UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 21, 2005
ROYAL GOLD, INC.
(Exact name of registrant as specified in its charter)
 	 	 	 	 	
Delaware	 	0-5664	 	84-0835164	
(State or Other Jurisdiction	 	(Commission	 	(I.R.S. Employer	
of Incorporation or Organization)	 	File Number)	 	Identification No.)	
1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202-1132
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: (303) 573-1660
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o	 	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

o	 	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

o	 	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

o	 	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

 
Item 1.01. Entry into a Material Definitive Agreement
On September 21, 2005, Royal Gold, Inc. (“Royal Gold”) entered into an underwriting agreement (the “Underwriting Agreement”) with HSBC Securities (USA) Inc., as representative of the underwriters identified therein (the “Underwriters”). The Underwriting Agreement relates to the issuance and sale by Royal Gold of 2,000,000 shares (the “Shares”) of common stock, par value $0.01 per share (“Common Stock”), plus an option exercisable by the Underwriters for an additional 300,000 shares of Common Stock to cover over-allotments, if any. The price per Share to the Underwriters is $24.70 per Share, and the Underwriters will initially offer the Shares to the public at $26.00 per Share. The offering of the Shares was made under Royal Gold’s shelf registration statement on Form S-3 (Registration No 333-111490) (the “Registration Statement”), including a prospectus dated July 14, 2004, as supplemented by a prospectus supplement dated September 22, 2005, which prospectus supplement was filed with the Securities and Exchange Commission on September 22, 2005. The Shares are expected to be delivered to the Underwriters on September 26, 2005.
The Underwriting Agreement contains customary representations, warranties and covenants by Royal Gold, conditions to closing and indemnification provisions. A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K, and the contents thereof are incorporated herein by reference.
Item 8.01. Other Events
On September 22, 2005, Royal Gold issued a press release announcing the pricing of the underwritten public offering of the Shares pursuant to the Registration Statement. A copy of the press release dated September 22, 2005 is filed as Exhibit 99.1 to this Current Report on Form 8-K, and the contents thereof are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits

(c)	 	Exhibits.	
 	 	 	
Exhibit No.	 	 	
 	 	 	
1.1	 	Underwriting Agreement, dated September 21, 2005, between Royal Gold, Inc. and HSBC Securities (USA) Inc., as representative of the underwriters identified therein.	
 	 	 	
99.1	 	Press release dated September 22, 2005.	
 	 	 	
99.2	 	Opinion of Hogan & Hartson L.L.P. relating to the Shares.	
 	 	 	
99.3	 	Form of Employment Contract (together with Schedule of Certain Executive Officers Parties Thereto).	
 	 	 	
99.4	 	Royalty Assignment and Agreement, effective as of December 26, 2002, between High Desert Mineral Resources, Inc. and High Desert Gold Corporation.	
 	 	 	
99.5	 	Royalty Assignment, Confirmation, Amendment, and Restatement of Royalty, and Agreement, dated as of November 30, 1995, among Barrick Bullfrog Inc., Barrick Goldstrike Mines Inc. and Royal Hal Co.	
 	 	 	
99.6	 	Amendment to Royalty Assignment, Confirmation, Amendment, and Restatement of Royalty, and Agreement, effective as of October 1, 2004, among Barrick Bullfrog Inc., Barrick Goldstrike Mines Inc. and Royal Hal Co.	

 
SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 	 	 	 	 	
 	ROYAL GOLD, INC.
 	 	
Date: September 22, 2005 	By:  	/s/ Karen P. Gross	 	
 	 	     Karen P. Gross 	 	
 	 	     Vice President & Secretary 	 	

 
Exhibit Index
 	 	 	
Exhibit No.	 	 	
 	 	 	
1.1	 	Underwriting Agreement, dated September 21, 2005, between Royal Gold, Inc. and HSBC Securities (USA) Inc., as representative of the underwriters identified therein.	
 	 	 	
99.1	 	Press release dated September 22, 2005.	
 	 	 	
99.2	 	Opinion of Hogan & Hartson L.L.P. relating to the Shares.	
 	 	 	
99.3	 	Form of Employment Contract (together with Schedule of Certain Executive Officers Parties Thereto).	
 	 	 	
99.4	 	Royalty Assignment and Agreement, effective as of December 26, 2002, between High Desert Mineral Resources, Inc. and High Desert Gold Corporation.	
 	 	 	
99.5	 	Royalty Assignment, Confirmation, Amendment, and Restatement of Royalty, and Agreement, dated as of November 30, 1995, among Barrick Bullfrog Inc., Barrick Goldstrike Mines Inc. and Royal Hal Co.	
 	 	 	
99.6	 	Amendment to Royalty Assignment, Confirmation, Amendment, and Restatement of Royalty, and Agreement, effective as of October 1, 2004, among Barrick Bullfrog Inc., Barrick Goldstrike Mines Inc. and Royal Hal Co.	

 

Exhibit 1.1
Royal Gold, Inc.
2,000,000 Shares
Common Stock
(par value $0.01 per share)
Underwriting Agreement
New York, New York
September 21, 2005
HSBC Securities (USA) Inc.
as Representative of the several Underwriters
c/o HSBC Securities (USA) Inc.
452 Fifth Avenue
New York, New York 10018
Ladies and Gentlemen:
     Royal Gold, Inc., a corporation organized under the laws of Delaware (the “Company”), proposes to sell to the several underwriters named in Schedule I to this Agreement (the “Underwriters”), for whom you (the “Representative”) are acting as representative, 2,000,000 shares of common stock, par value $0.01 per share (“Common Stock”) of the Company (said shares to be issued and sold by the Company being hereinafter called the “Underwritten Securities”). The Company also proposes to grant to the Underwriters an option to purchase up to 300,000 additional shares of Common Stock to cover over-allotments (the “Option Securities”; the Option Securities, together with the Underwritten Securities, being hereinafter called the “Securities”). The use of the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Any reference herein to the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the Effective Date of the Registration Statement or the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the case may be, and the Canadian offering memorandum (the “Canadian Offering Memorandum”) delivered to purchasers of Common Stock in the Provinces of Alberta, British Columbia, Ontario and Quebec (the “Canadian Jurisdictions”); and any reference herein to the terms “amend”, “amendment” or “supplement” with respect to the Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the Effective Date of the Registration Statement or the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the case may be, deemed to be incorporated therein by reference. Certain terms used herein are defined in Section 17 hereof.

 

     1.  Representations and Warranties .
     The Company represents and warrants to, and agrees with, each Underwriter as set forth below in this Section 1.
     (i) The Company meets the requirements for use of Form S-3 under the Act and has prepared and filed with the Commission a registration statement (file number 333-111490) on Form S-3, including a related basic prospectus, for registration under the Act of the offering and sale of the Securities. The Company may have filed one or more amendments thereto, including a Preliminary Final Prospectus, each of which has previously been furnished to you. The Company will next file with the Commission one of the following: (1) after the Effective Date of such registration statement, a final prospectus supplement relating to the Securities in accordance with Rules 430A and 424(b), (2) prior to the Effective Date of such registration statement, an amendment to such registration statement (including the form of final prospectus supplement) or (3) a final prospectus in accordance with Rules 415 and 424(b). In the case of clause (1), the Company has included in such registration statement, as amended at the Effective Date, all information (other than Rule 430A Information) required by the Act and the rules thereunder to be included in such registration statement and the Final Prospectus. As filed, such final prospectus supplement or such amendment and form of final prospectus supplement shall contain all Rule 430A Information, together with all other such required information, and, except to the extent the Representative shall agree in writing to a modification, shall be in all substantive respects in the form furnished to you prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information and other changes (beyond that contained in the Basic Prospectus and any Preliminary Final Prospectus) as the Company has advised you, prior to the Execution Time, will be included or made therein. The Registration Statement, at the Execution Time, meets the requirements set forth in Rule 415(a)(1)(x). No order preventing or suspending the use of any prospectus has been issued by the Commission.
     (ii) On the Effective Date, the Registration Statement did or will, and when the Final Prospectus is first filed (if required) in accordance with Rule 424(b) and on the Closing Date (as defined herein) and on any date on which Option Securities are purchased, if such date is not the Closing Date (a “settlement date”), the Final Prospectus (and any supplements thereto) will, comply in all material respects with the applicable requirements of the Act and the Exchange Act and the respective rules thereunder; on the Effective Date and at the Execution Time, the Registration Statement did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on the Effective Date, the Final Prospectus, if not filed pursuant to Rule 424(b), will not, and on the date of any filing pursuant to Rule 424(b) and on the Closing Date and any settlement date, the Final Prospectus (together with any supplement thereto) will not, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to the information contained in or omitted from the
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Registration Statement or the Final Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representative specifically for inclusion in the Registration Statement or the Final Prospectus (or any supplement thereto).
     (iii) Each of the Company and its subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as described in the Final Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification, and in which the failure to qualify would have a Material Adverse Effect.
     (iv) All the outstanding shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued and are fully paid and nonassessable, and, except as otherwise set forth in the Final Prospectus, all outstanding shares of capital stock of the Company’s subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any security interests, claims, liens or encumbrances.
     (v) The Company’s authorized equity capitalization is as set forth in the Final Prospectus. The share capital of the Company conforms in all material respects to the description thereof contained in the Final Prospectus. The outstanding shares of Common Stock have been duly and validly authorized and issued and are fully paid and nonassessable. The Securities being sold hereunder by the Company have been duly and validly authorized, and, when issued and delivered to and paid for by the Underwriters pursuant to this Agreement, will be fully paid and nonassessable. The certificates for the Securities are in valid and sufficient form. The holders of outstanding shares of capital stock of the Company are not entitled to preemptive or other rights to subscribe for the Securities; and, except as set forth in the Final Prospectus, no options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities for, shares of capital stock of or ownership interests in the Company are outstanding.
     (vi) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Final Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Final Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Final Prospectus, there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, except as set forth in or contemplated in the Final Prospectus.
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     (vii) There is no franchise, contract or other document of a character required to be described in the Registration Statement or Final Prospectus, or to be filed as an exhibit thereto, which is not described or filed as required; and the statements in the Final Prospectus under the headings “Tax Considerations,” “Risk Factors — Risks Related to Our Business — Anticipated federal legislation could decrease our royalty revenues” and “— The mining industry is subject to significant environmental risks,” and “Certain United States Federal Income Tax Considerations for Non-U.S. Holders” and in the Basic Prospectus under the heading “Description of Common Stock,” insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements, documents or proceedings.
     (viii) The Company is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Prospectus, will not be an “investment company” as defined in the Investment Company Act of 1940, as amended.
     (ix) No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein, except such as have been obtained under the Act, such as may be required by the National Association of Securities Dealers and the Toronto Stock Exchange, such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters in the manner contemplated herein and in the Final Prospectus and such as may be required with the securities regulatory authorities in each of the Canadian Jurisdictions.
     (x) None of the issue and sale of the Securities, the execution and delivery by the Company of this Agreement and the consummation of any other of the transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result in a breach or violation of, or result in the imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to: (i) the organizational documents of the Company or any of its subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any of its subsidiaries is a party or bound or to which its or their property is subject, except for the Loan Agreement between Royal Gold, Inc. and HSBC Bank (USA), Inc. dated December 18, 2000, for which the Company has received a waiver from HSBC Bank USA as of September 21, 2005, (iii) any statute, law, rule, or regulation, or (iv) any judgment, writ, injunction, ruling, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its subsidiaries or any of its or their properties.
     (xi) The consolidated historical financial statements of the Company and its subsidiaries included or incorporated by reference in the Final Prospectus and the Registration Statement present fairly in all material respects the consolidated financial condition, results of operations and cash flows of the Company and its subsidiaries as of the dates and for the periods indicated, comply as to form with the applicable accounting
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requirements of the Act and the Exchange Act and have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein). The selected consolidated financial data set forth under the caption “Prospectus Supplement Summary — Summary of Consolidated Financial Data” in the Final Prospectus and the Registration Statement fairly present, on the basis stated in the Final Prospectus and the Registration Statement, the information included therein.
     (xii) No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries or its or their property is pending or, to the knowledge of the Company, threatened that (i) could reasonably be expected to have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xiii) Each of the Company and each of its Significant Subsidiaries owns or leases all such properties as are necessary to the conduct of its operations as presently conducted; the Company and its subsidiaries have good and marketable title to all real property owned by them in fee simple, defensible title to all unpatented mining claims owned by them (subject to the paramount title of the United States), and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except as set forth in or contemplated in the Final Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its Significant Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Significant Subsidiaries.
     (xiv) Neither the Company nor any subsidiary of the Company is in violation or default of (i) any provision of its organizational documents, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or such subsidiary or any of its properties, as applicable, any of which defaults or violations described in clauses (ii) through (iii) will have, or after any required notice and passage of any applicable grace period, would have a Material Adverse Effect.
     (xv) PricewaterhouseCoopers LLP, who have certified certain financial statements of the Company and its consolidated subsidiaries and delivered their report with respect to the audited consolidated financial statements and schedules included or incorporated by reference in the Final Prospectus, is an independent registered public accounting firm with respect to the Company within the meaning of the Act and the Exchange Act and the applicable published rules and regulations thereunder.
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     (xvi) The Company has filed all foreign, federal, state and local tax returns that are required to be filed or has requested extensions thereof (except in any case in which the failure so to file would not have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto)) and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing is due and payable, except for any such assessment, fine or penalty that is currently being contested in good faith or as would not have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xvii) No labor problem or dispute with the employees of the Company or any of its Significant Subsidiaries exists or is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or its Significant Subsidiaries’ principal suppliers, contractors or customers, that could have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xviii) The Company and each of its Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; all policies of insurance and fidelity or surety bonds insuring the Company or any of its Significant Subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect; the Company and its Significant Subsidiaries are in compliance with the terms of such policies and instruments in all material respects; and there are no claims by the Company or any of its subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; neither the Company nor any such Significant Subsidiary has been refused any insurance coverage sought or applied for; and neither the Company nor any such Significant Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xix) No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xx) The Company and its subsidiaries possess all licenses, concessions, certificates, permits and other authorizations issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses (“Permits”); the Company and its subsidiaries have fulfilled and performed all of their respective obligations with respect to such Permits and neither the Company nor any such
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subsidiary has received any notice of proceedings relating to the revocation or modification of any such Permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xxi) The Company and each of its subsidiaries maintains and will maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with United States generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company maintains and will maintain disclosure controls and procedures (as defined as Rule 13a-15 of the Exchange Act) designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported in accordance with the Exchange Act and the rules and regulations thereunder. The Company has carried out and will carry out evaluations, under the supervision and with the participation of the Company’s management, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 of the Exchange Act.
     (xxii) The Company has not taken, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
     (xxiii) The Company and its subsidiaries (i) have been and are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received and have been and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) have not received notice of any actual or potential liability under any environmental law, except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto). Except as set forth in the Final Prospectus (exclusive of any supplement thereto), neither the Company nor any of its subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or is subject to any pending or threatened proceeding in which a governmental entity is a party except for such proceedings that would involve monetary sanctions of less than $100,000.
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     (xxiv) In the ordinary course of its business, the Company periodically reviews the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, have a Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (xxv) The minimum funding standard under Section 302 of the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (“ERISA”), has been satisfied by each “pension plan” (as defined in Section 3(2) of ERISA) which has been established or maintained by the Company and/or one or more of its subsidiaries, and the trust forming part of each such plan which is intended to be qualified under Section 401 of the Code is so qualified except in any case in which the failure to maintain such minimum funding standard or such qualification would not have a Material Adverse Effect; each of the Company and its subsidiaries has fulfilled its obligations, if any, under Section 515 of ERISA; neither the Company nor any of its subsidiaries maintains or is required to contribute to a “welfare plan” (as defined in Section 3(1) of ERISA) which provides for retiree or other post-employment welfare benefits or insurance coverage as to which the Company has not reserved its right to amend or terminate the plan in its discretion (other than “continuation coverage” (as defined in Section 602 of ERISA)); each pension plan and welfare plan established or maintained by the Company and/or one or more of its subsidiaries is in compliance in all material respects with the currently applicable provisions of ERISA; and neither the Company nor any of its subsidiaries has incurred or could reasonably be expected to incur any withdrawal liability under Section 4201 of ERISA, any liability under Section 4062, 4063, or 4064 of ERISA, or any other liability under Title IV of ERISA.
     (xxvi) There is and has been no failure on the part of the Company and any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications.
     (xxvii) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (“FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign
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political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and its subsidiaries have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
     (xxviii) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
     (xxix) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent or employee of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
     (xxx) The Company and its subsidiaries own, possess, license or have other rights to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of the Company’s business as now conducted or as proposed in the Final Prospectus to be conducted. Except as set forth in the Final Prospectus, (i) to the Company’s knowledge, there are no rights of third parties to any such Intellectual Property; (ii) to the Company’s knowledge, there is no material infringement by third parties of any such Intellectual Property; (iii) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any other fact which would form a reasonable basis for any such claim; (vi) to the Company’s knowledge, there is no U.S. or foreign patent or published U.S. patent application which contains claims that dominate or may
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dominate any Intellectual Property described in the Final Prospectus as being owned by or licensed to the Company or that interferes with the issued or pending claims of any such Intellectual Property; and (vii) there is no prior art of which the Company is aware that may render any U.S. patent held by the Company invalid or any U.S. patent application held by the Company unpatentable which has not been disclosed to the U.S. Patent and Trademark Office.
     (xxxi) Except as disclosed in the Registration Statement and the Final Prospectus, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of the Representative and (ii) does not intend to use any of the proceeds from the sale of the Securities hereunder to repay any outstanding debt owed to any affiliate of the Representative.
     Any certificate signed by any officer of the Company and delivered to the Representative or counsel for the Underwriters in connection with the offering of the Securities shall be deemed a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
     2.  Purchase and Sale . (a) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at a purchase price of $24.70 per share, the amount of the Underwritten Securities set forth opposite such Underwriter’s name in Schedule I to this Agreement.
     (b) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company hereby grants an option to the several Underwriters to purchase, severally and not jointly, up to 300,000 Option Securities at the same purchase price per share as the Underwriters shall pay for the Underwritten Securities. Such option may be exercised in whole or in part to cover over-allotments at any time on or before the 30th day after the date of the Final Prospectus upon written or telegraphic notice by the Representative to the Company setting forth the number of shares of the Option Securities as to which the several Underwriters are exercising the option and the settlement date. The number of Option Securities to be purchased by each Underwriter shall be the same percentage of the total number of shares of the Option Securities to be purchased by the several Underwriters as such Underwriter is purchasing of the Underwritten Securities, subject to such adjustments as you in your absolute discretion shall make to eliminate any fractional shares.
     3.  Delivery and Payment . Delivery of and payment for the Underwritten Securities and the Option Securities (if the option provided for in Section 2(b) hereof shall have been exercised on or before the third Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on September 26, 2005, or at such time on such later date not more than three Business Days after the foregoing date as the Representative shall designate, which date and time may be postponed by agreement between the Representative and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for the Securities being herein called the “Closing Date”). Delivery of the Securities shall be made to the Representative for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representative of the respective aggregate purchase prices of
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the Securities being sold by the Company to or upon the order of the Company by wire transfer payable in same-day funds to the accounts specified by the Company. Delivery of the Underwritten Securities and the Option Securities shall be made through the facilities of The Depository Trust Company unless the Representative shall otherwise instruct.
     If the option provided for in Section 2(b) hereof is exercised after the third Business Day prior to the Closing Date, the Company will deliver the Option Securities (at the expense of the Company) to the Representative, at 452 Fifth Avenue, New York, New York, on the date specified by the Representative (which shall be within three Business Days after exercise of such option) for the respective accounts of the several Underwriters, against payment by the several Underwriters through the Representative of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the accounts specified by the Company. If settlement for the Option Securities occurs after the Closing Date, the Company will deliver to the Representative on the settlement date for the Option Securities, and the obligation of the Underwriters to purchase the Option Securities shall be conditioned upon receipt of, supplemental opinions, certificates and letters confirming as of such date the opinions, certificates and letters delivered on the Closing Date pursuant to Section 6 hereof.
     4.  Offering by Underwriters . It is understood that the several Underwriters propose to offer the Securities for sale to the public as set forth in the Final Prospectus and in accordance with the selling restrictions set forth in Exhibit C hereto. With respect to the Canadian Jurisdictions, the several Underwriters agree that they shall offer for sale and sell the Common Stock only in such jurisdictions, and therein only in such manner that, pursuant to the applicable laws of the Canadian Jurisdictions, no prospectus need be delivered to purchasers or be filed in connection therewith, and therein only to purchasers eligible to purchase such securities in the jurisdiction of their residence. The Underwriters will utilize a form of subscription agreement (the “Subscription Agreement”) in the Canadian Jurisdictions satisfactory to the Company and its counsel, acting reasonably.
     5.  Agreements .
     The Company agrees with the several Underwriters that:
     (i) The Company will use its best efforts to cause the Registration Statement, if not effective at the Execution Time, and any amendment thereof, to become effective. Prior to the termination of the offering of the Securities, the Company will not file any amendment of the Registration Statement or supplement (including the Final Prospectus or any Preliminary Final Prospectus) to the Basic Prospectus or any Rule 462(b) Registration Statement unless the Company has furnished you a copy for your review prior to filing and will not file any such proposed amendment or supplement to which you reasonably object, unless required by the Act or the Exchange Act. Subject to the foregoing sentence, if the Registration Statement has become or becomes effective pursuant to Rule 430A, or filing of the Final Prospectus is otherwise required under Rule 424(b), the Company will cause the Final Prospectus, properly completed, and any supplement thereto to be filed in a form approved by the Representative with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Representative of such timely
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filing. The Company will promptly advise the Representative (1) when the Registration Statement, if not effective at the Execution Time, shall have become effective, (2) when the Final Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement shall have been filed with the Commission, (3) when, prior to termination of the offering of the Securities, any amendment to the Registration Statement shall have been filed or become effective, (4) of any request by the Commission or its staff for any amendment of the Registration Statement, or any Rule 462(b) Registration Statement, or for any supplement to the Final Prospectus or for any additional information, (5) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (6) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the institution or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof.
     (ii) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Final Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend the Registration Statement or supplement the Final Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will (1) notify the Representative of such event, (2) prepare and file with the Commission, subject to the second sentence of paragraph (i) of this Section 5, an amendment or supplement which will correct such statement or omission or effect such compliance and (3) supply any supplemented Final Prospectus to you in such quantities as you may reasonably request.
     (iii) As soon as practicable, the Company will make generally available to its security holders and to the Representative an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act.
     (iv) The Company will use the net proceeds received by it from the sale of the Common Stock pursuant to this Agreement in the manner specified in the Final Prospectus under the caption “Use of Proceeds.”
     (v) The Company will use its best efforts to list for quotation the Securities on the Nasdaq National Market and the Toronto Stock Exchange and maintain its status as a “reporting issuer” under the applicable securities laws of the Canadian Jurisdictions other than the Province of Quebec.
     (vi) The Company will furnish to the Representative and counsel for the Underwriters signed copies of the Registration Statement (including exhibits thereto) and to each other Underwriter a copy of the Registration Statement (without exhibits thereto)
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and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, as many copies of each Preliminary Final Prospectus and the Final Prospectus and any supplement thereto as the Representative may reasonably request.
     (vii) The Company will arrange, if necessary, for the qualification of the Securities for sale under the laws of such jurisdictions as the Representative may designate and will maintain such qualifications in effect so long as required for the distribution of the Securities; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering or sale of the Securities, in any jurisdiction where it is not now so subject.
     (viii) The Company will not, without the prior written consent of the Representative, offer, sell, contract to sell, pledge, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any affiliate of the Company, directly or indirectly, including the filing (or participation in the filing) of a registration statement with the Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any other shares of Common Stock or any securities convertible into, or exercisable or exchangeable for, such Common Stock; or publicly announce an intention to effect any such transaction, for a period of 90 days after the date of this Agreement, provided, however, that the Company may (i) issue and sell Common Stock or grant options pursuant to any employee stock option plan, stock ownership plan or dividend reinvestment plan of the Company in effect at the Execution Time and set forth in the Final Prospectus (exclusive of any supplement thereto) and (ii) issue Common Stock issuable upon the conversion of securities or the exercise of warrants or options outstanding at the Execution Time.
     (ix) The Company will comply with all applicable securities and other applicable laws, rules and regulations, including, without limitation, the Sarbanes Oxley Act, and will use its best efforts to cause the Company’s directors and officers, in their capacities as such, to comply with such laws, rules and regulations, including, without limitation, the provisions of the Sarbanes Oxley Act.
     (x) The Company will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
     (xi) The Company agrees to pay the costs and expenses relating to the following matters: (i) the preparation, printing or reproduction and filing with the Commission of the Final Prospectus, and each amendment or supplement thereto; (ii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement, each Preliminary Final Prospectus, the Final Prospectus, and all amendments or supplements
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to any of them, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (iii) the preparation, printing, authentication, issuance and delivery of certificates (if any) for the Securities, including any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (iv) the printing (or reproduction) and delivery of this Agreement, any blue sky memorandum and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Securities; (v) the registration of the Securities under the Exchange Act and the listing for quotation of the Securities on the Toronto Stock Exchange and the Nasdaq National Market; (vi) any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable fees and expenses of counsel for the Underwriters relating to such registration and qualification); (vii) any filings required to be made with the National Association of Securities Dealers, Inc. (including filing fees and the reasonable fees and expenses of counsel for the Underwriters relating to such filings); (viii) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Securities; (ix) the fees and expenses of the Company’s accountants and the fees and expenses of counsel for the Company; and (x) all other costs and expenses incident to the performance by the Company of its obligations under this Agreement.
     6.  Conditions to the Obligations of the Underwriters . The obligations of the Underwriters to purchase the Underwritten Securities and the Option Securities, as the case may be, shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein as of the Execution Time, the Closing Date and any settlement date pursuant to Section 3 hereof, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions:
     (a) If the Registration Statement has not become effective prior to the Execution Time, unless the Representative agrees in writing to a later time, the Registration Statement will become effective not later than (i) 6:00 PM New York City time on the date of determination of the public offering price, if such determination occurred at or prior to 3:00 PM New York City time on such date or (ii) 9:30 AM on the Business Day following the day on which the public offering price was determined, if such determination occurred after 3:00 PM New York City time on such date; if filing of the Final Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the Final Prospectus, and any such supplement, will be filed in the manner and within the time period required by Rule 424(b); and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened.
     (b) The Company shall have requested and caused Hogan & Hartson L.L.P., U.S. counsel for the Company, and Frasier Milner Casgrain LLP, Canadian counsel for the Company, to have furnished to the Representative their opinions substantially in the forms set forth in Exhibits D-1 and D-2 hereto, respectively, dated the Closing Date and any settlement date and addressed to the Representative.
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     (c) The Representative shall have received from Cleary Gottlieb Steen & Hamilton LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing Date and any settlement date and addressed to the Representative, with respect to the issuance and sale of the Securities, the Registration Statement, the Final Prospectus (together with any supplement thereto) and other related matters as the Representative may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.
     (d) The Company shall have furnished to the Representative a certificate of the Company, signed by the Chairman of the Board or the President and the principal financial or accounting officer of the Company, dated the Closing Date and any settlement date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Final Prospectus, any supplements to the Final Prospectus and this Agreement and that:
     (i) the representations and warranties of the Company in this Agreement are true and correct on and as of the Closing Date and any settlement date with the same effect as if made on the Closing Date and any settlement date and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date and any settlement date;
     (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company’s knowledge, threatened; and
     (iii) since the date of the most recent financial statements included or incorporated by reference in the Final Prospectus (exclusive of any supplement thereto), there has been no Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto).
     (e) The Company shall have requested and caused PricewaterhouseCoopers LLP to have furnished to the Representative letters, at the Execution Time and at the Closing Date and any settlement date, dated respectively as of the Execution Time and as of the Closing Date and any settlement date, in form and substance satisfactory to the Representative, confirming that it is an independent registered public accounting firm within the meaning of the Act and the Exchange Act and the respective applicable rules and regulations adopted by the Commission thereunder and stating in effect that:
     (i) in their opinion the audited financial statements and financial statement schedules included or incorporated by reference in the Registration Statement and the Final Prospectus and reported on by them comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the respective related rules and regulations adopted by the Commission;
     (ii) on the basis of carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards); a reading of the minutes of the meetings of the shareholders and directors of the Company; and inquiries of certain officials of the Company who have responsibility for financial and accounting
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matters of the Company and its subsidiaries as to transactions and events subsequent to June 30, 2005, nothing came to their attention which caused them to believe that:
     (1) with respect to the period subsequent to June 30, 2005, there were any changes, at a specified date not more than five days prior to the date of the letter, in the long-term debt of the Company and its subsidiaries or capital stock of the Company as compared with the amounts shown on the June 30, 2005 consolidated balance sheet included or incorporated by reference in the Registration Statement and the Final Prospectus, except in all instances for changes or decreases set forth in such letter, in which case the letter shall be accompanied by an explanation by the Company as to the significance thereof unless said explanation is not deemed necessary by the Representative;
     (2) the information included or incorporated by reference in the Registration Statement and Final Prospectus in response to Regulation S-K, Item 301 (Selected Financial Data) is not in conformity with the applicable disclosure requirements of Regulation S-K; and
     (iii) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company and its subsidiaries) set forth in the Registration Statement and the Final Prospectus and in Exhibit 12.1 of the Registration Statement, including the information set forth under the captions “Prospectus Supplement Summary,” “Risk Factors,” “Dividend Policy” and “Capitalization” in the Final Prospectus, the information included or incorporated by reference in Items 1, 2, 5, 6, 7, 7A and 11 of the Company’s Annual Report on Form 10-K, incorporated by reference in the Registration Statement and the Final Prospectus and agrees with the accounting records of the Company and its subsidiaries, excluding any questions of legal interpretation.
References to the Final Prospectus in this paragraph (e) include any supplement thereto at the date of the letter.
     (f) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any amendment thereof) and the Final Prospectus (exclusive of any supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 6 or (ii) any Material Adverse Effect, except as set forth in or contemplated in the Final Prospectus (exclusive of any supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment of the Representative, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Registration Statement (exclusive of any amendment thereof) and the Final Prospectus (exclusive of any supplement thereto).
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     (g) Prior to the Closing Date and any settlement date, the Company shall have furnished to the Representative such further information, certificates and documents as the Representative may reasonably request.
     (h) The Securities shall have been approved for quotation on the Nasdaq National Market and the Toronto Stock Exchange, subject only to official notice of issuance, and satisfactory evidence of such actions shall have been provided to the Representative.
     (i) At the Execution Time, the Company shall have furnished to the Representative a letter substantially in the form of Exhibit A to this Agreement from each officer and director of the Company addressed to the Representative.
     (j) The Underwriters having received duly completed and executed Subscription Agreements from purchasers in the Canadian Jurisdictions by no later than 5:00 p.m. (New York time) on September 23, 2005.
If any of the conditions specified in this Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Representative and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representative. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing.
     The documents required to be delivered by this Section 6 shall be delivered at the office of Cleary Gottlieb Steen & Hamilton LLP, counsel for the Underwriters, at One Liberty Plaza, New York, New York 10006, on the Closing Date.
     7.  Reimbursement of Underwriters’ Expenses . If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Underwriters, the Company will reimburse the Underwriters severally through the Representative on demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities.
     8.  Indemnification and Contribution . (a) The Company agrees to indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter and each person who controls any Underwriter within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement for the registration of the Securities as originally filed or in any amendment thereof, or in the Basic
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Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through the Representative specifically for inclusion therein; provided further , that with respect to any untrue statement or omission of material fact made in any Preliminary Final Prospectus, the indemnity agreement contained in this Section 8(a) shall not inure to the benefit of any Underwriter from whom the person asserting any such loss, claim, damage or liability purchased the securities concerned, to the extent that any such loss, claim, damage or liability of such Underwriter occurs under the circumstance where it shall have been determined by a court of competent jurisdiction by final and nonappealable judgment that (w) the Company had previously furnished copies of the Final Prospectus to the Representative, (x) delivery of the Final Prospectus was required by the Act to be made to such person, (y) the untrue statement or omission of a material fact contained in the Preliminary Final Prospectus was corrected in the Final Prospectus and (z) there was not sent or given to such person, at or prior to the written confirmation of the sale of such securities to such person, a copy of the Final Prospectus. This indemnity agreement will be in addition to any liability which the Company may otherwise have.
     (b) Each Underwriter severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange Act to the same extent as the foregoing indemnity to each Underwriter, but only with reference to written information relating to such Underwriter furnished to the Company by or on behalf of such Underwriter through the Representative specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. The Company acknowledges that the statements set forth in the last paragraph of the cover page regarding delivery of the Securities and, under the heading “Underwriting,” (i) the list of underwriters and their respective participation in the sale of the Securities, (ii) the sentences related to concessions and reallowances and (iii) the paragraphs related to stabilization, syndicate covering transactions and penalty bids in any Preliminary Final Prospectus and the Final Prospectus constitute the only information furnished in writing by or on behalf of the several Underwriters for inclusion in any Preliminary Final Prospectus or the Final Prospectus.
     (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party
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from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.
     (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Underwriters severally agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively “Losses”) to which the Company and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company and by the Underwriters from the offering of the Securities; provided, however, that in no case shall (i) any Underwriter (except as may be provided in any agreement among underwriters relating to the offering of the Securities) be responsible for any amount in excess of the underwriting discount or commission applicable to the Securities purchased by such Underwriter hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Underwriters shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and of the Underwriters in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) received by it, and benefits received by the Underwriters shall be deemed to be equal to the total underwriting discounts and commissions, in each case as set forth on the cover page of the Final Prospectus. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the
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Company on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls an Underwriter within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of an Underwriter shall have the same rights to contribution as such Underwriter, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d).
     9.  Default by an Underwriter . If any one or more Underwriters shall fail to purchase and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the respective proportions which the amount of Securities set forth opposite their names in Schedule I to this Agreement bears to the aggregate amount of Securities set forth opposite the names of all the remaining Underwriters) the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Securities set forth in Schedule I to this Agreement, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such non-defaulting Underwriters do not purchase all the Securities, this Agreement will terminate without liability to any non-defaulting Underwriter or the Company. In the event of a default by any Underwriter as set forth in this Section 9, the Closing Date and any settlement date shall be postponed for such period, not exceeding five Business Days, as the Representative shall determine in order that the required changes in the Registration Statement and the Final Prospectus (and any supplement thereto) or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to the Company and any non-defaulting Underwriter for damages occasioned by its default hereunder.
     10.  Termination . This Agreement shall be subject to termination in the absolute discretion of the Representative, by notice given to the Company prior to delivery of and payment for the Securities, if at any time prior to such time (i) trading in the Company’s Common Stock shall have been suspended by the Commission, the Toronto Stock Exchange or the Nasdaq National Market or trading in securities generally on the New York Stock Exchange, or the Nasdaq National Market shall have been suspended or limited or minimum prices shall have been established on such Exchange or the Nasdaq National Market, (ii) a banking moratorium shall have been declared by Federal, New York State or Canadian authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United
20

 

States or Canada of a national emergency or war, or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Representative, impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Final Prospectus (exclusive of any supplement thereto).
     11.  Representations and Indemnities to Survive . The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of the officers, directors, employees, agents or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Agreement.
     12.  Notices . All communications hereunder will be in writing and effective only on receipt, and, if sent to the Representative, will be mailed, delivered or telefaxed to HSBC Securities (USA) Inc., 452 Fifth Avenue, New York, New York 10018, attention: Mark Hutchinson (fax no.: (646) 366-3595), with a copy to Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006, attention: David I. Gottlieb (fax no.: (212) 225-3999); or, if sent to the Company, will be mailed, delivered or telefaxed to Royal Gold, Inc., 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202, attention: Stanley Dempsey, Chairman of the Board of Directors and Chief Executive Officer (fax no.: (303) 595-9385); with a copy to Hogan & Hartson, L.L.P., 1200 Seventeenth Street, Suite 1500, Denver, Colorado 80202, attention: Paul Hilton (fax no.: (303) 899-7333).
     13.  Successors . This Agreement will inure to the benefit of and be binding upon the parties to this Agreement and their respective successors and the officers, directors, employees, agents and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder.
     14.  Applicable Law . This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York.
     15.  Counterparts . This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.
     16.  Headings . The section headings used herein are for convenience only and shall not affect the construction hereof.
     17.  Definitions . The terms which follow, when used in this Agreement, shall have the meanings indicated.
     “Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
21

 

     “Basic Prospectus” shall mean the prospectus referred to in paragraph 1(i) above contained in the Registration Statement at the Effective Date including any Preliminary Final Prospectus.
     “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City.
     “Commission” shall mean the Securities and Exchange Commission.
     “Effective Date” shall mean each date and time that the Registration Statement, any post-effective amendment or amendments thereto and any Rule 462(b) Registration Statement became or become effective.
     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
     “Execution Time” shall mean the date and time that this Agreement is executed and delivered by the parties to this Agreement.
     “Final Prospectus” shall mean the prospectus supplement relating to the Securities that was first filed pursuant to Rule 424(b) after the Execution Time, together with the Basic Prospectus.
     “Material Adverse Effect” shall mean any event that (i) could reasonably be expected to have a material adverse effect on the performance of this Agreement or the consummation of any of the transactions contemplated hereby or (ii) could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business.
     “Preliminary Final Prospectus” shall mean any preliminary prospectus supplement to the Basic Prospectus which describes the Securities and the offering thereof and is used prior to filing of the Final Prospectus, together with the Basic Prospectus.
     “Registration Statement” shall mean the registration statement referred to in paragraph 1(i) above, including exhibits and financial statements, as amended at the Execution Time (or, if not effective at the Execution Time, in the form in which it shall become effective) and, in the event any post-effective amendment thereto or any Rule 462(b) Registration Statement becomes effective prior to the Closing Date, shall also mean such registration statement as so amended or such Rule 462(b) Registration Statement, as the case may be. Such term shall include any Rule 430A Information deemed to be included therein at the Effective Date as provided by Rule 430A.
     “Rule 415”, “Rule 424”, “Rule 430A” and “Rule 462” refer to such rules under the Act.
22

 

     “Rule 430A Information” shall mean information with respect to the Securities and the offering thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 430A.
     “Rule 462(b) Registration Statement” shall mean a registration statement and any amendments thereto filed pursuant to Rule 462(b) relating to the offering covered by the registration statement referred to in Section 1(i) of this Agreement.
     “Significant Subsidiary” shall mean each significant subsidiary of the Company as defined by Rule 1-02 of Regulation S-X or listed on Exhibit B attached hereto.
     18.  Arm’s Length Transaction . The Company acknowledges and agrees that (i) the Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, neither the Representative nor any other Underwriter is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company with respect thereto. Any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.
     This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
23

 

     If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company and the several Underwriters.
 	 	 	 	 	
 	Very truly yours,

ROYAL GOLD, INC.
 	 	
 	By:  	 	 	
 	 	Name:  	 	 	
 	 	Title:  	 	 	
 	
The foregoing Agreement is hereby confirmed and accepted as of the date first above written.
 	 	 	 		
HSBC SECURITIES (USA) INC.	 	 	
 	 	 		
By:	 	 		
 	 	 		
 	 	Authorized Signatory		
For themselves and the other several Underwriters named in Schedule I to the foregoing Agreement.
24

 

SCHEDULE I
 	 	 	 	 	
UNDERWRITERS	 	NUMBER OF	 	
 	 	UNDERWRITTEN	 	
 	 	SECURITIES TO BE	 	
 	 	PURCHASED	 	
HSBC Securities (USA) Inc.	 	 	1,400,000	 	
Merrill Lynch, Pierce, Fenner & Smith Incorporated	 	 	500,000	 	
National Bank Financial Inc.	 	 	100,000	 	
 	 	 	 	
Total	 	 	2,000,000	 	
25

EXHIBIT 99.1
 	 	 	
FOR IMMEDIATE RELEASE:	 	FOR FURTHER INFORMATION CONTACT:	
 	 	 	
 	 	Stanley Dempsey, Chairman & Chief Executive Officer	
 	 	Karen Gross, Vice President & Corporate Secretary	
 	 	(303) 573-1660	
ROYAL GOLD ANNOUNCES PRICING OF PUBLIC OFFERING
OF COMMON STOCK
      DENVER, COLORADO. SEPTEMBER 22, 2005: ROYAL GOLD, INC. (NASDAQ:RGLD; TSX:RGL) announced today the pricing of an underwritten public offering of 2,000,000 shares of its common stock pursuant to an effective shelf registration filed with the U.S. Securities and Exchange Commission. The offering was priced at $26.00 per share, and proceeds to the Company from the offering, net of expenses, are expected to be approximately $49.1 million.
     HSBC Securities (USA) Inc. acted as the sole bookrunner manager for the offering. Merrill Lynch, Pierce, Fenner & Smith Incorporated and National Bank Financial Inc. acted as co-managers. The Company has granted to the underwriters of the offering an option to purchase an additional 300,000 shares to cover over-allotments in the offering.
     The net proceeds of this offering are intended to fund the acquisition and financing of additional royalty interests and for general corporate purposes.
     A registration statement relating to these securities has been filed with and declared effective by the Securities and Exchange Commission. A final prospectus supplement and related prospectus relating to the offering may be obtained from HSBC Securities (USA) Inc., 452 Fifth Avenue, New York, NY 10018, Attn: Equity Syndicate Desk, or by sending a request via facsimile to 646-366-3332.
-1-

 

     This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which the offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that state.
     Royal Gold is a precious metals royalty company engaging in the acquisition and management of precious metal royalty interests. Royal Gold is publicly traded on the NASDAQ National Market System under the symbol “RGLD,” and on the Toronto Stock Exchange under the symbol “RGL.” The Company’s web page is located at www.royalgold.com.
-2-

EXHIBIT 99.2

 	 	 	 	one tabor center	
 	 	 	 	suite 1500	
 	 	 	 	1200 seventeenth street	
 	 	 	 	denver, co 80202	
 	 	 	 	tel (303) 899-7300	
 	 	 	 	fax (303) 899-7333	
 	 	 	 	www.hhlaw.com	
September 22, 2005
Board of Directors
Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
Ladies and Gentlemen:
     We are acting as counsel to Royal Gold, Inc., a Delaware corporation (the “Company”), in connection with its registration statement on Form S-3 (Registration No. 333-111490) (the “Registration Statement”), previously declared effective by the Securities and Exchange Commission (the “Commission”), relating to the proposed public offering of up to $300,000,000 of the Company’s common stock, par value $0.01 per share (“Common Stock”), warrants, depositary shares, preferred stock and debt securities, from time to time, as set forth in the Prospectus dated July 14, 2004 (the “Prospectus”) and as may be set forth from time to time in one or more supplements to the Prospectus. This opinion letter is rendered in connection with the proposed issuance and sale of up to 2,300,000 shares (the “Shares”) of the Company’s Common Stock, which are to be sold by the Company pursuant to the Underwriting Agreement (as defined below) and as described in the prospectus supplement dated September 22, 2005 (the “Prospectus Supplement”), filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 on September 22, 2005. This opinion letter is furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. § 229.601(b)(5), in connection with the Registration Statement.
     For purposes of this opinion letter, we have examined copies of the following documents:

 	1.	 	An executed copy of the Registration Statement, as filed with the Commission, including the Prospectus;	
 		
 	2.	 	A copy of the Prospectus Supplement, as filed with the Commission;	
 		
 	3.	 	The Certificate of Incorporation of the Company, as certified by the Secretary of the State of the State of Delaware on September 22, 2005,	
washington, dc new york baltimore northern virginia miami los angeles denver boulder colorado springs
berlin munich brussels london paris geneva budapest warsaw moscow beijing hong kong shanghai tokyo

 

Board of Directors
Royal Gold, Inc.
September 22, 2005
Page 2

 	 	 	and by the Secretary of the Company on the date hereof as being complete, accurate, and in effect.	
 		
 	4.	 	The Bylaws of the Company, as certified by the Secretary of the Company on the date hereof as being complete, accurate, and in effect.	
 		
 	5.	 	A certificate of good standing of the Company issued by the Secretary of State of the State of Delaware dated September 22, 2005.	
 		
 	6.	 	The Underwriting Agreement dated September 21, 2005, between the Company and the several underwriters named therein for whom HSBC Securities (USA) Inc. is acting as representative (the “Underwriting Agreement”).	
 		
 	7.	 	Resolutions of the (a) Board of Directors of the Company adopted by unanimous written consent dated December 12, 2003, as certified by the Secretary of the Company on the date hereof as being complete, accurate and in effect, relating, among other things, to authorization of the preparation and filing the Registration Statement and arrangements in connection therewith; (b) Board of Directors of the Company adopted at a telephonic meeting held on September 20, 2005, as certified by the Secretary of the Company on the date hereof as being complete, accurate and in effect, relating, among other things, to authorization of the Agreement and arrangements in connection therewith; and (c) Pricing Committee of the Board of Directors of the Company, adopted at a telephonic meeting held on September 21, 2005, as certified by the Secretary of the Company on the date hereof as being complete, accurate and in effect, relating, among other things, to the offer and sale of the Shares.	
     In our examination of the aforesaid documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the accuracy and completeness of all documents submitted to us, the authenticity of all original documents, and the conformity to authentic original documents of all documents submitted to us as copies (including telecopies). This opinion letter is given, and all statements herein are made, in the context of the foregoing.
     This opinion letter is based as to matters of law solely on the Delaware General Corporation Law, as amended. We express no opinion herein as to any other laws, statutes, ordinances, rules, or regulations. As used herein, the term “Delaware General Corporation Law, as amended” includes the statutory provisions contained therein, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting these laws.

 

Board of Directors
Royal Gold, Inc.
September 22, 2005
Page 3
     Based upon, subject to and limited by the foregoing, we are of the opinion that following (i) issuance of the Shares pursuant to the terms of the Underwriting Agreement, and (ii) receipt by the Company of the consideration for the Shares specified in the resolutions of the Board of Directors and the Pricing Committee of the Board of Directors, the Shares will be validly issued, fully paid, and non-assessable.
     This opinion letter has been prepared for your use in connection with the Registration Statement and speaks as of the date hereof. We assume no obligation to advise you of any changes in the foregoing subsequent to the delivery of this opinion letter.
     We hereby consent to the filing of this opinion with the Commission as Exhibit 99.1 to the Current Report on Form 8-K filed by the Company with the Commission on September 22, 2005. We also consent to the reference to this firm under the caption “Legal Matters” in the Prospectus and the Prospectus Supplement. In giving these consents, we do not thereby admit that we are an “expert” within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.

 

EXHIBIT 99.3
EMPLOYMENT CONTRACT
     THIS EMPLOYMENT CONTRACT, dated as of ___, ___is entered into by and between ROYAL GOLD, INC., a Delaware corporation, with offices at 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202 (the “Company”), and ___, residing at ___, ___, Colorado ___(the “Employee”).
     The Company desires to engage Employee to perform services for the Company and Employee desires to perform such services on the terms and conditions hereinafter set forth.
I. TERM
     The Company agrees to employ Employee, and the Employee agrees to serve, on the terms and conditions of this Agreement, for a period commencing on ___, ___and ending one (1) year from the starting date, subject to termination as provided in Sections 7, 8 and 9 hereof. The period during which Employee is employed hereunder is hereafter referred to as the “Employment Period.” The Employment Period shall be automatically extended, without further action by either party, for additional and successive one-year periods commencing ___, ___; provided that the Company may deliver a written notice of involuntary termination pursuant to Section 7 on 90 days’ prior written notice.
II. DUTIES AND SERVICES
     During the Employment Period, Employee shall be employed by and shall serve the Company as its ___. In performance of Employee’s duties, Employee shall be subject to the direction of the Chairman and Chief Executive Officer (“CEO”) of the Company. At all times during the Employment Period, Employee shall have powers and duties at least commensurate with Employee’s position as ___of the Company. Employee agrees to his/her employment as described in this Section 2 and agrees to devote such of his business time, energy and skill as shall be necessary to perform the duties of such positions under this Agreement; PROVIDED, HOWEVER, Employee shall be entitled to continue his/her personal investment activities as long as such activities do not conflict with the activities of the Company. Employee shall be available to travel as the needs of the business reasonably require.
III. COMPENSATION
     As full compensation for Employee’s services hereunder, the Company shall pay Employee, during the Employment Period, a salary payable in equal semi-monthly installments at the annual rate of ___Dollars ($___,000.00). Nothing contained herein shall preclude Employee from participating in the present or future employee benefit plans of the Company if Employee meets the eligibility requirements therefor. In addition, the Company has elected, from time to time, to provide Employee with certain fringe benefits. The fringe benefits are currently listed on the attached Schedule of Fringe Benefits. Notwithstanding anything herein to the contrary, the Company has sole discretion to modify any fringe benefit by action of the Board, EXCEPT THAT fringe benefits which are vested by the express terms of any Company Benefit Plan may not be altered, except in accordance with the terms of such Benefit Plan.

 

IV. EXPENSES AND VACATION
     Employee shall be entitled to reimbursement during the Employment Period for reasonable travel and other out-of-pocket expenses necessarily incurred in the performance of Employee’s duties hereunder, upon submission and approval of written statements and bills in accordance with the then regular procedures of the Company. Employee shall be entitled to reasonable vacations in accordance with the then regular procedures of the Company’s governing executives. Employee shall be entitled to not less than three (3) weeks of vacation time per year.
V. NON-COMPETITION
     Employee agrees that, unless approved by the Company, (a) Employee will not during the Employment Period engage in, or otherwise directly or indirectly be employed by, or act as a consultant or lender to, or be, a director, officer, employee, owner or partner of, any other business or organization, which now is, or shall then be, competing with the Company, and (b) for a period of one (1) year after the Employment Period, Employee shall not directly or indirectly compete with or be engaged in the same business as the Company, or be employed by, or act as consultant or lender to, or be a director, officer, employee, owner or partner of, any business or organization which at the time of such cessation, directly competes with or is engaged in the same business as the Company, except that in each case, the provisions of this Section 5 will not be deemed breached merely because Employee owns not more than ten percent (10%) of the outstanding common stock of a corporation, or ten percent (10%) of the outstanding interest or securities of a partnership or trust which may be in competition with the Company.
     Employee acknowledges that the business of the Company is national in scope and this covenant of non-competition shall be effective in any of the states of the United States where the Company does business involving revenues of $50,000 per year or more, or owns property or leases of any kind. Employee acknowledges that this covenant is a reasonable restraint on Employee’s business or employability.
VI. CONFIDENTIAL INFORMATION
     All confidential information which Employee may now possess, may obtain during or after the Employment Period, or may create prior to the end of the Employment Period, relating to the financial condition, results of operations, business, properties, assets, liabilities or future prospects of the Company, shall not be published, disclosed or made accessible by Employee to any other person or entity, either during or after the termination of Employee’s employment, or used by Employee except during the Employment Period in the business and for the benefit of the Company without prior written permission of the Company. Employee shall deliver to the Company all tangible evidence of such confidential information prior to or at the termination of Employee’s employment.
-2-

 

VII. INVOLUNTARY TERMINATION

 	A.	 	Certain Definitions. As used in Sections 7, 8, 9 and 10 of this Agreement:	
1. “Cause” means, and is limited to, (1) action by Employee involving willful malfeasance, (2) failure to act by Employee involving material and willful nonfeasance or (3) Employee being convicted of a felony involving moral turpitude, in each such case resulting in a material adverse effect on the Company; provided, however, that Employee’s employment shall not be terminated for “Cause” if such termination took place as a result of any act or omission believed by Employee in good faith to have been in the best interest of the Company.
2. “Change of Control Event” shall mean a change in ownership or control of the Company effected through any of the following transactions: (i) the acquisition, directly or indirectly by any person or related group of persons, of beneficial ownership of securities possessing more than thirty percent (30%) of the total combined voting power of the Company’s outstanding securities; (2) a change in the composition of the Board over a period of eighteen (18) consecutive months or less such that fifty percent (50%) or more of the Board members cease to be directors who either (A) have been directors continuously since the beginning of such period or (B) have been unanimously elected or nominated by the Board for election as directors during such period; (iii) a stockholder-approved merger or consolidation to which the Company is a party and in which (A) the company is not the surviving entity or (B) securities possessing more than thirty percent (30%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction; or (iv) the sale, transfer or other disposition of all or substantially all of the Company’s assets in complete liquidation or dissolution of the Company.
3. “Continuing Director” means any person who is either (1) a Director on December 4, 1992, or (2) was designated before such person’s initial election as a Director as a Continuing Director by a majority of the Continuing Directors.
4. “Director” means a member of the Board of the Company (“the Board”).
5. “Disability” means, as applied to Employee, that (1) Employee has been totally incapacitated by bodily injury or disease so as to be prevented thereby from engaging in any occupation or employment for remuneration or profit, (2) such total incapacity shall have continued for a period of 3 (three) consecutive months and (3) such total incapacity will, in the opinion of a qualified physician mutually acceptable to the Company and Employee, be permanent and continuous during the remainder of Employee’s life.
6. “Good Reason” means (1) without Employee’s specific written consent (A) (i) the assignment to Employee of any duties and responsibilities, or any limitation of Employee’s duties and responsibilities, inconsistent with Employee’s positions, duties, responsibilities
-3-

 

and status as an officer of the Company immediately prior to the date of a Change of Control Event or (ii) any removal of Employee from, or any failure to re-elect Employee to, any of Employee’s positions with the Company immediately prior to a Change of Control Event, except in connection with the termination of the employment of Employee by the Company for Cause or as a result of the death or Disability of Employee, and (B) the continuance thereof for a period of not less than 20 days after written complaint thereof to the Company from Employee; (2) any failure by the Company to pay, or any reduction by the Company of, the salary payable to Employee under Section 3 of this Agreement; (3) any failure by the Company (A) to continue to provide Employee with the opportunity to participate, on terms no less favorable than those in effect immediately prior to a Change of Control Event, in any benefit plan or program in which Employee was participating immediately prior to the Change of Control Event, or their equivalent, or (B) to provide Employee with all other fringe benefits, or their equivalent, from time to time in effect for the benefit of any of the Company’s salaried employees; (4) the relocation, without Employee’s written consent, of the principal place of Employee’s employment to a location that is more than 25 miles from Denver, Colorado; (5) continuing Directors no longer constitute at least a majority of the Directors constituting the Board; (6) the failure by the Company to obtain the specific assumption of this Agreement by a successor or assign of the Company or by any person acquiring substantially all of the Company’s assets; or (7) any material breach by the Company of any provision of this Agreement.
7. “Involuntary Termination” means (1) dismissal of Employee by the Company without Cause or (2) voluntary resignation by Employee for Good Reason during the Employment Period, provided that clause (2) of this subsection (g) shall only apply after a Change of Control Event has occurred.

 	B.	 	Compensation of Employee in the Event of Involuntary Termination. If Involuntary Termination occurs:	
1. The Company shall continue (1) to pay the salary payable to Employee under Section 3 of this Agreement for a period of one year from the date of the Involuntary Termination and (2) to provide the employee benefits (including, but not limited to, life, health and disability coverage but not including any severance pay benefit other than that provided pursuant to this Agreement) at levels that were applicable to Employee on the date immediately prior to the Involuntary Termination, or shall provide their equivalent through insurance coverage or other arrangements, for a period equal to one year following the Involuntary Termination; and
2. The Company shall pay Employee (1) all amounts which had accrued but were not paid prior to the Involuntary Termination and (2) all amounts payable under then existing employee benefit plans and programs.
-4-

 

VIII. TERMINATION DUE TO DEATH OR DISABILITY
     In the event of Employee’s Disability, Employee’s employment hereunder may be terminated by the Company upon written notice from the Company to Employee which shall specify a date not less than 30 days from the date of such notice as the date on which such termination shall become effective. If Employee’s employment hereunder is terminated because of the death or Disability of Employee, Employee, or Employee’s heirs, executors or administrators if termination is because of the death of Employee, shall be entitled to receive the salary payable to Employee under Section 3 of this Agreement for six months after the end of the month in which such termination occurs.
IX. TERMINATION FOR CAUSE
     If the Company terminates Employee’s employment for Cause, such termination shall relieve the Company of its obligation to make any further payments under this Agreement except (a) payments under employee benefit plans and programs and (b) payments of amounts which had accrued but were not yet paid prior to such termination. Termination of Employee’s employment for Cause shall be communicated by delivery by the Company to Employee of a written notice of termination together with a copy of a resolution which has been adopted by the affirmative vote of not less than three-quarters of the Directors then constituting the Board at a Board meeting called and held for that purpose, after reasonable notice to Employee and reasonable opportunity for Employee, together with Employee’s counsel, to be heard by the Board prior to such vote, and which states that in the good faith opinion of the Board, Employee was guilty of conduct specified in Section 7.1(a) of this Agreement and sets forth the particulars thereof. No termination of Employee’s employment for Cause shall be effective unless the Company complies with the procedure specified in the preceding sentence.
X. VOLUNTARY TERMINATION
     If Employee shall voluntarily terminate his employment for other than Good Reason, all payments required by this Agreement shall cease, and Employee shall have no further rights to payments hereunder except (a) payment of amounts which had accrued but were not paid prior to such voluntary termination and (b) payment of amounts payable under employee benefit plans and programs.
XI. SURVIVAL
     The covenants, agreements, representations and warranties contained in or made pursuant to this Agreement shall survive Employee’s termination of employment, irrespective of any investigation made by or on behalf of any party.
XII. MODIFICATION
     This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.
-5-

 

XIII. NOTICES
     Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given at the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 13). Any notice given to the Company shall be addressed to the attention of the Corporate Secretary. Notice to the estate of Employee shall be sufficient if addressed to Employee as provided in this Section 13. Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party’s address, which shall be deemed given at the time of receipt thereof.
XIV. WAIVER
     Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Agreement. The failure of a party to insist on strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing.
XV. BINDING EFFECT
     Employee’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise; such rights shall not be subject to commutation, encumbrance or the claims of Employee’s creditors, and any attempt to do any of the foregoing shall be void. The provisions of this Agreement shall be binding upon and inure to the benefit of Employee and Employee’s heirs and personal representatives, and shall be binding upon and inure to the benefit of the Company, its successors and assigns.
XVI. NO THIRD-PARTY BENEFICIARIES
     This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement, except as provided herein.
XVII. HEADINGS
     The headings in this Agreement are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.
XVIII. COUNTERPARTS; GOVERNING LAW
     This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. It shall be governed by
-6-

 

and construed in accordance with laws of the State of Colorado, without giving effect to the conflict of laws.
     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
 	 	 	 	 	
  	ROYAL GOLD, INC.
 	 	
 	By:  	 	 	
 	Name:	Stanley Dempsey	 	
 	Title:	Chairman and CEO	 	

 		
 	EMPLOYEE:

 	 	 	

-7-

 

SCHEDULE OF FRINGE BENEFITS
Comprehensive Medical Insurance
Life Insurance
Long-Term Disability
Employee Stock Purchase Plan
Paid Vacations
Profit Sharing Plan
Paid Holidays
Approved Training/Educational Development
Parking

 
Schedule of Certain Executive Officers Parties to the Employment Contract
 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Base Salary	
 	 	 	 	 	 	Year Ended	
Name	 	Position	 	Date	 	June 30, 2005	
 	 	 	 	 	 	 	 	 	
Stanley Dempsey	 	Chairman of the Board of	 	2/8/93	 	$	275,000	 	
 	 	Director and Chief Executive Officer	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Karen P. Gross	 	Vice President and Secretary	 	2/8/93	 	 	133,500	 	
 	 	 	 	 	 	 	 	 	
Donald J. Baker	 	Vice President Corporate	 	12/20/00	 	 	125,000	 	
 	 	Development	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Stefan Wagner	 	Treasurer and Chief Accounting	 	2/18/05	 	 	115,000	 	
 	 	Officer	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Randy Parcel	 	Vice President and General	 	6/1/05	 	 	175,000	 	
 	 	Counsel	 	 	 	 	 	 	

 

EXHIBIT 99.4
Royalty Assignment and Agreement
     This Royalty Assignment and Agreement (“ Agreement ”) is made effective as of December 26, 2002 (the “ Effective Date ”) by and between High Desert Mineral Resources, Inc., a Delaware corporation (“ High Desert ”) and High Desert Gold Corporation, a Nevada corporation (“ HD Gold ”).
Recitals
     HD Gold and High Desert have entered in to that certain Loan Repayment Agreement, of even date herewith.
     As contemplated by the Loan Repayment Agreement, High Desert wishes to grant, convey, and assign to HD Gold ten percent (10%) of certain royalties and interests owned by High Desert, and HD Gold wishes to accept such grants, conveyances, and assignments.
     For and in consideration of the covenants set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which High Desert and HD Gold (collectively the “ Parties ” and individually, a “ Party ”), hereby acknowledge, the Parties agree as follows:
Agreements and Conveyances
     1.  Conveyance of Interest in the Newmont Royalty .
          (a) Pursuant to the Carried Interest and Operating Agreement, dated as of May 3, 1999, between Newmont Gold Company (now Newmont USA Ltd.), a Delaware corporation (“ Newmont ”) and High Desert, a copy of which is recorded in the Official Records of Eureka County, Nevada (Document No. 172226) in Book 327 commencing at Page 217 (the “Newmont Royalty Agreement ”), High Desert is entitled to receive a “Proceeds Payment” equal to two percent (2%) of the “Net Value” of all “Minerals” produced and sold or deemed sold from the “Property” on the terms and conditions specified in the Newmont Royalty Agreement (the “Newmont Proceeds Payment ”). Capitalized terms used in this Section 1, but not defined in this Agreement, shall have the meanings set forth in the Newmont Royalty Agreement.
          (b) High Desert hereby grants, conveys, and assigns to HD Gold ten percent (10%) of the Newmont Proceeds Payment. The interest granted, conveyed, and assigned to HD Gold by this Section l(b) is referred to in this Agreement as the “ HDG Newmont Royalty .”
          (c) It is the intention of the Parties that by virtue of the grant, conveyance, and assignment by High Desert to HD Gold of the HDG Newmont Royalty made in this Section 1, HD Gold shall be entitled to receive and shall receive two tenths of one percent (0.2%) of the Net Value of all Minerals produced and sold or deemed sold from the Property on the terms and conditions specified herein and in the Newmont Royalty Agreement.

 

          (d) The HDG Newmont Royalty is an economic interest in minerals in place.
Only HD Gold shall be entitled to claim depletion relative to the gross income from the HDG Newmont Royalty and neither High Desert nor its affiliates shall claim depletion with respect to the gross income attributable to the HDG Newmont Royalty.
          (e) The Newmont Royalty Agreement contemplates that payments of Net Value thereunder will be made to only one party, notwithstanding the assignment by High Desert of a partial interest in its rights under that agreement. High Desert and HD Gold shall, promptly following the execution of this Agreement jointly request Newmont to make all payments due to HD Gold hereunder directly to HD Gold. If Newmont is unwilling to make the payments due hereunder to HD Gold directly to HD Gold, High Desert shall make all payments of the HDG Newmont Royalty to HD Gold as provided in Section 4 of this Agreement.
          (f) If, pursuant to Exhibit B of the Newmont Royalty Agreement, High Desert elects at any time to take product “in kind,” High Desert shall give HD Gold a Notice of such election (each, an “ In Kind Election Notice ”) at the same time it gives notice of its election to Newmont. HD Gold shall have ten (10) days after receipt of an In Kind Election Notice to elect, by Notice to High Desert, whether to receive the payment of HDG Newmont Royalty that is subject to the In Kind Election Notice either (i) “in kind” as herein provided, or (ii) as a cash payment as herein provided. If HD Gold elects to receive a payment of the HD Newmont Royalty “in kind,” High Desert shall instruct the refiner to credit to the account of HD Gold ten percent (10%) of the Refined Gold that is credited or delivered by Newmont to High Desert’s account as the Proceeds Payment. HD Gold shall be solely responsible for all costs of maintaining HD Gold’s account at the refinery and for all costs and expenses incurred in connection with Refined Gold credited to its account. If HD Gold elects to receive a cash payment, High Desert shall, within ten (10) days after its receipt of credit of Refined Gold from Newmont, pay to HD Gold ten percent (10%) of the aggregate amount of the Proceeds Payment that would have been payable under the Newmont Royalty Agreement for each month in the relevant quarter if High Desert had not elected to take payment “in kind.”
          (g) Subject to Section 5 of this Agreement, HD Gold commits to be bound by the terms of the Newmont Royalty Agreement to the same extent as is High Desert; provided, however that by virtue of this Agreement no undivided interest in the Property is being granted, conveyed or assigned to HD Gold and therefore HD Gold shall have no rights or obligations under the Newmont Royalty Agreement relating to the undivided two percent (2%) interest in the Property owned by High Desert.
          (h) The HDG Newmont Royalty shall remain in force and effect so long as Newmont Royalty Agreement remains in effect. Upon termination of the Newmont Royalty Agreement, High Desert, to the extent it retains any rights in the Property and to the extent it is entitled to a production royalty on the production and sale of minerals from the Property (the “ Production Royalty ”), shall grant, convey and assign to HD Gold rights and interests equivalent to ten percent (10%) of the Production Royalty and any other consideration received by High Desert in connection with such termination. Nothing in this Section l(h) shall diminish High Desert’s obligations under Section 3(c) of this Agreement.
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     2.  Conveyance of Interest in the Barrick Royalty .
          (a) Pursuant to the Royalty Assignment, Confirmation, Amendment and Restatement of Royalty and Agreement, dated November 30, 1995, among Royal Hal Co., a Delaware corporation (“ RHC ”), Barrick Goldstrike Mines Inc., a Colorado corporation (“ Barrick ”), and Barrick Bullfrog Inc., a Delaware corporation, (the “ Barrick Royalty Agreement ”), a copy of which is recorded in the Official Records of Eureka County, Nevada (Document No. 160315) in Book 291 commencing at Page 001, High Desert (with and into which RHC was merged on September 16, 1997) owns a royalty of one percent (1%) of the “Net Smelter Returns” from the production of minerals mined and sold from the “SJ Claims” on the terms and conditions set forth in the Barrick Royalty Agreement (the “ High Desert Barrick Royalty ”). Capitalized terms used in this Section 2 of this Agreement, but not defined in this Agreement, shall have the meanings set forth in the Barrick Royalty Agreement.
          (b) High Desert hereby grants, conveys and assigns to HD Gold ten percent (10%) of the High Desert Barrick Royalty. The royalty granted, conveyed and assigned to HD Gold by this Section 2(b) is referred to in this Agreement as the “ HDG Barrick Royalty .”
          (c) It is the intention of the Parties that by virtue of the grant, conveyance and assignment by High Desert to HD Gold of the HDG Barrick Royalty made in this Section 2, HD Gold shall own a royalty equivalent to one tenth of one percent (0.1%) of the “Net Smelter Returns” from the production of minerals mined and sold from the “SJ Claims” on the terms and conditions specified herein and in the Barrick Royalty Agreement.
          (d) The HD Gold Barrick Royalty is an economic interest in minerals in place. Only HD Gold shall be entitled to claim depletion relative to the gross income from the HD Gold Barrick Royalty, and neither High Desert nor its affiliates shall claim depletion with respect to the gross income attributable to the HD Gold Barrick Royalty.
          (e) Pursuant to Section 3(f)(i)of the Barrick Royalty Agreement, High Desert and HD Gold hereby designate the Wells Fargo Bank to receive all sums payable by Barrick under the Barrick Royalty Agreement.
          (f) If, pursuant to Section 3(e) of the Barrick Royalty Agreement, High Desert elects to at any time to receive the High Desert Barrick Royalty in kind by delivery of Refined Gold, High Desert shall give HD Gold an In Kind Election Notice at the same time it gives notice of its election to Barrick. HD Gold shall have ten (10) days after receipt of an In Kind Election Notice to elect, by Notice to High Desert, whether to receive the payment of Royalty that is subject to the In Kind Election Notice, (i) “in kind”, as herein provided, or as a cash payment, as herein provided. If HD Gold elects to receive a payment of Royalty “in kind,” High Desert shall instruct the refiner to credit to the account of HD Gold ten percent (10%) of the Refined Gold that is credited to High Desert’s account by Barrick. HD Gold shall be solely responsible for all costs of maintaining HD Gold’s account at the refinery and for all costs and expenses incurred in connection with Refined Gold credited to its account. If HD Gold elects to receive a cash payment, High Desert shall, within ten (10) days after its receipt of credit or delivery of Refined Gold, pay to HD Gold ten percent (10%) of the cash amount of the Net
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Smelter Returns that would have been payable under the Barrick Royalty Agreement for each month in the relevant quarter if High Desert had not elected to take payment “in kind.”
          (g) The grant, conveyance and assignment of the HD Gold Barrick Royalty made herein are made subject to the Barrick Royalty Agreement and Commingling Agreement of even date therewith between High Desert and Barrick, and HD Gold agrees to be bound by those agreements to the same extent as is High Desert.
     3.  Nature of Royalty Interests .
          (a) HD Gold shall be responsible for the payment of any Nevada net proceeds of mines tax due with respect to all payments of HDG Newmont Royalty and HDG Barrick Royalty. However, if High Desert is required to and does pay any such Nevada net proceeds of mines taxes on HD Gold’s behalf, and High Desert may deduct the amount of such payments made on HD Gold’s behalf from future amounts of the HDG Newmont Royalty or the HDG Barrick Royalty, as appropriate, owed to HD Gold under this Agreement. Notwithstanding the foregoing, if HD Gold takes its portion of either the HDG Newmont Royalty or the HDG Barrick Royalty in-kind under Section 2(f) or Section 3(f) of this Agreement, then during the period in which HD Gold is taking its royalty in kind High Desert shall promptly give HD Gold Notice of such payments and HD Gold shall promptly upon receipt of such Notice reimburse High Desert for the amount of such payment. If HD Gold shall fail to reimburse High Desert for any such payment of Nevada net proceeds of mines tax made on HD Gold’s behalf, High Desert shall have right to set off amounts of Nevada net proceeds of mines taxes paid on HD Gold’s behalf from future amounts of the HDG Newmont Royalty or the HDG Barrick Royalty, as appropriate, owed to HD Gold under this Agreement, including by sale of products which HD Gold would otherwise be entitled to take in kind.
          (b) The HDG Newmont Royalty and the HDG Barrick Royalty are interests running with the land subject to such royalties and any other properties or interests that from time to time may become subject to the Newmont Royalty Agreement or the Barrick Royalty Agreement.
          (c) High Desert shall retain all Executive Rights with respect to the Newmont Proceeds Payment and the High Desert Barrick Royalty. As used herein, “ Executive Rights ” means the right to make all elections and take all actions permitted or required of the owner of the royalty and interests created by the Newmont Royalty Agreement and the Barrick Royalty Agreement, including the rights to elect to receive payments of royalty “in kind,” to conduct inspections of the properties subject to such royalties and operations conducted thereon, to audit the books and records of Newmont and Barrick with respect to payments due under the Newmont Royalty Agreement and the Barrick Royalty Agreement, to negotiate agreements ancillary to the Newmont Royalty Agreement and the Barrick Royalty Agreement such as commingling agreements, and to modify various provisions of the Newmont Royalty Agreement and the Barrick Royalty Agreement. Notwithstanding the foregoing or any other provision of this Agreement, High Desert shall not exercise or fail to exercise the Executive Rights in any manner that would have a material adverse effect on the HDG Newmont Royalty or the HDG Barrick Royalty. After termination of either the Newmont Royalty Agreement or the Barrick
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Royalty Agreement, High Desert shall retain all of the Executive Rights with respect to the Property and the SJ Claims.
          (d) High Desert shall indemnify and hold harmless HD Gold, and its director, offices, employees, agents, and shareholders from and against all claims, costs, losses, causes of action and liabilities arising out of or resulting from the exercise of Executive Rights by High Desert or the ownership by High Desert of an undivided two percent (2%) interest in the Property subject to the Newmont Royalty Agreement.
          (e) Nothing is this Agreement shall be deemed to constitute either Party the partner of the other, to create a fiduciary duty between the Parties, nor, except as expressly provided in this Section 3, to constitute either Party the agent or legal representative of the other.
          (f) HD Gold hereby waives its rights under Section 9(a) of the Newmont Royalty Agreement; provided, however, that if High Desert elects to receive an assignment of any property pursuant to Section 9(a), High Desert shall convey and assign to HD Gold a royalty interest in such property on terms and conditions substantially equivalent to the HDG Newmont Royalty.
          (g) High Desert warrants title to the HDG Newmont Royalty and the HDG Barrick Royalty against any party claiming by, through or under High Desert, with respect to any actions taken or conveyances made by High Desert from and after December 16, 2002, but not otherwise.
     4.  Payment .
          (a) All payments due to HD Gold due under the HD Gold Newmont Royalty or the HD Gold Barrick Royalty, unless paid directly to HD Gold by Newmont or Barrick, shall be paid by High Desert by check, or upon 48 hours prior Notice from HD Gold, by wire transfer to an account specified by HD Gold in such Notice, unless HD Gold has elected to receive payment “in kind” pursuant to Section 1(f)(i) or Section 2(f)(i) of this Agreement.
          (b) High Desert shall make all payments due pursuant to the HDG Barrick Royalty and the HDG Newmont Royalty to HD Gold within ten (10) days after receipt by High Desert of payment under the Newmont Royalty Agreement or the Barrick Royalty Agreement, as the case may be. Any such funds paid to High Desert shall, at all times, be regarded as the sole property of HD Gold, and High Desert shall, at all times, be regarded as HD Gold’s agent and nominee with respect to the holding of such funds.
          (c) If any person or entity other than HD Gold asserts that it has a claim to a share in either the HD Gold Newmont Royalty or the HD Gold Barrick Royalty (an “Adverse Claim”), High Desert, at its sole discretion, after written notice to HD Gold, may suspend its obligation to make payments as provided herein with respect to the HD Gold Newmont Royalty or the HD Gold Barrick Royalty, as the case may be, and in lieu thereof, may deposit in a federally insured interest-bearing account payments equivalent to the payments which would otherwise due to HD Gold hereunder. Such deposit or deposits shall remain in such interest-bearing account until the claim or controversy is resolved or settled by final court decision, by arbitration, negotiation or otherwise; provided, however, that High Desert shall not enter into any
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such settlement with respect to an Adverse Claim without the prior written consent of HD Gold (such consent not to be unreasonably withheld). In the event an Adverse Claim arises from a breach by HD Gold of the representations and warranties set forth in Section 3.1 of the Loan Repayment Agreement, and if High Desert is required to make any payments (other than future payments of all or a portion of the HD Gold Newmont Royalty or the HD Gold Barrick Royalty) to such persons or entities not a party hereto as a result of, or in settlement of, any such Adverse Claim, either by way of contract, settlement, compromise, final court judgment, or otherwise, HD Gold shall be obligated to reimburse High Desert for all such payments which High Desert is required to make to such third-party claimants. In the event HD Gold fails to timely reimburse High Desert within thirty (30) days after receipt of notice from High Desert that High Desert has made any payment to any such third-party claimants, High Desert may recover from, or credit against, any payments thereafter becoming due to HD Gold hereunder, the amount of such payments and all other costs and expenses (including reasonable attorneys’ fees) paid or incurred by High Desert as a result of any such Adverse Claim, plus interest at the rate of ten percent (10%) per annum, accruing from the date that High Desert made any payment to a third party.
     5.  Information. Inspection, and Audit Rights .
          (a) High Desert shall promptly provide to HD Gold a copy of all information that High Desert receives under or relating to the Newmont Royalty Agreement or the Barrick Royalty Agreement, including the results of any inspections or audits conducted by or for High Desert under either such agreement, and High Desert shall promptly advise HD Gold of the commencement of any such inspection or audit. High Desert shall promptly notify HD Gold of any claim for additional payment High Desert makes under the Newmont Royalty Agreement or the Barrick Royalty Agreement, and shall prosecute any such claim for and on behalf of HD Gold to the extent of HD Gold’s interest in payments arising under such agreements to the same extent it prosecutes its own claim.
          (b) HD Gold shall have the right at its sole expense to inspect and audit, not more frequently that once each calendar year, High Desert’s books and recording relating to the Newmont Royalty Agreement and the Barrick Royalty Agreement. Any such inspection or audit shall be conducted during normal business hours, on at least five (5) days advance Notice to High Desert, and so as not to interfere unreasonably with High Desert’s operations. All royalty payments made in any calendar year shall be considered final and in full accord and satisfaction of all obligations of High Desert with respect thereto, unless HD Gold gives written notice describing and setting forth a specific objection to the calculation thereof within one (1) year following the close of the calendar year.
     6.  Assignment . HD Gold may transfer, sell, assign, convey, mortgage, pledge or otherwise encumber (“ Transfer ”) all or any portion of the HDG Newmont Royalty and/or the HDG Barrick Royalty and High Desert may Transfer its interest under this Agreement or in the Newmont Proceeds Payment and/or the High Desert Barrick Royalty subject to the following conditions:
          (a) The transferring Party shall provide Notice of the Transfer to the other Party;
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          (b) The transferee shall agree in writing to be bound by this Agreement;
          (c) High Desert shall be under no obligation to make payment of the HDG Newmont Royalty or the HDG Barrick Royalty to any transferee of HG Gold until High Desert has received Notice of the Transfer (together with a copy of the instrument of transfer as recorded in the Official Records of Eureka County, Nevada) and evidence reasonably satisfactory to High Desert that the transferee has agreed in writing to be bound by this Agreement; and
          (d) In no event shall High Desert be obligated to make payments of the HDG Newmont Royalty or the HDG Barrick Royalty or to give Notice to more than one entity or person.
     7.  Governing Law . This Agreement shall be construed under and governed by the laws of the State of Colorado without regard to the conflicts of laws provisions thereof.
     8.  Amendment . This Agreement may not be amended, modified or supplemented except upon the execution and delivery of a written agreement executed by both Parties.
     9.  Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
     10.  Waiver . Any of the terms or conditions of this Agreement that may be lawfully waived may be waived at any time by each Party that is entitled to the benefits thereof. Any waiver of any of the provisions of this Agreement by a Party shall be binding only if set forth in an instrument in writing executed on behalf of such Party. No failure to enforce any provision of this Agreement shall be deemed to or shall constitute a waiver of such provision and no waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
     11.  Notices . All notices, requests, claims, demands and other communications hereunder (“ Notices ”) shall be in writing and shall be given by delivery, by telex, telecopier or by mail (registered or certified mail, postage prepaid, return receipt requested); or reputable overnight courier to the respective Parties as follows:
If to High Desert:
High Desert Mineral Resources, Inc.
1660 Wynkoop, Suite 1000
Denver, Colorado 80202-1132
(facsimile) 303-595-9385
(telephone) 303-573-1660
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with a copy to:
Davis Graham & Stubbs LLP 1550
Seventeenth Street, Suite 500
Denver, Colorado 80202
(facsimile) 303-893-1379
(telephone) 303-892-9400
Attention: Randall Hubbard
If to HD Gold:
P. Lee Halavais
P.O. Box 2008
Elko, Nevada 89801
(facsimile) 775-753-7620
(telephone) 775-753-4270
with a copy to:
Denis McDevitt, Esq.
3550 Camino del Rio North, Suite 200
San Diego, CA 92108
(facsimile) 619-285-9124
(telephone) 619-285-9125
or to such other address as any party hereto may, from time to time, designate in a written notice given in like manner.
     12.  Interpretation . When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Use of the term “including” in the Agreement shall mean including, but not by way of limitation. The headings contained in this Agreement are for reference only and shall not affect in any way the meaning or interpretation of this Agreement.
     13.  Complete Agreement . This Agreement and the Loan Repayment Agreement between the Parties of even date herewith contain the entire understanding of the Parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof, including the letter agreement dated November 9, 2002 between the Parties, and no Party shall be liable or bound to the other in any manner by any warranties, representations, covenants or agreements except as specifically set forth herein or in the Loan Repayment Agreement.
     14.  Severability . Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.
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     15.  Third Parties . Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the Parties and their successors or permitted assigns, any rights or remedies under or by reason of this Agreement.
     16.  Resolution of Disputes . Any dispute arising out of or relating to this Agreement shall be resolved in accordance with the procedures set forth in this Section 16, which shall be the sole and exclusive process for the resolution of any such dispute. However, any Party may initiate litigation to obtain a preliminary injunction or other provisional relief, pending the completion of the procedures set forth in this Section 16, if in its sole judgment such action is necessary to avoid irreparable damage or to preserve the status quo.
          (a) The Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation. Any Party may give the other Party written notice of any dispute not resolved in the normal course of business. Within twenty (20) days after delivery of such a Notice, the receiving Party shall submit to the other a written response. The notice and the response shall include a statement of each Party’s position and a summary of arguments supporting that position. Within thirty (30) days after delivery of the disputing Party’s Notice, the Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All reasonable requests for information made by one Party to the other shall be honored. If the matter has not been resolved within forty five (45) days after the disputing Party’s Notice, or if the Parties fail to meet within 30 days after delivery of the Notice of dispute, either Party may initiate arbitration of the controversy as provided hereinafter.
          (b) All negotiations held pursuant to Section 16(a) are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence.
          (c) Any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof which has not been resolved by use of the processes set forth in Section 16(a) shall be resolved by arbitration in accordance with the Rules of Commercial Arbitration of the American Arbitration Association then in effect. The arbitration shall be governed by the Colorado Uniform Arbitration Act, 13 C.R.S. §§ 13-22-201 to 223, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Denver, Colorado. The arbitrators are not empowered to award damages in excess of compensatory damages and each Party hereby irrevocably waives any right to recover any such other damages with respect to any dispute resolved by arbitration.
          (d) All applicable statutes of limitation and defenses based upon the passage of time shall be deemed tolled while the procedures specified in this Section 16 are pending.
     17.  Submission to Jurisdiction; Waivers . Each of High Desert and HD Gold hereby irrevocably and unconditionally:
          (a) submits for itself and its property in any legal action or proceeding relating to the enforcement of Section 16 of this Agreement, or for recognition and enforcement of any
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judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of Colorado, the courts of the United States of America for the District of Colorado, and appellate courts from any of the foregoing;
          (b) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
          (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 11 hereof; and agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or, subject to Section 16 hereof, shall limit the right to sue in any other jurisdiction.
     18.  Further Assurances . Each Party hereto agrees that it shall take such actions and sign such documents reasonably requested by any other Party hereto to enable such requesting party to enjoy the benefits conferred upon such Party hereunder.
     19.  Recordation of Agreement Either Party may cause this Agreement to be recorded in the Official Records of Eureka County, Nevada.
     20.  Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party, it being understood that both Parties need not sign the same counterpart.
     IN WITNESS WHEREOF, each of High Desert and HD Gold has caused this Royalty Assignment and Agreement to be executed as of the day and year first above written.
 	 	 	 	 	
 	HIGH DESERT GOLD CORPORATION
 	 	
 	/s/ P. LEE HALAVAIS  	 	
 	P. Lee Halavais 	 	
 	President 	 	

 	HIGH DESERT MINERAL RESOURCES, INC.
 	 	
 	/s/ DONALD BAKER  	 	
 	Donald Baker 	 	
 	President 	 	
 	
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STATE OF UTAH	 	 	)	 	 	 	
 	 	 	)	 	 	ss.	
COUNTY OF SALT LAKE	 	 	)	 	 	 	
     This Royalty Assignment and Agreement was acknowledged before me, a notary public, on this 27 day of May, 2003 by P. Lee Halavais, President of High Desert Gold Corporation, a Nevada corporation, who is personally known or has been identified to me to be the person whose name is subscribed to the above instrument.
     This Royalty Assignment and Agreement was acknowledged before me, a notary public, on this 27th day of May, 2003 by P. Lee Halavais, President of High Desert Gold Corporation, a Nevada corporation, who is personally known or has been identified to me to be the person whose name is subscribed to the above instrument.
     Witness my hand and official seal.

 	/s/ ERIN ROBINSON  	 	
 	Notary Public 	 	

 	 	 	 	 	 	 	
 	 	 	 	 	
 	 	 	[STATE SEAL OF UTAH]	 	Notary Public	 	
 	 	 	 	 	ERIN ROBINSON	 	
 	 	 	 	 	2599 E. Wilmington Avenue	 	
 	 	 	 	 	Salt Lake City, Utah 84109	 	
 	 	 	 	 	My Commission Expires	 	
 	 	 	 	 	November 21, 2006	 	
 	 	 	 	 	State of Utah	 	
 	 	 	 	 	
     My commission expires:                                          
 	 	 	 	 	 	 	
STATE OF COLORADO	 	 	)	 	 	 	
 	 	 	)	 	 	ss	
CITY AND COUNTY OF DENVER	 	 	)	 	 	 	
     This Royalty Assignment and Agreement was acknowledged before me, a notary public, on this 24th day of June, 2003 by Donald Baker, as President of High Desert Mineral Resources, Inc. a Delaware corporation, who is personally known or has been identified to me to be the person whose name is subscribed to the above instrument.
     Witness my hand and official seal.

 	/s/ KAREN PASSAVANTE GROSS  	 	
 	Notary Public 	 	

[SEAL]
     My commission expires: My Commission Expires 07/02/2003
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EXHIBIT 99.5
[SEAL]
ROYALTY ASSIGNMENT, CONFIRMATION, AMENDMENT,
AND RESTATEMENT OF ROYALTY,
AND AGREEMENT
THIS INSTRUMENT, referred to as "this Assignment," dated as of November 30, 1995, (the "Effective Date"), is among BARRICK BULLFROG INC., a Delaware corporation ("Bullfrog"), P.O. Box 119, Toronto, Canada M5J 2J3, BARRICK GOLDSTRIKE MINES INC., a Colorado corporation ("Goldstrike"), P.O. Box 29, Elko, Nevada 89803, and ROYAL HAL CO., a Delaware corporation ("RHC"), 1200 Parkview Drive, Elko, Nevada 89801
RECITALS
A. As successor by mesne conveyances, mergers and name changes (described in more detail in recitals B through L below) to Long Lac Mineral Exploration Limited, an Ontario, Canada corporation ("Long Lac"), Bullfrog owns a royalty interest (the "Lac Royalty") that constitutes a burden upon and interest in the S.J. #l through #14 patented mining claims situated in Eureka County, Nevada, which are more particularly described in Exhibit A hereto (the "SJ Claims"), and other properties.
B. The Lac Royalty was reserved by Long Lac, the beneficial owner of 100% interest in possessory title to the S.J. Nos. 1 through 16 unpatented mining claims (the "SJ unpatented claims") in that certain Assignment and Agreement dated February 24, 1979 between Long Lac and Western States Minerals Corporation ("WSMC"), a copy of which is attached as Exhibit B, covering the S.J. unpatented claims and other properties.
C. The Assignment and Agreement was amended by First Amendment to Assignment and Agreement dated as of October 16, 1981 between Long Lac and WSMC (the "First Amendment"), a copy of which is attached as Exhibit C, which made the S.J. unpatented claims subject to the Lac Royalty in the amount of 5% of net smelter returns, and contained a ratification and confirmation of the Lac Royalty by WSMC, the record owner of possessory title to the S.J. unpatented claims.
D. By Assignment dated as of December 1, 1982, a copy of which is attached as Exhibit D, the Lac Royalty was assigned by Long Lac to Long Lac Mineral Exploration (Texas) Inc., a Texas corporation.
E. On December 31, 1983, Long Lac Mineral Exploration (Texas), Inc. merged into Willroy Mines (Texas), Inc., a Texas corporation, as evidenced by Certificate of Merger of Domestic Corporations issued by the Secretary of State of Texas and Articles of Merger of Long Lac Mineral Exploration (Texas), Inc. into Willroy Mines (Texas), Inc., copies of which are attached as Exhibit E.
F. Willroy Mines (Texas), Inc. changed its name to Long Lac Mineral Exploration (Texas), Inc., as evidenced by Articles of Amendment by the Sole Shareholder to the Articles of Incorporation of Willroy Mines (Texas), Inc. dated March 26, 1984 and Certificate of Amendment issued by the Secretary of State of Texas dated April 6, 1984, copies of which are attached as Exhibit F.
G. Long Lac Mineral Exploration (Texas), Inc. changed its name to Lac Minerals (USA), Inc., as evidenced by Articles of Amendment to Articles of Incorporation dated April 15, 1987, and Certificate of Amendment issued by the Secretary of State of Texas dated April 27, 1987, copies of which are attached as Exhibit G.
H. Lac Minerals Ltd., an Ontario, Canada corporation (formerly Long Lac), and Lac Minerals (USA), Inc. entered into an Amending Agreement dated as of November 24, 1987, a copy of which is attached as Exhibit H, which amended the Assignment referred to in Recital D above.
I. The Assignment and Agreement was further amended, and ratified and confirmed as amended, in a Second Amendment to Assignment and Agreement dated as of December 18, 1989 between Lac Minerals (USA), Inc. and Barrick Goldstrike Mines Inc., a copy of which is attached as Exhibit I.
J. Effective December 31, 1991, Lac Minerals (USA), Inc., a Texas corporation, merged with and into Bond Gold Holding, Inc., a Delaware corporation, and the name of the surviving corporation was changed to LAC Minerals (USA) Inc., a Delaware corporation, as evidenced by Articles of Merger of LAC Minerals (USA) Inc. with and into Bond Gold Holdings, Inc., a Certificate of Merger issued by the Secretary of State of Delaware based on documents filed in that office on December 24, 1991, and a Certificate of Merger issued by the Secretary of State of State of Texas dated December 27, 1991, copies of which are attached as Exhibit J.
K. By Assignment of Royalty Interest dated as of December 31, 1993, a copy of which is attached as Exhibit K, Lac Minerals (USA) Inc., a Delaware corporation, assigned the LAC Royalty to Lac Bullfrog Inc., a Delaware corporation.
L. Lac Bullfrog Inc. changed its name to Barrick Bullfrog Inc., as evidenced by Certificate of Amendment of Certificate of Incorporation of Lac Bullfrog Inc. dated March 29, 1995 and filed with the Delaware Secretary of State on April 5, 1995, a copy of which is attached as Exhibit L.
M. Bullfrog desires to assign a portion of the Lac Royalty as it applies to the SJ Claims (referred to as the "SJ Claims Royalty") to RHC hereunder pursuant to that certain Royalty Purchase and Sale Agreement of even date herewith among RHC, Bullfrog, and Goldstrike (the "Royalty Purchase and Sale Agreement").
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N. Goldstrike, a subsidiary of Barrick Gold Corporation, an Ontario Canada corporation ("BGC"), is an affiliate of Bullfrog, which is also a subsidiary of BGC. Goldstrike owns the SJ Claims.
O. Bullfrog and Goldstrike desire to confirm the SJ Claims Royalty insofar as it relates to the SJ Claims, which were patented on May 16, 1994.
P. Bullfrog, Goldstrike, and RHC desire to amend and restate the SJ Claims Royalty.
AGREEMENT
For and in consideration of the mutual covenants set forth in the Royalty Purchase and Sale Agreement, the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree and take action as follows:
1. Confirmation and Grant of Royalty.
Goldstrike and Bullfrog hereby warrant that Bullfrog owns the SJ Claims Royalty free and clear of material defects, liens, encumbrances and liabilities that might adversely affect the SJ Claims Royalty. For purposes of establishing record title thereto, Goldstrike hereby confirms the grant of and grants and conveys to Bullfrog a royalty of five percent (5%) of Net Smelter Returns (as herein defined) from the production of minerals mined and sold from the SJ Claims, which grant is, as specifically acknowledged and agreed by Bullfrog, in confirmation of the royalty previously reserved by Long Lac, the predecessor in title to Bullfrog, and is not in addition to such reserved royalty. For purposes of this instrument, the royalty herein confirmed and granted shall continue to be referred to as the SJ Claims Royalty.
2. Assignment.
Bullfrog hereby grants, conveys, and assigns to RHC twenty percent of the SJ Claims Royalty which shall be subject to the provisions hereof. The royalty so assigned is referred to herein as the "RHC SJ Claims Royalty." It is the intent of the parties that as a result of such assignment RHC will hold a royalty of 1% of Net Smelter Returns from the production of minerals mined and sold from the SJ Claims and Bullfrog will hold a royalty of 4% of Net Smelter Returns from the production of minerals mined and sold from the SJ Claims (the "Bullfrog SJ Claims Royalty").
3. Modification and Restatement of Royalty.
Goldstrike, Bullfrog, and RHC hereby agree that the SJ Claims Royalty (and by extension the Bullfrog SJ Claims Royalty and the RHC SJ Claims Royalty) is amended and restated in its entirety as follows and that all previous agreements constituting the SJ Royalty are superseded and replaced by the following. For convenience of reference, the term "Producer"
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means Goldstrike and its successors and assigns, and the term "Royalty Owner" is used to mean Bullfrog or RHC and their respective successors and assigns.
(a) Net Smelter Returns. "Net Smelter Returns" shall be equal to the Net Value (as hereinafter defined) of all minerals mined and removed from the SJ Claims.
(b) Net Value Defined. As used herein, "Net Value" means, (i) with respect to gold and silver (referred to as "Precious Metals"), the Gross Value of such Precious Metals, less Allowable Deductions, and (ii) with respect to all other minerals, the actual proceeds received from the sale of such minerals, less Allowable Deductions.
(c) Allowable Deductions Defined. As used herein, "Allowable Deductions" means, with respect to Precious Metals, only the following costs, charges, and expenses paid or incurred by or for Producer after production of dore, whether at the SJ Claims or elsewhere:
(i) charges for treatment by an independent, third party, commercial refinery in the refining process (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions) or equivalent charges, if Precious Metals are refined at a refinery that is not an independent third party;
(ii) actual costs of transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay, and forwarding expenses incurred by reason of or in the course of such transportation) of dore from the SJ Claims or other facility producing dore to the place of additional treatment and to the place of sale; and
(iii) sales, use, severance, net proceeds of mine, ad valorem taxes and other taxes applicable under state, federal, or local law, relating to production or sale of Precious Metals from the SJ Claims (but excluding income taxes).
No costs for the mining, treatment or beneficiation at or near the SJ Claims or for the transportation of ores or mineral products from the SJ Claims to any facility located in Elko or Eureka Counties, Nevada for treatment, processing, upgrading, beneficiation, or refining to produce dore or any less refined product shall be deducted from the proceeds received or deemed to be received by Producer to calculate the royalty due hereunder.
"Allowable Deduction" means, with respect to minerals other than Precious Metals, only the following costs, charges, and expenses paid or incurred by Producer:
(i) charges for treatment by an independent, third party, commercial smelter or refinery in the smelting and refining processes (including handling, processing, interest and provisional settlement fees, sampling, assaying and representation costs, penalties and other processor deductions);
(ii) actual costs of transportation (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay, and forwarding expenses incurred by reason
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of or in the course of such transportation), (A) in the case of ores, from the SJ Claims to the place of sale, or if the ores are further treated by an unrelated third party prior to sale, from the SJ Claims to such place of treatment and then to the place of sale, or (B) in the case of concentrates or other beneficiated products derived after the treatment of ores from the SJ Claims at facilities owned by Producer or its Affiliates, from such place of treatment to the place of sale, or if further treated prior to sale, from such place of treatment by Producer to the place of additional treatment and then to the place of sale.
(iii) sales, use, severance, net proceeds of mine, ad valorem taxes and other taxes applicable under state, federal or local law, relating to production or sale of such minerals from the SJ Claims (but excluding income taxes).
(d) Gross Value Defined. "Gross Value" shall have the following meaning:
(i) If Producer or an Affiliate of Producer (as defined below) causes refined gold meeting or exceeding generally accepted commercial standards for the sale of refined gold ("Refined Gold") to be produced from ores mined from the SJ Claims and, for purposes of determining Net Smelter Returns, the Refined Gold shall be deemed to have been sold at the Monthly Average Gold Price for the month in which it was refined, and the Gross Value shall be determined by multiplying Gold Production during the calendar month by the Monthly Average Gold Price. As used in this Agreement, "Gold Production" means for each calendar month the quantity of Refined Gold outturned to Producer's pool account (or to a third-party account for the benefit of Producer) by a refinery from ore mined from the SJ Claims on either a provisional or final settlement basis. As used herein, "Monthly Average Gold Price" means the average London Bullion Market Association P.M. Gold Fix, calculated by dividing the sum of all such prices reported for the month by the number of days for which such prices were reported.
If the London Bullion Market Association P.M. Gold Fix ceases to be made or published, all such references shall be replaced with references to prices of gold for immediate delivery in the most nearly comparable established market reasonably selected by Producer as such prices are published in "Metals Week" or a similar publication.
(ii) If Producer or an Affiliate of Producer causes refined silver meeting or exceeding generally accepted commercial standards for the sale of refined silver ("Refined Silver") to be produced from ore mined from the SJ Claims and, for purposes of determining the Net Smelter Returns the Refined Silver shall be deemed to have been sold at the Monthly Average Silver Price for the month in which it was refined, and the Gross Value shall be determined by multiplying Silver Production during the calendar month by the Monthly Average Silver Price. As used herein, "Silver Production" means for each calendar month the quantity of silver outturned to Producer's pool account (or to a third-party account for the benefit of Producer) by a refinery from ore mined from the SJ Claims on either a provisional or final settlement basis. As used herein, "Monthly Average Silver Price" means the average New York Silver Price as published daily by Handy & Harman, calculated by dividing the sum of all such prices reported for the calendar month by the number of days for which such prices were reported.
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If the Handy & Harman quotation ceases to be made or published, all such references shall be replaced with references to prices of silver for immediate delivery in the most nearly comparable established market selected by Producer as published in "Metals Week" or a similar publication.
(iii) If Producer sells raw ores of Precious Metals or concentrates or dore produced from such ores mined from the SJ Claims, then the Gross Value shall be calculated as set forth in Section 3(d)(i) and (ii), except that the Gold Production or Silver Production shall, in each case, be equal to the gold or silver contained in such raw ores, concentrates or dore sold in the specified month multiplied by (A) the recovery rate contractually determined between Producer and a third party processor or (B) if there is not a specifically contracted recovery rate, then by an assumed recovery rate equal to the average actual recovery rate for such metal during beneficiation by Producer for the latest calendar quarter ended prior to such month in which ores of such metal from the SJ Claims were beneficiated by or for Producer. If such ores have not been so beneficiated by or for Producer during any such calendar quarter, the recovery rate shall be the actual recovery rate experienced by the purchaser of such ores, concentrates or dore determined in good faith by Producer:
Gross Value for Precious Metals shall be determined as provided in this
Section 3(d) regardless of any actual selling or price protection arrangements entered into by Producer with respect to production of Precious Metals from the SJ Claims including, but not limited to, forward sales, futures trading or commodity options trading, and any other price hedging, price protection, and speculative arrangements which may involve the possible delivery of Precious Metals produced from ores mined from the SJ Claims.
(e) Payment In Kind.
(i) At any time and from time to time, either Bullfrog or RHC may elect, for any calendar quarter, to receive its Royalty "in kind" by delivery of Refined Gold as hereinafter provided, by notifying Producer of such election on or before thirty (30) days prior to the commencement of the quarter. An election by Bullfrog or RHC to receive its royalty in kind shall be irrevocable for the calendar quarter for which it is made.
(ii) The quantity of Refined Gold to be delivered to Bullfrog or RHC as the Bullfrog SJ Royalty or the RHC SJ Claims Royalty shall be determined as follows: (A) the amount of the Net Smelter Returns payable in cash shall be determined by multiplying the Net Value determined as provided in Sections 3(c) and (d) above by 1% in the case of the RHC SJ Claims Royalty and by 4% in the case of the Bullfrog SJ Claims Royalty, and (B) the quantity of Refined Gold to be paid as Royalty for the calendar quarter shall be determined by dividing the cash amount of the Net Smelter Returns payable for each month in the quarter by the Monthly Average Gold Price for the corresponding month. Producer shall instruct the refiner to credit to the account of Bullfrog and/or RHC the quantity of Refined Gold determined as above provided, or shall otherwise arrange for the delivery of Refined Gold to Bullfrog and/or RHC, with such credit or delivery to be governed by the procedures set forth in Section 3(f). Royalty Owner shall be solely responsible for all costs of maintaining its account at the refinery and for all costs and expenses incurred in connection with Refined Gold credited to its
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account, and, with respect to Refined Gold delivered to Bullfrog or RHC, for costs incurred for delivering Refined Gold to Bullfrog or RHC from the refiner as Royalty hereunder after the making of such credit by the refiner.
(f) Payment of Proceeds Payment. The obligation to pay the SJ Claims Royalty shall accrue upon the outturn of refined Precious Metals meeting the requirements of the specified published price to Producer's account (or to a third-party account for the benefit of Producer) as provided in Sections 3(d)(i) and (ii) or the sooner sale of unrefined metals, dore, concentrates or ores, as provided in Section 3(d)(iii). Timing of royalty payments and payment procedures shall be as follows:
(i) Net Value shall be determined on a calendar month basis. The RHC SJ Claims Royalty and the Bullfrog SJ Claims Royalty shall be paid on the fifteenth business day following the last day of the calendar quarter in which the same accrued. At the time of payment of the Royalty, Producer shall deliver to RHC and Bullfrog a statement showing in reasonable detail the quantities and grades of the refined Precious Metals, dore concentrates or ores produced and sold or deemed sold by Producer in the preceding quarter; the Average Monthly Price determined as herein provided for refined Precious Metals on which Royalty is due; Allowable Deductions; the computation of the quantity of Refined Gold delivered in kind pursuant to Section 3(e); and other pertinent information in reasonable detail to explain the calculation of the RHC SJ Claims Royalty and the Bullfrog SJ Claims Royalty with respect to each month in such quarter. Payment to RHC or Bullfrog shall be made in cash or by check, or upon 48 hours prior written notice from RHC or Bullfrog, by wire transfer to the account specified by RHC or Bullfrog in such notice, unless either RHC or Bullfrog has elected to receive payment in kind pursuant to Section 3(e). If Royalty Owner comprises more than one person (except for the distinction between RHC and Bullfrog); (A) such persons shall designate a bank or other agent to receive payment of all sums payable hereunder from Producer; (B) Producer shall have no responsibility as to the division of payments among the persons constituting Royalty Owner; (C) Producer shall not be in default with respect to any payment until 30 days after it had received delivery of an instrument signed by each person or entity constituting Royalty Owner that designates the name and address of a single agent or trustee to whom Producer shall make all payments; and (D) until Producer receives such designation, Producer may deposit such payments into a separate interest bearing account pending receipt of the designation.
(ii) Such quarterly statement shall also list the quantity and quality of any Precious Metals dore in inventory for more than ninety (90) days. Bullfrog and RHC shall each have ten (10) business days after receipt of the statement to either: (A) elect that the dore be deemed sold as provided in Sections 3(d)(i) and (ii) above as of such tenth day utilizing the mine weights and assays for such dore and utilizing a reasonable recovery rate for refined metal and reasonable deemed charges for all Allowable Deductions, or (B) elect to wait until the time that royalties would otherwise become payable pursuant to subsection (f)(i) hereof The failure of Royalty Owner to respond within such time shall be deemed to be an election to use the method set forth in (B) above. No Royalty payment shall be due with respect to stockpiles of ores or concentrate unless and until such ores or concentrates are actually sold.
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(iii) All Royalty payments shall be considered final and in full satisfaction of all obligations of Producer with respect thereto, unless Bullfrog or RHC gives Producer written notice describing and setting forth a specific objection to the calculation thereof within ninety (90) days after receipt by Bullfrog or RHC of the quarterly statement herein provided for in subsection (f)(i). If Bullfrog or RHC notifies Producer with respect to a particular quarterly statement, Bullfrog or RHC, for a period of thirty (30) days after Producer's receipt of such notice, shall have the right, upon reasonable notice and at reasonable times, to have Producer's accounts and records relating to the calculation of the royalty with respect to the quarter in question audited by an independent certified public accountant reasonably acceptable to Producer. If such audit determines that there has been a deficiency or an excess in the payment made to Bullfrog or RHC such deficiency or excess shall be resolved by adjusting the next quarterly royalty payment due hereunder. Bullfrog or RHC shall pay all costs of such audit unless a deficiency in the payment made to Bullfrog or RHC of 2% (of their respective royalties) is determined to exist, in which event Producer shall pay such costs. Where Royalty Owner comprises more than one person (except for the distinction between RHC and Bullfrog), each person shall conduct joint or simultaneous audits in a manner which will result in a minimum of inconvenience to Producer.
(g) Quarterly Reconciliation.
(i) If outturn of Precious Metals is made by an independent third-party refinery on a provisional basis, the Gross Value shall be based upon the amount of such provisional settlement, but shall be adjusted in subsequent statements to account for the amount of refined Precious Metals established by final settlement by such refinery. Within six months after any royalty payment made pursuant to Section 3(f)(i), Producer may reconcile any estimated Allowable Deductions reflected in such royalty payment with actual Allowable Deductions as finally determined and make adjustments therefore in subsequent statements. Any statements showing such adjustments shall be subject to Royalty Owner's rights under Section 3(f)(iii).
(ii) In the event either Bullfrog or RHC has been underpaid, Producer shall increase subsequent royalty payments or deliveries in kind as necessary to bring Bullfrog's or RHC's royalty into balance. If Bullfrog or RHC has been overpaid, Producer shall reduce subsequent royalty payments or deliveries in kind as necessary to bring Bullfrog's or RHC's royalty into balance. In neither case will either party be required to make direct payments or repayments to the other party and neither party shall otherwise be liable to the other for any such overpayments or underpayments, except as set forth in this section, or unless sufficient additional production is not available to make the adjustments.
(h) Transfer or Pledge of SJ Royalty. Any person constituting Royalty Owner may transfer, pledge, mortgage, charge, or otherwise encumber all or any part of its right, title, and interest in and to the RHC SJ Claims Royalty or the Bullfrog SJ Claims Royalty, provided that such transfer, pledge, mortgage, charge, or encumbrance is specifically made subject to the terms of this Assignment and the Commingling Agreement of even date among the parties to this Assignment (the "Commingling Agreement." No assignment, pledge, mortgage, transfer, or other conveyance or encumbrance of the Bullfrog SJ Claims Royalty, the RHC SJ Claims
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Royalty, or any portion thereof, shall be binding upon Producer, regardless of whether Producer has actual or constructive knowledge of the change of ownership, until 30 days after Producer has received from Royalty Owner a certified copy of the recorded instrument or instruments satisfactory, in the opinion of Producer, to evidence the change of ownership and to establish the right, title, or interest of the claiming party and the extent thereof.
(i) Taxes. Royalty Owner shall bear and pay a percentage based upon Royalty Owner's royalty of any and all taxes assessed upon any minerals with respect to which the royalty is paid, together with a share based upon the amount of Royalty Owner's royalty of all severance, production and license taxes, or other taxes or assessments levied or assessed on account of the production of such minerals (except income taxes) whether the same are assessed to Producer or Royalty Owner or otherwise, and Producer is hereby authorized to pay all such taxes and assessments on behalf of Royalty Owner and to deduct the amount so paid from any royalties due to Royalty Owner hereunder as provided in
Section 3(c)(iii), or from the royalties due if such payments for Royalty Owner are made directly by Producer to the taxing authority. Such deductions shall not duplicate deductions for taxes made in the computation of Allowable Deductions in accordance with subsection 3(c) above.
(j) Inspections. Any person constituting Royalty Owner, at such Royalty Owner's expense, may have a representative present at any stage when ores or mineral products derived after the treatment thereof are weighed, sampled, assayed, and the contained moisture determined, and shall upon request be furnished with a part of any sample taken. If more than one person or entity constitutes Royalty Owner, except for the distinction between RHC and Bullfrog, such inspections and sample share rights shall be exercised in a collective manner so as to minimize any inconvenience to Producer.
(k) Records. Producer shall keep accurate records of data necessary for the computation of royalty hereunder. Producer's records, books, and accounts, that are related to the computation and payment of the royalty due hereunder shall be open to the inspection of and copying by Royalty Owner or its designated representatives at times selected by Royalty Owner upon not less than three days notice to Producer during normal business hours. Royalty Owner will honor and comply with any reasonable confidentiality restrictions placed upon such information by Producer. If more than one person or entity constitutes Royalty Owner, except for the distinction between RHC and Bullfrog, any such inspection shall be deemed to be carried out on behalf of all of such individuals and entities, and such inspections shall be limited to one each calendar quarter.
(1) Control of Operations. Subject to Section 5.b of the Royalty Purchase and Sale Agreement, Producer shall have the sole and exclusive right to determine the timing and the manner of any mining or production from the SJ Claims and all related exploration, development and mining activities. The mining of ores from any properties not subject to the SJ Claims Royalty to the exclusion of ores and minerals that are subject to the SJ Claims Royalty shall not violate any provision hereof.
(m) Default. Should any default in any of the terms or provisions hereof occur, Royalty Owner shall give notice to Producer in writing, as hereinafter provided,
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designating such asserted default. If Royalty Owner comprises more than one person, except for the distinction between RHC and Bullfrog, such notice shall not be valid unless it is given by, or by an authorized agent or agents on behalf of, all such persons and/or entities; provided, however, that such concurrence shall not be required as between RHC, its successors and assigns, and Bullfrog, its successors and assigns. Producer shall thereafter have a period of 60 days from the date of receipt of such notice in which to correct or commence action to correct the defaults of which it has received notice, except for the payment of funds, with respect to which the period shall be 10 days. Should Producer fail to correct said defaults or to commence action to correct said defaults within the said 10 or 60 day period, Royalty Owner may, at its election, upon written notice to Producer pursue its remedies with respect to such default.
(n) Arbitration. All disputes, controversies or claims arising out of or relating to this Assignment, or the breach thereof, shall be submitted to binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and such arbitration shall be governed by the provisions of the Federal Arbitration Act and the Nevada Uniform Arbitration Act (Nev. Rev. Stat. Sec. 38.015 et seq.) or any successor Nevada law. This arbitration agreement shall be specifically enforceable, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
(o) Commingling. Commingling of ores produced from the SJ Claims and products produced after the treatment thereof with ores and products from other areas may be made by Goldstrike in accordance with the separate Commingling Agreement among the parties.
(p) Confidentiality. Bullfrog and RHC shall not, without the prior written consent of Producer, knowingly disclose to any third party any information or data obtained pursuant to Bullfrog's and RHC's exercise of its rights under this Assignment which is not generally available to the public; provided, however, Bullfrog or RHC may disclose information or data pertinent to this royalty: (i) if required for compliance with applicable laws rules, regulations or orders of a governmental agency or stock exchange having jurisdiction, in which event Bullfrog or RHC shall use their best efforts to provide Goldstrike with a copy of any disclosure in advance; (ii) to any third party to whom Bullfrog or RHC in good faith, anticipates selling or assigning its interest in the SJ Royalty, or (iii) to a prospective lender to whom an interest in payments of production royalties to be made to Bullfrog or RHC would be granted as security; provided that Goldstrike shall have been provided with a confidentiality agreement executed by such third party (excluding government agencies) or lender, which agreement shall include the confidentiality provisions of this Section.
(q) Production Projections. No later than December 1, each year, Producer shall provide Bullfrog and RHC with production forecasts or other information relating to its operations on the SJ Claims sufficient to allow Bullfrog and RHC to estimate the royalty which shall be payable for the ensuing year. Such information shall be subject to Section 3(q). Goldstrike makes no representations as to the accuracy of such projections and shall have no liability if actual production deviates from the projections.
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4. Applicability of Royalty Purchase and Sale Agreement.
This Assignment is subject to the provisions of the Royalty Purchase and Sale Agreement, including without limitation, the representations and warranties of the parties, which shall survive independently of this Assignment.
5. Miscellaneous.
(a) Successors and Assigns. This Assignment creates an interest in real property that runs with the land, and it shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
(b) Choice of Law. This Assignment shall be governed in all respects by the laws of the State of Nevada, except it choice of law rules.
(c) Amendment. This Assignment may not be amended or supplemented except by an instrument in writing signed by all parties.
(d) Severability. Whenever possible, each provision of this Assignment shall be interpreted in such manner as to be valid under applicable law; but, if any provision of this Assignment shall be invalid or prohibited under applicable law, such provision shall be ineffective to the extent of such invalidity or prohibition without invalidating the remainder of such provision or the remaining provisions of this Assignment.
(e) Notices. Any notice or communication required or permitted to be given hereunder shall be in writing and shall be hand delivered or sent by certified mail or telephone facsimile to the party to whom such notice is given hereunder at the address below or at such other address as such party may have notified the other party in the same manner.

To RHC:            Royal Hal Co.
                   1200 Parkview Drive
                   Elko, NV 89801
                   Attn: R. Sean Halavais and P. Lee Halavais
                   Fax:    (702)753-4270

To Bullfrog:       Barrick Bullfrog Inc.
                   Royal Bank Plaza
                   South Tower, Suite 2700
                   P.O. Box 119
                   Toronto, Ontario
                   Canada M5J 2J3
                   Attn: General Counsel
                   Fax: (416)861-9717	

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To Goldstrike:     Barrick Goldstrike Mines Inc.
                   P.O. Box 29
                   Elko, NV 89803
                   Attn:  Mine Manager
                   Fax:  (702)738-6543	

Hand delivery and mail delivery shall be effective upon receipt. Delivery by telephone facsimile shall be effective the first business day after successful transmission.
(f) Definition of Affiliate. The term "Affiliate" used herein means any person or entity related to a party that directly or indirectly controls, is controlled by, or is under common control with that party.
6. Further Assurances.
The parties shall also from time to time and at all times do such further acts and things and execute all such further documents and instruments as may reasonably be required in order to carry out and implement the true intent and meaning of this Assignment.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first set forth above, and shall be deemed effective as of said date.
BARRICK BULLFROG INC.

By: /s/ SYBIL E. VEENMAN
   ----------------------------------------
Name Printed: Sybil E. Veenman
             ------------------------------
Title: Secretary
      -------------------------------------	

BARRICK GOLDSTRIKE MINES INC.

By: /s/ SYBIL E. VEENMAN
   ----------------------------------------
Name Printed: Sybil E. Veenman
             ------------------------------
Title: Secretary
      -------------------------------------	

ROYAL HAL CO.

By: /s/ P. LEE HALAVAIS
   ----------------------------------------
Name Printed: P. Lee Halavais
             ------------------------------
Title: President
      -------------------------------------	

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STATE OF UTAH           )
                        :ss
COUNTY OF SALT LAKE     )	

On this 30th day of November, 1995, personally appeared before me, a notary public, Sybil E. Veenman, the Secretary of BARRICK BULLFROG INC., a Delaware corporation, personally known (or proved) to me to be the person whose name is subscribed to the foregoing instrument, who acknowledged that he executed the foregoing instrument on behalf of the corporation.
Notary Public
KATHI H. IZATT

         185 South State St. #1300           /s/ KATHI H. IZATT
[SEAL]  Salt Lake City, Utah 84111          -----------------------------------
           My Commission Expires            NOTARY PUBLIC
             November 21, 1997
               State of Utah

 My commission expires:
       11/27/97	

[SEAL]

STATE OF UTAH           )
                        :ss
COUNTY OF SALT LAKE     )	

On this 30th day of November, 1995, personally appeared before me, a notary public, Sybil E. Veenman, the Secretary of BARRICK GOLDSTRIKE MINES INC., a Colorado, corporation, personally known (or proved) to me to be the person whose name is subscribed to the foregoing instrument, who acknowledged that he executed the foregoing instrument on behalf of the corporation.
Notary Public
KATHI H. IZATT

         185 South State St. #1300           /s/ KATHI H. IZATT
[SEAL]  Salt Lake City, Utah 84111          -----------------------------------
           My Commission Expires            NOTARY PUBLIC
             November 21, 1997
               State of Utah

 My commission expires:
       11/27/97	

[SEAL]
-13-

STATE OF UTAH           )
                        :ss
COUNTY OF SALT LAKE     )	

On this 30th day of November, 1995, personally appeared before me, a notary public, P. Lee Halavais, the President of ROYAL HAL CO., a Delaware corporation, personally known (or proved) to me to be the person whose name is subscribed to the foregoing instrument, who acknowledged that he executed the foregoing instrument on behalf of the corporation.
Notary Public
KATHI H. IZATT

         185 South State St. #1300           /s/ KATHI H. IZATT
[SEAL]  Salt Lake City, Utah 84111          -----------------------------------
           My Commission Expires            NOTARY PUBLIC
             November 21, 1997
               State of Utah

 My commission expires:
       11/21/97	

[SEAL]
-14-
EXHIBIT B
ASSIGNMENT AND AGREEMENT
THIS ASSIGNMENT AND AGREEMENT, made and entered into this 24th day of February, 1979, by and between LONG LAC MINERAL EXPLORATION LIMITED, a company duly incorporated under the laws of the Province of Ontario, Canada (hereinafter called "Long Lac"), and WESTERN STATES MINERALS CORPORATION, a Utah corporation (hereinafter called "WSMC").
RECITALS
A. Long Lac holds the working interests in sixteen (16) unpatented lode mining claims, known as the SJ 1-16 claims (hereinafter called "the SJ Claims"), located by M. J. Fitzgerald in the County of Eureka, State of Nevada, as more particularly described in Exhibit A attached hereto.
B. Long Lac holds the leasehold working interest rights in certain lands as lessee under a Mining Lease with Southern Pacific Land Company, dated February 15, 1976, No. SPL-634 (hereinafter called "the SP Lease"), as more particularly described in Exhibit B hereto. All lands covered by the SP Lease and the SJ Claims and all rights of Long Lac thereunder are sometimes hereinafter referred to collectively as the "Subject Properties".
C. The Subject Properties, in whole or in part, are subject to a one percent (1%) net carried interest owned by H. Ranspot under that certain letter agreement dated July 7, 1975, as executed in counterparts by and between Harry Ranspot, Long Lac Minerals Exploration Limited, Belmoral Mines Limited, Great Bear Mining Limited, and Min-Ex Services Limited, and to a five percent (5%) net carried interest owned by M.J. Fitzgerald under that certain Memorandum of Agreement dated April 28, 1975, by and between Long Lac Exploration Limited, Great Bear Mining Limited, Belmoral Mines Limited and Min-Ex Services Limited (hereinafter collectively called the "Net Carried Interests").
D. Long Lac desires to assign to WSMC all of its right, title and interest in and to the Subject Properties and convey, or cause to have conveyed, to WSMC any and all right, title and interest of Long Lac and of M. J. Fitzgerald in the SJ Claims, subject only to the SP Lease and the Net Carried Interests, pursuant to the following terms and conditions
NOW, THEREFORE, in consideration of the following mutual promises and covenants, to be kept and performed by the parties, it is agreed as follows:
1. Grant. Long Lac hereby bargains, sells, transfers, assigns and conveys to WSMC all of its right, title and interest in and to the Subject Properties, subject to: (i) a reservation to Long Lac of certain royalties as provided herein; (ii) the SP Lease and the Net Carried Interests; and (iii) the other terms and conditions contained herein including, but not limited to, the right of WSMC to release and reconvey to Long Lac all or part of the Subject Properties pursuant to Paragraphs 2 and 6 below.
2. Consent to Assignment of the S.P. Lease; Renegotiation of S.P. Lease. On or before April 2, 1979 (the "Due Date"), Long Lac shall obtain from the Southern Pacific Land Company written consent to the assignment of the SP Lease to WSMC (the "Consent") and shall deliver the Consent to the Agent provided for in the Escrow Agreement attached hereto as Exhibit C and by this reference incorporated herein (the "Escrow Agreement"). WSMC may elect, at any time, in its sole discretion, to extend the Due Date by written notice thereof to Long Lac and to the Agent. In the event Long Lac fails to obtain the Consent on or before any Due Date then in effect, the initial advance royalty payment of Ten Thousand Dollars ($10,000) provided for below shall be returned to WSMC, pursuant to the terms of the Escrow Agreement, and the parties shall have no further rights or obligations hereunder, subject only to WSMC's obligation to deliver to Long Lac an executed quitclaim deed, in recordable form, conveying the Subject Properties to Long Lac.
-2-
WSMC may elect, in its sole discretion, to renegotiate any or all terms of the SP Lease. In the event that WSMC so elects and upon the execution by WSMC of any new or amended lease, WSMC shall promptly notify the Agent in writing thereof, directing the Agent to pay such initial advance royalty payment to Long Lac, pursuant to the terms of the Escrow Agreement. If at the time of the execution of any such new or amended lease, such initial advance royalty payment has been previously returned to WSMC, pursuant to the Escrow Agreement, WSMC shall promptly make such payment directly to Long Lac.
3. Payments to Long Lac.
(a) Advance Royalty Payments. Upon execution of this agreement, WSMC shall pay Ten Thousand United States Dollars (U.S. $10,000) to Long Lac as an advance royalty payment. Such payment shall be made by WSMC to the Agent for disbursement in accordance with the Escrow Agreement and with Paragraph 2 above.
Commencing not later than the second anniversary date of the execution hereof and continuing through the fifth anniversary date while this Agreement remains in effect, WSMC shall pay to Long Lac an annual advance royalty payment of Twenty Thousand United States Dollars (U.S. $20,000), except that such payments shall be reduced to the extent of any Earned Royalties actually paid to Long Lac prior to such due date which have not been applied to reduce any previous advance royalty payment. All advance royalties shall be deductible and recovered by WSMC as a credit against any Earned Royalties which accrue to Long Lac hereunder. It is expressly understood and agreed that such advance royalty payments are in lieu of any covenant by WSMC implied or otherwise, to develop the Subject Properties and that following the payment of a total of Ninety Thousand United States Dollars (U.S. $90,000) in advance and Earned Royalties,
-3-
WSMC shall have no duty to pay further advance royalties to Long Lac or to develop the Subject Properties.
(b) Earned Royalties. WSMC shall pay to Long Lac royalties based on production from the Subject Properties, if any, ("the Earned Royalties") in amounts calculated as follows:
The Earned Royalty shall be One United States Dollar (U.S. $1.00) per cubic yard of ore mined by WSMC, for so long as the average market price for gold during any given payment period is less than or equal to Two Hundred Fifty United States Dollars per ounce (U.S. $250/ounce), and shall increase by One United States Dollar (U.S. $1.00) per cubic yard of ore mined for each full Fifty United States Dollars (U.S. $50) increase in such average market price during any given payment period. For example:

                                    Market Price per Ounce of
Amount of Royalty per               Gold (industrial grade
Cubic Yard of Ore Mined             bullion)
-----------------------             -------------------------
U.S. $1/cu. yd                      U.S. $250/ounce or less

U.S. $2/cu. yd                      U.S. S250.01-300/ounce

U.S. $3/cu. yd                      U.S. $300.01-350/ounce	

All volumes of ore referred to herein shall be the volume of such ore in its in situ state and shall be measured by WSMC on a calendar quarter basis. For purposes hereof, "ore" is defined as that material mined from the Subject Properties by WSMC to be processed for its gold value. It is expressly understood that WSMC will be removing overburden and waste material for which no Earned Royalty will be payable and will be removing other materials of low gold value for which no Earned Royalty will be payable, except in the event that such" other material is actually subjected to processing, as WSMC may elect in its sole discretion.
The average market price of gold for the purposes of calculating the Earned Royalties due Long Lac hereunder shall be the average price of industrial grade bullion
-4-
gold in the United States quoted in Metals Week over the calendar quarter for ore mined during such quarter or, if that is not available, the average price of industrial grade bullion gold in the United States determined on the basis of a mutually agreeable price quotation system. Earned Royalties shall be payable no later than the last day of the calendar quarter following the quarter during which such ore is mined. Earned Royalty payments shall be accompanied by a settlement sheet and a copy of the records of volume measurements and gold valuations used as the basis for computing Earned Royalty or having a bearing on Earned Royalties. All records relating to the calculation of Earned Royalties shall be available for inspection by Long Lac during the normal hours of WSMC's operations.
4. Annual Assessment Work. WSMC agrees that it will, for the assessment year which ends September 1, 1979, and for each subsequent assessment year for which this Agreement remains in effect on March 1, subject to Paragraph 11 below, make all filings required by law to maintain the SJ Claims, and perform on or for the benefit of the SJ Claims assessment work of a character and value reasonably expected to satisfy the requirements of the mining laws of the United States. In the event that WSMC reasonably determines that any of the SJ claims are invalid for any reason, it shall have no obligations with regard to such claims, expressly including any obligations under this Paragraph and under Paragraph 6 below. If WSMC so determines it shall give Long Lac 30 days prior written notice before its obligations with regard to said claims shall be regarded as terminated pursuant to this paragraph. In no event however, may WSMC terminate its obligations regarding any of the SJ claims pursuant to this paragraph by giving notice less than 60 days prior to the expiry of the then current assessment year.
In the event that the performance of work intended by WSMC in good faith to satisfy the requirements under the mining laws with respect to assessment work shall be deficient in one respect or another and in the event that such failure shall, through
-5-
relocation of a third party or otherwise, result in the forfeiture or loss of such claim or claims as to which there is a deficiency in the work, WSMC shall not be liable to Long Lac or others in damages or otherwise on account of such failure to meet the requirements of the mining laws. If WSMC acquires any notice through legal proceedings, notice of relocation or attempted relocation, or in any other manner that a third person or any agency of the government of the State of Nevada or the United Sates is challenging the validity of the SJ claims, it shall immediately notify Long Lac thereof. If WSMC choses not to defend such action or not to challenge such relocation it shall immediately notify Long Lac thereof.
-5a-
WSMC agrees to prepare and timely file all instruments, documents, maps and perform other work which may be required for compliance with the filing requirements of the Federal Land Policy and Management Act of 1976 (43 U.S.C. ss. 1744) to the extent applicable to any of the SJ claims which WSMC reasonably determines to be valid. Long Lac shall reimburse WSMC for all costs so incurred not to exceed Two Hundred United States Dollars (U.S. $200) per claim. WSMC shall be reimbursed by offsetting such costs against royalties due Long Lac by WSMC pursuant to the provisions of Paragraph 16 below. Long Lac, at WSMC's request, shall execute or cause to be executed any and all documents necessary or desirable for this purpose and shall cooperate fully with WSMC in the preparation and filing of necessary instruments, documents and maps.
5. Payments under the SP Lease and the Net Carried Interests; Authority to Amend. WSMC agrees to perform all duties and obligations and make all payments under, and in accordance with terms and conditions of, the SP Lease and to make all payments attributable to the Net Carried Interests. WSMC shall have the authority and the right, as it may elect in its sole discretion, to negotiate and execute any amendments, modifications and other changes to the SP Lease, the Net Carried Interests and such other agreements as may affect the Subject Properties or WSMC rights hereunder. Any such amendments, modifications or other changes shall be binding on Long Lac in the event the Subject Properties are reconveyed to it.
6. Release and Reconveyance of Subject Properties. Subject to the provisions of this Paragraph, WSMC shall have the right, but not the obligation, at any time, to reconvey to Long Lac all or any one or more of the SJ Claims, and all or any portion of the SP Lease and thereby to terminate this
-6-
agreement as to such reconveyed property. Such reconveyance shall be effected by written notice to Long Lac thereof and by delivery to Long Lac of a quitclaim deed in recordable form conveying such property to Long Lac. With respect to any reconveyance of the properties covered by the SP Lease, WSMC also shall comply with the provisions of the SP Lease.
Except with regard to a reconveyance of the Subject Properties under Paragraph 2, with respect to any portion of the Subject Properties reconveyed hereunder, WSMC shall, at the time of such reconveyance, have paid all advance royalty payments to third parties and otherwise performed all necessary obligations so that the property so released shall be in good standing for a period of six (6) months following the date of reconveyance of such property to Long Lac. In the event of such reconveyance, all payments theretofore made by WSMC shall be retained by Long Lac and, except as provided in this Paragraph, WSMC shall have no further obligations with respect to the portion of the Subject Properties to which such reconveyance applies.
7. Further Documents; Cooperation: Long Lac agrees to provide to WSMC copies of documents in recordable form which establish Long Lac's right, title and interest in and to the Subject Properties and of documents in recordable form evidencing the nature and extent of the Net Carried Interests. Long Lac expressly agrees to obtain from M. J. Fitzgerald and provide to WSMC a conveyance in recordable form satisfactory to WSMC granting all his right, title and interest in the SJ Claims to WSMC and warranting that: (i) the SJ Claims are free and clear of all liens and encumbrances, except for the Net Carried Interest; (ii) to the best of his information and belief the SJ Claims were validly located and have been duly maintained in accordance with law; and (iii) he has no knowledge of any conflicting mining claims, except those certain claims known as the "Bazza" claims controlled by Pancana Industries, Inc.
-7-
Long Lac further agrees to provide WSMC copies of documents in recordable form satisfactory to WSMC evidencing that: (i) Long Lac is the sole survivor of that certain association known as the "Nevada Syndicate"; (ii) Long Lac has succeeded to all rights belonging thereto; (iii) no other member or party to the Nevada Syndicate has any right, title or interest to the Subject Properties, except the Net Carried Interests; and (iv) Long Lac has the right to convey the Subject Properties to WSMC, free and clear of all liens and encumbrances, except for the Net Carried Interests and the SP Lease requirements.
At WSMC's request, Long Lac shall make available to WSMC for copying any other reports, evaluations, maps and documents in Long Lac's possession or to which it has access relating to the Subject Properties. Long Lac agrees to cooperate with WSMC in any reasonable way to assist WSMC in effectuating the purposes of this agreement and, at WSMC's request, to execute any further documents deemed by WSMC to be necessary or convenient for such purposes.
8. Long Lac's Warranties. Long Lac represents that: (i) to the best of its knowledge and belief the SJ claims were properly located in accordance with applicable laws and regulations of the State of Nevada and of the United States;
(ii) to the best of its knowledge and belief, assessment work as required by the laws and regulations of the State of Nevada and the United States has been performed as required by law and appropriate proofs of labour filed; (iii) it has no knowledge of any conflicting mining claims except those certain claims known as the "Bazza" claims; and (iv) it is not in default of any payment or obligation under the SP lease and that the SP lease is currently valid and in full effect.
Long Lac covenants and warrants that: (i) it has not conveyed or otherwise encumbered the Subject Properties;
-8-
(ii) it is the sole survivor of the Nevada Syndicate; (iii) it has succeeded to all rights of the Nevada Syndicate; (iv) no other member of or party to the Nevada Syndicate holds any right, title or interest in or to the Subject Properties, except the Net Carried Interests; (v) that Long Lac has the right to convey the Subject Properties to WSMC; and (vi) the royalties and payments due under (a) the SP Lease and (b) the Net Carried Interests are the only royalties and payments to which the Subject Properties are subject.
Long Lac further covenants and warrants that this agreement shall cover and extend to any further or additional right, title, interest or estate hereafter acquired by Long Lac in or to the Subject Properties.
Long Lac agrees to indemnify, defend and hold WSMC, its successors and assigns, harmless from and against any and all liabilities, costs, damages, and expenses, including reasonable attorney's fees, which may result to WSMC as a result of any activities, events or conditions existing with respect to the Sub Properties directly attributable to Long Lac or its employees, agents, servants or authorized representatives prior to the date of execution hereof.
9. Mining Operations; Insurance and Inspections
WSMC agrees to conduct all mining operations on the Subject Properties in accordance with good mining practices and to save harmless and fully indemnify Long Lac from any liability arising out of injuries to the person or property of third persons (other than Long Lac, its employees, agents or representatives) by reason of the operations of WSMC, its employees, and subcontractors and their employees upon the Subject Properties.
WSMC agrees to carry such insurance, covering all persons working in or on the Subject Properties for WSMC, as will fully comply with the requirements of the statutes of the State of Nevada pertaining to workmen's compensation and occupational disease and disabilities as are now in force or as may be hereafter amended or enacted. In addition, WSMC
-9-
agrees to carry liability insurance in reasonable amounts. Further, WSMC agrees to comply with all the terms and provisions of all applicable laws of the State of Nevada, and of the United States of America now existing or as hereinafter amended or enacted, pertaining to social security, unemployment compensation, wages, hours and conditions of labor, and to indemnify and hold Long Lac harmless from payment of any damages occasioned by WSMC's failure to comply with said laws.
Long Lac shall have the right, at reasonable times and at the sole risk of Long Lac, to enter upon the Subject Properties for the purpose of inspecting the same and any work being conducted by WSMC thereon.
WSMC agrees to make available to Long Lac upon termination of this agreement for examination any survey maps, drill hole logs, title abstracts and title opinions, and other information on the Subject Properties, if any, which it develops during the term of this agreement. Long Lac agrees to treat any information it receives from WSMC as proprietary to WSMC and confidential and not disclose it to third persons without the prior written approval of WSMC until this agreement is terminated.
10. Covenants of the Parties.
10.1 Covenants of WSMC. In addition to obligations otherwise imposed upon it by this agreement, WSMC covenants and agrees as follows:
10.1.1 Corporate Status. WSMC is a corporation duly organized and existing, and in good standing, under the laws of the State of Utah, and is duly authorized to carry on its business in Nevada.
10.1.2 Corporation Authorization; Impediments. WSMC is duly authorized to execute and deliver this agreement and to perform all its obligations hereunder, and has obtained, or will use its best efforts to obtain, all governmental and other approvals with respect thereto.
-10-
10.1.3 Broker's or Finder's Fees. WSMC has not engaged or employed any broker or finder in connection with the negotiation, execution and delivery of this agreement, and no broker's or finder's fee or commission is due with respect thereto.
10.1.4 Binding Obligation. This agreement; when duly executed by the parties hereto, will constitute a valid and binding obligation of WSMC enforceable against WSMC in accordance with its terms.
10.2 Covenants of Long Lac. In addition to obligations otherwise imposed upon it by this agreement, Long Lac covenants and agrees as follows:
10.2.1 Corporate status. Long Lac is a corporation duly organized and existing, and in good standing, under the laws of the Province of Ontario, Canada, and is duly authorized to carry on its business as presently conducted in Nevada.
10.2.2 Corporation Authorization; Impediments. Long Lac is duly authorized to execute and deliver this agreement and to perform all its obligations hereunder.
10.2.3 Broker's or Finder's Fees. Long Lac has not engaged or employed any broker or finder in connection with the negotiation, execution and delivery of this agreement, and no broker's or finder's fee or commission is due with respect thereto.
10.2.4. Binding Obligation. This agreement, when duly executed by the parties hereto, will constitute a valid and binding obligation of Long Lac, enforceable against Long Lac in accordance with its terms.
11. Force Majeure. In the event either party is rendered unable, wholly or in part, by force majeure applying to it, to carry on its obligations under this agreement (other than the obligation to make payment of monetary amounts due hereunder or Long Lac's obligation under Paragraph 2, above), it is agreed that the obligations of such party, so
-11-
far as they are affected by such force majeure, shall be suspended during the continuance of any inability so caused, but for no longer period; that the various periods and terms provided for herein shall be extended for a period equivalent to such period of force majeure; and, such cause shall, so far as possible, be remedied with all reasonable dispatch. Said party will promptly notify the other party of the commencement and termination of any event to force majeure.
The term "force majeure," as employed herein shall mean acts of God, strikes, lockouts or other industrial disturbances, unavoidable accidents, uncontrollable delays in transportation, inability to obtain necessary materials in the open market, any State or Federal laws, regulations or requirements (expressly including inability to obtain necessary governmental approvals on terms reasonably acceptable to the applying party), or other matters beyond the reasonable control of the party, whether similar to matters herein specifically enumerated or not; provided, however, that performance shall be resumed within a reasonable period of time after such cause has been removed; and, provided, further that the party subject to the event of force majeure shall not be required against its will to adjust any labor dispute or to question the validity of or to refrain from judicially testing the validity of any State or Federal order, regulation or law.
12. Notices. Any notice or delivery of information herein contemplated to be given to WSMC shall be sufficient if given in writing by registered mail and addressed to:
Western States Minerals Corporation 7475 West 5th Avenue Suite 204
Lakewood, Colorado 80226
Attention: Mr. Gary L. Hutchinson
or to such other address or addresses as Western States may from time to time designate. Any notice or delivery of information herein contemplated to be given to Long Lac,
-12-
shall be sufficient if given in writing by registered mail and addressed to:
Long Lac Mineral Exploration Limited Suite 1900
101 Richmond Street, West Toronto, Ontario, CANADA M5H 1T1
Attention: Mr. Dennis Sheehan
or to such other address or addresses as Long Lac may from time to time designate.
Except as otherwise provided herein, service of notice of delivery of information shall be effective and complete five days after deposit thereof in the United States or Canadian (as appropriate) mail with postage prepaid and addressed as aforesaid.
13. Arbitration. All disputes, controversies or claims arising out of or relating to this agreement, or the breach thereof, shall be submitted to binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and such arbitration shall be governed by the provisions of the Nevada Uniform Arbitration Act (Nev. Rev. Stat. Section 38.015 et seq.) or any successor Nevada law. This arbitration agreement shall be specifically enforceable, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
14. Assignment; Inurement. Long Lac may not assign all or any portion of its interest hereunder without the prior written consent of WSMC, except that Long Lac may assign to any parent, subsidiary or affiliate of Long Lac without such consent. No assignment of any interest hereunder shall be effective until receipt by the nonassigning party of written notice of such assignment. This agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.
15. Title to Equipment and Structures. All tools, equipment, pipelines, apparatus, buildings, structures and
-13-
property of every nature and description, whether or not affixed to the soil, purchased for use on the Subject Properties by WSMC, shall be deemed to be and shall remain the personal property of WSMC and title thereto shall at all times remain and be in WSMC. WSMC shall have the right at all times during the term of this agreement and for a period of six months after the reconveyance of any portion of the Subject Properties to remove such property from such portion of the Subject Properties. Any property not so removed within such six months shall become the sole property of Long Lac.
16. Set-Off Rights. In the event that WSMC should become compelled by court order to make any payments based on production from the Subject Properties or otherwise, in excess of the royalties and payments under the SP Lease and the Net Carried Interests or the royalty payments which become due and payable to Long Lac pursuant hereto, or should incur costs for which it is entitled to reimbursement pursuant to Paragraph 4 above, WSMC shall have the right to retain all royalty payments which thereafter become due and payable to Long Lac hereunder until such time as WSMC has recovered the total amounts so paid by WSMC or such costs incurred by WSMC. Retention by WSMC of royalty payments pursuant to this Paragraph shall not, under any circumstances, be deemed to constitute a default by WSMC hereunder, and the amount so retained by WSMC shall, for all purposes of determining compliance by WSMC with the provisions of this agreement, be deemed to have been paid to Long Lac. The provisions of this Paragraph shall not be deemed to limit or restrict in any manner any other legal or equitable rights of WSMC.
17. Default. Should any default in any of the terms or provisions hereof occur, Long Lac shall give notice to WSMC in writing as hereinafter provided, designating such asserted default. WSMC shall thereafter have a period of sixty
(60) days from the date of receipt of such notice within which to correct or commence action to correct the
-14-
defaults of which it has received notice. Should WSMC fail to correct said defaults or to commence action to correct said defaults within said sixty-day period, Long Lac may, at its election, upon written notice to WSMC cancel and terminate this Agreement. It is specifically understood and agreed that, subject to the obligation of WSMC to pay royalties based upon production from the Subject Properties incurred prior to the date of such termination, the sole liability of WSMC for any default under the terms hereof, shall be such termination and WSMC shall under no circumstances have any liability to Long Lac by way of damages of any kind or otherwise.
18. Rights-Of-Way. Long Lac hereby authorizes WSMC to utilize all rights or entitlements which Long Lac may hold for purposes of access to the Subject Properties and which may be assigned by Long Lac to or otherwise be used by WSMC, and Long Lac agrees to maintain such rights and entitlements in effect so long as this Agreement shall be in effect.
19. Memorandum for Recording. WSMC may cause to be prepared a memorandum form of agreement which it determines to be suitable for recording with the Clerk and County Recorder of Eureka County, Nevada. Long Lac agrees to execute promptly any such memorandum agreement upon request by WSMC.
20. Entire Agreement. This instrument represents the full understanding of the parties, there being no oral agreements, promises or representation which are or may be incidental with or supplementary to the provisions hereof.
21. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada, except insofar as it may become necessary to comply with Federal statutes, rules or regulations.
-15-
IN WITNESS WHEREOF, the parties have executed this agreement this 24th day of February, 1979.
WESTERN STATES MINERALS
CORPORATION

By: /s/ [ILLEGIBLE]
   -----------------------------------------

Title: President
      --------------------------------------	

LONG LAC MINERAL EXPLORATION
LIMITED

By: /s/ [ILLEGIBLE]
   -----------------------------------------

And: /s/ [ILLEGIBLE]
    ----------------------------------------

                                      (SEAL)	

STATE OF COLORADO          )
                           ) ss.
COUNTY OF JEFFERSON        )	

On February 24, 1979, Gary L. Hutchinson personally appeared before me, a notary public, and who acknowledged that he executed the above instrument.

/s/ GWEN C. MOONEY
--------------------------------------------
              Notary Public	

My commission expires: Nov. 16, 1980.
[Acknowledgement of Long Lac to be completed by U.S. Consulate on separate page and attached hereto.]
Province of Ontario )
Judicial District of York )
On Thursday the 12th day of April, 1979, Peter A. Allen and Edward J.L. Wage personally appeared before me, a notary public, and who acknowledged that they were the President and Vice-President of Long Lac Mineral Exploration Limited and that they each had executed the above instrument.

/s/ [ILLEGIBLE]
--------------------------------------------
A Notary Public in and for
the Province of Ontario	

(SEAL)
My commission is unlimited as to time.
-16-
EXHIBIT A
To Assignment and Agreement of
February 24, 1979, Between
Western States Minerals Corporation
and Long Lac Mineral Exploration Limited
SJ Claims (County of Eureka, State of Nevada)

                                                           Certificate of      Location of
                        Date of            Recording         Recording           Data
Name of Claim           Location             Date              Book              Page
-------------           --------           ---------       --------------      -----------

SJ Claim No. 1        Aug. 14, 1975      Sept. 22, 1975         52                327
   "     No. 2         "   "     "         "   "     "           "                328
   "     No. 3         "   "     "         "   "     "           "                329
   "     No. 4         "   "     "         "   "     "           "                330
   "     No. 5         "   "     "         "   "     "           "                331
   "     No. 6         "   "     "         "   "     "           "                332
   "     No. 7         "   "     "         "   "     "           "                333
   "     No. 8         "   "     "         "   "     "           "                334
   "     No. 9         "   "     "         "   "     "           "                335
   "     No. 10        "   "     "         "   "     "           "                336
   "     No. 11        "   "     "         "   "     "           "                337
   "     No. 12        "   "     "         "   "     "           "                338
   "     No. 13        "   "     "         "   "     "           "                339
   "     No. 14        "   "     "         "   "     "           "                340
   "     No. 15        "   "     "         "   "     "           "                341
   "     No. 16        "   "     "         "   "     "           "                342	

EXHIBIT B
To Assignment and Agreement of
February 24, 1979, Between
Western States Minerals Corporation
and Long Lac Mineral Exploration Limited
Property Covered by SP Lease
 (County of Eureka, State of Nevada)

                                           MDM
Description               Sec.             Twp               Rge                Acres
-----------               ----             ---               ---                -----

   E1/2                   25               T36N              R49E               320.00	

EXHIBIT C
To Assignment and Agreement of
February 24, 1979, Between
Western States Minerals Corporation and
Long Lac Mineral Exploration Limited
ESCROW AGREEMENT
A. This Escrow Agreement relates to an Assignment of certain mining properties by and between Western States Minerals Corporation ("WSMC") and Long Lac Mineral Exploration Limited ("Long Lac") February ___, 1979 (the "Assignment and Agreement").
B. The payment by WSMC to Long Lac of the sum of $10,000 as provided for in Paragraph 3 of the Assignment and Agreement shall be held in escrow with Douglas V. Johnson (the "Agent") pursuant to the following instructions and provisions.
INSTRUCTIONS
1. WSMC shall deposit in escrow with the Agent simultaneously with its execution of five (5) copies of the agreement to which this Exhibit C is appended a Certified check in the amount of $8,500 payable to Long Lac, together with a statement concerning the withholding by Western States of $1,500, for payment over to the Internal Revenue Service pursuant to applicable Treasury Regulations and the U.S.-Canada Tax Treaty (the "Check"). Said executed copies of the Assignment and Agreement shall be promptly forwarded to Long Lac by the Agent.
2. Long Lac shall deposit in escrow with Agent the five (5) copies of the agreement to which this Exhibit C is appended, executed by Long Lac, with said Exhibit C also executed by Long Lac and with a proper acknowledgment of Long Lac's execution of the agreement by a consular officer of the United States attached to each such copy. In the event that such copies of the Assignment and Agreement, executed by Long
Lac, have not been delivered to the Agent by Long Lac on or before April 2, 1979, this Escrow Agreement shall be deemed void and terminated, the Agent shall return the Check to WSMC, and the Agent shall have no further responsibility hereunder.
3. Subject to Paragraph 2 above and Paragraph 4 below, the Check is to be held by the Agent until Long Lac shall deliver to the Agent a written agreement (the "Consent") executed and acknowledged by an authorized officer of the Southern Pacific Land Company ("SP") consenting to the assignment of the Mining Lease No. SPL-634 dated February 15, 1976, by and between Southern Pacific Land Company and Long Lac (The "SP Lease") by Long Lac to WSMC in the form of the Assignment and Agreement.
The Consent shall be in form suitable for recording and shall be accompanied by an opinion of counsel (the "Opinion of Counsel") that (i) the Consent permits assignment by Long Lac to WSMC of the SP Lease in the form of the Assignment and Agreement; (ii) the Consent has been executed and acknowledged by an authorized officer of SP and is binding upon SP; and (iii) the Consent is in form suitable for recording.
4. Upon delivery to the Agent of the Consent and Opinion of Counsel, the Agent: (i) shall deliver the Check to Long Lac, (ii) shall deliver the Consent and Opinion of Counsel to WSMC, (iii) shall deliver two (2) executed copies of the Assignment and Agreement to Long Lac, and two (2) executed copies of the Assignment and Agreement to WSMC, and (iv) shall notify Long Lac and WSMC that all terms and instructions of this Escrow Agreement have been performed. Upon the performance of the above duties by the Agent, this Escrow Agreement shall be terminated.
5. In the event that both the Consent and Opinion of Counsel have not been delivered to the Agent on or before April 2, 1979 (the "Due Date"), or on or before such other Due Date as WSMC may hereafter designate by written notice to
-2-
the Agent on or before April 2, 1979, the Agent shall deliver the Check to WSMC and this Escrow Agreement shall be terminated.
6. Notwithstanding any other provisions contained herein, upon receipt by the Agent of written notice from WSMC that WSMC has elected to renegotiate the SP Lease and has executed a new or amended lease, the Agent shall deliver the Check to Long Lac and this Escrow Agreement shall be terminated.
7. Any notices or deliveries provided for herein shall be in writing and shall be deemed given to a party when a copy thereof, addressed as provided below, is delivered, either by hand, or by registered or certified mail, return receipt requested, to the address for such party set forth below or such other address as the party to be notified may indicate in writing to the other parties:
Notices and deliveries for WSMC shall be addressed:
Western States Minerals Corporation 7475 West Fifth Avenue Suite 204
Lakewood, Colorado 80226 U.S.A.
Attention: Gary L. Hutchinson
Notices and deliveries for Long Lac shall be addressed:
Long Lac Mineral Exploration Limited Suite 1900
101 Richmond Street, West Toronto, Ontario, CANADA M5H 1T1
Attention: Dennis Sheehan
Notices and deliveries for Agent shall be addressed:
Douglas V. Johnson
Davis, Graham & Stubbs 2600 Colorado National Building 950 Seventeenth Street Denver, Colorado 80202
GENERAL PROVISIONS
1. The Agent shall have no duty to know or determine the performance or non-performance of any provision of any agreement between the other parties hereto, and the original, or a copy, of any such agreement deposited with the Agent shall not bind the Agent in any manner. The Agent assumes no responsibility for the validity or sufficiency of
-3-
any documents or papers or payments deposited or called for hereunder.
2. This Escrow Agreement may be supplemented, altered, amended, modified or revoked by writing only, signed by all of the parties hereto, and approved by the Agent, upon payment of all fees, costs and expenses incident thereto.
3. No assignment, transfer, conveyance or hypothecation of any right, title or interest in and to the subject matter of this Escrow Agreement shall be binding upon the Agent unless written notice thereof shall be served upon the Agent and all fees, costs and expenses incident thereto shall have been paid and then only upon the Agent's assent thereto in writing.
4. The Escrow Agent shall not be personally liable for any act it may do or omit to do hereunder as such agent, while acting in good faith and in the exercise of its own best judgment, and any act done or omitted by it pursuant to the advice of counsel shall be conclusive evidence of such good faith. The Agent shall have the right at any time to consult with counsel upon any question arising hereunder and shall incur no liability for any delay reasonably required to obtain such advice.
5. The Agent is hereby expressly authorized to disregard any and all notices or warnings given by any of the parties hereto, or by any other person, firm or corporation, excepting only orders or process of court, and is hereby expressly authorized to comply with and obey any and all process, orders, judgments or decrees of any court, and in the case the Agent obeys or complies with any such process, order, judgment or decree of any court it shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such process, order, judgment or decree be subsequently reversed, modified, annulled, set aside or vacated, or found to have been issued or entered without jurisdiction.
-4-
6. In consideration of the acceptance of this Escrow Agreement by the Agent, the undersigned agree, jointly and severally, for themselves, their successors and assigns, to indemnify and hold the Agent harmless as to any liability by it incurred to any other person, firm or corporation by reason of its having accepted the same, or in connection herewith, and under such circumstances, or in the event of a dispute, whether or not resulting in litigation, between the parties hereto, or between the parties hereto and the Agent, to reimburse the Agent for all its expenses, including, among other things, court costs and reasonable attorneys' fees incurred in connection therewith; and that the Agent shall have a first and prior lien upon all deposits made hereunder to secure the performance of said agreement of indemnity and the payment of all of its fees, charges and expenses, hereby expressly authorizing the Agent in the event payment is not received promptly from the undersigned, to deduct such fees, charges and expenses without previous notice from any funds deposited hereunder.
7. The Agent shall be under no duty or obligation to ascertain the identity, authority or rights of the parties (or their agents) executing or delivering or purporting to execute or deliver this Escrow Agreement or any documents or papers or payments deposited or called for hereunder.
8. The Agent shall not be liable for the outlawing of any rights under any Statute of Limitations or by reason of laches in respect to the Escrow Agreement or any documents or papers deposited.
9. In the event of any dispute between the parties hereto as to the facts of default, the validity or meaning of this Escrow Agreement or any other fact or matter relating to the transaction between the parties, the Agent is instructed as follows:
(a) That it shall be under no obligation to act, except under process or order of court, or until it has
-5-
been adequately indemnified to its full satisfaction, and shall sustain no liability for its failure to act pending such process or court order or indemnification;
(b) That it may in its sole and absolute discretion, deposit the property described herein or so much thereof as remains in its hands with the then Clerk, or acting Clerk, of the District Court of the City and County of Denver, State of Colorado, and interplead the parties hereto, and upon so depositing such property and filing its complaint in interpleader it shall be relieved of all liability under the terms hereof as to the property so deposited and shall be entitled to recover in such interpleader action, from the other parties hereto, its reasonable attorney fees and related costs and expenses incurred in commencing such action and furthermore, the parties hereto for themselves, their heirs, legal representatives, successors and assigns do hereby submit themselves to the jurisdiction of said court and do hereby appoint the then Clerk, or acting Clerk, of said court as their agent for the service of all process in connection with such proceedings. The institution of any such interpleader action shall not impair the rights of the Agent under paragraph 6, above.
10. The validity and effect of this Escrow Agreement shall be determined in accordance with the laws of the State of Colorado.
11. This Escrow Agreement shall bind and inure to the benefit of the parties hereto and their successors and assigns.
-6-
IN WITNESS WHEREOF the undersigned have hereunto affixed their signatures as of the date first above written.

LONG LAC MINERAL EXPLORATION                 WESTERN STATES MINERALS
LIMITED                                      CORPORATION

By: /s/ (ILLEGIBLE)                          By: /s/ (ILLEGIBLE)
   ---------------------------                  --------------------------------
                     PRESIDENT

And: /s/ (ILLEGIBLE)                         Title: President
    --------------------------                     -----------------------------
                VICE-PRESIDENT

Acceptance of the foregoing Escrow
Agreement and receipt of Check is
hereby acknowledged this 24th day
of February, 1979.

/s/ Douglas V. Johnson
------------------------------
Douglas V. Johnson, Agent	

-7-
EXHIBIT C
FIRST AMENDMENT
TO
ASSIGNMENT AND AGREEMENT
THIS FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT is made and entered into as of this 16th day of October, 1981, by and between LONG LAC MINERAL EXPLORATION LIMITED, a company duly incorporated under the laws of the Province of Ontario, Canada (hereinafter called "Long Lac"), and WESTERN STATES MINERALS CORPORATION, a Utah corporation (hereinafter called "WSMC").
RECITALS
A. Long Lac holds the working interests in sixteen (16) unpatented lode mining claims, known as the SJ 1-16 claims (hereinafter called the "SJ Claims"), located by M. J. Fitzgerald in the County of Eureka, State of Nevada, as more particularly described in Exhibit A attached hereto;
B. Long Lac holds the leasehold working interest rights in certain lands as lessee under a Mining Lease with Southern Pacific Land Company, dated February 15, 1976, No. SPL-634 (hereinafter called the "SP Lease"), as more particularly described in Exhibit B hereto. All lands covered by the SP Lease and the SJ Claims and all rights of Long Lac thereunder are sometimes referred to collectively as the Subject Properties";
C. Long Lac and WSMC entered into a certain Assignment and Agreement dated February 24, 1979 (the "1979 Assignment and Agreement") under which Long Lac assigned its interest in the Subject Properties to WSMC, subject to the terms therein;
D. WSMC has discovered a deposit of mineralization on the Subject Properties; and
E. Long Lac and WSMC now desire to revise Long Lac's production royalty reserved in the 1979 Assignment and Agreement toward the purposes of reducing the royalty burden on the Subject Properties, facilitating the further development and, if warranted, the production therefrom.
AGREEMENT
NOW, THEREFORE, FOR A GOOD AND VALUABLE CONSIDERATION, the sufficiency of which is hereby confessed and acknowledged, Long Lac and WSMC agree as follows:
1. Section 3 (b) of the 1979 Assignment and Agreement is deleted in its entirety and in place thereof is substituted the following:
(b) Earned Royalties. Long Lac reserves and WSMC shall pay to Long Lac as production royalty, 5% of the NET SMELTER RETURNS from the production of minerals mined and sold from the SJ Claims. Long Lac further reserves, and WSMC further agrees to pay to Long Lac as production royalty, 2-1/2% of the NET SMELTER RETURNS from the production of minerals mined and sold from the SP Lease. For purposes of this section 3(b) "NET SMELTER RETURNS" shall mean the actual proceeds of sale less (i) custom smelting costs, treatment charges and penalties, including,
but without being limited to, metal losses, penalties for impurities and charges for refining and selling; (ii) costs of transportation from the concentrator to a mint, smelter, or other place of treatment; (iii) in the event crude products or concentrates are shipped to a concentrator or smelter owned and operated by WSMC, the net smelter returns for which royalties are calculated shall be no less favourable to Long Lac than if such crude products or concentrates had been shipped to the nearest concentrator or smelter which would accept such products, except that charges for transportation, on crude products or concentrates shipped to WSMC's smelter shall be the actual cost to WSMC.
2. Except to the extent amended in this FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT, the 1979 Assignment and Agreement is hereby ratified, republished, and confirmed, and as amended remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this FIRST AMENDMENT TO ASSIGNMENT AND AGREEMENT effective as of the day and, year first above written.
WESTERN STATES MINERALS CORPORATION

Attest:                             By /s/ Arden B. Morrow
                                       -----------------------------------------
(ILLEGIBLE)                         Title: President
Secretary                                 --------------------------------------	

LONG LAC MINERAL EXPLORATION LIMITED

                                    By /s/ (ILLEGIBLE)                 PRESIDENT
                                       -----------------------------------------
                                    And: /s/ (ILLEGIBLE)          VICE PRESIDENT
                                        ----------------------------------------
STATE OF COLORADO        )
                         )    ss.
COUNTY OF JEFFERSON      )	

On February 8, 1982, Arden B. Morrow personally appeared before me, a notary public, and acknowledge that he executed the above instrument.

                                                   /s/ JUDY S. RAY
                                    --------------------------------------------
                                                    NOTARY PUBLIC

                                    Residing at: /s/ Colarado
                                                --------------------------------

My commission expires: 11-5-84.	

PROVINCE OF ONTARIO )
JUDICIAL DISTRICT OF YORK )
On Wednesday, the 6th day of January, 1982, Peter A. Allen and Dennis G. Shauhass personally appeared before me, a notary public, and acknowledged that they were the President and Vice-President of Long Lac Mineral Explore, Limited and that they each had executed the above instrument.

/s/ (ILLEGIBLE)
--------------------------------------------
A NOTARY PUBLIC in and for the
Province of Ontario	

My commission is unlimited as to time.
-2-
[Certificate of Authentication to be completed by U.S. Consulate on separate page and attached hereto.]

Canada                     )
Province of Ontario        )
City of Toronto            )        ss:      CERTIFICATE OF AUTHENTICATION
Consulate General of the   )                         (Notary Public)
United States of America   )	

I, the undersigned, _________________. Consul of the United States of America at Toronto, Ontario, Canada, duly commissioned and qualified, do hereby certify that ________________________________________________, whose name is subscribed to the annexed document, was at the time of subscribing the same a Notary Public of the Province of Ontario, Canada.
For the contents of the annexed document, I assume no responsibility.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of the Consulate General of the United States of America at Toronto, Canada, this ____ day of ________________, 1981.

Consul of the United States of America
EXHIBIT A
To First Amendment to Assignment and
Agreement of October 16, 1981, Between
Western States Minerals Corporation and
Long Lac Mineral Exploration Limited
SJ Claims (County of Eureka, State of Nevada)

                                                                        Certificate of        Location of
                              Date of                Recording            Recording               Data
Name of Claim                 Location                  Date                 Book                 Page
-------------                 --------               ---------          --------------        -----------
SJ Claim No. 1             Aug. 14, 1975           Sept. 22, 1975             52                  327
       " No. 2                 " " "                   " " "                  "                   328
       " No. 3                 " " "                   " " "                  "                   329
       " No. 4                 " " "                   " " "                  "                   330
       " No. 5                 " " "                   " " "                  "                   331
       " No. 6                 " " "                   " " "                  "                   332
       " No. 7                 " " "                   " " "                  "                   333
       " No. 8                 " " "                   " " "                  "                   334
       " No. 9                 " " "                   " " "                  "                   335
      " No. 10                 " " "                   " " "                  "                   336
      " No. 11                 " " "                   " " "                  "                   337
      " No. 12                 " " "                   " " "                  "                   338
      " No. 13                 " " "                   " " "                  "                   339
      " No. 14                 " " "                   " " "                  "                   340
      " No. 15                 " " "                   " " "                  "                   341
      " No. 16                 " " "                   " " "                  "                   342	

A-1
EXHIBIT B
To First Amendment to Assignment and
Agreement of October 16, 1981, Between
Western States Minerals Corporation and
Long Lac Mineral Exploration Limited
Property Covered by SP Lease
 (County of Eureka, State of Nevada)

                               MDM
Description             Sec.   Twp     Rge    Acres
-----------             ----   ----    ----   -----

E1/2                     25    T36N    R49E   320.00	

B-1
EXHIBIT D
ASSIGNMENT
THIS INDENTURE made in duplicate as of the 1st day of December, 1982.
BETWEEN:
LONG LAC MINERAL EXPLORATION LIMITED, a
 corporation incorporated under the laws of
the Province of Ontario;
(hereinafter referred to as the "Assignor")
OF THE FIRST PART
-and-
LONG LAC MINERAL EXPLORATION (TEXAS) INC., a
 company incorporated under the laws of the
State of Texas, U.S.A.,
(hereinafter referred to as the "Assignee")
OF THE SECOND PART
WHEREAS by an Assignment and Agreement (the "Agreement") made as of the 24th day of February, 1979 between the Assignor and Western States Minerals Corporation ("Western"), the Assignor assigned its interest in the sixteen (16) unpatented lode mining claims, (the "Claims") to Western, subject to the terms of the Agreement;
AND WHEREAS by an Amended Assignment and Agreement (the "Amendment") made as of the 16th day of October, 1981 between the Assignor and Western, Western agreed to pay the Assignor certain royalties under the terms of the Amendment;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the sum of One ($1.00) Dollar and other good and valuable consideration paid by the Assignee to the Assignor (the receipt whereof is hereby acknowledged), the Assignor doth hereby grant and assign unto the Assignee the Assignor's entire estate, right, title and interest in the Agreement and the Amendment and all benefits and advantages to be derived therefrom.
-2-
TO HAVE AND TO HOLD the same unto the Assignee subject to the performance and observance of the covenants, conditions and stipulations in the Agreement and Amendment reserved and contained, and henceforth on the Assignor's part to be performed and observed.
THE ASSIGNOR HEREBY COVENANTS AND AGREES WITH THE ASSIGNEE as
follows:
1. That notwithstanding anything herein contained or any act of the Assignor he now has in himself good right, full power and absolute authority to assign the Agreement and Amendment for the purposes and in the manner aforesaid, according to the true intent and meaning of these presents.
2. That subject to the terms of the Agreement and Amendment the Assignee may exercise the Assignors rights under the Agreement and Amendment for its own use and benefit without any interruption of or by the Assignor or any other person whomsoever claiming or to claim by, through or under him.
3. That the Assignor shall and will pay over to the Assignee any rents, royalties, or other monies that are paid or received by the Assignor pursuant to the covenants, conditions or agreements in the Agreement and Amendment contained from January 1, 1982.
4. That the Assignor shall and will from time to time and at all times hereafter, at the request and cost of the Assignee, do and perform all such acts and things and execute all such deeds, documents and writings, and give all such further assurances with respect to the assignment of the Agreement and Amendment as the Assignee shall reasonably require.
-3-
AND THE ASSIGNEE COVENANTS AND AGREES WITH THE ASSIGNOR that the Assignee shall and will indemnify and save harmless the Assignor of, from and against the observance and performance of the Assignor's covenants, conditions and agreements contained in the Agreement.
AND IT IS HEREBY DECLARED AND AGREED THAT these presents shall enure to the benefit of and be binding upon the Parties hereto, their respective successors and assigns.
IN WITNESS WHEREOF the Assignor and the Assignee have executed and delivered these presents, the day and year first above written.
LONG LAC MINERAL EXPLORATION LIMITED

/s/ [ILLEGIBLE]                        c/s
---------------------------------------

/s/ [ILLEGIBLE]
---------------------------------------	

LONG LAC MINEAL EXPLORATION (TEXAS) INC.

/s/ [ILLEGIBLE]                        c/s
---------------------------------------

/s/ [ILLEGIBLE]
---------------------------------------	

-4-
PROVINCE OF ONTARIO )
JUDICIAL DISTRICT OF YORK)
On Tuesday, the 4th day of January, 1983, E. J. Wade and D. G.
[Illegible] personally appeared before me, a notary public, and acknowledged that they were the Senior Vice President and Vice President of Long Lac Mineral Exploration Limited and that they each had executed the attached instrument.

/s/ [ILLEGIBLE]
-----------------------------
A NOTARY PUBLIC in and
for the Province of Ontario	

My commission is unlimited as to time.
PROVINCE OF ONTARIO )
JUDICIAL DISTRICT OF YORK)
On Tuesday, the 4th day of January, 1983, E. J. Wade and H. Rodrigues personally appeared before me, a notary public, and acknowledged that they were the President and Secretary of Long Lac Mineral Exploration (Texas) Inc. and that they each had executed the attached instrument.

/s/ [ILLEGIBLE]
-----------------------------
A NOTARY PUBLIC in and
for the Province of Ontario	

My commission is unlimited as to tine.
EXHIBIT H
AMENDING AGREEMENT
THIS AGREEMENT made as of the 24th day of November, 1987.
BETWEEN:
LAC MINERALS LTD., a corporation
incorporated under the laws of the Province
of Ontario, formerly LONG LAC MINERAL
EXPLORATION LIMITED.
(hereinafter referred to as the "Assignor")
-and-
LAC MINERALS (USA), INC., a company
incorporated under the laws of the State of
Texas, U.S.A., formerly LONG LAC MINERAL
EXPLORATION (TEXAS) INC.
(hereinafter referred to as the "Assignee")
WHEREAS by an Assignment and Agreement (the "Agreement") made as of the 24th day of February, 1979 between the Assignor and Western States Minerals Corporation ("Western"), the Assignor assigned its interest in the sixteen (16) unpatented lode mining claims (the "Claims) to Western, subject to the terms of the Agreement;
AND WHEREAS by an Amended Assignment and Agreement (the "Amendment") made as of the 16th day of October, 1981 between the Assignor and Western, Western agreed to pay the Assignor certain royalties under the terms of the Amendment.
AND WHEREAS the Assignor and the Assignee entered into an Assignment Agreement on December 1, 1982 (the "Assignment")
AND WHEREAS the Assignment was meant to include with the Claims, Mining Lease No. SPL-634 dated February 15, 1976 between Southern Pacific Land Company and the Assignor (the "SPL Lease") annexed hereto as Schedule "A".
THE ASSIGNOR HEREBY COVENANTS AND AGREES WITH THE ASSIGNEE as follows:
1. The Parties hereto agree that the Claims referred to in the Assignment should include the SPL Lease.
2. For greater certainty, the Assignment be and its hereby amended to include the SPL Lease.
3. All other terms and conditions of the Assignment shall remain in effect, unamended and unrevoked, except as provided hereby mutatis mutandis.
4. It is hereby declared and agreed that the presents shall enure to the benefit of and be binding upon the Parties hereto, their respective successors and assigns.
IN WITNESS WHEREOF the Assignor and the Assignee have executed and delivered these presents, the day and year first above written.
LAC MINERALS LTD.

/s/ [ILLEGIBLE]
----------------------------

/s/ [ILLEGIBLE]
----------------------------	

LAC MINERALS (USA), INC.

/s/ [ILLEGIBLE]
----------------------------

/s/ [ILLEGIBLE]
----------------------------	

SCHEDULE "A"
MINING LEASE NO. SPL-634
THIS LEASE, made this 15th day of February, 1976, by and between SOUTHERN PACIFIC LAND COMPANY, hereinafter called "Lessor", and LONG LAC MINERAL EXPLORATION LIMITED, hereinafter called "Lessee":
WITNESSETH;
1. For and in consideration of the sum of One Thousand Six Hundred & 00/100 dollars, paid to Lessor, the receipt of which is hereby acknowledged, and the payments to be made hereunder by Lessee, Lessor hereby leases to Lessee, for the purposes hereinafter provided and subject to the provisions hereof, that certain property, hereinafter sometimes referred to as "leased premises", situated in the County of Eureka in the State of Nevada, more particularly described in Exhibit "A", attached hereto and made a part hereof.
During the life of this lease, Lessee shall have the exclusive right to examine, prospect and explore the leased premises for minerals and mineral-bearing materials, and to open, develop and operate mines on the leased premises, to crush, mill, blend, commingle, concentrate, beneficiate, refine, reduce, or otherwise process any minerals which may be mined from the leased premises, to remove and ship all such ores, concentrates, and minerals or mineral products recovered in any manner from the leased premises, and to sell or dispose thereof, excepting and reserving to Lessor, its successors and assigns, the exclusive right to all hot water, brine, thermal energy, extractable minerals in solution, and oil, petroleum, and other hydrocarbons and natural gas, including steam, in and underlying the leased premises.
Lessee shall have the right to use the leased premises for purposes necessary in the exercise of Lessee's rights and conduct of Lessee's operations hereunder.
Reserving to Lessor, its successors and assigns, an easement for railroad, transportation, communication and pipeline purposes, and the right to use said property for any and all other purposes consistent with the rights leased to Lessee hereunder.
-1-
This lease is made subject to all rights of way; easements, limitations and restrictions, and to existing leases, licenses, and options, and renewals thereof, on or affecting said leased premises.
2. The term of this lease shall be five years from and after the date first herein written and so long thereafter as Lessee carries on mining or exploration on the leased premises, as provided in Section 5, however, this lease shall terminate fifty years from the date hereof, subject to such extensions as may arise under Section 6 hereof.
3. Lessee agrees, during the first: two years following the date first herein written, to perform substantial geophysical, geochemical, geological, stripping, drilling, or other work of a similar nature on the leased premises directed toward the evaluation of the mineral potential of the leased premises.
4. Subject to the right of Lessee to terminate this lease in whole or in part as set forth in Section 20 herein, Lessee agrees to pay to Lessor, annually in advance, on or before the first day of the second year of this lease and on or before the first day of each successive year thereafter that this lease remains in effect, a minimum royalty in the amount of $500.00 or the applicable following amount, whichever is the greater:
$5.00 per acre per year for the second through the ninth years of this lease; and
$10.00 per acre per year for the tenth year of this lease and each succeeding year this lease is in effect;
provided that for a maximum of two consecutive years during the first ten years of the term hereof no advance minimum royalty payments shall be due and payable while Lessee may be actively constructing a plant to treat ores mined from, or in the immediate vicinity of, the -leased premises, or both, which plant shall have a capacity estimated to be capable of producing mineral products in an amount sufficient to yield to Lessor annual production, royalty payments equal to or exceeding the annual minimum royalty provided for herein at the time the plant is being constructed.
-2-
Commencing with the year immediately following the first lease year in which mineral products are produced from the leased premises and sold for three calendar months or more, and for each succeeding year thereafter this lease remains in effect, said advance minimum royalty payments shall be increased or decreased each year in proportion to the amount of the increase or decrease in the "escalation percentage" for the lease year immediately preceding the year for which said advance minimum royalty payment is to be made.
The term "escalation percentage" as used herein shall mean the percentage variation, if any, of the "weighted average sales price" received or receivable by Lessee for mineral products produced and sold by Lessee from the leased premises during a particular lease year, from the "weighted average sales price" received or receivable by Lessee for similar products during the first calendar, or base, year in which Lessee produces and sells mineral products hereunder.
The term "sales price" for non-ferrous metals shall be defined as the Net Smelter Return as defined in Paragraph 8(c) herein, and the "sales price" for iron ore, rock products or industrial minerals shall be defined as the
f.o.b. sailing price at the mine or nearest railhead.
The term "weighted average sales price" as used herein shall be calculated as follows :
(a) Non-ferrous metals. The "weighted average sales price" for any particular lease year shall be the sum of the total re- ceipts (NSR) from sales received by the Lessee for the combined metals contained lit products produced by the Lessee from the o leased premises and sold during that year by the Lessee, divided by the total number of sales units.
(b) Iron ore. The "weighted average sales price" for any particular lease year shall be the total receipts from sales received by the Lessee f.o.b. mine or nearest railhead for iron-bearing materials produced by the Lessee from the leased
-3-
premises and sold during that year by the Lessee, divided by the total number of sales units.
(c) Rock products and industrial minerals. The "weighted average sales price" for any particular lease year shall be the total receipts from sales received by the Lessee, f.o.b. mine or nearest railhead, for the products produced by the Lessee from the leased premises and sold during that year by the Lessee, divided by the total number of sales units.
For purposes of calculating the "escalation percentage" to be applied to the minimum advance royalties, the sum of the "weighted average sales prices" as defined above in sub-sections 4 (a), (b) and (c), shall be divided by the number of such commodities produced and sold during the lease year, and the resulting quotient shall be the "weighted average sales price" used to calculate the percentage variation from the first calendar, or base, year. This percentage variation shall be the "escalation percentage".
The advance minimum royalty payments made hereunder shall be credited only against royalties becoming payable to Lessor under the terms of Section 8 herein during the year for which such minimum royalty payments were made. In addition, if the above mentioned plant is constructed during the initial ten-year period of this lease, that part of the advance minimum royalty payments made during such ten-year period covering the portions of the leased premises in which Lessee's mining rights hereunder are in effect, not previously credited against actual royalties, shall be credited against actual royalties accruing to Lessor under Section 8 during the remaining period this lease is in effect.
5. Beginning five years from the date hereof, and annually thereafter during the term hereof, Lessee shall expend at least Ten Thousand Dollars per year for exploration or mining upon the leased premises and Lessee shall diligently perform in good faith, in an active and substantial way, exploration or mining work upon said
-4-
leased premises directed toward the discovery and production of minerals. Exploration work shall consist of drilling, pitting, shaft sinking, winzing, tunneling, cross-cutting, drifting, raising, excavating, or stripping directed toward the physical exposure of mineral-bearing ores. Work such as road building, camp or surface plant construction shall not be considered as exploration or mining work as hereinabove defined.
6. The obligations of the Lessee hereunder shall be suspended only while the Lessee's performance and compliance is prevented by the elements, accidents, strikes, lockouts, riots, delays in transportation, inability to secure materials in the open market, or interference by governmental action, or any other causes beyond the reasonable control of the Lessee, whether similar or dissimilar to the causes specifically mentioned. The duration of this lease shall be extended for a period equal to the period for which performance under the provisions of this Section 6 is suspended. In the event that in any annual period after production has started on which actual royalties have become due or have been paid, in the judgment of Lessee, metal prices are such as to make further mining uneconomic, Lessee shall be excused from making the expenditures called for in Section 5 until such time as metal or mineral prices again become such as to make mining economic. It is agreed that the settlement of any strike or lockout shall be at the discretion of Lessee, and the continuance of any such strike or lockout shall be deemed a cause beyond Lessee's reasonable control.
7. Prior to commencement of actual mining and not later than the twenty-fifth day of the first month, following any lease year in which any exploration, development or mining work is required or in which any work is completed, and including the first calendar month next following the month in which this lease may be terminated, Lessee shall furnish to Lessor a report in writing detailing such work. Such report shall include geologic, geophysical, geochemical, engineering and assay maps and cross sections of workings on the leased
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premises and the location, direction, altitude, geologic log and assay logs of all exploratory drill holes completed by Lessee.
8. In the event that Lessee conducts mining operations on the leased premises and ships or sells crude ores, minerals or mineral products mined therefrom, Lessee agrees to pay to Lessor on or before the last day of each and every calendar month, royalty due and payable for the crude ore, minerals or mineral products sold or shipped to a smelter for treatment during the preceding calendar month, or within thirty days after Lessee has received a settlement sheet for the last of the crude ores, minerals, or mineral products sold or shipped to a smelter or treatment plant in said calendar month, but in no event later than thirty days after said last day of each and every calendar month. With each payment, Lessee shall furnish Lessor a statement setting forth in detail the basis for computation and determination of the royalties due and payable, which shall be calculated as follows:
(a) On industrial rocks and minerals mined or produced from the leased premises, 5% of the sale price thereof received by Lessee;
(b) On iron ore or concentrate products of iron-bearing materials, valuable principally for their iron-bearing content, mined or produced from the leased premises, two-thirds of a cent ($0.00666) per long ton unit of iron contained in the product sold, plus 10% of that part of the sale price therefor, to be calculated at the normal rail shipping point in Nevada , which exceeds 9 cents per long ton unit of contained in the product sold.
(c) on non-ferrous metallic ores shipped directly from the mine to a smelter without beneficiation other than crushing, screening, sorting or cobbing (hereafter referred to as crude products), or on concentrated products of non-ferrous metallic minerals or oxidized equivalents thereof (hereafter referred to as concentrates), which are produced from crude ores mined from the leased premises,
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the royalty rate shall be a percentage, as hereinafter provided, of the net smelter return received by Lessee for such crude products or concentrates.
For the purpose of this Agreement, "net smelter returns" shall be the amount received by Lessee from any smelter, reduction works or purchaser, other than a smelter owned or operated by Lessee, in payment for such crude products or concentrates, less costs and charges of transportation (including haulage, railroad freight, truckage and handling) from the crude ore treatment plant of Lessee to such smelter or facilities from which payment is received, and less treatment charges, special sampling charges, and all other charges incident to determination of net smelter returns made by such smelter or facility. In the event crude products or concentrates are shipped to a smelter owned and/or operated by Lessee, the net smelter returns on which royalties are calculated shall be no less favorable to Lessor than if such crude products or concentrates had been shipped to the nearest competitive smelter which would accept such products, except that charges of transportation, as herein defined, on crude products or concentrates shipped to Lessee's smelter shall be the actual cost to Lessee.
The royalties shall be based on the dollar value of the crude ore as mined and shall vary in accordance with the monthly average net smelter return per ton of crude ore, which shall be computed as the total of all net smelter returns received by Lessee during a calendar month for all non-ferrous crude products or concentrates produced by Lessee from the leased premises and sold, divided by the total number of tons of crude ore mined by Lessee from the leased premises and used or required to produce the products sold. In the event of commingling of crude ores from the leased premises with those of other land controlled by Lessee, the net smelter returns attributable to the leased premises and the number of tons of crude ore attributable to the other land shall be determined in the manner set forth in Section 9 hereof.
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If the average net smelter return per ton of crude ore for the month in question is $3.00 or less per short ton, the royalty payable to Lessor for such month shall be l 1/2% of the total net smelter returns received by Lessee during such month as a result of the sale of non-ferrous crude products or concentrates produced by Lessee from the leased premises; but if such average net smelter return per ton of crude ore for the month is higher than $3.00 per short ton; the royalty rate shall increase proportionately from 1 1/2% of such net smelter returns to a maximum of 7 1/2% of such net smelter returns at the rate of 1/2 of 1% for each $1.50 increase in the monthly average net smelter return per ton of crude ore.
The actual royalty formula subject to a maximum rate of 7 1/2% shall be as follows when the average value of crude ore exceeds $3.00 per short ton:
[1.50% + (0.50% x (average value - 3.00)] x average value
[ -------------------- ]
[ $1.50 ]
(d) On gold and silver bullion mined from the leased premises and produced in Lessee's plant (other than a smelter) for Lessee's account,five per cent of the sales price received by Lessee therefor.
9. It is understood that any minerals contained in the leased premises may constitute a portion or portions of a deposit or deposits of minerals which extend onto land other than leased from Lessor pursuant to this lease. It is contemplated that any exploration, development, mining, and processing to be performed by Lessee on the leased premises may be performed pursuant to mining plans which embrace exploration, development, mining and processing on other land owned or controlled by Lessee.
Lessee may mine, remove, and hoist minerals, mineral-bearing materials and waste materials from the leased premises or adjacent land over or across other land or through a shaft or shafts and inclines or other openings in or upon the leased premises or other land, by any means whatsoever and may mine, remove, and hoist materials, mineral-bearing materials, and waste materials from other land in which Lessee may be conducting mining operations, over and across the leased premises
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or through a shaft or shafts or inclines or other openings in or upon the leased premises by any means whatsoever, and may enjoy such other cross-mining rights involving ore, mineral-bearing materials, waste materials, slope rights, dump rights, water drainage, ventilation, mining machinery, mining equipment, plants, mills or buildings, and all mining supplies as may be necessary or convenient from time to time in the conduct of Lessee's mining operations, on either or both the herein leased premises or other land being mined by Lessee. It is specifically agreed that Lessee may excavate any portions of the leased premises which Lessee deems necessary to create pit slopes to permit the mining of other land controlled by Lessee.
Lessee shall have the right at Lessee's discretion to mix, prior to shipment or prior to beneficiation or at any stage in the process of beneficiation, and at any plant or plants, minerals, mineral bearing materials, and partially processed materials and concentrates mined from the leased premises with minerals, mineral-bearing materials, and partially processed materials and concentrates mined from any other land in which Lessee may have an interest. In such event, Lessee shall keep and make available to Lessor accurate accounts and records of the quantities of minerals, mineral-bearing materials, and partially processed materials and concentrates originating from the leased premises, and minerals, mineral-bearing materials, and partially processed materials, originating from such other land, either by weighing the same or by use of uniform size cars, trucks, or other containers or measure uniformly filled. Lessee shall make such sampling prior to mixing, make such analyses, and keep and make available to Lessor such records and data as shall be reasonably necessary to accurately determine the quality and character of the materials which Lessee desires to mix, as hereinabove provided. That portion of any mixture of minerals or concentrated product resulting from the beneficiation of any mineral-bearing material or partially processed materials or concentrates shall be deemed to have been derived from the leased premises which the quantity of the minerals, mineral-bearing materials, or concentrates from the leased premises contributed to the mixture and determined as herein provided bears to the total quantity of all
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of the minerals, mineral-bearing materials or concentrates contributed to such mixtures, and similarly determined, adjusted as may be necessary according to the quality and character of the materials which have been mixed. The actual shipping weights and value of each shipment of any mixture shall be apportioned between the respective leased premises and other land contributing thereto, in accordance with the provisions hereof.
It being the intent of this paragraph to provide an equitable and reasonably accurate method of determining the quantities and qualities of material originating on the leased premises which may be mixed with material originating elsewhere, the parties agree that Lessee may propose a different method of making such determination, and if such proposed method is acceptable to Lessor, it will be substituted for the method herein prescribed.
10. Lessor, its officers, employees and agents so authorized on its behalf, at Lessor's sole risk and expense, shall have the right at all reasonable times to enter the leased premises and the mines or works thereon in order to inspect, examine, survey or measure the same and the production therefrom, and may inspect the books kept by Lessee in relation to the production from said leased premises, provided that said right shall be exercised so as not unnecessarily to interfere or conflict with the operations of Lessee. On written request of Lessor, Lessee shall furnish to Lessor's accredited representative a copy of all logs, assays, location and direction maps of any exploration, opening, drift, crosscut, shaft, winze, raise, diamond drill, or other holes made in order to discover, develop, outline, and mine ore or mineral-bearing materials on said leased premises. As long as this lease is in force, any and all information acquired by examination or obtained from Lessee shall be held in strict confidence by Lessor and shall not be divulged to third parties without consent of Lessee.
11. Any mineral-bearing materials mined and recovered from said leased premises but not shipped as a part of, or processed into, products for current shipment for sale by Lessee and which contain at least 50% of the assay grade of crude ores currently being mined or processed into
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products for current shipment for sale from the leased premises or land in the near vicinity, shall be placed in stockpiles, on the leased premises, separate from waste material, according to good mining practice in the industry at the time such stockpiling took place. Lessee shall have the right to deposit waste removed from the leased premises or from other land in the near vicinity controlled by Lessee, including non-mineral-bearing waste and tailings, either on the leased premises or upon other nearby land, the use of the surface of which for such purposes shall have been obtained by the Lessee. Lessee shall have the right to stockpile or deposit on the leased premises ore, mineral-bearing materials, concentrates or waste material from other premises being mined by the Lessee; provided that, unless otherwise mutually agreed, any area or areas within said leased premises upon which stockpiling or deposition of materials may be planned, shall first be adequately explored and determination made so far as practicable that no economically mineable quantities of usable or mineral-bearing materials lie beneath said area or areas, the mining of which would be adversely affected by such dumping or stockpiling and in the event of dispute such determination shall be made by Board of Arbitration, as provided for in Section 13. Such exploration work shall be done prior to the stockpiling or dumping of ore, mineral-bearing materials, concentrates, or waste material of any kind that may come either from said leased premises or from other land in the near vicinity then being worked by Lessee.
12. Lessee may, during Lessee's operations hereunder, and at Lessee's discretion, extract ore, mineral-bearing materials or concentrated products from waste or tailings resulting from Lessee's operations hereunder. No royalty shall be payable on waste or tailings when shipped from the leased premises to stockpile on other premises, or to be used as fill on or beneath the surface. In the event Lessee should elect to extract ore, mineral-bearing materials or concentrated products from waste or tailings originating from the leased premises and resulting from Lessee's operations hereunder, or, shall sell said waste and tailings for other than their metallic
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mineral content, royalty shall be paid by Lessee to Lessor at the rates specified herein, and in the manner herein provided, on the products so sold. Upon termination of this lease, any waste or tailings stockpiled or deposited on land owned by others than Lessor shall become the property of Lessee, and Lessee may make such disposition of such waste and tailings as Lessee deems proper without any obligation to Lessor whatsoever and any waste or tailings stockpiled or deposited on the leased premises or other land belonging to Lessor shall become the property of Lessor and Lessor may make such disposition of such waste and tailings as he deems proper without any obligation to Lessee whatsoever.
13. It is agreed that in the event Lessor is of the opinion that Lessee's determination of royalties is erroneous and Lessor is unwilling to accept such determination, Lessor shall have the right at any time within sixty days after receiving such determination to contest the same. If Lessor desires to contest such determination, it shall do so by written notice to Lessee, and should Lessor and Lessee thereafter be unable to settle their differences and agree upon a determination within sixty days after the notice contesting the determination, the matter shall be submitted to a Board of Arbitration.
The Board shall be composed of qualified mining engineers, one appointed by Lessee, and one appointed by Lessor, and a third appointed by the first two. In the event that the first two appointed arbitrators are unable to agree as to the third, he will be appointed by any person then holding the office of Judge of the United States District Court for the District of Nevada, upon application made by either party upon thirty days' written notice to the other party. All data forming a basis for the determination of royalties shall be made available to the Board of Arbitration, together with such other evidence as either party may wish to submit. A decision by majority vote of the Board of Arbitration shall be binding and conclusive on Lessor and Lessee. Notwithstanding the above provision for submission to three arbitrators, the matter may be submitted to arbitration hereunder to one arbitrator if the parties can agree upon one arbitrator.
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The cost of the services of said Board of Arbitration shall be borne equally by the parties hereto.
Nothing in this section shall be construed to require a cessation of mining operations hereunder in the event of a contested determination hereinabove referred to.
14. In case Lessee shall, except by Lessor, be lawfully deprived of the possession of the rights hereby leased, or any part thereof, Lessee shall notify Lessor in writing setting forth in full the circumstances in relation thereto, whereupon Lessor may, at its option, either reinstall Lessee in possession of said rights or terminate this lease and refund to Lessee the pro rata amount of any rental theretofore paid in advance for the unexpired term of this lease from and after the receipt of such notice, whereupon no claims for damages of whatsoever kind or character incurred by Lessee by reason of such dispossession shall be chargeable against Lessor.
15. Lessee agrees to pay, prior to delinquency, during the effective term of this lease, all taxes and assessments levied and assessed on the mineral and mining rights hereby leased and on the minerals and ores produced hereunder, including any and all production or severance taxes computed or based upon production of minerals hereunder, and on all property and improvements owned by Lessee or placed or installed on the leased premises by or under Lessee, together with any and all penalties and interest thereon. In the event Lessee fails to so pay such taxes and assessments, Lessor, at Lessor's option, may pay the taxes and assessments, together with any and all penalties and interest thereon, and Lessee agrees to reimburse Lessor promptly on demand in the full amount of the payments so made by Lessor. Lessee further agrees to reimburse Lessor promptly upon demand, for an equivalent amount of any and all taxes and assessments levied and assessed on said leased premises which shall have been paid by Lessor, for each tax fiscal year or portion thereof, during the effective term of this lease. In the event that this lease is terminated in whole or in part prior to the date when taxes and assessments on the leased premises for the current fiscal tax year become due and payable, Lessee agrees, on such termination, to pay to
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Lessor, in lieu of reimbursement of the payment to be made by Lessor therefore, a sum equivalent to the taxes levied upon that part of the leased premises so terminated for the fiscal tax year immediately preceding the current fiscal tax year, prorated to the date of such termination. Notwithstanding the above provisions, Lessee shall not be liable for any and all taxes and assessments levied upon the minerals and rights reserved hereunder by Lessor.
16. Lessor may post and maintain upon the leased premises notices of nonresponsibility as provided by law. Lessee agrees to pay in full all persons who perform labor or services on, furnish material joined or affixed to, or provide equipment for, said property, or the construction, reconstruction, repair or replacement of any structure or improvement on said property, at Lessee's instance or request. Lessee shall not permit or suffer liens of any kind or nature to be enforced against said property for such labor, services, materials or equipment. Lessor may pay such amount as may be required to release any such lien or liens, to defend any action brought thereon or to satisfy a judgment entered therein. Lessee agrees to reimburse Lessor for all costs, damages, reasonable attorney fees and amounts paid by Lessor in defending such actions, payment of said liens or satisfying judgment obtained therefor.
17. Lessee shall abide by, comply with, and shall pay all fees imposed under, applicable, valid laws, ordinances, governmental regulations and orders pertaining to the exercise by Lessee of the rights leased hereunder and Lessee agrees to furnish forthwith to Lessor such evidence thereof as Lessor may demand. Lessee agrees to indemnify and save harmless Lessor from and against any and all liability, damages, penalties cost or expense incurred by, or imposed upon, Lessor due to Lessee's failure to do so.
18. Lessee shall release and agrees to indemnify Lessor from and against all liability, claims, causes of action, cost or expense for injuries to or deaths of persons, or loss of or damage to property, upon or in the vicinity of the leased premises, arising out of the occupancy and use made of the leased premises hereunder by Lessee and those claiming under Lessee.
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19. Upon breach by the Lessee of any of the terms, covenants or conditions of this lease and Lessee's failure to remedy the default within ninety days after written notice from Lessor so to do, then at the option of the Lessor, notice of the exercise of which shall be given to the Lessee in writing, this lease shall forthwith cease and determine as to that portion of the leased premises to which default applies, and all rights of the Lessee in and to such property shall be at an end, whereupon Lessee shall vacate such premises and surrender possession thereof to Lessor. The waiver by Lessor of any breach of any covenant or condition thereof shall not be deemed a waiver of any other or subsequent breach hereof nor of any other covenant or condition hereof. The acceptance of payments hereunder by Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of any covenant or condition hereof, other than the failure of Lessee to pay such particular payment so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such payment.
20. Notwithstanding anything to the contrary herein, Lessee may surrender and quitclaim this lease, either in its entirety or as to the leasehold mineral estate created hereby, at any time upon thirty days' written notice to Lessor, as to that part included in any one or more forty-acre legal subdivisions, according to the United States survey. Such termination of this lease shall not release any party hereto from any liability or obligation whatsoever under this lease resulting from acts, omissions or events happening prior to such termination or thereafter, to the extent this lease provides. In the event of termination of any one or more subdivisions in its entirety after the payment of any minimum annual royalty payment, as provided herein, and prior to the end of any period for which such payment is made, Lessor shall not be required to refund any of such payment. In the event, however, that Lessee wishes to quitclaim the mineral rights only in any one or more subdivisions and to retain use of such land for or in connection with mining operations on nearby premises as provided for in this section 20, Lessee shall be released only from performing exploration and mining work required hereunder on the lands
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on which the mineral interest is so terminated. Lessee shall be required to perform all exploration and mining work required hereunder on the lands on which the mineral interest is so retained.
In the event this Lease of Mining Rights is terminated as to any one or more forty-acre legal subdivision as provided for herein, upon payment to Lessor of the annual advance rental in an amount equal to the sums provided for herein as annual minimum royalties, this lease shall remain in effect as to those forty-acre subdivisions of the leased premises occupied or required for the purposes of rights of way in connection with its use of adjoining or nearby property for mining purposes and for stockpiling waste, ore or concentrated materials mined from the leased premises or adjoining property for so long as this lease remains in effect as to any remaining portion of the leased premises.
21. In the event of termination of this lease, in whole or in part, Lessee shall surrender to Lessor peaceable possession of the leased premises so terminated and shall deliver to Lessor a duly executed quitclaim deed therefor. Lessee shall provide with said quitclaim deed a certificate of title from a responsible title company covering the lands so quitclaimed for the period of time that Lessee is in possession of the premises under this lease, which certificate is made at the time of recordation of such quitclaim deed, and if there are any rights, interests, claims, liens or encumbrances conveyed, created, done, made or suffered by Lessee, or anyone claiming under Lessee, Lessee shall take such actions, steps and proceedings as may be deemed necessary to terminate and extinguish any such rights, interests, liens and encumbrances, failing in which Lessor may do so at the sole expense of Lessee, which expense, plus reasonable attorney fees, Lessee agrees to pay to Lessor on demand.
22. Lessee shall have one year after termination of this lease, as to all or any portion of the leased premises, to remove therefrom the property and improvements owned by Lessee, provided Lessee is not then in default under the provisions hereof, except that building and machinery foundations and underground support structures shall be left
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in place and title thereto shall vest in Lessor, unless Lessor shall give its written consent to Lessee to remove the same. Upon Lessee's failure to remove the above property and improvements authorized to be removed within said one-year period, from the leased premises or portion thereof, for which this lease has been terminated, title to said property and improvements shall vest in Lessor, provided that if Lessee is hampered by snowdrifts, washouts, inclement weather, or other causes beyond Lessee's control from completing the removal of such property and improvements within the time specified, Lessor agrees to extend the removal time for a reasonable period, if so requested by Lessee prior to expiration of said one-year period. Upon termination of this lease, in whole or in part, Lessee shall leave the leased premises in satisfactory condition, including proper fencing and protection of all openings, caves, excavations and holes in such manner as may be required by applicable laws, regulations and orders of governmental bodies having jurisdiction in the premises and in accordance with good mining engineering practice. If at the end of one year after such termination of this lease, Lessee fails to leave the leased premises in such satisfactory condition, Lessor may remove said property and improvements and restore the leased premises to a satisfactory condition, at Lessee's expense, which expense Lessee agrees to pay to Lessor upon demand.
If Lessee, within or prior to said one-year period after termination of this lease, shall have removed from the leased premises, as to which said termination is effective, ores, mineral-bearing materials or concentrates, Lessor shall be entitled to payment of royalties therefor, as provided in
Section 8 herein, and Lessor shall have a lien thereon for the fair value thereof, until such ores, mineral-bearing materials and concentrates are sold or Lessee has paid to Lessor the royalties due and payable therefor. In the event Lessee removes ores, mineral-bearing materials or concentrates mined from the leased premises and fails to sell the same within ninety days thereafter, Lessee agrees to pay to Lessor the fair value thereof within one hundred twenty days after the date of their removal by Lessee.
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23. If Lessee is adjudicated a bankrupt, or shall make an assignment for the benefit of creditors, or file a voluntary petition under any law having for its purpose the adjudication of Lessee a bankrupt, or the extension of time of payment, composition, adjustment, modification, settlement or satisfaction of the liabilities of Lessee, or a receiver be appointed for the property of Lessee by reason if the insolvency of Lessee, notwithstanding anything to the contrary elsewhere in the lease, Lessor shall have the immediate right to terminate this lease and to take exclusive possession of the leased premises. The acceptance of rent or other payments for the use of the leased premises shall not constitute a waiver of Lessor's right to terminate this lease as above set forth.
24. Any notice, demand or report which either of the parties hereto may be required or may desire to give to the other party hereto shall be in writing and shall be sufficiently given if mailed by United States certified mail in a sealed and postpaid envelope addressed as hereinafter provided. Any such instrument to be directed to Lessor shall be addressed to it and payments shall be made hereunder to it at Natural Resources, One Market Street, San Francisco, California 94105.
Any such instrument to be directed to Lessee shall be addressed to Lessee at: Suite 1900, 101 Richmond Street West, Toronto, Canada MSH ITI.
The place to which such notices, demands or reports shall be addressed and the place where payments hereunder shall be made may be changed from time to time by the party or parties whose address is to be changed by notice given as above provided.
25. Lessee agrees to pay to Lessor interest at the rate of 10% per annum upon any and all amounts whatsoever due under this lease to Lessor, such interest to be due and payable on all amounts remaining unpaid for more than 30 days from the date payment of each such amount is due and owing to Lessor or from the date of each breach by Lessee of an obligation hereunder, as the case may be.
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26. This instrument is intended as, and is, a lease. Lessor will not be called upon or required to make any repairs, or incur any expense of any kind or nature upon or in connection with said property for and during the term of this lease, but all such expenses shall be borne by Lessee.
27. Time and specific performance are of the essence of this lease.
28. No assignment of this lease or any sublease or agreement affecting this lease shall be valid unless made with the written consent of Lessor, except to any parent or subsidiary corporation or to any corporation in which Lessee holds the majority of the outstanding capital stock. Subject to the above, this lease shall inure to the benefit and be binding upon the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this lease as of the day and year first hereinabove written.
SOUTHERN PACIFIC LAND COMPANY

By /s/ [ILLEGIBLE]
  ----------------------------------
  General Manager, Natural Resources

Attest /s/ [ILLEGIBLE]
      ------------------------------
       Assistant Secretary	

LONG LAC MINERAL EXPLORATION LIMITED

By /s/ [ILLEGIBLE]
  ----------------------------------
                           PRESIDENT

   /s/ [ILLEGIBLE]
------------------------------------
                           SECRETARY	

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EXHIBIT "A"
Attached to and made a part of Mining Lease No. SPL-634 dated 15th day of February, 1976, from SOUTHERN PACIFIC LAND COMPANY to LONG LAC MINERAL EXPLORATION LIMITED.

                               MDM
Description             Sec.   Twp.    Rge.   Acres

E 1/2                    25    36N     49E   320.00	

EXHIBIT I
SECOND AMENDMENT TO ASSIGNMENT AND AGREEMENT
THIS SECOND AMENDMENT TO ASSIGNMENT AND AGREEMENT (the "Second Amendment"), dated as of the 18th day of December, 1989, is by and between LAC MINERALS (USA) INC. ("LAC") and BARRICK GOLDSTRIKE MINES INC. ("Barrick").
RECITALS
A. LAC is the successor in interest to Long Lac Mineral Exploration Limited, the assignor under the Assignment and Agreement dated February 24, 1979 by and between Long Lac Mineral Exploration Limited and Western States Minerals Corporation (the "Assignment and Agreement").
B. The Assignment and Agreement was amended by the First Amendment to Assignment and Agreement dated October 16, 1981 (the "First Amendment").
C. Barrick is the successor in interest to Western States Minerals Corporation, assignee under the Assignment and Agreement and the First Amendment.
D. LAC and Barrick now desire to amend the Assignment and Agreement a second time (the "Second Amendment") for the purposes of, among other things, modifying the right of Barrick to release property from the Assignment and Agreement and to permit LAC to seek damages in the event of a default under the Assignment and Agreement, to permit LAC to take its royalty "in kind", and to receive production reports for royalty purposes.
AGREEMENT
For good and valuable consideration, the sufficiency of which is hereby confessed and acknowledged, LAC and Barrick agree as follows:
1. The first paragraph of Section 6 of the Assignment and Agreement is deleted in its entirety and in place thereof is substituted the following:
Subject to the provisions of this paragraph, Barrick shall have the right, but not the obligation, at any time to reconvey, abandon, or release any or all or any one of the SJ claims, and all or any portion of the SP Lease and thereby terminate this Agreement as to such property. If Barrick
-1-
desires to reconvey, abandon or release all or any portion of the Subject Properties, Barrick shall give written notice to LAC. LAC shall then have 45 days in which to advise Barrick in writing of its desire to accept a reconveyance or to decline a reconveyance of such property. During such period Barrick shall permit LAC to inspect such property and to have access to records in Barrick's possession or control with respect thereto, and shall authorize the release to LAC of information or documents in the hands of third parties, including governmental bodies, with respect to such property. If LAC declines a reconveyance or if LAC fails to respond to Barrick's notice in writing within 45 days, Barrick shall be free to abandon or release such property and LAC shall have no further rights in such property. With respect to any of the properties covered by the SP Lease, Barrick also shall comply with the provisions of the SP Lease.
2. Section 12 is amended by changing the addresses as follows:
for LAC:
LAC MINERALS (USA) INC.
 Royal Bank Plaza
Suite 2100, North Tower P.O. Box 156
Toronto, Ontario
Canada M5J 2J4
for Barrick:
Barrick Goldstrike Mines Inc.
P.O. Box 29
Elko, Nevada 89801
3. Section 17 of the Assignment and Agreement is deleted in its entirety and in place thereof is substituted the following:
17. Default. From and after the date of this Second Amendment, should any material default in any of the terms or provisions hereof occur, LAC shall give notice to Barrick in writing, as hereinafter provided, designating such asserted default. Barrick shall thereafter have a period of sixty (60) days from the date of receipt of such notice in which to correct or commence action to correct the default of which it has received notice. Should Barrick fail to correct said defaults within the said 60 day period, or having commenced action to correct should fail to continue such action to completion with diligence, LAC may, at its election, upon written notice to Barrick, cancel and terminate this Agreement or institute proceedings to recover damages for the default.
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4. A new Section 22 is added to the Assignment and Agreement, as follows:
22. Royalty In Cash or In Kind.
(a) LAC may elect to receive its share of royalty "in cash" or "in kind" as refined bullion (based on "net smelter returns" as defined in the First Amendment to Assignment and Agreement dated October 16, 1981). The election may be exercised once per year on a calendar year basis during the life of production from the Subject Properties. Notice of its election to receive the following year's royalty in cash or in kind shall be made in writing by LAC delivered to Barrick on or before November 1 of each year. In the event no written election is made by LAC, the royalty will continue to be paid as it is then being paid.
(b) If LAC elects to receive its royalty in cash, such royalty shall be payable on the 30th day of each month following the month in which gold or other refined products are delivered or made available to Barrick from the refiner. For products produced from the Subject Properties other than refined gold or other refined products, payment shall be made within 30 days of the end of the month in which such products are sold. The price used for calculating the cash amount due to LAC shall be based upon the average spot price for gold or other products during the month in which gold or other products are sold and shall not reflect the actual proceeds received by Barrick as a result of any "hedging" or "trading" techniques employed by Barrick. For gold, the London p.m. fix shall be used to determine the average monthly spot price.
(c) (i) If LAC elects to receive its share of royalty in kind, LAC shall open a bullion storage account at each refinery or mint designated by Barrick as a possible recipient of dore or bullion in which LAC owns an interest. LAC shall be solely responsible for all costs and liabilities associated with maintenance of such account or accounts.
(ii) Royalty shall be due to LAC upon completion by the mint or refinery from time to time of the refining of any gold or silver produced from the Subject Properties. On or before the tenth day of each calendar month, Barrick shall deliver written instructions to the mint or refinery, with a copy to LAC, directing the mint or refinery to deliver gold or silver bullion due to LAC in respect of the royalty, by crediting to LAC's account a percentage of all ounces of gold or silver bullion refined. The percentage of bullion to be credited to LAC's account will be based upon LAC's share of the previous months' production from the Subject Properties as calculated pursuant to the Commingling Agreement between Barrick and LAC. The instruction shall remain in effect until the date the next monthly instruction is made by Barrick.
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(iii) Title to gold or silver bullion paid to LAC under this Agreement shall pass to LAC at the time such gold or silver bullion is credited to LAC's account at the mint or refinery.
(d) LAC agrees to hold harmless Barrick for any liability imposed as a result of the election by LAC to receive royalty in kind and from any losses incurred as a result of LAC's trading or hedging activities. LAC assumes all responsibility for any shortages which occur as a result of LAC's anticipation of credits to its account in advance of the actual deposit or credit to its account by a refiner or smelter of ounces.
(e) Within 30 days of the receipt of a statement showing charges incurred by Barrick for transportation, smelting or other costs deductible under the First Amendment to Assignment and Agreement, LAC shall remit to Barrick full payment for such charges. If LAC does not pay such charges when due, Barrick shall have the right, at its election, to deduct the gold equivalent of such charges from the ounces of gold to be credited to LAC in the following month.
5. A new Section 23 is added to the Assignment and Agreement, as follows:
23. Reports on Production. Barrick shall report by facsimile transmission, the following information:
(a) Barrick shall report to LAC by facsimile transmission information related to the production of ore and dore and refinement of bullion in which LAC owns an interest on the following basis:
(i) on a weekly basis, a photocopy of all shipping reports.
(ii) by the 10th day of each month for the preceding month, a report detailing:
(A) the number of tons of ore treated or processed in each facility;
(B) the average grade of ore treated or processed in each facility;
(C) the ounces of gold and silver produced at each facility;
(D) LAC's percentage share of ore treated or processed and ounces of gold and silver produced at each facility calculated in accordance with the Commingling Agreement between LAC and Barrick;
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(E) the dore production; and
(F) LAC's percentage of dore production calculated in accordance with the Commingling Agreement between LAC and Barrick.
(ii) within 30 business days after the end of each calendar month, a report:
(A) the total number of refined ounces reported in refiner's statements received during the previous month and the number of ounces credited to LAC's account; and
(B) all costs chargeable to LAC under the Assignment and Agreement, including all custom smelting costs, treatment charges and penalties, transportation, and insurance costs.
(b) Should the reports on production by Barrick to LAC be deficient, then LAC shall notify Barrick of the deficiencies and Barrick shall use its best efforts to correct such deficiencies and modify future reporting procedures to provide LAC with such information as LAC requests.
(c) Barrick shall instruct each mint or refinery at which LAC has opened a storage account to report directly to LAC immediately after refining each shipment of dore bars to such mint or refinery, the following:
i) a list of each dore bar received, its serial number, the date received and the date refining was completed.
ii) the number of ounces of all gold and silver bullion produced from each such shipment, and the number of ounces of gold and silver credited to LAC's account, together with LAC's assigned account number.
All reports shall be sent by facsimile transmission, with copy by mail, to the following address:
LAC Minerals (USA) Inc. Attention: Chief Financial Officer Suite 2100, P.O. Box 156 North Tower, Royal Bank Plaza Toronto, Ontario, M5J 2J4
(telecopier number: (416) 865-9597)
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6. A new Section 24 is added to the Assignment and Agreement, as follows:
24. Quarterly Reconciliation.
(a) The parties recognize that a period of time exists between the production of ore, the production of dore from ore, the production of bullion from dore and the receipt of refiner's statements for refined bullion. As a result, the monthly instructions from Barrick to the refiner set forth in Section 22(c) above for purposes of crediting LAC's account with bullion will not coincide exactly with the actual amount of bullion refined from ores produced from the Subject Properties. The parties agree, therefore, to reconcile on a quarterly basis the production of ores and dore for the quarter. The reconciliation will be made by Barrick and delivered to LAC within 60 days of the end of each calendar quarter.
(b) In the event that LAC has been underpaid in the previous calendar quarter, Barrick shall instruct the refiner to credit LAC's account during the ensuing month with the number of ounces necessary to bring LAC's royalty into balance. If LAC has been overpaid in the previous calendar quarter, Barrick shall instruct the refiner to withhold the number of ounces necessary to bring LAC's royalty into balance. In neither case will either party be required to make direct payments or repayments to the other party and neither party shall otherwise be liable to the other for any such overpayments or underpayments.
7. A new Section 25 is added to the Assignment and Agreement, as follows:
25. Confidentiality. LAC shall not, without the prior written consent of Barrick, knowingly disclose to any third party any information or data obtained pursuant to LAC's exercise of its rights under Section 1 of this Agreement which is not generally available to the public; provided, however, LAC may disclose information or data pertinent to its royalty: (i) if required for compliance with applicable laws, rules, regulations, or orders of a governmental agency or stock exchange having jurisdiction; (ii) to any third party to whom LAC, in good faith, anticipates selling or assigning its interest in the Subject Properties, or (iii) to a prospective lender to whom an interest in payments of production royalties to be made to LAC has been granted as security, provided that Barrick shall have been provided with a confidentiality agreement executed by such third party (excluding government agencies) or lender, which agreement shall include the confidentiality provision of this Section 4.
8. Exhibit A to this Assignment and Agreement is replaced in its entirety with Exhibit "A" attached to this Second Amendment.
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9. As amended by the First Amendment to Assignment and Agreement and by this Second Amendment, the Assignment and Agreement is hereby ratified, republished and confirmed, and as amended remains in full force and effect subject, however, to applicable provisions of that certain Settlement Agreement dated as of December 18, 1989, between LAC and Barrick, and the Commingling Agreement made pursuant thereto.
"LAC"
LAC MINERALS (USA) INC.

By: /s/ [ILLEGIBLE]
   --------------------------------
       Title: PRESIDENT	

"BARRICK"
BARRICK GOLDSTRIKE MINES INC.

By: /s/ [ILLEGIBLE]
   --------------------------------
       Title: Vice President	

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DESCRIPTIONS OF PROPERTIES
I. UNPATENTED MINING CLAIMS
The following described unpatented lode mining claims located in the Lynn Mining District, Eureka County, Nevada which are situated substantially in the N 1/2 S 1/2, S 1/2 NE 1/4, and SE 1/4 NW 1/4 of Section 24, T. 36 N., R. 49
E., M.D.B.&M.

                 DATE OF      EUREKA CO.          BLM
CLAIM NAME       LOCATION     BOOK/PAGE        SERIAL NO.

    SJ 1         01/15/88      175/196           471413
    SJ 2         01/15/88      175/197           471414
    SJ 3         01/15/88      175/198           471415
    SJ 4         01/15/88      175/199           471416
    SJ 5         01/15/88      175/200           471417
    SJ 6         01/15/88      175/201           471418
    SJ 7         01/15/88      175/202           471419
    SJ 8         01/15/88      175/203           471420
    SJ 9         01/15/88      175/204           471421
    SJ 10        01/15/88      175/205           471422
    SJ 11        01/15/88      175/206           471423
    SJ 12        01/15/88      175/207           471424
    SJ 13        01/15/88      175/208           471425
    SJ 14        01/15/88      175/209           471426
    SJ 15        01/15/88      175/210           471427
    SJ 16        01/15/88      175/211           471428	

Additional Certificates of Location for the SJ Nos. 1-16 have been filed as follow:

SJ 1         07/21/87      162/051           427376
SJ 2         07/21/87      162/052           427377
SJ 3         07/21/87      162/053           427378
SJ 4         07/21/87      162/054           427379
SJ 5         07/15/87      162/055           427380
SJ 6         07/15/87      162/056           427381
SJ 7         07/15/87      162/057           427382
SJ 8         07/15/87      162/058           427383
SJ 9         07/15/87      162/059           427384
SJ 10        07/15/87      162/060           427385	

SJ 11        07/16/87       162/061          427386
SJ 12        07/16/87       162/062          427387
SJ 13        07/16/87       162/063          427388
SJ 14        07/16/87       162/064          427389
SJ 15        07/16/87       162/065          427390
SJ 16        07/16/87       162/066          427391

SJ 1         08/14/75       52/327           73188
SJ 2         08/14/75       52/328           73189
SJ 3         08/14/75       52/329           73190
SJ 4         08/14/75       52/330           73191
SJ 5         08/14/75       52/331           73192
SJ 6         08/14/75       52/332           73193
SJ 7         08/14/75       52/333           73194
SJ 8         08/14/75       52/334           73195
SJ 9         08/14/75       52/335           73196
SJ 10        08/14/75       52/336           73197
SJ 11        08/14/75       52/337           73198
SJ 12        08/14/75       52/338           73199
SJ 13        08/14/75       52/339           73200
SJ 14        08/14/75       52/340           73201
SJ 15        08/14/75       52/341           73202
SJ 16        08/14/75       52/342           73203	

II. MINING LEASE
The following described Mining Lease located in the Lynn Mining District, Eureka County, Nevada:
Mining Lease No. SPL-634 dated February 15, 1976 by and between Southern Pacific Land Company and Long Lac Mineral Exploration Limited covering the E 1/2 of Section 25, T. 36 N., R. 49 E., M.D.B.&M. A Memorandum of Lease is recorded in Book 75 at page 427 of the Eureka County records.

EXHIBIT 99.6
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202-1132
Phone: (303) 573-1660
Fax: (303) 595-9385
Email: info@royalgold.com
www.royalgold.com

October 29, 2004
Mr. Russ Hofland
Barrick Goldstrike Mines, Inc.
PO Box 29
Elko, NV 89803
Dear Russ:
As previously discussed, following are items that we would like to clarify with you regarding our royalty interest per the terms of the Royalty Assignment Confirmation, Amendment, and Restatement of Royalty, and Agreement (the “Agreement”), dated November 30, 1995. Through discussions we have agreed that Barrick Goldstrike Mines, Inc. (“Barrick”) will administer the Agreement as follows, effective October 1, 2004.
Calculation of payments
Section 3, paragraphs d. (i) and d. (ii) of the Agreement provide that royalty payments are to be calculated using the monthly average London Bullion Market Association P.M. Gold Fix (“London P.M. Gold Price”) and the monthly average New York Silver Price, published by Handy & Harman. Currently royalty payments for gold production are calculated using the London P.M Gold Price. Barrick and Royal Gold have agree that, on a prospective basis, the royalty payments for silver should be calculated using the London Bullion Market Association Silver Fix.
Information received supporting monthly payments
Section 3, paragraph f. (i) of the Agreement states that at the time of payment, the Producer shall deliver a statement showing in reasonable detail the quantities and grades of the refined precious metals, dore, concentrates or ores produced and sold and deemed sold by the Producer in the preceding quarter; the Average Monthly Price determined; allowable deductions, and other pertinent information in reasonable detail to explain the calculation of the payment. In accordance with the Agreement, we would like to receive following additional information to support our payments:

 	•	 	Commingling worksheet provided monthly;	
 		
 	•	 	Support for the prior month’s adjustment amount, provided upon reasonable request of Royal Gold;	

 

Mr. Russ Hofland
October 29, 2004
Page 2

 	•	 	Settlement statements from refiner, provided upon reasonable request of Royal Gold; and	
 		
 	•	 	Supporting documentation for deductions, provided upon reasonable request of Royal Gold.	
Frequency of payments
Per Section 3, paragraph f. (i) of the Agreement, royalty payments are to be made quarterly and by the 15 th day following the end of each quarter. Currently payments are made monthly. As previously agreed upon, Barrick has indicated that it prefers to continue with monthly payments. Royal Gold agrees to receive such payments on a monthly rather than quarterly basis.
Timing of audits
Per Section 3, paragraph f. (iii) of the Agreement, all payments shall be considered final and in full satisfaction of all obligations, unless the Producer receives written notice of objection to the calculation within 90 days after receipt of the quarterly statement. However, as previously agreed upon, we feel that it is in the best interests of both parties that we conduct audits of our royalty payments on an annual basis rather than quarterly. Therefore, Barrick and Royal Gold have agreed that all payments made during a calendar year shall be considered final and in full satisfaction of all obligations, unless the Producer (as defined in the Agreement) receives written notice of objection to the calculation, within 90 days of that calendar year. If you wish to return to the original arrangement, you will give us timely notice.
Barrick and Royal Gold have agreed that the current Commingling Agreement (dated November 30, 1995) needs updating to reflect current operations and practices. We are in the process of preparing a revised protocol for your review. This revised protocol will incorporate many of the elements of allocation calculations that are described in the July 9, 2004 memo to you from Tom Bolles and the December 17, 1999 memo to Andy Bolland from John Langhans. We anticipate having that proposed revision to you in the next two to three weeks. However, in the meantime, the above revisions to the procedures to the Agreement shall, as noted above, become effective as of October 1, 2004. After Barrick Goldstrike Mines Inc.’s receipt of the revised commingling procedures the companies will endeavor in good faith to promptly finalize the document.
It is my understanding that our intent is that this letter agreement shall govern the administration of the Agreement with respect to the subjects addressed in this letter. Neither party intends that the Agreement shall be changed or modified, and that the rights, duties and obligations of the parties will remain in accordance with the Agreement, without regard to, and unprejudiced by, this letter agreement.

 

Mr. Russ Hofland
October 29, 2004
Page 3
Please acknowledge your agreement with the preceding clarifications to the Agreement by signing below. Please contact me with any questions you may have on the above at (303) 575-6502.
Sincerely,
 
/s/ Stefan L. Wenger
Stefan L. Wenger
Treasurer and Chief Accounting Officer
 	 	 	
cc:	 	Mike Feehan
Tony Jensen	
The terms of this letter are agreed to by Barrick Goldstrike Mines, Inc.
 	 	 	 	 	
By:	 	/s/ [ILLEGIBLE]	 	 	

Title:	 	Manager–Administration	 	 	

Date:	 	10-Nov-2004