Attached files
| file | filename |
|---|---|
| 8-K - MAINBODY8KSOURCEGOLD - Golden Matrix Group, Inc. | mainbody.htm |
| EX-99.1 - EXH991 - Golden Matrix Group, Inc. | exh99_1.htm |
MINERAL
PROPERTY
OPTION
AGREEMENT
THIS
AGREEMENT is dated as of the 26 day of October,
2009.
BETWEEN:
THUNDER BAY MINERALS INC., a company incorporated pursuant to
the laws of Alberta with an office at 81039 755 Bonavista Drive SE, Calgary,
Alberta T2J 7C9
(“Thunder”)
AND:
SOURCE GOLD
CORP., a company
incorporated pursuant to the laws of Nevada with an office at Suite 100 – 11245
Valley Ridge Drive, Calgary, Alberta, T3B 5V4.
(“Source”)
WHEREAS:
A. Thunder
is the owner of an undivided 100% legal and beneficial interest in those 19 mineral claims
located north of Thunder Bay, Ontario, more particularly described in Schedule A
to this Agreement (the “Property”);
B. Thunder
has agreed to sell to Source an undivided 50% legal and beneficial interest in
the Property on the terms described herein.
THEREFORE in consideration of
the mutual covenants and agreements in this Agreement, the Parties agree as
follows:
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1.
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Definitions
and Interpretation
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1.1 For the
purposes of this Agreement:
“Affected Party” has the
meaning set forth in section 12.1;
“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 party to this Agreement. 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;
“Agents” mean servants,
employees, agents, workmen and contractors;
“Closing” has the meaning set
forth in section 4.5;
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“Data” means all information
and data, including without limitation, topographical data, which is in digital
form and is in the possession or under the control of Thunder or its Affiliates
relating to the Property;
“Deed” has the meaning set
forth in section 5.1;
“Effective Date” means the
date of execution of this Agreement;
“Encumbrances” mean any and
all mortgages, pledges, security interests, liens, charges, encumbrances,
contractual obligations and claims of others, recorded and unrecorded,
registered and unregistered.
“Environmental Laws” means any
and all federal, provincial and local laws, statutes, regulations, ordinances,
bylaws, orders, permits, licences and approvals currently in effect or
subsequently enacted that regulate or provide liabilities or obligations in
relation to mining, mine development and mineral exploration or the existence,
use, production, manufacture, processing, distribution, transport, handling,
storage, removal, treatment, disposal, emission, discharge, migration, seepage,
leakage, spillage or release of Hazardous Substances or the construction,
alteration, use or operation, demolition or decommissioning of any facilities or
other real or personal property in relation to the foregoing or otherwise in
relation to the protection and preservation of the life, health or safety of
persons, or to the protection and preservation of the environment, including but
not limited to, air, soil, surface water, ground water, wildlife or personal or
real property;
“Environmental Liabilities”
means any and all costs, expenses, damages, losses and liabilities of
whatsoever kind, direct or indirect, including but not limited, to fines,
penalties, settlements, interest, property damage and economic loss and costs
and expenses incurred for investigation, study and monitoring and removal,
treatment, storage, disposal, remediation, clean-up, abatement, reclamation or
other activities, for breach of or failure to comply with, or otherwise suffered
or incurred under, or incurred in order to comply with, any and all
Environmental Laws, whether statutory, in contract or in tort, including
negligence and strict liability, or howsoever otherwise, pertaining to the
Property;
“Escrow Agent” has the meaning
set forth in section 5.1;
“Escrowed Documents” has the
meaning set forth in section 5.1;
“Expenditures” means any and
all direct and indirect expenses of or incidental to Operations conducted by or
on behalf of Source or its Affiliates together with any and all costs, fees and
expenses that may be paid to obtain a NI 43-101 compliant technical report,
feasibility, engineering or other studies or reports on or with respect to the
Property. For greater certainty and without limitation, the costs,
fees and expenses of recording work for assessment credit under applicable
legislation for the benefit of the Property are included in
Expenditures. There shall be added to and included in “Expenditures”
a charge for Source’s administrative overhead and corporate, technical and
business expenses equal to 9%
of all direct and indirect
expenses and charges;
“Hazardous Substance” means
any substance or material that is or becomes prohibited, controlled or regulated
by any federal, provincial, municipal, local or other level of government and
any government agency, body, corporation, organization, department, official or
authority responsible for administering or enforcing any law and includes any
toxic substance, waste and dangerous goods;
“Joint Venture” means the
joint venture to be formed between Thunder and Source in respect of the Property
(upon payment in full of the Purchase Price) pursuant to the Joint Venture
Agreement;
“Joint Venture Agreement”
means the joint venture agreement to be entered into between Thunder and Source
upon the payment in full of the Purchase Price, substantially in the form
attached as Schedule B hereto;
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“Losses” mean actual losses,
liabilities, damages, injuries, costs or expenses;
“Net Smelter Return Royalty”
means the maximum
three
percent (3.0%) net smelter return royalty in favour of Wheeler provided
in the royalty agreement attached as Schedule C;
“Operations” means any and
every kind of work which Source in its sole and absolute discretion elects to do
or to have done to conduct mineral exploration of the Property during the
Purchase Period;
“OTC BB” means the Over the Counter
Bulletin Board
“Party” means either of Source
or Thunder; and “Parties” mean both Source and
Thunder;
“Person” means any individual,
partnership, company, corporation, unincorporated association, person,
government or governmental agency, authority or entity howsoever designated or
constituted;
“Property” means those claims
more particularly described in Schedule “A” hereto, together with all
prospecting, research, exploration, exploitation, operating and mining permits,
licences and leases associated therewith, mineral, surface, water and ancillary
or appurtenant rights attached or accruing thereto, and any mining licence or
other form of substitute or successor mineral title or interest granted,
obtained or issued in connection with or in place of or in substitution for any
such Property (including, without limitation, any Property issued to cover any
internal gaps or fractions in respect of such ground), and includes any
renewals, extensions or replacements thereof; and includes any claims or lands
acquired within the area of mutual interest as contemplated in section
15.1;
“Purchase Period #1” means the
date hereof through to and including December 31, 2010;
“Purchase Period #2” means
January 1, 2011 through to and including December 31, 2011;
“Rule 144” means Rule 144 of the United States
Securities Act of 1933 (as amended)
“Shares” mean common shares in
the capital of Source;
“Termination Notice” has the
meaning set forth in section 14.1;
“Transfer” when used as a
verb, means to sell, grant, assign, encumber, pledge or otherwise commit or
dispose of, directly or indirectly, including through mergers, consolidations or
asset purchases. When used as a noun, "Transfer" shall mean a sale,
grant, assignment, pledge or disposal or the commitment to do any of the
foregoing, directly or indirectly, including through mergers, consolidations or
asset purchases; and
“Wheeler” means William James
Wheeler, President of Thunder.
-3-
1.2 For the
purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
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(a)
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“this Agreement” means
this Option Agreement and all Schedules attached
hereto;
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(b)
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any
reference in this Agreement to a designated “section”, “Schedule”, “paragraph” or other
subdivision refers to the designated section, schedule, paragraph or other
subdivision of this Agreement;
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(c)
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the
words “herein” and
“hereunder” and
other words of similar import refer to this Agreement as a whole and not
to any particular section or other subdivision of this
Agreement;
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(d)
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the
word “including”,
when following any general statement, term or matter, is not to be
construed to limit such general statement, term or matter to the specific
items or matters set forth immediately following such word or to similar
items or matters, whether or not non-limiting language (such as “without limitation” or
“but not limited
to” or words of similar import) is used with reference thereto but
rather refers to all other items or matters that could reasonably fall
within the broadest possible scope of such general statement, term or
matter;
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(e)
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any
reference to a statute includes and, unless otherwise specified herein, is
a reference to such statute and to the regulations made pursuant thereto,
with all amendments made thereto and in force from time to time, and to
any statute or regulation that may be passed which has the effect of
supplementing or superseding such statute or such
regulation;
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(f)
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the
headings in this Agreement are for convenience of reference only and do
not affect the interpretation of this
Agreement;
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(g)
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words
importing the masculine gender include the feminine or neuter gender and
words in the singular include the plural, and vice versa and “shall” has the same
meaning as the word “will”;
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(h)
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all
references to currency refer to Canadian
dollars;
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(i)
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all
references to business days are to days excluding Saturdays, Sundays and
banking holidays in the Province of British Columbia;
and
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(j)
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when
calculating the period of time within which or following which any act is
to be done or step is to be taken pursuant to this Agreement, the date
which is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-business day,
the period in question shall end on the next business
day.
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1.3 The
following are the Schedules to this Agreement, and are incorporated into this
Agreement:
Schedule
“A” The
Property
Schedule
“B” Form
of Joint Venture Agreement
Schedule
“C” RoyaltyAgreement
1.4 Wherever
any term or condition, expressed or implied, in any of the Schedules conflicts
or is at variance with any term or conditions of this Agreement, the terms or
conditions of this Agreement will prevail.
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2.
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Representations
and Warranties
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2.1
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Thunder
represents and warrants to Source
that:
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(a)
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Thunder
is a valid and subsisting corporation duly incorporated and in good
standing under the laws of the Province of Alberta. Thunder has
full power and authority to carry on its business and to enter into this
Agreement and any agreement or instrument referred to or contemplated by
this Agreement and to carry out and perform all of its obligations and
duties hereunder. Thunder has duly obtained all corporate and
all regulatory authorizations for the execution, delivery and performance
of this Agreement. This Agreement has been duly executed and
delivered by Thunder and is valid, binding and enforceable against Thunder
in accordance with its terms;
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(b)
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Thunder
is the owner of an undivided 100% legal and beneficial interest in the
Property, free and clear of any and all Encumbrances
save and except for the Net Smelter Return
Royalty. Thunder has the full power to hold its interest
in the Property;
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(c)
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the
Property has been properly staked, located and recorded pursuant to
applicable laws and regulations of the Province of Ontario and all mining
claims comprising the Property are in good standing and no event,
condition or occurrence exists that, after notice or lapse of time or
both, would constitute a default under such mining claims and all required
assessment work, reports, fees and payments have been filed or made and
are current;
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(d)
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there
is no adverse claim or challenge against or to the ownership of or title
to any part of the Property and, there is no basis for such adverse claim
or challenge;
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(e)
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the
consummation of the transactions contemplated by this Agreement does not
and will not conflict with, constitute a default under, result in a breach
of, entitle any Person to a right of termination under, or result in the
creation or imposition of any Encumbrance or restriction of any nature
whatsoever upon or against the Property or other assets of Thunder, under
its constating documents, any contract, agreement, indenture or other
instrument to which Thunder is a party or by which Thunder is bound, any
law, judgment, order, writ, injunction or decree of any court,
administrative agency or other tribunal or any regulation of any
governmental authority;
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(f)
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all
taxes and charges with respect to the Property have been paid in full as
of the Effective Date. Subject to the provisions of section 9,
no Person has any proprietary or possessory interest in the
Property. Save and except for the Net Smelter Return Royalty,
no Person is entitled to any royalty or other payment in the nature of
rent or royalty on any minerals, metals or concentrates or any other such
products removed or produced from the
Property;
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(g)
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there
is no legal, administrative, arbitration or other proceeding, claim or
action of any nature or investigation pending or, to the best of Thunder’s
knowledge after reasonable inquiry, threatened against or involving the
Property or which questions or challenges the validity of this Agreement
or any action taken or to be taken by Thunder pursuant to this Agreement
or any other agreement or instrument to be executed and delivered by
Thunder in connection with the transactions contemplated hereby and
Thunder does not know or have any reason to know of any valid basis for
any such legal, administrative, arbitration or other proceeding, claim,
action of any nature or investigation. Thunder is not subject
to any judgment, order or decree entered in any lawsuit or proceeding
which has had or may be expected to have an adverse effect on the
Property;
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(h)
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there
are no actual or pending proceedings for, and Thunder is unaware of any
basis for, the institution of any proceedings leading to the placing of
Thunder in bankruptcy or subject to any other laws governing the affairs
of insolvent parties and Thunder’s interest in the Property does not
represent all or substantially all of Thunder’s assets and/or
undertaking;
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(i)
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to
the best of Thunder’s knowledge after reasonable inquiry, no Hazardous
Substance has been placed, held, located, used or disposed of, on, under
or at the Property by Thunder or any of its Agents. To the best
of Thunder’s knowledge after reasonable inquiry, no claim has ever been
asserted and there are no present circumstances which could reasonably
form the basis for the assertion of any claim against Thunder for Losses
of any kind as a direct or indirect result of the presence on or under or
the escape, seepage, leakage, spillage, discharge, emission or release
from the Property of any Hazardous
Substance;
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(j)
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there
are no outstanding work orders or actions required or reasonably
anticipated to be required to be taken in respect of the rehabilitation or
restoration of the Property or relating to environmental matters in
respect of the Property or any operations thereon, nor has Thunder
received notice of same;
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(k)
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to
the best of Thunder’s knowledge after reasonable inquiry, all previous
exploration on the Property has been carried out in accordance with
applicable law and sound mining, environmental and business
practice. Thunder has not received notice of any breach,
violation or default with respect to the Property. The
prospecting work, processes, undertaking and other operations carried on
or conducted by or on behalf of Thunder in respect of the Property have
been carried on or conducted in a sound and workmanlike manner and in
compliance with sound geological and geophysical exploration and mining,
engineering and metallurgical
practices;
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(l)
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Thunder
has not received notice of the existence of any condemnation,
expropriation or similar proceedings affecting the
Property;
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(m)
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all
of the buildings, fixtures and improvements located on the Property or
comprising the Property are in good condition and repair, ordinary wear
and tear excepted and are usable in the ordinary course of
business;
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(n)
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Thunder
has made available to Source all material information in its possession or
control relating to the Property and throughout the Purchase Period,
Thunder shall continue to make available to Source all information in its
possession or control relating to the
Property;
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(o)
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Thunder
does not have any information or knowledge of any facts pertaining to the
Property or substances thereon or therefrom not disclosed in writing to
Source, which if known to Source might reasonably be expected to deter
Source from completing the transactions contemplated
hereby;
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(p)
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Thunder
is not a non-resident of Canada within the meaning of the Income Tax Act
(Canada); and
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(q)
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there
is no Person acting or purporting to act at the request of Thunder who is
entitled to any brokerage or finder’s fee in connection with the
transactions contemplated herein.
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2.2 At
Source’s request Thunder shall take all action reasonably necessary (including
judicial proceedings) to pay any outstanding fees, taxes, mortgages or liens
against the Property, or remove any doubt from or cure any defect in their title
to the Property or the ground covered thereby. If Thunder fails or
refuses to take action, Source may take action in Thunder’s name and Thunder
agrees to cooperate with Source in any action taken. Source may
recover from any payments thereafter to become due to Thunder hereunder all
costs and expenses (including attorneys’ fees) incurred by Source in any such
action, or is no further payments are due, then such payments made by Source
shall qualify as Expenditures hereunder. Any improvement or
perfection of title to the Property shall inure to the benefit of Source in the
same manner and to the same extent as if such improvement or perfection had been
made prior to the execution of this Agreement. If any third person
attacks the validity of any of the claims (or portion thereof) for any reason
except Source’s failure to comply with its obligation to pay annual fees and
maintain the Property pursuant to this Agreement, Source shall have no
obligation to defend the validity of the claims. If Source elects not
to defend the validity of the claims, it shall release and reconvey its interest
therein to Thunder, free and clear of liens and encumbrances arising by, through
or under Source.
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2.3 All
payments and Expenditures payable by Source hereunder are based upon Thunder’s
warranted ownership of the entire undivided interest in the minerals included
within the boundaries of the Property. If Thunder are found to own
less than 100% of the mineral interests, then all payments payable to Thunder
hereunder including Royalty payments shall be reduced
proportionately. Such reductions in payments shall not waive or
eliminate any other rights or remedies Source may have in connection with the
extent of Thunder’s actual interest in the Property.
2.4 The
representations and warranties contained in section 2.1 are provided for the
exclusive benefit of Source and the correctness of each such representation and
warranty is a condition upon which Source is relying upon in entering into this
Agreement. A breach of any one or more of the representations or
warranties may be waived by Source in whole or in part at any time without
prejudice to its rights in respect of any other breach of the same or any other
representation or warranty and the representations and warranties contained in
section 2.1 will survive the execution and delivery of this Agreement
notwithstanding any independent investigations Source may
make. Thunder agrees to indemnify and hold harmless Source from all
Losses actually incurred by Source in connection with a breach of any
representation or warranty made by Thunder and contained herein, provided that
such representations and warranties shall only have a survival period that
terminates two years following: (i) the payment in full of the Purchase Price;
or (ii) the termination of this Agreement.
2.5 Source
represents and warrants to Thunder that:
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(a)
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Source
is a valid and subsisting corporation duly incorporated and in good
standing under the laws of the State of
Nevada;
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(b)
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Source
has full power and authority to enter into this Agreement and to carry out
and perform all of its obligations and duties
hereunder;
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(c)
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Source
has duly obtained all corporate authorizations for the execution, delivery
and performance of this Agreement;
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(d)
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this
Agreement has been duly executed and delivered by Source and is valid,
binding and enforceable against Source in accordance with its
terms;
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(e)
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there
is no person acting or purporting to act at Source’s request who is
entitled to any brokerage or finder’s fee in connection with the
transactions contemplated herein;
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(f)
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the
consummation of the transactions contemplated by this Agreement does not
and will not conflict with, constitute a default under, result in a breach
of its constating documents or entitle any Person to a right of
termination under any contract, agreement, indenture or other instrument
to which Source is a party or by which Source is bound or to any law,
judgment, order, writ, injunction or decree of any court, administrative
agency or other tribunal or any regulation of any governmental
authority;
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(g)
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Source
is a "reporting issuer" within the meaning of the United States
Securities Act of
1933 (as amended), is not in default of any requirement of applicable laws
and no material change relating to Source has occurred with respect to
which a requisite material change report has not been filed and no such
disclosure has been made on a confidential basis. The common
shares of Source are listed for trading on the OTC bulletin
board;
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(h)
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no
securities commission or similar regulatory authority has issued any order
preventing or suspending trading in any securities of Source and to the
best of Source’s knowledge after reasonable inquiry, no such proceeding
for such purposes are pending or
threatened;
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(i)
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upon
issuance, the Consideration Shares shall be fully paid and non-assessable
and shall form part of a class of shares that is listed on the OTC BB,
subject to Rule 144; and
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(j)
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there
are no actual or pending proceedings for, and to the best of Source’s
knowledge after reasonable inquiry, there is no basis for, the institution
of any proceedings leading to the placing of Source in bankruptcy or
subject to any other laws governing the affairs of insolvent
parties.
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2.6 The
representations and warranties contained in section 2.5 are provided for the
exclusive benefit of Thunder and the correctness of each such representation and
warranty is a condition upon which Thunder is relying upon in entering into this
Agreement. A breach of any one or more representations or warranties
may be waived by Thunder in whole or in part at any time without prejudice to
its rights in respect of any other breach of the same or any other
representation or warranty and the representations and warranties contained in
section 2.5 will survive the execution and delivery of this Agreement
notwithstanding any independent investigations Thunder may
make. Source agrees to indemnify and hold harmless Thunder from all
Losses actually incurred by Source in connection with a breach of any
representation or warranty made by it and contained herein, provided that such
representations and warranties shall only have a survival period that terminates
two years following: (i) the exercise of the Option; or (ii) the termination of
the Option.
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3.
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Purchase
and Sale
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3.1 In
consideration of the covenants and agreements of Source herein contained,
Thunder hereby agrees to sell, transfer and assign to Source 50% of Thunder’s
right, title and interest in and to the Property for and in consideration of
Source paying the Purchase Price to Thunder.
3.2 The
Purchase Price payable by Source shall be (i) the payment of an aggregate
$110,000 (the “Cash Purchase
Price”), (ii) incurring Expenditures in
the aggregate amount of $1,000,000 on the Property, and (iii) issuing 2,000,000
Shares, as follows:
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(a)
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Paying
a total of $110,000 to Thunder as
follows:
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(i)
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upon
execution of this Agreement, Source will pay to Thunder the sum of
$50,000, as a non-refundable deposit toward the Purchase Price, in advance
of Source commencing its due diligence investigations of the Property as
contemplated in section 4.1 below;
and
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(ii)
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on
or before December 1, 2009, Source will pay to Thunder the sum of
$60,000;
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(b)
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Source
shall incur a minimum of $500,000 of Expenditures on the Property on or
before the expiry of the Purchase Period
#1;
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(c)
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Source
shall incur a minimum of $500,000 of Expenditures on the Property on or
before the expiry of the Purchase Period #2;
and
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(d)
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Subject
to section 3.3 below, Source shall allot and issue 2,000,000 Shares to the
shareholders of Thunder, which shares shall be subject to the restrictions
under Rule 144. In this regard, Thunder covenants to deliver to
Source, on or before 24 hours following the Closing Date, a list of the
shareholders of Thunder and instructions as to how the Shares will be
issued, registered and delivered to each
shareholder.
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3.3 Thunder
acknowledges that the Shares to be received as part of the Purchase Price will
be subject to resale restrictions in accordance with applicable securities
legislation and the rules of the OTC BB.
3.4 The
Purchase Price will be effectively paid, and the purchase and sale of a 50%
interest in the Properety shall be deemed closed and completed when Source has
made Expenditures which total $1,000,000 and the 2,000,000 Shares have been
issued. The due date for the making of Expenditures as well as the
Purchase Period shall be extended for such time as access to the Property and/or
work on the Property is prevented by any condition of Force Majeure as described
in section 12.1.
3.5 Notwithstanding
anything herein contained and in addition to any other rights Source may have
under the circumstances, if exploration and development work intended to be
conducted on or for the benefit of the Property is mistakenly conducted outside
the boundaries of the Property as a consequence of it being subsequently
discovered or determined by survey or otherwise that the Property boundaries are
not located where the Parties understood them to be on the Effective Date, such
exploration and development work shall constitute Expenditures hereunder and
Source shall suffer no forfeiture with respect to any interest earned or to be
earned hereunder.
4. Conditions
Precedent
4.1 The
obligation of Source to consummate the transactions contemplated under this
Agreement is subject to the following conditions which are for Source’s sole
benefit and may be waived in writing by Source:
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(a)
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Source
will have received all requisite regulatory approvals to the transactions
contemplated in this Agreement; and
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(b)
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Source
will be satisfied as to the title to the Property and its due diligence
investigations as against Thunder. Source will have a period of
30 days to complete its due diligence investigations; and shall at any
time on or before the expiry of such 30 days notify Thunder as to whether
it is (i) satisfied with its investigations and that it will proceed to
Closing in accordance with section 4.5 below, or (ii) not satisfied with
its investigations and that it will not be proceeding to Closing and that
the provisions of section 4.3 below will
apply.
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4.2 For
purposes of Source undertaking its due diligence investigations, Source shall be
entitled to: (i) full access to all Data, records, maps, reports, drill core,
documents, and files in Thunder’s possession or to which it may have access,
relating to the Property (“Property Information”); (ii) complete such field
investigations on the Property as Source considers necessary to verify
historical work represented as having been done on the Property; and (iii)
complete its review and investigation of legal title and ownership of the claims
comprising the Property, (collectively the “Due Diligence Review”).
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4.3 If
Source determines, for any reason, to deem its Due Diligence Review
unsatisfactory, it will provide notice to Thunder of the same, at which time (i)
Source will return the Property Information to Thunder together with all new
information gathered by Source pertaining to the Property within 48 hours of
such notice being sent, (ii) Source will remediate any and all disturbances it
made to the Property within 30 days of such notice being sent; and (iii) this
Agreement will terminate without any liability of further obligation whatsoever
on the part of either Party.
4.5 Subject
to compliance with the provisions of section 4.1, upon five days notice from
Source to Thunder, closing shall occur (the “Closing”) at the offices of
Source. On
Closing:
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(a)
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Source
and Thunder shall execute and deliver an acknowledgement to the effect
that the conditions precedent set forth in section 4.1 have been
satisfied; and
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(b)
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Source
shall deliver to Thunder (i) , on or before the date that is 30 days
following Closing, a share certificate or certificates (as directed by
Thunder) representing the 2,000,000 Shares; and (ii) a cheque, bank draft
or wire transfer for $60,000.
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4.6 Source
and Thunder will use their best efforts to assist each other in obtaining the
requisite regulatory approvals required in connection with the execution,
delivery and performance of this Agreement.
4.7 prior
to paying the portion of the Cash Purchase Price identified in subsection 3.2
(a)(ii), Thunder shall have provided evidence to Source, acting reasonably, that
all of the subject claims on the Property are in good standing.
4.7 This
Agreement will terminate if the conditions described in section 4.1 are not
satisfied on or before 7 days from the Effective Agreement.
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5.
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Property
Title and Joint Venture
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5.1 During
the Purchase Period, recorded title to the Property shall remain in the name of
Thunder. Notwithstanding the foregoing on Closing, Thunder shall
deliver to an independent party to be agreed upon
by and acceptable to both Thunder and
Source (the “Escrow
Agent”) to hold in trust pending payment in full of the Purchase Price or
other termination of this Agreement (the “Escrowed Documents”): (i) a
duly executed copy of a deed/transfer of a 50% interest in the mineral claims in
respect of the Property in registrable or recordable form (the “Deed”) and in content
sufficient pursuant to the laws of the Province of Ontario to transfer a 50%
undivided interest in the Property to Source free and clear of any and all
Encumbrances, subject to the Net Smelter Return Royalty. The Parties
shall also deliver to the Escrow Agent an indemnification agreement, as required
by the Escrow Agent, on terms and conditions satisfactory to the Escrow
Agent. The Escrowed Documents shall be held by the Escrow Agent
pending either: (i) termination of the Option in accordance with section 14.1,
in which case the Deed shall be released and delivered to Thunder and the
provisions of section 14.2 will apply; or (ii) upon payment of the Purchase
Price in accordance with section 3.2, the Escrowed Documents shall be released
to Source, and the Parties shall forthwith execute and deliver the Joint Venture
Agreement substantially in the form set out
in Schedule “B”.
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5.2 During
the Purchase Period, Thunder shall not transfer any of its interest in the
Property and/or this Agreement other than to Source as provided herein, and
shall not grant, create or allow any Encumbrances on the Property.
5.3 Upon
Source having performed all of the requirements of section 3.2, Source will have
paid the Purchase Price in full and have purchased an undivided 50% legal and
beneficial interest in the Property as at such date free and clear of any and
all Encumbrances, subject only to the Net Smelter Return Royalty; and Thunder
and Source will constitute a Joint Venture for the purpose of carrying out
further exploration, development and production work on the Property, and the
provisions of the Joint Venture Agreement will then apply.
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6.
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Property
Exploration and Maintenance
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6.1 During
the Purchase Period Thunder will act as operator, and be entitled to conduct
title management and to lead, define the nature of and execute all exploration
programs and subsequent phases of development on the Property.
6.2 Thunder
shall submit such reports of its exploration activities on the Property to the
appropriate governmental authorities as may be required to maintain the Property
in good standing during the Purchase Period.
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7.
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Right
of Entry
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7.1 Throughout
the Purchase Period, Thunder and its Affiliates and Agents shall have the sole,
exclusive and immediate right in respect of the Property to:
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(a)
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enter
the Property, to have quiet and exclusive possession of the Property and
to act as operator of the Property;
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(b)
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do
such prospecting, exploration, development and/or other mining work on and
under the Property so as to incur
Expenditures;
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(c)
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bring
erect and install upon the Property such buildings, plant, machinery and
equipment as Source may deem necessary or desirable in its sole
discretion; and
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(d)
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remove
from the Property all metals and minerals derived from Operations on the
Property as may be deemed necessary by Source for assay and testing
purposes.
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For
greater certainty and without limitation, it is understood and agreed that
Thunder as operator shall be under no obligation whatsoever to place the
Property into commercial production and if the Property is placed into
commercial production, Source shall have the right at any time to curtail or
suspend such commercial production as Source in its absolute discretion deems
advisable.
8. Recording
of Agreement
8.1 At all
times during the Purchase Period and from and after Closing, Thunder and Source
will execute and deliver such additional documentation as legal counsel for
Thunder and Source determine is necessary in order to duly register and record
in the appropriate registration and recording offices notice that Thunder’s
interest in and to the Property is subject to and bound by the terms of this
Agreement.
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9.
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Obligations
During Purchase Period
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9.1 During
the Purchase Period, unless this Agreement is terminated in accordance with
subsection 14.1, Source covenants and agrees with Thunder that Source
shall:
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(a)
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provide
to Thunder copies of all correspondence and other written communications
by Source to and from government authorities with respect to the Property,
including without limitation, any default notice given to Source,
forthwith on receipt by Source of such correspondence or written
communications; and
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(b)
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provide
to Thunder all technical data and any interpretation or reports on such
data in its possession relating to the
Property.
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9.2 During
the Purchase Period, unless this Agreement is terminated in accordance with the
provisions hereof, Thunder covenants and agrees with Source that it
will:
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(a)
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maintain
the Property in good standing by doing and filing all assessment work or
making payments in lieu thereof and by performing all other acts which may
be necessary in order to keep the Property in good standing and free and
clear of all Encumbrances arising from or out of its activities on the
Property;
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(b)
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do
all work on the Property in a good and workmanlike manner and in
accordance with sound mining and engineering practices and in compliance
with all applicable laws, bylaws, regulations, orders and lawful
requirements of any governmental or regulatory authority and comply with
all laws governing the possession of the Property, including without
limitation, those governing safety, pollution and environmental
matters;
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(c)
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deliver
to Source within 30 days after receipt by Thunder all engineering and
geological reports and assay results in respect of samples taken from the
Property (together with reports showing the location from which the
samples were taken and the type of samples) and report to Source on a
monthly basis in respect of all data relevant to the Property, including
without limitation, opinions and field results, provided that Source will
indemnify and save Thunder and its Agents harmless with respect to any use
made by Source of interpretive data prepared by and received from Thunder;
and
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(d)
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permit
Source and its duly authorized representatives, at their own sole risk and
expense, access to the Property at all reasonable times and to all records
prepared by Thunder in connection with Expenditures. Such
access shall not obstruct or interfere with the operation or activities
conducted by Thunder.
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10. No
Encumbrances Against Property
10.1 During
the Purchase Period, neither Source nor Thunder will be entitled to grant,
create or allow any Encumbrance of or upon the Property or any portion thereof
without the prior written consent of the other Party, which consent may be
unreasonably withheld.
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11.
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Royalties
Encumbering Property
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11.1 Source
acknowledges that the Property is subject to the Net Smelter Return Royalty in
favour of Wheeler to be calculated and paid in accordance with Schedule
“C”.
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12. Force
Majeure
12.1 If at any
time during the Purchase Period either Party is prevented or delayed in
complying with any of the provisions of this Agreement (the “Affected Party”) by reason of
strikes, lockouts, labour unrest or shortage, power or fuel shortages, fires,
wars, terrorism, acts of God, civil disturbances, governmental regulations
restricting normal operations, shipping delays, title disputes, Native land
claims, or any other reason or reasons beyond the reasonable control of the
Affected Party (provided that lack of sufficient funds to carry out exploration
on the Property will be deemed not to be beyond the reasonable control of the
Affected Party), then the time limited for the performance by the Affected Party
of its obligations hereunder will be extended by a period of time equal in
length to the period of each such prevention or delay. Nothing in
this section 12.1 or this Agreement will relieve either Party from its
obligation to maintain the mineral claims comprising the Property in good
standing and to comply with all applicable laws and regulations, including
without limitation, those governing safety, pollution and environmental
matters.
12.2 The
Affected Party will give notice to the other Party of each event of force
majeure under section 13.1 within seven days of such event commencing and upon
cessation of such event will furnish the other Party with written notice to that
effect together with particulars of the number of days by which the time for
performing the obligations of the Affected Party under this Agreement has been
extended by virtue of such event of force majeure and all preceding events of
force majeure.
12.3 Should
Source pay any amounts toward settling a title dispute (which it may only do
with the consent of Thunder), such amounts will be deducted from and will reduce
the next payments due by Source to Thunder pursuant to sections 3.2, or if no
payment is then due the same will constitute “Expenditures”
hereunder.
13. Confidential
Information
13.1 The terms
of this Agreement and all information obtained in connection with the
performance of this Agreement will be the exclusive property of the Parties
hereto and except as provided in section 13.2, will not be disclosed to any
third party or the public without the prior written consent of the other Party,
which consent will not be unreasonably withheld.
13.2 The
consent required by section 13.1 will not apply to a disclosure:
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(a)
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to
an Affiliate, consultant, contractor or subcontractor that has a bona fide need to be
informed;
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(b)
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to
any third party to whom the disclosing Party contemplates a transfer of
all or any part of its interest in this
Agreement;
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(c)
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to
a governmental agency or to the public which such Party believes in good
faith is required by pertinent laws or regulation or the rules of any
applicable stock exchange; or
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(d)
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to
an investment dealer, broker, bank or similar financial institution, in
confidence if required as part of a due diligence investigation by such
financial institution in connection with a financing required by such
Party or its shareholders or affiliates to meet, in part, its obligations
under this Agreement.
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14. Default
and Termination
14.1 Thunder
shall have the right to terminate this Agreement as a result of a breach of
section 3.2, subject to section 3.4, on prior written notice to Source (the
"Termination Notice"), if, within 60 days
after receipt of the Termination Notice, Source shall fail to incur the
requisite Expenditures set forth in section 3.2.
14.2 Upon
termination of this Agreement the provisions of section 4.3 shall be operative,
and Source shall:
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(a)
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deliver
to Thunder all maps, reports, results of surveys and drilling and all
other reports of information provided to Source by Thunder, as well as
copies of any and all assay plans, diamond drill records, information,
maps and other pertinent exploration reports produced by Thunder its
Affiliates or its Agents regarding the Property;
and
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(
(c)
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deliver
a deed of quit claim or other appropriate instrument to Thunder in
recordable form whereby Source will acknowledge and agree that it has no
interest either legal or equitable in and to the
Property.
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(
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15. Area
Of Mutual Interest
15.1 An
area of mutual interest shall exist for all lands within that area being within
seven kilometres of the outer boundaries of the Property. If Thunder
acquires any mineral interests within the lands lying within the area of mutual
interest, or if it enters into any type of agreement by which such an interest
may be earned or otherwise acquired therein, then Thunder shall promptly notify
Source of such acquisition or such agreement, and upon Source reimbursing
Thunder for its staking, filing and other acquisition costs incurred, this
Agreement shall apply thereto, and such lands or interests within the area of
mutual interest shall form part of the Property. Any mineral interest
acquired by Thunder in lands outside of the area of mutual interest shall not be
subject to the terms hereof, but may be the subject of that separate agreement
between the Parties whereby Thunder has agreed to grant to Source a right of
first refusal to acquire all mineral property interests acquired by Thunder
during the six years following the Effective Date.
16. Indemnities
16.1 Thunder
covenants and agrees with Source (which covenant and agreement will survive the
execution, delivery and termination of this Agreement), both before as well as
after Closing, to indemnify and save harmless Source, its Agents and Affiliates
and their respective officers, directors, employees and representatives from and
against:
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(a)
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any
and all Environmental Liabilities which may arise as a result of
Operations prior to the start of the Purchase Period;
and
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(b)
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any
and all Losses which may be suffered by Source arising out of or in
connection with or in any way referable to, whether directly or
indirectly, the entry on, presence on, or activities on the Property by
Thunder or its Agents on or before the Effective
Date.
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16.2 Source
covenants and agrees with Thunder (which covenant and agreement will survive the
execution, delivery and termination of this Agreement) to indemnify and save
harmless Thunder, its Agents and Affiliates and their respective officers,
directors, employees and representatives from and against:
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|
(a)
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any
and all Environmental Liabilities which may arise as a result of
Operations during the Purchase Period;
and
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|
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(b)
|
any
and all Losses which may be suffered by Thunder arising out of or in
connection with or in any way referable to, whether directly or
indirectly, the entry on, presence on, or activities on the Property by
Source from and after the Effective Date and during the Purchase
Period.
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17. Relationship
and Other Opportunities – General
17.1 The
rights, privileges, duties, obligations and liabilities, as between the Parties
shall be separate and not joint or collective and nothing herein contained shall
be construed as creating a partnership, an association, agency or subject as
herein specifically provided, a trust of any kind or as imposing upon either of
the Parties any partnership duty, obligation or liability. Neither
Party is liable for the acts, covenants and agreements of the other Party,
except as herein specifically provided.
17.2 Each
of the Parties shall have the free and unrestricted right independently to
engage in and receive the full benefits of any and all business endeavours of
any sort whatsoever whether or not competitive with the endeavours contemplated
herein without consulting the other Party or inviting or allowing the other
Party to participate therein. Neither Party shall be under any
fiduciary or other duty to the other Party which shall prevent it from engaging
in or enjoying the benefits of competing endeavours within the general scope of
endeavours contemplated by this Agreement. The legal doctrine of
“corporate opportunity”
sometimes applied to persons engaged in a joint venture or having fiduciary
status shall not apply in the case of a Party.
18. Assignment
and Right of First Refusal
18.1 This
Agreement and Source’s rights hereunder may be assigned, either in whole or in
part, by Source to an assignee provided that:
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(a)
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Thunder
gives its prior written consent to such assignment, which consent not to
be unreasonably withheld by
Thunder;
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|
(b)
|
Source
at the time of assignment is not in default of any of the obligations,
warranties or representations given hereunder or to be performed by it
pursuant to this Agreement;
|
|
(c)
|
Source
will not be relieved of any duty or obligation hereunder unless Source has
assigned its entire interest in this Agreement;
and
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|
(d)
|
each
assignee prior to the effective date of the assignment agrees in writing
with Thunder to be bound by the terms and conditions of this
Agreement.
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Thunder
shall not be permitted to Transfer any of its rights hereunder or in the
Property except as provided in section 18.2 below.
18.2 In
the event Thunder wishes to sell, assign or dispose of any entitlement or rights
hereunder, or any of its 50% interest in or to the Property, or any of its
rights in or to the Royalty, to any other party (a “Third Party”), then and in any
and each such event Thunder shall first offer to sell such interest to Source on
the same terms as offered to (or by) the Third Party. Source shall
have a period of 45 days to determine if it will acquire such interest, and to
provide notice to Thunder of its intentions. If Source elects to
acquire such interest, closing will occur on the same time frame (subject to the
additional 45 days noted above) and on the same terms and proposed with the
Third Party.
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18.3 Should
Thunder sell to a Third Party, it will:
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(a)
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furnish
to the Third Party a true copy of this
Agreement;
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(b)
|
obtain
the Third Party’s written agreement in favour of Source that the Third
Party shall be bound by the terms of this Agreement as if it were a party
thereto in the place and stead of Thunder;
and
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(c)
|
ensure
that any agreement between the Third Party and Thunder contains provisions
similar to those set forth in this section 9 of this Agreement, to be
binding upon the Third Party and any successor or assign, and that such
agreement is registered at the public registries in which it is required
or customary to register mining agreements pertaining to
land.
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19. Governing
Law
19.1 This
Agreement will be construed and in all respects governed by the laws of the
Province of Alberta and the federal laws of Canada applicable
therein.
20. Arbitration
20.1 In
the event of any dispute between Thunder and Source with respect to this
Agreement or any matter governed by this Agreement which Thunder and Source are
unable to resolve, the matter shall be settled by arbitration as
follows:
The Party
desiring arbitration shall nominate one arbitrator and shall notify the other
Party of such nomination and the other Party shall within 30 days after
receiving such notice nominate one arbitrator and the two arbitrators shall
select a third arbitrator to act jointly with them. If the said
arbitrators are unable to agree upon the selection of such third arbitrator, the
third arbitrator shall be designated by a Justice of the Supreme Court of
British Columbia. If the Party receiving the notice of nomination of
an arbitrator, does not nominate an arbitrator within 30 days of receiving such
notice, then the arbitrator nominated by the Party desiring arbitration may
proceed alone to determine the dispute. Any decision reached pursuant
to this section 20 shall be final and binding upon the
Parties. Insofar as they do not conflict with the provisions hereof,
the provisions of the Arbitration Act (Alberta) as
amended from time to time shall be applicable.
21. Notices
21.1 All
notices, payments and other required communications and deliveries to the
Parties will be in writing and will be addressed to the Parties at the address
and fax number appearing on the first page of this Agreement or at such other
address as the Parties may specify from time to time.
Notices
must be delivered, sent by telecopier or mailed by pre-paid post and addressed
to the Party to which notice is to be given. If notice is sent by
telecopier or is delivered, it will be deemed to have been given and received at
the time of transmission or delivery, if transmitted or delivered during regular
business hours, or the next business day, if not transmitted or delivered during
normal business hours. If notice is mailed, it will be deemed to have
been received ten business days following the date of the mailing of the
notice. If there is an interruption in normal mail service due to
strike, labour unrest or other cause at or prior to the time a notice is mailed
the notice will be sent by telecopier or will be delivered.
-16-
21.2 Either
Party may at any time and from time to time notify the other Party in writing of
a change of address and the new address to which a notice will be given
thereafter until further change.
2. Good
Faith
22.1 Each
Party shall at all times during the currency of this Agreement and after the
termination of the Option, act in good faith with respect to the other Party and
shall do or cause to be done all things within their respective powers which may
be necessary or desirable to give full effect to the provisions
hereof.
23. Entire
Agreement
23.1 This
Agreement constitutes the entire agreement between Thunder and Source and will
supersede and replace any other agreement or arrangement, whether oral or in
writing, previously existing between the parties with respect to the subject
matter of this Agreement.
24. Expenses
24.1 Each
of the parties will bear their own respective costs and expenses incurred in
connection with this Agreement, and specifically Source will be responsible for
the costs of its due diligence.
25. Consent
or Waiver
25.1 No
consent or waiver, express or implied, by either Party hereto in respect of any
breach or default by the other Party in the performance by such other Party of
its obligations under this Agreement will be deemed or construed to be a consent
to or a waiver or any other breach or default.
26. Further
Assurances
26.1 The
Parties will promptly execute, or cause to be executed, all bills of sale,
transfers, documents, conveyances and other instruments of further assurance
which may be reasonably necessary or advisable to carry out fully the intent and
purpose of this Agreement or to record wherever appropriate the respective
interests from time to time of the Parties in and to the Property.
27. Severability
27.1 If
any provision of this Agreement is or will become illegal, unenforceable or
invalid for any reason whatsoever, such illegal, unenforceable or invalid
provisions will be severable from the remainder of this Agreement and will not
affect the legality, enforceability or validity of the remaining provisions of
this Agreement.
28. Enurement
28.1 This
Agreement will enure to the benefit of and be binding upon the Parties hereto
and their respective successors and permitted assigns.
29. Amendments
29.1 This
Agreement may only be amended in writing with the mutual consent of both
Parties.
-17-
30. Time
30.1 Time
will be the essence of this Agreement and will be calculated in accordance with
the Interpretation Act
(Alberta).
31. Counterparts
31.1 This
Agreement may be executed in any number of counterparts and by facsimile
transmission with the same effect as if the Parties hereto had signed the same
document. All counterparts will be construed together and constitute
one and the same agreement.
IN WITNESS WHEREOF the Parties
have executed this Agreement the day and year first above written.
THUNDER
BAY MINERALS INC.
per: /s/James
Wheeler
James
Wheeler, President
SOURCE
GOLD CORP.
per:/s/Harry Bydgnes
Harry
Bydgnes, Pres.
-18-
SCHEDULE
“A”
DESCRIPTION
OF THE PROPERTY
(attached)
SCHEDULE
“B”
JOINT
VENTURE AGREEMENT
(attached)
SCHEDULE
“C”
NET
SMELTER RETURN ROYALTY
(attached)