AuRico Metals Inc.

  • Date: 2016-02-03

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ROYALTY ASSIGNMENT AGREEMENT THIS AGREEMENT dated with effect as of the time contemplated by Section 2.3(e) of the Plan of Arrangement. BETWEEN: AURICO METALS INC., a corporation incorporated pursuant to the laws of the Province of Ontario ("Assignee") - and AURICO GOLD INC. a corporation incorporated pursuant to the laws of the Province of Ontario ("Assignor") WHEREAS the Assignor, Crocodile Gold Inc. ("CGI") and Crocodile Gold Corp. ("Crocodile Gold") executed and delivered a share purchase agreement dated as of March 27, 2012 and amended as of May 4, 2012 and further amended as of December 22, 2014 (the "SPA"); AND WHEREAS the Assignor, entered into an assignment and royalty agreement dated January Royalty Agreement") pursuant CGI to the Assignor;

CGI and Fosterville Gold Mine Pty Ltd (the "Royalty Payor") novation agreement dated January 14, 2015 in respect of the 13, 2015 between the Royalty Payor and CGI (the "Fosterville to which the Fosterville Royalty Agreement was assigned by

AND WHEREAS pursuant to a contribution agreement made as of July 2, 2015 (the "Contribution Agreement") between the Assignee, Alamos Gold Inc. ("Alamos") and the Assignor, the Assignor agreed to sell, convey, assign and transfer to the Assignee, and Assignee agreed to purchase, the New AuRico Property; AND WHEREAS the parties hereto wish to evidence the assignment of the Fosterville Royalty Agreement in accordance with its terms to and in favour of the Assignee, and the assumption by the Assignee of the obligations on terms identical to those in the Fosterville Royalty Agreement as of the time contemplated by Section 2.3(e) of the Plan of Arrangement; AND WHEREAS the parties hereto are therefore desirous of executing and delivering this agreement, all on and subject to the terms and conditions herein contained; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the Assignor and the Assignee agree as follows:

234927.00051/91140296.4

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1.

DEFINITIONS

1.1

All capitalized terms used in this agreement (including without limitation in the recitals hereto) but not otherwise defined in this agreement shall have the respective meanings assigned thereto in the Contribution Agreement.

2.

ASSIGNMENT

2.1

With effect as of the time contemplated by Section 2.3(e) of the Plan of Arrangement, subject to the terms and conditions of the Contribution Agreement, the Assignor hereby sells, conveys, assigns and transfers to the Assignee all of the Assignor's right, title and interest in and to the Fosterville Royalty Agreement and the Assignee hereby purchases, accepts and assumes from the Assignor the Fosterville Royalty Agreement.

3.

ASSUMPTION OF OBLIGATIONS BY ASSIGNEE

3.1

With effect as of the time contemplated by Section 2.3(e) of the Plan of Arrangement, subject to the terms and conditions of the Contribution Agreement, the Assignee hereby assumes and agrees to be responsible for and honour, perform, discharge and pay as and when due, all of the liabilities and obligations of the Assignee, whether accrued, contingent or otherwise, in respect of, under or arising out of or in connection with the Fosterville Royalty Agreement and which by the terms and conditions thereof are to be observed, paid, discharged or performed at any time following the time contemplated by Section 2.3(e) of the Plan of Arrangement.

4.

GOVERNING LAW

4.1

This agreement shall be governed by and be construed in accordance with the laws in force in the State of Victoria, Australia.

5.

WAIVER AND AMENDMENT

5.1

No amendment to this agreement will be valid or binding unless set forth in writing and duly executed by the parties hereto. No waiver of any breach of any provision of this agreement will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided, will be limited to the specific breach waived.

6.

SUCCESSORS AND ASSIGNS

6.1

This agreement shall enure to the benefit of, and be binding on, the parties hereto and their respective successors and permitted assigns. Notwithstanding anything to the contrary herein, from and after the amalgamation of the Assignor and Alamos pursuant to the Arrangement, all of the rights and obligations of the Assignor hereunder shall be rights and obligations of Amalco and shall be enforceable by Amalco (in the case of rights) and enforceable against Amalco (in the case of obligations).

234927.00051/91140296.4

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3 -

7.

FURTHER ASSURANCES

7.1

Each of the parties covenants and agrees to sign such other papers, do and perform and cause to be done and performed such further and other acts and things as may be necessary or as the other party may reasonably require, in order to give full effect to this agreement.

8.

COUNTERPARTS

8.1

This agreement and any certificate or other writing delivered in connection with this agreement may be executed in any number of counterparts and either party to this agreement may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this agreement or such other writing, as the case may be, taken together will be deemed to be one and the same instrument. The execution of this agreement or any other writing by a party will not become effective until all counterparts, as the case may be, have been executed by the parties to this agreement. A copy of this agreement delivered by facsimile or other electronic means and bearing a copy of the signature of a party to this agreement shall for all purposes be treated and accepted as an original copy thereof.

9.

NO DEROGATION

9.1

This agreement shall in no way limit or derogate from and is without prejudice to the covenants, agreements, representations, warranties, indemnities, and obligations of the parties hereto contained in the Contribution Agreement, all of which shall continue in full force and effect in accordance with the terms thereof. This agreement is delivered pursuant to, and is subject to all of the terms and conditions contained in, the Contribution Agreement. In any event of any inconsistency between the provisions of this agreement and the provisions of the Contribution Agreement, the provisions of the Contribution Agreement shall prevail. For greater certainty, this agreement and the sale, conveyance, assignment and transfer contemplated hereby, is subject to the provisions regarding the "Fosterville Royalty" set forth in the definition of "Australian Royalties" in the Contribution Agreement. [Remainder of page intentionally blank.]

234927.00051/91140296.4

IN WITNESS WHEREOF the parties hereto have duly executed this agreement as of the date and year first above written.

AURICO METALS INC.

Bv:

Name: Chip's. Title:

AURICO GOLD INC.

Title:

234927.00051/9U40296.4

EXECUTION VERSION

ROYALTY ASSIGNMENT AND NOVATION AGREEMENT THIS AGREEMENT dated with effect as of the 14th day of January, 2015. BETWEEN: AURICO GOLD INC., a corporation incorporated pursuant to the laws of the Province of Ontario (“Assignee”) - and CROCODILE GOLD INC. a corporation incorporated pursuant to the laws of the Province of Ontario (“Assignor”) - and FOSTERVILLE GOLD MINE PTY LTD, ACN 010 604 878, a corporation incorporated and existing under the laws of Australia (“Royalty Payor”) WHEREAS the Assignee, the Assignor and Crocodile Gold Corp. (the “Crocodile Gold”) executed and delivered a share purchase agreement dated as of March 27, 2012 and amended as of May 4, 2012 (the “SPA”); AND WHEREAS the Assignee, the Assignor and Crocodile Gold Corp. executed and delivered an amendment to share purchase agreement to terminate cumulative free cash flow payments agreement dated as of December 22, 2014 (the “SPA Amendment Agreement”) pursuant to which the Assignee, the Assignor and Crocodile Gold agreed to terminate the obligations to make payments of Cumulative Free Cash Flow (as such term is defined in the SPA) under Section 2.2. of the SPA for (i) a cash payment of $20 million, (ii) an assignment from the Assignor of the 2% net smelter returns royalty on the Fosterville Project granted pursuant to the royalty agreement dated January 13, 2015 between Fosterville Gold Mine Pty Ltd and the Assignor (the “Fosterville Royalty Agreement”), (iii) an assignment from the Assignor of the 1% net smelter returns royalty on the Stawell Project granted pursuant to the royalty agreement dated January 13, 2015 between Stawell Gold Mines Pty Ltd and the Assignor, and (iv) an assignment from the Assignor of the 1% net smelter returns royalty on the Stawell Project granted pursuant to the royalty agreement dated January 13, 2015 between Leviathan Resources Pty Ltd and the Assignor; AND WHEREAS the parties hereto wish to evidence the assignment and novation of the Fosterville Royalty Agreement to and in favour of the Assignee, and the assumption by the Assignee of the obligations on terms identical to those in the Fosterville Royalty Agreement as of the date hereof; AND WHEREAS the parties hereto are therefore desirous of executing and delivering this agreement, all on and subject to the terms and conditions herein contained;

-2NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the Assignor, the Assignee and the Royalty Payor agree as follows: 1.

ASSIGNMENT AND NOVATION

1.1

Effective from and after the date of this agreement (the “Effective Date”), the Assignor hereby assigns, transfers, sets over and novates to and in favour of the Assignee, and the Assignee hereby acquires, all of the Assignor’s right, title, and interest in, to and under the Fosterville Royalty Agreement.

1.2

This agreement also constitutes notice to the Royalty Payor, for the purposes of the Property Law Act 1958 (Vic), that the Assignor has assigned to the Assignee all of its right, title, and interest in, to and under the Fosterville Royalty Agreement.

2.

ASSUMPTION OF OBLIGATIONS BY ASSIGNEE

2.1

The Assignee hereby accepts the assignment herein provided and assumes and agrees to be bound by, subject to and to perform all covenants, agreements and obligations of the Assignor in respect of, under or arising out of or in connection with the Fosterville Royalty Agreement arising on and after the Effective Date as if the Assignee was an original party thereto.

3.

ACCEPTANCE OF SUBSTITUTED PERFORMANCE AND RELEASE

3.1

As of and from the Effective Date, each of the parties hereto acknowledges and agrees that the Assignor is released from all of its duties and obligations under the Fosterville Royalty Agreement arising on and after the Effective Date.

4.

REFERENCES TO ASSIGNOR

4.1

From and after the Effective Date, all references to the Assignor, including to the Assignor as a “Party” or the “Royalty Holder”, in the Fosterville Royalty Agreement shall be replaced by references to the Assignee as if the Assignee was an original party thereto in the place and stead of the Assignor and the address of the Assignee set forth below shall apply for the purposes of Section 7.5 of such agreement.

5.

NOTICE Any notice, election, proposal, objection or other document required or permitted to be given hereunder will be in writing addressed to the Parties as follows: Notices to the Assignor will be given to the following address: First Canadian Place 100 King Street West Suite 5600 Toronto, ON M5X 1C9 Attention: Chief Financial Officer Facsimile No.: 416-644-8801

-3Email:

[email protected]

Notices to the Assignee will be given to the following address: 110 Yonge Street Suite 1601 Toronto, ON M5C 1T4 Attention: Robert Chausse, Chief Financial Officer Facsimile No.: 647-260-8881 Email: [email protected] Notices to the Royalty Payor will be given to the following address: McCormicks Road, Fosterville, Victoria Australia 3557 Attention: Ian Holland, General Manager Facsimile No.: +61 3 5439 9099 Email: [email protected] All notices will be given by personal delivery, facsimile transmission, electronic delivery or prepaid registered mail, return receipt requested. All notices will be effective and will be deemed delivered as follows: (a)

if by personal delivery, on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next Business Day following delivery;

(b)

if by facsimile or electronic delivery, on the same Business Day as receipt of the facsimile or electronic delivery; and

(c)

if by mail, on the Business Day of actual receipt.

A Party may at any time change its address for future notices hereunder by notice in accordance with this Section. The term “Business Day” means a day, other than a Saturday or Sunday, on which banks are generally open for business in the State of Victoria, Australia and Toronto, Ontario. 6.

GOVERNING LAW

6.1

This agreement shall be governed by and be construed in accordance with the laws in force in the State of Victoria, Australia.

7.

WAIVER AND AMENDMENT

7.1

No amendment to this agreement will be valid or binding unless set forth in writing and duly executed by the parties hereto. No waiver of any breach of any provision of this

-4agreement will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided, will be limited to the specific breach waived. 8.

SUCCESSORS AND ASSIGNS

8.1

This agreement shall enure to the benefit of, and be binding on, the parties hereto and their respective successors and permitted assigns.

9.

FURTHER ASSURANCES

9.1

Each of the parties covenants and agrees to sign such other papers, do and perform and cause to be done and performed such further and other acts and things as may be necessary or as the other party may reasonably require, in order to give full effect to this agreement.

10.

COUNTERPARTS

10.1

This agreement and any certificate or other writing delivered in connection with this agreement may be executed in any number of counterparts and either party to this agreement may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this agreement or such other writing, as the case may be, taken together will be deemed to be one and the same instrument. The execution of this agreement or any other writing by a party will not become effective until all counterparts, as the case may be, have been executed by the parties to this agreement. A copy of this agreement delivered by facsimile or other electronic means and bearing a copy of the signature of a party to this agreement shall for all purposes be treated and accepted as an original copy thereof. [Remainder of page intentionally blank.]

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IN WITNESS WHEREOF the parties hereto have duly executed this agreement as of the date and year first above written.

AURICO GOLD INC. By: Name: Scott Perry Title: President & Chief Executive Officer

CROCODILE GOLD INC. By: Name: Rodney Lamond Title: President & Chief Executive Officer

FOSTERVILLE GOLD MINE PTY LTD By: Name: Rodney Lamond Title: Director

EXECUTION VERSION

FOSTERVILLE ROYALTY AGREEMENT THIS AGREEMENT dated as of the 13th day of January, 2015 (this “Agreement”). BETWEEN: FOSTERVILLE GOLD MINE PTY LTD, ACN 010 604 878, a corporation incorporated and existing under the laws of Australia, (the “Royalty Payor”) - AND CROCODILE GOLD INC., a corporation incorporated and existing under the laws of Canada, (the “Royalty Holder”) WHEREAS for good and valuable consideration the receipt and sufficiency whereof being acknowledged by the Royalty Payor, the Royalty Payor has agreed to grant to the Royalty Holder a royalty interest in the Property in an amount equal to 2.0% of the Net Smelter Returns in accordance with the provisions of this Agreement. NOW THEREFORE THIS AGREEMENT WITNESSETH that the Parties covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1

Definitions

In this Agreement, unless otherwise provided: “1st Offer” has the meaning set forth in Section 5.2; “Affiliate” means any person, partnership, joint venture, corporation or other form of enterprise which directly or indirectly controls, is controlled by, or is under common control with, a Party. For the 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; “Allowable Deductions” mean the aggregate of the following charges (to the extent that they are not deducted in calculating Receipts) that are incurred in each calendar quarter: (a)

all costs, tolling charges, representation expenses, metal losses, umpire charges, expenses, penalties, fees, including all weighing, sampling and assaying costs and other expenses and charges of any nature whatsoever that are incurred by the Royalty Payor and/or its Affiliates for or in connection with smelting, refining, beneficiation processes, mineral treatment or other similar procedures for Gold but excluding any and all charges and costs, if any, of or related to the Royalty Payor’s mills or other processing plants constructed for the purposes of milling or processing Gold, in whole or in part or those of any Affiliate;

(b)

all costs, expenses and charges of any nature whatsoever that are incurred by the Royalty Payor and its Affiliates for or in connection with transportation

-2(including insurance, shipping, freight, stockpiling, storage, warehousing, handling, port, demurrage, delay and forwarding expenses, transaction taxes, customs and customs clearance, import and export duties and permit costs) of Gold away from the Property to a smelter or refinery or other place of mineral treatment or beneficiation and from there to the place or places of storage and sale to the ultimate purchaser; and (c)

sales, use, gross receipts, customs duties, severance, existing third Person royalties (excluding this Royalty and third Person royalties granted by the Royalty Payor), value added taxes and other taxes and governmental charges, if any, payable with respect to the existence, severance, production, removal, sale, processing, transportation, or disposition of Gold that are incurred by the Royalty Payor and/or its Affiliates with respect to the Gold (but excluding any taxes based on the gross or net income of the Royalty Payor and/or its Affiliates, any business or franchise taxes of the Royalty Payor and its Affiliates and any taxes based on the value of the Property and any improvements thereon including any ad valorem taxes).

Where a cost or expense otherwise constituting an Allowable Deduction is incurred by the Royalty Payor or an Affiliate of Royalty Payor in a transaction with a non-arm’s length Person, such cost or expense may be deducted, but only as to the lesser of the actual cost incurred by the Royalty Payor and the fair market value thereof, calculated at the time of such transaction; “Business Day” means a day, other than a Saturday or Sunday, on which banks are generally open for business in the State of Victoria, Australia and Toronto, Ontario; “Confidential Information” has the meaning set forth in Section 7.2; “Commencement Date” means the date of this Agreement; “Encumbrance” means any charge, encumbrance, lien, security interest or mortgage of any nature or kind whatsoever; “Gold” means gold contained in any and all metals, minerals and mineral rights of every nature and kind in whatever form or state that is mined, excavated, extracted, recovered in soluble solution or otherwise recovered or produced from the Property (other than by way of custom milling operations conducted at the Property with respect to gold mined, excavated, extracted or produced off the Property) including ore and any products resulting from the further milling, processing or other beneficiation of or otherwise derived from ore, including without limitation, concentrates, doré, powders, dusts or refined gold; “Net Smelter Returns” means the Receipts less the Allowable Deductions; “NI 43-101” means National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators; “Notice” has the meaning set forth in Section 5.2; “Notice of Offer” has the meaning set forth in Section 5.3; “Offered Interest” has the meaning set forth in Section 5.2 or Section 5.3, as applicable; “Party” or “Parties” means one or more of the parties to this Agreement;

-3“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof; “Property” means the property listed in Schedule “A” hereto and any other form of successor or substitute therefor. If it shall be determined by the Royalty Payor, by exploration or mining, that any mine extension that is located on the Property should be expanded over property that is contiguous to the Property, then in such event, “Property” shall include the contiguous property on which the expansion is situated; “Quoted Price” means the price per ounce of Gold as quoted on the London P.M. gold fixing (or A.M. fixing if there is no P.M. fixing on that day) as quoted by the London Bullion Market Association (or any mutually agreeable substitute source if quotes are no longer made thereon), on the date of final settlement from the smelter, refinery or other Purchaser of the Gold; “Receipts” means the aggregate of the following: (a)

the revenue received or receivable by the Royalty Payor from arm’s length purchasers of Gold

(b)

the fair market value of all Gold in whatever form sold by the Royalty Payor to non-arm’s length Persons (based in the case of refined Gold, on the Quoted Price on the date of sale); and

(c)

any proceeds of insurance received by the Royalty Payor in connection with the loss of Gold, produced and shipped, to which the Royalty would have applied.

If the Royalty Payor elects not to sell any portion of any refined Gold but instead elects to have the final product of any such Gold credited to or held for its account with any smelter, refiner or broker, such Gold shall be deemed to have been sold at the Quoted Price on the day such refined Gold is actually credited to or placed in the Royalty Payor’s account; “ROFR Consideration” has the meaning set forth in Section 5.3; “ROFR Exercise Notice” has the meaning set forth in Section 5.3; “Royalty” means the percentage of Net Smelter Returns to which the Royalty Holder is entitled pursuant to this Agreement, being 2.0%; “Third Party Offer” has the meaning set forth in Section 5.3; “Third Party Offeror” has the meaning set forth in Section 5.3; “Trading Activities” has the meaning set forth in Section 4.4; and “Transfer” means to transfer, sell, assign or dispose of all or part of an interest. 1.2

Governing Law

This Agreement will in all respects be governed by and be construed in accordance with the laws in force in the State of Victoria, Australia.

-41.3

Severability

If any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect under the laws of any jurisdiction, the validity, legality and enforceability of such provision will not in any way be affected or impaired thereby under the laws of any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby. 1.4

Calculation of Time

If any time period set forth in this Agreement ends on a day of the week that is not a Business Day, then notwithstanding any other provision of this Agreement, such period will be extended until the end of the next following day which is a Business Day. 1.5

Headings

The headings to the articles and sections of this Agreement are inserted for convenience only and will not affect the construction hereof. 1.6

Other Matters of Interpretation

In this Agreement: (a)

the singular includes the plural and vice versa;

(b)

the masculine includes the feminine and vice versa;

(c)

references to “article”, “section” and “subsection” are to articles, sections and subsections of this Agreement, respectively;

(d)

all provisions requiring a Party to do or refrain from doing something will be interpreted as the covenant of that Party with respect to that matter notwithstanding the absence of the words “covenants” or “agrees” or “promises”;

(e)

all provisions requiring a Party to do something will be interpreted as including the covenant of that Party to cause that thing to be done when the Party cannot directly perform the covenant but can indirectly cause that covenant to be performed, whether by an Affiliate under its control or otherwise;

(f)

the words “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions when used in this agreement refer to the whole of this Agreement and not to any particular article, part, section, exhibit or portion thereof;

(g)

all calculations shall be made in accordance with International Financial Reporting Standards ARTICLE 2 ROYALTY

2.1

Royalty

The Royalty Holder has reserved and the Royalty Payor has agreed to pay the Royalty, commencing as at and from the Commencement Date and in perpetuity thereafter, to the

-5Royalty Holder on all Gold sold (or deemed to have been sold) by or for the Royalty Payor, on the terms and conditions specified in this Agreement. 2.2

Interest in Land

The Parties intend that the Royalty, to the extent permissible under applicable laws, constitutes an interest in the Property and, accordingly agree that: (a)

the Royalty will run with the Property, and every interest therein; and

(b)

the Royalty Payor will upon request sign and deliver to the Royalty Holder, and the Royalty Holder may register or otherwise record against title to the Property, the form of notice or other document or documents as the Royalty Holder may reasonably request to give notice of the existence of the Royalty to third Persons, to secure payment of the Royalty and protect the Royalty Holder’s rights to receive the Royalty as contemplated herein. ARTICLE 3 OPERATION OF THE PROPERTY

3.1

Royalty Payor to Determine Operations

The Royalty Payor may, but will not be obligated to, treat, mill, heap leach, sort, concentrate, refine, smelt, or otherwise process, beneficiate or upgrade the Gold at sites located on or off the Property, prior to sale, transfer, or conveyance to a purchaser, user, or consumer. The Royalty Payor will not be liable for mineral values lost in processing under sound practices and procedures, and no Royalty will be due on any such lost mineral values. The Royalty Payor will have complete discretion concerning the nature, timing and extent of all exploration, development, mining and other operations conducted on or for the benefit of the Property and may suspend operations and production on the Property at any time it considers prudent or appropriate to do so. The Royalty Payor will owe the Royalty Holder no duty to explore, develop or mine the Property, or to do so at any rate or in any manner other than that which the Royalty Payor may determine in its sole and unfettered discretion. The Royalty Payor may, but is not obligated to, retain ore or treated ore products containing Gold as inventory for any length of time and for any reason. At the Royalty Holder’s reasonable request, the Royalty Payor shall deliver to the Royalty Holder a monthly statement of such inventory, but the Royalty Holder will have no right to any Royalty payment until the Royalty Payor actually sells the Gold. Raw minerals stockpiles containing Gold are not subject to the Royalty until sold. The Royalty Payor will have no obligation to sell any Gold at any time. The Royalty Payor may stockpile any minerals containing Gold from the Property at such place or places as the Royalty Payor may elect provided that the same is appropriately identified as to ownership and origin and is secured from loss, theft, tampering and contamination and provided that the Royalty shall continue to apply to such stockpiled Gold 3.2

Sales to Related Parties

The Royalty Payor will be permitted to sell Gold in the form of raw ore, doré, or concentrates to an Affiliate of the Royalty Payor or of any controlling or majority shareholder of the Royalty Payor, provided that such sales will be deemed, for the purposes of this Agreement, to have been sold at prices and on terms no less favourable to the Royalty Payor than those which would be extended by an unaffiliated third Person in an arm’s length transaction under similar circumstances and, where applicable shall be determined based on the Quoted Price on the date of such sale.

-63.3

Commingling

Commingling of minerals from the Property with other minerals produced elsewhere is permitted, provided that:

3.4

(i)

reasonable and customary procedures are established for the weighing, sampling, assaying and other measuring or testing necessary to fairly allocate Gold contained in such minerals;

(ii)

representative samples of the Gold shall be retained by the Royalty Payor and assays (including moisture and penalty substances) and other appropriate analyses of these samples must be made before commingling to determine gross metal content of the Gold and that the Royalty Payor shall retain such analyses for a reasonable amount of time, but not less than 24 months, after receipt by the Royalty Holder of the Royalty paid with respect to such commingled Gold from the Property; and

(iii)

the amount of valuable metals contained in such Gold is capable of being accurately verified by audit.

Tailings

All tailings, residues, waste rock, spoiled leach materials and other materials resulting from the Royalty Payor’s operations and activities on the Property shall be the sole property of the Royalty Payor, but shall remain subject to the obligation to pay the Royalty should the same be processed or reprocessed, as the case may be, in the future and result in the production of Gold. In the event Gold is processed or reprocessed, as the case may be, the Royalty applicable thereto with respect to Gold shall be as determined by using the best engineering and technical practices then available. 3.5

Property Tenure

The Royalty Payor shall have the right to abandon, relinquish or terminate or not renew all or any part of the Property or its interest therein, in its sole discretion. In the event the Royalty Payor or any Affiliate surrenders, allows to lapse or otherwise terminates its interest in any part of the Property and within a period of ten years from the date of such surrender, lapse or other termination, reacquires a direct or indirect interest therein, then the Royalty shall apply to such interest so acquired. The Royalty Payor shall give written notice to the Royalty Holder within ten days of any such re-acquisition. ARTICLE 4 PAYMENTS 4.1

Accrual of Payments Obligation

The obligation to pay the Royalty shall accrue upon the sale of Gold. The Royalty for each calendar quarter will be calculated and paid within 30 days after the end of the calendar quarter. Smelter settlement sheets if any, and a statement setting forth the Receipts and Allowable Deduction calculations in sufficient detail to show the payment’s derivation shall be submitted with the Royalty payment together with a statement showing in reasonable detail the quantities and grades of Gold produced and sold or deemed sold by the Royalty Payor in the preceding quarter, and if applicable, details with respect to Gold that has been sold to an Affiliate of the Royalty Payor during such quarter.

-7Subject to as hereinafter provided, all Royalty payments will be considered final and in full satisfaction of all obligations of the Royalty Payor with respect thereto unless within 180 days after receipt by the Royalty Holder of the statement the Royalty Holder delivers to the Royalty Payor a written notice describing and setting forth either: (i) a specific objection to the calculation of the Royalty Payment; or (ii) a desire to conduct an audit. For a period of 180 days after the Royalty Payor’s receipt of such notice, the Royalty Holder will have the right, upon reasonable notice and at a reasonable time, to direct that the Royalty Payor’s accounts and records relating to the calculation of the Royalty in question be audited by the auditors or other representatives of the Royalty Holder. If such audit determines that there has been a deficiency or an excess in any Royalty payment made to the Royalty Holder, such deficiency or excess will be resolved by adjusting the next Royalty payment due hereunder. If there is a deficiency of more than 21/2% of the amount due, the Royalty Payor will pay all the costs and expenses of such audit and if the deficiency is less than 21/2% of the amount due, such costs and expenses will be paid by the Royalty Holder. Failure on the part of the Royalty Holder to make claim against the Royalty Payor for adjustment in such 180 day period by delivery of a written notice will conclusively establish the correctness and sufficiency of the statement and Royalty payments for such period. Such limitation period shall not limit claims alleging acts of fraud or gross negligence on the part of the Royalty Payor. 4.2

Conversion of Currency and Withholding

All payments to be made under this Agreement will be made in United States dollars. All Royalty payments will be made subject to withholding or deduction in respect of the Royalty for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied on such Royalty payment by or on behalf of any governmental authority having power and jurisdiction to tax and for which the Royalty Payor is obligated in law to withhold or deduct on behalf of the Royalty Holder and remit to such governmental authority. The Royalty Payor shall set out in the statement referred to in Section 4.1 any amount so withheld. 4.3

Wire Transfer

Payments hereunder will be made by wire transfer in good, immediately available funds, to such account or accounts as the Royalty Holder may designate pursuant to wire instructions provided by the Royalty Holder to the Royalty Payor not less than three Business Days prior to the dates upon which such payments are to be made provided that Royalty Holder shall not be required to provide updated wire instructions and wire instructions provided by Royalty Holder shall remain effective until superseded by Royalty Holder. 4.4

Royalty in Kind

The Royalty Holder shall not have the right to take the Royalty in kind. 4.5

Trading Activities of Royalty Payor

The Royalty Payor will have the right to market and sell refined Gold in any manner it may elect, and will have the right to engage in forward sales, futures trading or commodity options trading and other price hedging, price protection, and speculative arrangements (the “Trading Activities”) which may involve the possible physical delivery of Gold. The Royalty will not apply to, and the Royalty Holder will not be entitled to participate in, the proceeds generated by the Royalty Payor, a shareholder of the Royalty Payor, or an Affiliate of either in Trading Activities or in the actual marketing or sales of Gold. The Royalty Payor will not be entitled to deduct from the Receipts any losses suffered or any other expenses or liabilities incurred by the Royalty Payor, a shareholder or an Affiliate of the Royalty Payor in Trading Activities. If the Royalty Payor engages in Trading Activities, the Royalty will be determined on the basis of the Quoted

-8Price on the date of sale of the Gold and without regard to the price or proceeds actually received by the Royalty Payor, for or in connection with the sale, or the manner in which a sale to a third Person is made by the Royalty Payor. 4.6

Books

The Royalty Payor shall keep true and accurate books and records of all of its operations and activities on the Property and under this Agreement, including the mining of Gold and the treatment, processing, refining and transportation of Gold. ARTICLE 5 ASSIGNMENT 5.1

Assignment by Royalty Payor

The Royalty Payor may grant Encumbrances and security interests on (i) the Property (which shall remain subject to the Royalty); and (ii) the Royalty Payor’s rights pursuant to Section 5.2 or 5.3 of this Agreement. The Royalty Payor shall have the right to Transfer all or any portion of its interest in the Property provided that the Royalty Payor must deliver to the Royalty Holder at least two Business Days prior to any such Transfer coming into effect, a written agreement from the transferee in standard industry form pursuant to which the transferee agrees to assume (pro rata, to the extent applicable) its share of the obligations to pay the Royalty under the terms of this Agreement. In addition, if Crocodile Gold Inc. seeks to transfer the shares of the Royalty Payor, directly or indirectly, the Royalty Payor must deliver to the Royalty Holder at least two Business Days prior to such transfer, written notice of such transfer. 5.2

Assignment by Royalty Holder - Right of First Offer

If the Royalty Holder wishes to make a bona fide offer to one or more third Persons to Transfer all or any portion of its interest in the Royalty (the “Offered Interest”) then prior to making any such offer, the Royalty Holder shall give notice in writing to the Royalty Payor of the terms and conditions upon which it would be prepared to Transfer the Offered Interest, which shall be in written form (the “Notice”). A Notice shall be deemed to constitute an offer (the “1st Offer”) by the Royalty Holder to the Royalty Payor to Transfer the Offered Interest on the terms and conditions set out in the Notice and shall be open for acceptance by the Royalty Payor for a period of 45 days from the date of its receipt. If the Royalty Payor gives notice to the Royalty Holder electing to accept the 1st Offer within the 45 day period, such acceptance shall constitute a binding agreement of purchase and sale between the Royalty Holder and the Royalty Payor in respect of the Offered Interest on the terms and conditions set out in the Notice. If the Royalty Payor does not accept the 1st Offer within the 45 day period, the Royalty Holder may complete a purchase and sale of the Offered Interest to any other Person or Persons on the terms and conditions set out in the Notice (or other terms and conditions as may be agreed, provided such terms and conditions are no more favourable to such Person or Persons) and such purchase and sale shall be completed within 30 days of the expiration of the right of the Royalty Payor to accept the 1st Offer provided for in this Section, failing which the Royalty Holder must again comply with the provisions of this Section in respect of a purchase and sale of the Offered Interest. For greater certainty and without limitation, if the purchase and sale of the Offered Interest to any other Person or Persons is for any consideration other than in cash, the Royalty Holder’s good faith estimate of the cash equivalent of the non-cash consideration shall be used in determining if the terms and conditions of such sale were no more favourable to such Person or Persons. If the Royalty Payor, acting reasonably, does not agree with such good faith estimate, the matter shall be referred to arbitration in accordance

-9with the provisions of this Agreement, in which case all time periods referred to in this Section shall be extended by the time taken to obtain such final determination. 5.3

Assignment by Royalty Holder - Right of First Refusal

(a)

If the Royalty Holder receives a bona fide written offer (a “Third Party Offer”) from any Person dealing at arm’s length with the Royalty Holder to purchase all or any portion of the Royalty (the “Offered Interest”), the Royalty Holder shall promptly give notice of the Third Party Offer (the “Notice of Offer”) to the Royalty Payor and comply with this Section. The Notice of Offer must contain a copy of the Third Party Offer, disclose the identity of the Person making the Third Party Offer (the “Third Party Offeror”). If the Third Party Offer provides for any non-cash consideration to be paid to the Royalty Holder in respect of the Offered Interest, the Notice of Offer must specify the Royalty Holder’s good faith estimate of the cash equivalent value of such non-cash consideration. If the Royalty Payor acting reasonably does not agree with such good faith estimate, the matter shall be referred to arbitration in accordance with the provisions of this Agreement, in which case all time periods referred to in this Section shall be extended by the time taken to obtain such final determination. Upon the Notice of Offer being given, the Royalty Payor will have the right to purchase all, but not less than all, of the Offered Interest free and clear of any and all Encumbrances, at the same price and upon the same terms and conditions as are contained in the Third Party Offer, subject to paying the aforesaid cash equivalent in lieu of any non-cash consideration (the “ROFR Consideration”).

(b)

If the Royalty Payor desires to exercise its right to purchase all of the Offered Interest as contemplated by Section 5.3(a), it will give notice of such desire (the “ROFR Exercise Notice”) to the Royalty Holder within 30 days after receipt of the Notice of Offer. The giving of the ROFR Exercise Notice shall constitute a legally binding agreement between the Royalty Holder and the Royalty Payor for the sale by the Royalty Holder to the Royalty Payor of the Offered Interest in accordance with the terms set out in the Third Party Offer (subject to the Royalty Payor paying the ROFR Consideration) which sale transaction will be completed on the date therein provided (or on such other date as the Royalty Holder and the Royalty Payor shall agree) by assignment of the Offered Interest by the Royalty Holder to the Royalty Payor, free and clear of any and all Encumbrances against payment by the Royalty Payor to the Royalty Holder of the ROFR Consideration by bank wire transfer, certified cheque or bank draft.

(c)

If the Royalty Payor does not give the ROFR Exercise Notice in accordance with the provisions of Section 5.3(b), the right of the Royalty Payor to purchase the Offered Interest will terminate and the Royalty Holder may sell all, but not less than all, of the Offered Interest to the Third Party Offeror in accordance with the terms of the Third Party Offer at any time within 60 Business Days after the expiry of the 30 day period specified in Section 5.3(b). If the Offered Interest is not so sold within such 30 day period on such terms, the rights of the parties pursuant to this Section will again take effect with respect thereto.

5.4

Affiliate Transfers

The Royalty Holder may Transfer all or any portion of its interest in the Royalty to an Affiliate of the Royalty Holder. For purposes of clarity, such Transfer is not subject to Section 5.2 or 5.3, provided, however, that if control over such Affiliate is immediately transferred to a third Person or if such transaction is merely an attempt at avoiding the provisions of Sections 5.2 or 5.3 then the provisions of Section 5.2 and 5.3 shall be deemed to apply to such transaction and such

- 10 transaction shall have no effect, unless the Royalty Payor subsequently declines to exercise its right to acquire the Offered Interest pursuant thereto. 5.5

Transfer to AuRico

Notwithstanding any other section of this Agreement, Sections 5.2 and 5.3 of this Agreement shall not apply to any Transfer of Royalty Holder’s interest in the Royalty to AuRico Gold Inc. 5.6

Multiple Parties

Notwithstanding that more than one Person may in future comprise the Royalty Holder, the Royalty Payor will not be or become liable to make payments in respect of the Royalty to, or to otherwise deal in respect of this Agreement with, more than one Person. If the interests of the Royalty Holder hereunder is at any time owned by more than one Person, the Royalty Holder will, as a condition of receiving payment hereunder, nominate one Person to act as agent and common trustee for receipt of monies payable hereunder and to otherwise deal with the Royalty Payor in respect of such interests and no Royalty Holders will be entitled to administer or enforce any provisions of this Agreement except through such agent and trustee. In such event, the Royalty Payor will, after receipt of notice respecting the nomination of such agent and trustee, thereafter make and be entitled to make payments due hereunder in respect of the Royalty to such agent and trustee and to otherwise deal with such agent and trustee as if it were the sole holder of the Royalty hereunder. 5.7

Confidentiality

The Royalty Holder shall obtain a confidentiality agreement in form and substance that is acceptable to the Royalty Payor acting reasonably and in substantially the terms of Section 7.3, from any intended transferee or transferee of all or part of the Royalty. ARTICLE 6 DISPUTE RESOLUTION 6.1

Resolution Process

Either Party may refer a matter in dispute hereunder for resolution by three arbitrators pursuant to this Article by written notice to the other Party. Within 10 days after receipt of such notice, each Party will appoint one arbitrator and a third arbitrator shall be appointed by the first two arbitrators. The two arbitrators selected by the respective Parties shall be experienced and knowledgeable in the mining industry. 6.2

Conduct of Arbitration

Except as specifically provided in this Article, an arbitration hereunder will be conducted in accordance with the rules of UNCITRAL. The arbitrators will fix a time and place in Toronto, Ontario for the purpose of hearing the evidence and representations of the Parties and they will preside over the arbitration and determine all questions of procedure not provided for under such rules or this Article. After hearing any evidence and representations that the Parties may submit, the arbitrators will make an award and reduce the award to writing and deliver one copy thereof to each of the Parties. The decision of the arbitrators will be made within 45 days after the appointment of the third arbitrator, subject to any reasonable delay due to unforeseen circumstances. The decision of the arbitrators may be entered into any court. The expense of the arbitration, including travel costs and attorney’s fees and costs of the prevailing Party, will be paid as specified in the award. The award of the arbitrators will be final and binding upon the Parties.

- 11 The Parties undertake as a general principle to keep confidential all information concerning the existence of the arbitration, all awards in the arbitration, all materials in the proceedings created or used for the purpose of the arbitration, and all materials and information produced during the arbitration and not in the public domain – save and to the extent that disclosure may be required of a party by legal duty or to enforce an award in bona fide legal proceedings before a competent court. Each Party shall obtain and deposit with the arbitrator a signed confidentiality undertaking from its legal counsel, independent experts and consultants regarding the confidential arbitration information in form and substance satisfactory to the arbitrator in order to give effect to this provision. ARTICLE 7 MISCELLANEOUS 7.1

Other Activities and Interests

This Agreement and the rights and obligations of the Parties hereunder are strictly limited to the Property. Each Party will have the free and unrestricted right to enter into, conduct and benefit from any and all business ventures of any kind whatsoever, whether or not competitive with the activities undertaken pursuant hereto, without disclosing such activities to the other Party or inviting or allowing the other to participate therein including activities involving mineral claims or mineral leases adjoining the Property. 7.2

Compliance with National Instrument 43-101

The Parties acknowledge that the Royalty Holder or Affiliates thereof may be or become subject to NI 43-101. The Royalty Payor hereby covenants that upon written request by the Royalty Holder or an Affiliate thereof, following delivery of a written notice from the Royalty Holder stating that the exemption set forth in Section 9.2(1) of NI 43-101 is unavailable to the Royalty Holder, the Royalty Payor shall: (a)

provide any and all necessary technical data on the Property required by the Royalty Holder or its Affiliates to comply with NI 43-101, as reasonably requested by the Royalty Holder;

(b)

grant access to the Property to the Royalty Holder, its Affiliates or any representative thereof for personal inspection of the Property on the provision of 3 Business Days prior written notice to the Royalty Payor, such access to be at a time and on a date that do not unduly interfere with the mining operations of the Royalty Payor, it being understood and agreed that the Royalty Holder shall abide by the health and safety rules and regulations of the Royalty Payor and that the Royalty Holder shall indemnify and hold harmless the Royalty Payor and its Affiliates from and against any and all damages, losses, suits and liabilities that they may suffer as a result of damage to life, limb or property as a result of such access by the Royalty Holder (absent the gross negligence of the Royalty Payor); and

(c)

allow any report prepared for the Royalty Payor in accordance with NI 43-101 to be used by the Royalty Holder or its Affiliates in any technical report prepared for the Royalty Holder or its Affiliates, on a condition that a “qualified person” (as such term is defined in NI 43-101) engaged by the Royalty Holder is the author of the report prepared for the Royalty Payor or its Affiliates.

- 12 7.3

Confidentiality

All information, data, reports, records, feasibility studies and test results relating to the Property and the activities of the Royalty Payor or any other Person thereon and the terms and conditions of this Agreement, all of which will hereinafter be referred to as “Confidential Information”, will be treated by the Royalty Holder and its Affiliates as confidential and will not be disclosed to any Person who is not a party to this Agreement, except in the following circumstances: (a)

the Royalty Holder or its Affiliates may disclose confidential information to its auditors, legal counsel, institutional lenders, brokers, underwriters and investment bankers, provided that such non-party users are advised of the confidential nature of the Confidential Information and undertake to maintain the confidentiality thereof and are strictly limited in their use of the Confidential Information to those purposes necessary for such non-party users to perform the services for which they were retained by the Royalty Holder or its Affiliates;

(b)

the Royalty Holder or its Affiliates may disclose Confidential Information to prospective purchasers of the Royalty, provided that each such prospective purchasers first agree in writing to hold such information confidential in accordance with this Section and to use it exclusively for the purpose of evaluating its interest in the Royalty;

(c)

the Royalty Holder or its Affiliates may disclose Confidential Information where disclosure is necessary to comply with their respective disclosure obligations and requirements under any securities law, rules or regulations or stock exchange listing agreements, policies or requirements or as otherwise required by law or in relation to proposed credit arrangements, and the Royalty Payor agrees to provide to the Royalty Holder all such information as the Royalty Holder, acting reasonably, determines is necessary or desirable to fulfill the disclosure obligations and requirements of the Royalty Holder or its Affiliates under applicable securities laws; or

(d)

with the approval of the Royalty Payor.

Any Confidential Information that becomes part of the public domain by no act or omission in breach of this Section will cease to be Confidential Information for the purposes of this Section 7.3. 7.4

No Partnership

This Agreement is not intended to, and will not be deemed to, create any partnership relation between the Parties including without limitation, a joint venture, mining partnership or commercial partnership. The obligations and liabilities of the Parties will be several and not joint and neither Party will have or purport to have any authority to act for or to assume any obligations or responsibility on behalf of the other Party. Nothing herein contained will be deemed to constitute a Party the partner, agent, joint venturer or legal representative of the other Party. 7.5

Notice

Any notice, election, proposal, objection or other document required or permitted to be given hereunder will be in writing addressed to the Parties as follows: Notices to the Royalty Payor will be given to the following address:

- 13 McCormicks Road, Fosterville, Victoria Australia 3557 Attention: Facsimile: Email:

Ian Holland, General Manager +61 3 5439 9099 [email protected]

Notices to the Royalty Holder will be given to the following address: First Canadian Place 100 King Street West Suite 5600 Toronto, ON M5X 1C9 Attention: Facsimile: Email:

Chief Financial Officer (416) 644-8801 [email protected]

All notices will be given by personal delivery, facsimile transmission, electronic delivery or prepaid registered mail, return receipt requested. All notices will be effective and will be deemed delivered as follows: (a)

if by personal delivery, on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next Business Day following delivery;

(b)

if by facsimile or electronic delivery, on the same Business Day as receipt of the facsimile or electronic delivery; and

(c)

if by mail, on the Business Day of actual receipt.

A Party may at any time change its address for future notices hereunder by notice in accordance with this Section. 7.6

Further Assurances

Each Party will, at the request of another Party and at the requesting Party’s expense, execute all such documents and take all such actions as may be reasonably required to effect the purposes and intent of this Agreement. 7.7

Entire Agreement

This Agreement, including the schedule hereto, constitutes the entire agreement of the Parties with respect to the subject matter hereof, all previous agreements and promises in respect thereto being hereby expressly rescinded and replaced hereby. No modification or alteration of this agreement will effective unless in writing executed subsequent to the date hereof by both Parties. No prior written or contemporaneous oral promises, representations or agreements in relation to the subject matter herein are binding upon the Parties. There are no implied covenants contained herein. 7.8

No Waivers

No waiver of or with respect to any term or condition of this Agreement will be effective unless it is in writing and signed by the waiving Party, and then such waiver will be effective only in the

- 14 specific instance and for the purpose of which given. No course of dealing among the Parties, nor any failure to exercise, nor any delay in exercising, any right, power, or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise of any specific waiver of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 7.9

Time of the Essence

Time is of the essence in the performance of any and all of the obligations of the Parties, including without limitation, the payment of monies. 7.10

Counterparts

This Agreement may be executed in multiple counterparts, each of which will constitute an original, but all of which together will constitute one and the same instrument, and may be signed and accepted by facsimile or PDF transmission. 7.11

Parties in Interest

This Agreement will enure to the benefit of and be binding on the Parties and their respective successors and permitted assigns. 7.12

Costs and duty

The Royalty Holder shall pay all duty (including fines, penalties and interest) that may be payable on this Agreement.

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SCHEDULE “A” PROPERTY

Tenement Number

Prospect/Tenement Name

EL 3539

Goornong

EL 4937

Yankee Creek

MIN 5404

Fosterville

MIN 4456

Pumping

-2-