Attached files
Exhibit 10-7
PERFORMANCE LOAN AGREEMENT FOR FUNDING OF DRILLING
PROGRAM
THIS
PERFORMANCE LOAN AGREEMENT FOR FUNDING OF DRILLING PROGRAM (the
“Agreement”) is made and entered into as of August 01,
2018, by and between Compañía Minera Milpo S.A.A., a
company organized under the laws of the Republic of Peru and
hereinafter “Nexa”), and Minera Solitario Peru S.A.C.,
a company organized under the laws of the Republic of Peru
(“Solitario”). Each of Nexa and Solitario is
individually referred to herein as a “Party,” and they
are collectively referred to herein as the
“Parties.”
RECITALS
A. Minera
Bongará S.A., a company organized under the laws of the
Republic of Peru (“Bongará”) is the holder of
certain mining concessions located in Peru, as described on the
attached Annex A (the “Properties”). Those Properties
comprise a portion of the “Florida Canyon
Project.”
B. Solitario,
Solitario Zinc Corp. (f/k/a Solitario Exploration & Royalty
Corp. and Solitario Resources Corp.), of which Solitario is a
wholly-owned subsidiary, and Votorantim Metais –
Cajamarquilla S.A. (“Votorantim”) are parties to that
Framework Agreement for the Exploration and Potential Development
of Mining Properties dated March 23, 2007 (the “Bongará
Framework Agreement”). Pursuant to the Bongará Framework
Agreement, Votorantim has the right to conduct mineral exploration,
evaluation, and possible development and exploitation of the
Properties, make certain associated earn-in expenditures and earn
up to a 70% shareholding interest in Bongará.
C. Bongará
and Votorantim are parties to a Mining Assignment Agreement dated
August 4, 2006, formalized by public deed issued before the public
notary in Lima, Peru, Luis Dannon Brender, dated April 19, 2007 (as
amended, the “Mining Assignment Agreement”). The Mining
Assignment Agreement allows Votorantim to conduct the activities
referred to in Recital B above on the Properties.
D. Effective
November 28th 2014, Votorantim
assigned its interests in the Bongará Framework Agreement and
the Mining Assignment Agreement to Compañía Minera Milpo
S.A.A.
E. Under
the terms of the Bongará Framework Agreement, Nexa is
currently obligated to incur 100% of the expenditures at the
Florida Canyon Project.
F. Solitario
engaged SRK Consulting (U.S.) Inc. (“SRK”) to design a
drilling program for exploration drilling at the Florida Canyon
Project. That drilling program, which calls for a 41-hole, 17,000
meter program, the location of the first sixteen holes of which are
attached hereto as Annex B (the “Drilling Program”). In
order to advance the Drilling Program, Solitario has agreed to
provide to Nexa a portion of the funds required to complete the
Drilling Program. Solitario will provide those funds to Nexa by way
of a performance installment loan, as more particularly described
in Section 2 (a)
below.
G. Solitario
and Nexa have now agreed to proceed with the Drilling Program, and
desire to enter into this Agreement, which will govern the
implementation, funding and completion of the Drilling Program,
loan amounts made by Solitario to Nexa, and repayment of those loan
amounts, irrespective of any of the terms of either the
Bongará Framework Agreement or the Mining Assignment Agreement
to the contrary.
NOW,
THEREFORE, for and in consideration of the mutual covenants
contained in this Agreement, the Parties agree as
follows:
1. Implementation of Drilling
Program.
(a) Nexa agrees to
carry out the Drilling Program, and shall use commercially
reasonable efforts to begin the Drilling Program by August 01,
2018, but in any event no later than October 1, 2018. Once it has
started the Drilling Program, Nexa shall diligently pursue it to
completion; provided, however, that Nexa may in its reasonable
discretion temporarily suspend the Drilling Program if weather
conditions (taking into account that some work may be season
dependent) do not allow for responsible or safe conduct of the
Drilling Program. In any event, however, Nexa shall be obligated to
complete the Drilling Program by December 31, 2019.
Notwithstanding the
above, if there are any permitting or community related issues
which do not allow Nexa to enter (in reasonable terms) into the
necessary agreements with the titleholders of the surface land
located within the boundaries of the Properties, or if there are
delays in obtaining necessary permits or consents (in both cases,
for more than two (2) months after the relevant access request or
administrative application has been filed) that either prevent
access or inhibit the initiation, performing or completion of the
Drilling Program (“Delays”), and the circumstances and
causes of such Delays are not caused by Nexa or are beyond
Nexa’s control, all of the dates set out in this Section 1(a)
shall be automatically deferred and extended for a period of time
equal to the time the Delays. Only once the Delays have ceased,
such deferral and extension will cease and the terms will be
resumed and begin running again.
Also,
Nexa may claim force majeure if is prevented from or delayed in
performing the Drilling Program by any cause beyond its reasonable
control, including, without limitation, acts of God, strikes,
lockouts, or other industrial disputes, laws, rules and regulations
or orders of any duly constituted court or governmental authority,
acts of terrorism, acts of the public enemy, war, insurrection,
riots, fire, storm, flood, unusually harsh weather causing delay,
explosion, government restriction, failure to obtain any approvals
required from regulatory authorities, inability or failure to
obtain surface access rights at all or on reasonable commercial
terms, or unavailability of equipment, materials or transportation
(provided that were properly applied for and pursued in good faith
and on a timely basis or the equipment, materials or transportation
were sought in a timely way), interference by local community or
third party interests groups or other causes whether of the kind
enumerated above or otherwise, then the terms applicable for the
performance of the Drilling Program shall be extended for a period
equivalent to the total period the cause of the prevention or delay
persists regardless of the length of such total period. Nexa may
also claim force majeure, if acting reasonably and having
documented and/or supported the events, believes that social or
political unrest in the area of the Properties or the threat of
that unrest will endanger the safety of its employees or the
employees of its contractors if Nexa were to continue with the
Drilling Program. Nexa shall promptly notify Solitario with a
written notice summarizing events that have occurred and prospects
for resolution.
2
Bongará will
cooperate with Nexa, at Nexa’s request, in any negotiation
with the titleholders of the surface lands.
If
actual drilling under the Drilling Program has not commenced by
October 1, 2018, then this Agreement will automatically terminate,
and Solitario shall have no obligation to fund or reimburse Nexa
for any expenditures incurred under this Agreement or pursuant to
the Drilling Program.
(b) Nexa shall be
responsible for implementation and execution of all activities
associated with the Drilling Program, including, without
limitation, (i) the hiring and supervision of a drilling
contractor, (ii) the hiring of a helicopter contractor as
necessary to get materials and supplies to the Properties,
(iii) arranging for all infrastructure (including, without
limitation, an exploration camp with appropriate core processing
and storage facilities, portable generators, satellite telephones,
fuel, potable water, chemical toilets and site security) at the
Properties as necessary to support the Drilling Program, (iv) the
hiring and supervision of contract geologists, administrative staff
and field helpers necessary to carry out the Drilling Program, (v)
arranging for trucks and other heavy equipment necessary to support
the Drilling Program, (vi) arranging for whatever temporary housing
is required at or near the Properties for personnel working on the
Drilling Program, and (vii) arranging for analysis of the drill
core and drill results by the reputable consulting companies
described above:
o Drilling:
Explomin
■ Helicopter:
PumaAir
■ Geology: Anglo
Peruana Terra (APT)
■ Field and
administrative: Explosupport
● Chemestry analysis:
ALS Global
and
(viii) preparing reports of results of the Drilling Program as
appropriate, and providing copies of those reports to Solitario in
15 calendar days after formal request or after they are
prepared.
2. Funding and Conduct of Drilling
Program.
(a) Pursuant to the
provisions of this Section
2(a), Solitario shall loan three (3) payments of
U.S.$526,596.00 each to Nexa, which the Parties agree shall be
based on the performance by Nexa of the first 5,100 meters of
drilling under the Drilling Program. Once the first 1,700 meters of
drilling is completed, Nexa shall notify Solitario; upon completion
of the second 1,700 meters of drilling, Nexa shall provide a second
notice; and upon completion of the third 1,700 meters (for a
cumulative total of 5,100 meters of drilling), Nexa shall issue a
final notice of completion. With each such notice, Nexa shall
provide reasonable documentary evidence of the completion of the
required 1,700 meters of drilling. Nexa shall issue such notices to
Solitario not later than the 15th day of the calendar
month following the month during which the required 1,700 meters of
drilling on the Properties has been completed, and Solitario,
unless it disputes in good faith the completion of the requisite
amount of drilling, shall make a loan payment of U.S.$526,596.00 to
Nexa within thirty (30) days after receipt of each such notice.
Once Solitario has made three (3) loan payments to Nexa in the
aggregate amount of U.S.$1,579,888.00 under this Section 2(a), Solitario shall
have no further obligation to loan further amounts to Nexa to fund
the Drilling Program. The funds loaned by Solitario to Nexa under
this Section 2(a)
shall not bear interest.
3
(b) Nexa shall be
obligated to complete the Drilling Program, and Nexa shall fund the
remainder of the Drilling Program through completion (41 holes and
17,000 meters of drilling).
(c) The funds loaned to
Nexa by Solitario pursuant to Section 2(a) shall be repaid
pursuant to the provisions of this Section 2(c). If Solitario
makes an election to obtain a non-recourse loan from Nexa under
Section 15.1 of the Bongará Framework Agreement (the
“Construction Loan”), then all amounts of money loaned
to Nexa by Solitario under Section 2(a) of this Agreement
shall be repaid to Solitario by being credited against and treated
as an advance against repayment of the Construction Loan by
Solitario. Such amounts shall not accrue interest, and shall reduce
the amount of principal outstanding under the Construction Loan. If
Solitario does not make the election to obtain the Construction
Loan from Nexa under the Bongará Framework Agreement, then all
amounts loaned to Nexa by Solitario under Section 2(a) of this Agreement
shall be repaid to Solitario by being credited against the next
capital contributions Solitario is obligated to make to
Bongará under the Bongará Framework
Agreement.
(d) Nexa’s books
of account reflecting implementation of and expenditures under the
Drilling Program, shall be available to Solitario in accordance
with Section 6.7.2 of the Bongará Framework Agreement, the
provisions of which are incorporated herein by this
reference.
(e) Any changes to the
Drilling Program shall require the unanimous written agreement of
the Parties. Prior to initiation of field activities Nexa and
Solitario shall consult and mutually agree upon the order in which
drilling shall occur under the Drilling Program, taking into
account Bongará’s best interests as well as logistical
considerations.
(f) Solitario shall be
entitled to all tax benefits available, if any, under applicable
laws with respect to all amounts for which it loans Nexa
hereunder.
3. Indemnity. Nexa agrees that the
indemnification provisions of Section 21.1 of the Bongará
Framework Agreement (the provisions of which are incorporated
herein by this reference) shall apply with respect to activities
conducted by or on behalf of Nexa pursuant to this Agreement. The
provisions of this Section
3 shall survive the termination of this
Agreement.
4. Inspection. The Parties agree
that the provisions of Sections 6.7.2 and 23 of the Bongará
Framework (the provisions of which are incorporated herein by this
reference) shall apply with respect to the rights of Solitario and
its authorized agents to inspect Nexa’s activities under this
Agreement, and review information pertaining to those
activities.
5. Environmental Obligations. The
Parties agree that the provisions of Section 6.7.5 of the
Bongará Framework Agreement (the provisions of which are
incorporated herein by this reference) shall apply with respect to
activities conducted by or on behalf of Nexa under this
Agreement.
6. Default. If any party fails in
the performance of any obligation under this Agreement (for
purposes of this Section 6 called the
“defaulting party”), the other Party shall serve upon
the defaulting party written notice of default, describing the
default with specificity. If the defaulting party, within thirty
(30) days after receipt of such notice, does not cure any material
default, the defaulting party shall be deemed to be in
default.
4
7. Consequences of Default. In the
event either Party is deemed to be in material default under
Section 6
above, the non-defaulting Party shall have the right to terminate
this Agreement pursuant to Section 8 hereof. An
election by a Party to terminate the Agreement under Section 8 shall not be deemed
to be a waiver by that Party of any other legal or equitable
remedies it may have with respect to such default.
8. Termination for Default. Should
either Party be in default of any of its material obligations under
this Agreement, determined as provided in Section 6 above, then the
other Party may, subject to the notice requirements and the
defaulting Party’s right to cure as set forth in Section 6, at its
election, terminate this Agreement by giving written notice of such
intention to the defaulting Party, and, upon the defaulting
Party’s receipt of such notice, this Agreement shall be
conclusively deemed terminated.
9. Assignability. Neither Party
shall have the right to assign, sublease or otherwise transfer any
interest in this Agreement without the prior written consent of the
non-assigning Party. Subject to the foregoing, this Agreement shall
be binding upon, and shall inure to the benefit of, the Parties
hereto, their successors and assigns.
10. Notice. Any notice, election,
report or other correspondence required or permitted hereunder
shall be in writing and (i) delivered personally; or
(ii) sent by reputable overnight courier; or (iii) sent
by email, with a confirmatory copy delivered personally or sent by
reputable overnight courier. All such notices shall be addressed to
the Party to whom directed as follows:
If to
Nexa:
Jonas Mota e
Silva
_______________________
_______________________
Email: jonas.silva@nexaresources.com
Telephone:
5117105500
If to
Solitario:
_______________________
_______________________
_______________________
Email: ( )
-
Telephone:
( ) -
11. Counterpart Execution. This
Agreement may be executed by each of the Parties hereto in separate
counterparts, each of which when so executed shall be deemed to be
an original and all of, which taken together shall constitute one
and the same Agreement.
12. Interpretation. Use of the word
“including” in this Agreement means “including
without limitation” or “including but not limited
to.” Each of the Annexes and Schedules attached to this
Agreement is incorporated into the Agreement by this
reference.
5
13. Relationship between
Agreements. Except as specifically set forth in Section 2(c), this
Agreement shall not in any way modify or amend or be deemed to
modify or amend the Bongará Framework Agreement or the Mining
Assignment Agreement. In addition, the execution and delivery of
this Agreement shall not constitute a waiver by either of the
Parties of any of its rights under either the Bongará
Framework Agreement or the Mining Assignment Agreement, and shall
not modify any of the Parties’ obligations thereunder,
including funding obligations (except to the extent that the
provisions of Section 2 of this
Agreement are inconsistent with the Parties’ funding
obligations under the Bongará Framework Agreement, the
provisions of Section 2 of this
Agreement shall be controlling).
14. Amendments. Any amendment,
supplement, variation, alteration or modification to this Agreement
must be made in writing and duly executed by an authorized
representative of each of the Parties hereto.
15. Severability. Any provision of
this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any other jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Each
Party hereby waives the benefit of any law which renders any
provision hereof prohibited or unenforceable in any
respect.
16. No Waiver. The failure in any
one or more instances of a Party to insist upon performance of any
of the terms, covenants or conditions of this Agreement, to
exercise any right or privilege in this Agreement conferred, or to
waive any breach of any of the terms, covenants or conditions of
this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but
the same shall continue and remain in full force and effect as if
no such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving Party.
17. Fees, Costs and Expenses. Each
Party shall be responsible for its own fees, costs and expenses
incurred by it in connection with this Agreement and the
transactions contemplated hereby.
18. Governing Law and Dispute
Resolution. The provisions of Section 30 of the Bongará
Framework Agreement, which are incorporated herein by this
reference, shall apply with respect to any disputes that arise
under this Agreement.
6
IN
WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first written
above.
|
|
COMPAÑÍA
MINERA MILPO S.A.A.
By: /s/
Jonas Belther
Name: Jonas
Belther
Title:________________________
COMPAÑÍA
MINERA MILPO S.A.A.
By: /s/
Diego Miranda
Name: Diego
Miranda
Title:________________________
MINERA
SOLITARIO S.A.
By:
/s/Todd Christensen
Name: Todd
Christensen
Title:
Gerente General
|
7
ANNEX A
- Properties
|
NUM
|
PROYECTO
|
CODIGOU
|
CONCESION
|
TITULAR
|
FECHA
|
HA_DISP
|
PARTID_REG
|
|
1
|
CAÑON
FLORIDA
|
010233396
|
BONGARA
CINCUENTICINCO
|
MINERA BONGARA
S.A.
|
07/08/1996
|
1,000.0000
|
P-20004465
|
|
2
|
CAÑON
FLORIDA
|
010233296
|
BONGARA
CINCUENTICUATRO
|
MINERA BONGARA
S.A.
|
07/08/1996
|
600.0000
|
P-20004464
|
|
3
|
CAÑON
FLORIDA
|
010783595
|
BONGARA
VEINTISIETE
|
MINERA BONGARA
S.A.
|
26/06/1995
|
300.0000
|
P-20005021
|
|
4
|
CAÑON
FLORIDA
|
010000306
|
DEL PIERO CINCO
|
MINERA BONGARA
S.A.
|
03/01/2006
|
1,000.0000
|
P-11053964
|
|
5
|
CAÑON
FLORIDA
|
010000206
|
DEL PIERO
CUATRO
|
MINERA BONGARA
S.A.
|
03/01/2006
|
500.0000
|
P-11055358
|
|
6
|
CAÑON
FLORIDA
|
010338405
|
DEL PIERO DOS
|
MINERA BONGARA
S.A.
|
02/11/2005
|
600.0000
|
P-11053955
|
|
7
|
CAÑON
FLORIDA
|
010204507
|
DEL PIERO SEIS
|
MINERA BONGARA
S.A.
|
26/03/2007
|
1,000.0000
|
P-11078790
|
|
8
|
CAÑON
FLORIDA
|
010338605
|
DEL PIERO TRES
|
MINERA BONGARA
S.A.
|
02/11/2005
|
700.0000
|
P-11053962
|
|
9
|
CAÑON
FLORIDA
|
010338505
|
DEL PIERO UNO
|
MINERA BONGARA
S.A.
|
02/11/2005
|
1,000.0000
|
P-11053944
|
|
10
|
CAÑON
FLORIDA
|
010190507
|
VM 42
|
MINERA BONGARA
S.A.
|
21/03/2007
|
1,000.0000
|
P-11106001
|
|
11
|
CAÑON
FLORIDA
|
010193707
|
VM 74
|
MINERA BONGARA
S.A.
|
21/03/2007
|
1,000.0000
|
P-11106007
|
|
12
|
CAÑON
FLORIDA
|
010045708
|
VM 94
|
MINERA BONGARA
S.A.
|
28/01/2008
|
900.0000
|
P-11138318
|
|
13
|
CAÑON
FLORIDA
|
010045808
|
VM 95
|
MINERA BONGARA
S.A.
|
28/01/2008
|
500.0000
|
P-11136133
|
|
14
|
CAÑON
FLORIDA
|
010193807
|
VM 75
|
MINERA BONGARA
S.A.
|
21/03/2007
|
1,000.0000
|
P-11105995
|
|
15
|
CAÑON
FLORIDA
|
010046008
|
VM 97
|
MINERA BONGARA
S.A.
|
28/01/2008
|
1,000.0000
|
P-11136132
|
|
16
|
CAÑON
FLORIDA
|
010046108
|
VM 98
|
MINERA BONGARA
S.A.
|
28/01/2008
|
500.0000
|
P-11136186
|
8
ANNEX B
– Drilling Program
|
PROGRAMA DE
PERFORACION DIAMANTINA PROYECTO FLORIDA CANYON
|
|||||||||
|
Plataforma
|
Drillhole
|
Easting
|
Northing
|
Elevation
|
Azimuth
|
Dip
|
Depth
(m)
|
Objetivo
|
Comment
|
|
108
|
Plat_108-4
|
824620
|
9353967
|
2726.13
|
297.69
|
-73.94
|
450
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
108
|
Plat_108-6
|
824620
|
9353967
|
2726.13
|
102.32
|
-78.35
|
470
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
109
|
Plat_109-1
|
824582
|
9353834
|
2688.09
|
162.53
|
-74.44
|
400
|
Incremento
Nuevos Recursos
|
Extender el
manto en la zona central
|
|
109
|
Plat_109-2
|
824582
|
9353834
|
2688.09
|
109.28
|
-79.10
|
390
|
Incremento
Nuevos Recursos
|
Extender el
manto en la zona central
|
|
111
|
Plat_111-1
|
824529
|
9353705
|
2756.01
|
127.50
|
-72.01
|
495
|
Incremento
Nuevos Recursos
|
Infill Zona de
alta ley de sulfuros en mantos
|
|
111
|
Plat_111-3
|
824529
|
9353705
|
2756.01
|
103.39
|
-77.58
|
455
|
Incremento
Nuevos Recursos
|
Extender el
manto en la zona central
|
|
113
|
Plat_113-12
|
825305
|
9353754
|
2732.34
|
202.83
|
-70.57
|
490
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
113
|
Plat_113-6
|
825305
|
9353754
|
2732.34
|
347.43
|
-78.90
|
560
|
Incremento
Nuevos Recursos
|
Continuidad
del manto al lado NE
|
|
122
|
Plat_122-1
|
824577
|
9353236
|
2517.28
|
80.77
|
-63.40
|
170
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
122
|
Plat_122-2
|
824577
|
9353236
|
2517.28
|
135.04
|
-65.20
|
170
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
122
|
Plat_122-3
|
824577
|
9353236
|
2517.28
|
302.68
|
-80.59
|
150
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
124
|
Plat_124-1
|
824488
|
9353222
|
2469.98
|
47.04
|
-66.46
|
150
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
124
|
Plat_124-2
|
824488
|
9353222
|
2469.98
|
106.40
|
-50.41
|
150
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
125
|
Plat_125-2
|
824418
|
9353137
|
2471.95
|
248.41
|
-63.25
|
170
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
125
|
Plat_125-3
|
824418
|
9353137
|
2471.95
|
300.38
|
-52.98
|
180
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
128
|
Plat_128-1
|
824437
|
9352985
|
2458.76
|
319.56
|
-52.62
|
170
|
Incremento
Nuevos Recursos
|
Continuidad
del manto en la parte central
|
|
Total
|
5,020
|
|
|
||||||
9