MINING OPTION AGREEMENT

AND:

A.  

The Optionor holds an option for 100% of the claims comprising the Property more particularly detailed on Schedule A appended hereto (the Property”).

B.  

The Optionee wishes to option a 100% interest in and to the Property from the Optionor, subject only to a 2% Net Smelter Royalty.

(a)  

“Acts” means all legislation, as amended from time to time, of the jurisdiction in which the Property is located, applicable to the Property, including title to, and Mining Operations on, the Property.

(b)  

 “Agreement” means this agreement, including the recitals, and schedules, all as amended, supplemented or restated from time to time.

(c)  

“AMI” means the area outlined in this Agreement or the Schedules hereto  and shall constitute an Area of Mutual Interest, between the Optionor and the Optionee and any Operator  which shall remain in force and effect for the term of this Agreement, and any Operating Agreement or Joint Venture Agreement which shall survive this Agreement.

(d)  

“Business Day” means a day other than a Saturday, Sunday or statutory holiday in the United States of America.

(e)  

“Effective Date” means February 1, 2012.

(f)  

“Encumbrances” means security interests, liens, royalties, charges, mortgages, pledges and encumbrances of any nature or kind whatsoever, whether written or oral, direct or indirect.

(g)  

 “Expenditures” means all costs, expenses and charges, direct or indirect, of or incidental to the Mining Operations incurred by the Optionee, which costs, expenses and charges shall be determined in accordance with the Optionee’s accounting practices applicable from time to time to the extent that those practices are consistent with Canadian generally accepted accounting principles.

(h)  

“Government” means any federal, provincial, regional, municipal or other government, governmental department, regulatory authority, commission, board, bureau, agency or instrumentality that have lawful authority to regulate or administer or govern a business, property or affairs of any person, and for the purposes of this Agreement also includes any corporation or other entity owned or controlled by any of the foregoing and any stock exchange in which shares of a party are listed for trading.

(i)  

“MDU” means map designated unit.

(j)  

“Minerals” means the end products produced or derived from operating the Property as a mine.

(k)  

“Mining Operations” means every kind of work done on or in respect of the Property or the Minerals derived from the Property during the Option Period 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, assaying, prospecting, designing, examining, equipping, improving, surveying, shaft-sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, surveying and bringing any mining claims to lease or patent, reclaiming and all other work usually considered to be prospecting, exploration, development, mining and reclamation 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.

(l)  

“Net Smelter Return”  has the meaning set out in Schedule "B" hereto.

(m)  

 “Operator” shall be Optionor, who may appoint a designated party to undertake its duties and has the meaning as set out in Schedule “C” appended hereto.

(n)  

“Option” has the meaning set out in Section 3.1 of this Agreement.

(o)  

“Option Period” means the period commencing on the Effective Date and ending on the earlier of January 31, 2015, and the date on which the Option is terminated or lapses in accordance with this Agreement.

(p)  

 “Permitted Encumbrance” means

(i)  

a current Option Agreement between the Optionor and the owner of the Claims as disclosed to the Optionee;

(ii)  

easements, rights of way, servitudes or other similar rights in land including, without limiting the generality of the foregoing, rights of way and servitudes for railways, sewers, drains, gas and oil pipelines, gas and water mains, electrical light, power, telephone, telegraph or cable television conduits, poles, wires and cables;

(iii)  

the right reserved to or vested in any Government or Regulatory Authority or other public authority by the terms of any or by any statutory provision, to terminate, revoke or forfeit any of the lease or mining claims or to require annual or other periodic payments as a condition of the continuance thereof;

(iv)  

rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate in any manner, and all applicable laws, rules and orders of any governmental authority;

 

“Property” means all of the subject claims in the Province of Quebec, Canada more particularly described in Schedule “A” attached hereto, and, when the context so implies, the lands and premises subject thereto, and includes any replacement or successor permit or claims, and all mining leases and other mining interests derived from any such permit covering the same area of land.

 

“Regulatory Authorities” means any and all securities regulatory authorities having jurisdiction over this Agreement and the transactions contemplated herein.

(a)  

the Optionor is a corporation duly incorporated, organized and subsisting under the laws of Belize with the corporate power to own its assets and to carry on its business in the jurisdiction in which the Property is located;

(b)  

the Optionor has good and sufficient authority to enter into and deliver this Agreement and to transfer its legal and beneficial interest in the Property as required under this Agreement to the Optionee;

(c)  

other than disclosed herein there is no contract, option or any other right of another form binding upon the Optionor to option, sell, transfer, assign, pledge, charge, mortgage, explore or in any other way option, dispose of or encumber all or part of the Property or any portion thereof or interest therein other than pursuant to the provisions of this Agreement;

(d)  

the execution, delivery and performance of this Agreement by the Optionor, and the consummation of the transactions herein contemplated will not (i) violate or conflict with any term or provision of any agreements in regard to the property entered into by the Optionor; (ii) violate or conflict with any term or provision of any order of any court, Government or Regulatory Authority or any law or regulation of any jurisdiction in which the Optionor’s business is carried on; or (iii) conflict with, accelerate the performance required by or result in the breach of any agreement to which it is a party or by which it is currently bound;

(e)  

the Optionor holds an option for 100% of the right, title and working interest in and to the Property, which, to the best of the Optionor’s knowledge without having made any inquiries, is free and clear of all Encumbrances except for those Permitted Encumbrances;

(f)  

the Property is properly and accurately described in Schedule “A” hereto and is in good standing under the laws of the jurisdiction in which the Property is located up to and including at least the expiry dates set forth in Schedule “A”;

(g)  

this Agreement has been duly authorized, executed and delivered by the Optionor and constitutes a valid and binding obligation of the Optionor enforceable against the Optionor in accordance with its terms, except as enforcement may be limited by

  

bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought; and

(h)  

the Optionor shall, during the Option Period:

(i)  

remain in good standing in the respective jurisdiction in which the Optionor is registered, and all jurisdictions as required to hold the Property, failure to do so will result in a default under this Agreement and the Optionee shall have the right to register title to the Property in its name to protect its interest in and to the Property;

(ii)  

promptly provide the Optionee with any and all notices and correspondence from the title holder, the Government or Regulatory Authorities in respect of the Property;

(iii)  

co-operate with the Optionee in obtaining any permits or licences required by authorities in the jurisdictions in which the Property is situated;

(iv)  

not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder.

(a)  

the Optionee is a corporation duly incorporated, organized and subsisting under the laws of Nevada with the corporate power to own its assets and will register the required documentation, if required,  to carry on its business in the jurisdiction in which the Property is located;

(b)  

the Optionee has all necessary power and authority to own or lease its assets and carry on its business as presently carried on, to carry out its obligations herein and to enter into this Agreement and any agreement or instrument referred to in or contemplated by this Agreement and to do all such acts and things as are required to be done, observed or performed by it, in accordance with the terms of this Agreement and any agreement or instrument referred to in or contemplated by this Agreement;

(c)  

the execution, delivery and performance of this Agreement by the Optionee, and the consummation of the transactions herein contemplated will not (i) violate or conflict with any term or provision of any of the articles, by-laws or other constating documents of the Optionee; (ii) violate or conflict with any term or provision of any order of any court, Government or Regulatory Authority or any law or regulation of any jurisdiction in which the Optionee’s business is carried on; or (iii) conflict with, accelerate the performance required by or result in the breach of any agreement to which it is a party or by which it is currently bound;

(d)  

this Agreement has been duly authorized, executed and delivered by the Optionee and constitutes a valid and binding obligation of the Optionee enforceable against the Optionee in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought;

(e)  

the Optionee shall promptly apply for and use it reasonable best efforts to obtain all approvals, orders or acceptances required in connection with this Agreement, including,

 

but not limited to those required by the Exchange, any Government or Regulatory Authorities, the shareholders of the Optionee and the Agency; and the Optionee shall deliver to the Optionor copies of all such approvals, orders and acceptances, as the case may be, forthwith upon receipt of them by the Optionee; and

(f)  

the Optionee shall, during the Option Period:

(i)  

promptly provide the Optionor with any and all notices and correspondence from Government or Regulatory Authorities in respect of the Property;

(ii)  

co-operate with the Optionor in obtaining any permits or licences required by authorities in the regions which have authorization over the Property;

(iii)  

deliver to the Optionor, from time to time, copies of any and all geological reports and assay results that pertain to the Property, within thirty (30) days of receipt of the aforementioned data;

(iv)  

not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionor hereunder; and

(v)  

maintain its corporate existence.

(i)  

22,500,000 shares of common stock upon execution of this Agreement;

(ii)  

10,000,000 shares of common stock on or before February 1, 2013;

(iii)  

7,500,000 shares of common stock on or before December 31, 2013.

(a)  

incur Expenditures in an aggregate amount of $525,000 as follows:

(i)  

subject to section 3.6 herein, at least $100,000  before December 31 , 2012;

(ii)  

$125,000 on or before December 31, 2013

(iii)  

$300,000 on or before December 31, 2014.

(b)  

during the Option Period, keep the Property in good standing by paying all taxes, assessments and other charges and by doing all other acts and things that may be necessary in that regard, which payments shall be made from the Expenditures as detailed in 3.4(a) above.

(a)  

The Optionee shall provide, maintain and pay for the following insurance which costs shall be covered in the Expenditures defined in 3.4(a) above.  Said insurance shall be placed with an insurance company or companies and in a form as may be acceptable to the Optionor:

(i)  

comprehensive general liability insurance protecting the Optionee and Optionor and their respective employees, agents, contractors, invitees and licencees 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 the Optionee and Optionor under this Agreement, including coverage for liability arising out of products, whether manufactured or supplied by the Optionee and Optionor, completed operations, contingent employer's liability and contractual liability, and

(ii)  

automobile insurance on the Optionee's owned and non-owned vehicles, if any, protecting the Optionee and its employees, agents, contractors, invitees and licencees against damages arising from bodily injury (including death) and from claims for property damage arising out of the operations of the Optionee and Optionor under this Agreement.

(b)  

Each policy of insurance contemplated in this Section shall:

(i)  

be in an amount which is  not less than $1,000,000 inclusive of any one occurrence;

(ii)  

and the policy of insurance referred to in  Section 4.4(a)(i) shall:

1.  

include a standard form of cross-liability clause;

2.  

contain a clause waiving the insurer's right of subrogation against the Optionor; and

3.  

indicate that the insurer will give the Optionor thirty days' prior written notice of cancellation or termination of the coverage.

(c)  

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

(a)  

receive, handle, use, store, treat, ship and dispose of any and all environmental contaminants (as established from time to time by applicable legislation or regulation or by-law) in strict compliance with all applicable environmental, health or safety laws, regulations, order or approvals; and will remove prior to the lapse or termination of the Option, from and off the Property all environmental contaminants.

(b)  

not release into the environment, or deposit, discharge, place, or dispose of at, on or near the Property any hazardous or toxic materials, substances, pollutants, contaminants or wastes as a result of the mining operations conducted by it; and

(c)  

not use the Property, not permit any other person to use the Property as a landfill or waste disposal site.

(a)  

With the exception of a default under Section 5.1(b) herein, the Optionee is in default in any material respect of any term or condition of this Agreement and fails to cure such default within thirty (30) Business Days of receiving notice from the Optionor specifying the particulars of such default;

(b)  

the Optionee fails to incur all of the Expenditures within the time periods set out herein;

(c)  

the Optionee fails to carry out the assessment work or pay the taxes, assessments and other charges described in Section 3.4 and fails to cure such default within 30 days of receiving notice from the Optionor specifying the particulars of such default;

(d)  

the Optionee fails to make the Exploration Program Advances as set out in this Agreement; or

(e)  

the Optionee fails to file the required assessment credits in respect of the Mining Operations in a timely manner, as prescribed herein and by the jurisdiction to which fees must be paid.

(a)  

ensure that any claims or map designated units comprising the Property are in good standing for a period of at least 90 days from the lapse, termination or surrender of the

Option and/or this Agreement, as the case may be, and upon request of the Optionor, retransfer the Property to the Optionor (if it is then in the name of the Optionee) free and clear of all Encumbrances;

(b)  

ensure that the Property is in at least the same state concerning environmental and hazardous conditions as the Property was on the date of this Agreement and that it is free and clear of all liens, claims and encumbrances that may have been created by the Optionee;

(c)  

deliver to the Optionor any and all reports, maps, assessment reports and maps, samples, assay results, drill cores, data and other information of any kind whatsoever pertaining to the Property or related to Mining Operations which have not been previously delivered to the Optionor;

(d)  

remove all materials supplies and equipment from the Property; provided however, that the Optionor may at the cost of the Optionee, dispose of any such materials, supplies or equipment not removed from the Property within 90 days of receipt of such notice by the Optionee; and

(e)  

not engage in any form of conduct, or make any statements or representations that disparage or may disparage or otherwise harm the Optionor’s reputation, good will or commercial interest.

(a)  

The Optionee shall and does hereby indemnify and save the Optionor harmless from and against all losses, liabilities, claims, demands, damages, expenses, suits, injury or death in any way referable to Mining Operations conducted by or on behalf of the Optionee after the date hereof; provided that the Optionor shall not be indemnified for any loss, liability, claim, demand, damage, expense, suit, injury or death resulting from the negligence or wilful misconduct of the Optionor or its employees, agents or contractors. For further clarity, the parties intend that the Optionee shall be responsible for all liabilities, known or unknown, contingent or otherwise, which were incurred or arose during the Option Period, relating to or arising out of:

(i)  

the conduct of activities in, on or under the Property;

(ii)  

the environmental protection, clean-up, remediation, and reclamation of the Property including, but not limited to, the obligations and liabilities arising out of or related to:

1.  

the disturbance or contamination of land, water (above or below surface) or the environment by exploration, mining, processing or waste disposal activities;

2.  

any failure to comply with all past, current or future governmental or regulatory authorizations, licenses, permits, and orders and all non-governmental prohibitions, covenants, contracts and indemnities;

3.  

any act or omission causing or resulting in the spill, discharge, leak, emission, ejection, escape, dumping or release of hazardous or toxic substances, materials, or wastes as defined in any federal, provincial, or local law or regulation in connection with or emanating from the Property; and

4.  

the long-term reclamation and remediation of the Property and the care and monitoring of the Property, and the posting and maintaining of bonds or other financial assurances required in connection therewith.

(b)  

Each party hereto shall indemnify and save harmless the other, as well as its officers, directors and shareholders, from and against any and all claims, losses, liabilities, damages, fees, fines, penalties, interests, deficiencies, costs and expenses, of any nature or kind whatsoever (collectively, the “Claims”), arising by virtue or in respect of any breach of covenant contained herein or failure to comply with any provision herein, or any inaccuracy, misstatement, misrepresentation or omission made by such party in connection with any matter set out herein, and any and all actions, suits, proceedings, demands, claims, costs, legal and other expenses related or incidental thereto.

(c)  

Notwithstanding any other provision of this Agreement and any termination of this Agreement, the indemnities provided herein shall remain in full force and effect until all possible liabilities of the persons indemnified thereby are extinguished by the operation of law and will not be limited to or affected by any other indemnity obtained by such indemnified persons from any other person.

(d)  

No investigation made by or on behalf of either of the parties hereto at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation, warranty or covenant made by the other party herein or pursuant hereto.  No waiver by either of the parties hereto of any condition herein, in whole or in part, shall operate as a waiver of any other condition herein.

(a)  

If there is a dispute between the parties with respect to this Agreement, or the interpretation of this Agreement, the Optionee and the Optionor shall, firstly, be obligated to use best efforts to reconcile and settle each and every dispute.  In the event that a settlement or agreement cannot be reached between the parties, the aggrieved party (“Claimant”) shall, pursuant to Section 10.1 herein, deliver an arbitration notice (“Arbitration Notice”) to the other party (the “Respondent”) detailing the nature of the dispute, the facts and the relevant evidence.  Within 7 days that the Respondent receives the Arbitration Notice, each of the Claimant and the Respondent shall appoint a nominee.  The two nominees so appointed shall, within 21 days of the date of the Arbitration Notice, in turn select a single arbitrator (the “Arbitrator”) to settle all matters arising from the dispute.  In the event that either the Claimant or Respondent, or their selected nominees, fail to appoint the Arbitrator within the prescribed periods, the party in default of the time provisions shall automatically accept the arbitrator selected by the party not in default, as being the Arbitrator to settle all matters arising from the dispute.

(b)  

The Claimant shall deposit with the Arbitrator a full and complete formal statement of claim, which shall not be subject to amendment at any time during the arbitration process unless otherwise permitted by the Arbitrator, within 30 days of the date that the Arbitrator was selected.  Unless otherwise required by the Regulatory Authorities, neither the Claimant nor the Respondent shall announce publicly the alleged claims or

 

dispute until such time as a formal statement of claim has been deposited with the Arbitrator.

(c)  

Each of the Claimant and the Respondent shall jointly instruct the Arbitrator to create an arbitration protocol in a timely manner dealing with the timing and procedures (including security for costs) of all matters that are subject to the dispute, taking into consideration: (i) the fact that each of the Claimant and the Respondent are reporting issuers, as that term is described in applicable securities legislation, and; (ii) the seasonality of the Mining Operations and what correlative effects the process may have on logistics.

(d)  

The award made by the Arbitrator shall be final and binding upon the parties, and shall in all respects be kept and observed.  The Arbitrator shall have the authority to award and direct that the parties, or either of them, execute and deliver such releases, conveyances, deeds, assurances and other documents as the Arbitrator thinks fit, and these releases, conveyances, deeds, assurances and other documents shall be executed and delivered accordingly

(e)  

All costs of the arbitral proceedings shall be in the discretion of the Arbitrator who may direct to and by whom, and in what manner, (including allocation between the parties) the costs or any part of them shall be paid, it being the intention of the parties that the first principle in the exercise of the Arbitrator’s discretion shall be that the costs of the arbitral proceedings shall follow the event of the award.  The costs of the arbitral proceedings and the award shall include, but not be limited to, the sum of (i) the Arbitrator’s fees and applicable taxes, (ii) all actual, reasonable legal fees and disbursements of the Arbitrator and the parties to the dispute, and (iii) a sum equal to the product of $200 multiplied by the number of days in the period commencing on the date that is 90 days prior to the date of the arbitral hearing (or trial) and ending on the last date of such hearing or trial.

(f)  

The Arbitrator may proceed ex parte in case either party, or any of their witnesses, shall at any time neglect or refuse to attend the arbitration proceedings after 7 days’ notice in writing under the hand of the Arbitrator given to each party or to the parties’ solicitor, unless the party, prior to the time fixed to attend, presents to the Arbitrator what the latter considers sufficient cause for failure to attend.

(g)  

The Arbitrator and any nominee under Subsection 12.11(a) must be a resident of Alberta and either of a practising notary, lawyer, advocate, accountant, professor, in the State of Nevada, or a retired justice of any of the courts of the State of Nevada.  An Arbitrator selected outside of the jurisdiction of Nevada may only be effective if agreed to in writing by each of the Claimant and the Respondent. The language to be used in the arbitral proceedings shall be English.

(h)  

Any award made by the Arbitrator may, at the instance of either of the parties to the dispute and without notice to the other of them, be made an Order of the Courts of Nevada

 

By:

 

 

 

 

By:

 

 

 

(a)

“Agreement” means the Agreement to which this Schedule is attached.

(b)  

“Program” means the work plan and budget of Mining Operations conducted during the Option Period and adopted pursuant to Section 4 of the Agreement.

“Costs” means all items of outlay and expense whatsoever, direct or indirect, with respect to Mining Operations, recorded by the Operator after the date hereof in accordance with this Agreement and prior to the formation of the Joint Venture and shall include all obligations and liabilities incurred or to be incurred with respect to the protection of the environment such as future decommissioning, reclamation and long-term care and monitoring, even if not then due and payable so long as the amounts can be estimated with reasonable accuracy, and whether or not a mine reclamation trust fund has been established.

(a)  

comply with the provisions of all agreements or instruments of title under which the Property or Assets are held;

(b)  

pay all Costs properly incurred promptly as and when due;

(c)  

maintain books of account in accordance with the normal industry accounting procedure, and the judgment of the Operator as to matters related to the accounting shall govern if the Operator's accounting practices are in accordance with accounting principles generally accepted in the mining industry in Canada; and

(d)  

perform its duties and obligations hereunder in a sound and workmanlike manner, in accordance with sound mining and engineering practices and other practices customary in the Canadian mining industry, and in substantial compliance with all applicable federal, provincial, Territorial and municipal laws, by-laws, ordinances, rules and regulations.

 

(a)

no more frequently than monthly, for the Costs incurred and paid by the Operator in carrying out a Program; or

 

(b)

not more than 120 days in advance of requirements, for an advance of the Costs estimated to be incurred and paid by the Operator in carrying out a Program or portion thereof.

 

(a)

the Operator shall not be entitled to submit a draft Program for the subject period;

 

(b)

the Optionee may submit a draft Program (the “Non-Operator's Program”) for the subject period for consideration by the Operator;

 

(c)

if the Operator elects to proceed with the Non-Operator's Program, it shall remain as the operator for the duration of the Non-Operator's Program; and

 

(d)

if the Operator elects not to proceed with the Non-Operator’s Program, it shall cease to be the Operator for the duration of the Non-Operator's Program, and the Optionee shall carry out the Non-Operator Program itself.

 

(a)

10% for each individual contract which is not more than $100,000;

 

(b)

8% for each individual contract which exceeds $100,000;

 

(c)

10% of all other Costs not included in clauses 5.01(a) and 5.01(b).

 

(a)

at the direction of, or with the concurrence of, the Optionee; or

 

(b)

unilaterally and in good faith by the Operator to protect life or property