________________________________________________________________________________
AMENDED
PROJECT ACQUISITION AGREEMENT
BETWEEN
GOLDEN SIERRA LIMITED
AND
SEARCHLIGHT EXPLORATION, LLC.
Dated as of October 6, 2005
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PROJECT ACQUISITION AGREEMENT
This PROJECT
ACQUISITION AGREEMENT
(this "Agreement"),
dated as of
October 6, 2005 is made by and between Golden Sierra 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 restricted
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 Mockingbird Project
(which includes the Great West
property) 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;
(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;
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(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 in the amount of US$10,000,
payable on April 1, 2005 will be made on
October 10, 2005.
(iv) The Quarterly payment due in the amount of US$10,000,
payable on July 1, 2005 will be made on
October 10, 2005.
(v) The Quarterly payment due in the amount of US$10,000,
payable
on October 1, 2005 will be made on October
31, 2005.
B. Following Company's exercise of the Purchase Option under
Section 7
and resulting termination of the Lease as provided in
Section 1, Company shall
pay to Claimholder (i) the Claimholder's net profits interest (NPI) under
Section 8A and (ii) the Claimholder's net smelter return (NSR) royalty under
Section 8B. Company's obligation to make
payment under Section 8A and Section 8B
shall cease to accrue on the first to
occur of (i)
completion by
Company of
mining operations, residual leaching and
reclamation in the Project Area or (ii)
other decision of Company to terminate
operations
in the Project Area
and, if
Claimholder so desires, to reconvey the
property to Claimholder once reclamation
and other environmental obligations have
been satisfied, although this provision
shall not relieve Company from its obligation to make payments that accrued
prior to such occurrence.
C. All payments shall be paid in US$ dollars in immediately
available
funds.
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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 on to Searchlight
10,000,000
(ten million)
shares of
Company's
restricted 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.
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, 2005 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)
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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.
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 in compliance
with all valid and applicable federal, state and local laws, rules and
regulations, including without limitation
laws, rules and regulations pertaining
to environmental protection, human health and safety, social security,
unemployment compensation, wages and hours and conditions of
labor, and Company
shall indemnify and hold Claimholder harmless from and against any loss,
liability, cost, expense or damage (including reasonable attorney's fees)
arising from or related to Company's
failure to comply with said laws.
J. Taxes. During the term of this Agreement, Company shall be
responsible for payment of all taxes levied or assessed upon or against the
Property, as well as any facilities or
improvements located thereon.
K. Liens and
Encumbrances. Company
shall keep title to
the Property
free and clear of all liens and encumbrances resulting from its operations
hereunder; provided, however, that Company
may refuse to pay any claim asserted
against it which it disputes in good faith. At its sole cost and expense,
Company shall contest any suit, demand or action commenced to enforce such a
claim and, if the suit, demand or action is decided by a court or other
authority of ultimate and final
jurisdiction
against Company or the Property,
Company shall promptly pay the judgment and shall post any bond
and take all
other action necessary to prevent any sale or
loss of the Property or any part
thereof. Company shall permit Claimholder
to p
