PROPERTY OPTION
AGREEMENT
THIS AGREEMENT
made and entered into as of the 1 st day
of April, 2009
BETWEEN: American
International Ventures Inc., a company having a mailing address at
4058 Histead Way, Evergreen, Colorado 80439,
(herein called the
“Optionor”)
OF THE FIRST PART
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Patriot Gold
Corp., a company having an office at 3651 Lindell Road, Suite D
#165, Las Vegas, NV 89103
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(herein called
the “Optionee”)
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WHERAS the
Optionor has represented that, subject to the NSR (as defined
herein), it is the sole recorded and beneficial owner in and to the
property called the Bruner Patented Claims (the “Property)
described in Schedule “A” attached hereto;
AND WHEREAS the
Optionor, subject to the 1.5% NSR reserved to the Optionor as
described in Schedule B and 2% NSR reserved to Miramar-Orcana
(collectively, the “Reserved NSR”), now wishes to grant
to the Optionee the exclusive right and option to acquire an
undivided 100% right, title and interest in and to the Property on
the terms and conditions hereinafter set forth;
NOW THEREFORE
THIS AGREEMENT WITNESSETH THAT in consideration of the premises,
the mutual covenants herein set forth herein and the sum of One
Dollar ($1.00) of lawful money of U.S. currency now paid by the
Optionee to the Optionor (the receipt whereof is hereby
acknowledged), the Parties hereto do hereby mutually covenant and
agree as follows:
The following
words, phrases and expressions shall have the following
meanings:
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“Facilities” means all mines and
plants, including without limitation, all pits, shafts, adits,
haulageways, raises and other underground workings, and all
buildings, plants, facilities and other structures, fixtures and
improvements, and all other property, whether fixed or moveable, as
the same may exist at any time in, or on the Property and relating
to the operator of the Property as a mine or outside the Property
if for the exclusive benefit of the Property only;
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“Force
Majeure” means an event beyond the reasonable control of the
Opionee that prevents or delays it from conducting the activities
contemplated by this Agreement other than the making of payments
referred to in Section 4 herein. Such events shall include but not
be limited to acts of God, war, insurrection, action or inaction of
governmental agencies reflecting an instability in government
procedures, or delay in permitting unacceptable to both Optionor
and Optionee;
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“Mineral
Products” means the commercial end products derived from
operating the Property as a mine:
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“Mining
Operations” includes:
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every kind of
work done on or with respect to the Property by or under the
direction of the Optionee during the Option Period or pursuant to
an approved Work Program; and
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without limiting
the generality of the foregoing, including all work capable of
receiving assessment credits pursuant to the Mines and Minerals Act
of Nevada and the work of assessment, geophysical, geochemical and
geological surveys, studies and mapping, investigating, drilling,
designing, examining equipping, improving, surveying, shaft
sinking, raising, cross-cutting and drifting, searching for,
digging, trucking, sampling, working and procuring minerals, ores
and metals, in surveying and bringing any mineral claims to lease
or patent, in doing all other work usually considered to be
prospecting, exploration, development, a feasibility study, mining
work, milling concentration, beneficiation or ores and
concentrates, as well as the separation and extraction of Mineral
Products and all reclamation, restoration and permitting
activities;
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“NSR” means that Net Smelter Royalty
as defined in Schedule “B” attached hereto;
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“Option” means the option granted by
the Optionor to the Optionee to acquire, subject to the Reserved
NSR to the Optionor, an undivided 100% right, title and
interest in and to the Property as more particularly set forth in
Section 4;
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“Option
Period” means the period from the date hereof to: (i) the
date at when the Optionee has performed its obligations to acquire
its 100% interest in the Property as set out in Section 4 hereof,
or (ii) the termination of this Agreement, which ever is
earlier.;
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“Property” means the mineral claims
described in Schedule “A”;
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“Filing
Fees” means all fees, payments and expenses necessary to keep
the patented claims in good standing with federal, state and local
government entities including property taxes;
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Any heading,
caption or index hereto shall not be used in any way in construing
or interpreting any provision hereof.
3. Singular,
Plural
Whenever the
singular or masculine or neuter is used in this Agreement, the same
shall be construed as meaning plural or feminine or body politic or
corporate or vice versa, as the context so requires.
The Optionor
hereby grants to the Optionee the sole and exclusive right and
option (the “Option”) to earn a 100% interest in the
Property , subject to the Reserved NSR, provided that each of the
following conditions are met:
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The Optionee
paying the sum of $30,000 USD to the Optionor by way of cash, and
due upon the date both Optionor and Optionee have signed this
agreement;
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On or before
April 1, 2010, the Optionee paying $35,000 USD to the
Optionor;
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On or before
April 1, 2011, the Optionee paying $40,000 U.S to the
Optionor;
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On or before
April 1, 2012, the Optionee paying $45,000 USD to the
Optionor;
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On or before
April 1, 2013, the Optionee paying $50,000 USD to the
Optionor;
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On or before
April 1, 2014, the Optionee paying $55,000 USD to the
Optionor.
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On or before
April 1, 2015, the Optionee paying $60,000 USD to the Optionor;
and
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On or before
April 1, 2016, the Optionee paying $1,185,000 USD to the
Optionor.
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Optionee can
prepay any or all of the above amounts. Upon the Optionee making
all of the payments above (a total of $1,500,000 to Optionor), the
Optionee shall be deemed to have exercised the Option (the
“Exercise Date”) and shall be entitled to an undivided
100% right, title and interest in and to the Property with the full
right and authority to equip the Property for production and
operate the Property as a mine subject to the Reserved
NSR.
The Optionee
shall have the right exercisable at any time up to 30 days after
beginning mine construction to buy 1.0% of the Optionor’s
1.5% NSR interest for USD $500,000. The right to purchase the said
NSR interest shall be exercised by the Optionee providing the
Optionor with notice of the purchase accompanied by payment in the
amount of USD $500,000.
The doing of any
act or the incurrence of any cash payments by the Optionee shall
not obligate the Optionee to do any further acts or make any
further payments.
5. Transfer
of Title
Upon
Optionee’s completion of all requirements to earn a 100
percent interest in the Property, as stated in Section 4 above, the
Optionor will deliver or cause to be delivered to the
Optionee’s solicitors a duly executed transfer of Property in
favor of the Optionee (the “Optionee Transfer”). The
Optionee shall be entitled to record the Optionee Transfer with the
appropriate government offices to effect transfer of legal title of
the Property into its own name upon the full and complete exercise
of the Option by the Optionee.
6. Operations
during Option
At any time
prior to the termination of this Agreement, the Optionee, its
servants, agents and workmen and any persons duly authorized by the
Optionee, shall have the right of access to and from and to enter
upon and take possession of and prospect, explore and develop the
Property in such manner as the Optionee in its sole discretion may
deem advisable and shall have the right to remove and ship
therefrom ores, minerals, metals, or other products recovered in
any manner therefrom as needed for metallurgy, bulk sampling and
other pre-production activities, subject to the
NSR. However, prior to (i) the commencement of any
Mining Operations beyond that necessary for a feasibility study or
(ii) the construction of any metallurgical processing plant or
recovery facility not required for a feasibility study, the
Optionee must have purchased the property as described in
Section 4.
During the
Option Period, Optionor will pay the annual taxes due on the
Property and will bill Optionee for such amount. Payment will be
made to Optionor by Optionee within thirty (30) days from receipt
of such invoice.
Prior to the
commencement of any Mining Operations or construction of any
metallurgical processing or recovery facility Optionee shall
obtain, and maintain during such periods of operations or
construction, insurance against hazards and risks and liability to
persons and property to the extent and in the manner which the
Optionee reasonably believes is customary for companies in similar
business similarly situated as the Optionee. Such insurance policy
shall be with a financially sound and reputable insurer and shall
name the Optionor as an additional insured. Optionee shall provide
a copy of such policy to Optionor when obtained.
During the
Option Period, all Mining Operations and any metallurgical and
ancillary operations conducted on the Property shall be conducted
in accordance with all applicable federal, state, and local laws
and regulations, including The Mines and Minerals Act of
Nevada.
7. Assignment
During the
Option Term, both parties shall have the right to sell, transfer,
assign, mortgage, pledge its interest in this Agreement or its
right or interest in the Property provided that such assignee shall
agree in writing to be bound by the terms of this Agreement
applicable to the assignor.
8. Termination
This Agreement
shall forthwith terminate in circumstances where:
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The Optionee
shall fail to comply with any of its obligations hereunder
including failure to make any of the payments set forth in Section
4, subject to Force Majeure, and within 30 days of receipt by the
Optionee of written notice from the Optionor of such default, the
Optionee has not:
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cured such
default, or commenced proceedings to cure such default and
prosecuted same to completion without undue delay; or
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given the
Optionor notice that it denies that such default has occurred for
matters other than the failure to make payments set forth in
Section 4 or failure to pay the annual taxes due on the
Property.
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In the event
that the Optionee gives notice that it denies that a default has
occurred, the Opionee shall not be deemed to be in default until
the matter shall have been determined finally through such means of
arbitration as stated herein as such matter has been subjected to
by either party; or
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The Optionee
gives notice of termination to the Optionor, which it shall be at
liberty to do at any time after the execution of this Agreement. If
and when the Optionee elects to terminate this Agreement, at such
time the Property or the specific project will be returned to the
Optionor.
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Bankruptcy,
insolvency, reorganization or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law for the
relief of debtors shall be instituted
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