PURCHASEOPTION AGREEMENT

 

(a)

Definitions, The following terms, wherever used in this Agreement, shall have the meanings set forth below:

 

(b)

"Effective Date" means the date first written above

 

(c)

"Minerals" shall mean the end products recovered, produced or derived from operating the Property as a mine;

 

(d)

"Mining Operations" means every kind of work done on or in respect of the property or the product, derived from the Property during the subsistence of the Option by or under the direction of the Optionee including, without limiting the generality of the foregoing, the work of assessment, geophysical. geochemical and geological surveys, studies and mapping, investigating, drilling, designing, examining, equipping, improving, surveying, shaft-sinking, raising, cross-cutting and drifting, searching for, drifting, trucking, sampling, working and procuring minerals, ores and metals, surveying and bringing any mining claims to lease or patent, and all other work usually considered to be prospecting, exploration, development and mining work; in paying wages and salaries of workers engaged in the work and In supplying food, lodging, transportation and other reasonable needs of the workers; in paying assessments or premiums for workers' compensation insurance, contributions for unemployment insurance or other pay allowances or benefits customarily paid in the district to those workers; in paying rentals, licence renewal fees, taxes and other governmental charges required to keep the property in good standing; in purchasing or renting plant, buildings, machinery, tools, appliances, equipment or supplies and in installing, erecting, detaching and removing them; mining, milling, concentrating rehabilitation, reclamation, and environmental protections and in the management of any work which may be done on the Property or in any other respect necessary for the due carrying out of the prospecting, exploration and development work;

 

(e)

"Mining Rights" includes mineral rights and the right to conduct Mining Operations on the Property and further includes the meanings and rights attributed to Mining Rights and mineral rights under the Mining Act, R.S.O. 1990, c.M-14 and amendments thereto;

 

(f)

"Property" means all of the unpatented mining claims being optioned by the Optionor as more particularly described in Schedule "A" including all Mining Rights as the context so implies;

 

(g)

"Production Royalty" means the payments required to be paid pursuant to Article 7;

 

(a)

it is the beneficial and registered or recorded owner of a one hundred percent (100%) interest in the unpatented mining claims;

 

(b)

the mining claims are in good standing, free and clear of all encumbrances;

 

(c)

the Property has been duly and validly located and recorded pursuant to the applicable legislation of the Province of Ontario constituting valid and subsisting Mining Rights and surface rights owned in fee simple and that the property is in good standing with respect to property tax requirements and will be maintained by the Optionor during the period of this Agreement until termination, abandonment or expiration;

 

(d)

it has the full and undisputed right to deal with the Property as provided for in this Agreement; and

 

(e)

the Property is not subject to any pending or threatened claims by any third party or any governmental agency.

 

(a)

The Optionor hereby grants to the Optionee the sole, exclusive, irrevocable and immediate working right to acquire a one hundred percent (100%) interest in the unpatented mining claims from the Optionor (subject to the Production Royalty in Article 7) by making the payments described herein and by complying with the terms and conditions of this Agreement.

 

(b)

Upon the full amount of the cash payments and shares set forth in Clause 3.2 having been paid and issued to the Optionor, the Optionor shall deliver to the Optionee a signed transfer in proper registerable form conveying all of the Optionor's right, title and interest in the Mining Rights to the Optionee. The said Transfer shall be prepared by and at the expense of the Optionee.

 

(c)

Upon execution of this Agreement, the Optionee may register this Agreement or notice of this Agreement against title to the Property.

 

(a)

Share Issuance: issue the shares and make the cash payments as hereinafter set forth:

 

(i)

an "Initial Grant" of 20,000 common shares to the Optionor within ten (10) days of receiving regulatory approval of the terms of this  Agreement;

 

(ii)

20,000 additional common and shares on the first anniversary date of the Initial Grant;

 

(iii)

20,000 additional common shares on the second anniversary date of the Initial Grant;

 

(iv)

20,000 additional common shares on the third anniversary date of the Initial Grant; and

 

(v)

Zero additional common shares on the fourth anniversary date of the Initial Grant;

 

(b)

Cash Payments:  The Optionee shall make five (5) cash payments to the Optionor totalling $ 84,000.00 according to the following schedule:

 

(i)

An "Initial Payment" of $7,000.00 on signing of this Agreement;

 

(ii)

An additional $12,000.00 on the first anniversary date following the Initial Payment;

 

(iii)

An additional $15,000.00 on the second anniversary date following the Initial Payment;

 

(iv)

An additional $20,000.00 on the third anniversary date following the Initial Payment;

 

(v)

An additional $30,000.00 on the fourth anniversary date following the Initial Payment.

 

(a)

comply with all applicable laws, regulations, by-laws, rules, orders and ordinances with respect to its operations hereunder in conducting its exploration and mining activities on the subject lands whether federal, provincial or municipal, including discharging the duty to consult with all First Nations groups;

 

(b)

conduct all operations in accordance with Environmental Standards. "Environmental Standards”· means all laws, orders, rules and regulations of whatever authority, as they may apply to and effect environmental and pollution control standards in effect, whether federal, provincial or municipal;

 

(c)

conduct all exploration, development and mining operations and supervise the operation of all contractors and or sub-contractors in, on and under the Property in a careful manner and in accordance with good mining practice and in compliance with all applicable legislation and, without limiting the generality of the foregoing the Optionee shall on the completion of its work or at the end of the term of this Agreement leave the subject property in a safe condition with all openings safeguarded in accordance with the provisions of all applicable legislation or regulations affecting them;

 

(d)

subject to the other provisions of this Agreement, the Optionee shall have complete discretion and control with respect to all prospecting, exploration, development or other mining work carried out on the Property provided, however, that all operations on the Property shall be conducted in a manner which will cause the least damage and defacement practicable under the circumstances. All access roads shall be set out in consultation with the Optionor and both parties will make their best efforts to co-operate so as to enable Optionee to conduct its operations in a reasonable manner while minimizing the damage and interference to the Property and to any timber resources thereon. The Optionee shall reimburse the Optionor or compensate them for all actual physical damage to the Property and actual damages to improvements, roads, wells, crops, timber, grass and livestock resulting from the Optionee's operations. Upon completion of its work or at the end of the term of this Agreement the Optionee shall restore and remediate the Property in accordance with good mining practices so as minimize permanent damage or interference with the Property;

 

(e)

pay or cause to be paid all workmen's wages and for all materials, supplies and services delivered to or performed on or respect of the Property, so as to avoid any Woodsman Lien or Construction Lien from arising;

 

(f)

pay all timber dues or other assessments or charges which may be levied or imposed under any statutory provision or otherwise arising, as a consequence of the harvesting of any timber resources from the Property;

 

(g)

maintain the property in good standing by doing all assessment work, recording all exploration and development work done on the property In accordance with the requirements of the Mining Act, R.S.O. 1990, c.M-14 and amendments thereto, paying all exploration licenses fees and by doing all other acts and things that may be necessary in that regard until the termination or expiration of the Agreement or the abandonment of rights and options granted hereunder;

 

(h)

abide by all directions of the Minister or any other governmental authority having jurisdiction over its operations hereunder; and

 

(i)

maintain adequate liability and other insurance and if requested by Optionor, to provide evidence of same.

 

(a)

While the Production Royalty remains payable hereunder, the Optionee shall not later than thirty (30) days after the end of each quarter of each calendar year render to the Optionor an interim statement of account in reasonable detail which statements shall be accompanied by the payment of the Production Royalty payable pursuant to this Agreement for the previous quarter year.

 

(b)

When all Minerals in any calendar year in which the Production Royalty remains payable have been sold and the revenues and expenditures determined, the Optionee shall, within sixty (60) days after the termination of such calendar year, render a final statement of account in reasonable detail together with the payment of the balance if any, of the Production Royalty for such previous year.

 

 

(c)

If any amounts have been paid in excess of those to which the Optionor's is entitled under the terms of this Agreement in any year, the equivalent amount shall be deducted from the next Royalty payment or payments. All payments not made to the Optionor within the time periods set forth herein shall bear interest at the prime rate plus one percent (1%).

Perry English:

David Adamson:

Glenn Kumoi:

Big Bear Mining Corporation

15111 N. Hayden Rd. Suite 160-185

Scottsdale, Arizona 85260

 

Fax No: 480 ###-###-####

e-mail: ***@***

 

Mr. Perry English, for and on behalf of

P. O. Box 414

Souris, Manitoba, ROK 2CO

 

Fax No:  204 ###-###-####

e-mail:   ***@***

 

 

Mr. Glenn Kumoi

Vice President General Counsel

e-mail:  ***@***

Optionee: Big Bear Mining Corporation

 

 

 

 

Steve Rix, President Big Bear Mining Corp.

Signature

 

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Print Name

 

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Date

 

Optionor:  PERRY VERN ENGLISH for and on behalf of Rubicon Minerals Corporation

 

 

 

___________________________________

Signature

 

Perry Vern English____________________

Print Name

 

___________________________________

Date