Musk Metals Enters into Pluto Property Option Agreement to Focus on Lithium Projects - Seite 2

Second Option

Jinhua may exercise the Option to acquire the remaining 20% interest in and to the Pluto Property (the "Second Option") by:

• incurring at least $250,000 in qualified exploration and development expenditures on the Pluto Property ("Expenditures") on or before the fourth anniversary of the execution of the Definitive Agreement; and
• incurring at least an additional $500,000 ($750,000 in the aggregate) in Expenditures on or before the fifth anniversary of the execution of the Definitive Agreement.

Upon satisfaction of incurring the expenditures set out above, the Second Option will be deemed to be exercised and Jinhua will acquire an additional 20% (100% in the aggregate) interest in and to the Pluto Property. Upon the exercise of the Second Option, the Joint Venture will terminate. In the event that Jinhua fails to satisfy the conditions to exercise the Second Option, the Second Option will terminate, Musk's interest will automatically change from a carried interest to a participating interest, and the parties will proceed to advance the Pluto Property in accordance with the Joint Venture terms.

Optionor Expenditures

Pursuant to the terms of the Option Agreement, from January 19, 2022 to December 31, 2022, Musk has the sole and exclusive right to conduct Expenditures on the Pluto Property of up to $200,000 (the "Optionor Expenditures"). Upon complying with certain notice and accounting requirements as set out in the Option Agreement, Jinhua has agreed to reimburse the Optionor Expenditures to Musk in cash, Jinhua Shares, or combination thereof, at the sole election of Jinhua. Any Jinhua Shares issuable will be subject to the approval of the Exchange and issued at the Discount Market Price as of the date that the expenditure certificate is received by Jinhua, or as otherwise required by the Exchange. All such Jinhua Shares issued will be subject to a restricted period of four months and one day.

Joint Venture Terms

Upon the formation of the Joint Venture, Jinhua will have an initial participating interest of 80% and Musk will have an initial carried interest of 20% until the earlier of the exercise of the Second Option and the termination of the Second Option. In the event the Second Option is exercised, the Joint Venture will terminate. In the event the Second Option is terminated, Musk's interest in the Pluto Property will automatically change to a participating interest.