- ---------------------------------- )
)
Occupation )
of Witness: Corporate Secretary )
------------------------- )
- 2 -
<PAGE>
DIRECTOR'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 30TH DAY OF OCTOBER 1995 (THE "AGREEMENT
DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(the "Company")
AND:
DELBERT STEINER
3555 Country Club Drive
Lewiston, ID
83501;
(the "Director")
WHEREAS the Director is a director of the Company and the Company would like to
grant to the Director an option to purchase common shares of the Company on the
terms and conditions contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Director shall have
and be entitled to and the Company hereby grants to the Director an option (the
"Option") to purchase all or any portion of 70,000 common shares without par
value in the capital stock of the Company from treasury at the price of $1.80
per share.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Director giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, for
the full amount of the purchase price of the shares then being purchased.
Provided such written notice and payment are received by the Company prior to
5:00 p.m. local time on the Termination Date at its address first above written,
<PAGE>
the Company covenants and agrees to issue and deliver to the Director, forthwith
thereafter, a share certificate for the number of shares so purchased registered
in the Director's name.
3. This is an Option only and does not impose upon the Director any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Director otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Director only by the Director himself.
5. This Option shall terminate 30 days after the Director ceases to be a
director of the Company save and except where the Director ceases to be a
director of the Company as a result of:
(a) ceasing to meet the qualifications set forth in section 138 of the
Company Act, R.S.B.C. 1979, c. 59;
(b) a special resolution passed by the members of the Company pursuant to
subsection 154(3) of the Company Act, R.S.B.C. 1979, c. 59; or
(c) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Director ceases to be a
director of the Company.
6. If the Director should die while still a director of the Company, the Option
may then be exercised by the Director's legal heirs or personal representatives
to the same extent as if the Director were alive and a director of the Company
for a period of one year after the Director's death but only for such shares as
the Director would have been entitled to purchase pursuant to the Option at the
date of the Director's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and the members of the Company. In the event such
approvals are not obtained within 60 days of the Agreement Date, this Agreement
shall be null and void and of no further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under
- 2 -
<PAGE>
option to the Director and the exercise price thereof shall be adjusted in
accordance with such subdivision, consolidation or other change in the share
capital of the Company.
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Director and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
10. The Company hereby covenants and agrees to and with the Director that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Director in the event the Director exercises the
Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ [Illegible] ) c/s
- -------------------------------- )
)
)
SIGNED, SEALED AND DELIVERED )
by DELBERT STEINER in the )
presence of: )
)
)
Signature of ) /s/ Delbert Steiner
Witness: /s/ [Illegible] )
------------------------- ) --------------------------------
) DELBERT STEINER
Address of )
Witness: P.O. Box 1788 )
------------------------- )
Lewiston, Id 83501 )
- ---------------------------------- )
)
Occupation )
of Witness: Secretary )
------------------------- )
Exhibit 10.17
SCHEDULE TO AMENDMENT TO DIRECTOR'S OPTION AGREEMENT
February 13, 1997
In addition to the Amendment to Director's Option Agreement dated February 13,
1997, between the Company and Delbert Steiner (the "Amending Agreement"), the
Company on the same date entered into Amendment to Director's Option Agreements
between the Company and each of E. Roy Knickel and Peter Lepik with identical
terms to the Amending Agreement.
Exhibit 10.18
AMENDMENT TO
EMPLOYEE'S STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 13th day of February, 1997.
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Colwnbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
WILFRIED J. STRUCK
1000 Erickson Ridge Road
P.O. Box 572
Elk City, ID 83525;
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. The Employee and the Company entered into an Employee Option Agreement made
as of the 30th day of October, 1995 (the "Option Agreement"), a copy of which is
attached hereto, pursuant to which the Employee was granted an option (the
"Option") to purchase all or any portion of 60,000 common shares in the capital
of the Company exercisable at a price of $1.80 per share, on or before the 30th
day of October, 1999;
B. The Employee exercised 10,000 of his options on the 17th day of May, 1996, so
that there remains a balance of 50,000 common shares held under option pursuant
to the Option Agreement;
C. The Employee and the Company wish to amend the Option Agreement, as to
exercise price only, from a price of $1.80 per share to a price of $1.15 per
share, upon the terms and conditions hereinafter set forth;
<PAGE>
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained, the parties
hereto covenant and agree as follows:
1. Paragraph 1 commencing on page 1 of the Option Agreement be deleted in its
entirety and replaced as follows:
"From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Employee shall
have and be entitled to and the Company hereby grants to the Employee an
Option (the "Option") to purchase all or any portion of 50,000 common
shares without par value in the capital stock of the Company from treasury
at the price of $1.15 per share."
2. Save and except as herein amended, the Option Agreement shall be and remains
in full force and effect on the terms set forth therein.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by WILFRIED J. STRUCK the )
presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Wilfried J. Struck
------------------------- ) --------------------------------
) WILFRIED J. STRUCK
Address of )
Witness: 3433 7th Street )
------------------------- )
Lewiston, Idaho 83501)
- ---------------------------------- )
)
Occupation )
of Witness: Corporate Secretary )
------------------------- )
-2-
<PAGE>
EMPLOYEE'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 30TH DAY OF OCTOBER 1995 (THE "AGREEMENT
DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(the "Company")
AND:
WILFRIED J. STRUCK
1000 Erickson Ridge Road
P.O. Box 572 Elk City, ID 83525;
(the "Employee")
WHEREAS the Employee is a bona-fide full time employee of the Company and the
Company would like to grant to the Employee an option to purchase common shares
of the Company on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Employee shall have
and be entitled to and the Company hereby grants to the Employee an option (the
"Option") to purchase a total of 60,000 common shares without par value in the
capital stock of the Company from treasury at the price of $1.80 per share. Only
one-half of the common shares held under the Option may be exercised during any
six month period.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Employee giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, in
favour of the Company for the full amount of the purchase price of the shares
then being purchased. Provided such written notice and payment are received by
the Company prior to 5:00 p.m. local time on the Termination Date at its address
first above written, the Company covenants and agrees to issue and deliver to
the
<PAGE>
Employee, forthwith thereafter, a share certificate for the number of shares so
purchased registered in the Employee's name.
3. This is an Option only and does not impose upon the Employee any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Employee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Employee only by the Employee himself.
5. This Option shall terminate 30 days after the Employee ceases to be an
employee of the Company save and except where the Employee ceases to be an
employee of the Company as a result of:
(a) termination for cause; or
(b) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Employee ceases to be
an employee of the Company.
6. If the Employee should die while still an employee of the Company, the Option
may then be exercised by the Employee's legal heirs or personal representatives
to the same extent as if the Employee were alive and an employee of the Company
for a period of one year after the Employee's death but only for such shares as
the Employee was entitled to purchase pursuant to the Option at the date of the
Employee's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and, if the Employee is an insider (as that term is
defined in the Securities Act, S.B.C. 1985, c. 83 as amended) of the Company, by
the members of the Company. In the event such approvals are not obtained within
60 days of the Agreement Date, this Agreement shall be null and void and of no
further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Employee and the exercise price thereof
shall be adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
-2-
<PAGE>
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Employee and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
10. The Company hereby covenants and agrees to and with the Employee that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Employee in the event the Employee exercises the
Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed in the )
presence of: )
)
/s/ [Illegible] ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by WILFRIED J. STRUCK in the )
presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Wilfried J. Struck
------------------------- ) -----------------------------
) WILFRIED J. STRUCK
Address of )
Witness: P.O. Box 1788 )
------------------------- )
Lewiston, ID 83501 )
- ---------------------------------- )
)
Occupation )
of Witness: Secretary )
------------------------- )
Exhibit 10.19
SCHEDULE TO AMENDMENT TO EMPLOYEE'S OPTION AGREEMENT
February 13, 1997
In addition to the Amendment to Employee's Option Agreement dated February 13,
1997 between the Company and Wilfried Struck (the "Amending Agreement"), the
Company on the same date entered into an Amendment to Employee's Option
Agreement between the Company and Geoffrey Magnuson with identical terms to the
Amending Agreement.
Exhibit 10.20
EMPLOYEE'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 17 DAY OF MAY 1996 (THE "AGREEMENT" DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORP., a company duly incorporated
under the laws of the Province of British Columbia, having a
place of business at Suite 470, 504 Main Street, Lewiston,
Idaho, 83501;
(the "Company")
AND:
KEN SCOTT
4299 Canada Way, Suite 225
Burnaby, BC
V6G lH3;
(the "Employee")
WHEREAS the Employee is the Chief Financial Officer of the Company and a bona
fide employee of a company providing accounting services to the Company, and the
Company would like to grant to the Employee an option to purchase common shares
of the Company on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to an including the day 4 years
from the Agreement Date (the "Termination Date"), the Employee shall have and be
entitled to and the Company hereby grants to the Employee an option (the
"Option") to purchase a total of 250,000 common shares without par value in the
capital stock of the Company from treasury at the price of $3.30 per share. Only
one-half of the common shares held under the Option may be exercised during any
six month period.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Employee giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, in
favour of the Company for the full amount of the purchase price of the shares
then being purchased. Provided such written notice and payment are received by
the Company prior to 5:00 p.m. local time on the Termination Date at its address
first above written, the Company covenants and agrees to issue and deliver to
the Employee, forthwith
<PAGE>
thereafter, a share certificate for the number of shares so purchased registered
in the Employee's name.
3. This is an Option only and does not impose upon the Employee any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Employee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Employee only by the Employee himself.
5. This Option shall terminate 30 days after the Employee ceases to be an
employee of the Company save and except where the Employee ceases to be an
employee of the Company as a result of:
(a) termination for cause; or
(b) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Employee ceases to be
an employee of the Company.
6. If the Employee should die while still an employee of the Company, the Option
may then be exercised by the Employee's legal heirs or personal representatives
to the same extent as if the Employee were alive and an employee of the Company
for a period of one year after the Employer's death but only for such shares as
the Employee was entitled to purchase pursuant to the Option at the date of the
Employer's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and, if the Employee is an insider (as the term is
defined in the Securities Act, S.B.C. 1985, c. 83 as amended) of the Company, by
the members of the Company. In the event such approvals are not obtained, this
Agreement shall be null and void and of no further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Employee and the exercise price thereof
shall be adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
- 2 -
<PAGE>
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Employee and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
10. The Company hereby covenants and agrees to and with the Employee that it
will reserve in its treasure sufficient shares to permit the issuance and
allotment of shares to the Employee in the event the Employee exercises the
Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS CORP. )
was hereunto affixed in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by KEN SCOTT in the presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Ken Scott
------------------------- ) --------------------------------
) KEN SCOTT
Address of )
Witness: Burnaby, BC )
------------------------- )
)
- ---------------------------------- )
Occupation )
of Witness: Secretary )
------------------------- )
- 3 -
Exhibit 10.21
SCHEDULE TO EMPLOYEE'S OPTION AGREEMENT
May 17, 1996
In addition to the Employee's Option Agreement dated May 17, 1996 between the
Company and Ken Scott, the Company on the same date granted options to purchase
Common shares in the capital stock of the Company on identical terms to the
option granted to Mr. Scott to Trudy Weed in the amount of 75,000 shares.
Exhibit 10.22
AMENDMENT TO
EMPLOYEE'S STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 13th day of February, 1997.
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
KEN SCOTT
4299 Canada Way, Suite 225
Burnaby, BC
V6G lH3;
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. The Employee and the Company entered into an Employee Option Agreement made
as of the 17th day of May, 1996 (the "Option Agreement"), a copy of which is
attached hereto, pursuant to which the Employee was granted an option (the
"Option") to purchase all or any portion of 250,000 common shares in the capital
of the Company exercisable at a price of $3.30 per share, on or before the 17th
day of May, 2000;
B. The Employee and the Company wish to amend the Option Agreement from an
exercise price of $3.30 per share to an exercise price of $1.15 per share, and
to further amend the Option Agreement by the cancellation of options so that the
Employee is entitled to purchase 50,000 shares rather than 250,000 shares upon
the terms and conditions hereinafter set forth;
<PAGE>
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained, the parties
hereto covenant and agree as follows:
1. Paragraph 1 commencing on page 1 of the Option Agreement be deleted in its
entirety and replaced as follows:
"From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Employee shall
have and be entitled to and the Company hereby grants to the Employee an
Option (the "Option") to purchase all or any portion of 50,000 common
shares without par value in the capital stock of the Company from treasury
at the price of $1.15 per share."
2. Save and except as herein amended, the Option Agreement shall be and remains
in full force and effect on the terms set forth therein.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- ---------------------------------- )
- 2 -
<PAGE>
SIGNED, SEALED AND DELIVERED )
by KEN SCOTT in the presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Ken Scott
-------------------------- ) ---------------------------------
) KEN SCOTT
Address of )
Witness: 3852 Richmond St )
-------------------------- )
Richmond, BC )
- ------------------------------------- )
)
Occupation )
of Witness: Chartered Accountant )
-------------------------- )
Exhibit 10.23
SCHEDULE TO AMENDMENT TO EMPLOYEE'S OPTION AGREEMENT
February 13, 1997
In addition to the Amendment to Employee's Option Agreement dated February 13,
1997 between the Company and Ken Scott (the "Amending Agreement"), the Company
on the same date entered into an Amendment to Employee's Option Agreement
between the Company and Trudy Weed with identical terms to the Amending
Agreement in the amount of 5,000 shares.
Exhibit 10.24
DIRECTOR'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 13TH DAY OF FEBRUARY 1997 (THE "AGREEMENT
DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(the "Company")
AND:
DELBERT STEINER
3555 Country Club Drive
Lewiston, Idaho
83501
(the "Director")
WHEREAS the Director is a director of the Company and the Company would like to
grant to the Director an option to purchase common shares of the Company on the
terms and conditions contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Director shall have
and be entitled to and the Company hereby grants to the Director an option (the
"Option") to purchase all or any portion of 150,000 common shares without par
value in the capital stock of the Company from treasury at the price of $1.15
per share.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Director giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, for
the full amount of the purchase price of the shares then being purchased.
Provided such written notice and payment are received by the Company prior to
5:00 p.m. local time on the Termination Date at its address first above written,
<PAGE>
the Company covenants and agrees to issue and deliver to the Director, forthwith
thereafter, a share certificate for the number of shares so purchased registered
in the Director's name.
3. This is an Option only and does not impose upon the Director any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Director otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Director only by the Director himself.
5. This Option shall terminate 30 days after the Director ceases to be a
director of the Company save and except where the Director ceases to be a
director of the Company as a result of:
(a) ceasing to meet the qualifications set forth in section 138 of the
Company Act, R.S.B.C. 1979, c. 59;
(b) a special resolution passed by the members of the Company pursuant to
subsection 154(3) of the Company Act, R.S.B.C. 1979, c. 59; or
(c) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Director ceases to be a
director of the Company.
6. If the Director should die while still a director of the Company, the Option
may then be exercised by the Director's legal heirs or personal representatives
to the same extent as if the Director were alive and a director of the Company
for a period of one year after the Director's death but only for such shares as
the Director would have been entitled to purchase pursuant to the Option at the
date of the Director's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and the members of the Company. In the event such
approvals are not obtained within 60 days of the Agreement Date, this Agreement
shall be null and void and of no further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Director and the exercise price thereof
shall be adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
-2-
<PAGE>
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Director and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
10. The Company hereby covenants and agrees to and with the Director that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Director in the event the Director exercises the
Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by DELBERT STEINER in the )
presence of: )
)
)
Signature of )
Witness: /s/ [Illegible] ) /s/ Delbert Steiner
------------------------- ) --------------------------------
) DELBERT STEINER
Address of )
Witness: 3433 7th Street )
------------------------- )
Lewiston, Id 83501 )
- ---------------------------------- )
)
Occupation )
of Witness: Corporate Secretary )
------------------------- )
- 3 -
Exhibit 10.25
SCHEDULE TO DIRECTOR'S OPTION AGREEMENT
February 13, 1997
In addition to the Director's Option Agreement dated February 13, 1997, between
the Company and Delbert Steiner, the Company on the same date granted options to
purchase Common shares in the capital stock of the Company on identical terms to
the option granted to Mr. Steiner to Geddes Webster in the amount of 50,000
shares.
Exhibit 10.26
EMPLOYEE'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 13TH DAY OF FEBRUARY, 1997 (THE "AGREEMENT
DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(the "Company")
AND:
ROBERT A. YOUNG
1360 Hornby Street, Suite 307
Vancouver, BC
V6B IN2;
(the "Employee")
WHEREAS the Employee is a bona-fide employee of the Company, and the Company
would like to grant to the Employee an option to purchase common shares of the
Company on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Employee shall have
and be entitled to and the Company hereby grants to the Employee an option (the
"Option") to purchase a total of 100,000 common shares without par value in the
capital stock of the Company from treasury at the price of $1.15 per share. Only
one-half of the common shares held under the Option may be exercised during any
six month period.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Employee giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, in
favour of the Company for the full amount of the purchase price of the shares
then being purchased. Provided such written notice and payment are received by
the Company prior to 5:00 p.m. local time on the Termination Date at its address
first above written, the Company covenants and agrees to issue and deliver to
the Employee, forthwith thereafter, a share certificate for the number of shares
so purchased registered in the Employee's name.
<PAGE>
3. This is an Option only and does not impose upon the Employee any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Employee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of tile Employee only by the Employee himself.
5. This Option shall terminate 30 days after the Employee ceases to be an
employee of the Company save and except where the Employee ceases to be an
employee of the Company as a result of:
(a) termination for cause; or
(b) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Employee ceases to be
an employee of the Company.
6. If the Employee should die while still an employee of the Company, the Option
may then be exercised by the Employee's legal heirs or personal representatives
to the same extent as if the Employee were alive and an employee of the Company
for a period of one year after the Employee's death but only for such shares as
the Employee was entitled to purchase pursuant to the Option at the date of the
Employee's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and, if the Employee is an insider (as that term is
defined in the Securities Act, S.B.C. 1985, c. 83 as amended) of the Company, by
the members of the Company. In the event such approvals are not obtained, this
Agreement shall be null and void and of no further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Employee and the exercise price thereof
shall be adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Employee and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
-2-
<PAGE>
10. The Company hereby covenants and agrees to and with the Employees it will
reserve in its treasury sufficient shares to permit the issuance and allotment
of shares to the Employee in the event the Employee exercises the Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by ROBERT A. YOUNG in the )
presence of: )
)
)
Signature of )
Witness: /s/ Heather Conley ) /s/ Robert A. Young
------------------------- ) --------------------------------
) ROBERT A. YOUNG
Address of )
Witness: 709 - 744 W. )
------------------------- )
Hastings, Vancouver )
- ---------------------------------- )
)
Occupation )
of Witness: Geologist )
------------------------- )
- 3 -
Exhibit 10.27
SCHEDULE TO EMPLOYEE'S OPTION AGREEMENT
February 13, 1997
In addition to the Employee's Option Agreement dated February 13, 1997, between
the Company and Robert Young, the Company on the same date granted options to
purchase Common shares in the capital stock of the Company on identical terms to
the option granted to Mr. Young to the following individuals:
Name of Optionee No. of Shares
---------------- -------------
Wilfried Struck 50,000
Geoffrey Magnuson 50,000
Mathew Binsfield 10,000
Exhibit 10.28
DIRECTOR'S OPTION AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 27TH DAY OF AUGUST 1997 (THE "AGREEMENT DATE").
BETWEEN:
IDAHO CONSOLIDATED METALS CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia, having a place of business at Suite 470, 504 Main
Street, Lewiston, Idaho, 83501;
(the "Company")
AND:
THEODORE J. TOMASOVICH
600 Wilshire Boulevard
Suite 1410
Los Angeles, California
90017;
(the "Director")
WHEREAS the Director is a director of the Company and the Company would like to
grant to the Director an option to purchase common shares of the Company on the
terms and conditions contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree (the "Agreement") as follows:
1. From and including the Agreement Date through to and including the day 4
years from the Agreement Date (the "Termination Date"), the Director shall have
and be entitled to and the Company hereby grants to the Director an option (the
"Option") to purchase all or any portion of 50,000 common shares without par
value in the capital stock of the Company from treasury at the price of $0.56
per share.
2. Subject to the terms of this Agreement, the right to take up shares pursuant
to the Option is exercisable by the Director giving notice in writing to the
Company accompanied by a cheque, certified if so required by the Company, for
the full amount of the purchase price of the shares then being purchased.
Provided such written notice and payment are received by the Company prior to
5:00 p.m. local time on the Termination Date at its address first above written,
<PAGE>
the Company covenants and agrees to issue and deliver to the Director, forthwith
thereafter, a share certificate for the number of shares so purchased registered
in the Director's name.
3. This is an Option only and does not impose upon the Director any obligation
to take up and pay for any of the shares under Option.
4. The Option shall not be assignable or transferable by the Director otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Director only by the Director himself.
5. This Option shall terminate 30 days after the Director ceases to be a
director of the Company save and except where the Director ceases to be a
director of the Company as a result of:
(a) ceasing to meet the qualifications set forth in section 114 of the
Company Act, Chapter 62;
(b) a special resolution passed by the members of the Company pursuant to
subsection 130(3) of the Company Act, Chapter 62; or
(c) by order of the Superintendent of Brokers for B.C., B.C. Securities
Commission, Vancouver Stock Exchange or any securities regulatory body
having jurisdiction to so order,
in which case the Option shall terminate on the date the Director ceases to be a
director of the Company.
6. If the Director should die while still a director of the Company, the Option
may then be exercised by the Director's legal heirs or personal representatives
to the same extent as if the Director were alive and a director of the Company
for a period of I year after the Director's death but only for such shares as
the Director would have been entitled to purchase pursuant to the Option at the
date of the Director's death.
7. This Agreement and any amendments hereto are subject to the approval of the
Vancouver Stock Exchange and the members of the Company. In the event such
approvals are not obtained within 60 days of the Agreement Date, this Agreement
shall be null and void and of no further force and effect.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Director and the exercise price thereof
shall be adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
- 2 -
<PAGE>
9. In the event that the Company undertakes an amalgamation, merger,
reorganization or other arrangement while any portion of the Option is
outstanding, the number of shares under option to the Director and the exercise
price thereof shall be adjusted in accordance with such amalgamation, merger,
reorganization or other arrangement.
10. The Company hereby covenants and agrees to and with the Director that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Director in the event the Director exercises the
Option.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed effective as of the day and year first above written.
THE COMMON SEAL of IDAHO )
CONSOLIDATED METALS )
CORPORATION was hereunto affixed )
in the presence of: )
)
/s/ Delbert Steiner ) c/s
- -------------------------------- )
SIGNED, SEALED AND DELIVERED )
by THEODORE J. TOMASOVICH )
in the presence of: )
)
Signature of )
Witness: /s/ Lori D. Cox ) /s/ Theodore J. Tomasovich
------------------------- ) --------------------------------
) THEODORE J. TOMASOVICH
Address of )
Witness: 504 Main Suite 470 )
------------------------- )
Lewiston, Id 83501 U.S.A.)
- ---------------------------------- )
)
Occupation )
of Witness: Investor Relations )
------------------------- )
- 3 -
Exhibit 10.29
SCHEDULE TO DIRECTOR'S OPTION AGREEMENT
August 27, 1997
In addition to the Director's Option Agreement dated August 27, 1997, between
the Company and Theodore Tomasovich, the Company on the same date granted
options to purchase common shares in the capital stock of the Company on
identical terms to the option granted to Mr. Tomasovich to Jag Vyas and Robert
Young.
Exhibit 10.30
DEBT SETTLEMENT AGREEMENT
THIS AGREEMENT MADE EFFECTIVE AS OF THE 30th DAY OF SEPTEMBER, 1997 (the
"Effective Date").
BETWEEN:
IDAHO CONSOLIDATED METALS CORP., a company incorporated under
the laws of British Columbia having its registered office at
P.O. Box 48800, 2100-1111 West Georgia Street, Vancouver,
B.C., V7X 1K9;
(the "Company")
AND:
WILFRED STRUCK, 2303 7th Street, Lewiston, ID 83501
(the "Creditor")
WHEREAS:
A. As at September 30, 1996, the amount of US$19,204.01 was due and owing to the
Creditor by the Company for unpaid wages and interest thereon. As at September
30, 1997, an additional amount of US$1,183.45 was due and owing to the Creditor
as interest charged on the outstanding amount. The total amount due and owing to
the Creditors is US$20,387.46, being Cdn$28,155.58 (the "Debt"). The parties
wish to settle. the Debt through issuance of its common shares to the Creditor;
B. The Creditor has agreed to accept 38,569 common shares without par value (the
"Shares") in the capital stock of the Company in settlement of the Debt, such
Shares to be issued at a price of Cdn$0.73 per Share;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the mutual
covenants and agreements herein contained, the receipt and sufficiency of which
is hereby acknowledged, the parties covenant and agree with each other (the
"Agreement") as follows:
1. On the basis of the representations and warranties of the Creditor contained
in this Agreement and subject to the terms of this Agreement, the Company agrees
to issue the Shares to or at the direction of the Creditor in full and final
settlement of the Debt.
2. For and in consideration of the issuance of the Shares by the Company to the
Creditor, the Creditor, for himself, his heirs, executors, administrators,
successors and assigns does hereby remise, release and forever discharge the
Company, its directors, officers, servants, employees and agents both present
and future and their respective heirs, executors, administrators, successors and
assigns of and from the Debt and from all manner of actions, causes of action,
suits, contracts, claims, demands or damages of any kind whatsoever in respect
of the Debt that the Creditor has ever had, now has or the Creditor or his
heirs, executors, administrators, successors or assigns may have in the future
in respect of the Debt as against the
<PAGE>
Company or against any of its directors, officers, servants, employees or agents
both present and future and their respective heirs, executors, administrators,
successors and assigns.
3. Upon execution of this Agreement the Creditor shall immediately discontinue
the prosecution of any action or proceeding of any kind whatsoever in respect of
the Debt and shall remove all liens, charges and encumbrances of any kind
whatsoever filed by or on behalf of the Creditor against the Company or any of
its assets or against any of its directors, officers, servants, employees or
agents or their assets.
4. This Agreement is subject to all necessary approvals of the Vancouver Stock
Exchange, and the Executive Director of the B.C. Securities Commission (the
"Regulators"). If these approvals are not obtained by the 31st day of December,
1997 , this Agreement shall then be null and void.
5. Subject to the Creditor having first complied with paragraph 3, the Company
shall deliver a share certificate representing the Shares to the Creditor at his
address shown on the first page of this Agreement within ten days of receiving
written notice of the last of the approvals of the Regulators.
6. The Creditor acknowledges that this Agreement is not being entered into and
the Shares are not being acquired by the Creditor as a result of any material
information about the Company's affairs that has not been publicly disclosed.
7. The Creditor understands and acknowledges that the Shares have not been
registered under the United States Securities Act of 1933, as amended (the
"Securities Act") or under the securities laws of any state of the United
States, in reliance upon certain exemptions for transactions not involving a
public offering, and that the Shares must be held indefinitely and cannot be
resold to any person in the United States unless resold pursuant to an offering
registered under the Securities Act and under certain state securities laws, or
unless an exemption from registration is available. The Creditor understands and
acknowledges that certificates representing the Shares will be endorsed with
restrictive legends which are required by applicable securities laws and
regulations.
8. In the event of any subdivision, consolidation or other change in the share
capital of the Company prior to the issuance of the Shares, the number of Shares
issued pursuant to this Agreement shall be adjusted in accordance with such
subdivision, consolidation or other change in the share capital of the Company.
9. Time shall be of the essence in this Agreement.
10. This Agreement is subject to, governed by and construed in accordance with
the laws of the Province of British Columbia.
11. All references to funds in this Agreement are in Canadian funds.
12. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.
13. The parties hereto agree to execute and deliver all such further documents
and other writings of any kind whatsoever and all such further acts and things
as are reasonably required to carry out the full intent and meaning of this
Agreement.
- 2 -
<PAGE>
14. Whenever the singular or masculine is used in this Agreement the same shall
be deemed to include the plural or the feminine or the body corporate as the
context may require.
15. This Agreement constitutes the entire agreement between the parties and
there are no representations, warranties, covenants or agreements collateral
hereto other than as contained herein.
16. This Agreement may be signed by facsimile and in as many counterparts as may
be deemed necessary, each of which so signed shall be deemed to be an original,
and all such counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this written Agreement effective as
of the Effective Date.
THE CORPORATE SEAL of IDAHO )
CONSOLIDATED METALS CORP. was )
hereunto affixed in the presence of: )
) c/s
)
- -------------------------------------- )
)
- -------------------------------------- )
SIGNED, SEALED & DELIVERED )
by WILFRIED STRUCK )
in the presence of: )
)
)
)
- -------------------------------------- ) ---------------------------------
Signature of Witness ) WILFRIED STRUCK
)
Name: )
--------------------------------- )
Address: )
----------------------------- )
)
- -------------------------------------- )
Occupation: )
--------------------------- )
- 3 -
Exhibit 10.31
SCHEDULE TO DEBT SETTLEMENT AGREEMENT
September 30, 1997
In addition to the Debt Settlement Agreement dated September 30, 1997, between
the Company and Wilfried Struck (the "Struck Agreement"), the Company on the
same date entered into debt settlement agreements with identical terms to the
Steiner Agreement with the following individuals in settlement of the following
amounts:
<TABLE>
Amount Owing
Name of Optionee No. of Shares (Canadian)
---------------- ------------- ---------------
<S> <C> <C>
Tomasovich Family Trust 77,137 $56,310.37
Stephens Berg & Lasater 100,000 $73,000.00*
Delbert Steiner 247,781 $180,880.22
Robert Young & Associates 39,315 $28,700.00
Staley Okada Chandler & Scott 64,407 $47,016.99
</TABLE>
* The Company owed $231,997.49 of which Stephens Berg & Lasater forgave
$179,138.19 leaving $52,859.30 being C$73,000.00.
SUBSCRIPTION AGREEMENT
Exhibit 10.32
November 12, 1997
TO: Idaho Consolidated Metals Corp.
The undersigned (the "Purchaser") hereby subscribes irrevocably for and agrees
to purchase from Idaho Consolidated Metals Corp. (the "Company"), subject to the
terms and conditions set forth herein, that number of Units (the "Units") of the
Company specified in paragraph A of Schedule "A" hereto for an aggregate
subscription price specified in paragraph B of Schedule "A" hereto, representing
a subscription price of CDN$0.60 (US$0.43) per Unit.
1. Definitions
1.1 In this Subscription Agreement, including any schedules forming a part of
this Subscription Agreement:
(a) "1933 Act" means the United States Securities Act of 1933, as amended;
(b) "B.C. Act" means the Securities Act (British Columbia);
(c) "Applicable Securities Laws" means, in respect of each and every offer
or sale of Units, the securities legislation having application and
the rules, policies, notices and orders issued by applicable
Regulatory Authorities having application;
(d) "Closing Date" has the meaning given to that term in section 9.1;
(e) "Closing" has the meaning given to that term in section 9.1;
(f) "distribution" has the meaning given to that term under Applicable
Securities Laws;
(g) "Exchange" means the Vancouver Stock Exchange;
(h) "Exemptions" means the exemptions from the registration and prospectus
or equivalent requirements under Applicable Securities Laws;
(i) "Foreign Portfolio Manager" means a person who carries on business as
a "portfolio manager" (within the meaning of that term under the
Applicable Securities Laws of British Columbia) in an International
Jurisdiction or the United States and who purchases Units as an agent
for fully managed accounts;
(j) "fully managed" in relation to an account, means that the Purchaser
has the absolute discretion as to purchasing and selling for the
account and in respect of which the Purchaser receives no instructions
from any person beneficially interested in such account or from any
other person;
<PAGE>
(k) "International Jurisdiction" means a country other than Canada or the
United States;
(l) "material fact" has the meaning given to that term under Applicable
Securities Laws;
(m) "Offering Memorandum" means an offering memorandum prepared by the
Company in connection with the Private Placement, and all amendments
thereto and has the meaning, if any, given that term under Applicable
Securities Laws;
(n) "Private Placement" means the offering and sale of the Units pursuant
to the terms and conditions of the Subscription Agreements;
(o) "Purchaser" means a person that subscribes for and purchases Units
under the Private Placement;
(p) "Purchaser's Units" means the number of Units subscribed for by the
Purchaser under this Subscription Agreement as specified in paragraph
A of Schedule "A" hereto;
(q) "Purchaser's Subscription Funds" means the aggregate subscription
price for the Units subscribed for by the Purchaser as specified and
defined in paragraph B of Schedule "A" hereto;
(r) "Qualifying Jurisdictions" means the Province of British Columbia, and
such other jurisdictions as may be determined by the Company;
(s) "Regulation S" means Regulation S promulgated by the Securities
Exchange Commission under the 1933 Act;
(t) "Regulatory Authorities" means the securities regulatory authorities
in each of the Qualifying Jurisdictions;
(u) "Subscription Agreement" means the subscription agreements (including
this subscription agreement) or purchase agreements to be entered into
between Purchasers of Units and the Company in respect of the purchase
and sale of Units and includes all schedules attached to such
subscription agreements or purchase agreements, in each case as they
may be amended or supplemented from time to time;
(v) "Time of Closing" has the meaning given to that term in section 10.1;
(w) "Unit" means an equity unit of the Company offered under the Private
Placement, each Unit consisting of one Unit Share and one Unit
Warrant, and "Units" means more than one "Unit";
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<PAGE>
(x) "Unit Share" means a common share of the Company forming part of a
Unit and "Unit Shares" means more than one Unit Share;
(y) "Unit Warrant" means a common share purchase warrant forming part of a
Unit and "Unit Warrants" means more than one Unit Warrant;
(z) "United States" means the United States of America, its territories
and possessions, any states of the United States, and the District of
Columbia;
(aa) "U.S. person" has the meaning ascribed thereto in Rule 902 of
Regulations S; and
(bb) "Warrant Share" means a common share of the Company to be issued upon
the exercise of one or more Unit Warrants and "Warrant Shares" means
more than one Warrant Share.
2. Subscription Procedure
2.1 The Purchaser shall deliver to the Company:
(a) cash, certified cheque or bank draft payable to the "Idaho
Consolidated Metals Corp." or such other party as the Company may
direct in an amount equal to the Purchaser's Subscription Funds;
(b) a completed and originally executed copy of this Subscription
Agreement (including Schedule A hereto);
(c) a completed and originally executed copy of the Private Placement
Questionnaire and Undertaking attached as Schedule "B" hereto;
(d) if the Purchaser is an individual, a completed and originally executed
copy of the Form 20A(IP) attached as Schedule "C" hereto; and
(e) if the Purchaser is other than an individual, a completed and
originally executed copy of the Form 20A(NIP) attached as Schedule "D"
hereto.
2.2 The Purchaser's Private Placement Questionnaire and Undertaking attached as
Schedule "B" hereto will be delivered to the Company so as to permit the Company
to make such necessary filings with the Exchange to obtain the approval of the
Exchange to the Private Placement. On Closing, the Company will, subject to
section 2.3, then issue and sell the Purchaser's Units to the Purchaser and
cause to be issued and delivered a definitive certificate representing the
Purchaser's Unit Shares and a definitive certificate representing the
Purchaser's Unit Warrants, each registered in the name of the Purchaser (or in
the other name or names set forth in paragraph D of Schedule "A" hereto) to or
upon the direction of the Purchaser, for delivery to the Purchaser in accordance
with the Purchaser's instructions in paragraph E of Schedule "A" hereto. In the
event that this offer is not accepted by the Company, this offer will be
returned by the Company to the Purchaser at the address of the Purchaser set
forth in paragraph C of Schedule "A" hereto.
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<PAGE>
2.3 The Company will have the right to accept this offer (in whole or in part)
at any time at or prior to the Time of Closing. The Company's acceptance of this
offer will be conditional upon, among other things, the sale of the Purchaser's
Units to the Purchaser being exempt from any registration and prospectus filing
requirements of all Applicable Securities Laws. The Company will be deemed to
have accepted this offer upon the delivery at the Closing of certificates
representing the Purchaser's Unit Shares and the Purchaser's Unit Warrants
referred to in and in accordance with section 2.2.
2.4 The Purchaser will, promptly upon request by the Company, provide the
Company with any additional information and execute and deliver to the Company
additional undertakings, questionnaires and other documents as the Company may
request in connection with the issue and sale of the Units. The Purchaser
acknowledges and agrees that such undertakings, questionnaires and other
documents, when executed and delivered by the Purchaser, will form part of and
will be incorporated into this Subscription Agreement with the same effect as if
each constituted a representation and warranty or covenant of the Purchaser
hereunder in favour of the Company. The Purchaser consents to the filing of such
undertakings, questionnaires and other documents as may be required to be filed
with any stock exchange or securities regulatory authority in connection with
the transactions contemplated under the Subscription Agreement.
3. Terms of Private Placement
3.1 The Units subscribed for are part of a larger offering of up to 1,858,045
Units having the material attributes described below, which is being undertaken
by the Company.
3.2 Each Unit will consist of one Unit Share and one Unit Warrant. Each Unit
Warrant will entitle the holder to purchase one Warrant Share of the Company for
a period of 2 years from the Closing Date at the price of CDN$0.60 (US$0.43) per
share in the first year and CDN$0.70 (US$0.50) per share in the second year.
3.3 The Share Purchase certificate will be in such form and contain such terms
as shall be approved by the Company and its counsel.
4. Representations, Warranties and Covenants of the Purchaser
4.1 By executing this Subscription Agreement, the Purchaser represents, warrants
and covenants to the Company (and acknowledges that the Company and its counsel,
are relying thereon) that:
(a) the Purchaser is resident in the jurisdiction specified in paragraph C of
Schedule "A" to this Subscription Agreement;
(b) the Purchaser's Units are not being purchased by the Purchaser as a result
of any material information concerning the Company that has not been
publicly disclosed and the Purchaser's decision to tender this offer and
purchase the Purchaser's Units has not been made as a result of any verbal
or written representation as to fact or otherwise (including
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<PAGE>
that any person will resell or repurchase or refund the purchase price of
the Purchaser's Units other than in accordance with their terms), that the
Unit Shares, Unit Warrants or Warrant Shares will be listed and posted for
trading on a stock exchange or that application has been made for such a
listing or as to the future price or value of the Unit Shares, Unit
Warrants or Warrant Shares made by or on behalf of the Company, or any
other person and is based entirely upon currently available public
information concerning the Company;
(c) if the Purchaser is resident of an International Jurisdiction then:
(i) the Purchaser is knowledgeable of, or has been independently advised
as to, the Applicable Securities Laws of the International
Jurisdiction which would apply to this subscription, if there are any;
(ii) the Purchaser is purchasing the Units pursuant to Exemptions from the
prospectus and registration requirements under the Applicable
Securities Laws of that International Jurisdiction or, if such is not
applicable, the Purchaser is permitted to purchase the Purchaser's
Units under the Applicable Securities Laws of the International
Jurisdiction without the need to rely on Exemptions; and
(iii)the Applicable Securities Laws do not require the Company to make any
filings or seek any approvals of any kind whatsoever from any
regulatory authority of any kind whatsoever in the International
Jurisdiction; and
(iv) the Purchaser will, if requested by the Company, deliver to the
Company a certificate or opinion of local counsel from the
International Jurisdiction which will confirm the matters referred to
in subparagraphs (ii) and (iii) above to the satisfaction of the
Company, acting reasonably;
(d) if the Purchaser is a Foreign Portfolio Manager:
(i) it is purchasing the Units on behalf of managed accounts over which it
has absolute discretion as to purchasing and selling, and in respect
of which it receives no instructions from any person beneficially
interested in such accounts or from any other person;
(ii) it carries on the business of managing the investment portfolios of
clients through discretionary authority granted by those clients (a
"portfolio manager" business) in the International Jurisdiction in
which it residents, and it is permitted by law to carry on a portfolio
manager business in that International Jurisdiction;
(iii)it was not created solely or primarily for the purpose of purchasing
securities of the Company;
(iv) the total asset value of the investment portfolios it manages on
behalf of clients is not less than CDN$20,000,000;
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<PAGE>
(v) it does not believe, and has no reasonable grounds to believe, that
any resident of British Columbia has a beneficial interest in any of
the managed accounts for which it is purchasing; and
(vi) it acknowledges that the Company has provided it with a list of the
directors, senior officers and other insiders of the Company, and the
persons that carry on investor relations activities for the Company
and it does not believe, and has no reasonable grounds to believe,
that any of those persons has a beneficial interest in any of the
managed accounts for which it is purchasing; and
(vii)the Purchaser will, if requested by the Company or the Underwriters,
deliver to the Company a certificate or opinion of local counsel from
the International Jurisdiction which will confirm the matters referred
to above to the satisfaction of the Company, acting reasonably;
(e) if the Purchaser is a U.S. Person,
(i) the Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risk of
an investment in the Units and it is able to bear the economic risk of
loss of its entire investment;
(ii) the Purchaser is acquiring the Units for its own account, for
investment purposes only and not with a view to any resale,
distribution or other disposition of the Units in violation of the
United States securities laws;
(iii)the Purchaser understands that the Unit Shares, the Unit Warrants and
the Warrant Shares (the "Securities") have not been and will not be
registered under the 1933 Act or the securities laws of any state of
the United States and that the sale contemplated hereby is being made
in reliance of an exemption from such registration requirements;
(iv) the Purchaser satisfies one or more of the categories indicated below
(please place an "X" on the appropriate lines):
<TABLE>
<S> <C> <C>
______ Category 1 An organization described in Section 501(c)(3) of the United
States Internal Revenue Code, a corporation, a Massachusetts or
similar business trust or partnership, not formed for the
specific purpose of acquiring the Units, with total assets in
excess of US$5,000,000;
______ Category 2 A trust that (a) has total assets in excess of US$5,000,000, (b)
was not formed for the specific purpose of acquiring the Units
and (c) is directed in its purchases
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<PAGE>
of securities by a person who has such knowledge and experience
in financial and business matters that he/she is capable of
evaluating the merits and risks of an investment in the Units;
______ Category 3 An investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section
2(a)(48) of that Act;
______ Category 4 A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
______ Category 5 A private business development company as defined in Section
202(a)(22) of the Investment Advisors Acts of 1940; and
______ Category 6 An entity in which all of the equity owners satisfy the
requirements of one or more of the foregoing categories;
</TABLE>
(v) the Purchaser agrees that if it decides to offer, sell or otherwise
transfer any of the Securities, it will not offer, sell or otherwise
transfer any of such Securities directly or indirectly, unless:
(A) the sale is to the Company;
(B) the sale is made outside the United States in a transaction
meeting the requirements of Rule 904 of Regulation S under the
1933 Act and in compliance with applicable local laws and
regulations:
(C) the sale is made pursuant to the exemption from the registration
requirements under the 1933 Act provided by Rule 144 thereunder
and in accordance with any applicable state securities or "Blue
Sky" laws; or
(D) the Securities are sold in a transaction that does not require
registration under the 1933 Act or any applicable state laws and
regulations governing the offer and sale of securities, and it
has prior to such sale furnished to the Company an opinion or
counsel reasonably satisfactory to the Company;
(vi) the Purchaser understands and agrees that the Unit Warrants may not be
exercised in the United States unless registered under the 1933 Act
and the securities laws
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<PAGE>
of all applicable states of the United States or an exemption from
such registration requirements is available;
(vii)the Purchaser acknowledges that the certificates representing the
Unit Shares, the Unit Warrants and the Warrant Shares will bear a
legend stating that such Securities have not been registered under the
1933 Act or the securities laws of any state of the United States and
may not be offered for sale or sold unless registered under the 1933
Act and the securities laws of all applicable states of the United
States or an exemption from such registration requirements is
available; and
(viii) the Purchaser consents to the Company making a notation on its
records or giving instructions to any transfer agent of the Company in
order to implement the restrictions on transfer set forth and
described herein.
(f) the offering and sale of the Purchaser's Units to the Purchaser was not
made through an advertisement of the Units in printed media of general and
regular paid circulation, radio or television or any other form of
advertisement;
(g) Prior to entering into this Agreement, the Purchaser was provided with, and
reviewed, an Offering Memorandum of the Company prepared for the
distribution of the Units;
(h) if the Purchaser is a corporation, the Purchaser is a valid and subsisting
corporation, has the necessary corporate capacity and authority to execute
and deliver this Subscription Agreement and to observe and perform its
covenants and obligations hereunder and has taken all necessary corporate
action in respect thereof, or, if the Purchaser is a partnership,
syndicate, trust or other form of unincorporated organization, the
Purchaser has the necessary legal capacity and authority to execute and
deliver this Subscription Agreement and to observe and perform its
covenants and obligations hereunder and has obtained all necessary
approvals in respect thereof, and, in either case, upon the Company
executing and delivering this Subscription Agreement, this Subscription
Agreement will constitute a legal, valid and binding contract of the
Purchaser enforceable against the Purchaser in accordance with its terms
and neither the agreement resulting from such acceptance nor the completion
of the transactions contemplated hereby conflicts with, or will conflict
with, or results, or will result, in a breach or violation of any law
applicable to the Purchaser, any constating documents of the Purchaser or
any agreement to which the Purchaser is a party or by which the Purchaser
is bound;
AND the Purchaser makes the representations and warranties under one of the
bolded and italicized headings below:
(i) Cdn$97,000 exemption
(i) in the case of the purchase by the Purchaser of the Units as:
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<PAGE>
(A) principal, the Purchaser is purchasing the Units as principal for
its own account, and not for the benefit of any other person, and
is purchasing a sufficient number of Units such that the
aggregate acquisition cost to the Purchaser of such Units is not
less than Cdn$97,000;
(B) agent for a disclosed principal, the Purchaser is an agent with
all necessary authority to execute this Agreement and all
documentation in connection with the purchase on behalf of each
beneficial Purchaser, and each beneficial Purchaser of such Units
for whom the Purchaser is acting is purchasing as principal for
its own account, and not for the benefit of any other person, and
is purchasing a sufficient number of Units so that each such
beneficial Purchaser has an aggregate acquisition cost for such
Units of not less than Cdn$97,000 and the Purchaser has due and
proper authority to execute this Agreement and all other
documentation in connection with the purchase on behalf of each
such undisclosed principal;
(C) as a trustee or as agent for a principal whose account is fully
managed by the Purchaser and whose identity is undisclosed or
identified by account number only, the Purchaser is purchasing a
sufficient number of Units such that the aggregate acquisition
cost to the Purchaser of such Units is not less than Cdn$97,000
and the Purchaser is:
(a) resident in British Columbia and is an insurer which has
received a business authorization under the Financial
Institutions Act (British Columbia) and is purchasing the
Units as trustee or as agent for accounts fully managed by
it;
(b) resident in British Columbia and is a trust company which
has received a business authorization under the Financial
Institutions Act (British Columbia) or is a portfolio
manager registered as such under the B.C. Act or exempt from
such registration under the B.C. Act and is purchasing the
Units, having an aggregate acquisition cost to such
Purchaser of not less than Cdn$97,000, as trustee or as
agent for accounts fully managed by it; or
(c) a trust company, insurer or portfolio manager which is
permitted under the Applicable Securities Laws of British
Columbia and the Applicable Securities Laws of the
jurisdiction in which the Purchaser resides, to be deemed to
be purchasing the Units as principal; or
(d) relying on and is purchasing the Units in accordance with an
order of the applicable securities commission of the
Purchaser's jurisdiction or residence exempting the sale of
such Units from the requirements to file a prospectus or
deliver an offering
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<PAGE>
memorandum (as that term is defined under Applicable
Securities Laws) issued on or before the Closing Date;
and the Purchaser has due and proper authority to execute this
Agreement and all other documentation in connection with the
purchase on behalf of each such undisclosed principal; and
(ii) neither the Purchaser nor any beneficial purchaser on whose behalf the
Purchaser is acting has been formed, created, established or
incorporated for the purpose of permitting the purchase of the Units
without a prospectus by groups of individuals whose individual share
of the aggregate acquisition cost for such Units is less than
Cdn$97,000;
(j) 50 sophisticated purchasers exemption:
(i) in the case of a purchase by the Purchaser of Units as:
(A) principal, the Purchaser is purchasing such Units as principal
for its own account and not for the benefit of any other person;
(B) agent for a disclosed principal, each beneficial purchaser of
such Units for whom the Purchaser is acting is purchasing as
principal for its own account, and not for the benefit of any
other person, and the Purchaser is an agent with due and proper
authority to execute this Agreement and all documentation in
connection with the purchase on behalf of each beneficial
purchaser;
(C) a trustee or as agent for a principal which is undisclosed or
identified by account number only, each beneficial purchaser of
the Units for whom the Purchaser is acting is purchasing as
principal for its own account, and not for the benefit of any
other person, and the Purchaser is a trustee or agent with due
and proper authority to execute this Agreement and all
documentation in connection with the purchase on behalf of each
beneficial purchaser;
(ii) the Purchaser is:
(A) a spouse, parent, brother, sister or child of a senior officer or
director of the Company, or of an affiliate of the Company; OR
(B) a company, all the voting securities of which are beneficially
owned by one or more of a senior officer or director of the
Company, or of an affiliate of the Company, or a spouse, parent,
brother, sister or child of a senior officer or director of the
Company, or of an affiliate of the Company; OR
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<PAGE>
(C) a "sophisticated purchaser" as defined in the Appendix to Form
20A(NIP) attached as Schedule "D" hereto; and
(iii)the offer and sale of these Units was not accompanied by an
advertisement and the Purchaser was not induced to purchase the
Purchaser's Units as a result of any advertisement made by the
Company;
OR
(k) $25,000 sophisticated purchaser exemption:
(i) in the case of the purchase by the Purchaser of Units as:
(A) principal, the Purchaser is purchasing such Units as principal
for its own account, and not for the benefit of any other person,
and is purchasing a sufficient number of Units such that the
aggregate acquisition cost to the Purchaser of such Units is not
less than CDN$25,000;
(B) agent for a disclosed principal, each beneficial purchaser of
such Units for whom the Purchaser is acting is purchasing as
principal for its own account, and not for the benefit of any
other person, and is purchasing a sufficient number of Units so
that the aggregate acquisition cost to such beneficial purchaser
of such Units is not less than CDN$25,000, and the Purchaser is
an agent with due and proper authority to execute this Agreement
and all documentation in connection with the purchase on behalf
of each beneficial purchaser;
(C) trustee or as agent for a principal which is undisclosed or
identified by account number only, each beneficial purchaser of
the Units for whom the Purchaser is acting is purchasing as
principal for its own account, and not for the benefit of any
other person, and is purchasing a sufficient number of Units so
that the aggregate acquisition cost to beneficial purchaser for
such Units is not less than CDN$25,000, and the Purchaser is a
trustee or agent with due and proper authority to execute this
Agreement and all documentation in connection with the purchase
on behalf of each beneficial purchaser;
(ii) neither the Purchaser nor any beneficial purchaser on whose behalf the
Purchaser is acting has been formed, created, established or
incorporated for the purpose of permitting the purchase of the Units
without a prospectus by groups of individuals whose individual share
of the aggregate acquisition cost for such Units is less than
CDN$25,000; and
(iii)the Purchaser is a "sophisticated purchaser" as defined in the
Appendix to Form 20A(NIP) attached as Schedule "D" hereto;
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<PAGE>
OR
(l) Directors and employees exemption:
(i) the Purchaser subscribes for and purchases the Units as principal for
the Purchaser's own account and not for the benefit of any other
person; and
(ii) the Purchaser is:
(A) an employee, senior officer or director of the Company or of an
affiliate of the Company and the Purchaser has not been induced
to make this subscription by expectation of employment or
continued employment; or
(B) a trustee on behalf of a person referred to in subparagraph (A)
above; or
(C) an issuer all the voting securities of which are beneficially
owned by one or more of the persons referred to in subparagraph
(A) above.
OR
(m) Friends and relatives exemption:
(i) the Purchaser subscribes for and purchases the Units as principal for
the Purchaser's own account and not for the benefit of any other
person; and
(ii) the Purchaser is:
(A) a spouse, parent, brother, sister, child or close personal friend
of a senior officer or director of the Company, or of an
affiliate of the Company; or
(B) a company, all the voting securities of which are beneficially
owned by one or more of a senior officer of director of the
Company, or of an affiliate of the Company, or a spouse, parent,
brother, sister, child or close personal friend of a senior
officer or director of the Company, or of an affiliate of the
Company; and
(iii)the offer and sale of these Units was not accompanied by an
advertisement and the Purchaser was not induced to purchase the
Purchaser's Units as a result of any advertisement made by the
Company;
4.2 The foregoing representations and warranties are made by the undersigned
with the intent that they may be relied upon in determining the undersigned's
eligibility to acquire the Units under Applicable Securities Laws. Unless the
Purchaser otherwise has advised the Company in writing, the representations and
warranties of the Purchaser contained in this Subscription Agreement shall be
true at the Time of Closing as though they were made at the Time of Closing and
shall survive the completion of the transactions contemplated under this
Subscription Agreement for a period of one year from the Closing Date.
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<PAGE>
4.3 The Purchaser understands that the Purchaser is purchasing the Units
pursuant to exemptions from the prospectus requirements of the Applicable
Securities Laws of the Qualifying Jurisdictions and as a consequence the
Purchaser may be restricted from using some of the civil remedies available
under the Applicable Securities Laws, the Purchaser may not receive information
that would otherwise be required to be provided to the Purchaser under
Applicable Securities Laws if the Exemptions were not being used and the Company
is relieved from certain obligations that would otherwise apply under Applicable
Securities Laws if the Exemptions were not being used. The Purchaser
acknowledges that no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Private Placement.
5. Covenants of the Company
5.1 The Company will:
(a) offer, sell, issue and deliver the Units pursuant to the Exemptions or
qualification requirements of Applicable Securities Laws of the
Qualifying Jurisdictions and otherwise fulfil all legal requirements
required to be fulfilled by the Company (including without limitation,
compliance with all Applicable Securities Laws of the Qualifying
Jurisdictions) in connection with the Private Placement;
(b) use its reasonable best efforts to maintain its status as a "reporting
issuer" not in default in British Columbia for a period of two years
from the Closing Date;
(c) use its reasonable best efforts to maintain its listing of its common
shares on the Exchange for a period of two years from the Closing
Date;
(d) within the required time, file with the applicable Regulatory
Authorities and the Exchange any documents, reports and information,
in the required form, required to be filed by Applicable Securities
Laws in connection with the Private Placement, together with any
applicable filing fees and other materials;
(e) from and including the date of this Subscription Agreement through to
and including the Time of Closing, do all such acts and things
necessary to ensure that all of the representations and warranties of
the Company contained in this Subscription Agreement or any
certificates or documents delivered by it pursuant thereto remain true
and correct in all material respects; and
(f) from and including the date of this Subscription Agreement through to
and including the Time of Closing, not do any such act or thing that
would render any representation or warranty of the Company contained
in this Subscription Agreement or any certificates or documents
delivered by it pursuant thereto materially untrue or materially
incorrect.
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<PAGE>
6. Resale Restrictions and Contractual Rights
6.1 The Purchaser understands and acknowledges that the Unit Shares, Unit
Warrants and Warrant Shares will be subject to certain resale restrictions under
Applicable Securities Laws and the securities laws of the United States and that
certificates representing the Unit Shares, Unit Warrants and Warrant Shares may
bear certain legends to that effect. If the Purchaser is a resident of any
jurisdiction other than British Columbia, the Purchaser further understands that
the Company is presently a reporting issuer only in British Columbia and that
the Unit Shares, Unit Warrants and Warrant Shares may be subject to an
indefinite hold period.
6.2 The Purchaser also acknowledges that it has been advised to consult its own
legal advisors with respect to applicable resale restrictions and that it is
solely responsible (and the Company is not in any manner responsible) for
complying with such restrictions.
6.3 If an Offering Memorandum is delivered to the Purchaser and it contains a
misrepresentation (as that term is defined under the B.C. Act) at the time this
Agreement is entered into, then the Purchaser may, while still the owner of the
Units, either rescind this Agreement or commence a civil action against the
Company for damages. In either case, written notice must be given to the Company
not later than 90 days after the date of which payment was made for the Units.
The Purchaser will not be entitled to commence an action to enforce this right
after, in the case of an action for rescission, 180 days after the date of
purchase of the Purchaser's Units or in the case of an action for damages, the
earlier of 180 days following the date the Purchaser first had knowledge of the
misrepresentation or three years following the date of purchase of the
Purchaser's Units.
The rights of action for rescission or damages described above shall be subject
to the defences, limitations and other provisions described under section 131 of
the B.C. Act and the equivalent provisions of any other applicable securities
legislation, each of which are incorporated herein by reference, mutatis
mutandis.
These contractual rights of action, rescission and withdrawal are in addition to
and without derogation from any other right available at law to the Purchaser.
The Purchaser should refer to all applicable provisions of the securities
legislation of the Purchaser's jurisdiction of residence for the particulars of
these rights and consult with a legal advisor.
7. Powers of Attorney
7.1 The Purchaser hereby irrevocably appoints any officer of the Company to act
as its true and lawful attorney-in-fact to represent it at the Closing for the
purpose of all closing matters and deliveries of documents and payments of funds
and the Purchaser hereby authorizes Company to make, on the Purchaser's behalf,
minor corrections or amendments to this Subscription Agreement and any documents
provided by the Purchaser or any provision thereof as in the Company in its
absolute discretion may deem appropriate.
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<PAGE>
8. Indemnity
8.1 The Purchaser agrees to indemnify and hold harmless the Company and its
respective directors, officers, employees, advisers and shareholders from and
against any and all loss, liability, claim, damage and expense whatsoever
including, but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, administrative proceeding or investigation commenced or threatened
or any claim whatsoever arising out of or based upon any representation or
warranty of the Purchaser contained herein or in any document furnished by the
Purchaser to the Company in connection herewith being untrue in any material
respect or any breach or failure by the Purchaser to comply with any covenant or
agreement made by the Purchaser herein or in any document furnished by the
Purchaser to the Company in connection herewith.
9. Closing
9.1 The Purchaser acknowledges and agrees that the closing of the transactions
contemplated hereby will be completed at the place and in the manner and at such
other time as the Company may determine (being the "Time of Closing" and the
"Closing Date", respectively).
10. General
10.1 For the purposes of this Subscription Agreement, time is of the essence.
10.2 This offer is made for valuable consideration and may not be withdrawn,
cancelled, terminated or revoked by the Purchaser.
10.3 Neither this Subscription Agreement nor any provision hereof shall be
modified, changed, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
10.4 The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as may either before or after the
execution of this Subscription Agreement be reasonably required to carry out the
full intent and meaning of this Subscription Agreement.
10.5 This Subscription Agreement shall be subject to, governed by and construed
in accordance with the laws of British Columbia.
10.6 This Subscription Agreement may not be assigned by any party hereto.
10.7 The Company shall be entitled to rely on delivery of a facsimile copy of
this Subscription Agreement, and acceptance by the Company of a facsimile copy
of this Subscription Agreement shall create a legal, valid and binding agreement
between the Purchaser and the Company in accordance with its terms.
- 15 -
<PAGE>
10.8 This Subscription Agreement may be signed by the parties in as many
counterparts as may be deemed necessary, each of which so signed shall be deemed
to be an original, and all such counterparts together shall constitute one and
the same instrument.
IN WITNESS WHEREOF the Purchaser has duly executed this Subscription Agreement
as of the date first written above.
Michael Colin Bousefield
Rosemarie Bousefield
----------------------------------------
Name of the Purchaser
By:/s/ M. C. Bousefield
-------------------------------------
/s/ Rosemarie Bousefield
-------------------------------------
Signature of Purchaser
-------------------------------------
Title (if applicable)
ACCEPTANCE
The above mentioned Subscription Agreement is hereby accepted by and agreed to
by the Company this ____ day of ______________, 1997.
IDAHO CONSOLIDATED METALS CORP.
By:
-------------------------------------
Delbert Steiner, President and CEO
- 16 -
<PAGE>
SCHEDULE "A" TO THE SUBSCRIPTION AGREEMENT
TO BE COMPLETED BY THE PURCHASER
A. Number of Units: The total number of Units subscribed for under this
Subscription Agreement is as follows:
------- Units
B. Amount of Subscription Funds: The total subscription amount (the "Purchaser's
Subscription Funds") for the Units subscribed for under this Subscription
Agreement is as follows:
$-------------
C. Name and Address of Purchaser: The name and address of the Purchaser is as
follows:
Name: ---------------------------------
Address: ------------------------------
------------------------------
D. Name and Address of Beneficial Purchaser: The name(s) and address(es) of any
beneficial purchasers for whom the Purchaser is purchasing as agent or trustee
are set forth below (or, if additional space is needed, are set forth in an
attachment hereto):
Name: ---------------------------------
Address: ------------------------------
------------------------------
E. Registration Instructions: The name(s) and address(es) of the person(s) in
whose name(s) the Purchaser's Units are to be registered, if other than as set
forth in paragraph C above, are as follows (or, if additional space is needed,
are set forth in an attachment hereto):
Name: ---------------------------------
Address: ------------------------------
------------------------------
F. Delivery Instructions: The name and address of the person to whom the
certificates representing the Purchaser's Units referred to in paragraph A above
are to be delivered, if other than as set forth in paragraph C above, is as
follows:
Name: ---------------------------------
Address: ------------------------------
------------------------------
<PAGE>
SCHEDULE "B" TO THE SUBSCRIPTION AGREEMENT
VANCOUVER STOCK EXCHANGE
PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING
TO BE COMPLETED BY ALL SUBSCRIBERS
1. DESCRIPTION OF TRANSACTION
(a) Name of issuer of the securities: Idaho Consolidated Metals Corp.
(b) Number and description of securities to be purchased:
------ Units where each Unit consists of one common share and one
share purchase warrant of the Issuer. One warrant will entitle the
holder to purchase one additional common share of the Issuer for a
period of two years from the Closing Date at the price of CDN$0.60 per
share in the first year and $0.70 per share in the second year.
(c) Purchase price: $0.60 per Unit.
2. DETAILS OF PURCHASER
(a) Name of purchaser: -----------------------------------
(b) Address: -----------------------------------
-----------------------------------
-----------------------------------
(c) If the purchaser is a corporation, state the jurisdiction of
incorporation:
N/A ----- or in the jurisdiction of ------------------.
(d) Names and address of persons having a greater than 10% beneficial
interest in the purchaser, if a corporation:
N/A ----- or ------------------------------------.
3. RELATIONSHIP TO LISTED COMPANY
(a) State if purchaser will become a control person with over 20% of the
company's issued share capital as a result of the purchase in section
1 above:
YES ------ NO ------
(b) Does the purchaser own any securities of the issuer at the date
hereof, if so, give particulars. State the number of securities of the
listed company held by the purchaser not including the purchase in
section 1 above:
---------------------------------------------------------------------
---------------------------------------------------------------------
<PAGE>
4. PAYMENT DATE
(a) State the date the purchaser has advanced full payment:
----------------------------.
(b) If the purchase funds are held in trust pending receipt of final
regulatory approval identify the trustee and give particulars of the
condition(s) required for release of the funds: not applicable.
(c) If the purchaser is an institutional investor and the funds have not
yet been advanced, give particulars of the condition(s) required for
the advance of funds: not applicable.
5. UNDERTAKING
TO: THE VANCOUVER STOCK EXCHANGE
The undersigned has subscribed for and agreed to purchase, as principal, the
Securities described in section 1 of this Private Placement Questionnaire and
Undertaking. (The purchase funds may be deposited in trust with advancement to
the Company subject only to receipt of all necessary regulatory approvals).
The undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period that
ends on the earlier of:
(a) twelve months from the payment date; and
(b) the date that a receipt for a final prospectus relating to the said
securities or any securities derived therefrom has been issued by the
British Columbia Securities Commission,
without the prior consent of the Vancouver Stock Exchange and any other
regulatory body having jurisdiction. The undersigned acknowledges that all
certificates representing the said securities will bear a legend to the effect
that the certificates are subject to such hold period.
The undersigned hereby certifies that the said Securities are not being
purchased as a result of any material information about the Company's affairs
that has not been publicly disclosed. The undersigned acknowledges that it is
aware that the removal from the Securities of any resale restriction after
twelve months that is imposed solely as a requirement of the Vancouver Stock
Exchange will not entitle it to sell the Securities if such sale would
contravene any other applicable securities legislation or regulation.
6. ADDITIONAL UNDERTAKING - PORTFOLIO MANAGER
If the undersigned is a portfolio manager purchasing as agent for accounts that
are fully managed by it, the undersigned acknowledges that it is bound by the
provisions of the Securities Act (British Columbia) (the "Act"), and undertakes
to comply with all provisions of the Act relating to ownership of, and trading
in, securities including, without limitation, the filing of insider reports and
reports pursuant to Section 111 of the Act.
If the undersigned carries on business as a portfolio manager in a jurisdiction
outside of Canada, the undersigned certifies that:
(a) it is purchasing securities of the Issuer on behalf of managed
accounts over which it has absolute discretion as to purchasing and
selling, and in respect of which it receives no instructions from any
person beneficially interested in such accounts or from any other
person;
(b) it carries on the business of managing the investment portfolios of
clients through discretionary authority granted by those clients (a
"portfolio manager" business) in ______________ [jurisdiction], and it
is permitted by law to carry on a portfolio manager business in that
jurisdiction;
-2-
<PAGE>
(c) it is not created solely or primarily for the purpose of purchasing
securities of the Issuer;
(d) the total asset value of the investment portfolios it manages on
behalf of clients is not less than $20,000,000;
(e) it does not believe, and has no reasonable grounds to believe, that
any resident of British Columbia has a beneficial interest in any of
the managed accounts for which it is purchasing; and
(f) the Issuer has provided it with a list of the directors, senior
officers and other insiders of the Issuer, and the persons that carry
on investor relations activities for the Issuer (which list is
attached as a schedule to this Appendix), and it does not believe, and
has no reasonable grounds to believe, that any of those persons has a
beneficial interest in any of the managed accounts for which it is
purchasing, except as follows:
- ----------------------------------------
- -----------------------------------------
(name of insider(s) or person(s) carrying
on investor relations activities for the
Issuer that have a beneficial interest in
an account)
The undersigned acknowledges that it is bound by the provisions of the Act
including, without limitation, sections 87 and 111 concerning the filing of
insider reports and reports of acquisitions.
Dated at ---------------------------
this ----- day of ------------------, 1997
- -------------------------------------
(Name of Purchaser - please print)
- -------------------------------------
(Authorized Signature)
- -------------------------------------
(Official Capacity - please print)
- --------------------------------------
(please print name of individual whose
signature appears above, if different
from name of purchaser printed above)
- 3 -
<PAGE>
SCHEDULE "A" TO THE PRIVATE PLACEMENT QUESTIONNAIRE
AND UNDERTAKING - PORTFOLIO MANAGER
List of Directors, Senior Officers and Insiders of the Issuer
and persons that carry on investor Relations Activities for the Issuer
Directors
Delbert W. Steiner
E. Roy Knickel
Theodore Tomasovich
Jag Vyas
Robert A. Young
Officers
Delbert W. Steiner - President, Chairman, C.E.O.
Lori Cox - Secretary
Wilfried J. Struck - VP, Mining and Exploration, Chief Operating Officer
Kenneth A. Scott - Chief Financial Officer
- 4 -
<PAGE>
SCHEDULE "C" TO THE SUBSCRIPTION AGREEMENT
FORM 20A (IP)
Securities Act
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from Idaho Consolidated Metals Corp. (the
"Issuer") ______ Units [number and description of securities] (the
"Securities") of the Issuer.
2. I am purchasing the Securities as principal and, on closing of the
agreement of purchase and sale, I will be the beneficial owner of the
Securities.
3. I [circle one] have/have not received an offering memorandum describing the
Issuer and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has reviewed
or passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities, AND
(c) I may lose all of my investment, AND
(d) there are restrictions on my ability to resell the Securities and it
is my responsibility to find out what those restrictions are and to
comply with them before selling the Securities, AND
(e) I will not receive a prospectus that the British Columbia Securities
Act (the "Act") would otherwise require be given to me because the
Issuer has advised me that it is relying on a prospectus exemption,
AND
(f) because I am not purchasing the Securities under a prospectus, I will
not have the civil remedies that would otherwise be available to me,
AND
(g) the Issuer has advised me that it is using an exemption from the
requirement to sell through a dealer registered under the Act, except
purchases referred to in paragraphs 5(a) and 5(g), and as a result I
do not have the benefit of any protection that might have been
available to me by having a dealer act on my behalf.
5. I also acknowledge that: [circle one]
(a) I am purchasing Securities that have an aggregate acquisition cost of
Cdn$97,000 or more, OR
(b) my net worth, or my net worth jointly with my spouse at the date of
the agreement of purchase and sale of the security, is not less than
$400,000, OR
(c) my annual net income before tax is not less than $75,000, or my annual
net income before tax jointly with my spouse is not less than
$125,000, in each of the two most recent calendar years, and I
reasonably expect to have annual net income before tax of not less
than $75,000 or annual
<PAGE>
net income before tax jointly with my spouse of not less than $125,000
in the current calendar year, OR
(d) I am registered under the Act, OR
(e) I am a spouse, parent, brother, sister or child of a senior officer or
director of the Issuer, or of an affiliate of the Issuer, OR
(f) I am a close personal friend of a senior officer or director of the
Issuer, or of an affiliate of the Issuer, OR
(g) I am purchasing securities under section 128(c) ($25,000 - registrant
required) of the Rules, and I have spoken to a person [Name of
registered person: --------------- (the "Registered Person")] who has
advised me that the Registered Person is registered to trade or advise
in the Securities and that the purchase of the Securities is a
suitable investment for me.
6. If I am an individual referred to in paragraph 5(b), 5(c) or 5(d), I
acknowledge that, on the basis of information about the Securities
furnished by the Issuer, I am able to evaluate the risks and merits of the
Securities because: [circle one]
(a) of my financial, business or investment experience, OR
(b) I have received advice from a person [Name of adviser:
----------------------- (the "Adviser")] who has advised me that the
Adviser is:
(i) registered to advise, or exempted from the requirement to be
registered to advise, in respect of the Securities, and
(ii) not an insider of, or in a special relationship with, the Issuer.
The statements made in this report are true.
DATED ------------------------, 1997.
----------------------------------------
Signature of Purchaser
----------------------------------------
Name of Purchaser
----------------------------------------
Address of Purchaser
- 2 -
<PAGE>
SCHEDULE "D" TO THE SUBSCRIPTION AGREEMENT
FORM 20A (NIP)
Securities Act
Acknowledgment of Purchaser that is not an Individual
1. -------------------- (the "Purchaser") has agreed to purchase from Idaho
Consolidated Metals Corp (the "Issuer") ------------ Units [number and
description of securities] (the "Securities") of the Issuer.
2. The Purchaser is purchasing the Securities as principal, or is a trust
company, insurer or portfolio manager acting on behalf of fully managed
accounts and is deemed to be purchasing as principal under section 74(1) of
the British Columbia Securities Act (the "Act").
3. On closing of the agreement of purchase and sale, the Purchaser will be the
beneficial owner of the Securities, except where the Purchaser is a trust
company, insurer or portfolio manager acting on behalf of fully managed
accounts under section 74(1) of the Act.
4. The Purchaser [circle one] has/has not received an offering memorandum
describing the Issuer and the Securities.
5. The Purchaser acknowledges that:
(a) no securities commission or similar regulatory authority has reviewed
or passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities, AND
(c) the Purchaser may lose all of its investment, AND
(d) there are restrictions on the Purchaser's ability to resell the
Securities and it is the responsibility of the Purchaser to find out
what those restrictions are and to comply with them before selling the
Securities, AND
(e) the Purchaser will not receive a prospectus that the Act would
otherwise require be given to the Purchaser because the Issuer has
advised the Purchaser that the Issuer is relying on a prospectus
exemption, AND
(f) because the Purchaser is not purchasing the Securities under a
prospectus, the Purchaser will not have the civil remedies that would
otherwise be available to the Purchaser, AND
(g) the Issuer has advised the Purchaser that the Issuer is using an
exemption from the requirement to sell through a dealer registered
under the Act, except purchases referred to in paragraph 6(b), and as
a result the Purchaser does not have the benefit of any protection
that might have been available to the Purchaser by having a dealer act
on the Purchaser's behalf.
6. The Purchaser acknowledges that:
(a) it is a "sophisticated purchaser" as described in paragraph 2 in the
attached Appendix A [circle the applicable subparagraph in paragraph 2
in Appendix A]; OR
(b) the Securities were purchased under section 128(c) ($25,000 -
registrant required) of the Rules and an authorized signatory of the
Purchaser has spoken to a person [Name of registered person:
<PAGE>
----------------------- (the "Registered Person")] who has advised the
authorized signatory that the Registered Person is registered to trade
or advise in the Securities and that the purchase of the Securities is
a suitable investment for the Purchaser; OR
(c) the Purchaser is a corporation, all the voting securities of which are
beneficially owned by one or more of:
(i) a close personal friend of a senior officer or director of the
Issuer, or of an affiliate of the Issuer, OR
(ii) a senior officer or director of the Issuer, or of an affiliate of
the Issuer, OR
(iii)a spouse, parent, brother, sister, or child of a senior officer
or director of the Issuer, or of an affiliate of the Issuer.
7. If the Purchaser is referred to in paragraph 6(a), the Purchaser
acknowledges that, on the basis of information about the Securities
furnished by the Issuer, the Purchaser is able to evaluate the risks and
merits of the Securities because: [circle one]
(a) of the financial, business or investment experience of the Purchaser,
OR
(b) the Purchaser has received advice from a person [Name of adviser:
-------------------- (the "Adviser")] who has advised the Purchaser
that the Adviser is:
(i) registered to advise, or exempted from the requirement to be
registered to advise, in respect of the Securities, AND
(ii) not an insider of, or in a special relationship with, the Issuer.
The statements made in this report are true.
DATED the -------- day of -------------------, 1997.
----------------------------------------
Signature of Authorized Signatory of
Purchaser
----------------------------------------
Name and Office of Authorized Signatory
of Purchaser
----------------------------------------
Name of Purchaser
----------------------------------------
Address of Purchaser
Please turn to Appendix A, which is attached to and forms a part of this Form
20A (NIP).
- 2 -
<PAGE>
APPENDIX A TO FORM 20A (NIP)
[Circle the applicable subparagraph in paragraph 2.]
"Sophisticated purchaser" means a purchaser that, in connection with a
distribution, gives an acknowledgment under section 135 of the Rules to the
Issuer, where the Issuer does not believe, and has no reasonable grounds to
believe, that the acknowledgment is false, acknowledging both that:
1. the purchaser is able, on the basis of information about the investment
furnished by the Issuer, to evaluate the risks and merits of the
prospective investment because of:
(a) the purchaser's financial, business or investment experience, OR
(b) advice the purchaser receives from a person who is registered to
advise, or is exempted from the requirement to be registered to
advise, in respect of the security that is the subject of the trade
(the "Security") and who is not an insider of, or in a special
relationship with, the Issuer of the Security; AND
2. the purchaser is one of the following [circle one]:
(a) a person registered under the Securities Act, OR
(b) an individual who:
(i) has a net worth, or net worth jointly with the individual's
spouse, at the date of the agreement of purchase and sale of the
Security, of not less than $400,000, OR
(ii) has had in each of the 2 most recent calendar years, and
reasonably expects to have in the current calendar year:
o annual net income before tax of not less than $75,000, OR
o annual net income before tax, jointly with the individual's
spouse, of not less than $125,000; OR
(c) a corporation, partnership or trust that:
(i) has net assets of not less than $400,000, OR
(ii) has had in each of the 2 most recent calendar years, and
reasonably expects to have in the current calendar year, net
income before tax of not less than $125,000, OR
(d) a corporation in which all of the voting shares are beneficially owned
by sophisticated purchasers or of which the majority of the directors
are sophisticated purchasers, OR
(e) a general partnership in which all of the partners are sophisticated
purchasers, OR
(f) a limited partnership in which a majority of the general partners are
sophisticated purchasers, OR
(g) a trust in which all of the beneficiaries are sophisticated purchasers
or the majority of the trustees are sophisticated purchasers.
- 3 -
SCHEDULE TO SUBSCRIPTION AGREEMENT
November 12, 1997
Exhibit 10.33
In addition to the Subscription Agreement dated November 12, 1997 between the
Company and Michael Bousefield and Rosemarie Bousefield of the following
address: Rosebank the Street, Ridgehill, Near Winford, Bristol B518 8TB,
England, for 93,599 shares (the "Bousefield Agreement") the Company on the same
date entered into subscription agreements with substantially the same terms to
the Bousefield Agreement with the following individuals in the following
amounts:
Name and Address of Subscriber Number of Shares
------------------------------ ----------------
Morton Borch 83,333
Advokat
Nedre Vollgt. 4
P.B. 597 Sentrum
101106 Oslo
Norway
Cathy Bruce 47,492
c/o Salem Management Company Ltd./
International Freedom
Design House, Leeward Highway
P.O. Box 150
Providenciales, Turks & Cacos Islands
British West Indies
Cardinal Forestry Consulting Company 25,889
Ltd.
2485 Orchard Road
Sidney, B.C.
V8L 1S1
Beneficial Owner: Bernd Struck
Bernd Struck 25,890
2485 Orchard Road
Sidney, B.C.
V8L 1S1
Ceemac Holdings, Inc. 14,167
603 - 2020 Highbury Street
Vancouver, B.C.
V6R 4N9
Beneficial Owner: Ron Merrit
<PAGE>
- 2 -
Name and Address of Subscriber Number of Shares
------------------------------ ----------------
Tomasovich Family Trust 927,062
600 Wiltshire Blvd., Suite 1410
Los Angeles, CA
U.S.A. 90017
Hideo Kita 545,801
600 Wiltshire Blvd., Suite 1410
Los Angeles, CA
U.S.A. 90017
Exhibit 10.34
CONVERTIBLE LOAN AGREEMENT #1
THIS CONVERTIBLE LOAN AGREEMENT dated effective the 9th day of April,
1998
BETWEEN:
TOMASOVICH FAMILY TRUST, 600 Wilshire Boulevard,
Suite 1410, Los Angeles, California, 90017
(the "Lender")
AND:
IDAHO CONSOLIDATED METALS CORPORATION, a company incorporated under
the laws of British Columbia, having its principal office at 540 Main
Street, Suite 470, Lewiston, Idaho, 83501
(the "Borrower")
WHEREAS the Borrower wishes to borrow and the Lender is willing to
lend to the Borrower the sum of U.S.$100,000 (the "Loan"), upon the terms and
subject to the conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE 1
INTERPRETATION
1.1 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the laws prevailing in British Columbia.
1.2 Severability. If any one or more of the provisions contained in this
Agreement is found by a court of competent jurisdiction to be invalid, illegal
or unenforceable in any respect the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
1.3 Headings and Marginal References. The divisions of the Agreement into
articles, paragraphs, sub-paragraphs and other subdivisions and the insertion of
headings are for convenience of reference only and do not affect the
construction or interpretation of this Agreement.
<PAGE>
-2-
1.4 Currency. All sums of money to be paid or calculated pursuant to this
Agreement shall be paid or calculated in United States or Canadian currency, as
indicated throughout.
1.5 Number and Gender. All references to any party to this Agreement shall be
read with such changes in number and gender as the context may require.
ARTICLE 2
THE LOAN
2.1 Closing Date. The closing of the financing contemplated by this Agreement
will take place on the first business day following the date of receipt of final
acceptance by the Vancouver Stock Exchange (the "Exchange") of this Agreement
for filing (the "Closing Date") or such later date as the parties may agree upon
in writing.
2.2 Establishment of the Loan. On the terms and subject to the conditions set
forth in this Agreement, the Lender shall lend to the Borrower the sum of
U.S.$100,000, receipt of which is hereby acknowledged by the Borrower effective
January 23, 1998 (the "Payment Date").
2.3 Evidence of Indebtedness. In order to evidence the indebtedness of the
Borrower to the Lender in respect of the Loan, the Borrower shall execute and
deliver to the Lender a promissory note in substantially the form attached as
Schedule "A" hereto (the "Note").
2.4 Interest. Commencing on January 23, 1999, the Borrower shall pay to the
Lender annually on January 23, 1999 and January 23, 2000 while any amount of the
Loan remains outstanding, interest on the principal amount of the Loan at the
rate of 9% per annum, calculated annually in arrears, both before and after
maturity, default and judgment. In the event that any interest payment is not
made in a timely manner, a late payment fee of 9% of the amount of the interest
payment then due shall be paid to the Lender.
2.5 Repayment of the Loan. Subject to paragraphs 2.6 and 3.1, the Borrower shall
repay the Loan, together with any outstanding interest thereon, to the Lender on
or before January 23, 2000 (the "Maturity Date").
2.6 Prepayment of the Loan. Subject to paragraph 3.1, the Borrower may prepay
the Loan in whole or in part, together with any outstanding interest thereon to
the Lender at any time after January 23, 1999 until the Maturity Date without
penalty.
ARTICLE 3
CONVERSION
3.1 Conversion. During the period from June 18, 1998 until the Maturity Date,
the Lender may require the Borrower to convert all or any portion of the
principal amount of the Loan advanced and then outstanding into units ("Units"),
at a conversion price of one Unit for each Cdn.$0.26 of indebtedness until and
including January 23, 1999 and at a conversion price of one Unit for each
Cdn.$0.31 of indebtedness during the period from January 24, 1999 until the
Maturity Date. Each Unit consists of one common share in the capital stock of
the Borrower (the "Shares")
<PAGE>
-3-
and one non-transferable common share purchase warrant ("Warrant"). The Lender
shall give written notice of conversion to the Borrower specifying the part or
whole of the principal indebtedness of the Borrower to the Lender to be
converted and the number of Units to be issued on conversion, calculated in
accordance with the terms of this Agreement.
3.2 No Fractions. In converting the principal indebtedness of the Loan into
Units, the Borrower shall round fractions down to the nearest whole Unit, so
that the Lender will not be entitled to receive a fraction of a Unit.
3.3 Delivery. Three business days after the date a notice of conversion is
received by the Borrower from the Lender (the "Conversion Date"), the Lender
shall be deemed for all purposes to be the holder of record of that number of
Shares and Warrants designated in the notice of conversion, the outstanding
principal indebtedness of the Borrower to the Lender shall be deemed to be
reduced by the amount designated in the notice of conversion and the Borrower
shall deliver to the Lender on the Conversation Date a share certificate
representing the number of Shares and a certificate representing the number of
Warrants comprised in the Units as specified in the notice of conversion,
together with any unpaid interest which is due as at the Conversion Date.
3.4 Warrants. The Warrants shall be non-transferable and, if and when issued,
each Warrant shall entitle the Lender to purchase one common share in the
capital stock of the Borrower (the "Warrant Share") for a term commencing on the
Conversion Date and exercisable until the Maturity Date at a price of Cdn.$0.26
per Warrant Share until January 23, 1999 and thereafter at a price of Cdn.$0.31
per Warrant Share until the Maturity Date. The terms and conditions governing
the Warrants shall contain provisions, inter alia, for appropriate adjustment in
the class, number and price of the Shares issuable pursuant to any exercise
thereof upon the occurrence of certain events including any subdivision,
consolidation or reclassification of the Shares, the payment of stock dividends
or the amalgamation of the Company, as set forth in the form of warrant
certificate attached hereto as Schedule "B".
3.5 Adjustment. The terms and conditions set out in sections 1 and 2 of Schedule
"B" with respect to the adjustment in the class, number and price of the Warrant
Shares upon the occurrence of certain events apply, with the necessary changes,
to the Shares.
3.6 Reservation of Shares and Warrant Shares. For so long as any part of the
principal indebtedness of the Loan remains outstanding, the Borrower shall at
all times reserve out of its unissued common shares a sufficient number thereof
to accommodate the conversion of the principal indebtedness of the Loan into
Shares and the exercise of the Warrants into Warrant Shares, all as provided for
in this Agreement.
3.7 Questionnaire and Undertaking. The Lender shall execute and deliver to the
Borrower for filing with the Exchange the form of Private Placement
Questionnaire and Undertaking and such other documents and information as may be
required by the Exchange in connection with this transaction.
<PAGE>
-4-
ARTICLE 4
BORROWER'S REPRESENTATIONS AND WARRANTIES
4.1 The Borrower represents and warrants to the Lender that:
(a) the Borrower is a reporting issuer only in British Columbia and is not
in default of any requirement of the British Columbia Securities Act
and Rules promulgated thereto (the "Act");
(b) the Borrower is a corporation duly incorporated, validly existing and
in good standing with respect to filing of annual reports with the
Registrar of Companies for British Columbia;
(c) the Borrower has all requisite corporate power and authority to own
and use its property, to carry on its business as now being conducted,
to enter into this Agreement and to execute and deliver the Note and
to carry out the obligations contemplated herein and therein;
(d) all necessary corporate action of the directors of the Borrower to
authorize the execution, delivery and performance of this Agreement
has been taken;
(e) this Agreement has been duly executed and delivered on behalf of the
Borrower and constitutes a legal, valid and binding obligation of the
Borrower, enforceable by the Lender in accordance with its terms;
(f) the authorized capital of the Borrower consists of 100,000,000 common
shares without par value of which 7,104,208 common shares are validly
issued and outstanding as at April 9, 1998;
(g) the Shares to be allotted and issued pursuant to the due and valid
conversion, in whole or in part, of the principal indebtedness of the
Loan have been duly and validly authorized to be issued as fully paid
and non-assessable common shares upon receipt by the Borrower of a
notice of conversion;
(h) the Warrant Shares to be allotted and issued pursuant to the due and
valid exercise, in whole or in part, of the Warrants have been duly
and validly authorized to be issued as fully paid and non-assessable
common shares upon receipt by the Borrower of full payment therefor;
(i) the common shares of the Borrower are listed and posted for trading
only on the Exchange; and
(j) no Default (as defined below) or event which with the giving of notice
or the lapse of time would become a Default has occurred or is
continuing.
<PAGE>
-5-
ARTICLE 5
LENDER'S REPRESENTATIONS AND WARRANTIES
5.1 The Lender represents and warrants to the Borrower that:
(a) the Lender, if a corporation, is a valid and subsisting corporation
under the laws of its incorporating jurisdiction, has the necessary
corporate capacity and authority to execute and deliver this Agreement
and to observe and perform its covenants and obligations hereunder and
has taken all necessary corporate action in respect thereof, and this
Agreement constitutes a legal, valid and binding contract of the
Lender enforceable against the Lender in accordance with its terms;
(b) the Lender is a resident of the State of California;
(c) the Lender is entering into this Agreement and acquiring the Note as
principal for the Lender's own account, and not for the benefit of any
other person;
(d) the Lender is purchasing the Note in an aggregate acquisition cost of
not less than $97,000 and the Lender was not created solely, and is
not being used primarily, to permit a group of individuals to purchase
the Note without a prospectus; or
(e) the Lender is aware that this Agreement and the Note are being
distributed under an exemption from the registration and prospectus
requirements of the Act and states that this Agreement is not being
entered into as a result of any information about the affairs of the
Borrower that is not generally known to the public save knowledge of
this particular transaction;
(f) this Agreement and the Loan are not being used to settle prior
outstanding debts of the Borrower to the Lender or, if they are being
used to settle prior outstanding debt owing by the Borrower to the
Lender, then the Lender is not permitted to receive Warrants comprised
in the Units on that part of its Loan that corresponds to the amount
of the prior outstanding debt;
(g) the Lender is not presently a "control person" of the Borrower as
defined in the Act but may become a "control person" of the Borrower
by virtue of the purchase of the Note pursuant to this Agreement and
the conversion of the Note into units; and (h) the Lender has executed
and delivered to the Company herewith the additional representations
and warranties set out on Schedule "C" attached hereto.
ARTICLE 6
ACKNOWLEDGMENTS AND COVENANTS OF THE LENDER
6.1 The Lender hereby acknowledges and covenants that:
(a) the Note that is being issued and the Units, Shares, Warrants and
Warrant Shares that may be issued pursuant to this Agreement (together
the "Securities") will be issued
<PAGE>
-6-
under an exemption from the registration and prospectus requirements
of the Act and under the policies of the Exchange and that the sale by
the Lender in British Columbia of the Securities is, unless otherwise
exempted under the Act and approved by the Exchange, deemed to be a
distribution to the public unless:
(i) if the Lender is an insider of the Borrower, other than a
director or senior officer of the Borrower, the Lender has filed
all records required to be filed under section 87 (insider
reports) and section 90 (personal information form) of the Act;
(ii) if the Lender is a director or senior officer of the Borrower,
the Lender has filed all records required to be filed under
section 87 (insider reports) and section 90 (personal information
form) of the Act and the Borrower has filed all records required
to be filed under part 12 of the Act and of the Rules promulgated
to the Act (continuous disclosure);
(iii) a twelve-month period has elapsed from the Payment Date or, if
on the Conversion Date the Company is an AIF Issuer as defined in
the policies of the Exchange, a four month period has elapsed
from the Payment Date;
(iv) the trade is not a distribution from the holdings of a control
person;
(v) no unusual effort is made to prepare the market or to create a
demand for the Securities; and
(vi) no extraordinary commission or consideration is paid in respect
of the trade;
(b) the foregoing is a summary based on the provisions of the Act as at
the date hereof and is subject to amendment and the Lender covenants
that, prior to trading in the Securities in British Columbia, the
Lender will consult with the Lender's own legal counsel in connection
with the applicable resale rules;
(c) the Lender will complete, execute and deliver to the Borrower the
Private Placement Questionnaire and Undertaking attached as Schedule
"D" hereto as required by the Exchange for filing with the Exchange in
connection with the Loan;
(d) if the Lender is an individual, the Lender will complete, execute and
deliver to the Borrower a Form 20A(IP), Acknowledgement and
Undertaking as required under the Act; and
(e) the certificates representing the Securities will contain a legend
denoting the restrictions on transfer imposed by the Act or, if
applicable, by the policies of the Exchange, to the effect that the
securities represented by the certificate are subject to a hold period
and may not be traded in British Columbia until one year from the
Payment Date, or, if on the Conversion Date the Company is an AIF
Issuer, until four months from the Payment Date.
<PAGE>
-7-
ARTICLE 7
COVENANTS OF THE BORROWER
7.1 The Borrower covenants and agrees with the Lender that at all times during
the currency of this Agreement it will:
(a) take all reasonable steps to remain in good standing under the Act;
(b) pay the principal sum of the Loan, interest and all other monies
required to be paid to the Lender pursuant to this Agreement in the
manner set forth herein;
(c) observe and perform each of its covenants and agreements set forth in
this Agreement and the Note; and
(d) provide the Lender with immediate notice of any Default.
7.2 The Borrower shall assume and pay all costs, charges and expenses, including
reasonable legal fees and expenses, which may be incurred by the Lender in
respect of this Agreement or the Note in any proceedings taken or things done by
the Lender or on its behalf in connection therewith to collect, protect, realize
or enforce the Note.
ARTICLE 8
DEFAULT
8.1 It is a Default if:
(a) the Borrower defaults in any payment when the same is due under this
Agreement;
(b) the Borrower becomes insolvent or makes a general assignment for the
benefit of its creditors, or if an order is made or effective
resolutions are passed for the winding-up, merger or amalgamation of
the Borrower or if the Borrower is declared bankrupt or if a custodian
or receiver is appointed for the Borrower under any bankruptcy
legislation, or if a compromise or arrangement is proposed by the
Borrower to its creditors or any class of its creditors, or if a
receiver or other officer with like powers is appointed for the
Borrower; or
(c) the Borrower defaults in observing or performing any other covenant or
agreement of this Agreement on its part to be observed or performed
and such default has continued for a period of seven days after notice
in writing has been given by the Lender to the Borrower specifying
such default.
8.2 In the event of a Default, unless it is waived in writing by the Lender, the
principal balance of the Loan, costs and any other money owing to the Lender
under this Agreement shall immediately become payable by the Borrower.
<PAGE>
-8-
ARTICLE 9
GENERAL
9.1 Waiver or Modification. No consent or waiver, express or implied, by any
party to or of any breach or default by any other party of any or all of its
obligations under this Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this section;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this section in any other or subsequent instance.
9.2 Further Assurances. The parties hereto will do, execute and deliver or will
cause to be done, executed and delivered all such further acts, documents and
things as may be reasonably required for the purpose of giving effect to this
Agreement.
9.3 Assignment. No party may assign its interest herein or any part thereof
without the consent of the other party which neither party will unreasonably
withhold. In the case of an assignment by the Borrower, the Borrower must comply
with all applicable securities laws and obtain the consent of the Vancouver
Stock Exchange.
9.4 Notices. Any notice, demand or other document required or permitted to be
given hereunder shall be deemed to have been well and sufficiently given if
telecopied to or delivered at the address of the intended recipient set forth on
the first page hereof or at such other address as the intended recipient may
from time to time direct in writing, and any such notice, demand or document
shall be deemed to have been received.
9.5 Exchange Acceptance for Filing. It is acknowledged and agreed between the
parties that the Loan made hereunder is subject to acceptance for filing by the
Exchange. If final acceptance is not obtained within 120 days of the date of
this Agreement, unless the parties agree otherwise, the Agreement shall
automatically be terminated and of no further force or effect and the borrower
shall repay the outstanding principal amount of the Loan and accrued interest to
the Borrower.
9.6 Amendments. No provision of this Agreement may be amended, waived,
discharged or terminated orally, but only by instrument in writing signed by the
party against whom enforcement of the amendment, waiver, discharge or
termination is sought.
<PAGE>
-9-
9.7 Parties in Interest. This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective personal representatives,
successors and permitted assigns.
9.8 Counterparts. This Agreement may be executed in counterparts and by
facsimile with the same effect as if all parties had signed the same document
and all such counterparts will be construed together and will constitute one and
the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
THE CORPORATE SEAL of IDAHO )
CONSOLIDATED METALS CORPORATION was )
hereunto affixed in the presence of: )
)
Per: /s/ Delbert Steiner )
---------------------------------- ) C/S
Authorized Signatory )
)
Per: /s/ Lori Cox )
---------------------------------- )
Authorized Signatory )
TOMASOVICH FAMILY TRUST
Per: /s/ Theodore J. Tomasovich, Trustee
-----------------------------------
Authorized Signatory
<PAGE>
SCHEDULE "A"
FORM OF
CONVERTIBLE PROMISSORY NOTE #1
U.S.$100,000 January 23, 1998
FOR VALUE RECEIVED, the undersigned, Idaho Consolidated Metals Corporation,
a British Columbia, corporation ("ICMC" or "the Company"), hereby promises to
pay to the Tomasovich Family Trust ("Tomasovich"), the principal sum of U.S. One
Hundred Thousand Dollars (U.S.$100,000) plus interest at 9% per annum. All
unpaid principal and interest shall be due and payable in full on January 23,
2000. Unpaid principal and interest under this Note may be prepaid without
penalty after the first anniversary hereof. Interest to be paid annually. In the
event that any interest payment is not made in a timely manner, a late payment
fee of 9% of the amount of the interest payment then due shall be paid to
Tomasovich.
Said note shall be convertible to units in the Company at the sole election
of Tomasovich. Each unit shall consist of one (1) share and one (1)
non-transferable share purchase warrant at a unit price of Cdn.$0.26
representing the closing share price on the day prior to the execution of this
Note less 15%. Said price shall be valid for 1 year. Conversion in the 2nd year
of the note shall be at Cdn.$0.31 per unit. Any election for conversion shall
not be made any earlier than June 18, 1998. Any conversion shares will have a
hold period commencing on the date hereof until the lesser of one (1) year or
four (4) months if ICMC is an "AIF Issuer" as defined in the policies of the
Vancouver Stock Exchange ("VSE") at the time of conversion.
All payments on this Note, as well as any notices, are to be made or given
to Tomasovich whose address for this purpose is 600 Wilshire Blvd., Suite 1410,
Los Angeles, California, 90017, or to such other place as Tomasovich may from
time to time direct by written notice to ICMC.
All amounts payable hereunder are payable in lawful money of the United
States. If any suit or action be instituted to enforce this Note, ICMC promises
to pay, in addition to the costs and disbursements otherwise allowed by law, all
other costs including actual attorneys' fees incurred by Tomasovich if such suit
or action is successful.
The parties hereto recognize that there may be other VSE requirements other
than notice concerning this Note. ICMC shall fulfill all of said requirements
which shall be met prior to payment to or conversion by the lender hereof.
This Note is given pursuant to the Convertible Loan Agreement #1 dated
effective April 9, 1998 between Tomasovich and ICMC and is to be construed and
enforced in accordance therewith.
This Note shall be governed by and construed according to the laws of the
Province of British Columbia and meet all requirements of the VSE.
IDAHO CONSOLIDATED METALS CORPORATION
a British Columbia Corporation
By: __________________________________
Delbert Steiner, President
<PAGE>
SCHEDULE "B"
FORM OF WARRANT CERTIFICATE
THIS WARRANT WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 4:30
P.M. (VANCOUVER TIME) ON JANUARY 23, 2000.
THIS WARRANT AND THE SHARE CERTIFICATES REPRESENTING ANY COMMON SHARES ISSUED ON
EXERCISE OF ALL OR A PART OF THE RIGHTS REPRESENTED BY THIS WARRANT ARE SUBJECT
TO A HOLD PERIOD AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL JANUARY 23,
1999 [MAY 23, 1998 IF IDAHO IS AN AIF ISSUER ON CONVERSION DATE] EXCEPT AS
PERMITTED BY THE BRITISH COLUMBIA SECURITIES ACT AND RULES MADE THEREUNDER (THE
"HOLD PERIOD").
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") AND MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT, OR (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A
UNDER THE U.S. SECURITIES ACT OR (2) RULE 144 UNDER THE U.S. SECURITIES ACT, IF
APPLICABLE, OR (3) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT (THE "U.S. LEGEND").
NON-TRANSFERABLE WARRANTS
IDAHO CONSOLIDATED METALS CORPORATION
(Incorporated under the laws of British Columbia)
Warrant Certificate No.: W*/* Right to Purchase * Common Shares
WARRANT CERTIFICATE FOR PURCHASE OF COMMON SHARES
THIS IS TO CERTIFY THAT, for value received, Tomasovich Family Trust
of 600 Wilshire Boulevard, Suite 1410, Los Angeles, California, 90017
(hereinafter called the "holder") is entitled to subscribe for and purchase *
fully paid and non-assessable Common Shares in the capital of Idaho Consolidated
Metals Corporation (hereinafter called the "Corporation") at any time prior to
4:30 p.m. (Vancouver Time) on January 23, 2000 and at a price of Cdn.$0.26 per
share until January 23, 1999 and at price of Cdn.$0.31 per share from January
24, 1999 to January 23, 2000 subject, however, to the provisions and upon the
terms and conditions hereinafter set forth.
<PAGE>
-2-
The rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part (but not as to a fractional share of Common Shares),
by completing the subscription form attached hereto as Schedule "A" and
surrendering this Warrant at the office of the Transfer Agent of the
Corporation, Montreal Trust Company of Canada, of 4th Floor - 510 Burrard
Street, Vancouver, British Columbia, together with a certified cheque payable to
or to the order of the Corporation in payment of the purchase price of the
number of Common Shares subscribed for.
In the event of any exercise of the right represented by this Warrant,
certificates for the Common Shares so purchased shall be delivered to the holder
hereof within a reasonable time, not exceeding three business days after the
rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of Common
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within such time.
The Corporation covenants and agrees that all Common Shares which may
be issued upon the exercise of the right represented by this Warrant will, upon
issuance, be fully paid and non-assessable and free of all liens, charges and
encumbrances. The Corporation further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Corporation will at all times have authorized and reserved, a sufficient number
of Common Shares to provide for the exercise of the rights represented by this
Warrant.
THE FOLLOWING ARE THE TERMS AND CONDITIONS REFERRED TO IN THIS
WARRANT:
1. In case the Corporation shall at any time subdivide its outstanding Common
Shares into a greater number of shares, the Warrant purchase price shall be
proportionately reduced and the number of subdivided Common Shares entitled to
be purchased proportionately increased, and conversely, in case the outstanding
Common Shares of the Corporation shall be consolidated into a smaller number of
shares, the Warrant purchase price shall be proportionately increased and the
number of consolidated Common Shares entitled to be purchased hereunder shall be
proportionately decreased.
If any capital reorganization or reclassification of the capital stock
of the Corporation, or the merger, amalgamation or arrangement of the
Corporation with another corporation shall be effected, then as a condition of
such reorganization, reclassification, merger, amalgamation or arrangement,
adequate provision shall be made whereby the holder hereof shall have the right
to purchase and receive upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the Common Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, or other securities as may be issued
with respect to or in exchange for such number of outstanding Common Shares
equal to the number of Common Shares purchasable and receivable upon the
exercise of this Warrant had such reorganization, reclassification, merger,
amalgamation or arrangement not taken place. The Corporation shall not effect
any merger, amalgamation or arrangement unless prior to or simultaneously with
the consummation thereof the successor corporation (if other than the
<PAGE>
-3-
Corporation) resulting from such merger, amalgamation or arrangement shall
assume by written instrument executed and mailed or delivered to the holder of
this Warrant the obligation to deliver to such holder such shares of stock or
securities in accordance with the foregoing provisions, such holder may be
entitled to purchase.
2. In case at any time:
(a) the Corporation shall pay any dividend payable in stock upon its
Common Shares or make any distribution to the holders of its Common
Shares;
(b) the Corporation shall offer for subscription pro rata to the holders
of its Common Shares any additional shares of stock of any class or
other rights;
(c) there shall be any capital reorganization, or reclassification of the
capital stock of the Corporation, or consolidation or merger,
amalgamation or arrangement of the Corporation with, or sale of all or
substantially all of its assets to, another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation;
then, and in any one or more of such cases, the Corporation shall give to the
holder of this Warrant, at least twenty days' prior written notice of the date
on which the books of the Corporation shall close or a record shall be taken for
such dividend, distribution or subscription rights, or for determining rights to
vote with respect to such reorganization, reclassification, consolidation,
merger, amalgamation, arrangement, sale, dissolution, liquidation or winding-up
and in the case of any such reorganization, reclassification, consolidation,
merger, amalgamation, arrangement, sale, dissolution, liquidation or winding-up,
at least twenty days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause, shall also specify,
in the case of any such dividend, distribution or subscription rights, the date
on which the holders of Common Shares shall be entitled thereto, and such notice
in accordance with the foregoing shall also specify the date on which the
holders of Common Shares shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, amalgamation, arrangement, sale,
dissolution, liquidation or winding-up as the case may be. Each such written
notice shall be given by first class mail, registered postage prepaid, addressed
to the holder of this Warrant at the address of such holder, as shown on the
books of the Corporation.
3. As used herein, the term "Common Shares" shall mean and include the
Corporation's presently authorized Common Shares and shall also include any
capital stock of any class of the Corporation hereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends and in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation.
<PAGE>
-4-
4. This Warrant shall not entitle the holder hereof to any rights as a
shareholder of the Corporation, including without limitation, voting rights.
5. This Warrant and all rights hereunder are not transferable.
6. This Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the office of the Transfer Agent of the Corporation, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of Common Shares as shall be designated by such holder hereof at the time
of such surrender.
IN WITNESS WHEREOF the Corporation has caused this Warrant to be
signed by its duly authorized officers under its corporate seal, and this
Warrant to be dated __________________________,__________.
Idaho Consolidated Metals Corporation
Per: _________________________________
Director
COUNTERSIGNED BY:
Montreal Trust Company of Canada
Per: _________________________________
<PAGE>
SCHEDULE "A"
To
WARRANT CERTIFICATE
SUBSCRIPTION FORM - TO BE COMPLETED
ON EXERCISE OF WARRANTS
TO: Idaho Consolidated Metals Corporation
(the "Corporation")
The undersigned hereby exercises the right to purchase and hereby subscribes for
_______________ Common Shares in the capital stock of the Corporation referred
to in the attached Warrant Certificate according to the conditions thereof and
herewith makes payment by certified cheque of the purchase price in full for the
said shares. The undersigned acknowledges that the share certificates
representing any Common shares issued on exercise of all or a part of the rights
represented by this Warrant ("Warrant Shares") are subject to the Hold Period
noted on page one of this Warrant Certificate, and may not be traded in British
Columbia except as permitted by the British Columbia Securities Act and Rules
made thereunder. The undersigned also acknowledges that the share certificates
representing any Warrant Shares will be endorsed with the U.S. Legend.
Please issue a certificate for the shares being purchased as follows:
(Note: Until the expiry of the Hold Period, the certificate must be issued in
the name of the undersigned.)
Name: __________________________________________________________
(please print)
Address: __________________________________________________________
__________________________________________________________
__________________________________________________________
If applicable, please deliver a Warrant Certificate in respect of the balance of
the Common Shares referred to in the attached Warrant Certificate but not
presently subscribed for, to the undersigned.
DATED this _______ day of _____________________, _______.
___________________________________
<PAGE>
SCHEDULE "C"
ONLY U.S. SUBSCRIBERS NEED TO COMPLETE AND SIGN
(Capitalized terms not specifically defined herein shall have
the meaning ascribed to them in the Convertible Loan Agreement to
which this Schedule is attached.)
In connection with the execution of the Convertible Loan Agreement #1 made
effective April 9, 1998 (the "Agreement") to which this Schedule is attached,
the undersigned (the "Lender") covenants, represents and warrants to the
Borrower that:
(a) it has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment
in the Securities and it is able to bear the economic risk of loss of
its entire investment;
(b) it is acquiring the Securities for its own account, for investment
purposes only and not with a view to any resale, distribution or other
disposition of the Securities in violation of the United States
securities laws;
(c) it understands that the Securities have not been and will not be
registered under the United States Securities Act of 1933, as amended
(the "1933 Act") or the securities laws of any state of the United
States and that the sale contemplated hereby is being made in reliance
of an exemption from such registration requirements;
(d) it satisfies one or more of the categories indicated below (please
place an "X" on the appropriate lines):
____ Category 1. An organization described in Section 501(c)(3) of the
United States Internal Revenue Code, a corporation, a Massachusetts or
similar business trust or partnership, not formed for the specific
purpose of acquiring the Securities, with total assets in excess of
U.S.$5,000,000;
____ Category 2. A natural person whose individual net worth, or joint
net worth with that person's spouse, at the date hereof exceeds
U.S.$1,000,000;
____ Category 3. A natural person who had an individual income in
excess of U.S.$200,000 in each of the two most recent years or joint
income with that person's spouse in excess of U.S.$300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;
____ Category 4. A trust that (a) has total assets in excess of
U.S.$5,000,000, (b) was not formed for the specific purpose of
acquiring the Securities and (c) is directed
<PAGE>
-7-
in its purchases of securities by a person who has such knowledge and
experience in financial and business matters that he/she is capable of
evaluating the merits and risks of an investment in the Securities;
____ Category 5. An investment company registered under the Investment
Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
____ Category 6. A Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958;
____ Category 7. A private business development company as defined in
Section 202(a)(22) of the Investment Advisors Acts of 1940; or
____ Category 8. An entity in which all of the equity owners satisfy
the requirements of one or more of the foregoing categories.
(e) it has not purchased the Securities as a result of any form of general
solicitation or general advertising, including advertisements,
articles, notices or other communications published in any newspaper,
magazine or similar media or broadcast over radio, or television, or
any seminar or meeting whose attendees have been invited by general
solicitation or general advertising;
(f) if it decides to offer, sell or otherwise transfer any of the
Securities, it will not offer, sell or otherwise transfer any of such
Securities directly or indirectly, unless:
(i) the sale is to the Borrower;
(ii) the sale is made outside the United States in a transaction
meeting the requirements of Rule 904 of Regulation S under the
1933 Act and in compliance with applicable local laws and
regulations;
(iii)the sale is made pursuant to the exemption from the registration
requirements under the 1933 Act provided by Rule 144 thereunder
and in accordance with any applicable state securities or "Blue
Sky" laws; or
(iv) the Securities are sold in a transaction that does not require
registration under the 1933 Act or any applicable state laws and
regulations governing the offer and sale of securities, and it
has prior to such sale furnished to the Borrower an opinion of
counsel reasonably satisfactory to the Borrower;
(g) the certificates representing the Securities will bear a legend
stating that such shares have not been registered under the 1933 Act
or the securities laws of any state of the
<PAGE>
-8-
United States and may not be offered for sale or sold unless
registered under the 1933 Act and the securities laws of all
applicable states of the United States or an exemption from such
registration requirements is available;
(h) it understands and agrees that the Warrants may not be exercised in
the United States or by or on behalf of a "U.S. Person" or a person in
the United States unless registered under the 1933 Act and any
applicable state securities laws or unless an exemption from such
registration requirements is available and that certificates
representing the Warrants will bear a legend to such effect;
(i) it understands and agrees that there may be material tax consequences
to the Lender of an acquisition or disposition of the Securities. The
Borrower gives no opinion and makes no representation with respect to
the tax consequences to the Lender under United States, state, local
or foreign tax law of the undersigned's acquisition or disposition of
such Securities. In particular, no determination has been made whether
the Borrower will be a "passive foreign investment company" ("PFIC")
within the meaning of Section 1291 of the United States Internal
Revenue Code;
(j) it understands and agrees that the financial statements of the
Borrower have been prepared in accordance with Canadian generally
accepted accounting principles, which differ in some respects from
United States generally accepted accounting principles, and thus may
not be comparable to financial statements of United States companies;
and
(k) it consents to the Borrower making a notation on its records or giving
instructions to any transfer agent of the Borrower in order to
implement the restrictions on transfer set forth and described herein.
ONLY U.S. SUBSCRIBERS NEED TO COMPLETE AND SIGN
Dated this ______ day of ______________________, _________.
-------------------------------------------------
(Name of Subscriber - please print)
By: --------------------------------------------
(Authorized Signature)
-------------------------------------------------
(Official Capacity or Title - please print)
<PAGE>
-9-
-------------------------------------------------
(Please print name of individual whose signature
appears above if different than the name of the
Subscriber printed above)
<PAGE>
SCHEDULE "D"
VSE
APPENDIX 16A
PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING
1. DESCRIPTION OF TRANSACTION
a) Name of issuer of the securities
Idaho Consolidated Metals Corporation
b) Number and description of securities to be purchased
U.S.$100,000 convertible loan, the outstanding principal of the loan being
convertible into Units on the basis of one unit for each Cdn.$0.26 in the
first year and Cdn.$0.31 in the second year
c) Purchase price
U.S.$100,000
2. DETAILS OF PURCHASER
a) Name of Purchaser Tomasovich Family Trust
b) Address 600 Wilshire Boulevard, Suite 1410, Los Angeles, California, 90017
c) If the purchaser is a corporation, state the jurisdiction of incorporation
N/A
d) Names and addresses of persons having a greater than 10% beneficial
interest in the purchaser, if a corporation or trust
Theodore Tomasovich, of 600 Wilshire Boulevard, Suite 1410, Los Angeles,
California, 90017
<PAGE>
-2-
3. RELATIONSHIP TO LISTED COMPANY
a) State if the purchaser will become a control person with over 20% of the
company's issued share capital as a result of the purchase in section 1
above.
If the Convertible Promissory Notes are converted into Units, it is
possible the purchaser may then be a control person
b) Does the purchaser own any securities of the issuer at the date hereof, if
so, give particulars. State the number of securities of the listed company
held by the purchaser not including the purchase in section 1 above.
1,548,611 shares; warrants to purchase 927,062 shares
4. PAYMENT DATE
a) State the date the purchaser has advanced full payment.
January 23, 1998
b) If the purchase funds are held in trust pending receipt of final
regulatory approval identify the trustee and give particulars of the
condition(s) required for release of the funds.
N/A
c) If the purchaser is an institutional investor and the funds have not yet
been advanced, give particulars of the condition(s) required for the
advance of funds.
N/A
5. UNDERTAKING
*Last amended January 1998
TO: THE VANCOUVER STOCK EXCHANGE
The undersigned has subscribed for and agreed to purchase as principal, the
securities described in section 1 of this Private Placement Questionnaire and
Undertaking. (The purchase funds may be deposited in trust with advancement to
the Company subject only to receipt of all necessary regulatory approvals).
<PAGE>
-3-
The undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period of
twelve months (four months if the issuer is an AIF Issuer as defined in the
Definitions Section of the Manual) from the payment day, without the prior
consent of the Vancouver Stock Exchange and any other regulatory body having
jurisdiction. The undersigned acknowledges that all certificates representing
the said securities will bear a legend to the effect that the certificates are
subject to the applicable hold period.
The undersigned hereby certifies that the said securities are not being
purchased as a result of any material information about the Company's affairs
that has not been publicly disclosed. The undersigned acknowledges that it is
aware that the removal from the securities of any resale restriction after the
applicable twelve or four months that is imposed solely as a requirement of the
Vancouver Stock Exchange will not entitle it to sell the securities if such sale
would contravene any other applicable securities legislation or regulation.
6. ADDITIONAL UNDERTAKING AND CERTIFICATION
- PORTFOLIO MANAGER
If the undersigned is a portfolio manager purchasing as agent for accounts that
are fully managed by it, the undersigned acknowledges that it is bound by the
provisions of the Securities Act (British Columbia) (the "Act"), and undertakes
to comply with all provisions of the Act relating to ownership of, and trading
in, securities including, without limitation, the filing of insider reports and
reports pursuant to Section 111 of the Act.
If the undersigned carries on business as a portfolio manager in a jurisdiction
outside of Canada, the undersigned certifies that:
a) it is purchasing securities of the Issuer on behalf of managed accounts
over which it has absolute discretion as to purchasing and selling, and in
respect of which it receives no instructions from any person beneficially
interested in such accounts or from any other person;
b) it carries on the business of managing the investment portfolio of clients
through discretionary authority granted by those clients (a "portfolio
manager" business) in ________________________ [jurisdiction], and it is
permitted by law to carry on a portfolio manager business in that
jurisdiction;
c) it was not created solely or primarily for the purpose of purchasing
securities of the Issuer;
d) the total asset value of the investment portfolios it manages on behalf of
clients is not less than $20,000,000;
<PAGE>
-4-
e) it does not believe, and has no reasonable grounds to believe, that any
resident of British Columbia has a beneficial interest in any of the
managed accounts for which it is purchasing; and
f) the Issuer has provided it with a list of the directors, senior officers
and other insiders of the Issuer, and the persons that carry on investor
relations activities for the Issuer (which list is attached as a schedule
to this Appendix), and it does not believe, and has no reasonable grounds
to believe, that any of those persons has a beneficial interest in any of
the managed accounts for which it is purchasing, except as follows:
----------------------------------------------
(name of insider(s) or person(s) carrying on
investor relations activities for the Issuer
that have a beneficial interest in an account)
The undersigned acknowledges that it is bound by the provisions of the British
Columbia Securities Act including, without limitation, sections 87 and 111
concerning the filing of insider reports and reports of acquisitions.
Dated at Los Angeles, California
this _____ day of _________________, 1998
Tomasovich Family Trust
-----------------------------------------------
Name of Purchaser - please print)
-----------------------------------------------
(Authorized Signature)
-----------------------------------------------
(Official Capacity - please print)
-----------------------------------------------
(please print name of individual whose
signature appears above, if different from name
of purchaser printed above)
Exhibit 10.35
SCHEDULE TO CONVERTIBLE LOAN AGREEMENT #1
January 23, 1998
In addition to the Convertible Loan Agreement #1 dated January 23, 1998, between
the Company and the Tomasovich Family Trust (the "Trust")(collectively the
"Parties"), the Parties entered into the following Convertible Loan Agreements
in substantially the same form as Convertible Loan Agreement #1:
1. Convertible Loan Agreement #2 dated January 23, 1998 whereby the Trust
agreed to lend the Company US$110,000. In this connection, the Company
issued a US$110,000 convertible promissory note repayable on or before
March 31, 2000 bearing interest at 9% per annum. After June 17, 1998, the
Trust may require the Company to convert all or any portion of the
principal amount of the loan advanced and then outstanding into units at a
conversion price of one unit for each CDN$0.26 of indebtedness until and
including March 31, 1999 and at a conversion price of one unit for each
CDN$0.31 of indebtedness during the period from April 1, 1999 until March
31, 2000 for a maximum of 600,769 units if the principal amount is
converted in its entirety by March 31, 1999 and a maximum of 508,871 units
if the principal amount is converted in its entirety between April 1, 1999
and March 31, 2000. Each unit consists of one common share and one
non-transferable warrant with each warrant being exercisable at a price of
CDN$0.26 per share until March 31, 1999 and CDN$0.31 per share from April
1, 1999 to March 31, 2000.
2. Convertible Loan Agreement #3 dated May 15, 1998 whereby the Trust agreed
to lend the sum of US$150,000 to the Company. In this connection, the
Company issued a US$150,000 convertible promissory note repayable on or
before May 15, 2000 bearing interest at 9% per annum. After June 17, 1998,
the Trust may require the Company to convert all or any portion of the
principal amount of the loan advanced and then outstanding into units at a
conversion price of one unit for each CDN$0.23 of indebtedness until and
including May 15, 1999 and at a conversion price of one unit for each
CDN$0.28 of indebtedness during the period from May 16, 1999 until May 15,
2000 for a maximum of 932,608 common shares if the principal amount is
converted in its entirety in the first year and a maximum of 766,071 units
if the principal amount is converted in its entirety between May 16, 1999
and May 15, 2000. Each unit consists of one common share and one
non-transferable warrant with each warrant being exercisable at a price of
CDN$0.23 per share until May 15, 1999 and CDN$0.27 per share from May 16,
1999 to May 15, 2000.
Exhibit 22.1
IDAHO CONSOLIDATED METALS CORPORATION
NOTICE OF ANNUAL AND EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual and Extraordinary General Meeting of the
Shareholders of IDAHO CONSOLIDATED METALS CORPORATION (hereinafter called the
"Company") will be held on Wednesday, the 17th day of June, 1998 at the hour of
11 o'clock in the forenoon (Vancouver time) at The Four Seasons Hotel, 791 West
Georgia Street, Vancouver, British Columbia, for the following purposes:
1. to receive the consolidated financial statements of the Company for the
fiscal year ended December 31, 1997 (with comparative statements relating
to the preceding fiscal period) together with the report of the Auditors'
Report thereon;
2. to determine the number of Directors for the ensuing year at 4;
3. to elect Directors for the ensuing year;
4. to appoint Auditors for the ensuing year, and to authorize the Directors to
fix their remuneration;
5. to consider and, if thought appropriate, to approve the grant of stock
options and the amendment of any outstanding stock options granted to
certain Insiders of the Company since the last annual general meeting of
the Company, and to grant authority to the Directors to grant new stock
options and amend existing stock options granted to certain Insiders until
the date of the next annual general meeting of the Company; :
6. to consider and, if thought appropriate, to approve the possible change of
control of the Company to the Tomasovich Family Trust and Theodore
Tomasovich which may result in the event of the conversion of outstanding
loans made by the Trust to the Company aggregating US$360,000; and
7. to transact such other business as may properly come before the Meeting.
Accompanying this Notice of Annual and Extraordinary General Meeting is the
Company's Quarterly Report for its fourth fiscal quarter which contains the
Company's consolidated financial statements for the fiscal year ended December
31, 1997 and the auditors' report thereon, as well as an Information Circular,
Proxy and a Supplemental Mailing List Form. The accompanying Information
Circular provides information relating to the matters to be addressed at the
meeting and is incorporated into this Notice.
Shareholders unable to attend the Annual and Extraordinary General Meeting in
person should read the Notes accompanying the enclosed Proxy and complete and
return the Proxy to the Company's Registrar and Transfer Agent, Montreal Trust
Company of Canada, 4th Floor, 510 Burrard Street, Vancouver, British Columbia,
V6C 3B9, within the time set out in the said Notes. The enclosed Proxy is
solicited by Management and you may amend it, if you so desire, by striking out
the names listed therein and inserting in the space provided the name of the
person you wish to represent you at the Meeting.
DATED at Lewiston, Idaho, this 13th day of May, 1998.
BY ORDER OF THE BOARD
Signed: "Delbert W. Steiner"
------------------------------
DELBERT W. STEINER
President, Chief Executive Officer
and Director
<PAGE>
IDAHO CONSOLIDATED METALS CORPORATION
504 Main Street, Suite 470
Lewiston, Idaho 83501
Telephone: (208) 743-0914
Facsimile: (208) 746-6678
INFORMATION CIRCULAR
for the 1998 Annual and Extraordinary General Meeting
of Members (containing information as at May 13, 1998
unless otherwise noted)
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation of
proxies by management of IDAHO CONSOLIDATED METALS CORPORATION (the "Company")
for use at the Annual and Extraordinary General Meeting of shareholders (the
"Meeting") to be held on Wednesday, the 17th day of June, 1998 at the time and
place and for the purposes set forth in the accompanying Notice of Meeting.
While it is expected the solicitation will be primarily by mail, proxies may be
solicited personally or by telephone by directors, officers and employees of the
Company. All costs of this solicitation will be borne by the Company.
The contents and the sending of this Information Circular have been approved by
the Directors of the Company.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the accompanying form of proxy are directors or
officers of the Company. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO
NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM OR HER AT THE MEETING HAS THE RIGHT
TO DO SO, EITHER BY INSERTING SUCH PERSON'S NAME IN THE BLANK SPACE PROVIDED IN
THE PROXY AND STRIKING OUT THE TWO PRINTED NAMES, OR BY COMPLETING ANOTHER
PROXY. A proxy will not be valid unless the completed, dated and signed form of
proxy is received by MONTREAL TRUST COMPANY OF CANADA, 4th Floor, 510 Burrard
Street, Vancouver, British Columbia, V6C 3B9, not less than 48 hours (excluding
Saturdays and holidays) before the Meeting at which the person named therein
purports to vote in respect thereof, or deposited with the Chairman of the
Meeting at any time prior to the commencement of the Meeting.
A shareholder who has given a proxy may revoke it by an instrument in writing
executed by the shareholder or by his or her attorney authorized in writing or,
where the shareholder is a corporation, by a duly authorized officer or attorney
of the corporation, and delivered to the registered office of the Company at
Suite 1040, Guinness Tower, 1055 West Hastings Street, Vancouver, British
Columbia, V6E 2E9, at any time up to and including the last business day
preceding the day of the Meeting or, if adjourned, any reconvening thereof, or
to the Chairman of the Meeting on the day of the Meeting prior to its
commencement or, if adjourned, any reconvening thereof, or in any other manner
provided by law. A revocation of a proxy does not affect any matter on which a
vote has been taken before the revocation.
<PAGE>
VOTING OF PROXIES
SHARES REPRESENTED BY PROXY ARE ONLY ENTITLED TO BE VOTED ON A POLL AND, WHERE A
CHOICE WITH RESPECT TO ANY MATTER TO BE ACTED UPON HAS BEEN SPECIFIED IN THE
FORM OF PROXY, THE SHARES WILL, ON A POLL, BE VOTED OR WITHHELD FROM VOTING IN
ACCORDANCE WITH THE SPECIFICATIONS SO MADE. SUCH SHARES WILL ON A POLL BE VOTED
IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED BY THE
SHAREHOLDER.
The enclosed Proxy when properly completed and delivered and not revoked confers
discretionary authority upon the person appointed proxy thereunder to vote on
amendments or variations of matters identified in the Notice of Annual General
Meeting, and on other matters which may properly come before the Meeting. In the
event that amendments or variations to matters identified in the Notice of
Annual General Meeting are properly brought before the Meeting or any further or
other business is properly brought before the Meeting, it is the intention of
the persons designated in the enclosed form of proxy to vote in accordance with
their best judgment on such matters or business. At the time of printing of this
Information Circular, management of the Company knows of no such amendment,
variation or other matter to come before the Meeting.
APPROVAL OF MATTERS
Unless otherwise noted, approval of matters to be placed before the Meeting is
by an "ordinary resolution", which is a resolution passed by a simple majority
(50% plus one) of the votes cast by shareholders of a company present and
entitled to vote in person or by proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Authorized Capital: 100,000,000 Common shares without par value
Issued and Outstanding: 9,434,650 Common shares without par value.
Only shareholders of record at the close of business on May 11, 1998 (the
"Record Date"), who either personally attend the Meeting or who have completed
and delivered a form of proxy in the manner and subject to the provisions
described above shall be entitled to vote or to have their shares voted at the
Meeting.
Each shareholder is entitled on a poll to one vote for each share registered in
his or her name on the list of members, which is available for inspection during
normal business hours at Montreal Trust Company of Canada and at the Meeting.
To the knowledge of the directors and senior officers of the Company, there are
no individuals or companies who beneficially own, directly or indirectly, or
exercise control or direction over shares carrying more than 10% of the voting
rights attached to all outstanding shares of the Company, other than the
Tomasovich Family Trust together with Theodore Tomasovich, a director of the
Company (collectively hereinafter referred to as "Tomasovich"). As at the date
of this information circular, Tomasovich beneficially owns, or exercises control
or direction over, a total of 1,548,611 common shares being 16.41% of the
present issued capital of the Company. In the event of exercise of 927,062
warrants held by Tomasovich and a stock option held by Mr. Tomasovich to
purchase 50,000 shares, Tomasovich would own 2,525,673 common shares, being
24.26% of the then issued capital of the Company, assuming no other common
shares were issued.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors presently consists of 4 directors. It is intended to
determine the number of directors at 4 and to elect 4 directors for the ensuing
year.
The term of office of each of the present directors expires at the Meeting. The
persons named below will be presented for election at the Meeting as
management's nominees, and the persons named in the accompanying form of Proxy
intend to vote for the election of these nominees. Management does not
contemplate that any of these nominees will be unable to serve as a director.
Each director elected will hold office until the next annual general meeting of
the Company or until his successor is elected or appointed, unless his office is
earlier vacated in accordance with the Articles of the Company, or with the
provisions of the Company Act (British Columbia), R.S.B.C. 1996, c.62 (the
"Company Act").
Pursuant to Section 111 of the Company Act, Advance Notice of the Meeting was
published in The Province Newspaper on April 22, 1998 and notice was provided to
the Executive Director, British Columbia Securities Commission and the Vancouver
Stock Exchange (the "Exchange") on April 22, 1998.
In the following table and notes thereto is stated the name of each person
proposed to be nominated by management for election as a director, the country
in which he is ordinarily resident, all offices of the Company now held by him,
his principal occupation, the period of time for which he has been a director of
the Company, and the number of shares of the Company beneficially owned by him,
directly or indirectly, or over which he exercises control or direction, as at
the date hereof.
<TABLE>
Name, Position and Country Principal Occupation Date Served Number
of Resident(1) During the Past 5 Years (1) as a Director of Shares (2)
- ------------------------- --------------------------- ------------- -------------
<S> <C> <C> <C>
Delbert W. Steiner (3) President and Chief Executive Officer of Since 673,782(4)
President, Chief Executive the Company, Attorney-at-Law September 1988
Officer and Director
United States
Theodore J. Tomasovich (3) President of PYJ Corporation, a private Since 1,548,611 (5)
Director real estate/equities corporation located July 1997
United States in Los Angeles, CA
Robert A. Young Principal of Robert A. Young and Since 41,315
Director Associates, a private corporate finance July 1997
Canada and development company located in
Vancouver, BC
Jag Vyas (3) Accountant, self-employed Since Nil
Director July 1997
Canada
</TABLE>
(1) The information as to country of residence and principal occupation, not
being within the knowledge of the Company, has been furnished by the
respective directors individually.
(2) The information as to the shares beneficially owned or over which a
director exercises control or direction, not being within the knowledge of
the Company, has been furnished by the respective directors individually
and is for the month ended April 30, 1998.
(3) Denotes member of Audit Committee.
(4) Of this amount, 247,500 shares are performance shares which are allotted
but not issued, and are held in trust by Montreal Trust Company of Canada.
(5) Shares held by the Tomasovich Family Trust. Reference "Voting Securities
and Principal Holders Thereof" above for further particulars.
- 3 -
<PAGE>
STATEMENT OF EXECUTIVE COMPENSATION
"Named Executive Officers" means the Chief Executive Officer ("CEO") of the
Company, regardless of the amount of compensation of that individual and each of
the Company's four most highly compensated executive officers, other than the
CEO, who were serving as executive officers at the end of the most recent fiscal
year and whose total salary and bonus amounted to $100,000 or more. In addition,
disclosure is also required for any individuals whose total salary and bonus
during the most recent fiscal year was $100,000 whether or not they are an
executive officer at the end of the fiscal year.
The Company currently has one Named Executive Officer, namely, Delbert W.
Steiner, the President, Chief Executive Officer and a director of the Company.
The following table sets forth the compensation awarded, paid to or earned by
the Company's Named Executive Officer during the fiscal years ended December 31,
1995, 1996 and 1997.
Summary Compensation Table
<TABLE>
Annual Compensation Long Term Compensation
Awards Payouts
Securities Restricted
Name and Other Under Shares or
Principal Year Annual Options Restricted LTIP All Other
Position Ending Salary Bonus Compensation Granted Share Pay-outs Compensation
(1) Units
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Delbert Steiner 1997 $69,000 NIL NIL 150,000 NIL NIL NIL
President, CEO 1996 $49,012 NIL NIL N/A NIL NIL NIL
and Director 1995 $18,870 NIL NIL 70,000 (1) NIL NIL NIL
</TABLE>
(1) On May 17, 1996, Mr. Steiner acquire 10,000 shares on the partial exercise
of this option.
Long Term Incentive Plan Awards
Long term incentive plan awards ("LTIP") means "any plan providing compensation
intended to serve as an incentive for performance to occur over a period longer
than one financial year whether performance is measured by reference to
financial performance of the Company or an affiliate, or the price of the
Company's shares but does not include option or stock appreciation rights plans
or plans for compensation through restricted shares or units". No LTIPs were
granted to the Named Executive Officer or directors during the the fiscal year
ended December 31, 1997.
Stock Appreciation Rights
Stock appreciation rights ("SAR's") means a right, granted by an issuer or any
of its subsidiaries as compensation for services rendered or in connection with
office or employment, to receive a payment of cash or an issue or transfer of
securities based wholly or in part on changes in the trading price of the
Company's shares. No SARs were granted to or exercised by the Named Executive
Officer or directors during the fiscal year ended December 31, 1997.
Option Granted During the Last Fiscal Year
- 4 -
<PAGE>
The following table sets forth particulars of stock options granted by the
Company to the Named Executive Officer during the fiscal year ended December 31,
1997.
<TABLE>
% of Total
Options
Securities Granted to Market Value of
Under Employees in Exercise or Securities Underlying
Options/SARs Fiscal Year Base Price Options on the Date
Name Granted ($/Security) of Grant Expiration Date
(#) ($/Security)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delbert Steiner 150,000(1) 26.8%(2) $1.15(3) $1.15(3) February 13, 2001
</TABLE>
(1) Options granted on February 13, 1997.
(2) Percentage of all options granted during the last fiscal year.
(3) The exercise price of the stock options was originally priced at $1.15.
Subsequent to the fiscal year ended December 31, 1997 it was amended to
$0.26. The repricing of the stock options was approved by the Directors of
the Company and is subject to Exchange acceptance.
Table of Option Repricings to Named Executive Officer and Directors
The following table sets forth details of all repricings of stock options during
the fiscal year ended December 31, 1997 in respect of the Named Executive
Officer.
<TABLE>
Name Date of Securities Market Price of Exercise New Length of
Repricing Under Securities at Price at Exercise Original
Options/SARs Time of Time of Price Option Term
Repriced or Repricing or Repricing or ($/Security) Remaining at
Amended (#) Amendment Amendment Date of
($/Security) ($/Security) Repricing or
Amendment
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Delbert Steiner February 13/97 60,000 $1.09 $1.80 $1.15(1) 32 months
</TABLE>
(1) The exercise price of the stock options was further amended to $0.26
subsequent to the fiscal year ended December 31, 1997. The repricing of the
stock options to $0.26 was approved by the Directors of the Company and is
subject to Exchange acceptance.
The following table sets forth details of all repricings of stock options during
the fiscal year ended December 31, 1997 in respect of the Directors who are not
Named Executive Officers as a Group:
<TABLE>
Name Date of Securities Market Price of Exercise New Length of
Repricing Under Securities at Price at Exercise Original
Options/SARs Time of Time of Price Option Term
Repriced or Repricing or Repricing or ($/Security) Remaining at
Amended (#) Amendment Amendment Date of
($/Security) ($/Security) Repricing or
Amendment
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Directors who February 13/97 50,000(1) $1.09 $1.80 $1.15 32 months(1)
are not Names
Executive
Officers as a
Group (1)
</TABLE>
- 5 -
<PAGE>
(1) Options were cancelled subsequent to the fiscal year ended December 31,
1997, 30 days after the resignation of the director.
Options were repriced once during the fiscal year ended December 31, 1997 in
accordance with VSE Policy based on a ten day average closing price for the
Company's shares on the Exchange immediately prior to the date of such
repricing, without any discount (the "Market Price"). The Company's policy on
compensation provides that options will generally not be repriced in the event
of temporary fluctuations in market price. Such repricing was considered
reasonable in light of the significant changes in market conditions during
fiscal 1997. In accordance with VSE Policy, the Company received member approval
to such repricing in advance at its last annual general meeting. Such repricing
was subject to Exchange acceptance, which was obtained.
Pension Plans
The Company does not provide retirement benefits for directors or executive
officers.
Termination of Employment, Change in Responsibilities and Employment Contracts
The Company has no plans or arrangements in respect of remuneration received or
that may be received by the Chief Executive Officer in the Company's most
recently completed financial year or current fiscal year in respect of
compensating such officers in the event of termination of employment (as a
result of resignation, retirement, change of control, etc.) or a change in
responsibilities following a change of control, where the value of such
compensation exceeds $100,000 per executive officer.
Compensation of Directors
The Company has no standard arrangement pursuant to which directors are
compensated by the Company for their services in their capacity as directors,
except for the granting from time to time of incentive stock options in
accordance with the policies of the Exchange.
The following table sets forth stock options granted by the Company during the
fiscal year ended December 31, 1997 to directors who are not Named Executive
Officers of the Company:
<TABLE>
% of Total
Options
Securities Granted to Market Value of
Under Employees in Exercise or Base Securities
Options/SARs Fiscal Year Price Underlying Options
Name Granted ($/Security) on the Date of Grant Expiration Date
(#) ($/Security)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Theodore Tomasovich 50,000 9% $0.56(1) $0.54 Aug 27, 2001
Robert Young 100,000 18% $1.15(1) $1.09 Feb 13, 2001
50,000 9% $0.56(1) $0.54 Aug 27, 2001
Jag Vyas 50,000 9% $0.56(1) $0.54 Aug 27, 2001
Geddes Webster 50,000(2) 9% $1.15 $1.09 cancelled
</TABLE>
(1) The exercise price of the stock options was further amended to $0.26
subsequent to the fiscal year ended December 31, 1997. The repricing of the
stock options to $0.26 was approved by the Directors of the Company and is
subject to Exchange acceptance.
- 6 -
<PAGE>
(2) Options were cancelled during the fiscal year ended December 31, 1997, 30
days after the resignation of the director.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
No director, executive officer or senior officer of the Company, proposed
management nominee for election as a director of the Company or each associate
or affiliate of any such director, executive or senior officer or proposed
nominee is or has been at any time during the Company's last completed fiscal
year indebted to the Company or its subsidiaries or is and has been indebted to
another entity where such indebtedness is or has been the subject of a
guarantee, support agreement, letter of credit or other similar arrangement or
understanding provided by the Company or its subsidiaries, other than routine
indebtedness.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Private Placement
On March 18, 1998, the Company issued by way of private placement 1,763,233
units (each unit consisting of one common share and one non-transferable
warrant) at a price of $0.60 per unit, for gross subscription proceeds of
$1,057,939.80 to eight subscribers. Each warrant entitles the holder to purchase
one additional common share in the capital stock of the Company for a term of
two years ending on March 18, 2000 at a price of $0.60 per share in the first
year and at a price of $0.70 per share in the second year. The following insider
of the Company participated in this private placement as follows:
Name Relationship Number of Units
Tomasovich Family Trust controlled by Theodore Tomasovich, a 927,062
director of the Company
Shares for Debt
On April 21, 1998, the Company issued to five creditors a total of 567,209
common shares in its capital stock at a price of $0.73 per share to settle
indebtedness totalling $414,063.17. The following insiders of the Company or
their associates or affiliates participated in the shares for debt transaction
as follows:
<TABLE>
Name Relationship No. of Shares
- ---- ------------ -------------
<S> <C> <C>
Tomasovich Family Trust controlled by Theodore Tomasovich, a director of 77,137
the Company
Staley, Okada, Chandler & Scott Ken Scott, an officer of the Company, is a 64,407
Chartered Accountants partner of Staley, Okada
Wilfried Struck officer of the Company 38,569
Delbert Steiner officer of the Company 247,781
Robert Young & Associates controlled by Robert Young, a director of the 39,315
Company
</TABLE>
Except as disclosed herein and other than transactions carried out in the
ordinary course of business of the Company or its subsidiaries, none of the
directors or senior officers of the Company, a proposed management nominee for
election as a director of the Company, any member beneficially owning shares
- 7 -
<PAGE>
carrying more than 10% of the voting rights attached to the shares of the
Company nor an associate or affiliate of any of the foregoing persons has since
January 1, 1997 (being the commencement of the Company's last completed
financial year) any material interest, direct or indirect, in any transactions
which materially affected or would materially affect the Company or any of its
subsidiaries.
APPOINTMENT OF AUDITORS
Unless such authority is withheld, the persons named in the accompanying proxy
intend to vote for the re-appointment of Coopers & Lybrand, Certified Public
Accountants, as auditors of the Company and to authorize the directors to fix
their remuneration. Coopers & Lybrand were first appointed auditors of the
Company in June 1995.
MANAGEMENT CONTRACTS
Pursuant to an agreement dated January 1, 1997, the Company employed the
services of Wilfried J. Struck as its Chief Operating Officer and
Vice-President, Mining and Exploration at a salary of US$5,000 per month for an
initial term of one year. During fiscal 1997, the agreement was renewed for an
additional one year term.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The policies of the Exchange require shareholder approval to any possible change
of control of a company resulting from certain transactions including private
placements. A possible change of control of the Company may occur as a result of
the acquisition of convertible securities by the Tomasovich Family Trust by
private placement. Reference should be made to "Change of Control" herein for
further particulars of the possible change of control of the Company to the
Tomasovich Family Trust and Theodore Tomasovich, a director of the Company.
Other than as set forth in this Information Circular, no person who has been a
director or senior officer of the Company at any time since the beginning of the
last fiscal year, nor any proposed nominee for election as a director of the
Company, nor any associate or affiliate of any of the foregoing, has any
material interest, directly or indirectly, by way of beneficial ownership of
securities or otherwise, in any matter to be acted upon other than the election
of directors or the appointment of auditors. Directors and senior officers may,
however, be interested in the general authorization granted to the Company's
Board of Directors with respect to "Stock Options to Insiders" as detailed
herein.
STOCK OPTIONS TO INSIDERS
The Company currently may grant, pursuant to the policies of the Exchange, stock
options to its directors, senior officers and employees or to employees of a
company providing management services to the Company in consideration of their
providing their services to the Company and to independent consultants. The
number of shares subject to each option and the price per share is determined by
the Company's Board of Directors within the guidelines established by the
Exchange. The option agreements must provide that the option can only be
exercised by the optionee and only so long as the optionee shall continue in the
capacity as a director, senior officer or employee of the Company or an
independent consultant or within a period of not more than 30 days after ceasing
to be a director, officer, employee or independent consultant, or, if the
optionee dies, within one year from the date of the optionee's death. Approval
will be sought at the Annual General Meeting in respect of all incentive stock
options which were granted to insiders ("Insiders") of the Company (as that term
is defined in the Securities Act (British Columbia) subsequent to the last
Annual General Meeting, the details of which are
- 8 -
<PAGE>
described herein under the heading "Statement of Executive Compensation". All
such options were granted in accordance with the policies of the Exchange and
were accepted for filing by the Exchange.
For the purpose of satisfying the Exchange's requirement that shareholders
approve stock options granted to Insiders prior to their exercise, the Company
is also seeking the approval of the members, in advance, to each amendment which
may be made by the Company to the terms of existing stock options remaining
outstanding which were granted to Insiders or to other persons whose stock
options as originally constituted were approved by the members of the Company
and to each grant by the Company of new options to Insiders and any amendments
thereafter to such new options until the date of the next Annual General
Meeting. Any new options will be granted and/or amended, or any alterations to
existing options will be made, only on the approval of the board of directors
and in accordance with the policies of the Exchange in effect at the time of
grant or amendment. Accordingly, management of the Company is seeking
shareholder approval to the following resolution:
"RESOLVED THAT the grant by the Company of stock options to Insiders and
any amendments to such stock options granted to Insiders since the date of
the last annual general meeting, and the granting of new stock options to
Insiders of the Company and any amendments to outstanding stock options
held by Insiders of the Company at any time until the date of the next
Annual General Meeting, on terms within the policies of the Vancouver Stock
Exchange in effect at the time of grant or amendment, be and the same are
hereby approved."
OTHER BUSINESS
Change of Control
The policies of the Exchange require shareholder approval to any possible change
of control of a company resulting from certain transactions including private
placements. A "control person" is defined in the British Columbia Securities Act
as:
(a) a person who holds a sufficient number of the voting rights attached
to all outstanding voting securities of an issuer to affect materially
the control of the issuer, or
(b) each person in a combination of persons, acting in concert by virtue
of an agreement, arrangement, commitment or understanding, which holds
in total a sufficient number of the voting rights attached to all
outstanding voting securities of an issuer to affect materially the
control of the issuer,
and, if a person or combination of persons holds more than 20% of the
voting rights attached to all outstanding voting securities of an issuer,
the person or combination of persons is deemed, in the absence of evidence
to the contrary, to hold a sufficient number of the voting rights to affect
materially the control of the issuer.
- 9 -
<PAGE>
At the Meeting, the shareholders will be requested to approve a possible change
of control of the Company to the Tomasovich Family Trust and Theodore
Tomasovich, a director of the Company, of 600 Wilshire Blvd., Suite 1410, Los
Angeles, California, 90017, which may occur as a result of the acquisition of
convertible securities by the Tomasovich Family Trust by private placement.
Theodore Tomasovich, a director of the Company, is the trustee of the Tomasovich
Family Trust (the "Trust") and has voting control of the Trust. Over the past
year, the Trust has participated in financings of the Company and a debt
settlement. As at the date hereof, the Trust, together with Theodore Tomasovich,
who is acting jointly or in concert with the Trust, beneficially owned, or
exercised control or direction over, a total of 1,548,611 common shares in the
capital stock of the Company, being 16.41% of the present issued capital. In
addition, the Trust holds warrants to purchase 927,062 shares exercisable until
March 18, 2000 at a price of $0.60 per share in the first year and $0.70 per
share in the second year and Theodore Tomasovich holds a stock option to
purchase 50,000 common shares in the capital stock of the Company exercisable
until August 27, 2001 originally at a price of $0.56 per share, being reduced to
$0.26 per share subject to acceptance by the Exchange.
The Company is borrowing an aggregate of US$360,000 from the Trust in 1998 and
is issuing convertible promissory notes in connection therewith as follows:
(a) On January 23, 1998, the Company borrowed the sum of US$100,000 ("Loan #1")
and issued a convertible promissory note to the Trust. After June 17, 1998,
the Trust may require the Company to convert all or any portion of the
principal amount of Loan #1 advanced and then outstanding into units
("Units"), each Unit consisting of one common share and one
non-transferable common shares purchase warrant ("Warrant"), at a
conversion price of one Unit for each Cdn$0.26 of indebtedness in the first
year and for each Cdn$0.31 of indebtedness in the second year. If the
principal outstanding amount of Loan #1 is converted in whole in year one,
the Company would issue a maximum of 546,154 common shares at $0.26 per
share and Warrants to purchase a maximum of 546,154 common shares. If the
principal outstanding amount of Loan #1 is converted in whole in year two,
the Company would issue a maximum of 458,064 common shares at a price of
$0.31 per share and issue Warrants to purchase up to a maximum of 458,064
common shares. The Warrants would be exercisable for a term of two years at
a price of $0.26 per share in the first year and $0.31 per share in the
second year;
(b) On March 31, 1998, the Company borrowed the sum of US$110,000 ("Loan #2")
and issued a convertible promissory note to the Trust. After June 17, 1998,
the Trust may require the Company to convert all or any portion of the
principal amount of Loan #2 advanced and then outstanding into Units at a
conversion price of one Unit for each Cdn$0.26 of indebtedness in the first
year and for each Cdn$0.31 of indebtedness in the second year. If the
principal outstanding amount of Loan #2 is converted in whole in year one,
the Company would issue a maximum of 600,769 common shares at $0.26 per
share and Warrants to purchase a maximum of 600,769 common shares. If the
principal outstanding amount of Loan #2 is converted in whole in year two,
the Company would issue a maximum of 503,871 common shares at a price of
$0.31 per share and issue Warrants to purchase up to a maximum of 503,871
common shares. The Warrants would be for a term of two years at a price of
$0.26 per share in the first year and $0.31 per share in the second year;
(c) The Company intends to borrow the sum of US$150,000 ("Loan #3") and issue a
convertible promissory note to the Trust. After June 17, 1998, the Trust
may require the Company to convert all or any portion of the principal
amount of Loan #3 advanced and then outstanding into Units at
- 10 -
<PAGE>
a conversion price of one Unit for each Cdn$0.23 of indebtedness in the
first year and for each Cdn$0.28 of indebtedness in the second year. If the
principal outstanding amount of Loan #3 is converted in whole in year one,
the Company would issue a maximum of 932,608 common shares at $0.23 per
share and Warrants to purchase a maximum of 932,608 common shares. If the
principal outstanding amount of Loan #3 is converted in whole in year two,
the Company would issue a maximum of 766,071 common shares at a price of
$0.28 per share and issue Warrants to purchase up to a maximum of 766,071
common shares. The Warrants would be exercisable for a term of two years at
a price of $0.23 per share in the first year and $0.27 per share in the
second year.
The material terms of the Convertible Letter Agreements for Loans #1, #2 and #3
(together, the "Loans") are the same and are summarized as follows:
(b) the outstanding principal amount of the Loans bears interest at 9% per
annum;
(c) the outstanding principal amount of the Loans shall be repaid together with
any outstanding interest thereon, to the Trust on or before the second
anniversary (the "Maturity Date") of the applicable date the funds were
advanced to the Company (the "Payment Date");
(d) the Company shall pay the interest on the outstanding principal amount of
the Loans to the Trust annually on the first anniversary of the Payment
Date and on the Maturity Date while any amount of the respective Loans
remains outstanding;
(e) the Company may prepay the outstanding principal amount of the Loans and
outstanding interest at any time six months after the Payment Date; and
(f) after June 17, 1998, the Trust may require the Company to convert all or
any portion of the outstanding principal amount of the Loans into Units at
the conversion prices as set out above.
The Company borrowed the principal amount of Loans #1 and #2 for the purpose of
paying certain legal fees arising from litigation between the Company and Mr.
Joe Swisher and for working capital purposes and the Company borrowed the
principal amount of Loan #3 for the purpose of settling the lawsuit between the
Company and Mr. Swisher with the balance to be used for working capital. The
Convertible Loan Agreements between the Company and the Trust with respect to
each of the Loans are subject to acceptance for filing by the Exchange.
If all or any part of the outstanding principal amounts of the Loans are
converted into Units (shares and Warrants), it is possible that the Trust will
then beneficially own or have control over 20% or more of the Company's issued
and outstanding shares and, as a result, become a "control person" of the
Company. Pursuant to the policies of the Exchange, shareholder approval to the
change of control of the Company is required prior to any of the Loans being
converted into Units. Accordingly, management of the Company is seeking
shareholder approval to the possible change of control of the Company to the
Trust and Theodore Tomasovich. Theodore Tomasovich and the Trust will abstain
from voting on the resolution. The shareholders of the Company will be requested
to pass the following ordinary resolution:
"RESOLVED that the possible change of control of the Company to the
Tomasovich Family Trust and Theodore Tomasovich which may result from the
conversion in whole or in part of the outstanding principal indebtedness of
loans made by the Tomasovich Family Trust to the Company aggregating
US$360,000 into common shares and
- 11 -
<PAGE>
warrants to purchase additional common shares in the capital stock of the
Company, be and the same is hereby approved."
Management is not aware of any matters to come before the Meeting other than
those set forth in the Notice of Meeting. If any other matter properly comes
before the Meeting, it is the intention of the persons named in the form of
proxy to vote the shares represented thereby in accordance with their best
judgment on such matter.
ON BEHALF OF THE BOARD OF DIRECTORS
Signed: "Delbert W. Steiner"
--------------------------------------
DELBERT W. STEINER
President, Chief Executive Officer and Director
Exhibit 99.1
IDAHO CONSOLIDATED METALS CORP.
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
Report of Independent Accountants
Board of Directors and Shareholders
Idaho Consolidated Metals Corp.
We have audited the accompanying consolidated balance sheets of Idaho
Consolidated Metals Corp. (an exploration stage company) as of December 31, 1997
and 1996 and the related consolidated statements of operations and cash flows
for each of the three years in the period ended December 31, 1997 and cumulative
from inception (September 15, 1988) through December 31, 1997, and the
consolidated changes in shareholders' equity from inception (September 15, 1988)
through December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Idaho Consolidated
Metals Corp. as of December 31, 1997 and 1996 and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 and cumulative from inception (September 15, 1988)
through December 31, 1997 and the changes in shareholders' equity from inception
(September 15, 1988) through December 31, 1997 in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred significant losses
since its inception and has a working capital deficiency at December 31, 1997.
In addition, as described in Note 1, uncertainties exist regarding the Company's
ability to obtain necessary financing to successfully develop economic ore
reserves on its properties and realize profitable production levels or proceeds
from their disposition. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans as to these
matters are also described in Note 1 to the consolidated financial statements.
The consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Spokane, Washington signed: "Coopers & Lybrand L.L.P.
May 3, 1998
F-1
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Balance Sheets
December 31, 1997 and 1996
(in U.S. dollars)
<TABLE>
ASSETS 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 78,885 $ 267,142
Cash in trust 50,000
Other 3,988 2,750
----------------------------
Total current assets 132,873 269,892
Restricted investments 90,000 85,000
Property rights, plant and equipment, net 3,022,036 3,911,015
----------------------------
Total assets $ 3,244,909 $ 4,265,907
================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 22,173
Accounts payable - related parties $ 180,992 172,356
Other accounts payable 154,574 402,785
Notes payable to shareholders, due currently 254,150 529,194
----------------------------
Total current liabilities 589,716 1,126,508
Notes payable to shareholders, noncurrent 13,070 17,209
----------------------------
Total liabilities 602,786 1,143,717
----------------------------
Commitments and contingencies (Notes 1, 3 and 4)
Shareholders' equity:
Common stock, no par value, authorized:
100,000,000 shares; issued and outstanding: 1997 -
9,434,686 shares (including 2,330,478 shares
allotted); 1996 - 6,854,208 shares 8,710,329 7,466,177
Deficit accumulated during the exploration stage (6,015,621) (4,291,402)
Foreign currency translation adjustments (52,585) (52,585)
----------------------------
Total shareholders' equity 2,642,123 3,122,190
----------------------------
Total liabilities and shareholders' equity $ 3,244,909 $ 4,265,907
================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
ON BEHALF OF THE BOARD:
signed: "Delbert W. Steiner", Director signed: "Robert Young", Director
- ----------------------------- -----------------------
F-2
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Statement of Changes in Shareholders' Equity
(in U.S. Dollars)
<TABLE>
Deficit
Accumulated Foreign
During the Currency
Common Shares Exploration Translation
Shares Amount Stage Adjustment Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at inception
(September 15, 1988) 2 $ 2 $ 2
Issuance of shares for
cash ($.21 per share) 288,000 60,352 60,352
Net loss for the period $ (1,553) (1,553)
Translation adjustment $ (282) (282)
------------------------------------------------------------------------------
Balances, December 31, 1988 288,002 60,354 (1,553) (282) 58,519
Issuance of shares for cash
($.21 per share) 372,000 79,747 79,747
Net loss for the year (19,073) (19,073)
Translation adjustment 274 274
------------------------------------------------------------------------------
Balances, December 31, 1989 660,002 140,101 (20,626) (8) 119,467
Issuance of shares for cash
($.05 per share) 966,000 51,414 51,414
Net loss for the year (53,798) (53,798)
Translation adjustment (155) (155)
------------------------------------------------------------------------------
Balances, December 31, 1990 1,626,002 191,515 (74,424) (163) 116,928
Issuance of shares for cash
($.48 per share), net of
$37,555 of issuance costs 750,000 322,793 322,793
Exercise of warrants
($.57 per share) 550,000 311,955 311,955
Exercise of options
($.48 per share) 30,000 14,398 14,398
Issuance of shares for
property rights
($.48 per share) 70,000 33,595 33,595
Net loss for the year (146,890) (146,890)
Translation adjustment (3,574) (3,574)
------------------------------------------------------------------------------
Balances, December 31, 1991 3,026,002 $ 874,256 $ (221,314) $ (3,737) $ 649,205
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Statement of Changes in Shareholders' Equity, Continued
(in U.S. Dollars)
<TABLE>
Deficit
Accumulated Foreign
During the Currency
Common Shares Exploration Translation
Shares Amount Stage Adjustment Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1991 3,026,002 $ 874,256 $ (221,314) $ (3,737) $ 649,205
Issuance of shares for exercise
of options ($.43 per share) 55,000 23,633 23,633
Issuance of shares for property
rights ($1.09 per share) 700,000 765,625 765,625
Release of escrowed shares
for executive compensation
($1.14 per share) 58,882 58,882
Net loss for the year (271,822) (271,822)
Translation adjustment (31,370) (31,370)
------------------------------------------------------------------------------
Balances, December 31, 1992 3,781,002 1,722,396 (493,136) (35,107) 1,194,153
Issuance of shares for cash
in May and August ($.97
per share) 166,330 161,173 161,173
Issuance of shares for cash in
December ($1.55 per share) 280,212 433,350 433,350
Release of escrowed shares
for executive compensation
($1.34 per share) 181,323 181,323
Net loss for the year (355,691) (355,691)
Translation adjustment (6,202) (6,202)
------------------------------------------------------------------------------
Balances, December 31, 1993 4,227,544 2,498,242 (848,827) (41,309) 1,608,106
Issuance of shares for exercise
of options ($.68 per share) 212,500 143,523 143,523
Issuance of shares for exercise
of warrants ($2.19 per share) 270,000 591,240 591,240
Issuance of shares for equip-
ment and process ($1.25
per share) 600,000 750,000 750,000
Release of escrowed shares
for executive compensation
($1.68 per share) 315,471 315,471
Net loss for the year (945,661) (945,661)
Translation adjustment (11,276) (11,276)
------------------------------------------------------------------------------
Balances, December 31, 1994 5,310,044 4,298,476 (1,794,488) (52,585) 2,451,403
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Statement of Changes in Shareholders' Equity, Continued
(in U.S. Dollars)
<TABLE>
Deficit
Accumulated Foreign
During the Currency
Common Shares Exploration Translation
Shares Amount Stage Adjustment Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1994 5,310,044 $4,298,476 $(1,794,488) $ (52,585) $2,451,403
Issuance of shares for cash
($1.50 per share) 628,264 942,396 942,396
Issuance of shares for exercise
of warrants ($2.23 per share) 30,000 66,900 66,900
Release of escrowed shares
for executive compensation
($1.57 per share) 294,375 294,375
Net loss for the year (850,878) (850,878)
------------------------------------------------------------------------------
Balances, December 31, 1995 5,968,308 5,602,147 (2,645,366) (52,585) 2,904,196
Issuance of shares for cash in
May ($1.50 per share) 100,000 150,000 150,000
Issuance of shares for cash in
June ($1.75 per share) 755,900 1,322,825 1,322,825
Issuance of shares for exercise
of options ($1.32 per share) 30,000 39,520 39,520
Release of escrowed shares
for executive compensation
($1.88 per share) 351,685 351,685
Net loss for the year (1,646,036) (1,646,036)
------------------------------------------------------------------------------
Balances, December 31, 1996 6,854,208 7,466,177 (4,291,402) (52,585) 3,122,190
Issuance of shares for
resource property in March
($0.83 per share) 125,000 104,000 104,000
Issuance of shares for
resource property in
September ($0.65 per share) 125,000 81,250 81,250
Allotment of shares for debt
settlement in September
($0.53 per share) 567,245 299,842 299,842
Allotment of shares for cash
in November ($0.43 per
share) 1,763,233 759,060 759,060
Net loss for the year (1,724,219) (1,724,219)
------------------------------------------------------------------------------
Balances, December 31, 1997 9,434,686 $ 8,710,329 $ (6,015,621) $ (52,585) $ 2,642,123
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Statements of Operations
(in U.S. Dollars)
<TABLE>
Cumulative
from Inception
(September 15,
1988) through
Year Ended December 31, December 31,
1997 1996 1995 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Property option receipts $ 165,000 $ 165,000
Cost of property optioned 72,588 72,588
----------------------------------------------------------
92,412 92,412
Interest income 5,627 $ 8,316 $ 3,204 46,260
----------------------------------------------------------
98,039 8,316 3,204 138,672
----------------------------------------------------------
Operating expenses:
General and administrative 830,681 991,114 819,311 4,455,372
Write-off processing
equipment and related costs 1,017,883 419,440 1,437,323
Abandonment of property
rights 345,622 200,279 550,720
Loss on disposal of
equipment 4,576 4,576
Interest costs 58,502 67,622 42,645 196,531
Less interest capitalized (27,346) (24,103) (12,450) (87,145)
----------------------------------------------------------
2,225,342 1,654,352 854,082 6,557,377
----------------------------------------------------------
Loss before extraordinary
items 2,127,303 1,646,036 850,878 6,418,705
Extraordinary items:
Gain on settlement of
lawsuit 223,946 223,946
Gain on settlement of debts 179,138 179,138
----------------------------------------------------------
Net loss $ 1,724,219 $1,646,036 $ 850,878 $6,015,621
=========================================================================================================
Net loss per common share -
basic and diluted:
Before extraordinary items $ 0.29 $ 0.27 $ 0.15
=========================================================================================================
After extraordinary items $ 0.23 $ 0.27 $ 0.15
=========================================================================================================
Weighted-average shares
outstanding - basic and
diluted 7,446,141 5,989,371 5,619,581
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(in U.S. Dollars)
<TABLE>
Cumulative
from Inception
(September 15,
1988) through
Year Ended December 31, December 31,
1997 1996 1995 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating activities:
Net loss $ (1,724,219) $ (1,646,036) $ (850,878) $(6,015,621)
Adjustments to reconcile net
loss to net cash used
by operating activities:
Depreciation 12,577 8,026 1,524 39,108
Gain on settlement of lawsuit (223,946) (223,946)
Gain on settlement of debt (179,138) (179,138)
Loss on disposal of equipment 4,576 4,576
Write-off of inventory and
equipment 1,017,883 415,254 1,433,137
Abandonment and sale of
property rights 418,211 200,279 623,309
Release of escrowed shares
for executive compensation 351,685 294,375 1,201,736
Change in:
Inventory (40,000) (25,000) (164,416)
Other assets (1,238) (2,662) 4,668 (3,988)
Accounts payable - related
parties 141,503 55,483 97,747 538,859
Other accounts payable 17,850 76,965 107,972 420,635
Cash used by operating activities (520,517) (581,006) (365,016) (2,325,749)
Investing activities:
Property rights, plant and
equipment:
Acquisition costs (105,585) (312,993) (252,909) (1,262,447)
Exploration costs (268,857) (370,823) (301,769) (1,830,833)
Proceeds from sale of
option on property 50,000 50,000
Deposit on property rights (100,000)
Cash in trust (50,000) (50,000)
Purchase of investments for
reclamation bond (5,000) (75,000) (10,000) (90,000)
Cash used by investing activities (429,442) (708,816) (564,678) (3,283,280)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
<TABLE>
Cumulative
from Inception
(September 15,
1988) through
Year Ended December 31, December 31,
1997 1996 1995 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financing activities:
Proceeds from note payable to
bank $ 35,408 $ 35,408
Repayments on note payable to
bank (22,173) (13,235) (35,408)
Proceeds from related-party
notes payable 24,815 385,000 809,815
Repayments on related-party
notes payable (143,597) (400,000) (543,597)
Net proceeds from sale of
common stock 759,060 1,546,495 975,146 5,474,281
Cash provided by financing activities 761,702 1,389,663 995,554 5,740,499
Effect of foreign currency
translation on cash (52,585)
Net increase (decrease) in cash
and cash equivalents (188,257) 99,841 65,860 78,885
Cash and cash equivalents,
beginning of period 267,142 167,301 101,441
Cash and cash equivalents, end
of period $ 78,885 $ 267,142 $ 167,301 $ 78,885
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows, Continued
(in U.S. Dollars)
<TABLE>
Cumulative
from Inception
(September 15,
1988) through
Year Ended December 31, December 31,
1997 1996 1995 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Supplemental disclosures of cash
flow information:
Cash paid during the period for
interest, net of amount
capitalized $ 12,953 $ 29,604 $ 5,364 $ 52,437
=============================================================================================================
Schedule of noncash investing
and financing activities:
Claim rental fees accrued
(reversed) as capitalized
exploration costs $(183,300) $ 61,100
Deposit used to acquire
property rights $ 100,000
Debt incurred for equipment and
process rights 80,000
Common stock issued for
property rights $ 185,250 984,470
Common stock issued for
equipment and process rights 750,000
Common stock issued upon
conversion of accounts
payable to related parties 172,145 172,145
Common stock issued upon
conversion of other accounts
payable 86,923 86,923
Common stock issued for
conversion of notes payable to
to shareholders 40,774 40,774
Release of escrowed shares for
executive compensation 351,685 294,375 1,201,736
Conversion of accounts payable
to notes payable 225,000 225,000
Share subscriptions receivable 34,150 34,150
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
1. The Company and Basis of Presentation of Financial Statements:
Idaho Consolidated Metals Corp. (the Company) was incorporated in British
Columbia, Canada on September 15, 1988 to engage in mineral exploration,
development and processing. The Company is presently in the development stage as
revenue-producing activities have not commenced. The Company's financial
statements have been prepared in accordance with generally accepted accounting
principles as practiced in the United States and are stated in U.S. dollars.
During 1996, the Company established a wholly owned subsidiary, Idaho
Consolidated Metals International, Ltd. (ICMI) in the British Virgin Islands.
ICMI does not have any operations as of December 31, 1997. All intercompany
accounts and transactions have been eliminated in consolidation.
These consolidated financial statements have been prepared assuming the Company
will continue as a going concern and be able to realize assets and liquidate
liabilities in the normal course of business. Since its inception, the Company
has incurred significant losses during the exploration stage and at December 31,
1997 has a net working capital deficit of approximately $457,000. These factors,
along with the uncertainties regarding the Company's ability to obtain necessary
financing to develop its properties and to successfully develop economic ore
reserves on these properties and realize profitable production levels or
proceeds from their disposition, raise substantial doubt about the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
Management of the Company continues to seek additional sources of financing to
fund its ongoing capital needs and mitigate its working capital deficiency. The
Company is presently considering additional funding sources including the sale
of its common stock. Additionally, the Company is seeking additional joint
venture partners to assist in the development of certain of its other
properties. There can be no assurance that the Company will be successful in
obtaining additional funds or in locating suitable joint venture partners to
assist in the development of its mineral properties.
2. Significant Accounting Policies:
Property Rights, Plant and Equipment
Property rights, plant and equipment are stated at the lower of cost (or the
predecessor's cost basis if acquired from an affiliate) or estimated net
realizable value. Maintenance, repairs and renewals are charged to operations.
Major betterments are capitalized. When assets are retired or sold, the costs
and related accumulated depreciation and amortization are eliminated and any
resulting gain or loss is reflected in operations. Proceeds received from the
sale of any interest in the property will first be credited against the carrying
value of the property with any excess included in operations for the period.
F-10
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements, Continued
2. Significant Accounting Policies, Continued:
Property Rights, Plant and Equipment, Continued
The Company is in the process of exploring its mineral properties and has not
yet determined whether these properties contain ore reserves that are
economically recoverable.
Acquisition, development and exploration costs are capitalized on an individual
property basis until such time as an economic ore body is defined or the
property is abandoned. Capitalized costs associated with a producing property
will be amortized on a unit-of-production method based on the estimated life of
the ore reserves while costs for abandoned properties are written off in the
period in which a decision is made to abandon such property. During the years
ended December 31, 1997 and 1996, the Company abandoned certain properties and,
therefore, wrote off approximately $346,000 and $200,000, respectively, of costs
which had previously been capitalized.
Depreciation of furniture and fixtures is based on the estimated lives of the
assets using accelerated methods. Depreciation of the process plant and
equipment will commence when processing begins at the facility using the
straight-line method over the estimated useful lives of the plant and equipment.
During the years ended December 31, 1997 and 1996, the Company wrote down
approximately $1,018,000 and $255,000, respectively, of capitalized processing
equipment and related costs associated with the processing facility to net
realizable value.
Management periodically reviews and obtains independent geologist reports in
determining if adjustments to the carrying values of each of its mineral
properties, on a property-by-property basis, are required to record those
properties at net realizable value. The ultimate recoverability of the amounts
capitalized for the mineral properties is dependent upon the delineation of
economically recoverable ore reserves, the Company's ability to obtain the
necessary financing to complete their development and realize profitable
production or proceeds from the disposition thereof. Management's estimates of
recoverability of the Company's investment in various projects have been based
on current conditions. However, it is reasonably possible that changes could
occur in the near term which could adversely affect management's estimates and
may result in future write-downs of capitalized property carrying values.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (SFAS No. 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
SFAS No. 121 requires that long-lived assets and certain identifiable intangible
assets being held and used by an entity be reviewed for impairment by estimating
the fair values or future cash flows from use and disposition of the assets
whenever circumstances indicate that the carrying amount of such assets may not
be recoverable. There was no effect on the Company's consolidated financial
statements of adopting SFAS No. 121 on January 1, 1996.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers cash and cash
equivalents to include amounts held in banks and highly liquid investments with
remaining maturities at point of purchase of three months or less. Restricted
investments represent certificates of deposit which were purchased for
reclamation bond requirements. The Company places its cash and cash investments
with institutions of high-credit worthiness. At times, such investments may be
in excess of federal insurance limits.
F-11
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
2. Significant Accounting Policies, Continued:
Net Loss Per Common Share
In February 1997, Statement of Financial Accounting Standards No. 128 (SFAS No.
128), "Earnings per Share," was issued. SFAS No. 128 established standards for
computing and presenting earnings per share (EPS). It requires the dual
presentation and reconciliation of basic and diluted EPS. The Company adopted
the provisions of SFAS No. 128 in 1997, which had no effect on EPS as previously
reported.
Net loss per share-basic is computed by dividing net loss by the
weighted-average number of common shares outstanding during the period. Net loss
per share-diluted is computed by increasing the weighted-average number of
common shares outstanding by the additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. Due to the
losses incurred during the years ended December 31, 1997, 1996 and 1995, the
dilutive securities (stock options and warrants) of 2,806,183, 1,191,850 and
418,900, respectively, have been excluded from the computation as their effect
would be anti-dilutive.
Compensation Associated with Escrowed Common Shares
The Company records compensation expense associated with the release of escrowed
common shares of the Company as those shares become eligible for release based
upon the market value of those shares at that time (see Note 5).
Foreign Currency Translation
Prior to 1995, the Company's functional currency was the Canadian dollar. All
assets and liabilities of the Company's Canadian activities were translated to
U.S. dollars using the exchange rates at the balance sheet date. Resulting
foreign currency translation adjustments were reported as a separate component
of shareholders' equity. Income and expense items were reported using average
exchange rates during the periods. Gains or losses from foreign currency
transactions were included in operations. As of January 1, 1995, the Company
began transacting most of its business in U.S. dollars. Therefore, the
functional currency was changed from Canadian dollars to U.S. dollars. The
change in functional currency has been accounted for prospectively beginning on
January 1, 1995. Translation adjustments from prior periods are included in
shareholders' equity. The translated amounts for non-monetary assets prior to
the change have become the accounting basis for those assets.
Management's Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Reclassifications
Certain 1996, 1995 and cumulative amounts have been reclassified to conform to
the 1997 presentation. These reclassifications had no effect on the net loss or
deficit accumulated during the exploration stage as previously reported.
F-12
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
2. Significant Accounting Policies, Continued:
New Accounting Pronouncements
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued, which
requires reporting of comprehensive income. Comprehensive income is defined as
the change in equity of a business enterprise arising from non-owner sources.
This Statement is effective for fiscal years beginning after December 15, 1997.
Management does not believe that the implementation of SFAS No. 130 will have a
material impact on the presentation of the consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments for an Enterprise and Related Information." This
Statement requires presentation of segment information in reports to
shareholders, including disclosures about the products and services an entity
provides and its major customers. The Statement is effective for fiscal years
beginning after December 15, 1997. Management does not believe the
implementation of SFAS No. 131 will have a material impact on the presentation
of the consolidated financial statements.
3. Property Rights, Plant and Equipment:
Following are the major components of property rights, plant and equipment:
<TABLE>
1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mining property rights $ 2,518,403 $ 2,413,456
Process plant and equipment, including capitalized
interest of $87,145 and $59,799 473,285 1,455,634
Furniture and fixtures 62,997 61,997
----------------------------
3,054,685 3,931,087
Accumulated depreciation 32,649 20,072
----------------------------
$ 3,022,036 $ 3,911,015
======================================================================================================
The detail by major area of interest of the Company's investment in mining
property rights is as follows:
1997 1996
- ------------------------------------------------------------------------------------------------------
Petsite Project $ 646,777 $ 608,057
Deadwood Project 1 25,054
Buffalo Gulch Property 467,343 171,400
Eckert Hill Property 656,454 574,566
Tuxedo Property 205,383 204,549
Dean Mine and Mill Site 85,045 79,227
Other properties 457,400 750,603
$ 2,518,403 $ 2,413,456
======================================================================================================
</TABLE>
F-13
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
A number of the properties are located within the Nez Perce National Forest, on
land administered by the U.S. Forest Service. Permits must be obtained for all
exploration and development work to be carried out on these properties. During
1993, plans of operations were filed with the U.S. Forest Service, thereby
accomplishing the first stage of the permitting process. There can be no
assurances that the Company will be able to obtain all necessary permits in
order to place its mineral properties into production.
Following is a summary of the agreements associated with the Company's major
mineral property projects and acquisition of its mineral rights.
a. Petsite Project
By an agreement dated May 20, 1996 and approved by the regulatory authorities on
February 14, 1997, the Company granted Cyprus Gold Exploration Corporation
(Cyprus) the right to participate in a joint venture to earn up to a 70% working
interest in certain unpatented mineral claims located in Idaho County, Idaho.
* Cyprus has earned its 70% working interest in the project by:
* Making a cash payment of $50,000 to the Company on execution of the
agreement (completed).
* Contributing to the joint venture certain of its unpatented mineral claims
in the area of the joint venture (completed).
* Completing $1,500,000 of cumulative exploration and development
expenditures by May 20, 2000 (completed by December 31, 1997).
* Maintaining the unpatented claims within the project during the earn-in
period.
On February 23, 1998, Cyprus notified the Company that it had completed its
earn-in of the 70% interest and was preparing the formal joint venture with
initial deemed expenditures of $1,500,000 by Cyprus and $642,857 by the Company
for purposes of future joint venture contributions or dilution calculations. The
Company has 90 days to elect to:
* Participate and contribute with non-contribution resulting in dilution to a
minimum 10% working interest at which point the working interest would
automatically convert to a 5% net proceeds royalty; or
* Participate and be carried by Cyprus with the resulting loan bearing
interest and repayable from a portion of the Company's share of the
proceeds of production; or
* Convert to the 5% net proceeds royalty.
The underlying Company claims are the Petsite Property, the Golden Eagle
Property and the Friday Property.
F-14
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
a. Petsite Project, Continued
Petsite Property
The Company originally acquired these unpatented lode mining claims for cash in
the amount of $10,000 during 1989, cash in the amount of $10,000 during 1991 and
the issuance of 20,000 common shares during 1991 at a deemed price of $9,599.
The optionor retained a 5% net profits interest in the claims. The President of
the Company had a minority interest in the entity which controlled the Petsite
Property. Accordingly, the Petsite Property has been carried in the consolidated
financial statements at the lower of cost or the predecessor's cost basis.
Golden Eagle Property
By agreements dated October 15, 1992, the Company acquired a 60% undivided
working interest in the Golden Eagle Property by issuing 150,000 common shares
at the estimated fair market value of the shares issued ($1.09 per share)
aggregating $163,500 from Idaho Mining and Development Company (IMD), a
stockholder. The Company was also contingently required to issue an additional
150,000 common shares upon completion of $180,000 of exploration expenditures on
these properties with the recommendation of a qualified engineer or geologist to
proceed with further exploration. The Company was also granted a right of first
refusal to acquire the remaining 40% undivided interest on these properties from
IMD.
Golden Eagle Property, Continued
Pursuant to the terms of a Global Settlement Agreement (see Note 7), the Company
has terminated any requirement to issue the 150,000 contingent common shares and
has entered into a lease agreement, subject to regulatory approval, with IMD on
its 40% interest in the property. The initial term of the lease coincides with
the initial term of the Petsite Project joint venture with Cyprus to May 20,
2000 and is renewable for two additional 5 year terms by payments of $10,000 for
each 5 year extension and a minimum of $100,000 per year of exploration and
development work on the property. The lessor shall be entitled to a 40% share of
all benefits derived from these specific claims by the Company during the term
of the lease. Should the Golden Eagle Property be put into production, the lease
will be terminated and IMD can either elect to participate with the Company and
be carried as to its 40% share of pre-production costs or receive a 5% net
smelter return. Should IMD elect to participate, its pro rata share of
pre-production costs shall be recovered by the Company together with interest at
prime plus 2% from IMD's share of the proceeds of production.
Friday Property
By an agreement effective December 11, 1995 and approved by the regulatory
authorities on February 14, 1997, the Company acquired a lease on certain
patented claims in Idaho for an initial term of 5 years from Idaho Gold
Corporation (IGC). In order to obtain the lease, the Company shall:
* Issue IGC 30,000 common shares on the closing date of the agreement.
* Issue IGC an additional 30,000 common shares by July 19, 1997.
* Complete exploration and development expenditures of $135,000 by July 19,
2001.
All of the above requirements have been completed.
F-15
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
a. Petsite Project, Continued
Friday Property, Continued
IGC retains a 3% net smelter royalty to a maximum of $1,000,000. IGC has also
been granted an option, expiring July 19, 2001, to reacquire a 49% interest in
the property by paying to the Company 115% of expenditures on the property from
January 1, 1996 to the date of delivery of such payment. If IGC exercises the
option, then a formal joint venture will be drawn and the 3% net smelter royalty
will be terminated. The Company may purchase IGC's option to reacquire the 49%
interest for $300,000 Cdn. within 21 days of receipt of notice from IGC of its
intention to reacquire.
The Company is also responsible on an underlying agreement for a 3% net smelter
royalty payable at $3,000 per quarter to a maximum of $300,000 covering certain
claims within the property. As of December 31, 1997, a total of $144,000 advance
royalty payments have been made and are currently funded by Cyprus under this
joint venture.
b. Deadwood Project
By an agreement dated June 13, 1997 and subsequent amendments, the Company
granted Cyprus the right to participate in a joint venture to earn up to an 80%
working interest in certain unpatented mineral claims located in Idaho County,
Idaho. The agreement was approved by the regulatory authorities on November 4,
1997.
In order to earn its interest in the property, Cyprus shall, at its option:
* Make a cash payment of $65,000 to the Company on execution of the agreement
(completed in 1997).
* Deposit in trust $50,000 to be released to the Company upon resolution of
the title issues on the Golden Eagle Property-see Note 3a (completed in
1997).
* Make a cash payment of $50,000 to the Company by December 13, 1997
(completed in 1997).
* Contribute to the joint venture certain of its unpatented mineral claims in
the area of the joint venture (completed in 1997).
* Complete $250,000 of cumulative exploration and development expenditures by
June 13, 1998.
* Complete $650,000 of cumulative exploration and development expenditures by
June 13, 1999.
* Complete $1,150,000 of cumulative exploration and development expenditures
by June 13, 2000 at which time the initial 60% working interest will be
earned.
* Complete $1,750,000 of cumulative exploration and development expenditures
by June 13, 2001.
* Complete $2,500,000 of cumulative exploration and development expenditures
by June 13, 2002 at which time the full 80% working interest will be
earned.
* Maintain the unpatented claims within the project during the earn-in period
and make all property payments to underlying parties.
F-16
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
b. Deadwood Project, Continued
Once Cyprus has earned its 60% or 80% working interest, a joint venture will be
formed and the Company can elect to:
* Participate and contribute with non-contribution resulting in dilution to a
minimum 10% working interest at which point the working interest would
automatically convert to a 5% net proceeds royalty; or
* Participate and be carried by Cyprus with the resulting loan bearing
interest and repayable from a portion of the Company's share of the
proceeds of production; or
* Convert to a 5% net proceeds royalty.
The underlying Company claims are the Deadwood Property.
Deadwood Property
By an agreement effective December 11, 1995 and approved by the regulatory
authorities on February 14, 1997, the Company acquired a lease on certain
unpatented claims in Idaho for an initial term of five years from IGC. In order
to obtain the lease, the Company shall:
* Issue IGC 35,000 common shares on the closing date of the agreement.
* Issue IGC an additional 35,000 common shares by July 19, 1997.
* Complete exploration and development expenditures of $135,000 by July 19,
2001.
As of December 31, 1997, all of the above requirements have been completed.
IGC retains a 3% net smelter royalty to a maximum of $2,000,000. IGC has also
been granted an option, expiring July 19, 2001, to reacquire a 49% interest in
the property by paying to the Company 115% of expenditures on the property from
January 1, 1996 to the date of delivery of such payment. If IGC exercises the
option, then a formal joint venture will be drawn and the 3% net smelter royalty
will be terminated. The Company may purchase IGC's option to reacquire the 49%
interest for $100,000 Cdn. within 21 days of receipt of notice from IGC of its
intention to reacquire.
The Company is also responsible on certain underlying agreements for:
* A 3% net smelter royalty payable at $3,000 per quarter to a maximum of
$300,000 covering certain claims within the property known as the Deadwood
claims. As of December 31, 1997, a total of $144,000 of advance royalty
payments have been made and are currently being paid by Cyprus pursuant to
the Petsite Project-Friday Property upon which this agreement also
underlies.
* A 3% net smelter royalty payable at $6,000 per quarter to a maximum of
$500,000 covering certain claims within the property known as the Orogrande
claims. As of December 31, 1997, a total of $264,000 of advance royalty
payments have been made and are currently funded by Cyprus under this joint
venture.
F-17
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
c. Buffalo Gulch Property
By an agreement effective December 11, 1995 and approved by the regulatory
authorities on February 14, 1997, the Company acquired a lease on certain
unpatented claims in Idaho for an initial term of five years from IGC. In order
to obtain the lease, the Company shall:
* Issue IGC 60,000 common shares on the closing date of the agreement.
* Issue IGC an additional 60,000 common shares by July 19, 1997.
* Complete exploration and development expenditures of $310,000 by July 19,
2001.
As of December 31, 1997, all of the above requirements have been completed.
IGC retains a 3% net smelter royalty to a maximum of $3,000,000. IGC has also
been granted an option, expiring July 19, 2001, to reacquire a 49% interest in
the property by paying to the Company 115% of expenditures on the property from
January 1, 1996 to the date of delivery of such payment. If IGC exercises the
option, then a formal joint venture will be drawn and the 3% net smelter royalty
will be terminated. The Company may purchase IGC's option to reacquire the 49%
interest for $300,000 Cdn. within 21 days of receipt of notice from IGC of its
intention to reacquire.
The Company is also responsible on three underlying agreements as follows:
Black Bear Agreement
By an agreement dated August 1, 1996 and approved by the regulatory authorities
on February 14, 1997, the Company renegotiated an underlying agreement related
to the property by making cash payments of $6,900 prior to December 31, 1996 and
$2,400 by April 1, 1997. The Company must, at its option, make staged quarterly
payments to a cumulative total of $120,000 as follows:
* $2,400 per quarter commencing August 1, 1997 (paid).
* $3,600 per quarter commencing August 1, 1998.
* $4,800 per quarter commencing August 1, 1999.
* $6,000 per quarter commencing August 1, 2000.
* $7,200 per quarter commencing August 1, 2001.
* A final payment of $24,000 by July 31, 2002.
The Company must also complete $3,000 annually in exploration and development
expenditures on the property.
Whiskey Jack Agreement
The Company has assumed the obligation of an underlying agreement dated July 1,
1988 which requires quarterly payments of $600 to a maximum of $85,000. As of
December 31, 1997, all required payments have been made to date totaling
$22,800.
F-18
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
c. Buffalo Gulch Property, Continued
Gray Estates Agreement
The Company has assumed the obligation of an underlying agreement dated May 21,
1984 which requires quarterly advance royalty payments of $6,000 or a 5% net
smelter royalty upon commencement of commercial production, to a maximum of
$500,000. As of December 31, 1997, a total of $324,000 of advance royalty
payments have been made.
The Company has also entered into the following agreement on a contiguous
property:
Gallaugher Property
By an agreement dated September 5, 1996 and approved by the regulatory
authorities on February 14, 1997, the Company was granted an option to acquire a
100% working interest in certain unpatented mineral claims in Idaho. In order to
complete the option, the Company shall, at its option make staged quarterly
payments to a cumulative total of $150,000 as follows:
* $2,400 per quarter commencing March 5, 1997 (paid).
* $3,600 per quarter commencing March 5, 1998 (paid).
* $4,800 per quarter commencing March 5, 1999.
* $6,000 per quarter commencing March 5, 2000.
* $7,200 per quarter commencing March 5, 2001.
* A final payment of $54,000 by March 5, 2002.
A third party receives a 10% finder's fee deducted from all option payments made
by the Company to the optionor.
d. Eckert Hill Property
By a mineral lease agreement dated June 28, 1993, the Company leased certain
property located in Idaho County, Idaho for an initial term of five years. In
order to maintain the lease, the Company has and must make the following
payments to the lessors:
Minimum
Minimum Advance
Rental Royalty
Payment Payment
- -------------------------------------------------------------------
On execution (paid) $13,000
By November 1, 1993 (paid) $15,000
By June 28, 1994 (paid) 15,000 15,000
By June 28, 1995 (paid) 7,500 22,500
By June 28, 1996 (paid) 7,500 22,500
By June 28, 1997 (paid) 30,000
---------- ----------
$43,000 $105,000
- -------------------------------------------------------------------
F-19
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
d. Eckert Hill Property, Continued
The June 1997 minimum advance royalty payment forms the base amount for
subsequent advance payments due each June starting June 1998. The base amount
will be adjusted upward annually based upon changes in the consumer price index
in the United States.
The Company will pay the lessors a royalty of 4% for gross production realized
after June 1995.
The initial five-year term of the lease may be extended for an additional term
of five years, at the option of the Company, under the same terms as the
original five-year period unless modified by mutual agreement of the parties.
The Company also agreed to and did expend a minimum of $100,000 on mineral
exploration and development of the property by June 1996, not including any
costs to develop or improve the mill, plant or any processing equipment.
e. Tuxedo Property
Pursuant to an option agreement dated December 28, 1993 and an addendum dated
April 27, 1994, approved by the regulatory authorities on February 14, 1997, the
Company acquired the right to certain mineral rights on property located in Deer
Lodge and Silver-Bow Counties of Montana for a cash payment of $100,000. The
Company was also granted the right to negotiate for additional mineral rights on
the property.
Pursuant to an assignment dated September 30, 1994 and an underlying purchase
and sale agreement dated June 1, 1994, the Company acquired the mineral rights
to 1,380 acres in Silver-Bow County, Montana for a cash payment of $43,000. The
underlying vendor retains a 3% net smelter return on the property.
Pursuant to the September 30, 1994 assignment and an underlying exploration
agreement and option to lease mining claims dated May 24, 1994, the Company
acquired an option to lease 60 acres in Silver-Bow County, Montana. During 1997,
the Company terminated the lease agreement.
f. Dean Mine and Mill Site
By an agreement dated October 15, 1996 and approved by the regulatory
authorities on February 14, 1997, the Company acquired certain property, data
base and equipment located in Battle Mountain, Nevada for a cash payment of
$25,000, acceptance by the vendor of the $50,000 in prior option payments made
under an earlier option agreement dated August 2, 1995 and the issuance of
75,000 common shares of the Company (not yet issued).
The agreement was subject to the Company negotiating a lease on an adjacent
property. During 1997, it was determined that reasonable lease terms could not
be negotiated with the third party owner of this adjacent property. Accordingly,
the Company has not issued the 75,000 shares of its stock and the parties have
mutually agreed that the Company will retain the data base and equipment
acquired for the cash payments made and that the portion of the agreement
related to the shares and property are rescinded.
F-20
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
g. Other Properties
Claim Blocks
By agreements dated October 15, 1992, the Company acquired a 60% undivided
working interest in 10 claim blocks and a 100% undivided interest in 2
additional claim blocks by issuing 550,000 common shares, upon receipt of
regulatory approval, at the estimated fair market value of the shares issued
($1.09 per share) aggregating $602,125 from IMD and Silver Crystal Mines, Inc.
(Silver Crystal). The Company was also contingently required to issue a further
650,000 common shares upon completion of $780,000 of exploration expenditures on
these properties with the recommendation of a qualified engineer or geologist to
proceed with further exploration. The Company was also granted a right of first
refusal to acquire the remaining 40% undivided interest on the properties from
the vendor.
The Company has dropped many of the claims from these claim blocks retaining
only the key claims based upon review of the properties by management. As a
result, the Company has dropped all claims from 4 of the claim blocks during
1997 and 3 of the claim blocks in 1996 and has written-off the related costs of
$274,672 and $200,279 in 1997 and 1996, respectively.
Pursuant to the terms of a Global Settlement Agreement (see Note 7), the Company
has terminated any requirement to issue the 650,000 contingent common shares and
has entered into certain operating agreements, subject to regulatory approval,
with IMD and Silver Crystal to perfect title to the claims and to proceed with
further exploration and development of these properties.
Mineral Zone Property
By an agreement dated December 1, 1995, subject to regulatory approval, the
Company agreed to acquire a property located in the Elk City Mining District,
Idaho County, Idaho from two shareholders of the Company. Regulatory approval of
this agreement was held in abeyance by the regulatory authorities pending
resolution of the legal disputes with IMD (see Note 7). During 1997, the Company
restaked the property due to title concerns over certain claims covered by the
December 1, 1995 agreement.
Pursuant to the terms of a Global Settlement Agreement (see Note 7), the Company
has terminated the agreement dated December 1, 1995 and the parties have agreed
to enter into a new agreement by which the Company will purchase the property
from IMD and Mr. D. Steiner, the Company's president and director, based upon a
price to be determined by a mutually agreed upon qualified appraiser. Principal
payments of 3.5% of the purchase price must be paid on the earlier of six months
from the date of the agreement or upon obtaining the valuation report with an
additional 3.5% within six months of the valuation date. The remaining balance
will be payable in quarterly installments over the estimated mine life
commencing from the date of the commencement of commercial production, if any.
Interest on the principal balance commences six months from the date of the
valuation report and shall be paid on a quarterly basis. The new property
agreement shall be subject to approval by the regulatory authorities and should
such approval not be obtained, then all other portions of the Global Settlement
Agreement shall survive.
F-21
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
3. Property Rights, Plant and Equipment, Continued:
g. Other Properties, Continued
Mallard Property
By a purchase and sale agreement dated February 28, 1990 and a subsequent
amendment, the Company acquired certain unpatented lode mining claims in the
Dixie Mining District, Idaho County, Idaho for cash in the amount of $10,000
during 1990 and the issuance of 50,000 common shares during 1991 at a deemed
price of $23,996.
The President of the Company had a minority interest in the entity which
controlled the property. Accordingly, the property has been recorded in the
consolidated financial statements at the lower of cost or the predecessor's cost
basis.
During 1997, management has determined that title to the property is in question
and no significant work program is planned for this property. Accordingly, the
property has been written-down by $47,944 to a nominal carrying value.
Snowstorm Property
By a purchase and sale agreement dated February 19, 1991, the Company acquired
an undivided 50% interest in certain unpatented lode mining claims in the Elk
City Mining District, Idaho County, Idaho for cash in the amount of $5,000
during 1990. The Company has a right of first refusal to acquire the remaining
undivided 50% interest. The President of the Company had a minority interest in
the entity which controlled the property.
During 1997, management has determined that title to the property is in question
and no significant work program is planned for this property. Accordingly, the
property has been written-down by $23,006 to a nominal carrying value.
4. Notes Payable to Shareholders:
Details of notes payable to shareholders are as follows at December 31, 1997 and
1996:
<TABLE>
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Uncollateralized note payable, settled by a debt
settlement agreement including accrued interest of
$10,774 for 77,173 common shares (see Note 8) $ -- $ 30,000
Uncollateralized note payable bearing interest at 9.0%,
due on demand (A) -- 205,410
Note payable bearing interest at the bank's prime rate
plus 2.5% (11.0% at December 31, 1997),
collateralize by a pledge of equipment located at the
Eckert Hill property, due on demand (B) $ 250,000 $ 250,000
Uncollateralized note payable, due in monthly payments
of $460 including interest at 9.0% per annum 17,220 20,993
Uncollateralized, non-interest bearing note, due on
demand (A) -- 40,000
----------- ----------
267,220 546,403
Less current portion (254,150) (529,194)
----------- ----------
$ 13,070 $ 17,209
=========== ===========
</TABLE>
F-22
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
4. Notes Payable to Shareholders, Continued:
(A) These notes have been eliminated upon settlement of the litigation with IMD
as part of the Global Settlement Agreement (see Note 7).
(B) During 1997, the note holder commenced an action against the Company to
collect upon its note receivable plus accrued interest and is seeking to perfect
its claim against certain equipment located primarily at the Eckert Hill
Property. The equipment is currently appraised at $333,285 and management is
seeking to negotiate a settlement of this dispute.
The principal payments on notes payable to shareholders become due as follows:
Year Ending
December 31, Amount
- ----------------------------------------------------------
1998 $ 254,150
1999 4,527
2000 4,953
2001 3,590
---------
$ 267,220
===========================================================
5. Common Shares:
The Company has a stock option plan which covers its officers and directors. The
options are granted for varying terms ranging from two to seven years and are
immediately vested upon the date of grant. Following is a schedule of the
activity pursuant to this stock option plan.
F-23
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
5. Common Shares, Continued:
<TABLE>
Exercise
Price Per
Share (in
Number Canadian
of Shares Dollars) Expiration Date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1989 and
December 31, 1989 0
Options granted 235,000 $ 0.55 April 1996
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1990 235,000 0.55 April 1996
Options exercised (30,000) 0.55
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1991 205,000 0.55 April 1996
Options granted 17,500 1.85 September 1993
Options granted 62,500 1.85 September 1994
Options exercised (55,000) 0.55
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 230,000 0.55-1.85 September 1993-April 1996
Options expired (17,500) 1.85
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 212,500 0.55-1.85 September 1994-April 1996
Options exercised (150,000) 0.55
Options exercised (62,500) 1.85
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 0
Options granted 250,000 1.80 October 1999
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 250,000 1.80 October 1999
Options exercised (30,000) 1.80
Options granted 325,000 3.30 May 2000
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 545,000 1.80-3.30 October 1999-May 2000
Options canceled (220,000) 1.80 October 1999
Options canceled (325,000) 3.30 May 2000
Options regranted 220,000 1.15 October 1999
Options regranted 55,000 1.15 May 2000
Options granted 410,000 1.15 February 2001
Options granted 150,000 0.56 August 2001
Options expired (60,000) 1.15 October 1999
Options expired (110,000) 1.15 February 2001
- -------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 665,000 $ 0.56-1.15 October 1999-August 2001
========================================================================================================
</TABLE>
During 1997, the Company canceled certain options ranging in exercise price from
$1.80-$3.30 and regranted a portion of these options at $1.15 per option. As of
December 31, 1997, all options are exercisable. At December 31, 1997, the
weighted average exercise price per option was $1.02. The weighted average
contractual life of the options was 2.2 years.
F-24
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
5. Common Shares, Continued:
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for
Stock-Based Compensation." SFAS No. 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. The statement
encourages all entities to adopt a fair value based method of accounting, but
allows an entity to continue to measure compensation cost for those plans using
the intrinsic value based method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company adopted certain of the
provisions of SFAS No. 123 on January 1, 1996. As permitted by SFAS No. 123,
management has adopted the disclosure only provisions of SFAS No. 123 as
follows:
<TABLE>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss before extraordinary items:
As reported $ 2,127,303 $ 1,646,036 $ 850,878
Pro forma 2,503,203 2,204,514 875,645
Net loss per share before extraordinary items:
As reported $ 0.29 $ 0.27 $ 0.15
Pro forma 0.34 0.37 0.16
Net loss:
As reported $ 1,724,219 $ 1,646,036 $ 850,878
Pro forma 2,100,119 2,204,514 875,645
Net loss per share:
As reported $ 0.23 $ 0.27 $ 0.15
Pro forma 0.28 0.37 0.16
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions:
1997 1996
- ------------------------------------------------------------------------
Expected dividend yield 0.00% 0.00%
Expected stock price volatility 87.82% 60.53%
Risk-free interest rate 6.05% 5.55%
Expected life of options years 2 years
The weighted average grant-date fair value of options granted in 1997 and 1996
was $0.76 and $1.72, respectively.
The Company has commitments to issue common stock for the acquisition of mineral
properties (see Note 3).
In connection with sales of common stock during 1994, 1995, 1996 and 1997, the
Company has also issued warrants to acquire common stock. The warrant activity
is as follows:
F-25
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
5. Common Shares, Continued:
<TABLE>
Number of
Warrants Price Per Share Expiration
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1993
Warrants issued 300,000 $3.00 Cdn 1995
Warrants exercised (270,000) 3.00 Cdn
-----------
Balance, December 31, 1994 30,000 $3.00 Cdn 1995
Warrants issued 168,900 2.00 U.S. 1997
Warrants exercised (30,000) 3.00 Cdn
-----------
Balance, December 31, 1995 168,900 $2.00 U.S. 1997
Warrants issued 100,000 2.00 U.S. 1997
Warrants issued 377,950 (A) 1998
-----------
Balance, December 31, 1996 646,850 $2.00-2.75 U.S. 1997-1998
Warrants issued 1,763,233 (B) 2000
Warrants expired (168,900) 2.00 U.S. 1997
Warrants expired (100,000) 2.00 U.S. 1997
-----------
$0.60 CDN-
Balance, December 31, 1997 2,141,183 $2.75 U.S. 1998-2000
=================================================================================================
</TABLE>
(A)Warrants were exercisable at $2.75 (U.S.) and expired May 3, 1998.
(B)Warrants are exercisable at $0.60 (Cdn) per warrant during the first year and
at $0.70 (Cdn) during the second year and expire March 18, 2000.
In conjunction with the Company's initial public offering, certain Company
officers and directors were required to place 750,000 common shares of the
Company in escrow in accordance with policies of the Vancouver Stock Exchange
(VSE). The shares are subject to release from escrow as the Company expends
funds on exploration and development of its mineral properties and with VSE
approval. As the shares become eligible for release based upon the expenditure
of exploration and development funds, the Company has recorded stock
compensation expense based upon the number of shares eligible for release from
escrow and the market value of the shares at that time. Accordingly, the Company
has recorded compensation expense associated with these shares of $-0-, $351,685
and $294,375 during the years ended December 31, 1997, 1996 and 1995,
respectively. If the shares have not been released from escrow pursuant to the
release provisions by the year 2001, the remaining shares in escrow will be
surrendered to the Company for cancellation. At December 31, 1997, 562,500
shares remain in escrow pursuant to this arrangement; however, the Company has
not as yet requested release of eligible shares pertaining to 1994 through
1996's expenditures for exploration and development which, when requested and
approved by the VSE, would allow for the release of the remaining 562,500 common
shares.
F-26
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
6. Related-Party Transactions:
In addition to related-party transactions included in Notes 3, 4, 5 and 7, the
Company has paid or accrued for payment the following amounts to related
parties:
<TABLE>
1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fees to a company controlled by a former director $ 2,500
Fees to a company controlled by a director 6,100
Management fees to the President and director 69,000 $ 34,129 $ 18,870
Management fees to a former director 3,868 164 2,072
Management fees to a company controlled by
a former director 35,300 1,250
Management fees to a relative of a director 4,815
Office rent to directors 1,773 5,660
Interest expense on notes payable to shareholders 50,296 52,765 37,456
-----------------------------------
$ 167,064 $ 90,081 $ 68,873
====================================================================================================
Purchase of furniture and fixtures from the President
and director $ 27,050
====================================================================================================
</TABLE>
The Company had the following transactions with IMD, a shareholder.
By an agreement dated March 1993, subsequently amended and completed August 31,
1994, the Company acquired certain mining and processing equipment and the joint
use and license of the Swisher-Br metallurgical process developed by IMD and its
controlling shareholder for $914,715 which was paid by the issuance of 600,000
common shares of the Company at a deemed amount of $750,000 during 1994 and
$164,175 notes payable to IMD. All costs of this acquisition were attributed to
the acquisition of the mining and processing equipment. The notes payable were
eliminated upon settlement of the litigation with IMD (see Note 7).
Pursuant to the terms of the Global Settlement Agreement dated April 29, 1998
(see Note 7), the Company has agreed to transfer to IMD and Mr. J. Swisher its
interest in the Swisher-Br metallurgical process for a royalty of 2% of gross
revenues derived from any use or licensing of the process by IMD, any party
related to IMD or by any third party. Such royalties are payable on a quarterly
basis by IMD.
Prior to the termination of all agreements with IMD, the Company paid $ -0-,
$73,333 and $161,000 during 1997, 1996 and 1995, respectively, to IMD and
related companies for assessment work on mineral properties and work on the
metallurgical facility.
7. Global Settlement Agreement:
On October 18, 1996, Mr. J. Swisher and IMD filed suit against the Company for
$3,473,857 or alternatively $344,257 and 1,304,000 common shares of the Company
plus interest, attorney fees and any further relief available.
Subsequently, the Company filed a suit against Mr. J. Swisher and Silver Crystal
alleging breach of contract on the Eckert Hill processing plant contract and
filed a counter-claim against Mr. J. Swisher and IMD for alleged failure to
perform contracted assessment work, alleged breach of the Swisher-Br
metallurgical process contract and alleged breach of certain other mineral
property agreements.
F-27
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
7. Global Settlement Agreement, Continued:
On April 29, 1998, the parties signed a Global Settlement Agreement which causes
all claims and counter-claims between the parties to be dismissed. In full and
final settlement of all existing and potential claims between and amongst the
parties, the Company will pay $50,000 to IMD within 2 business days of the
settlement and will deposit in trust a further $50,000. Both of these payments
have been made. The balance in trust will be released to IMD upon delivery by
IMD to the Company of certain quitclaim deeds to the Claim Block properties. The
Company has recorded a gain on settlement of debt as a result of the lawsuit as
follows:
Trade accounts payable owing to IMD and Silver Crystal
prior to the settlement $ 60,722
Notes payable to IMD prior to the settlement 263,224
-----------
323,946
Settlement to be paid to IMD 100,000
-----------
Gain on settlement $ 223,946
================================================================================
The settlement has been recorded as of December 31, 1997 and the $100,000 is
accrued within amounts payable to related parties in the consolidated financial
statements. The gain on debt settlement has been recorded as an extraordinary
item in the statement of operations for the year ended December 31, 1997.
8. Gain on Settlement of Debt
During 1997, the Company and certain noteholders reached an agreement and
allotted 567,245 common shares to settle debts in the amount of $299,842. The
debt settlement was subject to approval by the VSE. Approval for the transaction
was obtained in March 1998, and therefore, the settlement has been recorded in
the 1997 financial statements. In addition to the debt settlement, the Company
negotiated a reduction of previously invoiced and accrued legal fees of $179,138
from the Company's former U.S. securities counsel. The reduction has been
recorded as an extraordinary item in the consolidated statements of operations
for the year ended December 31, 1997.
9. Income Taxes:
No income tax provision or benefit has been provided for any of the periods
presented due to the Company's net operating loss carryforward position.
Net deferred tax assets consist of the following at December 31, 1997, 1996 and
1995:
1997 1996 1995
- --------------------------------------------------------------------------------
Deferred tax assets $ 1,755,000 $ 1,145,700 $ 662,000
Valuation allowance (1,755,000) (1,145,700) (662,000)
------------- ------------- -------------
Net deferred tax assets $ 0 $ 0 $ 0
================================================================================
F-28
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
9. Income Taxes, Continued:
The deferred tax assets are primarily comprised of the tax effect of net
operating loss carryforwards. The Company has recorded a valuation allowance
equal to the net deferred tax asset as it is uncertain that these benefits will
be realized through the generation of future taxable income. The net change in
the valuation allowance for 1997, 1996 and 1995 was due to the increase in net
operating loss carryforwards and the uncertainty of their realization.
The Company has recorded the above valuation allowance to reflect the estimated
amount of the deferred tax asset which may not be realized principally due to
uncertainty regarding the generation of future taxable income to utilize
existing net operating losses. If it becomes more likely than not that the
Company will generate future taxable income, the valuation allowance could be
adjusted in the near term.
The Company is subject to income tax filing requirements in Canada and the
United States. As of December 31, 1997, the Company had income tax losses
carried forward available to reduce future taxable income, if any, which expire
as follows:
United (Canadian
Year States Dollars)
- --------------------------------------------------------------------------------
1998 $ 172,600
1999 271,800
2000 229,400
2001 902,700
2002 722,000
2003 1,496,300
2004 507,900
2011 $ 1,646,000
2012 1,724,200
------------- ------------
$ 3,370,200 $ 4,302,700
================================================================================
10. Fair Value of Financial Instruments:
The following estimated fair value amounts have been determined using available
market information and appropriate valuation methodologies. However,
considerable judgment is required to interpret market data and to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize in a current
market exchange.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practical to estimate that
value. Potential income tax ramifications related to the realization of
unrealized gains and losses that would be incurred in an actual sale or
settlement have not been taken into consideration.
The carrying amounts for cash and cash equivalents and the restricted
investments are a reasonable estimate of their fair value. Due to the due dates
and interest rates of the notes payable to shareholders, the carrying value of
these notes is a reasonable estimate of their fair value.
F-29
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
10. Fair Value of Financial Instruments:
The estimated values of financial instruments at December 31, 1997 and 1996 are
as follows:
<TABLE>
1997 1996
----------------------------------------------------------
Carrying Fair Carrying Fair
Amounts Value Amounts Value
----------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 78,885 $ 78,885 $ 267,142 $ 267,142
Restricted investments 90,000 90,000 85,000 85,000
Financial liabilities:
Note payable to bank 22,173 22,173
Notes payable to shareholders 267,220 267,220 546,403 546,403
</TABLE>
11. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP):
These financial statements are prepared in accordance with accounting principles
generally accepted in the United States. The significant differences between
U.S. and Canadian GAAP are as follows:
Under U.S. GAAP, stock compensation expense is recorded as shares held in escrow
become eligible for release based upon the number of shares eligible for release
and the market value of the shares at that time (see Note 5). Under Canadian
GAAP, no value is attributed to such shares released and no compensation expense
is recorded.
A reconciliation of U.S. financial statement presentation to Canadian financial
statement presentation is as follows:
F-30
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
11. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP):
<TABLE>
1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss - U.S. basis $ 1,724,219 $ 1,646,036 $ 850,878
Stock compensation expense (351,685) (294,375)
------------------------------------------------
Net loss - Canadian basis $ 1,724,219 $ 1,294,351 $ 556,503
====================================================================================================
Net loss per share - Canadian basis $ 0.23 $ 0.22 $ 0.10
====================================================================================================
Deficit accumulated during the
exploration stage - U.S. basis $ 6,015,621 $ 4,291,402 $ 2,645,366
Stock compensation expense, current year (351,685) (294,375)
Stock compensation expense, prior year's
cumulative (1,201,736) (850,051) (555,676)
-------------- ------------- -------------
Deficit accumulated during the
exploration stage - Canadian basis $ 4,813,885 $ 3,089,666 $ 1,795,315
====================================================================================================
</TABLE>
12. Subsequent Events:
In addition to items disclosed elsewhere in these financial statements, the
following significant events occurred between January 1, 1998 and May 3, 1998:
The Company received cash in the amount of $100,000 and issued a convertible
promissory note to a related party in the amount of $100,000 bearing interest at
9% per annum and due in full on January 23, 2000. The note may be converted into
units of the Company at the option of the lender at Cdn $0.26 during the first
year and at Cdn $0.31 during the second year. Each unit consists of one common
share and one common share purchase warrant. The convertible note is subject to
approval by the regulatory authorities.
The Company received cash in the amount of $110,000 and issued a convertible
promissory note to a related party in the amount of $110,000 bearing interest at
9% per annum and due in full on March 31, 2000. The note may be converted into
units of the Company at the option of the lender at Cdn $0.26 during the first
year and at Cdn $0.31 during the second year. Each unit consists of one common
share and one common share purchase warrant. The convertible note is subject to
approval by the regulatory authorities.
13. Subsequent Events, Continued:
The Company received cash in the amount of $150,000 and issued a convertible
promissory note to a related party in the amount of $150,000 bearing interest at
9% per annum and due in full on April 30, 2000. The note may be converted into
units of the Company at the option of the lender at Cdn $0.23 during the first
year and at Cdn $0.27 during the second year. Each unit consists of one common
share and one common share purchase warrant. The convertible note is subject to
approval by the regulatory authorities.
As described in Note 8, the Company issued 567,245 common shares in settlement
of outstanding debts of $299,842. Of these shares, 65,407 are required to be
held until May 29, 1998 and 26,430 are required to be held until September 30,
1998.
F-31
<PAGE>
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
12. Subsequent Events, Continued:
The Company issued 1,763,233 common shares and warrants to purchase 1,763,233
common shares pursuant to a private placement for proceeds of $759,060. The
private placement was completed in late 1997, but was subject to approval by the
VSE, which was received in April 1998. These shares were disclosed as allotted
at December 31, 1997 and are required to be held until March 18, 1999.
F-32
<PAGE>
SCHEDULE B Page 1 of 2
---------- -----------
1. YEAR-TO-DATE REQUIREMENTS
a) Deferred costs, exploration and development: See attached Schedule B.1 for
details.
b) General and administrative: See attached Schedule B.2 for details.
c) Expenditures to non-arms length parties:
<TABLE>
U.S. Funds
-----------
<S> <C>
Paid/accrued management fees and salary to president and director $ 69,000
Paid management fees to directors and companies controlled by directors 47,768
Paid interest on loans from directors 50,296
==========
$167,064
==========
</TABLE>
2. FOR THE QUARTER ENDED 31 DECEMBER 1997
a) Securities issued:
NONE
b) Option granted:
<TABLE>
<S> <C> <C> <C> <C> <C>
Date Granted Number Type Name (CDN Funds) Expiry Date
25 September 1997 50,000 Director T. Tomasovich $0.56 27 August 2001
25 September 1997 50,000 Director R. Young $0.56 27 August 2001
25 September 1997 50,000 Director J. Vyas $0.56 27 August 2001
---------
150,000
=========
</TABLE>
3. AS AT 31 DECEMBER 1997
a) Authorized and issued share capital:
Issued
----------------------------
Authorized U.S. Funds
Class Par Value Number Number Amount
- ----- --------- ------ ------ ------
Common N.P.V. 100,000,000 7,104,208 $7,651,427
F-33
<PAGE>
SCHEDULE B Page 2 of 2
---------- -----------
3. AS AT 31 DECEMBER 1997 - Continued
b) Summary of options, warrants and convertible securities outstanding:
<TABLE>
Price
Security Number Type Name (CDN Funds) Expiry Date
- --------------------- ----------------- ------------------ -------------------- ------------------ ----------------------
<S> <C> <C> <C> <C> <C>
Options: 60,000 Director D. Steiner $1.15 30 October 1999
50,000 Director E.R. Knickel $1.15 30 October 1999
50,000 Employee W. Struck $1.15 30 October 1999
50,000 Employee K. Scott $1.15 17 May 2000
5,000 Employee T. Weed $1.15 17 May 2000
150,000 Director D. Steiner $1.15 13 February 2001
50,000 Employee W. Struck, $1.15 13 February 2001
100,000 Employee R. Young $1.15 13 February 2001
50,000 Director T. Tomasovich $0.56 27 August 2001
50,000 Director R. Young $0.56 27 August 2001
50,000 Director J. Vyas $0.56 26 August 2001
-----------------
665,000
=================
Warrants: (U.S. Funds)
-------------------- ------------------
12 Sept. 1996 377,950 N/A N/A $2.75 3 May 1998
</TABLE>
c) Shares in escrow or subject to pooling:
562,500 common shares
d) List of directors: D.W. Steiner, T. Tomasovich, J. Vyas, R. Young
F-34
<PAGE>
Idaho Consolidated Metals Corp. Schedule B.1
Schedule of Resource Property Costs
For the Year Ended 31 December 1997
Prepared by Management
U.S. Funds
<TABLE>
1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
Direct - Mineral
Idaho County, Idaho, U.S.A.
Acquisition and filing $ 290,835 $ 114,957
Geological, geochemical and metallurgical 157,139 112,430
Camp and general 57,250 52,556
Transportation 20,558 3,584
Drilling 10,258 80,776
Assaying 8,122 15,111
Surveying and mapping 7,960 -
Environmental 4,450 -
Taxes, licenses and leases 3,120 (56,567)
Test mill construction - 131,274
Costs for the Year $ 559,692 $ 454,121
========================================================================================
</TABLE>
Schedule of General and Administrative Expenses Schedule B.2
For the Year Ended 31 December 1997
Prepared by Management
U.S. Funds
<TABLE>
1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
General and Administrative Expenses
Wages, fees and benefits $ 266,284 $ 157,831
Professional fees 247,197 251,816
Shareholder information 127,135 68,741
Office and general 65,223 80,828
Travel 60,233 49,625
Finance fees 24,958 5,067
Transfer agent and filing fees 19,716 13,689
Amortization 12,577 8,026
Advertising and promotion 5,713 3,285
Property search 1,645 521
Executive remuneration - 351,685
Costs for the Year $ 830,681 $ 991,114
=======================================================================================
</TABLE>
F-35
<PAGE>
SCHEDULE C
4TH QUARTER 1997
The Company completed a review and announced an update on the South Buffalo
Gulch property. The property is controlled 100% by Idaho Consolidated Metals
Corporation (ICMC).
An independent geologist was commissioned by the company to review South Buffalo
relative to the Company's results from its 2,700 foot core drilling program on
Buffalo Gulch.
Drill results were released on holes PZ35 through PZ64 showing continuity of
mineralization between holes.
Certified assays for reverse circulation drill holes PZ65 through PZ80. To date,
Cyprus has drilled a total of 106 reverse circulation holes and 11 diamond drill
core holes on the Petsite Joint Venture.
Assays for reverse circulation drill holes PZ81 through PZ90 were provided by
Cyprus. The 1997 field program on the property was completed in November and
data is currently being analyzed on the Petsite project.
Cyprus Gold Exploration Corporation notified ICMC they had reached and surpassed
the expenditure requirements necessary to vest Cyprus to a 50% interest in the
Petsite Joint Venture pursuant to the contract between the parties.
The Company announced plans to do a geophysical program on the Ophir property
which is a copper/cobalt prospect on the western side of the Elk City Gold Belt.
The geophysical program initiated in November has been completed and a draft
report was prepared by Western Geophysics.
F-36
