Earn-in Agreements

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EARN-IN AGREEMENT


BETWEEN


RODEO CREEK GOLD INC.


GREAT BASIN GOLD LTD. (AS GUARANTOR)


AND


HECLA VENTURES CORP.


HECLA MINING COMPANY (AS GUARANTOR)






HOLLISTER DEVELOPMENT BLOCK VENTURE

 


TABLE OF CONTENTS


EARN-IN AGREEMENT

ARTICLE I DEFINITIONS.....................................................2 ARTICLE II REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS ..............5 ARTICLE III TERM OF EARN-IN AGREEMENT ......................................8 ARTICLE IV RELATIONSHIP OF THE PARTIES.....................................8 ARTICLE V INITIAL CONTRIBUTION...........................................10 ARTICLE VI MAINTENANCE AND ABANDONMENT OF PROPERTIES......................13 ARTICLE VII AREA OF INTEREST ..............................................14 ARTICLE VIII WITHDRAWAL AND TERMINATION.....................................15 ARTICLE IX OPERATIONS AND GOVERNANCE......................................17 ARTICLE X RECLAMATION OBLIGATIONS........................................28 ARTICLE XI REPORTING, INSPECTION AND AUDIT................................29 ARTICLE XII MEMORANDUM.....................................................30 ARTICLE XIII DEFAULTS.......................................................30 ARTICLE XIV CONFIDENTIALITY................................................30 ARTICLE XV TAXES..........................................................32 ARTICLE XVI COOPERATION....................................................32 ARTICLE XVII GENERAL PROVISIONS.............................................32


EXHIBITS

EXHIBIT A: PROPERTIES AND TERMINATION & RELEASE AGREEMENT

EXHIBIT B: ACCOUNTING PROCEDURES

EXHIBIT B1 INSURANCE

EXHIBIT C: FORM OF QUITCLAIM DEED AND ASSIGNMENT

EXHIBIT D: FORM OF MEMORANDUM OF AGREEMENT

EXHIBIT E: EXPENDITURE SCHEDULE AND INITIAL
PROGRAM & BUDGET

EXHIBIT F: OPERATING AGREEMENT

EXHIBIT G: HECLA MINING WARRANT AGREEMENT

EXHIBIT H: GREAT BASIN WARRANT AGREEMENT

 


EARN-IN AGREEMENT


This Earn-in Agreement is made as of August 2, 2002, ("Effective Date") between HECLA VENTURES CORP., a Nevada corporation duly qualified to do business and in good standing in the state of Nevada, whose principal address is 6500 Mineral Drive, Coeur d'Alene, Idaho 83815-8788 (hereinafter referred to as "Hecla Ventures") and its Guarantor, Hecla Mining Company and RODEO CREEK GOLD INC., a Nevada corporation whose address is C/O Richard Harris, Ste. 260-6121 Lakeside Drive, Reno, NV 89511 (hereinafter referred to as "Rodeo Creek") who is qualified to do business and is in good standing in the State of Nevada and its Guarantor, Great Basin Gold Ltd.


RECITALS


A. WHEREAS, Rodeo Creek owns certain mining claims and other real property interests more specifically described in Exhibit A, attached hereto and incorporated herein by this reference (hereinafter referred to as the "Properties");


B. WHEREAS, Hecla Ventures desires to acquire an undivided interest in the Properties by spending the Earn-in Expenditures on or for the benefit of the Properties unless terminated pursuant to the terms hereof; and


C. WHEREAS, upon completion of a Earn-in Activities (as that term is defined below) by Hecla Ventures, Hecla Ventures and Rodeo Creek; enter into the Operating Agreement attached hereto as Exhibit F;


D. WHEREAS, Hecla Mining Company ("Hecla Mining"), as Guarantor has agreed to guarantee the due performance of all of the obligations of Hecla Ventures hereunder.


E. WHEREAS, Great Basin Gold Ltd. ("Great Basin"), as Guarantor has agreed to guarantee the due performance of all the obligations of Rodeo Creek hereunder.


NOW, THEREFORE, in consideration of the payments provided for herein and the mutual promises set forth below, all the Parties hereto agree to the provisions of this Earn-in Agreement.


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ARTICLE I
DEFINITIONS


1.1 "Accounting Procedures" means the procedures set forth in Exhibit B.


1.2 "Affiliate" means any person, partner, partnership, joint venture, limited liability company, corporation or other form of enterprise which directly or indirectly controls, is controlled by, or is under common control with a party to this Agreement. For purposes of the preceding sentence, "control" means possession, directly or indirectly, of the power to direct or cause direction of management and policies through ownership of voting securities, contract, voting trust or otherwise.


1.3 "Area of Interest" means an area commonly known as the Hollister Development Block with the three dimensional coordinates 34,000 E to 40,000 E;35,000 N to 42,000 N; and from surface to 4,000 feet above sea level. (A map of the Hollister Development Block is attached to this Earn-in Agreement as Exhibit A).


1.4 "Assets" means all materials, supplies, equipment, and personal property required to conduct Earn-in Activities.


1.5 "Currency", "$", means US dollars unless otherwise stated.


1.6 "Commercial Production" means greater than or equal to 400 tonnes mined on average per day over a 21 day calendar period or such longer time as is consistent with the Feasibility Study.


1.7 "Default" means a Party's failure to perform its obligations required under this Earn-in Agreement.


1.8 "Earn-in Activities" means all activities on or for the benefit of the Properties giving rise to Earn-in Expenditures which are duly incurred and paid as herein provided.


1.9 "Earn-in Agreement" means this Earn-in Agreement together with all Exhibits and other information appended hereto.


1.10 "Earn-in Expenditures" means the issuance of the Hecla Mining Warrants (subject to the issuance of the Great Basin Warrants) and other expenditures including Assets acquired by Hecla Ventures for Earn-in Activities for the benefit of the Properties.


1.11 "Effective Date" means the date set forth on Page 1 of this Earn-in Agreement.


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1.12 "Expenditure Commitment" means the minimum sum Hecla Ventures must spend on Earn-in Expenditures (pursuant to the Expenditure Schedule that is found in Exhibit E) during each Annual Expenditure Commitment Period.


1.13 "Expenditure Commitment Period" means each year (set out in the Expenditure Schedule that is found in Exhibit E and/or an approved Program and Budget under Section 9.3) during which the corresponding Annual Expenditure Commitment is to be spent.


1.14 "Expenditure Schedule" means Exhibit E.


1.15 "Feasibility Study" means a study of the feasibility of developing and operating one or more mine(s) on the Properties, including an analysis of economic, geological, engineering, environmental, regulatory and other considerations, and containing the level of detail customary in the industry for a feasibility study presented to financial institutions for the purpose of seeking and obtaining financing for the development of a mine (with all estimates developed to an accuracy within +/-10%).


1.16 "Guarantors" means Great Basin Gold Ltd. ("Great Basin") and Hecla Mining Company ("Hecla Mining").


1.17 "Initial Feasibility Study" or "Prefeasibility Study" means a study of the feasibility of developing and operating a mine on the Properties, including an analysis of economic, engineering, geological, environmental, regulatory and other considerations, and containing the level of detail customary in the industry to determine whether the veins, ore bodies or other targets identified in Stage I of Earn-in Activities are of sufficient interest to the Parties to proceed with Stage II of Earn-in Activities (with all estimates developed to an accuracy within +/-15%).


1.18 "Operating Agreement" means that agreement, attached to this Earn-in Agreement as Exhibit F, which is to be effective between Rodeo Creek and Hecla Ventures upon Hecla Ventures' fulfillment of the requirements set out in Article V, Section 5.1 of this Earn-in Agreement.


1.19 "Participating Interest" means the percentage interest of a Participant in the Properties, Products and all other rights and obligations arising under this Earn-in Agreement. From the Effective Date hereof through completion of Earn-in Activities, and only for purposes of implementing Earn-in Activities, Hecla Ventures and Rodeo Creek shall each be deemed to have a fifty percent (50%) Participating Interest.


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1.20 "Parties" means Rodeo Creek and Hecla Ventures and any other persons or entities that become subject to this Earn-In Agreement in accordance with the provisions hereof. Great Basin and Hecla Mining are Parties to this Earn-In Agreement only with regard to their respective obligations:


(1) as Guarantors under Recitals D and E, and Sections 2.3 and 2.6;


(2) under Sections 2.4 and 2.7 concerning certain representations and warranties; and


(3) to issue their respective Warrants pursuant to Article V and Exhibits E, G and H.


1.21 "Participants" means Rodeo Creek and Hecla Ventures.


1.22 "Payments" means those payments identified in Exhibit E.


1.23 "Prime Rate" means a prime rate listed in the Wall Street Journal (source: Federal Reserve).


1.24 "Products" means all ores, minerals and mineral resources produced from the Properties under this Earn-In Agreement.


1.25 Programs and Budgets are as defined under Section 9.3.


1.26 "Property or Properties" means those interests in real property and all mineral estates (and portions thereof) therein described in Exhibit A and all other interests in real property within the Area of Interest which are made subject to this Agreement subject to the obligations pertaining thereto under applicable law or pursuant to Underlying Agreements noted on Exhibit A.


1.27 "Term" means the term of this Earn-in Agreement as defined in Article III.


1.28 "Underlying Agreements" means those agreements pursuant to which Rodeo Creek or any Affiliate holds and interest in the Properties with Newmont Mining Corp. and certain other parties all of which are more particularly described in Exhibit A.

All words not defined herein shall first be construed as commonly used in the mining industry. If there is no such usage in the mining industry then such words shall be given its common understanding.


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ARTICLE II
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS


2.1 Capacity. Each of the Parties represents as follows:


(a) that it is a corporation duly incorporated and in good standing in its state or jurisdiction of incorporation and that it is qualified to do business and is in good standing in those states or jurisdictions where necessary in order to carry out the purposes of this Earn-in Agreement;


(b) that it has the capacity to enter into and perform this Earn-in Agreement and all transactions contemplated herein and that all corporate and other actions required to authorize it to enter into and perform this Earn-in Agreement have been properly taken;


(c) that it will not breach any other agreement or arrangement by entering into or performing this Earn-in Agreement; and


(d) that this Earn-in Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms.


2.2 Rodeo Creek's Representations and Warranties. Rodeo Creek represents and warrants that, with respect to the Properties:


(a) Rodeo Creek is in possession of and has the interests in the Properties as described in Exhibit A and subject to the Underlying Agreements;


(b) To the best of its information and belief and subject to the paramount title of the United States, (i) the unpatented mining claims were properly laid out and monumented; (ii) all required location work was properly performed; (iii) location notices and certificates were properly recorded and filed with appropriate governmental agencies; (iv) all assessment work has been performed, or fee payments in lieu thereof made, as required to hold the unpatented mining claims through the assessment year ending August 31, 2002; (v) all affidavits of assessment work and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (vi) the claims are free and clear of defects, liens or encumbrances arising by, through or under Rodeo Creek; (vii) there are no conflicting claims; and (viii) there are no pending or threatened actions, suits or proceedings involving the mining claims;


(c) To the best of its information and belief, the Properties are free and clear of all defects, liens and encumbrances except for those specifically identified on Exhibit A hereto and except for those which would not have a material adverse effect on the usage contemplated herein;


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(d) There is no judgment outstanding or litigation, proceeding or governmental investigation pending or threatened against Rodeo Creek, or the Properties, which would have an adverse effect on the title or interest of Rodeo Creek in or to the Properties or Rodeo Creek's power or right to sell, convey, transfer or assign the mineral estate on the Properties, nor has Rodeo Creek received any communication asserting or threatening any adverse claim to any part of the Properties;


(e) Rodeo Creek has made or shall make, pursuant to Article XVI of this Earn-in Agreement, available to Hecla Ventures all information and data regarding the existence of minerals within the Properties, and all information concerning record, possessory, legal or equitable title to the Properties which is within Rodeo Creek's knowledge, possession or control;


(f) To the best of Rodeo Creek's knowledge information and belief and except as disclosed to the appropriate environmental regulatory authorities, there has never been any: 1) release, spill, discharge, leak, emission, escape, dumping or any material release of any kind of any toxic or hazardous substances as defined under any local, state or federal regulation, laws or statutes, from, on, in or under Rodeo Creek's Properties or into any environment surrounding the Properties, except for those releases permissible under such regulations, laws or statutes or otherwise allowable under applicable permits; 2) disposal of toxic or hazardous substances or toxic or hazardous wastes on the Properties or related to the Properties; and, 3) material storage or treatment of toxic or hazardous substances or toxic or hazardous wastes on, at, or related to the Properties;


(g) To the best of its information and belief, Rodeo Creek is in compliance in all material respects with all federal, state and local laws, rules and regulations relating to or affecting the Properties, and has obtained, maintained in full force and effect, and operated in substantial compliance with all authorizations, licenses, permits, easements, consents, certificates and orders of any governmental or regulatory body relating to or affecting the Properties; and operations of Rodeo Creek and its agents or contractors on, at, or related to the Properties have not resulted in any violations of federal, state or local laws, rules, regulations, ordinances or orders which would have an adverse effect on the usage contemplated herein;


(h) There are no existing mineral production or other royalties of any kind which are payable with respect to the Properties or mineral substances mined therefrom other than those specifically identified in Exhibit A;


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(i) Rodeo Creek is not a party to nor has any knowledge of any existing oral or written agreement of any kind which does or could have any adverse impact whatsoever on record or possessory title to the mineral estate of the Properties and/or the access, exploration, development or mining of same;


(j) To the best of Rodeo Creek's knowledge, information and belief there are no existing restrictions which would have any adverse effect on the right to explore, develop and mine mineral substances from the Properties, excluding restrictions contained in applicable laws, statutes, regulations, permits and other agency directives including Bureau of Land Management ("BLM"), Nevada Division of Environmental Protection ("NDEP") and Traditional Cultural Property on the Properties, and other Nevada State and Federal agencies;


(k) To the best of Rodeo Creek's knowledge, information, and belief, Rodeo Creek is unaware of any material facts or circumstances, which have not been disclosed or made available to Hecla Ventures or been deliberately withheld from Hecla Ventures, which Hecla Ventures should be aware of in order to prevent the representations in this Section 2.2 from being misleading.


(l) Rodeo Creek and its Affiliates shall conduct its other business activities near, under and adjacent to the Area of Interest in a manner that does not unreasonably interfere with, hinder or delay Earn-in Activities.


2.3 Great Basin, on behalf of Rodeo Creek, hereby warrants and covenants with Hecla Ventures that it does hereby unconditionally and irrevocably guarantee to Hecla Ventures all of Rodeo Creek's representation, warranties and obligations hereunder.


2.4 For Great Basin only, Great Basin represents and warrants, that its publicly filed corporate disclosure records with regulatory authorities are up to date and correct in all material respects.


2.5 Hecla Ventures' represents and warrants that it has or will obtain the necessary labor and equipment to conduct Earn-in Activities.


2.6 Hecla Mining, on behalf of Hecla Ventures hereby warrants and covenants with Rodeo Creek that it does hereby unconditionally and irrevocably guarantee to Rodeo Creek all of Hecla Ventures' representations, warranties and obligations hereunder.


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2.7 For Hecla Mining only, Hecla Mining represents and warrants that its publicly filed corporate disclosure record with regulatory authorities is up to date and correct in all material respects.


2.8 Materiality of Representations. Al representations warranties and covenants made in this Article II are material to this Earn-in Agreement and the Parties' intent in entering into it.


ARTICLE III
TERM OF EARN-IN AGREEMENT


The Term of this Earn-in Agreement shall commence as of the Effective Date and shall automatically terminate after four (4) years thereof or upon execution of the Operating Agreement in accordance with Sections 5.5 and 8.3, unless this Earn-in Agreement is terminated earlier pursuant to Article VIII or extended by amendment upon the Parties' mutual written agreement.


ARTICLE IV
RELATIONSHIP OF THE PARTIES


4.1 No Partnership. Nothing contained in this Earn-in Agreement shall be deemed to constitute any Party the partner of another, nor, except as otherwise herein expressly provided, to constitute any Party the agent or legal representative of another, nor to create any fiduciary relationship between or among them. It is not the intention of the Parties to create, nor shall this Earn-in Agreement be construed to create, any mining, commercial or other partnership. No Party shall have any authority to act for or to assume any obligation or responsibility on behalf of the other Party, except as otherwise expressly provided herein. The rights, duties, obligations and liabilities of the Parties shall be several and not joint or collective. Each Party shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein, it being the express purpose and intention of the Parties that their ownership of assets and the rights acquired hereunder shall be as tenants in common. Each Party shall indemnify, defend and hold harmless the other Party, its directors, officers, employees, agents and attorneys from and against any and all losses, claims, damages and liabilities (including litigation costs and attorneys' fees) arising out of any act or any assumption of liability by the indemnifying Party, or any


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of its directors, officers, employees, agents and attorneys done or undertaken, or apparently done or undertaken, on behalf of any other Party, except pursuant to the authority expressly granted herein or as otherwise agreed in writing between the Parties.


4.2 Federal Tax Elections and Allocations. The Parties agree that their relationship pursuant to this Earn-in Agreement shall not constitute a tax partnership within the meaning of Section 761(a) of the United States Internal Revenue Code of 1986, as amended.


4.3 State & Provincial Income Tax. The Parties also agree that their relationship shall be treated for Canadian Federal, U.S. State and Canadian Provincial income tax purposes in the same manner as it is for U.S. Federal income tax purposes.


4.4 Other Business Opportunities. Except as expressly provided in this Earn-in Agreement, each Party shall have the right independently to engage in and receive full benefits from business activities, whether or not competitive with the operations under this Earn-in Agreement, without consulting any other Party. The doctrines of "corporate opportunity" or "business opportunity" shall not be applied to any other activity, venture, or operation of any Party, and, except as otherwise provided in this Earn-in Agreement, no Party shall have any obligation to any other with respect to any opportunity to acquire any property at any time.


4.5 Waiver of Right to Partition. The Parties hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets, including any such rights provided by applicable law.


4.6 Transfer or Termination of Rights to Properties. Except as otherwise provided in this Earn-in Agreement, no Party shall transfer all or any part of its interest in the Properties or this Earn-in Agreement or otherwise permit or cause such interests to terminate.


4.7 Implied Covenants. There are no implied covenants contained in this Earn-in Agreement other than those of good faith and fair dealing.


4.8 Employees. Employees of the respective Parties are not and shall not be employees of the other Parties or of any venture, which may be comprised of the Parties.


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ARTICLE V
INITIAL CONTRIBUTION


5.1 Properties and Required Earn-in Expenditures.


(a) Rodeo Creek, hereby makes available to Hecla Ventures the Properties for the purposes of this Earn-in Agreement and all existing technical data and other information concerning the Properties. Upon receipt of each Tranche of Hecla Mining Warrants (as defined below) Rodeo Creek will forthwith issue to Hecla Ventures two year warrants to purchase common shares in Great Basin ("Great Basin Warrants") as follows: 1) 1 million Great Basin Warrants upon receipt of Tranche 1 Hecla Mining Warrants; 2) 500,000 Great Basin Warrants upon receipt of Tranche 2 Hecla Mining Warrants; and 3) 500,000 Great Basin Warrants upon receipt of Tranche 3 Hecla Mining Warrants. Great Basin Warrants will be exercisable at the weighted average daily closing prices for the twenty (20) trading days on the TSX Venture Exchange immediately prior to issuance and done substantially in accordance with the form Warrant Agreement attached hereto in Exhibit H.


(b) Hecla Ventures hereby agrees to fund one-hundred percent (100%) of Stage I Earn-in Activities and shall exchange with Great Basin 2 million (2,000,000) two year warrants ("Tranche 1") to purchase Hecla Mining common stock $0.25 par value exercisable at the weighted average daily closing prices on the New York Stock Exchange for the twenty (20) trading days immediately prior to the date of the Warrant Agreement ("Exercise Price") which for Tranche 1 is also the Effective Date. Hecla Ventures agrees to issue the Warrants within thirty (30) days after the warrant date to Great Basin as attached hereto as Exhibit G.


(c) Hecla Ventures hereby commits to initiate and fund Stage I Earn-in Activities on the Effective Date, subject to receipt of Stage I permits, in an expeditious manner and to complete same on a best efforts diligent basis, within 24 months of the Effective Date, provided that the Earn-in Activities are not subjected to a public Environmental Impact Statement (under NEPA) or other public review and comment process, and to completely fund (100%) of Stage I (estimated to take approximately twelve (12) months) such Earn-in Activities. Within sixty (60) days after completion of Stage I Earn-in Activities, Hecla Ventures must elect to either: (1) proceed with and fund 100% of the estimated $11.5 million Stage II Program of Earn-In Activities as approved by the


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Management Committee; (2) vest by making the payment to the Joint Venture upon its actual formation under the Operating Agreement and taking other action as set forth in section 5.5(b); or (3) elect not to proceed with Stage II and terminate this Earn-In Agreement. If Hecla Ventures elects to proceed with Stage II Earn-in Activities or funding in lieu, it will issue one million (1,000,000) Hecla Mining Warrants ("Tranche 2") dated and priced on the election date, within ten (10) days thereafter in the form of the Warrant Agreement in Exhibit G, exercisable at the Exercise Price and in accordance with the terms and conditions of the Warrant Agreement. If however, Hecla Ventures elects not to proceed with Stage II of Earn-in Activities or funding in lieu, it shall provide written notice to Rodeo Creek. Notwithstanding any provision in this Earn-in Agreement to the contrary, if Hecla Ventures does not notify Rodeo Creek in writing within the required time of its choice to proceed, or to terminate or elects not to participate in Stage II Earn-in Activities, it shall have no further rights or obligations hereunder (except the obligation to reclaim the Properties for all Earn-in Activities it has conducted) and the Parties shall execute and record the Termination and Release Agreement in substantially the same form as Exhibit A, Part IV. To complete the Earn-In Activities, Hecla Ventures will issue Rodeo Creek an additional one million (1,000,000) two year warrants (dated and priced on the date that Hecla Ventures gives notice to Rodeo Creek that Stage II Earn-In Activities are complete or Hecla Ventures elects to fund Stage II in lieu) to purchase Hecla Mining common stock ("Tranche 3") exercisable at the Exercise Price and in accordance with the terms and conditions of the Warrant Agreement. The Tranche 3 Warrants will be issued within 30 days from the date of the Warrants. After vesting of Hecla Ventures' Participating Interest, each of the Participants shall be obligated to fund such activities in accordance with its Participating Interest as defined in Exhibit F attached hereto and determined thereunder from time to time.


5.2 Reasonable Earn-in Activities. Hecla Ventures' Earn-in Activities shall be conducted in accordance with Exhibit E at the direction of the Management Committee and in accordance with all applicable laws, regulations and good mining industry standards in the United States.


5.3 Credit for Excess Earn-in Expenditures. Earn-in Expenditures made by Hecla Ventures in excess of that required in a given Annual Expenditure Commitment Period shall be credited to subsequent Annual Expenditure Commitments for the following Annual Expenditure Commitment Periods.


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5.4 Completion of Required Earn-in Expenditures. Within thirty (30) days after completing Earn-in Activities (as provided in Section 5.1 and in accordance with Exhibit E), Hecla Ventures shall provide notice to Rodeo Creek that it has completed Earn-in Expenditures. Together with the notice, Hecla Ventures shall provide sufficient detail and supporting documentation to permit Rodeo Creek to review, audit and reasonably verify the Earn-in Expenditures.


5.5 Transfer. Hecla Ventures shall have earned a vested and undivided Participating Interest in the Properties subject to the Operating Agreement by completing either of the requirements in subparagraphs (a) OR (b) OR (c) of this section 5.5:


(a) Upon completion of Stage II Earn-in Activities and issuing Rodeo Creek Tranche 3 Hecla Mining Warrants set forth in Exhibit E and G, Hecla Ventures shall have a vested right to an undivided fifty percent (50%) Participating Interest in the Properties effective as of the date Hecla Ventures provides notice pursuant to Section 5.4 above. Within thirty (30) days after providing notice verifying that Hecla Ventures has made Earn-in Expenditures consistent with the requirements of this Article V:


(1) Rodeo Creek shall convey to Hecla Ventures an undivided
fifty percent (50%) of Rodeo Creek's interest in the
Properties, by executing, acknowledging and delivering to
Hecla Ventures a good and sufficient conveyance in the form of
Exhibit C to this Earn-in Agreement; and,


(2) Rodeo Creek and Hecla Ventures shall cause to become
effective an Operating Agreement on the Properties in the form
of the attached Exhibit F, which 1) shall include the
Properties and 2) shall have an effective date as of the date
of the above-described notice from Hecla Ventures to Rodeo
Creek; and,


(3) Rodeo Creek shall issue to Hecla Ventures the Great Basin
Warrants set forth in Exhibit E and H.


(b) By completing Stage I Earn-In Activities and providing written notice to Rodeo Creek that Hecla Ventures elects to vest by making a payment to the Joint Venture in an amount of $21.8 million dollars (U.S.) less actual costs to complete Stage I of Earn-In Activities (excluding overruns greater than 10%) of a Management Committee approved Program and Budget; and issue Rodeo Creek the Tranche 2 and Tranche 3 Hecla Mining Warrants set forth in Exhibit E and G. Within thirty (30) days after receiving the preceding vesting payment:


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(1) Rodeo Creek shall convey to Hecla Ventures an
undivided fifty percent (50%) of Rodeo Creek's
interest in the Properties, by executing,
acknowledging and delivering to Hecla Ventures a good
and sufficient conveyance in the form of Exhibit C to
this Earn-in Agreement; and,


(2) Rodeo Creek and Hecla Ventures shall cause to become
effective an Operating Agreement on the Properties in
the form of the attached Exhibit F, which 1) shall
include the Properties and 2) shall have an effective
date as of the date of the above-described notice
from Hecla Ventures to Rodeo Creek; and


(3) Rodeo Creek shall issue to Hecla Ventures the Great
Basin Warrants set forth in Exhibit E and H.


(c) By Hecla Ventures completing Stage I and thereupon completing either Stage II of Earn-in Activities and achieving Commercial Production; and in either such event issuing Rodeo Creek the Tranche 2 and Tranche 3 Warrants;


(1) Rodeo Creek shall convey to Hecla Ventures an
undivided fifty percent (50%) of Rodeo Creek's
interest in the Properties by executing,
acknowledging and delivering to Hecla Ventures a good
and sufficient conveyance in the form of Exhibit C to
this Earn-in Agreement; and,


(2) Rodeo Creek and Hecla Ventures shall cause to become
effective an Operating Agreement on the Properties in
the form of the attached Exhibit F, which 1) shall
include the Properties and 2) shall have and
effective date as of the date of the above described
notice from Hecla Ventures to Rodeo Creek; and


(3) Rodeo Creek shall issue to Hecla Ventures the Great
Basin Warrants set forth in Exhibit E and H.


ARTICLE VI
MAINTENANCE AND ABANDONMENT OF PROPERTIES


6.1 Maintenance of Properties. Hecla Ventures as Manager shall take all steps necessary to maintain at its expense, as part of the Earn-in Activities, of the Properties (pursuant to the Underlying Agreements and all general legal requirements relating thereto) all necessary payments on the Properties to maintain them in good standing during the Term of this Earn-in Agreement.


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6.2 Assessment Work or Fees. During the term of this Earn-in Agreement, Hecla Ventures as Manager shall also perform any annual assessment work required to maintain such claims for any assessment year in which this Earn-in Agreement has not expired or been terminated prior to thirty (30) days before the end of such assessment year, and will make annual fee payments required to maintain unpatented (or patented) mining claims included in the Properties for any assessment year in which this Earn-in Agreement has not expired or been terminated forty-five (45) days prior to the fee payment due date. Hecla Ventures shall timely record, file and furnish to Rodeo Creek affidavits of such performance and evidence of fee payment. Excepting for the August 2002 Properties filings and amounts due shall be paid by and filed by Rodeo Creek. These 2002 amounts shall be reimbursed by Hecla Ventures to Rodeo Creek as part of Earn-in Activities, within thirty (30) days of receipt of invoice from Rodeo Creek. No Party shall be liable on account of holdings by any court or governmental agency that the effects of any work elected and performed in good faith by such Party are insufficient to constitute annual assessment work for purposes of preserving title to such claims, provided that the work so done is of the kind generally accepted as assessment work in the mining industry in the United States and provided that such Party expended a total amount sufficient to meet any minimum requirements during the required period of time with respect to all such unpatented claims.


6.3 Abandonment of Properties. If either Participant desires to abandon, release or surrender its rights to a part of the Properties at any time, it shall notify the other Participant and offer to convey to the other Participant at no cost the part of those parts of the Properties it intends to abandon, release or surrender. If the other Participant does not accept the offer within thirty (30) days of the notice, the notifying Participant may abandon, release, or surrender that part of those Properties without liability or obligation to the other Participant for such abandonment, release or surrender but any liability for reclamation or to any third party arising before such event shall be unaffected. Properties that are abandoned, released, surrendered, or conveyed to the other Participant pursuant to this Section 6.3 shall cease to be part of the Properties and the Area of Interest.


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ARTICLE VII
AREA OF INTEREST


7.1 Proposed Acquisition of Properties. If during the Term of this Earn-in Agreement, a Party or an Affiliate of any Party should acquire any interest in real property (including any mineral interest or estate therein) within the boundary of the Area of Interest, it shall notify the other Party (referred to in this Article VII as "Other Party") within ten (10) days after the acquisition and shall include in the notice a description of the interest in real property and a statement of the total acquisition cost and any committed work expenditures.
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