SHARE PURCHASE AGREEMENT BETWEEN INTI HOLDINGS LIMITED and RAE-WALLACE MINING COMPANY and RAE WALLACE PERU S.A.C. and GEORGE COLE TABLE OF CONTENTS

ARTICLE 1 INTERPRETATION

1

1.1

Definitions

1

1.2

Best Knowledge

6

1.3

Currency

6

1.4

Governing Law

6

1.5

Interpretation Not Affected by Headings

6

1.6

Number and Gender

6

1.7

Time of Essence

6

1.8

Severability

7

1.9

Accounting Terms

7

1.10

Calculation of Time Periods

7

1.11

Statutory Instruments

7

1.12

Incorporation of Schedules

7

ARTICLE 2 PURCHASE AND SALE

7

2.1

Purchased Shares

7

2.2

Purchase Price

8

2.3

Payment of Purchase Price

8

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

8

3.1

Representations and Warranties of the Vendor, the Shareholder and the Corporation

8

3.2

Representations and Warranties of the Purchaser

20

3.3

Survival of Covenants, Representations and Warranties of the Parties

21

ARTICLE 4 COVENANTS

22

4.1

Conduct During Interim Period

22

4.2

Access to Information

23

4.3

Satisfaction of Closing Conditions

24

4.4

Delivery of Records

24

ARTICLE 5 CONDITIONS OF CLOSING

5.1

Conditions for the Benefit of the Purchaser

24

5.2

Waiver or Termination by the Purchaser

26

5.3

Conditions for the Benefit of the Vendor and the Shareholder

27

5.4

Waiver or Termination by the Vendor and the Shareholder.

27

5.5

Conditions Precedent

28

5.6

Survival following Termination

28

ARTICLE 6 CLOSING ARRANGEMENTS

6.1

Place of Closing

28

6.2

Deliveries at the Closing

28

ARTICLE 7 INDEMNIFICATION

7.1

Indemnification by the Vendor

28

7.2

Indemnification by the Purchaser

29

7.3

Notice of Claim

29

7.4

Procedure for Indemnification

30

7.5

General Indemnification Rules

30

ARTICLE 8 GENERAL

8.1

Confidentiality

32

8.2

Notices

32

8.3

Public Announcements and Disclosure

33

8.4

Assignment

33

8.5

Best Efforts

33

8.6

Expenses

34

8.7

Further Assurances

34

8.8

Entire Agreement

34

8.9

Waiver, Amendment

34

8.10

Rights Cumulative

34

8.11

Arbitration

34

8.12

Counterparts

35

Schedule 1.1(hh) – Peruvian Documents

Schedule 3.1(15) – Financial Statements

Schedule 3.1(28)(32)(33) - Material Contracts, Real and Leased Properties, Authorizations and Mineral Rights

Schedule 3.1(29) – Bank Accounts and Powers of Attorney

 

(a)

“Agreement” means this share purchase agreement and all instruments amending it; “hereof”, “hereto” and “hereunder” and similar expressions mean and refer to this Agreement and not to any particular Article, Section, or other subdivision; “Article”, “Section” or other subdivisions of this Agreement followed by a number means and refers to the specified Article, Section or other subdivision of this Agreement;

 

(b)

“assessment” shall include a reassessment or additional assessment and the term “assessed” shall be interpreted in the same manner;

 

(c)

“Business” means the business carried on by the Corporation which primarily involves the exploration of mineral properties in the Republic of Peru and all operations related thereto;

 

(d)

“Business Day” means any day other than a Saturday, a Sunday or a statutory holiday in the Province of Ontario or any other day on which the principal chartered banks located in the City of Toronto are not open for business during normal banking hours;

 

(e)

“Claim” has the meaning ascribed in Section 7.3;

 

(f)

“Closing” means the completion of the Transactions pursuant to this Agreement at the Closing Time;

 

(g)

“Closing Date” means April 2, 2013, or such other date as the Parties may agree upon;

 

(h)

“Closing Time” means 10:00 a.m. in the City of Toronto on the Closing Date or such other time on the Closing Date as the Parties may agree upon as the time at which the Closing shall take place;

 

(i)

“Closing Time Year” means the taxation year of the Corporation ending at the Closing Time;

 

(j)

“Consent” means a license, permit, approval, consent, certificate, registration or authorization (including, without limitation, those made or issued by a Regulatory Authority, in respect of a Contract, or otherwise);

 

(k)

“Contract” means any agreement, understanding, indenture, contract, lease, deed of trust, license, option, instrument or other commitment;

 

(l)

“Deposit” has the meaning ascribed in Section 2.3;

 

(m)

“Encumbrances” means mortgages, charges, pledges, security interests, liens, encumbrances, actions, claims, demands and equities of any nature whatsoever or howsoever arising and any rights or privileges capable of becoming any of the foregoing;

 

(n)

“Environmental Consents” has the meaning ascribed in Section 3.1(34)(ii);

 

(o)

“Environmental Laws” has the meaning ascribed in Section 3.1(34)(i);

 

(p)

“Financial Statements” means the financial statements of the Corporation for the most recently completed reporting period consisting of a balance sheet, an income statement, a statement of changes in financial position and a statement of retained earnings together with the accompanying notes, a copy of which are attached as Schedule 3.1(15);

 

(q)

“Financial Statements Date” means the date of the balance sheet included in the Financial Statements;

 

(r)

“IFRS” means the International Financial Reporting Standards, as used by publicly accountable enterprises, adopted from time to time by the Accounting Standards Board as the accounting principles generally accepted in Canada and as issued, established and updated into the CICA Handbook of the Canadian Institute of Chartered Accountants, applied in a consistent manner from one accounting period to another;

 

(s)

“Hazardous Substance” has the meaning ascribed in Section 3.1(34)(iii);

 

(t)

“Indemnified Party” has the meaning ascribed in Section 7.3;

 

(u)

“Indemnifying Party” has the meaning ascribed in Section 7.3;

 

(v)

“Interim Period” means the period from and including the date of this Agreement to and including the Closing Date;

 

(w)

“ITA” means the Income Tax Act (Canada);

 

(x)

“Law” or “Laws” means all requirements imposed by statutes, regulations, rules, ordinances, by-laws, decrees, codes, policies, judgments, orders, rulings, decisions, approvals, notices, permits, guidelines or directives of any Regulatory Authority;

 

(y)

“Leased Premises” means the premises leased or subleased by the Corporation under the Leases;

 

(z)

“Leases” means the leases, subleases, agreements to lease and tenancy agreements under which the Corporation leases or subleases any real property as lessee or sublessee, as listed in Schedule 3.1(28)(32)(33);

 

(aa)

“Lessee” has the meaning ascribed in Section 3.1(32)(c);

 

(bb)

“Mineral Rights” has the meaning ascribed in Section 3.1(33);

 

(cc)

“NI 45-106” means National Instrument 45-106 Prospectus and Registration Exemptions adopted by the Ontario Securities Commission;

 

(dd)

“Parties” means the Vendor, the Purchaser, the Corporation and the Shareholder, and any other person that may become a party to this Agreement and Party means any one of them;

 

(ee)

“Pilot Gold NSR” means the 2% net smelter return royalty with respect to certain Mineral Rights, and for greater certainty such 2% net smelter return royalty not with respect to any interest in the Liscay project, granted in favour of Pilot Gold Inc. (“Pilot Gold”) pursuant to a termination agreement dated July 18th, 2012;

 

(ff)

“Permitted Encumbrances” means:

 

(i)

liens for Taxes, assessments and governmental charges due and being contested in good faith and diligently by appropriate proceedings (and for the payment of which adequate provision has been made);

 

(ii)

servitudes, easements, restrictions, rights of parties in possession, zoning restrictions, encroachments, reservations, rights-of-way and other similar rights in real property or any interest therein, provided the same are not of such nature as to materially adversely affect the validity of title to or the value, marketability or use of the property subject thereto by the Corporation;

 

(iii)

liens for Taxes either not due and payable or due but for which notice of assessment has not been given;

 

(iv)

undetermined or inchoate liens, charges and privileges incidental to current construction or current operations and Encumbrances claimed or held by any Regulatory Authority that have not at the time been filed or registered against the title to the asset or served upon the Corporation pursuant to law or that relate to obligations not due or delinquent;

 

(v)

assignments of insurance provided to landlords (or their mortgagees) pursuant to the terms of any Lease and liens or rights reserved in any Lease for rent or for compliance with the terms of such Lease;

 

(vi)

security given in the ordinary course of the Business to any Regulatory Authority in connection with the operations of the Business, other than security for borrowed money; and

 

(vii)

the reservations of any real property or interest therein and statutory exceptions to title that do not materially detract from the value of the real property concerned or materially impair its use in the operation of the Business;

 

(gg)

“person” includes any individual, corporation, partnership, firm, joint venture, syndicate, association, trust, government, governmental agency and any other form of entity or organization;

 

(hh)

“Peruvian Documents” means the corporate and tax documents that are required to be delivered by the Vendor and the Purchaser to SUNAT as attached as Schedule 1.1(hh);

 

(ii)

“Purchase Price” has the meaning ascribed in Section 2.2;

 

(jj)

“Purchased Shares” means the Shareholder Share and the Vendor Shares;

 

(kk)

“Real Properties” means the real properties, other than the mineral properties, owned by the Corporation which are described in Schedule 3.1(28)(32)(33);

 

(ll)

“Records” means all technical, business and financial records relating to the Business, including, without limitation, minute books, share ledger, customer lists, operating data, files, financial books, correspondence, credit information, research materials, contract documents, title documents, leases, surveys, records of past sales, supplier lists, employee documents, inventory data, accounts receivable data, financial statements and any other similar records in any form whatsoever (including written, printed, electronic or computer printout form);

 

(mm)

“Regulatory Authority” means any government, regulatory or administrative authority, agency, commission, utility or board (federal, provincial, municipal or local, domestic or foreign) having jurisdiction in the relevant circumstances and any person acting under the authority of any of the foregoing and any judicial, administrative or arbitral court, authority, tribunal or commission having jurisdiction in the relevant circumstances;

 

(nn)

“Release” has the meaning ascribed in Section 3.1(34)(iv);

 

(oo)

“Royalty Agreement” means the purchase agreement made effective as of the 8th day of July, 2010 between Geologix Explorations Inc., Geologix (Peru) S.A. (“Geologix”), the Vendor and the Corporation by which Geologix granted Newmont Peru S.R.L. a two percent (2%) net smelter return royalty for precious metals and a one percent (1%) net smelter return royalty for all other minerals from the sale or other disposition of all minerals produced from the properties;

 

(pp)

“Securities Act” means the Securities Act (Ontario);

 

(qq)

“Shareholder Share” means the 1 common share issued and outstanding in the capital of the Corporation being sold by the Shareholder and purchased by the Purchaser;

 

(rr)

“SUNAT” means the Peruvian National Superintendence of Tax Administration;

 

(ss)

“Tax” and “Taxes” have the meaning ascribed in Section 3.1(31)(i);

 

(tt)

“Tax Return” has the meaning ascribed in Section 3.1(31)(ii);

 

(uu)

“Termination Agreement” means the termination agreement made as of the 9th day of July, 2012 (as amended by an amending agreement dated January 30, 2013) between Pilot Gold, the Vendor and the Corporation by which the parties agreed to, among other things, terminate an option agreement with respect to the Mineral Rights and grant Pilot Gold the Pilot Gold NSR;

 

(vv)

“Transactions” means the purchase and sale of the Purchased Shares and all other transactions contemplated by this Agreement; and

 

(ww)

“Vendor Shares” means the 3,613,879 issued and outstanding common shares in the capital of the Corporation being sold by the Vendor and purchased by the Purchaser.

Schedule 3.1(15)

Financial Statements;

Schedule 3.1(28)(32)(33)

Material Contracts, Real Properties and Leased Premises and Mineral Rights

 

(a)

The Vendor and the Shareholder have all necessary corporate power to own the Purchased Shares and to enter into and perform their obligations under this Agreement, and each of the Vendor, Corporation and the Shareholder have all necessary corporate power to enter into and perform their respective obligations under any other agreements or instruments to be delivered or given by it pursuant to this Agreement.

 

(b)

The Vendor’s execution and delivery of, and performance of its obligations under, this Agreement and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part of each of the Vendor and the Corporation, respectively.

 

(c)

This Agreement or any other agreements entered into pursuant to this Agreement to which either of the Corporation or the Vendor is a party constitute legal, valid and binding obligations of each of the Corporation or the Vendor, as the case may be, enforceable against each of them in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

 

(a)

contravene or violate or result in a breach or a default under or give rise to a right of termination, amendment or cancellation or the acceleration of any obligations of the Vendor or the Corporation:

 

(i)

any applicable Law;

 

(ii)

any judgment, order, writ, injunction or decree of any Regulatory Authority having jurisdiction over the Vendor or the Corporation;

 

(iii)

the articles, by-laws or any resolutions of the board of directors or shareholders of the Vendor or the Corporation;

 

(iv)

any Consent held by the Vendor or the Corporation or necessary to the ownership of the Purchased Shares or the operation of the Business; or

 

(v)

the provisions of any Contract to which the Vendor or the Corporation is a party or by which any of them is, or any of their properties or assets are, bound; or

 

(b)

result in the creation or imposition of any Encumbrance on any of the Purchased Shares or any of the property or assets of the Corporation.

 

(a)

have been prepared in accordance with IFRS on a basis consistent with that of prior fiscal periods;

 

(b)

are complete and accurate; and

 

(c)

present fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of the Corporation at the respective balance sheet dates, and the results of operations of the Corporation.

 

(a)

distributor, sales, advertising, agency or manufacturer’s representative Contract;

 

(b)

collective bargaining agreement or other Contract with any labour union;

 

(c)

continuing Contract for the purchase of materials, supplies, equipment or services involving more than $10,000 in respect of any such Contract;

 

(d)

employment or consulting Contract or any other Contract with any officer, employee or consultant other than oral Contracts of indefinite hire terminable by the employer without cause on reasonable notice;

 

(e)

profit sharing, bonus, stock option, pension, retirement, disability, stock purchase, medical, dental, hospitalization, insurance or similar plan or agreement providing benefits to any current or former director, officer, employee or consultant;

 

(f)

trust indenture, mortgage, promissory note, loan agreement, guarantee or other Contract for the borrowing of money, the provision of financial assistance of any kind or a leasing transaction of a type required to be capitalized in accordance with IFRS, or any Contract creating an Encumbrance relating thereto;

 

(g)

commitment for charitable contributions;

 

(h)

Contract for capital expenditures in excess of $10,000 in the aggregate;

 

(i)

Contract for the sale of any assets, other than sales of inventory to customers in the ordinary course of the Business;

 

(j)

Contract pursuant to which the Corporation is a lessor of any machinery, equipment, motor vehicles, office furniture, fixtures or other personal property material to the Business;

 

(k)

Contract pursuant to which the Corporation is committed to process minerals or any other material;

 

(l)

Contract pursuant to which the Corporation is committed to transport minerals, concentrates, dumps, tailings or any other material;

 

(m)

Contract pursuant to which the Corporation is committed to sell or transfer any minerals or any other material;

 

(n)

Contract pursuant to which the Corporation is committed to store minerals, concentrates, leached solutions, drilling cores, machinery or any other material or equipment;

 

(o)

confidentiality, secrecy or non-disclosure Contract (whether the Corporation is a beneficiary or obligor thereunder) relating to any proprietary or confidential information or any non-competition or similar Contract;

 

(p)

agreement of guarantee, support, indemnification, assumption or endorsement of, or any other similar commitment with respect to, the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of, or any agreement to provide financial assistance of any kind to, any other person (except for cheques endorsed for collection);

 

(q)

Contract that expires, or may expire if the same is not renewed or extended at the option of any person other than the Corporation, more than one year after the date of this Agreement;

 

(r)

Contract with any officer, director, employee, shareholder or any other person not dealing at arm’s length with the Corporation (within the meaning of the ITA) except for Contracts of employment; or

 

(s)

Contract entered into by the Corporation other than in the ordinary course of the Business.

 

(a)

For purposes of this Section 3.1(31), the following definitions shall apply:

 

(i)

“Tax” and “Taxes” shall mean any or all national, federal, regional, provincial, local or foreign income, gross receipts, real property gains, goods and services, license, payroll, employment, excise, severance (including the “Compensación por Tiempo de Servicios”), workers profit sharing, mandatory workers insurances, indemnifications for layouts, pension premiums, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, mining concession fees, penalties for not meeting the annual minimum production or investment, or other taxes, levies, governmental charges or assessments of any kind whatsoever, including, without limitation, any estimated tax payments, interest, penalties or other additions, whether or not disputed.

 

(ii)

“Tax Return” shall mean any return, declaration, report, estimate, information return or statement, or claim for refund relating to, or required to be filed in connection with any Taxes, including information returns or reports with respect to withholding at source or payments to third parties, and any schedules or attachments or amendments of any of the foregoing.

 

(b)

The Corporation has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, all such Tax Returns are complete and accurate in all material respects, for all periods through December 31, 2011 for the Corporation.  All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, other than those which are being contested in good faith and in respect of which adequate reserves have been provided in the most recently published financial statements of the Corporation.  The Corporation’s Financial Statements reflect a reserve in accordance with IFRS for all Taxes payable by the Corporation for all taxable periods and portions thereof through the date of such financial statements.  No deficiency with respect to any Taxes has been proposed, asserted or assessed in writing against the Corporation, there are no actions, suits, proceedings, investigations or claims pending or threatened against the Corporation in respect of Taxes or any matters under discussion with any Regulatory Authority relating to Taxes, in each case which are likely to have a material adverse effect on the Corporation, and no waivers or written requests for waivers of the time to assess any such Taxes are outstanding or pending.  The Corporation has withheld from each payment made to any of their past or present employees, officers or directors, and to any non-resident of Canada, the amount of all Taxes required to be withheld therefrom and have paid the same to the proper tax or receiving officers within the time required under applicable legislation.  The Corporation, Vendor or Shareholder, as applicable, has remitted or will promptly remit upon completion of the transaction contemplated herein to the appropriate tax authorities all amounts collected by it in respect of Taxes payable with respect to the transaction contemplated by this Agreement or otherwise.  There are no liens for Taxes upon any asset of the Corporation except liens for taxes not yet due.

 

(c)

The Corporation is not a party to any joint venture, partnership or other arrangement or Contract that could be treated as a partnership for Tax purposes.

 

(a)

Schedule 3.1(28)(32)(33) lists all Real Properties owned in whole or in part by the Corporation and sets forth the legal descriptions. There are no Contracts to sell, transfer or otherwise dispose of any of the Real Properties, or to purchase or acquire any real properties other than the Real Properties, or which would restrict the ability of the Corporation to acquire or transfer any of the Real Properties.

 

(b)

The Corporation is the absolute beneficial owner of, and has good and marketable title in fee simple to each of the Real Properties, free and clear of any and all Encumbrances, except for the Permitted Encumbrances. Complete and correct copies of all documents creating those Permitted Encumbrances which affect the Real Properties have been provided to the Purchaser. Except as otherwise disclosed in Schedule 3.1(28)(32)(33), none of the Real Properties is leased, subject to an usufruct, subject to an easement, or licenced, in whole or in part, to any other person.

 

(c)

Schedule 3.1(28)(32)(33) describes all Leases under which the Corporation leases or subleases any real property as lessee or sublessee (hereinafter in this section referred to as the “Lessee”). Other than the Leases, the Corporation is not a party to or is not bound, as Lessee, by any lease, sublease, license or other instrument relating to real property. Complete and correct copies of the Leases have been provided to the Purchaser. The Leases are in full force and effect, unamended. The Lessee under each Lease is exclusively entitled to all rights and benefits as Lessee under such Lease, and no Lessee has sublet, assigned, licensed or otherwise conveyed any rights in any of the Leased Premises or in any of the Leases to any other person.

 

(d)

All rental and other payments and other obligations required to be paid and performed by the Lessee pursuant to each of the Leases have been duly paid and performed. The Lessee is not in default of any of its obligations under any of the Leases and none of the landlords or other parties to the Leases are in default of any of their obligations under any of the Leases. No waiver, indulgence or postponement of the Lessee’s obligations under any of the Leases has been granted by the landlord thereunder. There exists no event of default under any Lease or event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default under the Lease. None of the terms and conditions of any of the Leases will be affected by, nor will any of the Leases be in default as a result of, the completion of the Transactions, and all Consents of landlords or other parties to the Leases required in order to complete the Transactions have been obtained, or will have been obtained by the Closing Time, and are, or once obtained will be, in full force and effect.

 

(e)

The use by the Corporation of each of the Real Properties and Leased Premises is not in breach of any Laws, including any building, zoning or other statutes or any official plan, or any covenants, restrictions, rights or easements, affecting such Real Property or Leased Premises.  All buildings, structures and improvements situated on any of the Real Properties, and those situated on any of the Leased Premises, are located wholly within the boundaries of such Real Property or Leased Premises, as applicable, and comply with all Laws, covenants, restrictions, rights and easements affecting the same. There are no outstanding work orders, non-compliance orders, deficiency notices or other such notices relative to any of the Real Properties or Leased Premises. No part of any of the Real Properties or Leased Premises has been condemned, taken or expropriated by any Regulatory Authority, nor has any notice or proceeding in respect thereof been given, commenced or threatened.  Each of the Real Properties and Leased Premises is fully serviced by utilities having adequate capacities for the normal operations of the Business. Each of the Real Properties and Leased Premises has adequate rights of access to and from public streets or highways for the normal operations of the Business and there is no fact or circumstance which could result in the termination or restriction of such access. There is no defect or condition affecting any of the Real Properties or Leased Premises (or the soil or subsoil thereof) or any adjoining property which would impair the current use of such Real Property or Leased Premises.

 

(f)

No amounts including, without limitation, municipal property Taxes, local improvement Taxes, levies or assessments, are owing by the Corporation in respect of any of the Real Properties or the Leased Premises to any Regulatory Authority or public utility, other than current accounts which are not in arrears. There are no outstanding appeals on assessments which have been issued or raised by any Regulatory Authority or by the Corporation concerning any realty, business or other Taxes with respect to any of the Real Properties or Leased Premises. All amounts for labour or materials supplied to or on behalf of the Corporation relating to the construction, alteration or repair of or on any of the Real Properties or Leased Premises have been paid in full and no one has filed or has a right to file any construction, builders’, mechanics’ or similar liens.

 

(g)

The buildings and structures comprising the Real Properties and the Leased Premises are free of any structural defect. The heating, ventilating, plumbing, drainage, electrical and air conditioning systems and all other systems used in any of the Real Properties or the Leased Premises are in good working order, fully operational and free of any defect, except for normal wear and tear.

 

(a)

All of the Corporation’s material mineral interests and rights (including any material claims, concessions, exploration licenses, exploitation licenses, prospecting permits, mining leases and mining rights, in each case, either existing under contract, by operation of Law or otherwise) (collectively, the “Mineral Rights”), are set out in Schedule 3.1(28)(32)(33).  Other than the Mineral Rights set out in Schedule 3.1(28)(32)(33), the Corporation does not own, lease or have any interest in any material mineral interests and rights, including rights upon ore processing facilities.

 

(b)

Except as set forth in Schedule 3.1(28)(32)(33), the Corporation is the sole legal and beneficial owner or all right, title and interest in and to the Mineral Rights, free and clear of any Encumbrances.

 

(c)

All of the Mineral Rights have been properly located and recorded in compliance with applicable Law, including the registry of their UTM coordinates at the registry file of each of the rights comprising the Mineral Rights, and are comprised of valid and subsisting mineral claims, with full authority to explore and mine on them.

 

(d)

The Mineral Rights are in good standing under applicable law and any and all work and investment required to be performed and filed in respect thereof has been performed and filed, all Taxes, rentals, fees, expenditures and other payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.

 

(e)

There is no overlapping or material adverse claim against or challenge to the title to or ownership of the Mineral Rights.

 

(f)

The Corporation has the exclusive right to deal with the Mineral Rights.

 

(g)

Other than the Royalty Agreement and the Pilot Gold NSR, no Person other than the Corporation has any interest in the Mineral Rights or the production or profits therefrom or any royalty in respect thereof or any right to acquire any such interest.

 

(h)

Other than the right of first refusal granted to Pilot Gold pursuant to the Termination Agreement, there are no options, back-in rights, earn-in rights, rights of first refusal or similar provisions or rights which would affect the Corporation’s interest in the Mineral Rights.

 

(i)

The Mineral Rights are not located within any natural protected area or its buffering zone, any town or its expansion zone, or any area banned for mining activities.  There are not material restrictions on the ability of the Corporation to use, transfer, explore, develop, construct or exploit the Mineral Rights, except pursuant to the applicable Law.

 

(j)

The Corporation has not received any notice, whether written or oral, from any Regulatory Authority of any revocation or intention to revoke any interest of the Corporation in any of the Mineral Rights.

 

(k)

The Corporation has all surface rights, including fee simple estates, leases, easements, right of way and permits or licences for operations from landowners or Regulatory Authorities permitting the use of surface land by the Corporation, and mineral interests for development and current exploration of the Mineral Rights and no third party, local community or group holds any such rights that are required by the Corporation to develop and currently exploit the Mineral Rights.

 

(l)

All mines located in or on the lands of the Corporation or lands pooled or unitized therewith, which have been abandoned by the Corporation, have been abandoned in accordance with good mining practices and in compliance with all applicable Laws, and all future abandonment, remediation and reclamation obligations known to the Corporation as of the date hereof have been accurately set forth in Schedule 3.1(28)(32)(33) without omission of information necessary to make the disclosure not misleading.

 

(a)

For the purposes of this Agreement, the following terms and expressions shall have the following meanings:

 

(i)

“Environmental Laws” means all Laws applicable to the environment, occupational health and safety, product safety, product liability and public safety.

 

(ii)

“Environmental Consents” includes all Consents issued by or issuable by any Regulatory Authority under Environmental Laws.

 

(iii)

“Hazardous Substance” means, any material or substance that may impair the quality of the environment or which under Environmental Laws is deemed to be “hazardous”, a “pollutant”, “toxic”, “deleterious”, “caustic”, “dangerous”, a “waste”, a “hazardous material”, a “source of contamination” or analogous substance including, without limitation, petroleum and petroleum products, asbestos, polychlorinated biphenyls, and flammable and radioactive materials.

 

(iv)

“Release” means any release, spill, leak, emission, discharge, leach, dumping, migration, pumping, pouring, emitting, emptying, injecting, spraying, burying, abandoning, incinerating, seeping, escape, disposal or similar or analogous act as defined in any Environmental Laws.

 

(b)

The Corporation, the operation of the Business and the assets owned or used by the Corporation have been and are in compliance with all Environmental Laws, including all Environmental Consents.

 

(c)

The Corporation has not been charged with or convicted of any offence for non-compliance with Environmental Laws, or been fined or otherwise sentenced or settled any prosecution short of conviction; and (ii) there are no notices of judgment or commencement of proceedings of any nature and the Corporation has never been investigated relating to any breach or alleged breach of Environmental Laws.

 

(d)

The Corporation has obtained all Environmental Consents necessary to conduct the initial exploration activities and to own, use and operate their respective properties and assets.

 

(e)

There are no Hazardous Substances located on or in or under the surface of the Mineral Rights or any Real Properties or Leased Premises of the Corporation, and no Release of any Hazardous Substances has occurred on, in or from any of the Mineral Rights, Real Properties or Leased Premises or has resulted from the operation of the Business and the conduct of activities thereon.

 

(f)

The Corporation has not used the area of the Mineral Rights or any of its Real Properties or Leased Premises to produce, generate, manufacture, treat, store, handle, transport or dispose of any Hazardous Substances except in compliance with Environmental Laws.

 

(a)

The Purchaser has all necessary corporate power to own the Purchased Shares. The Purchaser has all necessary corporate power to enter into and perform its obligations under this Agreement and any other agreements or instruments to be delivered or given by it pursuant to this Agreement.

 

(b)

The execution, delivery and performance by the Purchaser of this Agreement and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part of the Purchaser.

 

(c)

This Agreement or any other agreements entered into pursuant to this Agreement to which the Purchaser is a party constitute legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

 

(a)

contravene or violate or result in a breach or a default under or give rise to a right of termination, amendment or cancellation or the acceleration of any obligations of the Purchaser, under:

 

(i)

any applicable Law;

 

(ii)

any judgment, order, writ, injunction or decree of any Regulatory Authority having jurisdiction over the Purchaser;

 

(iii)

the articles, by-laws or any resolutions of the board of directors or shareholders of the Purchaser;

 

(iv)

any Consent held by the Purchaser; or

 

(v)

the provisions of any Contract to which the Purchaser is a party or by which it is, or any of its properties or assets are, bound.

 

(i)

amends its articles, by-laws, constating documents or other organizational documents;

 

(ii)

amalgamates, merges, reorganizes or consolidates with, or acquires all or substantially all the shares or assets of any person; or

 

(iii)

transfers, leases, licenses, sells or otherwise disposes of any of its assets, or permits any Encumbrance to attach to or affect any of its assets, or does any act or thing other than in the ordinary course of the Business consistent with past practice;

 

(a)

any material adverse change in any of the assets, business, financial condition, earnings, results of operations or prospects of the Corporation that has, or threatens to have, a material adverse effect on the assets, business, financial condition, earnings, results of operations or prospects of the Corporation on a consolidated basis or which might materially adversely affect the ability of the Corporation to carry on the Business after the Closing substantially as such Business is being conducted upon the date of this Agreement; or

 

(b)

any damage, destruction or loss, or other event, development or condition of any character (whether or not covered by insurance) which would have a material adverse effect on the assets, business, financial condition, earnings, results of operations or prospects of the Corporation on a consolidated basis.

 

(a)

duly executed resignations effective as at the Closing Time of each director and officer of the Corporation specified by the Purchaser;

 

(b)

all Records and all corporate records of the Corporation and other documents referred to in this Agreement or any Schedule;

 

(c)

certificates representing the Vendor Shares, accompanied by a notarized copy of the entry of the share ledger of the Corporation duly signed by an authorized officer of the Corporation showing the transfer of the Vendor Shares to the Purchaser, and all such other assurances, consents and other documents as the Purchaser may reasonably request to effectively transfer to the Purchaser title to the Vendor Shares free and clear of all Encumbrances;

 

(d)

a certificate representing the Shareholder Share, accompanied by a notarized copy of the entry of the share ledger of the Corporation duly signed by an authorized officer of the Corporation showing the transfer of the Shareholder Share to the Purchaser, and all such other assurances, consents and other documents as the Purchaser may reasonably request to effectively transfer to such person as the Purchaser so directs title to the Shareholder Share free and clear of all Encumbrances;

 

(e)

a waiver from the Vendor with respect to its right of first refusal on the transfer of the Shareholder Share by the Shareholder;

 

(f)

a waiver from the Shareholder with respect to his right of first refusal on the transfer of the Vendor Shares held by the Vendor;

 

(g)

a waiver from the Corporation with respect to its right of first refusal on the transfer of the Purchased Shares;

 

(h)

a written confirmation of no interest and quit claim from Pilot Gold whereby Pilot Gold releases, discharges, and quit claims any rights in and to the Mineral Rights, subject to the Pilot Gold NSR; and

 

(i)

all documentation and other evidence reasonably requested by the Purchaser in order to establish the due authorization and consummation of the Transactions, including the taking of all corporate proceedings by the boards of directors and shareholders of the Vendor and the Corporation required to effectively carry out the obligations of the Vendor and the Corporation pursuant to this Agreement.

 

(a)

payment of the Purchase Price to be paid under Section 2.3;

 

(b)

receipt for the certificates representing the Purchased Shares;

 

(c)

a certificate of status or the equivalent under the laws of the jurisdiction governing the corporate existence of the Purchaser;

 

(d)

a written confirmation and acknowledgement of the Pilot Gold NSR in accordance with Section 4(b)(ii) of the Termination Agreement; and

 

(e)

all documentation and other evidence reasonably requested by the Vendor in order to establish the due authorization and consummation of the Transactions, including the taking of all corporate proceedings by the boards of directors and shareholders of the Purchaser required to effectively carry out the obligations of the Vendor and the Corporation pursuant to this Agreement.

 

(a)

the amount of any insurance or other reimbursement received by the Indemnifying Party in relation to the breach or other event giving rise to the Claim; and

 

(b)

the amount expected to be recovered under any counterclaims against third parties in relation to the breach or other event giving rise to the Claim.

 

(a)

there shall be no liability of an Indemnifying Party for any Claim unless an individual Claim group or series of Claims exceed $10,000, it being understood that such Claims shall accumulate until such time or times as the aggregate of all such Claims exceed $10,000, whereupon the Indemnified Party shall be entitled to claim indemnification hereunder for all such Claims including such accumulated $10,000amount; and

 

(b)

the maximum cumulative amount of Claims recoverable from the Indemnified Party under this Agreement shall in no event exceed $700,000.

 

(a)

if to the Vendor or the Shareholder:

 

(b)

if to the Purchaser:

 

(c)

if to the Corporation:

 

1.

Escritura Pública de Transferencia de Concesiones Mineras y Bienes de Geologix (Peru) S.A. a Rae Wallace Perú S.A.C;

 

2.

the Royalty Agreement (as defined and further described above) and the according two percent (2%) net smelter return royalty for precious metals and a one percent (1%) net smelter return royalty for all other minerals from the sale or other disposition of all minerals produced from the properties granted by Geologix in favour of Newmont Peru S.R.L.;

 

3.

the Termination Agreement (as defined and further described above) and the according Pilot Gold NSR;

 

4.

Autorización de Uso y Servidumbre para Uso de Terrenos de la Comunidad Indígena de Ccarhuancho de fecha 12 de Febrero del 2011;

 

5.

Contrato de Arrendamiento del inmueble ubicado en cale los lirios Mz K -24-Urbanización Alpamayo, Ate Vitarte, Lima Perú; and

 

6.

Constancia de Aprobación de Declaracion de Impacto Ambiental Proyecto Toro Blanco de fecha 11 de Julio del 2011.

1

Liscay 1

01-05978-07

1000 Has.

12195849

2

Liscay 2

01-06190-07

1000 Has.

12195366

3

Liscay G3

01-06191-07

1000 Has.

12195746

4

Liscay 4

01-06230-07

1000 Has.

12195717

5

Liscay 5

01-06231-07

1000 Has.

12195697

6

Liscay 6

01-06431-07

1000 Has.

12437912

7

Liscay 7

01-06432-07

800 Has.

12196815

8

Liscay 8 1000

01-00399-08

1000 Has.

12438282

9

Liscay 9 1000

01-02352-08

1000 Has.

12437777

10

Liscay S 1 1000

01-00798-08

1000 Has.

12194178

11

Liscay S 2 1000

01-00800-08

1000 Has.

12190152

12

Liscay S 3 1000

01-00799-08

1000 Has.

12190327

1

Tambo Nuevo 15

01-02803-04

900 Has.

11048698

1

Tambo Nuevo 11

01-00443-04

400 Has.

11028687

1

Lachoc

01-01132-07

1000 Has.

11111717

2

Los Osos 2006

01-02150-06

600 Has.

11098035

1

Lagartija 1

01-02097-06

1000 Has.

12139565

2

Los Lagartos 1 1000

01-01910-08

1000 Has.

12194143

3

Los Lagartos 2 1000

01-01911-08

1000 Has.

12540787

1

Hermosita

01-01353-07

1000 Has.

11111698

2

Hermosita 500

01-01484-07

500 Has.

11111712

3

Hermosita 1000

01-01485-07

1000 Has.

11111700

1

Tambo Nuevo 4

01-00094-04

400 Has.

11028676

1

Tambo Nuevo 5

01-00106-04

1000 Has.

11028837

2

Tambo Nuevo 6

01-00107-04

500 Has.

11028675

3

Tambo Nuevo 13

01-00920-04

400 Has.

11111690

 

1.

Banco de Credito del Peruú BCP  Soles  Nº 011-0387-0100019405-88; and

 

2.

Banco de Credito del Peruú BCP   US$  Nº 0011-0387-0100019391-80.