True North Agreement

EX-10 19 truenorthagreement.htm TRUE NORTH AGREEMENT True North Agreement

OPTION AGREEMENT - RAGLAN PROPERTIES - QUEBEC

THIS AGREEMENT IS DATED FOR REFERENCE THE 26TH DAY OF MARCH, 2004

(THE "EFFECTIVE DATE").

BETWEEN:

MINERA CAPITAL CORPORATION

Suite 705 - 595 Hornby Street Vancouver,

British Columbia, V6C 2E8

(hereinafter referred to as the "Optionor")

OF THE FIRST PART

AND:

NOVAWEST RESOURCES INC.

1000 - 355 Burrard Street

Vancouver, British Columbia, V6C 2G8

(hereinafter referred to as the "Optionee")

OF THE SECOND PART

WHEREAS :

The Optionor is the beneficial owner of those certain mineral claims more particularly described in Schedule "A" attached hereto and forming part of this Agreement (the "Mineral Claims");

The Optionor desires to grant an option to earn a 70% interest in the Mineral Claims to the Optionee, and the Optionee is desirous of obtaining an option to earn the said interest, upon the terms and subject to the conditions herein contained.

NOW THEREFORE in consideration of the premises and of the mutual covenants and provisos herein contained, the parties hereto agree as follows:

WORKING OPTION

The Optionee, and its employees and agents and any person duly authorized by the Optionee, shall have the sole and exclusive right and option subject to the provisions of paragraph 7(b) to:

(a)

enter upon the Mineral Claims;

(b)

have exclusive and quiet possession thereof;

(a)

(c)

do such prospecting, exploration, development or other mining work thereon and thereunder as the Optionee, in its sole discretion, may consider advisable;

(d)

bring upon and erect upon the Mineral Claims such mining facilities as the Optionee may consider advisable; and

(e)

remove from the Mineral Claims and sell or otherwise dispose of reasonable quantities of any mineral products derived therefrom, for the purpose of obtaining assays or making other tests.

The right and option given and granted under this paragraph 1 is hereinafter called the "working option".

OPTION SHARES AND COMMITMENTS

2.1

Subject to paragraphs 11 and 12 hereof, in order to maintain the working option in good standing and to earn a 70% interest in the Mineral Claims hereinafter provided for, the Optionee shall incur the following cumulative Expenditures:

(a)

$40,000 on or before 12 months from the Effective Date;

(b)

$140,000 on or before 24 months from the Effective Date;

(c)

$440,000 on or before 36 months from the Effective Date; and

(d)

in each calendar year during this Agreement on or before November 1 to pay to the appropriate Branch of the Government of Quebec such fees as are required to renew the Mineral Claims for a period of not less than one year, and to provide written confirmation of the payments to the Optionor.

2.2

For the purposes of paragraph 2.1 hereof, "Expenditures" means and includes monies expended in prospecting, exploring, geological, geophysical and geochernical surveying, sampling, examining, diamond and other types of drilling, developing, dewatering, assaying, testing, constructing, maintaining and operating roads, trails and bridges, upon or across the mineral claims, buildings, equipment, plant and supplies, salaries and wages (including fringe benefits) of employees and contractors directly engaged therein, prior insurance premiums; and all other expenses ordinarily incurred in prospecting, exploring and developing mining lands, including direct head office supervision and engineering expenses, and an allowance for indirect head office overhead expenses of not more than 10% of all other expenses described above in this paragraph 2.2.

ACQUISITION OF INTEREST

Upon the completion by the Optionee of the Expenditures set out in paragraph 2, the Optionee shall have earned a 70% interest in and to the Mineral Claims, subject only to the royalty interests referred to on Schedule "B" hereto.

TERMINATION OF WORKING OPTION

This Agreement and the working option granted hereunder shall be terminable by the Optionor by notice in writing to the Optionee

(a)

if any of the Expenditures referred to in paragraph 2 have not been incurred by the Optionee on or within 30 days of the date on which such are required to be made; or

(b)

if the Optionee should be in default in performing any of its obligations hereunder and has failed to take reasonable steps to cure such default within 30 days after the giving of a notice of default by the Optionor.

Upon termination of this Agreement by the Optionor the provisions of paragraph 9 shall apply.

TRANSFER OF INTEREST IN THE MINERAL CLAIMS

Upon the exercise of the working option, the Optionor shall deliver to the Optionee duly executed transfers of the Mineral Claims, transferring a 70% interest in the Mineral Claims to the Optionee, which the Optionee shall be entitled to record at all such places of record as may be appropriate or desirable to effect the legal transfer of a 70% interest in the Mineral Claims to the Optionee,

EXCLUSION OF MINERAL CLAIMS

The Optionee shall have the right at any time and from time-to-time to exclude from this Agreement any one or more of the Mineral Claims by written notice to the Optionor of its election so to do; PROVIDED THAT any of the Mineral Claims so excluded shall not expire for a period of at least 12 months from the date the said notice has been received by the Optionor.

COVENANTS OF THE OPTIONEE

During the currency of this Agreement, the Optionee shall:

(a)

keep the Mineral Claims in good standing by doing and filing of assessment work or by making payments in lieu thereof, and by the doing of all other acts and things and making all other payments which may be necessary in that regard;

(b)

permit the Optionor, or its representative, duly authorized by it in writing, at its own risk and expense, access to the Mineral Claims at all reasonable times, and to all records prepared by the Optionee or the Optionor's agent in connection with work done on or with respect to the Mineral Claims, PROVIDED the Optionor shall not, without the prior written consent of the Optionee, such consent not to be unreasonably withheld, disclose any information obtained by it or communicated to it, to any third party except as may be required by regulatory bodies having jurisdiction; and

(c)

furnish to the Optionor, as soon as practical in each year but not later than December 31^St in each year, a comprehensive written report on the work carried out by the Optionee on or with respect to the Mineral Claims during the preceding year, the cost thereof, and results obtained.

COVENANTS OF THE OPTIONOR

The Optionor covenants with and represents and warrants to the Optionee that:

(a)

the Optionor is the legal and beneficial owner of the Mineral Claims;

(b)

to the best of the Optionor's knowledge the Mineral Claims have been duly and validly located and recorded in accordance with the applicable laws of the Province of Quebec, and are valid and subsisting Mineral Claims as of the date of execution and delivery of this Agreement;

(c)

the Mineral Claims are in good standing, free and clear of all liens, charges and encumbrances; and

(d)

the Optionor has the exclusive right and authority to enter into this Agreement and to dispose of the Mineral Claims in accordance with the terms hereof, and that no other person, firm or corporation has any proprietary or other interest in the same.

TERMINATION PRIOR TO ACQUISITION OF MINERAL CLAIMS

If this Agreement is terminated, the Optionee shall:

(a)

cause the Mineral Claims to be free and clear of all liens and encumbrances, and in good standing with ^lrespect to the performance of assessment work or payment of renewal fees for at least one year;

(b)

deliver to the Optionor, as soon as possible after receipt of written request from the Optionor, copies of all reports, maps, drill logs, assay results and any other relevant technical data compiled by the Optionee with respect to the Mineral Claims; and

(c)

remove from the Mineral Claims within 2 months of the effective date of termination all mining facilities erected, installed or brought upon the Mineral Claims by or at the instance of the Optionee, and any mining facilities remaining on the Mineral Claims after the expiration of the said period shall, without compensation to the Optionee, become the property of the Optionor.

10.

ADDITIONAL TERMINATION

In addition to any other termination provisions contained in this Agreement, the Optionee shall at any time have the right to terminate this Agreement without liability therefor by giving written notice of such termination to the Optionor, and, in the event of such termination this Agreement, save and except for the provisions of paragraph 9 hereof; and subject to the obligations of the Optionee arising from termination, shall be of no further force and effect.

11.

FORCE MAJEURE

If the Optionee is prevented or delayed in complying with any provisions of this Agreement by reason of strikes, lockouts, labour shortages, power shortages, fires, wars, acts of God, governmental regulations restricting normal operations or any other reason or reasons beyond the control of the Optionee, the time limited for the performance of the various provisions of this Agreement as set out above shall be extended by a period of time equal in length to the period of such prevention and delay. The Optionee, insofar as is possible, shall promptly give written notice to the Optionor of the particulars of the reasons for any prevention or delay under this paragraph, and shall take all reasonable steps to remove the cause of such prevention or delay and shall give written notice to the Optionor as soon as such cause ceases to subsist.

12.

DEFAULT

Notwithstanding anything in this Agreement to the contrary, if the Optionee should be in default in performing any requirement herein set forth (except for the requirement to issue the shares set out in paragraph 2 in a timely manner), the Optionor shall give written notice to the Optionee specifying the default, and the Optionee shall not lose any rights granted under this Agreement, unless, within 60 days after the giving of a notice of default by the Optionor, the Optionee has failed to take reasonable steps to cure the default by the appropriate payment or performance, (the Optionee hereby agreeing that should it so commence to cure any defect it will prosecute the same to completion without undue delay); and if the Optionee fails to take reasonable steps to cure any such default, the Optionor shall be entitled thereafter to terminate this Agreement and the provisions of paragraph 9 shall then be applicable, and to seek any remedy it may have on account of such default.

13.

JOINT VENTURE

13.1

Upon the exercise of the working option by the Optionee, the Mineral Claims shall be operated as an unincorporated joint venture (the "Joint Venture") in which the parties hereto shall have the same percentage interest and right to participate in the revenues, Expenditures and obligations of the Joint Venture as their working interest percentage in the Mineral Claims from time-to-time.

13.2

Upon the commencement of the Joint Venture, the initial working interest of the parties in the Joint Venture and their deemed contributions to Expenditures would be as follows:

Optionor 30% $250,000

Optionee 70% $500,000

Thereafter, the parties' working interests in the Joint Venture shall vary according to the parties' actual contributions to Expenditures in accordance with the following formula:

Percentage Working Interest =

Deemed and Actual Expenditures of a Party

x 100 Total Deemed and Actual Expenditures of a Party

13.3

The parties shall own their interests in the Mineral Claims as tenants-in-common, with each party having a percentage undivided, beneficial interest therein as determined from time-to-time in accordance with the provisions of paragraph 13.2.

13.4

In the event that any party's interest in the Joint Venture/Mineral Claims is subsequently reduced to 5%, then that party's interest shall be converted to a Net Profits Interest payable in accordance with standard mining industry practice and, thereupon, that party shall forfeit to the remaining party all of its interest in the Joint Venture and the Mineral Claims.

13.5

Subject as hereinafter provided:

(a)

the Optionee shall be the operator (the "Operator") of the Joint Venture;

(b)

if the interest in the Joint Venture of the party which is the Operator is reduced to less than 50% or 25% should a third party participate, then the other party may, after 30 days' written notice to the then Operator, appoint a new Operator of the Joint Venture; and

(c)

all work required to be carried out pursuant to the exploration and development of the Mineral Claims shall be carried out under the direction and control of the Operator.

13.6

Subject to the rights, powers and authority of the Management Committee, the Operator shall have the full right, power and authority to do everything necessary or desirable to carry out the purposes of the Joint Venture, and to determine the manner of exploration and development and operation of the Mineral Claims.

13.7

On the commencement of the Joint Venture, the parties shall form a Management Committee (the "Management Committee"), and each party shall have two members on the Management Committee. The members of the Management Committee shall have the right to cast votes representing the percentage interest of the party they represent. The Management Committee shall determine all matters coming before it by affirmative vote of members having voting interests in the aggregate of more than 50%. In the case of an equality of votes on matters which cannot be resolved, the Chairman of the Management Committee shall be deemed to have a sufficiently large interest to exercise a majority of the votes entitled to be cast, and, if the Chairman exercises such vote, it shall be deemed to be a resolution approved by a majority. The Chairman of the Management Committee shall be a representative of the Operator on the Management Committee.

13.8

The parties hereto shall enter into a joint venture agreement, which agreement shall contain the above provisions, and those provisions usually contained in a joint venture agreement for the purposes of exploration and developing a mining property.

14.

NOTICE

Any notice required to be given under this Agreement shall be deemed to be well and sufficiently given if delivered or if mailed by registered mail in Canada (save and except during the period of any interruption in the normal postal service within Canada) or sent by prepaid telegram or by telecopier, in the case of the Optionor addressed as follows:

Minera Capital Corporation

Suite 705 - 595 Hornby Street Vancouver,

British Columbia, V6C 2E8

Telecopier No.:

604-683-3485

and in the case of the Optionee addressed as follows:

NovaWest Resources Inc.

1000 - 355 Burrard Street

Vancouver, British Columbia, V6C 2G8

Telecopier No.:

604-683-8903

and any notice given as aforesaid shall be deemed to have been given, if delivered, when delivered, if telecopied, when received, or if mailed, or telegraphed, on the third business day after the date of mailing or telegraphing thereof. Either party may from time-to-time by notice in writing change its address for the purpose of this paragraph.

15.

OPTION ONLY

This is an option only and except as specifically provided other wise, nothing herein contained shall be construed as obligating the Optionee to do any acts or make any payments hereunder, and any act or acts, or payment or payments as shall be made hereunder shall not be construed as obligating the Optionee to do any further act or make any further payment. If this Agreement is terminated, the Optionee shall not be bound thereafter in debt, damages or otherwise under this Agreement save and except as provided for in paragraph 9 and with respect to obligations arising from termination; and all shares issued by the Optionee shall be retained by the Optionor in consideration for entering into this Agreement and for the rights conferred on the Optionee thereby.

16.

FURTHER ASSURANCES

The parties hereto agree to execute all such further or other assurances and documents and to do or cause to be done all acts or things necessary to implement and carry into effect the provisions and intent of this Agreement.

17.

TIME OF ESSENCE

Time shall be of the essence of this Agreement.

18.

TITLES

The titles to the respective paragraphs hereof shall not be deemed as part of this Agreement but shall be regarded as having been used for convenience only.

19.

SUCCESSORS AND ASSIGNS

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors, and permitted assigns. The Optionor acknowledges and agrees that the Optionee has the right to grant to a third party the right to earn a 35% interest in the Mineral Claims, provided that such third party agrees to be bound by the provisions of this Agreement.

20.

ARBITRATION

If any question, difference or dispute shall arise between the parties or any of them in respect of any matter arising under this Agreement (other than the issuance of the shares provided for in paragraph 2) or in relation to the construction hereof the same shall be determined by the award of three arbitrators to be named as follows:

(a)

the party or parties sharing one side of the dispute shall name an arbitrator and give notice thereof to the party or parties sharing the other side of the dispute;

(b)

the party or parties sharing the other side of the dispute shall, within 14 days of receipt of the notice, name an arbitrator; and

(c)

the two arbitrators so named shall, within 15 days of the naming of the latter of them, select a third arbitrator.

The decision of the majority of these arbitrators shall be made within 30 days after the selection of the latter of them. The expense of the arbitration shall be borne equally by the parties to the dispute. If the parties on either side of the dispute fail to name their arbitrator within the time limited or to proceed with the arbitration, the arbitrator named may decide the question. The arbitration shall be conducted in accordance with the provisions of the Commercial Arbitration Act of the Province of British Columbia, and the decision of the arbitrator or a majority of the arbitrators, as the case may be, shall be conclusive and binding upon all the parties.

21.

GOVERNING LAW

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of British Columbia.

22.

PRIOR AGREEMENTS

This Agreement supercedes and replaces all prior agreements between the parties hereto with respect to the Mineral Claims, which said prior agreements shall be deemed to be null and void upon the execution hereof.

23.

REGULATORY APPROVAL

This Agreement shall be subject to acceptance by the TSX Venture Exchange. The Optionee will use its best efforts to obtain such approval, and, if such approval has not been obtained on or before 120 days from the date hereof, the Optionor shall be in default for the purposes of paragraph 12 hereof.

IN WITNESS WHEREOF the parties hereto have hereunto executed these presents as of the day and year first above written.

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