PURCHASE AND SALE AGREEMENT FOR THE RUBY HILL ROYALTY by ROYAL GOLD INC

 

Exhibit 10.1

 

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PURCHASE AND SALE AGREEMENT
FOR THE
RUBY HILL ROYALTY

 

 

 

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AMONG

 

 

METALLIC VENTURES (U.S.), INC.,

 

INTERNATIONAL MINERALS CORPORATION,

 

 

AND

 

 

ROYAL GOLD, INC.

 

 

May 23, 2012

 

 

 

PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement ("Agreement") is made as of this 23^rd day of May 2012 ("Agreement Date"), by and among METALLIC VENTURES (U.S.), INC., a corporation organized under the laws of the State of Nevada ("Seller"), international Minerals Corporation, a corporation organized under the laws of the Yukon Territory ("International"), and ROYAL GOLD, INC., a corporation organized under the laws of the State of Delaware (the "Purchaser").

 

RECITALS

 

A.     By Warranty Deed made effective as of June 29, 1994, from Ruby Hill Mining Company ("Ruby Hill") to Homestake Mining Company of California ("Homestake") ("Royalty Agreement"), recorded on February 19, 1998 in the Official Records of Eureka County, Nevada, at Book 318, Page 96, File No. 169763, Ruby Hill: (i) granted, conveyed and warranted to Homestake those lands situate in Eureka County, Nevada more particularly described in Exhibit A to the Royalty Agreement, together with certain other real and personal property interests (collectively, the "Mining Property"); and (ii) reserved to itself a production royalty of three percent of "Net Smelter Returns" (as that term is defined in the Royalty Agreement) for all ores and minerals mined or otherwise recovered from the Mining Property and thereafter sold by or for the account of Homestake, subject to the terms and conditions of the Royalty Agreement ("Royalty").

 

B.     As a result of certain transactions culminating with the Merger, Seller is the owner of an undivided 100% interest in and to the Royalty.

 

C.     Seller is a wholly-owned subsidiary of Ecuadorian, and Ecuadorian is a wholly-owned subsidiary of International.

 

D.     Seller has agreed to sell to Purchaser, and Purchaser has agreed to purchase from Seller, the Royalty on the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENTS

 

In consideration of the premises and the mutual covenants, agreements, representations, warranties and payments contained in this Agreement, and intending to be legally bound, Seller and Purchaser agree as follows:

 

Article 1
DEFINITIONS AND INTERPRETATION

 

1.1.

Definitions

 

The following terms shall have the respective meanings set out below, and grammatical variations of such terms shall have corresponding meanings:

 

(a)     "Affiliate" of a Party means any entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Party.

 

 

(b)     "Agreement" has the meaning set forth in the introductory paragraph to this Agreement and includes the Exhibits attached hereto.

 

(c)     "Agreement Date" has the meaning set forth in the introductory paragraph to this Agreement.

 

(d)     "Assumed Liabilities" has the meaning set forth in Section 5.1(a).

 

(e)     "Business Day" means any day that is not a Saturday, Sunday or statutory holiday in Denver, Colorado.

 

(f)     "Closing" means the completion of the purchase and sale of the Royalty pursuant to Article 4 hereof.

 

(g)      "Dollars" or "$" means United States Dollars, the official currency of the United States of America.

 

(h)     "Ecuadorian" means Ecuadorian Minerals Corporation (U.S.), a corporation organized under the laws of the State of Nevada.

 

(i)     "Effective Date" has the meaning set forth Section 6.1(a).

 

(j)     "Environmental Laws" means all Laws relating to the environment and/or the protection thereof, including with respect to the following substances and/or the transportation thereof:

 

(i)

any substance the presence of which requires reporting, investigation, removal, preventative measures, management or remediation under any Laws;

 

(ii)

any substance that is defined as a pollutant, contaminant, dangerous substance, toxic substance, hazardous or toxic chemical, hazardous waste or hazardous substance under any Laws;

 

(iii)

any substance that is toxic, explosive, corrosive, flammable, ignitable, infectious, carcinogenic or otherwise hazardous and is regulated by or forms the basis of liability under any Laws;

 

(iv)

any substance the presence of which on a property causes or threatens to cause a nuisance upon the property or to adjacent properties or poses or threatens to pose a hazard to health or safety of persons on or about a property;

 

(v)

any substance that contains gasoline, diesel fuel or other petroleum hydrocarbons, including crude oil and fractions thereof, natural gas, synthetic gas and any mixtures thereof;

 

(vi)

any substance that contains asbestos and/or asbestos-containing materials;

 

 

(vii)

any substance that contains pcbs, or pcb-containing materials or fluids; or

 

(viii)

any nuclear material.

 

(k)     "Governmental Authority" means a federal, state, municipal or local government in the United States of America, or any subdivision of any of the foregoing, including an entity, person, court, agency or other body or organization exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government or subdivision.

 

(l)     "Homestake" has the meaning set forth in Recital A to this Agreement.

 

(m)     "Indemnitee" has the meaning set forth in Section 5.5(a).

 

(n)     "Indemnitor" has the meaning set forth in Section 5.5(a).

 

(o)     "International" has the meaning set forth in the introductory paragraph to this Agreement.

 

(p)     "Knowledge" of a Party means the actual knowledge of such Party, after reasonable inquiry, including due inquiry of all directors and officers of such Party, and the direct reports of such officers.

 

(q)     "Laws" means all laws, statutes, ordinances, regulations, rules and orders of any Governmental Authority applicable to a Party, this Agreement or the Royalty, including labor, tax, and Environmental Laws.

 

(r)     "Merger" means the merger of Ruby Hill with and into Seller, effective August 8, 2007, following which Seller was the surviving entity and Seller's articles of incorporation and bylaws continued as the organizational documents of Seller.

 

(s)     "Metallic Acqusition Date" means February 26, 2010, the date on which International acquired all of the issued and outstanding shares of Metallic Ventures Gold Inc. by way of statutory plan of arrangement.

 

(t)     "Mining Property" has the meaning set forth in Recital A to this Agreement.

 

(u)     "Notices" has the meaning set forth in Section 7.3.

 

(v)     "NNPM Tax" means the Nevada Net Proceeds of Minerals Tax.

 

(w)     "Party" means Seller, International or Purchaser, and "Parties" means Seller, International and Purchaser.

 

(x)     "Purchase Price" has the meaning set forth in Section 2.2(a).

 

(y)     "Purchaser" has the meaning set forth in the introductory paragraph to this Agreement.

 

 

(z)     "Retained Liabilities" has the meaning set forth in Section 5.1(b).

 

(aa)     "Royalty" has the meaning set forth in Recital A to this Agreement.

 

(bb)     "Royalty Agreement" has the meaning set forth in Recital A to this Agreement.

 

(cc)     "Ruby Hill" has the meaning set forth in Recital A to this Agreement.

 

(dd)     "Ruby Hill Mine" means the Mining Property and all of the open pit mining, beneficiation and related operations situated on the Mining Property and certain surrounding lands in Eureka County, Nevada, owned and operated on the Agreement Date by Homestake.

 

(ee)     "Seller" has the meaning set forth in the introductory paragraph to this Agreement.

 

(ff)     "Taxes" means value-added taxes, sales or commodity taxes, goods-and-services taxes, withholding taxes, stamp duties or similar taxes, duties and any registration, transfer or other fees imposed or levied in accordance with applicable Law or by any Governmental Authority, but excludes taxes on income or capital gains.

 

1.2.

Rules of Construction

 

The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All references herein to articles, sections and exhibits, unless the context requires a different construction, shall be deemed to be references to the articles and sections of this Agreement and the Exhibits attached hereto. Such Exhibits are incorporated herein and made a part hereof for all purposes. In this Agreement, unless a clear contrary intention appears, the word "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding such term. Words, terms and phrases used, but not specifically defined, in this Agreement shall have the meanings commonly ascribed to such words, terms or phrases. The headings of the various articles and sections of this Agreement are for convenience only and shall not affect the meaning of the terms and conditions of this Agreement. No provision of this Agreement shall be interpreted or construed against any Party solely because that Party or its legal representative drafted such provision. In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa, and words importing a gender include all genders.

 

Article 2
Purchase And Sale Of RoyaltY

 

2.1.

Purchase and Sale

 

Upon the terms and subject to the conditions of this Agreement, on the Agreement Date Seller shall sell, convey, assign, grant, transfer and deliver to Purchaser, and Purchaser shall purchase and assume from Seller, the Royalty and all of Seller's rights in and to the Royalty Agreement. Such purchase and sale shall be effective as of the Effective Date.

 

 

2.2.

Purchase Price

 

(a)     Purchase Price. The price to be paid by Purchaser to Seller on the Agreement Date for the Royalty shall be Thirty-Eight Million Dollars ($38,000,000.00) (the "Purchase Price").

 

(b)     Payment. Payment of the Purchase Price shall be made by wire transfer of immediately available funds to a bank account designated by Seller and confirmed in writing to Purchaser on or prior to the Agreement Date.

 

Article 3
Representations, Warranties, Acknowledgements AND COVENANTS

 

3.1.

Representations and Warranties of Seller, International and Purchaser

 

As of the Agreement Date, Seller and International (jointly and severally) represent and warrant to Purchaser, and Purchaser represents and warrants to Seller and International, as follows, each acknowledging that the others will rely on such representations and warranties in entering into this Agreement, and in concluding the purchase and sale contemplated by this Agreement:

 

(a)     Organization and Power. It (i) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation; (ii) is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required in connection with the performance or satisfaction of an obligation hereunder; (iii) has the corporate power to execute and deliver this Agreement and to perform its obligations under this Agreement; and (iv) in the case of Seller, it has the corporate power to own the Royalty.

 

(b)     Due Authorization. It has been duly authorized by all requisite corporate action to execute, deliver and fully perform its obligations hereunder. This Agreement and all other agreements, conveyances, transfers and other documents to be executed and delivered hereunder have been duly and validly executed and constitute and will constitute the valid and binding obligations upon it, enforceable in accordance with its terms.

 

(c)     No Conflicts or Violations. Neither the entering into of this Agreement and all other agreements, conveyances, transfers and other documents to be executed and delivered hereunder, nor the completion of the transactions contemplated hereby in accordance with the terms hereof will conflict with or result in the violation or breach of any of the terms or provisions of its constating documents. Neither the entering into of this Agreement and all such other agreements, conveyances, transfers and other documents, nor such completion thereof will:

 

(i)

result in the violation of any of the terms or provisions of any agreement, instrument or obligation to which it is a party or by which it is bound, or in the case of Seller, by which Seller's interest in the Royalty is bound or affected;

 

 

(ii)

conflict with, or result in a breach of, or violate any Law; or

 

(iii)

give to any other person, after the giving of notice or otherwise, any claim or cause of action, or any right of termination, cancellation or acceleration in or with respect to any agreement or other instrument to which it is a party or is subject, or from which it derives benefit.

 

(d)     Broker's Fees. It has no liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the other Party could become liable or obligated, or which could constitute a lien or encumbrance on the Royalty.

 

(e)     Litigation. There is no action, suit, prosecution, investigation or other similar proceeding of a material nature at law or in equity pending or, to its Knowledge, threatened against it that affects the validity or enforceability of the Royalty or this

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