November
8, 2006
VIA
FAX
AND FEDEX
Mr.
Charles Merchant
CM
Properties
3189
County Road 10
Heflin,
AL 36264
| |
Re:
|
Notice
of Termination - Assignment of Minerals
Lease
|
Dear
Mr.
Merchant,
Reference
is made to the Assignment of Minerals Lease Agreement, dated as of December
31,
2005, between your sole proprietorship, CM Properties and Thorium Power,
Ltd.
(formerly, Novastar Resources Ltd.) (the “Company’), as amended by Amendment No.
1 to Assignment of Minerals Lease, dated March 5, 2006, between such parties
(the “Mineral Lease”).
Section
1
of the amendment referred to above provides that notwithstanding any other
provision of the Mineral Lease, the sole remedy available to you for a breach
of
the Agreement by the Company is the termination of the Agreement and that
no
further relief or recourse, whether at law, in equity, or otherwise, will
be
available to you.
The
Company has determined, based on independent core drilling sample test results
regarding the mineral content of the Cleburne County District of Alabama
properties that are the subject of the Mineral Lease (the “Properties”), that it
is not economically feasible for us to mine the Properties and provide a
satisfactory rate of return on investment to our stockholders. Accordingly,
the
Company intends to cease performance of its obligations under the Mineral
Lease
and to forfeit any rights that it has to the Properties and re-vest in you
those
rights. The Company will pay the outstanding invoice in the amount of $6,671.00
that you submitted that covers payroll for your two employees for the period
from October 30 through December 1, 2006 and fuel charges from October 4
through
October 24, 2006. The Company, however, will make no further payments to
you in
cash or equity and it is the Company’s position that if you believe any amounts
in cash or equity are due to you, your sole recourse for the Company’s failure
to pay such amounts would be termination of the Mineral Lease as per the
provision in Section 1 of the amendment to the Mineral Lease described above.
The
Company will take any reasonable action that you deem necessary to re-vest
in
you any interest in the Properties that the Company holds as a result of
the
Mineral Lease.
Please note that this termination is specific to the Properties covered
by the
Mineral Lease and in no way affects the thorium/monazite mineral properties
located in Clay County, Alabama that were assigned to the Company by American
Graphite Holdings pursuant to that certain Assignment of Specific Mineral
Rights
Agreement dated September 14, 2005, as amended March 5, 2006.
Very
truly yours,
Thorium
Power, Ltd.
/s/
Seth
Grae
By:
Seth
Grae
Chief
Executive Officer,
President
and Director
Thorium
Power, Ltd., 8300 Greensboro Drive, Suite 800, McLean, VA 22102 USA
Tel
703-918-4918 Fax 202-318-2502 E-Mail sgrae@ThoriumPower.com