Exploration License

EXHIBIT 10.4


EXPLORATION LICENSE, MINERAL PURCHASE OPTION AND LEASE AGREEMENT


THIS EXPLORATION LICENSE, MINERAL PURCHASE OPTION AND LEASE AGREEMENT is made this 7th day of December, 1999 by and between A. Russell Gjerde and Betty Ann Gjerde, h/w, Joint Tenants ("Owners"); and Britt Minerals, Inc. ("Britt").


A. Owners own and possesses NW1/4se1/4 (100% of Minerals & Surface); NE1/4SW1/4 (50% Minerals & 100% Surface); SE1/4NW1/4 (50% Minerals & 100% Surface); of Section 14, in Township 14 North, Range 24 East, Fergus County, Montana, for a total of 80 mineral acres. All ores, minerals, mineral rights, and the right to explore for, mine, remove the same and so much of the water as will be required or with the right to drill a water well, with ingress and egress over adjoining lands now owned by Owners shall be referred to collectively as "Mineral Property", except oil and gas, and the remainder of the surface, water rights and improvements, easements, licenses, rights-of-way and other interests appurtenant thereto, shall be referred to collectively as the "Surface".


B. The parties now wish to enter into an agreement giving Britt an exclusive license to explore the Mineral Property and the exclusive option to purchase the Mineral Property on the terms and conditions set forth below.


THEREFORE, the parties have agreed as follows.


SECTION ONE
Exploration License


1.1 Grant of Exploration License. Owners hereby grant to Britt the exclusive right and option to enter upon and explore the Mineral Property. The Exploration License shall have a term of Two (2) years commencing on execution of this agreement by both parties (the "Effective Date"). During the term of the license, Britt shall have the right to undertake geological, geophysical, and geochemical examinations of the Mineral Property, to sample the Mineral Property by means of pits, trenches, and drilling by any means, and to take mini-bulk samples (not to exceed 1 ton total) from the Mineral Property for the purpose of conducting mineralogical tests, etc. However, Britt shall not commence mining activities on the Mineral Property unless it exercises its option to purchase set forth in Section 2 below.


1.2 Payments For Exploration License. In consideration of this License, Britt shall pay Owners the sum of Three Thousand Dollars ($3,000.00) upon execution of this agreement. Britt shall also pay to owners the sum of Three Thousand Dollars ($3,000.00) on or before the anniversary date of this Agreement, in order to maintain this Exploration Licence in effect.


1.3 Delivery of Data. Following execution of this Agreement, Owners shall allow Britt to review and copy (at Britt's cost) all data and reports, if any, in the possession of Owners.


1.4 Termination of Exploration License. This exploration license shall terminate two (2) years from the Effective date, unless extended by mutual agreement of the parties. Britt shall have


the right to terminate the License at any time and shall, upon delivery of a termination notice to Owners, be relieved of all further obligations after termination date.


1.5 Work Commitment. The payment set forth in Section 1.2 above shall be in lieu of any work commitment on the Mineral Property, and Britt shall have no obligation, express or implied, to explore, develop, or mine the Mineral Property.


1.6 Environmental Liabilities. Owners shall remain solely liable and responsible for all environmental conditions and reclamation responsibilities which arose prior to the execution of this Agreement. Britt shall have responsibility for all environmental conditions and reclamation responsibilities arising from Britt's activities on the Surface after execution of this Agreement.


SECTION TWO
Option to Lease


2.1 Grant of option. In consideration of the payment made in Section 1.2, Owner hereby grants to Britt the exclusive right and option to Purchase Owners' ownership interest, in and to all mineral interests, as defined in "A" above, and Lease so much of the Surface as needed and/or required for the sum of Forty Thousand Dollars ($40,000.00) to be paid according to the schedule set forth below. The option shall have a term of five (5) years unless sooner terminated or canceled as hereinafter provided, and the Surface Lease shall run for 5 years or so long after the end of such term as there is production from the Mineral Property. The Lease shall commence on the date Britt gives Owners notice of executive of Option to Purchase and makes a payment of Two Thousand Dollars ($2,000.00). In order to maintain the option in effect, Britt shall make the following annual option payments to Owners:


Anniversary of Option Date Option Payment
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1 $ 3,000.00


2 $ 5,000.00


3 $ 8,000.00


4 $10,000.00


5 $12,000.00


2.2 Exercise of Option. Britt shall elect (a) to terminate this Agreement and relinquish the Mineral Property and Surface to Owners in accordance with Section 6.1 below, or (b) to exercise its option and purchase the Mineral Property for the price set forth in Section 2.1 and Lease so much of the Surface as is needed and/or required. During the term of the five year Option, if Britt elects to purchase the Mineral Property, the parties shall open an escrow account and proceed to complete the sales transaction within sixty (60) days following Britt's election. Owners shall deposit a Warranty Deed into the escrow account conveying the Mineral Property to Britt, and Britt shall deposit the purchase price in to escrow. Upon deposit of both the deed and purchase payment, the


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deed shall be released and recorded, and the initial payment shall be delivered to owners. Britt shall bear all of the costs of escrow and recording.


The parties acknowledge that Britt shall have the right to terminate the option at any time in accordance with Section 6 below.


2.3 Production Royalty. If the Premises are placed into commercial production, Britt agrees to pay to Owners a production royalty of one percent (1%) of the Net Returns, as defined herein, from the proceeds received from commercial production from the Mineral Property. Payments of such production royalty from the proceeds received from commercial production shall be determined at the end of each calendar quarter after the effective date. Payments of the production royalty shall be made within thirty (30) days after the end of each calendar quarter.


2.3.1 "Net Returns" shall mean for any period the amount of
earned revenues actually paid to and received by Britt by
any refinery or other purchaser of metals, ores, minerals
or mineral substances, or concentrates produced therefrom
for product ...