(TSXV: MAD)("Miranda") (the "Miranda Agreement"), whereby CMQ may earn up to a 60% jointventure interest in certain mining claims controlled by Miranda, located inEureka County, Nevada (the "Red Canyon Claims"), by spending a total ofUSD$4,000,000 on certain exploration expenditures over a five-year period. CMQis committed to expend a minimum of USD$500,000 in the first year. Anyadditional amounts are at the election of CMQ but no interest is earned untilthe entire USD$4,000,000 is expended. After earning a 60% interest, CMQ is tothen earn an additional 10% interest in the Red Canyon Claims by funding thecost of a feasibility study in respect thereof. The terms of the MirandaAgreement shall be set forth in a formal exploration agreement that is to beexecuted within 60 days.
CMQ has signed a Letter Agreement with Geologix Explorations Inc. (TSXV:GIX) ("Geologix") (the "Geologix Agreement"), whereby CMQ may earn up to a 55%joint venture interest in certain mining claims controlled by Geologix,located in Humboldt County, Nevada (the "South Sleeper Claims"), by spending atotal of USD$3,000,000 on certain exploration expenditures over a five-yearperiod. CMQ is committed to expend a minimum of USD$200,000 in the first year.Any additional amounts are at the election of CMQ but no interest is earneduntil the entire USD$3,000,000 is expended. CMQ may also elect, in due course,to earn an additional 10% interest in the South Sleeper Claims by funding thecost of a feasibility study in respect thereof. The operator, followingcompletion of a feasibility study, may elect to earn an additional 5% byarranging financing at its expense for the project through to commercialproduction. Alternatively, CMQ and Geologix may form a Joint Venture tofurther explore the project. The terms of the Geologix Agreement shall be setforth in a formal exploration agreement that is to be executed within 60 days.
Funding Agreement
In order to meet its short term financing requirements, including thecommitted amounts under the Miranda Agreement and Geologix Agreement, CMQ hasagreed in principle to enter into a funding agreement (the "FundingAgreement") with Matco Capital Ltd. ("Matco"), which would permit CMQ to drawand obligate Matco to provide up to CDN$1,000,000 in loans. The FundingAgreement expires June 30, 2009 and will be secured by a charge on all assetsand interests of CMQ and requires payment by CMQ of a $50,000 set-up fee.Amounts drawn under the Funding Agreement bear interest at 9% per annum. Thereare no standby or other charges in respect of undrawn amounts. It isanticipated that the amounts outstanding under the Funding Agreement shall berepaid upon the completion of the private placement financing described below.The Funding Agreement has been entered into, conditional upon receivingshareholder approval at the Annual and Special Meeting of Shareholdersdescribed below.
Annual and Special Meeting of Shareholders
CMQ will hold an annual and special meeting of shareholders (the"Meeting") in early August, 2008. At the Meeting, shareholders of CMQ will beasked to consider and approve the following items of special business: (i) theFunding Agreement; (ii) the consolidation of all of the common shares of CMQ(the "Common Shares") on the basis of ten (10) pre-consolidation Common Sharesfor every one (1) post-consolidation Common Share (the "ProposedConsolidation"); (iii) a future private placement of Common Shares to becompleted within 12 months of the Meeting for up to $5,000,000 (the "PrivatePlacement") in which insiders and control persons of CMQ may participate; and(iv) a reduction in the stated capital account of the Common Shares.
