I can't sleep either

Trying to figure out what those guys were trying to do in the agreement

Teck had some high grade moose pasture

Keevil thought it was good, but they decided they wanted to farm out the exploration

They knew this geologist that might be able to find out if there was anything worth pursuing, and he proposed the follwing terms, that Teck accepted

http://www.salazargeominerals.com/docs/resume-July-9-2011.pdf

The question was how to incentivize someone to undertake the work to get to them to define a minimally economic mine, if it existed

Teck held a total of about 93.4% of the equity in 2 different forms in the Schaft Creek claims

A direct holding of 70% and an indirect 23.4% via shares in a historic Schaft entity, Liard

The proposed package had 2 parts

Salazar could earn the 70% Direct interest, just by spending $5,000,000 by 1/1/2007, or $15,000,000 by 1/1/2012, and Teck could back-in if they were interested in what was found

Further, Salazar could earn the Indirect interest by delivering a Bankable Feasibility study, as defined, after spending $5,000,000

Teck wanted a mine and Salazar wanted a participation

So how do we tailor the langauge to do this

It was preferable to have a larger mine than a smaller one

So incentive clauses were drafted, providing more favorable terms for satisfying a larger mine than a smaller one

This was 2002, nobody really knew what was there for sure

After the expenditure of $5,000,000, by 1/1/2007, the following scenarios were provided for

a minimum mine to satisfy Teck, and earn the Indirect(Liard) interest was defined as a mine capable of producing 25,000 tons of copper metal production for 12 years

For a mine this size, a 12%NPV would be used to automatically qualify to earn the Indirect interest as well as the Direct

Should a larger mine be discovered, one capable of 50,000 tons of copper metal production for 15 years, and producing an 8%NPV, that would also automatically qualify as positive for purposes of earning bith direct and indirect interests

Ok, what's left?

What about we get a 10 year, 20,000tpa mine that shows 15%NPV

or a 25 year 150,000tpa mine @7.5NPV

We gonna simply ignore those?

Or do we insert language that says that we can call anything we want, at our sole discretion, positive?

I don't think there was ever any intent to make those clauses as complicated as we have done

They weren't trying to trip each other up over one size meeting or not meeting some 2 criteria

They were trying to get to a meeting of the minds on how to deal with whatever might turn up

...and we are at the 8%NPV as specified