OPTION TO PURCHASE AND ROYALTY AGREEMENT

(a)

“Closing” means the date to be mutually agreed upon between the parties.

(b)

“Data” means all information and knowledge, in whatever form, paper, electronic or otherwise, relating to the Property and Area of Interest, including but not limited to, geologic reports, drill core, assay results, geophysical reports, technical data, analysis, and compilations, feasibility reports, environmental reports, etc.

(c)

“Minerals” shall mean any products of value derived from the Property;

(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 Term by, on the behalf of or under the direction of 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, bulk sampling and processing such samples, shaft-sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, including stone, crushed rock or aggregate, ores and metals, surveying and bringing any mining claims to lease or patent, the construction and maintenance of necessary access roads, drill site preparation, 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 including the costs of creating and maintaining a camp on or near the Property; 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, license renewal fees, taxes and other governmental charges required to keep the Property in good standing in accordance with the laws of the County of Maricopa, State of Arizona, United States, including the costs of claim renewal fees and permits; 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 protection, including the cost of resolving any environmental problems associated with the work on the Property including from creating drill sites or access roads that may affect any grounds or waters surrounding the Property as may be required by any governmental agency or otherwise, 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)

“Net Smelter Return” means the proceeds received by Optionee from any smelter or other purchaser from the sale of any ores, concentrates or minerals produced from the Property;

(f)

“Option” means the right granted by Optionor to Optionee to acquire up to a 100% undivided right, title and interest in and to the Property as provided in Section 4 hereof;

(g)

“Royalty” means the 2% net smelter return royalty described in Exhibit “B” attached hereto;

(h)

“Term” means the period during the term of this Agreement from the Effective Date to and including the date of exercise of the Option;

(a)

Optionor has been duly incorporated under the laws of the State of Arizona and validly exists as a corporation in good standing under the laws of that jurisdiction of incorporation;

(b)

Optionor is the registered and beneficial owner and, at the time of transfer to Optionee of an interest in the unpatented mining claims and mineral exploration permits comprising the Property, they will be the registered and beneficial owners of all of the unpatented mining claims and mineral exploration permits comprising the Property free and clear of all liens, charges and claims of others, save and except the Royalty, and no taxes or rentals are due in respect of any thereof;

(c)

the unpatented mining claims and mineral exploration permits comprised in the Property have been duly and validly located and recorded, and are in good standing in the office of the mining recorder or such other applicable regulatory agency having jurisdiction over the Property;

(d)

there are no known adverse claims or challenges against or to the ownership of or title to any of the unpatented mining claims and mineral exploration permits comprising the Property, nor to the knowledge of Optionor is there any basis therefore, and there are no outstanding agreements or options to acquire or purchase the Property or any portion thereof, and no known person having any royalty or other interest whatsoever in production from any of the unpatented mining claims and mineral exploration permits comprising the Property;

(e)

Optionor has duly obtained all corporate authorizations for the execution of this Agreement and for the performance of this Agreement by it, and the consummation of the transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of, the Articles, By-laws or the constating documents of Optionor or any shareholders’ or directors’ resolution, indenture, agreement or other instrument whatsoever to which Optionor is a party or by which it is bound or to which it may be subject, nor does it conflict with any applicable law by which Optionor is bound;

(f)

Optionor has duly obtained all authorizations for the execution of this Agreement and for the performance of this Agreement by it, and the consummation of the transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of any indenture, agreement or other instrument whatsoever to which Optionor is a party or by which it is bound or to which it may be subject nor does it conflict with any applicable law by which Optionor is bound;

(g)

no proceedings are pending for, and Optionor is unaware of any basis for the institution of any proceedings leading to, the dissolution or winding up, or the placing of Optionor in bankruptcy or subject to any other laws governing the affairs of insolvent persons.

(a)

Optionee has been duly incorporated and validly exists as a corporation in good standing under the laws of the State of Nevada;

(b)

it has duly obtained all corporate authorizations for the execution of this Agreement and for the performance of this Agreement by it, and the consummation of the transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of, the Articles or the constating documents of Optionee or any shareholders’ or directors’ resolution, indenture, agreement or other instrument whatsoever to which Optionee is a party or by which it is bound or to which it may be subject, nor does it conflict with any applicable law by which Optionee is bound; and

(c)

no proceedings are pending for, and Optionee is unaware of any basis for the institution of any proceedings leading to, the dissolution or winding up of Optionee or the placing of Optionee in bankruptcy or subject to any other laws governing the affairs of insolvent persons.

(a)

pay to Optionor a sum total of Three Million Four Hundred Twenty-Five Thousand Dollars US (3,425.000.00), in cash, as follows:

 

(i)

on January 1, 2012, the sum of US $150,000.00; July 1, 2012 the sum of US $150,000.00;

 

(ii)

on January 1, 2013, the sum of US $200,000.00; July 1, 2013 the sum of US $200,000.00;

 

(iii)

on January 1, 2014, the sum of US $250,000.00; July 1, 2014 the sum of US $250,000.00;

 

(iv)

on January 1, 2015, the sum of US $300,000.00; July 1, 2015 the sum of US $300,000.00;

 

(v)

on January 1, 2016, the sum of US $350,000.00; July 1, 2016 the sum of US $350,000.00; and

 

(vi)

on January 1, 2017, the sum of US $425,000.00.

(a)

There shall be an area of mutual interest which shall comprise that area which is within ten kilometres of the outermost boundary of each of the unpatented mining claims and mineral exploration permits which constitute the Property (the “Area of Interest”) as at the date of this Agreement.

(b)

If at any time during the Term, any party (in this section only called the “Acquiring Party”) stakes, locates or otherwise acquires, directly or indirectly, any right to or interest in any unpatented mining claim, license, lease, grant, concession, permit, patent or other mineral property located wholly or partly within the Area of Interest, the Acquiring Party shall forthwith give notice to the other parties of that staking or acquiring, the costs thereof and all details in possession of that party with respect to the nature of the property and the known mineralization.

(c)

Each party may, within 30 days of the receipt of the Acquiring Party’s notice, elect by notice to the Acquiring Party, to require any such mineral properties and the right or interest acquired be included in the Property and thereafter form part of the Property for all purposes of this Agreement.

(d)

In the event that Optionee is the Acquiring Party, and Optionor elects to require such mineral properties and rights or interests acquired by Optionee be included in the Property, Optionor shall within 30 days of submission of its election notice to Optionee reimburse Optionee for all acquisition and reasonable transaction costs related to such acquisition.

(a)

Optionee shall provide, maintain and pay for the following insurance which shall be placed with an insurance company or companies and in a form as may be acceptable to Optionor:

 

(i)

The usual form of insurance available to the mining industry in Arizona for exploration and development operations protecting Optionee and Optionor and their respective employees, agents, contractors, invitees and licensees against damages arising from personal injury (including death) and from claims for property damage which may arise directly or indirectly out of the operations of Optionee and Optionor under this Agreement;

(b)

Each policy of insurance contemplated in this Section 4.8 shall be in an amount acceptable to Optionor; and

(c)

Optionee shall provide Optionor with such evidence of insurance as Optionor may request.

(a)

It will maintain the Property in good standing and will pay all rentals, rates, duties, royalties, assessments, fees, taxes or other government charges levied with respect to the Property or Optionee’s operations thereon which shall fall due during the Term.  Notwithstanding the forgoing, and in acknowledgement that record title of the Property shall remain in the name of Optionor until such time as exercise of the Option, Optionor shall cooperate with and assist Optionee with the preparation of documentation required for the payment of such rentals, rates, duties, royalties, assessments, fees, taxes or other government charges levied with respect to the Property or Optionee’s operation thereon which shall fall due during the Term.  In the event that Optionor fails to cooperate with and assist Optionee with the preparation of documentation required for the payment of such rentals, rates, duties, royalties, assessments, fees, taxes or other government charges levied with respect to the Property or Optionee’s operation thereon which shall fall due during the Term, Optionor hereby grants Optionee the full power of attorney to make all such payments and take all actions necessary or prudent, in Optionee’s sole and absolute discretion, to preserve the property, and any such payments made as well any reasonable costs incurred by Optionee shall be deducted from any cash payments due Optionor pursuant to Section 3.2(a) hereunder;

(b)

It will carry out its operations on the Property in a careful and miner-like manner and in accordance with applicable laws and regulations of the State of Arizona;

(c)

It will properly pay all accounts of every nature and kind for wages, supplies, Workers’ Compensation Assessments, or the equivalent under Arizona law, income tax deductions, and all other accounts and indebtedness incurred by it so that no claim or lien arises thereon or upon the ore or minerals contained therein and it will indemnify Optionor and save them harmless from any and all loss, costs, actions, suits, damages or claims which may be made against Optionor in respect of the operations on the Property, provided however, that Optionee shall have the right to contest the validity of any such lien or claim of lien;

(d)

Upon termination of this Agreement, it will leave the Property in a safe condition in accordance with the applicable regulatory requirements;

(e)

It will at all times maintain and keep true and correct records of all production and the disposition thereof and of all costs and expenditures incurred as well as all other data necessary or proper for the settlement of accounts between the parties hereto in connection with their rights and obligations under this Agreement;

(f)

It will obtain all necessary environmental permits prior to commencing operations on the Property and it will be responsible for any environmental assessments made by the governmental bodies as a result of operations on the Property; and

(g)

It will indemnify and save harmless Optionor from any and all liability arising in relation to the Property including, but not limited to, any liability from environmental damage during the Term, unless such liability was caused by the fault of Optionor, or either of them, or their directors, officers, employees, agents or consultants.

(a)

During the Term, should Optionor receive any notice, assessment, permit or any other documentation from the applicable regulatory authorities relating to the Property or the Operations of Optionee thereon, Optionor will promptly forward a true copy of the same to Optionee.

(a)

it first gives to Optionee a notice of default containing particulars of the obligation which Optionee has not performed, or the warranty or covenant breached, and

(b)

Optionee does not, within 30 days after delivery of such notice of default, cure such default or commence proceedings to cure such default by appropriate payment or performance (Optionee hereby agreeing that should Optionee so begin to cure any default Optionee will prosecute such curing to completion without undue delay).

(a)

nothing contained in this Agreement, nor any payment made, Mining Operations conducted incurred by Optionee on or in connection with the Property or part of it, nor the doing of any act or thing by Optionee under the terms of this Agreement shall obligate Optionee to do anything else under this Agreement other than to, make payments and maintain the Property to the extent that it may have expressly undertaken to do so pursuant to the terms of this Agreement;

(b)

subject to the terms of this Agreement, Optionee may at any time abandon the working right and Option granted to it under Section 3.1 and may at any time after exercising the Option granted herein abandon the working right  granted to it under Section 3.5; and

(c)

in the event that Optionee abandons the Option granted to it under Section 3.1, or the working right Section 3.5, the liabilities and obligations of Optionee shall cease with respect to the Property except that Optionee shall remain liable for any and all liabilities or obligations arising directly or indirectly from the actions of Optionee in conducting work or having conducted work on the Property and the provisions of Section 6 herein.

(a)

sets forth the entire agreement between the parties and any persons who have in the past or who are now representing either of the parties;

(b)

supersedes all prior understandings and communications between the parties or any of them, oral or written; and

(c)

constitutes the entire agreement between the parties.

Optionee: 

STANDARD GOLD CORP.