EXPLORATION AGREEMENT
WITH
OPTION TO FORM JOINT
VENTURE
(PPM GOLD PROJECT)
THIS EXPLORATION
AGREEMENT WITH OPTION TO FORM JOINT VENTURE (PPM GOLD PROJECT) (the
“Agreement”) is made effective this 17th day of April,
2007 (the “Effective Date”) by and between MIRANDA
U.S.A., INC., a Nevada corporation (“Miranda”); and
PIEDMONT MINING COMPANY, INC., a North Carolina corporation
(“Piedmont”).
RECITALS
A. Miranda
owns and possesses the “PPM” group of forty-four (44)
unpatented lode mining claims situated in Humboldt County, Nevada
(the “PPM Gold Project”). The claims are more
particularly described on Exhibit A attached hereto.
These claims,
together with all ores, minerals, surface and mineral rights, and
the right to explore for, mine, and remove the same, and all water
rights and improvements, easements, licenses, rights-of-way and
other interests appurtenant thereto, shall be referred to
collectively as the “Property.”
B. Miranda
U.S.A., Inc. is a wholly owned subsidiary of Miranda Gold Corp., a
British Columbia corporation.
C. Piedmont
wishes to acquire an interest in the Property by making a cash
payment to Miranda and funding a work program on the Property
pursuant to Section 1.1 of this Agreement.
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C. Following
completion of the work program and satisfaction of the terms and
conditions of Section 1.1 of this Agreement, Piedmont and Miranda
may form a Joint Venture for further exploration and development of
the Property.
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THEREFORE, the
parties have agreed as follows:
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SECTION
ONE
Exploration
Agreement
1.1
Option to Earn 55% Interest . Miranda hereby grants to
Piedmont the exclu-sive option to earn an undivided fifty-five
percent (55%) interest in the Property by funding ONE MILLION SEVEN
HUNDRED FIFTY THOUSAND DOLLARS ($1,750,000.00) in exploration
activities during a five-year period. In order to earn this
interest, Piedmont shall make the following payments:
a. Within
thirty (30) days of the Effective Date of this Agreement, Piedmont
will pay to Miranda the sum of TWENTY-FIVE THOUSAND DOLLARS
($25,000.00). This payment shall not be credited against the work
requirement.
b. Piedmont
agrees to spend a minimum of ONE HUNDRED SEVENTY-FIVE THOUSAND
DOLLARS ($175,000.00) in Exploration Expenditures on the Property
within one (1) year following the Effective Date. The term
“Exploration Expenditures” shall include monies
expended on geological, geophysical, and geochemical surveys on the
Property; sampling, trenching, drilling, and assaying;
federal
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claim maintenance
fees payable to the Nevada Bureau of Land Management; recording
fees payable to Humboldt County in connection with the recording of
Affidavits and Notices of Intent to Hold; and related exploration
costs (but excluding the value of any cash payments made to
Miranda). This is a binding commitment and cannot be cancelled
through termination of this Agreement.
c. Thereafter,
Piedmont may elect to continue funding of Exploration Expenditures
on the Property by completing the following expenditure
requirements:
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Year of
Agreement
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Amount of
Expenditures
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2
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Additional
$200,000.00
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3
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Additional
$300,000.00
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4
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Additional
$425,000.00
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5
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Additional
$650,000.00
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Any excess of
expenditures in one year shall be carried forward as a credit
against the subsequent years’ expenditures. Any shortfall in
expenditures can be made up in the following year with
Miranda’s consent. Absent such consent, a shortfall in
expenditures shall be paid to Miranda at the end of each contract
year, provided the provisions of Section Eight have not been
invoked or the Agreement has not been terminated in accordance with
Section 4.1 below.
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d. At
such time as Piedmont has expended ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND DOLLARS ($1,750,000.00) in exploration expenditures in
accordance with Sections 1.(b) and 1.(c) above, Piedmont will have
earned an undivided 55% interest in the Property. The parties shall
then proceed to form a Joint Venture in accordance with Section 3
below.
1.2
Funding of Exploration Activities . Prior to the
commencement of each contract year, Piedmont shall prepare a
general plan and budget (“Plan”) setting forth the
description and amount of Piedmont’s proposed exploration
expenditures for the year. Miranda shall review and comment upon
the Plan within fifteen (15) days of its submission. However,
Piedmont, as Manager during the earn-in period, shall have the
final say regarding the Plan. Piedmont may add an overhead fee of
ten percent (10%) to all expenditures (except the claim maintenance
fees described in Section 1.4 below) as a credit toward its work
requirement for that year. Piedmont may, in its sole discretion,
elect to nominate Miranda as its contractor to plan and implement
exploration activities on the Property in accordance with the
Services Agreement attached hereto as Exhibit B.
1.3
Claim Maintenance . So long as the Agreement has not been
terminated prior to June 1 of each year, Piedmont shall have the
obligation to maintain the claims in good standing. Piedmont shall
pay the federal claim maintenance fees to the Nevada Bureau of Land
Management by August 1 of each year, and Piedmont shall record an
Affidavit and Notice of Intent to Hold with the Humboldt County
Recorder not later than
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October 1 of each
year. Piedmont shall promptly provide evidence of these filings to
Miranda. These payments shall be credited against Piedmont’s
work expenditure requirements.
1.4
Area of Interest . The parties hereby establish an Area of
Interest extending one (1) mile from the exterior boundaries of the
property, which is depicted on the map attached hereto as Exhibit
C. Any mineral claims or rights acquired by either Miranda or
Piedmont within the Area of Interest shall be subject to the terms
of this Agreement.
SECTION
TWO
Conduct of
Exploration Work
The following
provisions shall govern exploration activities on the Property
during the term of the Exploration Agreement described in Section 1
above.
2.1
Conduct of Work . Piedmont shall perform its exploration
activities on the Property in accordance with good mining practice,
shall comply with the applicable laws and regulations relating to
the performance of exploration and mining operations on the
Property, and shall comply with the applicable worker's
compensation laws of the State of Nevada.
2.2
Liability and Insurance . Piedmont shall defend, indemnify,
and hold Miranda harmless from any claims, demands, or liabilities
arising from acts of gross negligence or willful misconduct on the
part of Piedmont. Piedmont shall obtain and
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carry a policy of
public liability insurance in the minimum amounts of $1,000,000.00
or more for personal injury and $300,000.00 for property damage,
protecting Piedmont and Miranda against any claims for injury to
persons or damage to property resulting from Piedmont’s
operations. Piedmont shall provide Miranda with a certificate of
insurance evidencing such insurance.
2.3
Liens . Piedmont shall keep the Property free and clear from
any and all mechanics’ or laborers’ liens arising from
labor performed on or material furnished to the Property at
Piedmont’s request. However, a lien on the Property shall not
constitute a default if Piedmont, in good faith, disputes the
validity of the claim, in which event the existence of the lien
shall constitute a default thirty (30) days after the validity of
the lien has been adjudicated adversely to Piedmont.
2.4
Acquisition of Permits . Piedmont shall acquire all federal,
state, and local permits required for its operations. Piedmont
shall be responsible for reclamation of only those areas disturbed
by Piedmont’s activities. Piedmont will post any operating
and reclamation bonds required by regulatory agencies for work on
the Property. The bond will revert to Piedmont upon satisfactory
completion of the reclamation program.
2.5
Inspection of Property . Miranda, or Miranda’
authorized agents or representatives, shall be permitted to enter
upon the Property at all reasonable times for the purpose of
inspection, but shall enter upon the Property at Miranda’ own
risk and so as not to hinder unreasonably
