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 r
