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 Lease in recordable form.
X.
DEFAULT
10.1 Lessee shall be in
default hereunder if either of the following shall
occur:
a. Lessee fails to
fulfill an obligation to Lessor, or does not in good faith contest
in writing the particular
