Seal:
Eduardo Avello Concha, Notary Public, Notary No. 27, Santiago,
Initials
CONTRACT
FOR THE OPTION TO PURCHASE MINING HOLDINGS
INGENIERIA
DE PROYECTOS, DESARROLLO, ESTUDIOS Y SERVICIOS
H.I.T.
LIMITADA AND OTHERS
TO
MINERA
FARELLON LIMITADA
In
Santiago de Chile, the seventh of December of two thousand and
seven, before me, EDUARDO AVELLO CONCHA, Attorney, Titleholder
of the Twenty-Seventh Notary of Santiago, with an office at
Orrego Luco No. zero one hundred and fifty-three, Providencia,
appeared: HERNAN ALCIDES IRIBARREN TORRES, Chilean, married,
mining engineer, National I.D. No. four million three hundred
and twenty thousand five hundred and one dash three, acting on
his own behalf and, in addition, as the representative of
INGENIERIA DE PROYECTOS, DESARROLLO, ESTUDIOS Y SERVICIOS
H.I.T. LIMITADA (Project Engineering, Development, Studies and
Services H.I.T. Limited), a company engaged in what is
indicated in the company name, Sole Taxation List No.
seventy-seven million two hundred and ninety-two thousand two
hundred dash zero, both with the address Sucre two hundred and
twenty, Office No. five hundred and ten, Commune of
Antofagasta, hereafter jointly called “the Offering
Party”; and KEVIN ROBERT MITCHELL, Canadian, married,
separation of goods, miner, I.D.
Document
for Foreigners No. fourteen million four hundred and
ninety-eight thousand nine hundred and seventeen dash one. He
is representing the company, MINERA FARELLON LIMITADA, a
Chilean company engaged in what is indicated in the company
name, Sole Taxation List No. seventy-six million eight hundred
and fourteen thousand one hundred and seventy dash three, both
with the address Prat one thousand and fifty-one, Office No.
four, commune of Vallenar, hereafter known as “Minera
Farellon”. The persons appearing are of legal age and
verified their identity with the above-mentioned I.D.
Documents and stated: That in virtue of this document, they
have come to execute the following contract for the
option to purchase mining holdings, in agreement
with what is stipulated in Articles one hundred and sixty-nine
and the others that are applicable of the Mining Code.
FIRST ARTICLE:
Individualization of the Holdings : A) Hernan Alcides
Iribarren Torres, as the representative of Ingenieria de
Proyectos, Desarrollo, Estudios y Servicios H.I.T. Limitada,
hereafter and indistinctly called “H.I.T. LTDA.”,
declares that the company that he is representing is the sole
and exclusive owner of the following mining holdings: One)
“CAMILA DOS, Uno al Veinte”, located in Quebrada
Jilguero, Commune of Vallenar, Province of Huasco, Third
Region of Atacama, the declaration of which is registered on
Page No. one thousand nine hundred and twenty-one, No. one
thousand five hundred and thirty-six of the Registry of
Discoveries of the Conservator of Mines of Vallenar for the
year two thousand and five; Two) “CAMILA TRES, Uno al
Veinte”, located in Quebrada Jilguero, Commune of
Vallenar, Province of Huasco, Third Region of Atacama, the
declarations of which are registered on the back of Page No.
two thousand five hundred and fifty-three, No. two thousand
and forty-two of the Registry of Discoveries of the
Conservator of Mines of Vallenar for the year two thousand and
six; Three) “CAMILA CUATRO, Uno al Veinte”,
located in Quebrada Jilguero, Commune of Vallenar, Province of
Huasco, Third Region of Atacama, the declaration of which is
registered on Page No. two thousand five hundred and
fifty-two, No. two thousand and forty-one of the Registry of
Discoveries of the Conservator of Mines of Vallenar for the
year two thousand and six; B) Hernan Alcides Iribarren Torres
declares, in turn, that he is the sale and exclusive owner of
the mining holdings “CAMILA, Uno al Veinte”,
located in the Sector of Quebrada El Jilguero, Commune of
Vallenar, Province of Huasco, Third Region of Atacama,
the measuring
document of which is registered on Page No. thirteen, No.
three, of the Property Registry of the Conservator of Mines
of
Vallenar
for the year two thousand. The mining holdings in the process
of constitution indicated in Letter A, and the mining holdings
detailed in Letter B of this article shall be called,
hereafter and jointly, “Mining Holdings”. Included
in this denomination shall also be the concessions for
exploitation that could be constituted from the detailed
declarations registered in Letter A referred to above. Once
they are registered, the measurement document and the
constitutive decision for the holdings that originate from the
above-mentioned declarations, this option contract shall be
noted in the margin of these registrations. SECOND ARTICLE:
One. Option Offer : In virtue of this document, Hernan
Alcides Iribarren Torres, for himself and as the
representative for which he is appearing, grants to Minera
Farellon the option to purchase and irrevocably offers to
sell, cede and transfer to Minera Farellon the mining holdings
detailed in the First Article of this document. Two. Price of
the Purchase/Sale Offered : The price of the
purchase/sale offered regarding each one of the mining
concessions detailed in the article above, is the equivalence
in pesos national currency to the amount of three hundred
thousand dollars of the United States of America, which comes
to a total price for the purchase/sale offered of one million
and two hundred thousand dollars of the United States of
America. Notwithstanding the above, in the case where the
option to purchase the Mining Holdings is exercised before the
term for the expiration of the purchase option indicated in
No. Three below, the price of the purchase/sale offered shall
increase in the amount of the price of the option that has not
accrued interest and been paid, in agreement with what is
stipulated in the Fifteenth Article. The mining holdings and
the minerals that they contain shall be sold and transferred
with all of their uses, rights, customs and easements, free
from all encumbrances, prohibitions, resolutory conditions,
embargos or pending litigation, as well as any other
impediment whatsoever that could affect their free use,
enjoyment and disposition; free from all superposition, and
with their mining patents totally paid. The vendor or Offering
Party is responsible for the Warranty of Title and Right of
Possession according to the Law. Three. Option
Term : The term of the option, within which Minera
Farellon shall be able to freely accept or refuse the
purchase/sale offer of the holdings, shall expire the seventh
of December of two thousand and nine. Four: Option
Price : The price
of the option is the sum in pesos, national currency,
equivalent to two hundred thousand
dollars
of the United States of America, which shall be paid under the
terms that are indicated in the Fourth Article of this
document. THIRD
ARTICLE : Mr. Kevin Robert Mitchell, as the
representative of Minera Farellon Limitada, accepts the
stipulations of this contract for the company that he is
representing under the terms of Article one hundred and
sixty-nine and the others that are applicable of the Mining
Code, in virtue of the fact that the Second Article grants
Minera Farellon the power to accept or reject the offer made
by the Offering Party. Therefore, Minera Farellon shall be
able, at any time whatsoever counted from the date of this
document and up to the expiration of the term indicated in No.
Three of the Second Article of this document, to decide to
accept the purchase/sale of the Mining Holdings under the
terms indicated in this contract. FOURTH ARTICLE.
One) Price of the Option to Purchase the Mining
Holdings : The price of the option contract to purchase
the Mining Holdings is the amount of two hundred thousand
dollars of the United States of America, payable in pesos,
national currency, in the following amounts and payment
periods: /a/ the amount of fifty thousand dollars of the
United States of America, which Minera Farellon shall pay on
the seventh of June of two thousand and eight to Hernan
Alcides Iribarren Torres, for himself and as the
representative of H.I.T. LTDA., in the proportions of a fourth
part for the first and three quarters for the second, which
are the proportions into which all of the payments that are
made in agreement with this document shall be distributed; /b/
the amount in pesos national currency equivalent to the sum of
fifty thousand dollars of the United States of America, which
shall be paid on the seventh of December of two thousand and
eight; and /c/ the amount in pesos national currency
equivalent to the sum of one hundred thousand dollars of the
United States of America, which shall be paid on the seventh
of June of two thousand and nine. Two) Form and Place
of Payment of the Quotas : The quotas indicated in
Letters /a/, /b/, and /c/ above shall be paid on their
expiration date, through the delivery to the Notary that is
authorizing this document, or to whoever substitutes, replaces
him or carries out his duties, through a bank Sight Draft,
payable to the order of Hernan Alcides Iribarren Torres, or to
the individual that replaces him as the representative of
H.I.T. LTDA, or to the common representative of the
successors, continuers or transferees, for the corresponding
amount. The Notary shall not deliver
the above-mentioned Sight Draft unless the
corresponding
public document is signed as the receipt. The Notary rights
that are generated because of these payments shall be paid by
Minera Farellon. Three) Cessation of the
obligation of future payments in the event of a
withdrawal : If Minera Farellon withdraws from
accepting the purchase/sale offer that this document refers
to, before the expiration of any of the terms indicated in
Letters /a/, /b/, and /c/ above, the obligation that Minera
Farellon has to pay the remaining quotas of the option that
have not accrued interest on the date of the withdrawal shall
cease immediately, without prejudice to what is stipulated
below in this document. FIFTH ARTICLE.
Acceptance of the Offer : If Minera Farellon decides to
accept the offer within the term agreed on to do so, the
company shall state the desire to do so through a public
document drawn up in this same Notary declaring that it wishes
to accept the offer. With the same objective, Minera Farellon
shall deliver to the Notary that authorizes this document, or
to the individual that substitutes, replaces him or carries
out his duties, a bank Sight Draft made out to the order of
Hernan Alcides Iribarren Torres, or to the person that
replaces him as the representative of H.I.T. LTDA., or the
common representative of the successors, continuers or
transferees for the amount in pesos national currency
equivalent to two hundred thousand dollars of the United
States of America, readjusted as necessary, according to what
is agreed on in the Sixth Article below, the amount that
corresponds to the Fixed Part of the price for the
purchase/sale. According to what is indicated in the Second
Article No. Two of this document, this amount shall increase
in the amount of the quotas of the price for the option that
could still be unpaid, in the event that Minera Farellon
accepts the offer of the sale and exercises the option to
purchase the Mining Holdings prior to the dates indicated in
Letters /a/, /b/, and /c/ of the Fourth Article. The Notary
shall not deliver the above-mentioned Sight Draft unless the
corresponding public document is signed as the receipt. Minera
Farellon shall pay the Notary fees that are generated because
of this payment. The corresponding Conservator of Mines, with
the copy of this document before him, verifying the delivery
of the above-mentioned Sight Draft to the appropriate Notary,
and a copy of the document regarding the acceptance that
Minera Farellon is granting, shall register the Mining Holding
indicated in the acceptance document in the name of Minera
Farellon Limitada. All of this is in virtue of what is
stipulated in the final section of Article
one hundred and sixty-nine of the Mining Code according to
which, for a contract for the option to purchase the rights
especially regulated by said
Code,
it shall be sufficient to have the sole acceptance of the
irrevocable offer for the purchase/sale offered to be
perfected, with the sole requirement being that the offer as
well as the acceptance are verified in a public document.
SIXTH ARTICLE.
Payment of Purchase/Sale Price : The price of the
purchase/sale of the Mining Holdings is the amount of one
million and two hundred thousand dollars of the United States
of America, which shall be paid readjusted in the same
proportion that the Consumer Prices Index of the United States
of America has varied, taking as a basis the index appearing
in the publication of the same immediately prior to the date
of this document and comparing it with the index appearing in
the publication immediately prior to the date of the
corresponding payment. If the index is not available, the
method that shall be applied is the method of the calculation
of the variation of the internal prices of the United States
of America that in the corresponding opportunity is employed
in Chile and is more favourable to the creditor. The price of
the purchase/sale is made up of the part that is called the
“Fixed Part”, and the other part that is called
the “Varied Part”: /a/ Fixed Part: The fixed Part
of the purchase/sale is the sum in pesos equivalent to two
hundred thousand dollars of the United States of America,
which Mineral Farellon shall pa
