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EXHIBIT 10.19
MAVERICK SPRINGS
EXPLORATION AND DEVELOPMENT AGREEMENT
THIS AGREEMENT is made as of the 9th day of
June 2003,
AMONG:
VISTA GOLD CORPORATION, a company continued under the laws of
the
Yukon Territory and having its head office located at 7961
Shaffer
Parkway, Suite 5, Littleton, CO 80127
("VISTA")
AND:
VISTA NEVADA CORP., a corporation incorporated under the laws of
the
State of Nevada and having its head office located at 7961
Shaffer
Parkway, Suite 5, Littleton, CO 80127
("VNC")
AND:
MAVERICK SILVER INC., a corporation incorporated under the laws of
the
State of Nevada and having an office located at Suite 1180, 999
West
Hastings Street, Vancouver, BC V6C 2W2
("MSI")
WHEREAS:
A. under a mining lease (the
"Artemis Lease") dated October 1, 2001, as
amended August
26, 2002, August 29, 2002 and September 25, 2002, between
Newmont Mining
Corporation ("Newmont") and Artemis Exploration Company
("Artemis"),
Newmont acquired, among other things, all of Artemis' rights
to certain
property known as the Maverick Springs Property, located in
Elko
and White Pine
Counties, Nevada, and the exclusive right to explore,
develop and mine
the Maverick Springs Property;
B. in consideration of the
rights granted to Newmont under the Artemis Lease,
Newmont is
required to, among other things: (a) pay advance royalties of
US
$10,000 on
signing the Artemis Lease, US $15,000 on October 1, 2002, US
$50,000 on
October 1, 2003 and US $100,000 on each October 1st thereafter;
(b) pay a
net
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smelter returns
royalty ranging from 1.9% for gold and silver prices that
are less than US
$250 and US $4.50 per ounce, respectively, to 5.9% for
gold and silver
prices that are greater than US $550 and US $8.50 per
ounce,
respectively, and a net smelter returns royalty of 2.9% for all
metals other
than gold and silver; and (c) complete a minimum of 6,400 feet
of exploration
drilling in each of the first three years of the Artemis
Lease;
C. under the Vista Agreement
(as defined in this Agreement), Newmont and
Newmont Capital
Limited ("NCL") assigned all of their respective interests
in the Maverick
Springs Property and the Artemis Lease to VNC in
consideration
of:
(a) the payment at closing of US
$250,000 in cash;
(b) the reimbursement at closing of
2003 federal maintenance fees in the
amount of US $37,300;
(c) the issuance at closing of 141,243
shares of Vista and 141,243
warrants of Vista (with each warrant exercisable for one share
of
Vista for a period of two years at US $4.43 per share);
(d) the issuance, on the first
anniversary of closing, of the number of
shares of Vista determined by dividing US $500,000 by the
weighted
average closing price of the shares of Vista on the American
Stock
Exchange averaged over the 10-day trading period ending on the
day
before the first anniversary of the closing (the "Weighted
Average
Price") and an equal number of share purchase warrants (with
each
warrant exercisable for a period of two years from the closing at
a
price equal to 125% of the Weighted Average Price);
(e) the grant to Newmont of a 1 1/2%
net smelter returns royalty on
production from the Maverick Springs Property;
D. the Vista Agreement also
provides that following the fourth anniversary of
the closing of
the Vista Agreement, Newmont may, on payment of 200% of
expenditures,
acquire a 51% interest in the Maverick Springs Property with
expenditures by
Vista, following the backin by Newmont, capped at US
$2,000,000 until
completion of a feasibility study; and
E. Vista and VNC have agreed to
grant MSI, an indirect wholly owned subsidiary
of Silver
Standard Resources Inc., an option to acquire a 55% interest in
the Maverick
Springs Property, which is proportionate to the property's
silver resources
at the date of this Agreement, on the terms contained in
this
Agreement;
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NOW THEREFORE THIS AGREEMENT WITNESSES that
in consideration of the mutual
covenants and agreements herein contained
and subject to the terms and
conditions hereinafter set forth, the
parties hereto agree as follows:
1. INTERPRETATION
1.1 In this Agreement:
(a) "ARTEMIS ROYALTY" means the
advance royalties and net smelter returns
royalties on production from the Property payable to Artemis under
the
Artemis Lease;
(b) "BACKIN RIGHT" means the right of
Newmont to acquire a 51% interest in
the Property under the Vista Agreement after October 7, 2006;
(c) "COMMERCIAL PRODUCTION" means the
operation of the Property or any
part thereof as a mine but does not include milling for the purpose
of
testing or milling by a pilot plant. Commercial Production shall
be
deemed to have commenced on the first day of the month following
the
first 45 consecutive days during which gold and silver have
been
produced from the Property at an average rate not less than 70% of
the
initial rated capacity of the mine as provided in the
Feasibility
Study;
(d) "DEVELOPMENT" has the meaning set
out in Exhibit D to the Rocky
Mountain Mineral Law Foundation Form 5A, Exploration, Development
and
Mine Operating Agreement;
(e) "ENCUMBRANCE" means any lien,
claim, charge, pledge, hypothecation,
security interest, mortgage, title retention agreement, option,
royalty interest or encumbrance of any nature or kind
whatsoever;
(f) "EXPENDITURES" means all cash
outlays, expenses, obligations and
liabilities of whatever kind or nature, but without duplication,
spent
or incurred or deemed incurred hereunder in connection with the
exploration and development of the Property;
(g) "FEASIBILITY STUDY" means any
feasibility study prepared in respect of
the Property which becomes the basis for the decision to place
the
Property into commercial production;
(h) "GOLD RESOURCES" means, at any
time, the measured, indicated and
inferred resources of gold, in ounces, determined in accordance
with
NI 43-101 at that time;
(i) "INTEREST" means a 55% interest in
the Artemis Lease and the Property;
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(j) "MANAGEMENT COMMITTEE" means the
management committee to be
established under Article 5;
(k) "NEWMONT ROYALTY" means the net
smelter returns royalty on production
from the Property payable to Newmont under the Vista Agreement;
(l) "NI 43-101" means National
Instrument 43-101 of the Canadian
Securities Administrators;
(m) "OPTION" has the meaning set out
in section 2.1;
(n) "OPERATOR" means the party
appointed as the Operator in accordance
with Article 4;
(o) "PARTICIPATING INTEREST" has the
meaning set out in Exhibit D to the
Rocky Mountain Mineral Law Foundation Form 5A, Exploration,
Development and Mine Operating Agreement;
(p) "PROGRAMS" the work plans and
budgets for exploration and development
activities conducted on the Property during the term of this
Agreement
and adopted pursuant to section 6.1;
(q) "PROPERTY" means the Maverick
Springs Property as described in the
Vista Agreement;
(r) "SILVER RESOURCES" means, at any
time, the measured, indicated and
inferred resources of silver, in ounces, determined in accordance
with
NI 43-101 at that time;
(s) "SIMPLE MAJORITY" means a decision
made by the Management Committee by
more than 50% of the votes represented and entitled to be cast at
a
meeting thereof;
(t) "SPECIAL MAJORITY" means a
decision made by the Management Committee
by more than 65% of the votes represented and entitled to be cast
at a
meeting thereof;
(u) "UNDERLYING ROYALTIES" means the
Newmont Royalty and the Artemis
Royalty;
(v) "VISTA AGREEMENT" means the
agreement dated October 7, 2002 among
Newmont, NCL, Vista and VNC, a copy of which is attached as
Schedule
A; and
(w) "VNC/MSI JOINT VENTURE" has the
meaning set out in section 3.2.
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1.2 For the purposes of this
Agreement, except as otherwise expressly provided
herein:
(a) "this Agreement" means this
Agreement, including the Schedule hereto,
as it may from time to time be supplemented or amended;
(b) all references in this Agreement
to a designated Article, section,
subsection, paragraph, or other subdivision, or to a Schedule, is
to
the designated Article, section, subsection, paragraph or other
subdivision of or Schedule to this Agreement unless otherwise
specifically stated;
(c) the words "herein", "hereof" and
"hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any
particular Article, clause, subclause or other subdivision or
Schedule;
(d) the singular of any term includes
the plural and vice versa and the
use of any term is equally applicable to any gender and where
applicable to a body corporate;
(e) the word "or" is not exclusive and
the word "including" is not
limiting (whether or not non-limiting language such as "without
limitation" or "but not limited to" or other words of similar
import
are used with reference thereto);
(f) except as otherwise provided, any
reference to a statute includes and
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 regulations that may be passed which
have
the effect of supplementing or superseding such statute or such
regulations;
(g) the headings to the Articles and
clauses of this Agreement are
inserted for convenience only and do not form a part of this
Agreement
and are not intended to interpret, define or limit the scope,
extent
or intent of this Agreement or any provision hereof;
(h) all amounts of money which are
referred to in this Agreement are
expressed in lawful money of the United States of America;
(i) any reference to a corporate
entity includes and is also a reference
to any corporate entity that is a successor to such entity;
(j) the parties acknowledge that this
Agreement is the product of arm's
length negotiation between the parties, each having obtained its
own
independent legal advice, and that this Agreement shall be
construed
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neither strictly for, nor strictly against, any party irrespective
of
which party was responsible for drafting this Agreement; and
(k) the representations, warranties,
covenants and obligations of Vista
and VNC in this Agreement shall be and be deemed to be made or
incurred jointly and severally by each of them.
1.3 The following schedule is
incorporated into this Agreement by reference:
SCHEDULE
DESCRIPTION
------------
---------------------
Schedule A
Vista Agreement
2.
GRANT AND MAINTENANCE OF OPTION
2.1 VNC hereby grants to MSI the
exclusive and irrevocable right and option
(the "Option")
to acquire the Interest free and clear of all
Encumbrances,
other than the Backin Right, Underlying Royalties and
other rights
retained by Newmont in the Vista Agreement.
2.2 In order to keep the right and
Option granted to MSI in respect of the
Property in good
standing and in force and effect MSI shall be obligated
to:
(a) pay US $300,000 to VNC forthwith
following acceptance for filing of
this Agreement by The Toronto Stock Exchange and, if required, by
the
TSX Venture Exchange; and
(b) fund all Expenditures on the
Maverick Springs property up to US
$1,200,000 over a period of four years commencing from October
7,
2002.
2.3 If MSI fails to make the required
option payments and contribute the
required
Expenditures in accordance with section 2.2 within the time
periods
specified in section 2.2, subject to section 12.2, then MSI
shall
lose its Option
and this Agreement and the Option shall terminate.
2.4 This Agreement represents an
option and any further performance hereunder
by MSI is
expressly at the election of MSI.
2.5 This Agreement is subject to the
terms and conditions of the Vista
Agreement and
the Artemis Lease.
2.6 The parties acknowledge and agree
that it is the intent of this Agreement
that MSI will
own and control the Silver Resources of the Property and VNC
will own and
control the Gold Resources of the Property.
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3. EXERCISE OF OPTION
3.1 At such time as MSI has made the
required option payment and funded
Expenditures in
accordance with section 2.2 within the time periods
specified in
section 2.2, then the Option shall be deemed to have been
exercised by MSI
without any further act.
3.2 On exercise of the Option, VNC and
MSI shall form a joint venture (the
"VNC/MSI Joint
Venture") and enter into a joint venture agreement (the
"Joint Venture
Agreement") in the form of the Rocky Mountain Mineral Law
Foundation Form
5A, Exploration, Development and Mine Operating Agreement,
which shall
provide for:
(a) any major decisions (including,
without limitation, exploration
expenditures on any one program in excess of US $100,000,
capital
expenditures in excess of US $2,000,000, Development decision,
suspension of production and closure) requiring a Special
Majority
vote, dilution provisions, an area of interest provision and a
right
of first refusal in respect of each other's interest in the
Property;
(b) the Participating Interests of MSI
and VNC in the VNC/MSI Joint
Venture to be equal to a 55% Participating Interest for MSI and a
45%
Participating Interest for VNC;
(c) following the formation of the
VNC/MSI Joint Venture each of MSI and
VNC may elect to reduce their Participating Interest in the
VNC/MSI
Joint Venture by giving written notice of such election to the
other
party. The president of each of MSI and VNC shall meet with each
other
at a place to be agreed upon by them or by telephone, within 15
days
after the date of the later of any election notice delivered by MSI
or
VNC, to agree upon the respective Participating Interests of VNC
and
MSI in the VNC/MSI Joint Venture. In the event such persons fail
to
meet in such 15 day period or fail to agree upon their
respective
Participating Interests, MSI will be deemed to have a 55%
Participating Interest in the VNC/MSI Joint Venture and VNC will
be
deemed to have a 45% Participating Interest in the VNC/MSI
Joint
Venture;
(d) the Feasibility Study to calculate
gold and silver reserves in
accordance with NI 43-101;
(e) MSI to own and control the Silver
Resources of the Property (including
any silver resources included in any tailings or waste rock as
a
result of commercial production on the Property) and for VNC to
own
and control the Gold Resources of the Property (including any
gold
resources
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included in any tailings or waste rock as a result of
commercial
production on the Property);
(f) in the event a decision is made
for the Development of the Property,
MSI to elect, at its sole discretion, by delivering written notice
to
VNC within 30 days after the decision by the management committee
of
the VNC/MSI Joint Venture for the Development of the Property,
to
increase its Participating Interest up to a maximum of 55%, by
specifying in percent the amount by which it is increasing its
interest (the "MSI Differential") and the aggregate amount of
such
increased interest in such notice, and paying to VNC an amount
equal
to 200 percent of the expenditures incurred by the VNC/MSI
Joint
Venture from the date of formation of the joint venture to the
date
the decision was made by the management committee of the VNC/MSI
Joint
Venture for the Development of the Property multiplied by the
MSI
Differential;
(g) in the event a decision is made
for the Development of the Property,
VNC to elect, at its sole discretion, by delivering written notice
to
MSI within 30 days after the decision by the management committee
of
the VNC/MSI Joint Venture for the Development of the Property,
to
increase its Participating Interest up to a maximum of 45%, by
specifying in percent the amount by which it is increasing its
interest (the "VNC Differential") and the aggregate amount of
such
increased interest in such notice, and paying to MSI an amount
equal
to 200
percent of the expenditures incurred by the VNC/MSI Joint
Venture from the date of formation of the joint venture to the
date
the decision was made by the management committee of the VNC/MSI
Joint
Venture for the Development of the Property multiplied by the
VNC
Differential;
(h) VNC to elect, by delivering
written notice to MSI within 30 days after
the commencement of Commercial Production, to take in kind the
gold
production from the Property;
(i) MSI to elect, by delivering
written notice to VNC within 30 days after
the commencement of Commercial Production, to take in kind the
silver
production from the Property;
(j) the governing law of the agreement
to be the law of the State of
Nevada.
3.3 In the event Newmont exercises its
Back-In Right:
(a) the VNC/MSI Joint Venture will
enter into a joint venture agreement
with Newmont in accordance with section 3.5 of the Vista
Agreement;
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(b) any payments made by Newmont in
exercising the Back-In Right with
respect to Maverick Springs shall be made to VNC or the VNC/MSI
Joint Venture and will be distributed to the VNC/MSI Joint
Venture
participants on the basis of their actual contributions;
(c) VNC may elect, by delivering
written notice to the VNC/MSI Joint
Venture within 30 days after the commencement of Commercial
Production, to take in kind the VNC/MSI Joint Venture's share
of
gold production from the Property and upon receipt of such
notice
the VNC/MSI Joint Venture shall elect under its joint venture
agreement with Newmont to take its share of production in kind;
(d) MSI may elect, by delivering
written notice to the VNC/MSI Joint
Venture within 30 days after the commencement of Commercial
Production, to take in kind the VNC/MSI Joint Venture's share
of
silver production from the Property and upon receipt of such
notice
the VNC/MSI Joint Venture shall elect under its joint venture
agreement with Newmont to take its share of production in kind;
and
(e) the maximum US$ 2.00 million
contribution, required for the
completion of a bankable feasibility study under paragraph
3.5(b)(iii) of the Vista Agreement will be contributed by MSI
and
VNC on the basis of their Participating Interests in the
VNC/MSI
Joint Venture at the time the cash requests are made by
Newmont.
4. OPERATOR
4.1 VNC will be the Operator until the
earlier to occur of the following
events:
(a) Exercise of the Option by MSI and
completion of the Joint Venture
Agreement;
and
(b) VNC resigns as the Operator.
4.2 The Operator shall perform its
duties hereunder in accordance with the
Programs under
the direction of the Management Committee and in accordance
with this
Agreement.
4.3 As Operator, VNC will not charge a
management fee or any other fee for
carrying out its
duties. VNC will charge the actual time spent by VNC and
Vista personnel
on the Prope
