Registration of Securities of a Foreign Private Issuer — Form 20-F Filing Table of Contents
1: 20FR12G Form 20-F Registration Statement 81 420K
5: EX-3.(I) Articles 26 114K
2: EX-3.(I) Certificate of Change of Name 2 6K
3: EX-3.(I) Special Resoultion and Altered Memorandum 3 9K
4: EX-3.(II) Memorandum 2 7K
6: EX-10 Documents Relating to Cinco Minas Property 17 68K
7: EX-10 Documents Relating to Gran Cabrera Properties 4 17K
9: EX-10 Heads of Agreement Relating to the Tinka Property 4 14K
8: EX-10 Letter of Intent Relating to the Tinka Property 2 9K
10: EX-21 List of Subsidiaries 2 6K
EX-10 — Documents Relating to Cinco Minas Property
HEADS OF AGREEMENT ("HOA")
Minera San Jorge S.A. de C.V., July 6, 2002
Aguamarina 2457, Bosques de la Victoria,
Attn: Mr. George Barnett:
Re: Option to earn a 60% interest of the Cinco Minas precious metal Property
in Jalisco, Mexico and right to acquire the remaining 40% interest.
This HOA sets out the terms and conditions of our agreement whereby Tumi
Resources Ltd ("Tumi") will have the option to acquire up to a 100% interest
from Minera San Jorge S.A. de C.V. ("MSJ") in MSJ's right, title and interest in
certain Exploration and Mining Concessions in Mexico known as the Cinco Minas
claims. The concessions are listed in the attached schedule A and shown on the
attached map. The general terms and conditions of this HOA are as follows:
1. MSJ will represent and warrant that it is the legal and beneficial owner
or has the right to 100% of the titles to the Cinco Minas core area
concessions totaling 600.07 ha and listed in Schedule A and that all are
in good standing with respect to Mexican law. As well, MSJ represents and
warrants that any underlying option agreements with concession owners are
in good standing and registered correctly under Mexican law and MSJ can
freely grant the option to Tumi as contemplated by this HOA. Tumi
acknowledges that there is an outstanding payment of $US15,000 attached
to the Fitch agreement by which MSJ has the right to purchase 100%
interest in the Fitch concessions for $US350,000. Provided Tumi proceeds
with its option agreement then $US25,000 is payable in the second year
and $US35,000 in the third year. The balance of $US275,000 can be paid
out of production revenues. MSJ represents that there are no other
financial obligations attached to the concessions.
2. On signing of this HOA, MSJ will transfer the claims to a joint venture
company owned 60% by Tumi and 40% by MSJ. Should Tumi withdraw from this
option agreement the Cinco Minas Concessions will be transferred 100%
back to MSJ.
3. Tumi will have the option to acquire the rights to a further 10,862 ha of
concessions, in an area of influence, that are contiguous with or near
the Cinco Minas concessions. These are listed on Schedule A.
4. On signing of this HOA, Tumi will pay to MSJ an additional $US75,000 for
a total of $US100,000 paid. This total amount will be fully refundable to
Tumi if, for any reason, the representations and warranties set out in
point 1 are incorrect. MSJ acknowledges that Tumi has already paid an
initial $US25,000 to MSJ for the right to review MSJ's property package
and enter into this HOA and this payment will be applied to this
$US100,000 option payment.
5. Tumi and MSJ have agreed to co-operate to the fullest extent possible to
come to a mutually satisfactory joint venture agreement acceptable to the
TSE Venture Exchange as soon as possible.
6. In order to maintain the option agreement to earn a 60% interest in the
Cinco Minas concessions, Tumi must fund a total of $US2.5 million in
exploration expenditure, including underlying option payments to
concession holders and government concession taxes, over a three year
period. The work will be performed within the exploration company formed
for exploring the Cinco Minas Concessions. Tumi undertakes to spend an
initial $US250,000 in Year 1 on underground channel sampling and
drilling. In order to vest it's interest, Tumi must have spent $US2.5
million including the completion of a feasibility study regarding
production on or before the end of three (3) years after approval of this
agreement by the TSX Venture Exchange.
7. As further consideration for this option agreement, Tumi will issue, on
TSE Venture Exchange approval of the agreement, 100,000 fully paid shares
in Tumi, and then 200,000, 300,000 and 500,000 fully paid shares in Tumi
on each anniversary thereafter provided that Tumi has not withdrawn from
the option agreement. Should Tumi produce a feasibility study that
justifies production at any time within the three year period then the
unissued common shares mentioned in this clause will be issued. MSJ
acknowledges that the shares will be subject to restrictions on resale
under Canadian securities laws and that issuance of each tranche of
shares is dependent on TSX Venture Exchange acceptance.
8. Tumi shall be the operator of the joint venture programs and shall submit
all programs and budgets to MSJ for approval. If MSJ does not approve,
then MSJ will submit its concerns in writing and Tumi will attempt to
resolve the concerns. If it is unable to do so, Tumi will submit the
program and budget and MSJ's concerns to a reputable independent
consultant acceptable to both parties for determination of such concerns.
As the operator of the program, the final decision for implementation of
each program and budget lies with Tumi.
9. Tumi recognizes the value of the operating experience of MSJ's personnel
and independent consultants in Mexico and will use MSJ's personnel
wherever possible including consultancy work for Mr George Salazar
Barnett. MSJ acknowledges that Tumi has limited financial resources in
the initial stages of this program and that as a vendor, MSJ's personnel
will be unable to perform certain tasks attached to the exploration
10. Should the property justify production and MSJ cannot fund it's share of
development costs then Tumi will use its best endeavors to fund or deal
with such share according to generally accepted resource property
11. Tumi has the option at any time to purchase for money or the equivalent
amount in shares the remaining 40% interest that MSJ has in the Cinco
Minas Concession areas, its value to be determined by a discounted NPV.
Tumi shall have the right of first refusal should an outside party bid
for MSJ's 40% interest.
12. Tumi has the right to withdraw from this option agreement at any time
after the initial exploration program with no further obligation or
commitment to MSJ with 30 days advance notice.
On behalf of Tumi Resources Ltd. On behalf of Minera San Jorge S.A. de C.V.
/s/ David Henstridge /s/ George BarnettDavid Henstridge, President George Barnett
MINING EXPLORATION AND PROMISE OF ASSIGNMENT OF RIGHTS AGREEMENT EXECUTED ON THE
ONE PART BY MlNERA SAN JORGE, S. A. DE C. V. (HEREINAFTER CALLED "MSJ")
REPRESENTED BY ITS PRESIDENT MR. GEORGE S. BARNETT AND ON OTHER PART BY TUMI
RESOURCES LIMITED (HEREINAFTER CALLED "TUMI"), REPRESENTED BY ITS PRESIDENT MR.
DAVID HENSTRIDGE IN ACCORDANCE WITH FOLLOWING STATEMENTS AND CLAUSES STATEMENTS
I. MSJ states:
a) To be a Mexican mining corporation legally incorporated according
to the laws of the Mexican Republic, legally qualified to execute
agreements and to be owner of mining concessions;
b) That its Legal Representative Mr. George S. Barnett is dully
empowered to represent it and to execute this agreement;
c) That it is the legal and beneficial owner or has an option to
acquire up to 100% of the mining claims ("THE CLAIMS") listed in
the Area A of Schedule "A", located in the State of Jalisco,
Mexico, also known as "Cinco Minas" claims.
d) That in regard to "Fitch Concessions" mentioned in Schedule A,
there is an underlying option agreement, attached hereto as
Schedule B, for a total purchase price of US$350,000, payable in
accordance with Clause 4.
e) That except for what it is mentioned in paragraph f) below, in
regard to THE CLAIMS it has fulfilled with all the obligations
provided in the Mining Law, its Regulations and all other
applicable legal dispositions, specially as to the filing of
assessment works reports and the payment of taxes on mining
f) That except for what it is mentioned in paragraph g) below, the
rights derived from the mining concessions existing over THE
CLAIMS are free and clear from any lien, encumbrance or limitation
g) Tumi has advanced $US3,000 to its Mexican attorney in order to pay
outstanding claim taxes ; and
h) That it is willing to grant TUMI an option to enter into a joint
venture to explore, evaluate, develop and, eventually exploit THE
CLAIMS and to acquire a 60% interest in THE CLAIMS, by
transferring THE CLAIMS to a new mining corporation in which TUMI
will have 60% and MSJ 40% and also the option to acquire up to 100
% of the rights on THE CLAIMS, in accordance with the terms and
conditions stipulated in this agreement
II. TUMI states:
a) To be a Canadian mining company incorporated according to the laws
of British Columbia, legally qualified to be titleholder of mining
concessions and to enter into this Agreement;
b) That its President Mr. David Henstridge is duly empowered to
represent it and to execute this agreement;
c) That it has the necessary financial, technological and human
resources to contribute with them to conduct and carry on the
exploration, evaluation and development of THE CLAIMS, as it may
be required for the purpose of this agreement; and
d) That it is willing to be granted with an option to enter into a
joint venture with MSJ to explore, evaluate, develop and,
eventually exploit THE CLAIMS and to acquire a 60% interest in THE
CLAIMS, by transferring THE CLAIMS to a new mining corporation in
which TUMI will have 60% and MSJ 40% and also the option to
acquire up to 100% of the rights on THE CLAIMS, in accordance with
the terms and conditions stipulated in this agreement:
In accordance with the former statements, the parties hereby grant and agree to
C L A U S E S
FIRST. Right to Explore THE CLAIMS. MSJ grants TUMI the right to explore,
evaluate and develop, THE CLAIMS, as wel1 as an option to enter into a joint
venture with MSJ to put them into production and to acquire a 60% interest in
THE CLAIMS and also the option to acquire up to 100 % of the rights on THE
To allow TUMI to acquire a 60% interest of THE CLAIMS, the parties will
incorporate a new Mexican mining company under the name of COMPANIA MINERA CINCO
MINAS, S. A. DE C. V. ("CMCM"), in which TUMI will have shares representing 60 %
of the corporate capital and MSJ shares representing 40% and to which MSJ will
transfer THE CLAIMS and or its option to acquire them, immediately after its
Likewise, TUMI will incorporate a Mexican subsidiary under the name of TMXI
RESOURCES, S. A. DE C. V. ("TMXI"), through which TUMI will conduct and carry
out the exploration, evaluation and developing of THE CLAIMS according to
exploration program prepared by TUMI and approved by MSJ according to this
TUMI, through its Mexican subsidiary TMXI, will be the operator and will carry
out the exploration program for THE CLAIMS in accordance with the
above-mentioned exploration program. For such purpose TMXI and CMCM will enter
into an Exploration Services Agreement.
During the term of this agreement, TMXI may carry out on THE CLAIMS all
exploration works permitted to be carried out by the valid mining concessions
title and underlying agreements existing at the moment to carry out said works,
observing and complying with all pertinent Mexican Laws.
SECOND. Right to terminate this agreement in advance. The term of this agreement
will be of three years from the date in which TUMI will receive approval from
the TSX Venture Exchange.
However, if said approval would not be obtained after three months of signing
the agreement, then it will be automatically canceled, unless the parties agrees
to the contrary in writing.
Nevertheless, MSJ will also have the right to terminate this agreement at any
moment, according to the provisions of Clauses Nine and Ten, if TUMI or TMXI do
not fulfil with the obligations they undertake in this document or be in the
process of proceeding to correct such defaults.
In case of termination of this agreement, all amounts previously paid to or on
behalf of MSJ will remain in their favour and therefore in such cases they will
no be obligation to reimburse any amount to TUMI.
THIRD. Earning of Interest in THE CLAIMS by TUMI. To earn a 60% interest in THE
CLAIMS, in CMCM and the option to acquire up to 100% interest in said CLAIMS and
in CMCM, TUMI shall:
1) Have paid MSJ and delivered to it the shares to which Clause Five
2) Expend a minimum of US$250,000 during the first year on underground channel
sampling and drilling;
3) Fund a total of US$2.5 million in exploration, evaluation, developing and
put into production THE CLAIMS, being included therein the necessary
amounts to make the underlying option payments to the concession owners and
to pay the surface taxes on THE CLAIMS; and
4) With the information obtained from the exploration on THE CLAIMS, to
complete a Feasibility Study on or before the end of the three-year period
of this agreement, to determine if production in THE CLAIMS is feasible and
Once TUMI have fulfilled with all of the above-mentioned obligations, it will
have earned a 60% interest in THE CLAIMS and in CMCM and the parties will have
entered into a joint venture agreement to develop and put into production THE
CLAIMS. In such a case the terms and conditions of the joint venture between the
parties will be those provided at the corporate by-laws of CMCM, at the
provisions of this agreement and of any other agreement to be entered between
the parties for such effect, in case it will be consider necessary.
From the moment TUMI have earned its 60% interest in THE CLAIMS or in CMCM, the
parties will have to contribute for to develop and put into production THE
CLAIMS with its share in the same percentage of the interest each one would have
of THE CLAIMS or CMCM.
In case the Feasibility Study determines that the production in THE CLAIMS is
feasible and economical and MSJ cannot fund its share to develop and put them
into production, the TUMI will use its best efforts to fund or deal with such
share according to generally accepted resource property development agreements.
FOURTH. TUMI' Option to purchase MSJ's interest. Whenever it will be up to date
in the fulfilling of all the obligations it has under this agreement, TUMI will
have the option to purchase up to a 100% interest in THE CLAIMS or in CMCM, at
any time during the term of this agreement, by paying MSJ the value of the
remaining 40% interest in THE CLAIMS or CMCM, value that will be determined by
calculating the Net Present Value of either THE CLAIMS or CMCM, at the moment
TUMI would notify MSJ its decision to purchase said 40%.
In any case, the purchase price determined for the remaining 40% interest, could
be paid by TUMI to MSJ, either in United States Dollars or the equivalent amount
in TUMI shares. The shares will be distributed to the shareholders of MSJ.
In the event that MSJ decides to sell its remaining 40% ownership interest prior
to Tumi vesting its interest, then MSJ will immediately advise Tumi of any
offers and Tumi has 7 days to exercise its right of first refusal. In the event
that Tumi does not exercise the right of first refusal then MSJ has the right to
complete the transaction subject the new owner of the 40% interest also having
the obligation to sell its 40% interest to Tumi and distribute the proceeds to
FIFTH. Consideration. As consideration for the right to explore, evaluate and
develop THE CLAIMS and transferring them or the option to purchase them to CMCM,
TUMI will pay to MSJ:
a) CASH US$50,000 (already paid)
1. On Acceptance of this
transaction by the
TSX Venture Exchange (TSX) 100,000 fully paid shares of Tumi
2. On the first anniversary
from the date of the
approval by the TSX 200,000 fully paid shares of TUMI;
3. On the second anniversary: 300,000 fully paid shares of TUMI; and
4. On the third anniversary: 500,000 fully paid shares of TUMI;
The obligation of TUMI to pay with shares will cease in any moment TUMI would
terminate this agreement without any further responsibility with MSJ. In case
TUMI produce a Feasibility Study that justifies production at any time within
the three-year period, then the not issued common shares mentioned in this
Clause will be issued. MSJ recognises that the shares will be subject to the
restrictions on resale under Canadian Securities laws and that their issuance
will depend on the approval by the TSX.
SIXTH. Exploration Program. TUMI shall prepare the exploration program for THE
CLAIMS as well as the exploration budget and will submit it to MSJ for approval
at the latest thirty days after signing this agreement.
If MSJ would have observations or objections to the exploration program
submitted, it will communicate them the in writing to TUMI and they will attempt
to mutually resolve them. If the parties will not be able to resolve their
differences, then TUMI will submit the exploration program and budget, together
with MSJ observations or objections, to a reputable independent consultant
acceptable to both parties for him to prepare a definitive exploration program.
However, as the operator of the program, the final decision for implementation
of the program and budget will be TUMI's.
TUMI recognises the importance and value of the operating experience of MSJ's
personnel and independent consultants in Mexico and will use such personnel
whenever possible, including consultancy work of Mr. George Salazar Barnett. MSJ
acknowledges that TUMI has limited financial resources for the initial stages of
the exploration program and that as a vendor MSJ's personnel will be unable to
perform certain tasks contemplated at the exploration program.
As herein above mentioned TUMI, through its Mexican Subsidiary TMXI, will be the
operator and will conduct the exploration works of THE CLAIMS according to the
above-mentioned program. However, it is understood that to carry out some of the
exploration work it will be necessary to contract with third parties.
MSJ will have the right to keep watching the exploration works carried out on
THE CLAIMS by TMXI. For such purpose MSJ will agree with TUMI on the best way to
exercise its right without interfere in the execution of the program.
SEVENTH. Labor responsibility. Since there will not exist any labor relation
between the employees, workers and contractors of each party and the other, each
party expressly agrees that with respect to its workers and contractors, it or
its contractors, as to their workers, will assume all labor responsibility and
therefore each party hereby covenants with the other party to maintain it free
and clear from any claim, accusation or complaint which may be filed against
each party by its workers or employees, or those of its contractors, or by the
labor or administrative authorities.
EIGHTH. Additional obligations of MSJ. In addition to the obligations assumed by
MSJ at the preceding clauses, during all the term this agreement will be in
force, it will have also the following:
a) Maintain valid and in force the rights derived from the mining concessions
existing over THE CLAIMS and, likewise, to maintain them free and clear
from any lien, encumbrance or limitation of dominion until they will be
transferred to CMCM. And, in case it will apply for new mining concessions
over claims located within an influence area of three kilometers from the
perimeter of any of THE CLAIMS, to include them into this agreement as part
of THE CLAIMS, if so asked by TUMI for no further consideration;
b) Not to transfer the rights derived from the mining concessions existing
over THE CLAIMS, without the previous authorisation of TUMI;
c) Maintain TUMI free and clear and harmless from any claims and
responsibilities that may be addressed against it due to acts directly
imputable to MSJ which will be of his sole responsibility; and
d) To promptly provide TUMI an information and documentation existing over THE
CLAIMS. Subsequently, to promptly provide TUMI, all notices and documents
pertaining to THE CLAIMS that he win receive from Federal or State
e) In case this agreement be terminated, to grant TUMI a term of ninety (90)
days to remove all its equipment and machinery from THE CLAIMS, unless said
equipment is being used by TUMI for ongoing reclamation activities, in
which case TUMI may retain its equipment and presence on THE CLAIMS for
such purposes following termination.
NINTH. Additional obligations of TUMI. In addition to the obligations assumed by
TUMI at the preceding clauses, during all the term this agreement will be in
force, it also will have the following:.
a) To carry out the exploration and, in its case, the exploitation of THE
CLAIMS in accordance with good mineralize practices, according to the
appropriate and rational mining practices and in accordance with all legal
dispositions, executing enough exploration and exploitation works in order
to fulfill and comply with the appropriate or applicable provisions of the
b) To undertake and fulfill the obligations of preparing and filing the
exploration and exploitation assessment work and to pay the taxes on mining
concessions. Likewise, to undertake and fulfill all obligations related to
Environmental and Police and Security required by law at mines and during
c) Annually, within the following forty five (45) days to the anniversary date
of signing this agreement, to provide MSJ a report on the exploration and,
in its case, exploitation works carried out in THE CLAIMS and, in case of
termination, to deliver to MSJ all pending reports together with the
complete documentation, information, samples remaining, drilling results
and drill core it may have from THE CLAIMS, within the following forty five
(45) days to the date of termination. The above
mentioned reports shall include proof of the exploration and exploitation work
d) To maintain THE CLAIMS in good standing, exploration and in its case,
exploitation conditions, as well as to permit MSJ to inspect the works
carried out in THE CLAIMS during working days and hours, but without
interfering in said works. And, in case of termination of this agreement,
to return THE CLAIMS to MSJ in good standing and free and clear from any
liens, encumbrances or limitation of dominion, imposed due to TUMI;
e) In case it would file applications for new mining concessions within an
influence area of three kilometers from the perimeter of any of THE CLAIMS
the respective concessions will be denounced in the name of MSJ and
considered as part of some of the Groups of CLAIMS and of this agreement,
all expenses made by MSJ to denounce the claims shall be reimbursed to them
but no additional consideration payment for exploration shall be made to
them for said concessions. As long as this agreement will be maintained as
valid and in force, the consideration payments referred to in Clause Five
shall have to be made and if further this agreement will be, totally or
partially terminated, THE CLAIMS shall have to be returned back to MSJ free
and clear from any and all liens or encumbrances attributable or caused by
f) Not to permit at any moment the access to THE CLAIMS to third parties
different from its workers or contractors, neither to consent invasions
from third parties or performance by them of exploration, exploitation,
hand carrying or clearing of mineral within THE CLAIMS. TUMI shall not be
liable for exclusion of the surface owners, if any. In case it would be
necessary or advisable to purchase, expropriate or occupy surface land,
TUMI will be responsible for the payment of the required amounts to carry
out said acquisitions.
If at any moment during the term of this agreement TUMI should not fulfill the
obligations assumed by it and specially with those mentioned in this Clause, MSJ
will have the right to terminate this agreement under the terms of Clause Ten
herein below, independently of their right to ask an indemnification for
damages, subject to the required judicial resolution..
TENTH. Unfulfillment. The unfulfillment of any of the parties with the
obligations they assume in this agreement, will grant the other party the right
to ask the immediate fulfilment of the non-fulfilled obligations, for said
purpose, it will have to ask by written notice to the party in default to fulfil
said obligations and if after a thirty day period from the date of delivering
said petition, the unfulfillment still exists, and no reasonable efforts have
been made to remedy the unfulfillment, then the affected party will have the
right, at its option, to ask in court the fulfillment of the unfulfilled
obligations or to terminate this agreement. Nevertheless, TUMI states that it
will not ask the payment of damages in any case.
ELEVENTH. Force majeure. It will not be considered that the parties have
incurred in unfulfillment when due to force majeure they will be unable to
fulfil with the obligations they assume under this agreement. Nevertheless, Tumi
will make all necessary payments to maintain the claims in good standing.
It will be considered as force majeure, in an enunciative but not in a
limitative way: earthquakes, fires, floods, collapses, riots, rebellions, wars,
strikes, revolutions, acts of authority and, in general, any other fact or act
totally out of the will of the parties and of their control and which prevent
them to fulfil, totally or partially, with their obligations.
When any of the parties will be affected by force majeure and therefore unable
to fulfil with its obligations, it shall notify so to the other party, informing
about the estimated time said force majeure will prevent said party to fulfil
with its obligations.
If after six months from the date in which such force majeure has occurred it
prevails and when possible, no reasonable efforts have been made to remedy such
force majeure then the other party will have the right to terminate this
agreement, subject to the necessary judicial review.
TWELFTH. Total agreement of the parties. This agreement reflects the total
agreement between the parties with respect to its purpose, therefore, it cancels
and left without effects any other agreements, contracts or letters of intent,
executed previously between them with respect to the same purpose.
This agreement will oblige under its terms and conditions to the heirs,
assignees or beneficiaries of the parties. Therefore, this agreement will
continue valid even the existing rights derived from the mining concessions on
THE CLAIMS be transferred to third parties.
THIRTEENTH. Notices and notification. All notices and notifications to be made
between the parties in accordance with this agreement, shall be made, by one
part to the other, either verbally or by written notice, being understood that
when it be desired that a notice or notification be on record, it shall be made
before a Notary Public.
For the purposes of this agreement the parties hereby set the following
MSJ TUMI MINERA SAN JORGE, S. A. DE C. V. TUMI RESOURCES LTD.
Aquamarina 2457 1305 - 1905 Georgia St.
Basques de la Victoria, C.P. 44570 W. Vancouver, B. C.
Guadalajara, Jalisco Canada, V6E 3V7
Any change in the above mentioned addresses shall be notified by one part to the
other when it occurs.
FOURTEENTH. Applicable Laws and Courts. For everything not expressly stipulated
in this agreement the parties submit themselves to the applicable laws in
Mexico, Federal District, specially to those of the Mining Law, its Regulations,
the Federal Duties Law, the Commerce Code and the Civil Code for the Federal
District and in case of litigation they agree to submit to the jurisdiction of
the competent courts of Mexico City, Federal District, waiving to the
jurisdiction of any other courts to which they may be entitled by reason of
their present or future domiciles.
This agreement is signed by duplicate by MSJ in Tucson, Arizona, this 14th day
of August of 2002 and by TUMI in Tucson, Arizona. this 14th day of August of
MSJ TUMI MINERA SAN JORGE, S. A. DE C. V. TUMI RESOURCES LTD.
/s/ George S. Barnett /s/ David HenstridgeGeorge S. BarnettDavid Henstridge
MINING EXPLORATION AND UNILATERAL PROMISE OF ASSIGNMENT OF RIGHTS AGREEMENTEXECUTED ON THE ONE PART BY MR. PABLO ANTONIO FITCH PARENTE (HEREINAFTER CALLED
"PROMISEE") AND ON THE OTHER PART, MINERA SAN JORGE, SA DE C. V. (HEREINAFTER
CALLED THE "EXPLORER"), REPRESENTED BY ITS LEGAL REPRESENTATIVE MR. GEORGE
BARNETT SALAZAR, IN ACCORDANCE WITH FOLLOWING STATEMENTS AND CLAUSES STATEMENTS
a) He is a citizen of Mexico, of age, single, legally empowered to contract
and to be a holder of title to mining concessions.
b) That PROMISSEE is the legal title holder for rights derived from the
mining concessions that exist for the following mining claims ("THE
NAME OF CLAIM TITLE NO. SURFACE HAS. CONCESSION
------------- --------- ------------ ----------
LUCERITO T-199590 26.9210 EXPLORATION CONSUELO T-199598 46,1513 EXPLORATION
All of the claims are located in the County/Municipality of
Hostotipaquillo, State of Jalisco, within the jurisdiction of the Mining
Agency of Guadalajara, Jalisco.
c) That he is willing to enter into the present contract concerning the
CLAIMS and that they are current with regard to all of the obligation
that are imposed by the Law and its Regulations on the title holders and
other applicable legal requirements, and that, in a like manner, that the
rights derived from the concessions are free from all encumbrances,
liens, or limitations on ownership.
d) That he is willing to enter into the present contract with the EXPLORER
to grant it the right to explore the CLAIMS and agree to a unilateral
sale of the rights derived from the existing mining concessions or that
might be granted for the CLAIMS, subject to and under the conditions
II. The EXPLORER Declares:
a) To be a Mexican mining corporation legally incorporated according to the
laws of the Mexican Republic, legally qualified to execute agreements and
to be owner of mining concessions;
b) That its Legal Representative Mr. George Barnett Salazar is duly
empowered to represent it and to execute this agreement with the
authorized powers he demonstrates before the [Federal Public] Notary
before whom this contract is ratified, which have not been revoked nor
restricted in any manner; and
c) That they wish to be granted the right to explore and exploit/mine the
CLAIMS and the right of option to purchase of the rights derived from the
existing mining concessions or any that may be granted for them, in the
terms and conditions established herein.
In accordance with the former Declarations, the parties hereby grant and agree
to the following.
FIRST. Right to explore and exploit/mine the CLAIMS. PROMISSEE grants the
EXPLORER the exclusive right to explore and exploit/mine the CLAIMS during a
period of five years counted from the date of signing of the present contract,
with the EXPLORER being able to conduct/carry out all types of exploration and
exploitation work in the CLAIMS during said period permitted under the Mining
Law, it Regulation the [granting of] mining concession or in the case that the
mining licenses are exist or are granted during the term of the present contract
for the CLAIMS, the EXPLORER can [is entitled to or authorized to] start its
SECOND. Right to terminate this agreement in advance. The period of time for the
present contract shall be obligatory for the PROMISSEE and voluntary for the
EXPLORER, who can as a result of this terminate this agreement simply by
advising the PROMISSEE of the date of termination, said notice shall be
delivered by certified means to the PROMISSEE, at least 15 days before the date
the cancellation is to take effect.
In spite of the above [clause], the PROMISSEE will have the right to terminate
this contract at any time in accord with Clauses Nine and Ten in the instance
where the EXPLORER does not comply with the obligations contained in the present
THIRD. Unilateral Promise of Sale. The PROMISSEE by means of this contract
unilaterally promises to sell to the EXPLORER or to the person or corporation it
designates, if it should desire to buy them, the rights derived from the mining
exploration concessions which exist for the CLAIMS, at a [maximum] total price
of US $350,000.00 dollars of the United States of America (Three hundred fifty
thousand dollars and 0/100). This promise [of sale] will remain in force only
during the term of validity of the present contract.
Due to the unilateral nature of the existing promise, it shall be obligatory to
the PROMISSEE and voluntary for the EXPLORER, who as a result will have the
right to decide if it does or does not buy the rights for the CLAIMS within the
term of this contract. If the EXPLORER does exercise its right of option to
purchase, it shall notify the PROMISSEE who will be obligated to enter into the
[final] sale-purchase agreement for the rights derived from the mining
concessions for the CLAIMS within a period of 30 days counted from the date of
receiving said notification from the EXPLORER.
FOURTH: Consideration. As Consideration for the granting of the present
unilateral promise of sale and in that case, as an advance applicable to the
price of purchase, the EXPLORER has paid to the CONCESSION HOLDERS or will pay
them the following amounts:
a) The sum of $5,000 USD (FIVE THOUSAND DOLLARS U.S and 0/100) upon signing
of this contract
b) The sum of $5,000 USD (FIVE THOUSAND DOLLARS U.S. and 0/100) three months
from the date of signing of the present contract
c) The sum of S 5,000 USD (FIVE THOUSAND DOLLARS U.S. and 0/100) six months
from the date of signature of the present contract.
d) The sum of $15,000 USD (FIFTEEN THOUSAND DOLLARS U.S. and 0/100) twelve
months from the signing of the present contract.
e) The sum of $20,000 USD (TWENTY THOUSAND DOLLARS U.S. and 0/100) eighteen
months from the date of signature of the present contract.
f) The sum of $ 25,000 USD (TWENTY FIVE THOUSAND DOLLARS U.S. and 0/100)
twenty-four months from the date of signing the present contract.
g) The sum of $25,000 USD (TWENTY FIVE THOUSAND DOLLARS U.S. and 0/100)
thirty months from the date of signing the present contract
h) The sum of $30,000 USD (THIRTY THOUSAND DOLLARS U.S. and 0/100)
thirty-six months from the date of signing of the present contract
i) The sum of $30,000 DOLLARS U.S. (THIRTY THOUSAND DOLLARS and 0/00)
forty-two months from the date of signing of the present contract.
j) The sum of $35,000 DOLLARS U.S. (THIRTY FIVE THOUSAND U.S. and 0/100)
forty-eight months from the date of signing of the present contract
k) The sum of $35,000 DOLLARS U.S. (THIRTY FIVE THOUSAND U.S. and 0/100)
fifty-four months from the date of signing of the present contract
1) Payment of the remaining $120,000 DOLLARS U.S. (ONE HUNDRED TWENTY
THOUSAND DOLLARS U.S. 0/100) will be made upon signing of the final
In the instance were the [mining] development is begun on the CLAIMS before the
five years this contract is in force, [the parties] will continue according to
[the terms and conditions] of the present contract, and the PROMISSOR will not
have the right to claim any form of royalty.
All the payments referred to in this contract shall be paid in the national
currency at the then current conversion rate for the US dollar according the
published quote for the [USA] dollar. [sic] at the interbank rate for the US
dollar published by BANAMEX S.A. on the day before the date of payment.
Any payment made to the PROMISSEE pursuant to this Clause, will be considered as
an advance against the end sale price and in the instance that the EXPLORER were
to terminate the present contract without exercising its option to purchase and
the amounts paid to the PROMISSOR, will remain to his benefit.
FIFTH. Professional fees, rights/stamps, taxes and expenses. All professional
fees, rights/stamps and costs that are generated for the signing and origination
of the present contract and for the corresponding purchase/sale contract will be
paid by the EXPLORER, except for the taxes that generated for the income
received by the PROMISSEE, these [personal income taxes] will be paid by him.
SIXTH. Guarantee of Compliance. In order to guarantee to the EXPLORER the
fulfilling of this unilateral promise of sale, the PROMISSEE grants in this
document a special irrevocable power of attorney in favor of Mr. Francisco
Javier Azpeitia Jaramillo in order for him to exercise acting in representation
of the PROMISSEE sell to the EXPLORER or to the individual or company of his
choosing, the rights derived from the mining concessions that exist covering the
CLAIMS with the same terms and conditions established in this contract with the
understanding that all the advances as well as the final purchase price shall be
delivered directly to the PROMISSEE under the terms set forth in the Fourth
Clause, supra and that this special power
of attorney can only be exercised by the grantee if the PROMISSEE choose not to
sign and ratify the final contract of sale within the time frame established or
set forth in the Third Clause of this contract, once the EXPLORER has exercised
its right of option to purchase and the purchase price has been deposited for
the benefit of the EXPLORER according to procedure established by law. This
Special Power of Attorney shall be extinguished if the EXPLORER does not
exercise its right of option to purchase..If the EXPLORER does not exercise its
option to buy [the concessions], all the amounts paid to PROMISSEE shall remain
for his sole benefit and EXPLORER will have no further right of any kind that
these [option payments] will be reimbursed/repaid.
THE PROMISSEE obligates himself to transmit to EXPLORER any and all mining
[exploration] rights that he currently bas or may obtain for any mining
[exploration] concession(s) within a radius of 5 Kms., measured from the outside
boundary of the area covered by the Concessions/CLAIMS, included in a unit
[sole] price of one hundred dollars (US $100.00). The transfer [of the
concession or concessions] shall be carried out within a period of six months,
counted from the date of receipt by PROMISSEE of a letter from EXPLORER
demanding this be done.
SEVENTH. Laboral Responsibility. Due to the fact that there is no existing labor
relationship between the workers and contractors of each of the parties, each
party expressly agrees that with respect to its/their workers and contractors,
that regarding their workers they or their/its contractor will assume [sole]
Laboral responsibility and as such each of the parties agrees to maintain the
other party free and clear of any all claims, demands, accusation or complaint
that could appear against it/him by the workers, employees or contractors of
this part or by the labor or administrative authorities.
EIGHTH. Additional Obligations of the PROMISSEE. In addition to the obligations
assumed by the PROMISSEE in the above clauses, during the term of this Contract
be/it shall have the following [obligations]:
a) To keep the [mining exploration] rights derived from the existing mining
concessions for the CLAIMS and, likewise to maintain them free from all
of all encumbrance, affectation or limitation of dominion [ownership of
b) Not to transfer the rights derived from the granting of the existing
mining concessions [THE CLAIMS] without the prior approval of the
c) To keep EXPLORER free and clear of any demand and/or responsibility that
[anyone] could try to impute to it them so that are directly imputable to
THE PROMISSEE and that are of their/its exclusive responsibility; and in
case the present contract is terminated, to grant to the EXPLORER a term
of ninety (90) days to be able to retire all its equipment and machinery
from the CLAIMS/CONCESSIONS;
NINTH. Additional Obligations of the EXPLORER. In addition to the obligations
assumed by the EXPLORER in the previous clauses, during all the term or period
of time this contract is in force, shall have the following:
a) To conduct the exploration and, if it is applicable, mining exploitation
of the CLAIMS/CONCESSIONS, as a good miner and in accord with the mining
practices that are most appropriate and rational and in accord with all
the legal requirements imposed by law, investing at least the minimum
amount and conducting the work required to comply with the standards
established in the Mining Law and its Regulation;
b) To take responsibility for and comply as required on a timely basis with
the [legal] obligations of preparing and presenting regular reports
concerning assessment work for exploration and, if applicable, for mining
exploitation and to pay the mining taxes for the mining CONCESSIONS /
CLAIMS and to comply with the obligations [legal responsibilities]
imposed or established by the Policing and Security for mine work and for
controlling environmental contamination;
c) To pay the PROMISSEE the amounts stipulated [as option payments] in this
d) To keep the CLAIMS in good conditions of conservation and exploration [no
wasting or destruction of the property] and; in good conditions of
conservation and exploration
e) Not to permit at any time access to the CLAIMS/CONCESSIONS to third
parties apart or distinct from its [EXPLORER's] workers or contractors,
and not to consent to invasions by third parties nor to allow them to
conduct exploration work, shipping/haulage or ore sorting/picking in the
If at any time during the period this contract is valid/enforceable EXPLORER
does not comply with the obligations assumed [by it] there under and
particularly those mentioned in this Clause, PROMISSEE shall have the right to
terminate this contract pursuant to the terms established in the Tenth Clause,
TENTH. Non-Compliance. The compliance of the parties with the obligations
contracted pursuant to this agreement shall give the right of one of them to
request the immediate compliance with any obligations that are not being
complied with. In order for this to be brought about, the party that bas not had
compliance with the obligations established shall ask the non-complying party in
writing to comply said obligations and if after thirty days from the date this
request was made [in writing] the lack of compliance continues and no reasonable
efforts to correct said non-compliance have been undertaken, then the affected
party shall have the right, at its/his election to file a lawsuit demanding
satisfactory compliance of the obligations or [it/he] may terminate this
contract, having as an additional remedy the right to sue for damages.
ELEVENTH. Reports regarding information in case of termination of this contract.
In the instance that the EXPLORER decides not to exercise its right of option
[to purchase] and terminates this contract, EXPLORER shall be obligated to
deliver within forty five calendar days following the termination the following:
a) A copy of the final report including [all] die results obtained as part
of the exploration of the CLAIMS including assays, geologic maps, all
types/forms of information and technical data. as well as the results of
ore samples [assays and metallurgical tests], and [all] technical
information regarding the drilling that was conducted; and,
b) The documents showing the compliance with all the obligations related to
the mining concessions for the CLAIMS as far as the presentation of proof
of assessment work for exploration and/or exploitation/mining and the
payment of mining taxes during the term of the present contract.
The parties agree in case of the termination of this contract by the EXPLORER
that from the effective date of the termination, any of the reports regarding
assessment work [for exploration or exploitation] performed which are necessary
with regard to the CLAIMS pursuant to the mining legislation [of Mexico] shall
be the exclusive responsibility and at the expense of the PROMISSEE, with the
EXPLORER freed from any later obligation related to the CLAIMS which that arises
subsequently pursuant to the Mining Legislation that is required to keep the
mining concessions legally valid
TWELFTH. Force majeure. It will not be considered that the parties have incurred
in non-compliance when due to force majeure they will be unable to comply with
the obligations they assume under this agreement.
Elements considered as force majeure, in an enunciatively but not in a
limitative way are: earthquakes, fires, floods, landslides, riots, rebellions,
wars, revolutions, acts of authority and, in general, any other fact or act
completely against the will of the parties and outside of their control which
prevents them from complying, totally or partially, with their obligations.
When any of the parties is affected by causes of force majeure that makes it
impossible for them/it to comply with its/their obligations, it/they will notify
the other party of this fact, informing of the estimated time said force majeure
will prevent that party from fulfilling its obligations.
If after six months from the date in which such force majeure has occurred it
continues, and no reasonable efforts have been made to remedy such causes of
force majeure, then the other party will have the right to terminate this
agreement, if the remediation was possible.
THIRTEENTH. Total agreement of the parties. This agreement reflects the total or
entire agreement between the parties with respect to its purpose; therefore, it
cancels and leaves without effect any other agreements, contracts or letters of
intent, executed previously between them with respect to the same purpose.
This agreement will obligate according to its term and conditions the heirs,
assignees or beneficiaries of the parties.
The parties agree to ratify the present contract before a Notary Public and
record it in the [National] Public Registry of Mining pursuant to the
requirements of the Mining Code and its Regulation.
FOURTEENTH. Applicable Laws and Courts. For everything not expressly stipulated
in this agreement the parties submit themselves to the applicable laws in the
City of Guadalajara, Jalisco, particularly to those of the Mining Law, its
Regulations, the Federal Duties/Rights Law, the Commercial Code and the Civil
Code for the Federal District and in case of litigation they agree to submit to
the jurisdiction of the competent courts of Guadalajara, Jalisco, waiving the
jurisdiction of any other courts to which they may be entitled by reason of
their present or future domiciles.
DECIMA QUINTA. Notices and notifications. All notices and notifications that
should be made by the parties in accordance with this agreement, shall be made,
by one party to the other by written notice, it being understood that when one
of the parties desires or wants to give some notice or a formal recorded
notification, the said notice shall be made before a Notary Public.
For the purposes of this agreement the parties hereby establish the following
THE PROMISSEE: THE EXPLORER: PABLO ANTONIO FITCH PARENTE MINERA SAN JORGE, S.A. DE C. V
C Rio de la plata 28 Camarena 179-19 Col. Centro
Fracc. Campo Bello 82010 C.P. 45501, Tlaquepaque, Jalisco
Mazat1an Sinaloa TeVFax: (33) 3639-1675
Any changes to the addresses shown above shall be given to the other party when
The PRO MIS SEE in Guadalajara, Jalisco signed the present contract in
quadruplicate on the second day of August 2002 and by the EXPLORER the day de
_____ del 2002.