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Property Acquisition And Royalty Agreement

Royalty Agreement

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 This Royalty Agreement involves

SIGA RESOURCES INC. | Peter Osha and Siga Resources Inc

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Title: Property Acquisition and Royalty Agreement
Date: 3/16/2011
Industry: Gold and Silver     Sector: Basic Materials

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Exhibit 10.5 Property Acquisition and Royalty Agreement dated January 16, 2011 between Peter Osha and Siga Resources Inc

 

Property Acquisition and Royalty Agreement

 

This agreement ( the Agreement) executed on the 16 th day of January, 2011,

 

By and Between:

 

Siga Resources Inc .( Siga ) and Peter Osha ( Osha ) .

 

Hereinafter referred to collectively as the PARTIES.

 

This purpose of this Agreement is for the parties to set the terms of the transaction wherein Siga is acquiring the Lucky Thirteen Placer Mining Property near Hope BC, described hereinafter in Exhibit A. (the Property ).

 

This transaction has been the subject of previous agreements and negotiations. The transaction described in this Agreement will cancel and replace any and all earlier agreements between Siga and Osha and Osha and Touchstone Ventures Ltd, and/or Touchstone Precious Metals Inc.

 

Section I: TERM

 

This Agreement will terminate at the earlier of the following events; Siga ceases to make the required payments, or the Acquisition is completed by Siga paying all the funds as described in the schedule of payments in Section II.

 

The net smelter return royalty granted to Osha by this agreement is perpetual and has no expiry as long as Siga maintains its interest.

 

Section II: Transaction:

 

Siga and Osha hereby agree that Siga can acquire 100 percent of the Property to acquire 100% of the Lucky Thirteen Placer Property under the following terms:

 

Siga will pay Osha $1.5 million CAD under the following payment schedule and grant Osha a Net Smelter return royalty of 3 percent on the production of placer products from the Lucky Thirteen Placer claim Property. There is to be no partial earn-in under this agreement.

 

The purchase payments will be made on the following schedule:

 

By or before January 15, 2011

$10,000

Within 90 Days of execution

40,000

Within 6 months of effective date

50,000

Within 12 months of effective date

100,000

Within 18 months of effective date

100,000

Within 24 months of effective date

150,000

Within 30 months of effective date

150,000

Within 36 months of effective date

200,000

Within 42 months of effective date

200,000

Within 48 months of effective date

250,000

Within 54 months of effective date

250,000

Total

$1,500,000

 

(For greater clarity, the date of signature is the effective date) The payments will be made as OSHA directs with regard to place of deposit.

 

Section III: Royalty and Royalty Payment

 

Definition of Net Smelter Return Production Royalty and Payment schedule

 

For the purposes of this agreement, the definition of Net Smelter Return Royalty shall be as follows:

 

The net smelter return royalty shall be calculated as a percentage of the gross receipts of the refining process, less the costs incurred subsequent to concentrating. These costs include refining, smelting, marketing, transportation and Insurance of concentrates produced from the project.

 


For greater clarity, no direct mine operating costs will be deducted from the gross receipts in calculating the royalty payments due.

 

Royalty payment

 

Production Net smelter Royalty payments will be paid quarterly. The royalty due on the preceding three months production will be paid within 15 days of the end of any given quarter. Full calculations will accompany each quarterly payment.

 

Section IV: Evaluation Program

 

Siga will, as soon as appropriate permits are approved and field operations are feasible, conduct an evaluation program pursuant to the permit. The evaluation program will bulk sample the deposit with approximately 12 excavated pits, or by large diameter hole drilling as agreed when logistics and cost data are available.

 

The samples will be excavated and processed through a washing plant and concentrator. Gravel quality and quantity data will be collected via screening and other methods during this program, and all black sands possible will be recovered for further analysis and testing. The estimated total cost of the evaluation program is approximately $400,000 CD.

 

The details of the Evaluation program will be agreed to between Osha and Siga prior to February 15, 2011.

 

Evaluation Contractor

 

Siga agrees to work with Osha through his contracting company Triple O Contracting, to accomplish the evaluation program. The arrangement for conducting the evaluation will be on normal commercial terms for the work involved.

 

It is agreed that Triple O contracting, on submission of acceptable invoices, will be reimbursed for all costs to date, and subsequent costs involved with getting the rail crossing approved, permitted and installed and all other costs incurred directly in the development of the property.

 

The parties agree that Triple O Contracting, if it wishes, will have the opportunity to contract the operations if Siga elects, in its sole authority, to establish a production mining operation on the property.

 

Section V: Project Operator

 

Siga will be the operator and manager of the project. Siga shall have full operating authority during its tenure on the property, and shall carry such insurance for its actions as is reasonable and customary, and in accordance with the laws of British Columbia.

 

As operator, Siga will be responsible for bonds, fees and general costs for its operations, including any environmental liabilities incurred after the date of this Agreement.

 

Section VI: Osha Warranties

 

Osha warrants that as of the date of this agreement :

 

He owns the claims 100 percent and that it is free and clear from liens and encumbrances;

 

The Property is presently in good standing under the laws of British Columbia;

 

He has the sole and complete power to enter this Agreement and otherwise deal with the Property as contemplat


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