Kermode Resources Ltd. options the Rye Patch Mine project in Nevada, USA. The option provides Kermode with the right but not the obligation to undertake a cash lease of the property. The project comprises patented and unpatented mining claims covering approximately 120 acres in Pershing
County, Nevada owned by Gold Range Company LLC. The first phase of the deal is the Option, where Kermode begins with a one-year term that can be renewed for additional one-year periods by mutual consent of the counterparties so long as Kermode is paying or causing to be paid all annual claim maintenance fees and holding costs. During the first phase, Kermode may carry out certain "pre-drilling" mineral exploration activities including but not limited to mapping, rock, soil and geochemical sampling, geophysical surveys and other exploration activities. Kermode will not conduct drilling activities of any kind or nature whatsoever including auger, core, rotary, reverse circulation or other without first entering into the lease agreement contemplated in this Option Agreement. The second phase of the deal is a Lease, where Kermode commits to these cash payments: on signing the lease- USD 5,000; On the first anniversary-USD 5,000; On the second anniversary- USD 10,000; On the third anniversary- USD 50,000; On the fourth anniversary- USD 100,000; On the fifth & sixth anniversaries- USD 150,000; On the seventh & eighth anniversaries- USD 200,000; On the eighth anniversary and thereafter- USD 250,000. The lease has a 10-year term and is renewable for 10-year increments so long as exploration or mining activity is ongoing. The proposed transaction includes additional terms as follows: Royalty: There shall be a 5% Net Smelter Return (NSR) royalty. The royalty is subject to the following buy-down conditions: the first 1% of the NRS may be bought down for $1 million, the second 1% of the NSR may be Bought Down for $2 million, and the third 1% of the NSR may be bought down for $2 million leaving at least a 2% NSR to Gold Range. Advance Royalty Payments: The cash payments are Minimum Advance Royalties and the total over any previous 5-year period shall be recoupable from production royalty (NSR) payments. Inflation Index: All cash payments & buydowns for Year 5 & beyond indexed to CPI with 2024 base year. Future sales interest: An amount equal to 10% of gross value of any transaction will be payable by Kermode to the Gold Range if Kermode sells the leasehold interest, subject to consent by Gold Range LLC. During the first phase, Gold Range may terminate the option upon 15 days' written notice, provided that during such 15-day period, Kermode will have the right to enter into the Contemplated lease agreement. During the second phase, Gold Range may not terminate the Lease. During the first phase, the Option will not be assignable. During the second phase, the Lease and Leasehold Interest will be assignable, and only then with Gold Range's written consent not to be unreasonably withheld, which may be withheld at Gold Range's discretion for reason.