EX-4.20 23 o19082exv4w20.txt ENVIRONMENTAL INDEMNITY AGREEMENT - AURAMET TRADING, LLC EXHIBIT 4.20 ENVIRONMENTAL INDEMNITY AGREEMENT (JOHNSON CAMP) THIS ENVIRONMENTAL INDEMNITY AGREEMENT (the "AGREEMENT") is made by NORD RESOURCES CORPORATION, a Delaware corporation and successor by merger to NORD COPPER CORPORATION whose address is P.O. Box 384, Dragoon, AZ 85609 ("NORD") in favor of AURAMET TRADING, LLC, a Delaware limited liability company (the "LENDER"). WHEREAS, Lender has made a loan in the principal amount of $2,850,000 (as amended, supplemented, refinanced, renewed, refunded or otherwise modified from time to time, the "Loan") to Nord represented by that certain secured promissory note, dated as of even date herewith (as amended, supplemented or otherwise modified from time to time, the "NOTE"), pursuant to which Nord has agreed, among other things, to make the full and punctual payment and performance when due of the obligations and liabilities of Nord, whether direct or indirect, absolute or contingent, due or to become due, or existing now or prior to the date hereof or hereafter incurred, which may arise under, out of, or in connection the Note and any other agreements relating to the Loan (together with any and all other obligations arising under the Loan, the "OBLIGATIONS"); WHEREAS, contemporaneously herewith and as required by the Note, and the other transaction documents executed by the parties in connection with the Note (collectively with the Note, the "LOAN DOCUMENTS"), Nord is delivering to Lender a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (collectively, the "DEED OF TRUST"), for the purpose of, among other things, securing the Obligations by and through the grant to Lender of a lien against certain premises located in Cochise County, Arizona, commonly known as the Johnson Camp Mine, and which are more particularly described on Exhibit "A" attached hereto (the "JOHNSON CAMP MINE"); and WHEREAS, the Loan Documents require Nord indemnify Lender as set forth herein. NOW, THEREFORE, FOR AND IN CONSIDERATION of valuable consideration, the receipt and sufficiency of which are acknowledged, and further in consideration of the mutual covenants and conditions contained in this Agreement, Nord hereby certifies, represents, and warrants to Lender, and agrees as follows: 1. As used herein, the following terms shall have the meanings specified below: The term "ENVIRONMENTAL LAWS" shall mean any federal, state or local law, whether by common law, statute, ordinance, or regulation, pertaining to health, industrial hygiene, or environmental conditions, including without limitation, the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601, et seq. ("CERCLA"); the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901, et seq. ("RCRA"); the Toxic Substances Control Act of 1976, 15 U.S.C. $62501, et seq. ("TSCA"); the Superfund Amendments and Reauthorization Act of 1986, Title III, 42 U.S.C. Sections 11001, et seq. ("SARA"); the Clean Air Act, 42 U.S.C. Sections 7401, et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251, et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections 300f, et seq.; the Solid Waste Disposal Act, 42 U.S.C. Sections 3251, et seq.; the Arizona Environmental Quality Act, Ariz. Rev. Stat. Ann. 49-101, et seq.; and any other federal, state or local law, common law, statute, ordinance, or regulation now in effect or hereinafter enacted which pertains to health, industrial hygiene, or the regulation or protection of the environment. The term "HAZARDOUS SUBSTANCE" shall include: (a) Those substances included within the definitions of "hazardous materials," "toxic substances," or "solid waste" in CERCLA, RCRA, TSCA, SARA, and the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq., and in the regulations promulgated pursuant thereto; (b) Those substances defined as "hazardous substances" in A.R.S. 49-201 and in rules adopted or guidelines promulgated pursuant thereto; (c) Those substances listed in the United States Department of Transportation Table (49 C.F.R. 172.1010 and amendments thereto) or by the Environmental Protection Agency as hazardous substances (40 C.F.R. Part 302 and amendments thereto); and (d) All other substances, materials and wastes that are, or that become, regulated under, or that are classified as hazardous or toxic under any Environmental Law. The term "RELEASE" shall mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, or dumping. 2. Nord shall neither use, generate, manufacture, produce, store, or Release, on, under or about the Johnson Camp Mine, or transfer to or from the Johnson Camp Mine, any Hazardous Substance nor permit any third party to do so, except in substantial compliance with all applicable Environmental Laws. Nord shall not permit any environmental liens to be placed on any portion of the Johnson Camp Mine. 3. Nord shall give prompt written notice to Lender at the address set forth in the Note of: (a) Any proceeding, including lawsuit, investigation or settlement by or with any federal, state or local governmental authority (including, without limitation, the Arizona Department of Health Services, Arizona Department of Environmental Quality or the U.S. Environmental Protection Agency) with respect to the presence of any Hazardous Substance on the Johnson Camp Mine or the migration thereof from or to any other property adjacent to, or in the vicinity of, the Johnson Camp Mine; 2 (b) Nord's discovery of a violation of Environmental Laws that Nord is legally required to report to any federal, state or local governmental authority or the discovery of a Release of a Hazardous Substance in sufficient quantities to be reportable under CERCLA or the Arizona Environmental Quality Act to any federal, state or local governmental authority. (c) All claims made or threatened by any third party against Nord or the Johnson Camp Mine relating to any loss or injury resulting from any Hazardous Substance; and (d) Nord's discovery of any occurrence or condition on any property adjoining or in the vicinity of the Johnson Camp Mine that could cause the Johnson Camp Mine or any part thereof to be subject to any restrictions on its ownership, occupancy, transferability or use under any Environmental Laws. 4. Nord shall conduct and complete all investigations, studies, sampling, testing and all remedial, removal, and other actions necessary to clean up and remove all Hazardous Substances in, from or affecting the Johnson Camp Mine; (a) In compliance with all applicable Environmental Laws; (b) In accordance with the orders and directives of all governmental authorities. 5. If Lender shall ever have good reason to believe that there are Hazardous Substances (other than those disclosed in writing to Lender) affecting any of the Johnson Camp Mine, Lender (by their respective officers, employees, and agents) at any time and from time to time may contract for the services of persons (the "SITE REVIEWERS") to perform environmental site assessments ("SITE ASSESSMENTS") on the Johnson Camp Mine for the purpose of determining whether there exists on the Johnson Camp Mine any environmental condition that could result in any liability, cost, or expense to the owner, occupier, or operator of such Johnson Camp Mine arising under any Environmental Laws. The Site Assessments may be performed at any time or times, upon reasonable notice, and under reasonable conditions established by Nord that do not impede the performance of the Site Assessments and do not unreasonably interfere with any of Nord's activities or operations at the Johnson Camp Mine. The Site Reviewers are hereby authorized to enter upon the Johnson Camp Mine for such purposes. The Site Reviewers are further authorized to perform both above and below the ground testing for environmental damage or the presence of Hazardous Substances on the Johnson Camp Mine and such other tests on the Johnson Camp Mine as may be necessary to conduct the Site Assessments in the reasonable opinion of the Site Reviewers. Nord will supply to the Site Reviewers such historical and operational information regarding the Johnson Camp Mine as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments and will make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters. On request, Lender shall make the results of such Site Assessments fully available to Nord, which (prior to an Event of Default 3 under the Loan Documents) may, at their election, participate under reasonable procedures in the direction of such Site Assessments and the description of tasks of the Site Reviewers. The cost of performing such Site Assessments shall be paid by Lender. Lender agrees to keep all data and information pertaining to the Site Assessments, and the Site Assessments themselves, confidential, and not to disclose any such data or information to any third party (other than the consultants preparing the Site Assessments; unless such disclosure is required by applicable law or court order). 6. Lender shall have the right, but not the obligation, without in any way limiting Lender's other rights and remedies under the Loan Documents, to enter onto the Johnson Camp Mine or to take such other actions as it deems reasonably necessary or advisable in good faith, to clean up, remove, resolve, or minimize the impact of, or otherwise deal with, any Hazardous Substances on or affecting the Johnson Camp Mine following receipt of any notice from any person or entity asserting the existence of any Hazardous Substances pertaining to the Johnson Camp Mine or any part thereof that, if true could result in an order, notice, suit, imposition of a lien on the Johnson Camp Mine, or other action and/or that, in Lender's reasonable and good faith opinion, could jeopardize Lender's security under the Loan Documents. All reasonable costs and expenses paid or incurred by Lender in the exercise of any such rights shall be paid by Nord, and all such reasonable costs and expenses paid or incurred by Lender shall be secured by the Loan Documents and shall be payable by Nord upon demand. All such actions taken by Lender pursuant to this Paragraph 7 shall be in a manner so as not to unreasonably interfere with any of Nord's activities or operations at the Johnson Camp Mine, and shall be taken in accordance with Nord's reasonable safety rules and regulations and any such rules and regulations imposed by any governmental agency. 7. Lender shall have the right at any time to appear in and to participate in, as a party if it so elects, and be represented by counsel of its own choice in, any action or proceeding initiated in connection with any Environmental Law that affects the Johnson Camp Mine. 8. Nord shall indemnify and hold harmless Lender, any successor to Lender, any purchaser of the Johnson Camp Mine upon foreclosure of Lender's interest in the Johnson Camp Mine, and all directors, officers, employees and agents of all of the foregoing, from and against all claims, costs, expenses, actions, suits, proceedings, losses, damages and liabilities of any kind whatsoever, including but not limited to attorneys' fees and expenses, directly or indirectly arising out of or attributable to (i) the use, generation, manufacture, production, storage, Release, threatened Release, or presence of a Hazardous Substance on, under or about the Johnson Camp Mine occurring from and after the closing of the sale of the Johnson Camp Mine to Nord and not substantially arising out of or substantially related to any material action or omission to act by Lender; (ii) any violation or claim of violation of any Environmental Law with respect to the Johnson Camp Mine, and not substantially arising out of or substantially related to any material action or omission to act by Lender; or (iii) any material breach of any of the warranties, representations and covenants contained herein. Lender shall give written notice to Nord promptly of any claim, suit, action, the commencement of any proceeding 4 or demand of which Lender has received written notice from a third party and as to which Lender believes it may be entitled to indemnification hereunder. 9. This Agreement shall be binding upon Nord and its successors and assigns and shall inure to the benefit of Lender, their respective successors and assigns. The indemnity contained herein shall continue in full force and effect and shall survive the payment and performance of the Note, the release of any lien or encumbrance securing the Note, any foreclosure (or action in lieu of foreclosure) of any lien or encumbrance securing the Note, the exercise by Lender of any other remedy under any documents securing the Note, and any suit, proceeding or judgment against Nord by Lender hereon. 10. If any material warranty, representation or statement contained herein shall be or shall prove to have been false when made or if Nord shall fail or neglect to perform or observe any of the terms, provisions or covenants contained herein, the same shall constitute an Event of Default under the Note and under all documents and instruments executed and delivered in connection therewith that shall entitle Lender to pursue any and all remedies provided for such default. 11. Any notice required or permitted in connection herewith shall be given in the manner provided in the Note or other documents executed and delivered in connection with the Note. 12. Nord acknowledges that Lender has and will rely upon the representations, warranties and agreements herein set forth in closing and funding (or modifying as the case may be) the Note and that the execution and delivery of this Agreement is an essential condition but for which Lender would not have agreed to loan Nord the funds as set forth in the Note. 13. Nord waives any right or claim of right to cause a marshaling of the assets of Nord or to cause Lender to proceed against any of the security for the Note before proceeding under this Agreement against Nord; Nord agrees that any payments required to be made hereunder shall become due on demand; Nord expressly waives and relinquishes all rights and remedies accorded by applicable law to Nord or guarantors (including, without limitation, A.R.S. Sections 12-1641, et seq., and 44-142, and Rule 17f of the Arizona Revised Statutes Rules of Civil Procedure), except any rights of subrogation that Nord may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever that may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights, including, without limitation, any claim that such subrogation rights were abrogated by any acts or omissions of Lender. 14. This Agreement shall be governed by and construed according to the laws of the State of Arizona, without giving effect to conflict of laws principles. 5 IN WITNESS WHEREOF, Nord has executed this Agreement on October 17th, 2005. NORD RESOURCES CORPORATION, a Delaware corporation and successor by merger to NORD COPPER CORPORATION By: /s/ Erland A. Anderson ------------------------------------ Name: Erland A. Anderson Title: President STATE OF ARIZONA ) ) ss. County of Pima ) The foregoing instrument was acknowledged before me this day of October 17th, 2005 by Erland A. Anderson, the President of NORD RESOURCES CORPORATION, a Delaware corporation and the successor by merger to NORD COPPER CORPORATION, on behalf of the corporation. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ Madelyn L. Swingle ---------------------------------------- Notary Public My commission expires: 6-14-09 6 EXHIBIT "A" The following property located in Cochise County, Arizona, together with all extralateral rights, water rights, and appurtenances, and all fixtures, stockpiles, leach heaps, dumps, and tailings situated thereon: Part 1 - Patented Mining Claims PARCEL 1 Arizona, Blue Grass, Puzzle, Enough, and Canton patented lode mining claims, Mineral Survey No. 4340, embracing a portion of Section 23, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 1143496, recorded in the records of Cochise County at Docket 100, Page 283, EXCEPT all that portion of the ground within the boundaries of Ross, Dewey, and True Blue, Mineral Survey No. 1717, and North Star, Mineral Survey No. 3242; and further except all veins, lodes, and ledges, throughout their entire depth, the tops or apexes of which lie inside the said excluded ground, containing 66.721 acres, more or less. PARCEL 2 Afterthought, Burro, Burro No. 3, Coronado, Coronado No. 2, and Mason No. 1 patented lode mining claims, Mineral Survey No. 4571, embracing portions of Sections 25, 26, and 35, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 02-63-0060, recorded in the records of Cochise County at Docket 315, Page 561, EXCEPT all that portion of the ground within the boundaries of Republic, Mineral Survey No. 324; Golden Shield, Mineral Survey No. 325; Chicora, Mineral Survey No. 326; Southern, Mineral Survey No. 327; Mayflower, Mineral Survey No. 2764; Calumet, Mineral Survey No. 4197; Tenderfoot, Mineral Survey No. 4314; and Section 36, Township 15 South, Range 22 East; and further except all veins, lodes, and ledges, throughout their entire depth, the tops or apexes of which lie inside the said excluded ground, containing 89.005 acres, more or less. PARCEL 3 St. George patented lode mining claim, Mineral Survey No. 1966, embracing a portion of Section 36, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 42949, recorded in the records of Cochise County at Book 20, Deeds of Mines, Page 312, containing 17.732 acres, more or less. 7 PARCEL 4 Mayflower (aka May Flower) patented lode mining claim, Mineral Survey No. 2764, embracing portions of Sections 25 and 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No: 298716, recorded in the records of Cochise County at Docket 12, Page 581, containing 19.414 acres, more or less. PARCEL 5 Acorn, A-Number One, A-Number Two, Chicago, Cochise, Copper Thread, Johnson, Little Johnnie, Rough Rider, Tenderfoot, and United Fraction patented lode mining claims, Mineral Survey No. 4314, embracing portions of Sections 23, 25, and 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 1141449, recorded in the records of Cochise County at Docket 93, Page 620, EXCEPT all that portion of the ground within the boundaries of Blue Lead Extension, Dwarf, Esmeralda, and Copper Chief, Mineral Survey No. 3242; Copper Bell, Mineral Survey 1717; Highland Mary, Mineral Survey No. 284; Copper King, Mineral Survey No. 285; Republic, Mineral Survey No. 324; Golden Shield, Mineral Survey No. 325; Mayflower, Mineral Survey No. 2764; Tycoon, Mineral Survey No. 329; and Gingham No. 3, unsurveyed; and further except all veins, lodes, and ledges, throughout their entire depth, the tops or apexes of which lie inside the said excluded ground, FURTHER EXCEPT those portions of Cochise and United Fraction, containing 0.026 and 0.387 acres, more or less, respectively, being those portions lying in the Southeast Quarter of the Northwest Quarter (SE1/4NW1/4) and the Northeast Quarter of the Southwest Quarter (NE1/4SW1/4) of Section 25, Township 15 South, Range 22 East, G&SRB&M, conveyed by Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David Rae, Grantee, recorded in the Cochise County records as document No. 870102364, containing 106.572 acres, more or less. PARCEL 6 Blue Lead, North Star, Little Bush, Copper Chief, Southern Cross, Blue Lead Extension, Dwarf, and Esmeralda patented lode mining claims, Mineral Survey No. 3242, embracing portions of Sections 23 and 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 610053, recorded in the records of Cochise County at Book 29, Deeds of Mines, Page 92, containing 92.563 acres, more or less. 8 PARCEL 7 Anaconda, Last Chance, Delta, and Sara patented lode mining claims, Mineral Survey No. 1525, embracing portions of Sections 23 and 24, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 036147, recorded in the records of Cochise County at Book 15, Deeds of Mines, Page 236, containing 54.14 acres, more or less. PARCEL 8 Southern patented lode mining claim, Lot 45, Mineral Survey No. 327, embracing portions of Sections 25, 26, and 36, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 9043 (or 9143), recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 459, containing 18.79 acres, more or less. PARCEL 9 Mi-an-te-no-mah patented lode mining claim, Lot 48, Mineral Survey No. 330, embracing a portion of Section 23, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 10723, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 455, containing 19.28 acres, more or less. PARCEL 10 Peabody patented lode mining claim, Lot 39, Mineral Survey No. 286, embracing portions of Sections 23 and 24, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 6424, recorded in the records of Cochise County at Book 12, Deeds of Mines, Page 433, containing 17.36 acres, more or less. PARCEL 11 Donna Anna patented lode mining claim, Lot 40, Mineral Survey No. 287, embracing a portion of Section 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 6423, recorded in the records of Cochise County. at Book 31, Deeds of Mines, Page 427, containing 20.66 acres, more or less. 9 PARCEL 12 Highland Mary patented lode mining claim, Lot 37, Mineral Survey No. 284, embracing portions of Sections 25 and 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 6474, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 431, EXCEPT all that portion of Highland Mary containing 0.064 acres, more or less, being that portion lying in the Southeast Quarter of the Northwest Quarter (SE1/4NW1/4) of Section 25, Township 15 South, Range 22 East, G&SRB&M, conveyed by Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David A. Rae, Grantee, recorded in the Cochise County records as Document No. 870102364, containing 20.596 acres, more or less. PARCEL 13 Copper King patented lode mining claim Lot 38, Mineral Survey No. 285, embracing a portion of Section 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 6475, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 435, containing 20.11 acres, more or less. PARCEL 14 Golden Shield patented lode mining claim, Lot 43, Mineral Survey No. 325, embracing a portion of Section 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 8891, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 439, containing 19.51 acres, more or less. PARCEL 15 Republic patented lode mining claim, Lot 42, Mineral Survey No. 324, embracing a portion of Section 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 9045, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 471, containing 20.66 acres, more or less. PARCEL 16 10 Chicora patented lode mining claim, Lot 44, Mineral Survey No. 326 embracing a portion of Sections 25 and 26, Township 15 South, Range 22.East, G&SRB&M, in the Cochise Mining District Cochise County, Arizona, U.S. Patent No. 9044, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 443, containing 15.60 acres, more or less. PARCEL 17 Tycoon patented lode mining claim, Lot 47, Mineral Survey No. 329, embracing portions of Sections 25 and 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 8888, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 467, containing 16.88 acres, more or less. PARCEL 18 Mammoth patented lode mining claim, Lot 49, Mineral Survey No. 331, embracing portions of Sections 23 and 26, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U. S. Patent No. 8889, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 463, containing 19.28 acres, more or less. PARCEL 19 Clondike, Blue Jacket, Keystone, Blue Bell, Copper Bell, Dewey, True Blue, and Ross patented lode mining claims, Mineral Survey No. 1717, embracing a portion of Section 23, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 42087, recorded in the records of Cochise County at Book 20, Deeds of Mines, Page 542, containing 147.266 acres, more or less. PARCEL 20 Hillside, Pittsburg, and Teaser patented lode mining claims, Mineral Survey No. 3306, embracing a portion of Sections 23 and 24, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 648851, recorded in the records of Cochise County at Docket 634, Page 478, EXCEPT all that portion of Hillside and Pittsburg containing 1.235 and 0.381 acres, more or less, respectively, being that portion lying in the South Half of the Southeast Quarter of the Northwest Quarter (SE1/4NW1/4) and the East Half of the Southwest Quarter (E1/2SW1/4) of Section 24, Township 15 South, Range 22 East, 11 G&SRB&M, conveyed by Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David A. Rae, Grantee, recorded in the Cochise County records as Document No. 870102364, containing 49.852 acres, more or less. PARCEL 21 San Jacinto patented lode mining claim, Lot 46, Mineral Survey No. 328, embracing a portion of Section 27, Township 15 South, Range 22 East, G&SRB&M, in the Cochise Mining District, Cochise County, Arizona, U.S. Patent No. 8890, recorded in the records of Cochise County at Book 31, Deeds of Mines, Page 475, containing 19.15 acres, more or less 12 PART 2 - FEE LANDS PARCEL 1 TOWNSHIP 15 SOUTH, RANGE 22 EAST, G&SRB&M COCHISE COUNTY, ARIZONA Section 26: Lots 8, 9, 10, and 11 EXCEPT all coal and other minerals as reserved in the patent from the United States of America, containing 139.00 acres, more or less. PARCEL 2 TOWNSHIP 15 SOUTH, RANGE 22 EAST, G&SRB&M COCHISE COUNTY ARIZONA Section 26: Those portions of the King and Wolfrime Queen patented lode mining claims lying within the Southeast Quarter (SE1/4) as shown on Mineral Survey No. 1800, U.S. Patent No. 40087, recorded in the records of Cochise County at Book 26, Deeds of Mines, Page 251, containing 1.00 acres, more or less. PARCEL 3 TOWNSHIP 15 SOUTH, RANGE 22 EAST, G&SRB&M COCHISE COUNTY, ARIZONA Section 24: Lot 16 Section 25: Lots 11, 13, 14, 16, 17, 18, 20, and 21 EXCEPT any portion of Section 25 lying in the Southeast Quarter of the Northwest Quarter and the Northeast Quarter of the Southwest Quarter of Section 25, Township 15 South, Range 22 East, G&SRB&M conveyed by Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David A. Rae, Grantee, recorded in the Cochise County records as Document No. 870102364. EXCEPT a right-of-way for ditches and canals constructed by the authority of the United States as reserved in the patent from the United States of America. 13 containing 53.444 acres, more or less. PARCEL 4 TOWNSHIP 15 SOUTH, RANGE 22 EAST, G&SRB&M COCHISE COUNTY, ARIZONA Section 23: Lots 11, 12, 13, 15, and 16 Section 24: Lots 11, 12, and 13 EXCEPT any portion lying within the South Half of the Southeast Quarter of the Northwest Quarter (S1/2SE1/4NW1/4) and the East Half of the Southwest Quarter (E1/2SW1/4) of Section 24, Township 15 South, Range 22 East, G&SRB&M conveyed by Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David A. Rae, Grantee, recorded in the Cochise County records as Document No. 870102364. Section 25: Lot 12 EXCEPT any portion lying within the Southeast: Quarter of the Northwest Quarter (SE1/4NW1/4) and the Northeast Quarter of the Southwest Quarter (NE1/4SW1/4) of Section 25, Township 15 South, Range 22 East, G&SRB&M, conveyed by Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David A. Rae, Grantee, recorded in the Cochise County records as Document No. 870102364. Section 26: Lots 4, 14, 15, 16, 17, 18, and 19; Southwest Quarter of the Northwest Quarter (SW1/4NW1/4) EXCEPT a right-of-way for ditches and canals constructed by the authority of the United States as reserved in the patent from the United States of America. containing 307.47 acres, more or less. TOWNSHIP 15 SOUTH, RANGE 22 EAST, G&SRB&M (SURFACE AND MINERAL) COCHISE COUNTY, ARIZONA Section 25: Lot 15 consisting of 37.53 acres, more or less; and Lot 16 consisting of 38.26 acres, more or less; and 14 Lot 19 consisting of 40 acres, more or less, subject to ownership of those portions of unpatented claims Gladys R and Erika that lie North of the Southern boundary of Lot 19; and Those portions of Lots 20 and 21 that lie East of the survey line dated April 23, 1989 completed by H.W. Smith, Registered Land Surveyor; and Those portions of the Cochise Lode Claim and the United Fraction Lode Claim that lie East of the survey line dated April 23, 1989 completed by H.W. Smith, Registered Land Surveyor; and That portion of the Highland Mary Lode Claim lying East of the survey line dated April 23, 1989 completed by H.W. Smith, Registered Land Surveyor. All described lands, in sum, containing 116.267 acres, more or less. 15 PART 3 - UNPATENTED MINING CLAIMS The following unpatented lode mining claims located in Sections 22, 23, 24, 25, 26, 27, 35, and 36, Township 15 South, Range 22 East, G&SRB&M, Cochise Mining District, Cochise County, Arizona:
Original Recordation Amended Recordation BLM Serial -------------------- ------------------- No. Name of Claim Book Page Book Page A MC ------------- ---- ---- ---- ---- ---------- Alamosa 38 38 369 145 43520 Bee R1 65 247 1504 298 43521 Bee No. R2 1128 723 1504 300 43522 Bee R3 65 249 1504 302 43523 Bee R4 65 250 1504 304 43524 Bee R5 65 251 1504 306 43525 Bee R11 65 256 1504 308 43531 Bee R12 65 257 1504 310 43532 Bumble Bee 75 24 383 207 43542 Burro - 4 278 485 43543 Burro -5 278 486 43544 Burro -6 278 487 43545 Burro -R7 1010 363 43546 Burro -8- 278 489 43547 Burro -9 278 490 43548 Burro -11 278 492 43550 Burro -12 278 493 43551 Burro -13 278 494 43552 Burro -14 278 495 43553 Burro -R15 1010 364 43554 Burro -16 278 497 43555 Burro -A 821 104 43560 Burro -B 821 106 43561 Burro -C 821 107 43562 Burro -D 821 108 43563 Burro -E 821 109 43564 Burro -G 821 111 43566 Burro -H 821 112 43567 Burro - I 821 113 43568 Burro R L 1010 361 43571 Calumet 17 310 37 446 43573 Charles 17 530 37 445 43574 Coronado R-1 1013 447 43576 Dora 39 262 43578 Echo I 395 301 43579 Echo R2 1128 457 1504 312 43580
16 Echo R3 395 303 1504 314 43581
Original Recordation Amended Recordation BLM Serial -------------------- ------------------- No. Name of Claim Book Page Book Page A MC ------------- ---- ---- ---- ---- ---------- Elephant 38 36 369 142 43586 Ella 39 264 43587 Erika 24 424 37 435 43588 Ernest 36 380 37 439 43589 Gladys R 49 102 1504 316 43593 Gustave 39 263 43594 Hagerman 16 19 37 438 43595 Ina 39 261 43597 Laura J 362 507 43602 Louie 17 581 37 440 43603 Mary 24 423 37 436 43605 Millinton 38 39 369 144 43622 Portland 38 37 369 143 43635 Prim Rose 41 331 369 141 43636 Primrose-Bee 73 428 369 147 43637 Ultimo 36 381 37 437 43645 Wolfrime 17 259 37 442 43675 Rosie R 1592 459 172613 Addie R 16 98 43519 Bonanza 17 41 43539 Branda Kaye 1620 440 187203 Burro -17 278 513 43556 Burro - 18 278 498 43557 Burro - 19 278 499 43558 Burro - 20 278 500 43559 Charlene 1620 434 187204 Colorado 39 41 43575 Defender 41 328 43577 Ellenor 1620 432 187205 Eula Belle 1620 430 187206 Francine 1620 436 187207 Imogene 1620 426 187208 Indicator 41 329 43598 Jane Rae 1620 438 187209 Katie 36 204 43599 Kentucky 41 330 43600 Last Chance 36 151 43601 Lime No. 1 1620 448 187214 Lime No. 2 1620 446 187215 Lime No. 3 1620 444 187216
17 Lime No. 4 1620 442 187217 Linda Sue 1620 422 187210
Original Recordation Amended Recordation BLM Serial -------------------- ------------------- No. Name of Claim Book Page Book Page A MC ------------- ---- ---- ---- ---- ---------- Mary Eilene 1620 428 187211 Mescal No. 5 67 51 43621 Moore #1 132 73 43623 Moore #2 132 72 43624 Moore #3 132 71 43625 Nelda Lane 1620 424 187212 Puzzle no. 2 17 529 43638 Sharie Lynn 1620 418 187218 Shirley Louise 1620 420 187213
18 PART 4 - RIGHTS OF WAY BLM RIGHT OF WAY NO. A-22976 A 50 foot wide right--of-way, designated as BLM Right-of-way Number A-22976, for a road crossing the Ella, Dora, Wolfrime, Mary, Charles, Hagerman, and Erika unpatented lode mining claims, BLM Serial Numbers A MC 43587, 43578, 43675, 43605, 43574, 43595, and 043588, respectively, the same being located in the Southeast Quarter of the Southwest Quarter (SE1/4SW1/4) of Section 25 and the East Half of the Northwest Quarter (E1/2NW1/4) of Section 36, Township 15 South, Range 22 East, G&SRB&M, Cochise County, Arizona, and containing 3.4980 acres more or less, which is more fully described as follows: Beginning at adot stationing 895 + 99.3, Thence North 27 degrees 25' 15" West 306.32 feet to a curve with an arc of 34 degrees 15' 52", a radius of 300', a tangent of 92.48' and a length of 179.41'; Thence North 61 degrees 41' 07" West 701.98 feet to a curve with an arc of 58 degrees 34' 32", a radius of 400', a tangent of 224.36' and a length of 408.93'; Thence North 3 degrees 06' 35" West 251.47 feet to the southern boundary line of the Ella lode claim, the true point of beginning; Thence from the true point of beginning, 1,972.03 feet to a curve with an arc of 13 degrees 08' 56", a radius of 400', a tangent of 46.10 feet, and a length of 91.80'; Thence North 2 degrees 02' 21" East 233.66 feet to a curve with an arc of 10 degrees, a radius of 400', a tangent of 35.23' and a length of 70.29'; Thence North 0 degrees 08' 13" East 679.68' to the point where the centerline of the road intersects the northern boundary of the Erika unpatented lode mining claim, BLM Serial Number A MC 43588. BLM RIGHT-OF-WAY NO. A-9621 Right-of-way for a pipeline, powerline, and access road over and across Lot 4 of Section 24, Township 15 South, Range 22 East, G&SRB&M, which right-of-way crosses a portion of the Bee R12 and the Echo R3 unpatented lode mining claims, BLM Serial Numbers A MC 43532 and 43581, respectively. 19 STATE OF ARIZONA RIGHT-OF-WAY NO. 18-95162 A 50-foot wide right-of-way for a road crossing State of Arizona surface lying directly south of and abutting the Ella unpatented lode mining claim, BLM Serial Number A MC 43587, and more particularly described as follows: Beginning at adot stationing 895 + 99.3, Thence North 27 degrees 25' 15" West 306.32 feet to a curve with an arc of 34 degrees 15' 52", a radius of 300 feet, a tangent of 92.48 feet and a length of 179.41 feet; Thence North 61 degrees 41' 07" West 701.98 feet to a curve with an arc of 58 degrees 34' 32", a radius of 400 feet, a tangent of 224.36 feet and a length of 408.93 feet to the true point of beginning. Thence from the true point, of beginning North 3 degrees 06' 35" West 251.47 feet to the southern boundary line of the Ella unpatented lode mining claim, which point lies South 69 degrees 17' 35" East 167.92 feet from the southwest corner of the Ella unpatented lode mining claim. RIGHT-OF-WAY AS RESERVED FROM DAVID RAE A right-of-way across an existing roadway in the East Half of the West Half (E1/2W1/2) of Section 25, Township 15 South, Range 22 East, G&SRB&M as reserved in Special Warranty Deed dated January 26, 1987 from Cyprus Mines Corporation, Grantor, to David A. Rae, Grantee, recorded in the Cochise County records as Document No. 8701-02364, as further described below: BEGINNING at a point on the centerline of the road at its intersection with the section line of Sections 25 and 36, Township 15 South, Range 22 East, G&SRB&M, Cochise County, Arizona, which point is South 89 degrees 50' 33" West, 414.85 feet from the quarter section corner of Sections 25 and 36: Thence North 00 degrees 30' 06" West, 678.30 feet; Thence North 10 degrees 27' 11" West, 981.02 feet; Thence North 14 degrees 40' 20" West, 171.79 feet; Thence North 29 degrees 16' 00" West, 128.66 feet; Thence North 34 degrees 47' 37" West, 638.55 feet; Thence North 37 degrees 21' 57" West, 109.64 feet; Thence North 45 degrees 39' 35" West, 126.85 feet; Thence North 49 degrees 59' 15" West, 127.59 feet to the intersection of the road with the west sixteenth section line of Section 25, which point is North 00 degrees 00' 40" East, 66.19 feet from the west center sixteenth section corner of Section 25. 20 ACCESS ROAD RIGHT OF WAY A right-of-way for ingress and egress over and across an existing roadway extending from the West Half (W1/2) of Lot 20 in Section 25, and running thence through portions of the Northeast Quarter (NE1/4) of Section 25, the Southeast Quarter (SE1/4) of Section 23 and the Southwest Quarter (SW1/4) of Section 23, all in Township 15 South, Range 22 East, G&SRB&M, as further described below: BEGINNING at a point lying North 49 degrees 59' 15" West.127.59 feet to the intersection of the road with the west sixteenth section line of Section 25, which point is North 00 degrees 00' 40" East, 66.19 feet from the west center sixteenth section corner of Section 25; Thence North 49 degrees 59' 15" West, 798.44 feet; Thence North 53 degrees 14' 47" West, 221.39 feet; Thence North 60 degrees 43' 02" West, 194.54 feet; Thence North 64 degrees 21' 44" West, 145.27 feet; Thence North 65 degrees 49' 06" West, 257.90 feet to the intersection of the road with the section line between Sections 25 and 26, which point is south 00 degrees 00' 43" West, 1660.30 feet from the section corner of Sections 23, 24, 25, and 26; Thence North 65 degrees 49' 06" West, 89.93 feet; Thence North 61 degrees 10' 22" West, 232.91 feet; Thence North 72 degrees 14' 31" West, 609.33 feet; Thence North 59 degrees 29' 13" West, 409.07 feet; Thence North 53 degrees 11' 26" West, 669.07 feet; Thence North 48 degrees 10' 06" West, 176.99 feet; Thence North 41 degrees 05' 19" West, 562.84 feet; Thence North 48 degrees 15' 42" West, 246.72 feet; Thence North 50 degrees 38' 20" West, 25.91 feet to the intersection of the road with the line between Sections 23 and 26, which point is South 89 degrees 54' 08" East, 194.54 feet from the quarter section corner of Sections 23 and 26; Thence North 50 degrees 38' 20" West, 312.68 feet; Thence North 27 degrees 54' 00" West, 152.67 feet; Thence North 27 degrees 57' 35" West, 177.57 feet; Thence North 27 degrees 47' 54" West, 155.73 feet; Thence North 20 degrees 07' 26" West, 194.99 feet; Thence North 48 degrees 22' 21" West, 158.51 feet; 21 Thence North 56 degrees 34' .27" West, 143.29 feet; Thence North 56 degrees 39' 39" West, 296.31 feet; Thence North 64 degrees 44' 49" West, 276.84 feet; Thence South 89 degrees 42' 38" West, 184.52 feet; Thence North 64 degrees 28' 24" West, 339.24 feet to a point on the East end line (line 2-3) of the Enough lode, common with line 2-3 of the Arizona lode, both of Mineral Survey No. 4340, which point is South 32 degrees 27' West, 266.03 feet from Corner No. 2 of the Enough lode, identical with Corner No. 3 of the Arizona lode. 22 PART 5 - WATER RIGHTS, WELLS, AND AGREEMENTS STATE OF ARIZONA WELL REGISTRATIONS State of Arizona, Department of Water Resources, Water Well Registrations and associated water wells located in portions of Sections 23 and 25, Township 15 South, Range 22 East, G&SRB&M, Cochise County, Arizona, as further described below:
Well Registration No. Location of Well --------------------- ---------------- 36-66376 Township 15 South, Range 22 East, G&SRB&M Section 23: SE1/4SW1/4 36-66377 Township 15 South, Range 22 East, G&SRB&M Section 25: SW1/4NW1/4 36-66378 Township 15 South, Range 22 East, G&SRB&M Section 23: NW1/4SE1/4
ACCESS AND WATER USE AGREEMENT Access and Water Use Agreement dated the 26th day of January, 1987 between David A. Rae and Cyprus Mines Corporation, the same being recorded as Document No. 870102368, Cochise County, Arizona, which agreement covers the unrestricted use by Cyprus of that certain water well, State of Arizona Department of Water Resources Well Registration No. 36-66379, located in Northwest Quarter of the Northwest Quarter (NW1/4NW1/4) of Section 19, Township 15 South, Range 23 East, G&SRB&M. 23