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AMENDED
PROJECT ACQUISITION AGREEMENT
BETWEEN
WESTERN GOLD LIMITED
AND
SEARCHLIGHT EXPLORATION, LLC.
Dated as of October 7, 2005
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PROJECT ACQUISITION AGREEMENT
This PROJECT
ACQUISITION AGREEMENT (this "Agreement"), dated as of October
7, 2005 is made by and between Western Gold Limited.,
a Gibraltar
corporation
with Registration Number 88708 having offices at c/0 St James Resource
Management Limited, 16 Hanover Square, London, W1S 1HT, United Kingdom
("Company") and Searchlight Exploration LLC, an Arizona limited liability
company with offices at 9212 Empire Rock
Street., Las Vegas, NV 89143 U.S.A.
("Searchlight" or "Claimholder") .
1. Grant of Lease, Purchase Option and 75% Net Profits Interest. In
consideration for the sum of US$10,000 to be
paid by Company to
Claimholder on
or before July 1, 2004 (the "Initial
Payment"), the further
payments of $10,000
to be paid by Company to Claim holder quarterly during the Lease Term
("Quarterly Payments"), 10,000,000 (ten million) shares of common stock of
Company and other good and valuable
consideration,
the receipt and
sufficiency
of which are hereby acknowledged, Claimholder hereby leases the unpatented
placer and / or lode mining claims known as the Bouse Project and more
particularly described in Exhibit A hereto (the
"Property")
to Company
(the
"Lease") and grants to Company a 75% net
profits interest and an exclusive
irrevocable option (the "Purchase Option")
to purchase the Property, each on the
terms and conditions set forth below. Provided the Initial Payment has been
made, the term of the Lease shall
commence on July 1,
2004 and, provided
that
all Quarterly Payments are made, shall run to and including June
30, 2007 (the
"initial term"), with the right of Company
at its option to extend the Lease for
up to three (3) additional three year terms on the same terms
and conditions to
and including June 30, 2016 (an "extended
term") (the initial and extended terms
being hereinafter referred to as the "Lease
Term"). Company shall have the right
to sooner terminate the Lease pursuant to
Section 6 and, subject
to Section 15
below, to exercise the Purchase Option
pursuant to Section 7 at any time during
the Lease Term. The Purchase Option may be exercised by Company
only upon the
delivery to Claimholder of each of (a) a
"positive" feasibility
study for the
Property, (b) corporate resolution of the Company (and any parent company
thereof) evidencing an affirmative
production decision
for the Property and (c)
evidence satisfactory to Claimholder that Company has obtained the
financing
necessary to develop and operate the
Property. Upon
transfer of title
pursuant
to exercise of the Purchase Option, the
Lease shall terminate.
2. Title to the
Property.
A. Claimholder hereby
represents and warrants to Company as follows:
(i) Claimholder
owns or is able to convey a full and undivided interest in
and to each of the unpatented mining claims included in the Property as of
the
date hereof;
(ii) To the best
of the knowledge,
information and belief
of Claimholder,
all such claims have been validly
located and maintained
in accordance with all
applicable laws and regulations;
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<PAGE>
(iii)
All such claims are free and clear of all liens, claims, and
encumbrances whatsoever, subject only to the paramount
interest of the
United
States of America and / or the State of
Arizona; all taxes, if any, which may be
or which may become a lien upon the
Property, as of the
date hereof, have
been
paid;
(iv) The
Property is not in any manner encumbered as a result of any
conduct or activity of Claimholder;
(vi)
Having secured the approval of its sole member to the terms and
conditions of this Agreement, Claimholder has full and complete authority to
execute this Agreement and to grant the
rights herein conferred on Company; and
(vii)
Claimholder has no knowledge that any of the mining claims
comprising
the Property are invalid, or that, except for any patented ground
lying within
the Project Area, there are other senior mining
claims in conflict with any of
such claims.
3. Lease
Payments and Other Payments.
A. During the Lease Term,
Company shall make the following payments to
Claimholder, which shall constitute a portion of the purchase price for the
Property:
(i) The Initial Payment of $10,000, on or before July 1, 2004;
and
(ii) The Quarterly Payments each in the amount of $10,000,
payable on
October 1, January 1, April 1 and July 1 of each year
during the Lease
Term,
commencing with October 1, 2004.
(iii) The quarterly
payment due on October 1, 2005 will be paid
on
October 31. 2005.
B. Following
Company's exercise of
the Purchase Option under Section 7 and
resulting termination of the Lease as provided in
Section 1, Company shall pay
to Claimholder (i) the Claimholder's net
profits interest (NPI) under Section 8A
and (ii) the Claimholder's net smelter return (NSR) royalty under Section
8B.
Company's obligation to make payment under
Section 8A and Section 8B shall cease
to accrue on the first to occur of (i) completion by Company of mining
operations, residual leaching and reclamation
in the Project Area or (ii) other
decision of Company to terminate operations in the Project Area and, if
Claimholder so desires, to reconvey the
property to Claimholder once reclamation
and other environmental obligations have
been satisfied, although this provision
shall not relieve Company from its obligation to make payments that accrued
prior to such occurrence.
C. All payments
shall be paid in US$dollars in immediately available funds.
D. Company hereby represents and warrants to Claimholder that it has
adequate financial resources to make the
payments required under this Section 3,
as well as the Work Expenditures required
under Section 4.
E. Company
shall also issue
within 10 business
days of execution of
this
Agreement to Searchlight, 10,000,000 (ten million) shares of Company's
common
stock. The shares shall be validly
issued, fully paid and
nonassessable.
The
shares shall be restricted and eligible for resale pursuant to Rule 144 in
accordance with said rule. Company,
following its initial public offering, shall
use its best efforts to comply with its
reporting obligations
under applicable
securities law so as to enable Searchlight
to utilize Rule 144 for resale of the
shares following the applicable holding
period.
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F. The previous
Project Acquisition Agreement between the parties dated
January 27, 2004 is hereby terminated and
replaced with this Agreement.
4. Work
Expenditures.
During the Lease Term,
until terminated by
Company
under Section 6 or until the
Purchase Option is exercised under Section 7,
Company shall make work expenditures ("Work
Expenditures") on or for the benefit
of the Property in the following
amounts:
A. The sum of $100,000 on or before June 30, 2006. This is a firm
commitment. If Company fails to perform the total amount of such Work
Expenditures, Company shall pay Claimholder the deficiency in immediately
available funds.
B. The sum of
$100,000 on or before June 30, 2007.
C. The sum of
$100,000 on or before June 30 of each year thereafter.
Any excess of Work Expenditures in any year shall be carried forward to the
succeeding year. If Work Expenditures in any year after the period ended
June
30, 2006 are deficient and Company desires to maintain the Lease and
Purchase
Option in effect, Company shall pay
Claimholder in immediately available funds a
sum equal to the deficiency in lieu of the Work Expenditure shortfall. For
purposes of this Agreement, "Work Expenditures" is defined as sums spent or
incurred by Company directly on the Property for
exploration and development of
the Property, including drilling,
geochemical sampling,
geophysical or
seismic
survey, assaying, and ore reserve calculation; metallurgical and engineering
analyses; environmental and permitting analyses and activities; feasibility
studies; and financing investigations; plus 5% of such direct costs in
lieu of
headquarters overhead and general and
administrative expenditures.
5. Rights and
Obligations
During Lease Term.
The parties
shall have the
following rights and obligations during the
Lease Term:
A. Access to
Property and Provision of Data. Company shall have full access
to the Property to conduct such
investigations
and examinations as
Company may
deem desirable and to all information and
data in Claimholder's
possession and
control pertaining to the Property
necessary or desirable
to enable Company to
fully evaluate the Property and its
commercial
feasibility.
Claimholder agrees
to cooperate fully with Company in its
investigation.
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B. Activities by Company.
Company shall have
exclusive possession
of the
Property, subject to the paramount rights of the United States and / or the
State of Arizona with respect to unpatented mining claims included in the
Property, and shall have the exclusive right to conduct such exploration,
evaluation, and development activities on
the Property (including bulk sampling)
as Company may desire. Claimholder shall provide at Company's expense all
reasonable assistance to Company for the
obtaining of any permits, licenses, and
third party consents needed for such work.
Company shall also
have the right to
contact the pertinent federal, state, and local permitting agencies, and to
negotiate with such agencies.
C. Maintenance of Property. Company shall maintain in good standing all
unpatented mining claims that comprise the
Property. Company
shall, as required
by the Federal Government with respect to unpatented
mining claims on
federal
lands, perform required assessment work or timely pay all
claim maintenance or
rental fees and all required property taxes, and shall timely make all
filings
and recordings in the appropriate
governmental
offices required in connection
with such payments. In the event
Claimholder makes any such payment (although it
shall have no obligation to do so), Company
shall promptly reimburse Claimholder
for payment of such holding costs upon receipt by Company of evidence of
such
payment. Company shall have the right to amend or
relocate in the name(s) of
Claimholder any unpatented mining claims included in the Property,
to locate
different types of claims on ground covered
by existing claims,
and to locate
any fractions.
D. Sharing of
Data. During each year of the Lease Term, Company will share
with Claimholder all information
(including
interpretive and
non-interpretive
data, subject to typical disclaimers
regarding interpretive
data and statements
that Claimholder may not rely upon the same)
obtained from the exploration,
evaluation, and development activities pertaining to the Property,
including
providing a copy of any geological and
other principal
reports relating to
the
Property, and will report to Claimholder in
writing at least quarterly regarding
the progress of the exploration and
evaluation work and Work Expenditures made
during the period.
E. Claimholder Access to Property. Claimholder may have access to the
Property at its sole risk on reasonable
notice, and shall be entitled to conduct
tours of the Property for investor relations and financing activities.
Claimholder's exercise of its access rights
shall not interfere in any way with
Company's operations on the Property,
which shall take
precedence in the event
of any conflict.
F. Conduct of Operations by Company at the Property. All of the
exploration, development, mining, milling and related work and any other
activities which may be performed by Company or its agents or contractors
hereunder shall be performed in accordance
with all of the terms and conditions
of this Agreement and good mining
practices, but the
timing, nature, manner and
extent of any exploration, development or any other operations or activities
hereunder shall be in the sole discretion of Company, and there shall be no
implied covenant to begin or continue any
such operations or activities.
G. Indemnity. Except for damages sustained by Claimholder while on the
Property pursuant to Section 5F., Company agrees to indemnify and hold
Claimholder and its affiliates, and their respective, officers, directors,
employees, agents, members, partners and agents harmless from
and against any
loss, liability, cost, expense or damage (including
reasonable attorney's fees)
that may be incurred for injury to or death
of persons or damage to property, or
otherwise, as a result of Company or its
agents or contractors
conducting any
operations on or in connection with the
Property.
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H. Insurance.
Company agrees to carry such insurance, covering all persons
working at or on the Property for Company, as will fully comply with the
requirements of the statutes of the State of Arizona
pertaining
to worker's
compensation and occupational disease and
disabilities as are now in force or as
may be hereafter amended or enacted. In addition, Company agrees to carry
liability insurance with respect to its
operations at the Property in reasonable
amounts in accordance with accepted industry practices. Company agrees that
Claimholder shall be named as an additional
insured on all such
policies, and
agrees to forward to Claimholder
certificates
of such insurance policies not
later than 10 days prior to the date that
Company commences any
such activities
on the Property. Company shall have no right to commence
any such
activities
until such certificates are delivered to
Claimholder.
I. Compliance
with Laws.
Company agrees to
conduct and perform all of its
operations at the Property during the term of this Agreement
i
