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Exhibit 10.1(i)
MINING LEASE WITH OPTION TO PURCHASE
THIS MINING LEASE AGREEMENT MADE AND ENTERED INTO on this 19th day
of April,
2004, by and between NORTH BECK JOINT VENTURE, L.L.C., a Utah
limited
liability company (hereinafter referred to as "Lessor") and VALLEY
HIGH MINING
COMPANY., a Nevada corporation (hereinafter referred to as
"Lessee").
IN CONSIDERATION of a total of 5,000,000 (five million) post-
merger/change of
domicile "restricted" common capital shares of Lessee to be issued
to and in
the name of Lessor, par value $0.001 per share, and other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged,
Lessor does hereby grant, demise and let exclusively unto Lessee
for the
duration and for the purposes herein specified, all of Lessor's
right, title
and interest in and to the following described patented lode mining
claims
comprising 470.097 acres, more or less, and situated in the Tintic
Mining
District of Juab County, State of Utah; including all dips, spurs
and
appurtenant rights, including water rights, hereinafter
collectively referred
to as the "Leased Premises."
FOR "LEASED PREMISES" DESCRIPTION, SEE EXHIBIT "A"
ATTACHED HERETO AND MADE A PART HEREOF
I. EXCLUSIVE RIGHTS GRANTED
1.1 The Leased Premises are hereby leased exclusively to Lessee and
its
successor-in-interest for the following purposes, all or any of
which may be
performed by Lessee in such manner and at such time or times as
Lessee may
determine in its absolute discretion, subject to the terms
hereof:
a. Exploring and prospecting for, developing, mining, excavating,
leaching,
milling, processing and smelting, whether by open pit, underground,
strip
mining, solution mining, heap leaching, or any other methods deemed
desirable
by Lessee in its sole discretion, all minerals, ores, valuable
rocks, rare
earths and materials of all kinds, including mine dumps and
tailings
(hereinafter collectively referred to as "Leased Substances");
b. Processing, concentrating, beneficiating, treating, milling,
smelting,
shipping, selling and otherwise disposing of the Leased Substances
and
receiving the proceeds of any such sale;
c. Erecting, constructing, maintaining, using and operating in and
on the
Leased Premises such buildings, structures, machinery, facilities
and
equipment as Lessee deems necessary; and
d. Engaging in any other activity that Lessee deems reasonable and
necessary
to achieve the foregoing purposes.
II. TERM OF LEASE
2.1 The term of this Mining Lease shall be for five (5) years from
the
effective date set forth above, and may be renewed by Lessee for
successive
five (5) year periods upon substantially the same terms and
provisions as set
forth herein based upon the then-capital structure of the Lessee,
until
declared forfeited and canceled by Lessor or relinquished by Lessee
as
provided herein. Lessee shall give Lessor written notice of each
renewal at
least thirty (30) days prior to expiration of the respective
five-year term.
III. ADVANCE ROYALTY AND WORK COMMITMENT
3.1 A portion of the "restricted" stock received by Lessor shall
constitute an
Advance Royalty paid the Lessor as initial consideration upon
execution of
this Mining Lease. Such shall further constitute the minimum
advance royalty
on or before the anniversary date of each succeeding lease
year.
3.2 Lessee shall be entitled to a $30,000 credit in the amount of
all such
Advance Royalties paid against Production Royalties otherwise owing
to Lessor
pursuant to Article IV of this Lease.
3.3 Lessee shall perform exploration, mining, development,
production,
processing or any other activity ("work" herein) which benefits the
Leased
Premises at a minimum cost of $15,000 for each successive five (5)
year term
during the term of this Mining Lease and commencing on the date of
this Lease.
All work on other lands within 500 feet of the boundary of any
portion of the
Leased Premises shall be deemed to benefit the Leased Premises for
the work
commitment if such work is part of an overall plan or project that
includes
the Leased Premises. All costs expended for work in excess of
$15,000 for any
five (5) year term shall accrue and be applied to the work
commitment for the
next successive 5-year term only; however, the maximum amount that
can so
accrue for the next succeeding lease term shall be no more than
$15,000.
3.4 In the event that Lessee does not perform work in the amount of
the entire
$15,000 minimum expenditure (which amount will include any excess
amount
accrued from the prior five year term), Lessee shall pay Lessor the
amount of
any such shortage in cash. Within 30 days after the end of each
five (5) year
term, Lessee shall submit an accounting report of the expenditures
toward the
work commitment and a report containing factual, non- interpretive
data
concerning the work of Lessee during the preceding 5-year term. On
or before
August 10 of each year, a separate one-year report shall be
prepared and
furnished to Lessor containing factual, non-interpretive data
concerning work
of Lessee, if any, during the preceding calendar year.
3.5. The breach, by Lessee, of paragraphs 3.3 and/or 3.4 above
shall entitle
Lessor to immediately terminate the Lease and in such event, Lessor
waives the
right to sue for monetary damages.
IV. PRODUCTION ROYALTY
4.1 In addition to the consideration set forth herein, Lessee shall
pay Lessor
a Three and One Half percent (3.5%) Net Smelter Royalty on all
mineral bearing
ores.
4.2 The payment of Production Royalty shall be made not more than
45 days
after the close of the month during which the payment is received
from the
smelter or buyer on which such Royalty is calculated.
4.3 "Net Smelter Returns" shall mean the net amount of money
received by
Lessee from the sale of Leased Substances to a smelter, refinery or
other
buyer, after deduction of costs of transportation to point of sale
and costs
of any concentration of Leased Substances prior to delivery to the
smelter,
refinery or other buyer, and less the deduction of all cost,
penalties or
charges required by said smelter, refinery or other buyer to be
paid by Lessee
as a condition of sale. In the event a Leased Substance is sold to
any buyer
other than a smelter, all costs incurred by Lessee after mining for
processing
or treating such substances, including refining, shall be
deductible costs.
4.4 The payment of Production Royalty shall be made not more than
45 days
after the close of the month during which the payment is received
from the
smelter or buyer on which such Royalty is calculated.
4.5 All Leased Substances which the Lessee chooses to market shall
be marketed
at the best terms reasonably obtainable, with due regard to
freight
differentials, and if such ores or concentrates or other products
shall be
treated at a smelter or refinery of Lessee, the smelter or refinery
schedules
used for determining the Net Smelter Returns thereon shall not be
less
favorable than the terms and conditions either being offered to
others or
being contracted with others at the time for products of like
character and in
similar quantities for delivery to Lessee's smelters or
refineries.
4.6 Lessee shall be entitled to credit all Advance Royalty payments
paid to
Lessor pursuant to Article III of this Mining Lease against all
Production
Royalties payable to Lessor under this Article IV.
V. INSPECTION, REPORTS, BOOKS AND RECORDS
5.1 Lessor, or its duly authorized agent or representative, shall
be permitted
to enter into or upon the Leased Premises for the purpose of
inspection, at
all reasonable times during business hours, after 48 hours advance
notice in
writing to Lessee. Lessor shall enter upon said Leased Premises at
Lessor's
own risk and so as not to hinder the operations of Lessee. Lessor
shall
indemnify and hold harmless Lessee from any damage, claim or demand
arising
from the entry or inspection by Lessor or its agent or
representatives, or any
of them, on the Leased Premises or the approaches thereto.
5.2 The books and records of Lessee insofar as they relate to
operations on
the Leased Premises pursuant to this Mining Lease shall be open to
inspection
and copying by Lessor or its duly authorized representatives, at
the expenses
of Lessor, during regular business hours, after 48 hours advance
request in
writing to Lessee. Within twenty-four (24) months after the end of
each
calendar year, Lessor may at its sole cost and expense make or have
made an
audit of the accounts and records of Lessee concerning operations
on the
Leased Premises for that calendar year; provided that Lessor may
audit the
accounts for a calendar year only once and provided further that
Lessor must
notify Lessee in writing of its intention to cause such an audit to
be made
sixty (60) days in advance of such date.
VI. DATA ON THE PROPERTY
6.1 Upon execution of this Mining Lease, Lessor will provide Lessee
with
access to all data concerning the Leased Premises then in
possession of Lessor
or its agents. Lessee shall have the right to make and remove
copies of all
such data at the expense of Lessee, but Lessee shall not remove
original
documents without written consent of Lessor. Lessee hereby
acknowledges that
Lessor has provided all data in its possession.
VII. PROTECTION FROM LIENS, DAMAGES AND LIABILITY
7.1 Lessee shall keep the Leased Premises free and clear of liens
for labor
done or performed or materials furnished on or for the development
or
operation of the Leased Premises under this Mining Lease. Lessee
will not be
considered in breach of this provision so long as Lessee, in good
faith,
contests the validity of any liens or claims against the Leased
Premises.
7.2 Lessee shall indemnify and shall hold harmless Lessor and all
of Lessor's
partners, agents, and employees, and each of them, from and against
any and
all obligations, debts, loss, damage, claims, demands, suits,
controversies,
costs, fees, liens, encumbrances, and liabilities whatsoever,
including
attorneys' fees, in any way resulting from or arising out of any
failure by
Lessee to abide by any material term of the Mining Lease or any
negligent or
intentional act or omission by Lessee's contractors arising out of
or in
connection with the operations and activities of Lessee hereunder,
or out of
its possession and occupancy of the Leased Premises, including
environmental
costs resulting from Lessee's operations, or from any similar
actions by the
public during the term of this Mining Lease. Lessor shall not be
responsible
or liable for any loss or damage to Lessee or to Lessee's property
or business
that may be occasioned by or through acts or omissions of persons
or entities
(other than for negligent or reckless acts or willful misconduct or
omissions
by Lessor or any of its partners, agents or employees) occupying,
using, or
passing over any part of the Leased Premises. Lessee shall use and
occupy the
Leased Premises at its own risk, and hereby releases Lessor, to the
full
extent permitted by law, from all claims of every kind or nature,
including
claims for loss of life, personal or bodily injury, or property
damage except
as otherwise excluded herein.
7.3 Lessor is informed that the Environmental Protection Agency
(EPA) is
involved in a Super Fund clean-up project in the City of Eureka,
Utah, an area
near the Leased Premises. This project is based on alleged lead
contamination
in the yards of Eureka city dwellers, contamination that is
allegedly the
result of mining in the Tintic Mining District. (The actual cause
of the
alleged contamination is the fact that Eureka city dwellers
reportedly took
and used a variety of mineral tailings for fill dirt in their front
and back
yards.) This project has been reported in local newspapers. While
Lessor does
not believe that it has any liability whatsoever for creating any
lead
contamination in the City of Eureka, Lessor cannot guarantee that
the EPA will
not pursue it, along with other, similarly situated landowners,
for
reimbursement of part of the cost of such clean-up project.
Accordingly,
Lessor hereby indemnifies and holds Lessee harmless from and
against any claim
by the EPA or some similar state agency based solely on past
mining
contamination or violations. In the event the EPA or a similar
state agency
brings suit against Lessee as a person in the chain of title,
Lessor further
agrees to defend any such suit on Lessee's behalf at its sole cost
and
expense.
VIII. COMPLIANCE WITH LAW
8.1 In conducting its operations hereunder, Lessee will cause all
work,
development and mining to be done in a careful and miner-like
manner, and
Lessee shall fully comply with the terms and provisions of
worker's
compensation laws and other laws governing its operations under
this Mining
Lease, including but not limited to any mining or environmental
obligation,
under existing or hereafter enacted legislation.
IX. TERMINATION BY LESSEE
9.1 Lessee shall have the continuing right to terminate this Mining
Lease at
any time and to surrender the Leased Premises to Lessor by giving
Lessor
written notice thereof at least 30 days prior to the stated date
of
termination.
9.2 In the event of termination, all sums theretofore paid Lessor
by Lessee
shall, except in the case of manifest error, be retained by Lessor,
and all
obligations of Lessee to make payments (expect those accruing prior
to the
date to termination) and perform any other obligation set forth in
this Mining
Lease shall terminate.
9.3 In the event of termination, Lessee, upon request by Lessor,
shall make,
execute, acknowledge and deliver to Lessor a written relinquishment
of this
Mining Le
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