Title and Ownership Rights Argentina is one of relatively few countries in which mineral rights are owned by the provinces, not by the central (federal) government. The Federal Constitution vests mineral rights with the provinces, which administer claims and assess royalties, although increasingly in line with Federal policies. Under the Federal Mining Code, which is adhered to by all provinces, minerals are divided into several categories including metal ores and construction materials.
The types of mineral concessions relevant to the El Quevar project are cateos (claims) for exploration and minas (mines) for exploitation. These are granted by a judge of the Salta Mining Court and are entered into a public register.
The El Quevar project includes 23 exploitation concessions and six exploration concessions ("cateos"), for a total of approximately 67,000 hectares. Three of the concessions near the primary Yaxtché target are subject to options to purchase from the existing third party concession owners. One option agreement covers the El Quevar II concession and one-half of the Castor concession, and another option agreement covers the Nevado I concession. Our remaining payments on the El Quevar II/Castor and Nevado I option agreements total $1,100,000 and $1,050,000, respectively. Assuming funding is available and the results of our additional drilling and planned economic study work are promising, we intend to make all remaining option payments by June 22, 2012.
In addition, under the terms of the option agreements, we are required to pay a 1% net smelter return royalty on the value of all metals extracted from the El Quevar II or Nevado I concessions and one-half of the minerals extracted from the Castor concession. We are also required to pay a 3% royalty to the Salta province based on the mine mouth value of minerals. To maintain all of the El Quevar concessions, we make yearly aggregate rental payments to the Argentine government of approximately $32,000.
Mineral Concessions at El Quevar - Data as of May 2011