DEFINITIVE
AGREEMENT FOR DEVELOPMENT OF “CIENEGUITA”
PROJECT
ENTERED
INTO BY MINERA RIO TINTO, S.A. DE CV. REPRESENTED HEREIN BY ITS
SOLE ADMINISTRATOR MARIO HUMBERTO AYUB TOUCHE, HEREINAFTER REFERRED
TO AS “MRT”, AND BY MEXORO MINERALS LTD, REPRESENTED
HEREIN BY ITS CEO FRANCISCO RAMON QUIROZ LUNA, HEREINAFTER REFERRED
TO AS “MEXORO” AND BY SUNBURST MINING DE MEXICO S.A. DE
C.V. REPRESENTED HEREIN BY FRANCISCO QUIROZ LUNA AND JUAN MANUEL
FLORES CARRILLO, HEREINAFTER REFERRED TO AS “SUNBURST”
AS PER THE FOLLOWING:
STATEMENTS
I.-
MRT STATES BY MEANS OF ITS SOLE ADMINISTRATOR THAT:
a).-
Its
principal is a company incorporated on July 1 nineteen
hundred ninety four before the public faith of Victor Emilio
Anchondo Paredes, Notary Public No. 29 for this Judicial District
of Morelos, State of Chihuahua, as per Public Deed Number 330,
Volume 16, which business purpose, among others, is to acquire, by
application or by any other legal title, mines, placers, stratum or
deposit and alluvial deposits containing mineral ore; enter into
agreements of any kind related to mining claims, and it is duly
recorded under number 461, folio 18, book 666 of the Commerce
Section, Real Estate Public Records Office of this Judicial
District of Morelos dated September 14, 1994, which is recorded
under number 139, folio 176 front and 177 front, Volume XXI of the
Book of Mining Companies dated December 7, 1995.
b).-
The
authority he appears with has not been revoked nor modified in any
way;
c).-
MRT
has the capacity, experience, capital, technical and operating
support, sufficient to develop this contract;
II.-
MEXORO STATES BY MEANS OF ITS CEO:
1
a)
To be
a Colorado company, incorporated pursuant to the laws of the State
of Colorado, United States of America and is a reporting company
under the Securities and Exchange Commission, United States of
America, as per number 0-23561, and 84-1431797 of IRS
Employer Identification Number.
b)
As
Chief Executive Officer, he has the necessary authorities to enter
into this contract, authorities which have not been revoked or
modified in any way.
c)
MEXORO
is the owner of 99.99% of the capital shares of SUNBURST, also
appearing at the execution of this contract.
d)
Shall
be also subject to the provisions of Statement III, paragraph f)
herein.
III.-
SUNBURST STATES BY MEANS OF ITS LEGAL REPRESENTATIVES:
a)
To be
a Mexican corporation incorporated by public deed number 9,912
(nine thousand nine hundred twelve), Volume XXXVIII (thirty eight),
before the public faith of Guilebaldo Flores Tirado, Notary Public
number 118, in duty in Mazatlan, Sinaloa, on July 8 (eight) 2005
(two thousand five), recorded under electronic mercantile folio
number 17658*2 (seventeen thousand six hundred fifty eight asterisk
two) before the Commerce Public Records Office of Mazatlan,
Sinaloa, on July 13 (thirteen) 2005 (two thousand five), as well as
mercantile folio number 24401*10 of the Real Estate Public Records
Office and Commerce of Chihuahua, Chihuahua, dated May 21, 2008, as
well as mercantile folio number 24401*10 of the Real Estate Public
Records Office and Commerce of Chihuahua, Chihuahua, on May
21, 2008 and under deed number 270 (two hundred seventy), page 135
(one hundred thirty five) over, volume XXXVIII (thirty eight), of
the Book of Mining Companies, in the Mining Records Office.
b)
Its
legal representatives have the sufficient authority to enter into
this contract, which have not been revoked or modified in any
way.
c)
To be
the holder of rights derived from the “Exploration, working
and purchase promise” entered into with the company
“Corporativo Minero S.A. de C.V.”, in regards to
the following mining concessions:
1)
AURIFERO
,
title 196356, area 492 hectares;
2
2)
AURIFERO
NORTE ,
title 196153, area 60 hectares;
3)
LA
MARAVILLA ,
title 190479, area 48 hectares;
4)
AQUILON
UNO ,
title 208339, area 222 hectares;
These
concessions altogether constitute the “CIENEGUITA
PROJECT” or the “PROJECT” , located in the
municipality of Urique, Chihuahua.
d
)
It
has the necessary licenses and authorizations by the corresponding
authorities for the development of the preparation and working
development of the “CIENEGUITA
PROJECT”.
e)
It
requires the participation and financing from MRT to develop the
PROJECT .
f)
To
operate the Third Phase of the contract herein, the authorization
from Paramount Gold & Silver Corporation is required in regards
to Industrial Mortgages or Security Agreements dated May 9, 2008
and June 12, 2008 which guarantee the Convertible Debentures of May
9, 2008 for US$500,000.00 (Guaranteed with Mortgage dated
May 9, 2008); of June 18 and July 11, 2008, for
US$370,000.00 and US$500,000.00 correspondingly (Guaranteed
with Mortgage of June 12), all with an interest of 8% per year, to
be due in one year as of the execution of each one; or, payment to
release any encumbrance on its assets.
IV.-
THE PARTIES STATE:
a)
To
acknowledge each other with their authority they appear to enter
into this contract;
b)
They
acknowledge the status of the mentioned mining concessions and the
Industrial Mortgages;
c)
On
November 21, 2008, they entered into a Letter of Intent to make a
Strategic Alliance to provide funding for the development and
production of the CIENEGUITA PROJECT, in which
compliance they execute this contract ;
d)
They
have decided to join their efforts and resources to develop the
PROJECT; therefore, it is their will to enter into this
contract based on the following:
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CLAUSES
1
.- PURPOSE
1.1.-
The
parties enter into this contract to develop the
“CIENEGUITA PROJECT” in its preparation, working
and commercialization of mineral deposits in it.
2.-
DEVELOPMENT OF THE PROJECT .
2.1.-
The CIENEGUITA PROJECT , shall be Developed in the following
phases:
FIRST
PHASE.- INITIAL INVESTMENT
SECOND
PHASE.- DEVELOPMENT AND INITIAL PRODUCTION OF THE
PROJECT
THIRD
PHASE.- FEASIBILITY OF THE PROJECT (Bankable
Feasibility)
The
development of each phase shall be carried out pursuant to the
provisions of the following clauses:
3.-
FIRST PHASE, INITIAL INVESTMENT.
3.1.-
MRT will
invest in SUNBURST and MEXORO up to the amount of de
US$1,000,000.00 (ONE MILLION DOLLARS 00/100) within 5 months
from the execution of the Letter of Intent mentioned in the above
Statement III, paragraph c), to be used as work capital of
SUNBURST AND MEXORO , by 1 (one) initial payment of
US$250,000.00 and 5 (five) monthly payments of
US$150,000.00 .
3.2.-
For
each payment made by MRT according to the above paragraph,
MEXORO shall subscribe Secured Convertibles
Debentures. These shall bear an annual interest at the rate of
8% and a conversion date to December 31, 2010. The interest
shall be paid every quarter in cash or in common stock, at the
discretion of MEXORO . Payment of interests made in common
shares shall be calculated at a 20% discount to the 20 day trading
average of the shares as quoted on the OTC BB or other such
exchange as the case may be . The
Secured Convertible Debentures authorize MRT to change the
invested amounts for Units whose value shall be US$0.60
each.
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Each
Unit consists of 2 (two) common shares of MEXORO and a
Warrant, exercisable at US$0.50 per share for a period of 3
years.
If
the 30 thirty days trading average of the shares as quoted on the
OTC BB or other such exchange, before the mature date is US$0.60 or
higher per share, MRT will be obligated to convert into shares the
amount owed on the Convertible Debenture.
3.3.-
The
Secured Convertible Debentures shall be guaranteed with a
Unilateral Assumption of Obligations and constitution of Industrial
Mortgages made by SUNBURST , over its assets and
rights, which shall be due in a recordable manner in the Mining
Public Registry and the Real Estate and Commerce Public Records
Office, at the place of registration as appropriate. It is
understood that such a pledge will be subordinate to the current
security agreement with Paramount Gold and Silver Corp.
3.4.-
Any payment made by MRT during this phase, shall produce the right
for MRT to enter into the SECOND and THIRD phase further described.
4.-
SECOND PHASE, DEVELOPMENT AND INITIAL PRODUCTION OF THE
PROJECT.
4.1.-
The
development and initial production of the Project consists in
carrying out each and all exploration activities, mining, benefit,
smelting, freight, commercialization and any other necessary for
CIENEGUITA PROJECT to have the necessary conditions for
production.
4.2.-
The
production to be developed during this phase consisting in
removing, transfer, benefit, smelting and commercialization of
mineral ore deposits shall be limited to the surface of the
PROJECT, to a maximum depth of 15
meters.
4.3.-
For the development of this phase, SUNBURST, within its
regular operations and based on its Exploitation Rights, shall
enter into an Operation and Exploitation Contract with MRT to
develop this phase of the PROJECT, which purpose shall be the
following:
a)
Activities of MRT:
1.-
Prior
initiation of production, MRT shall make a land surveying to
determine the amount and location of the mineral capable of being
mined and removed;
2.
-
All
necessary work to site development;
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3.
-
All
mining work (removal of minera
