Document/Exhibit Description Pages Size
1: 10-K 10-K 12-31-96 147 756K
2: EX-10.15 Agreement of Purcahse and Sale 17 51K
3: EX-10.23 Exploration License Agreement 18 64K
4: EX-10.24 Exploration Agreement (English Trans) 27 103K
5: EX-10.25 Termination and Settlement Agreement 24 70K
6: EX-10.26 Option and Joint Venture Agreement (English Trans) 53 186K
7: EX-10.27 Heads of Agreement 1-22-96 15 55K
8: EX-10.28 Heads of Agreement 11-13-96 18 62K
9: EX-10.29 Heads of Agreement 8-19-96 16 60K
10: EX-10.30 Underwriting Agreement (English Translation) 16 62K
11: EX-10.31 Convertion D'Etablissment (English Translation) 30 109K
12: EX-10.33 1992 Non-Discretionary Option Plan 6 28K
13: EX-10.39 Agreement Between the Company and Outside Director 48 177K
14: EX-10.40 Employment Agreement 5-15-92 1 11K
15: EX-21.1 Subsidiaries of the Registrant 1 6K
16: EX-23.1 Consent of Coopers & Lybrand 1 8K
17: EX-27.1 Financial Data Schedule 1 9K
EX-10.26 — Option and Joint Venture Agreement (English Trans)
Exhibit Table of Contents
EXHIBIT 10.26
CERTIFICATE OF TRANSLATION
I, Louis O. Peloquin, Vice President, General Counsel and Secretary of
Golden Star Resources Ltd. (the "Company") declare to the best of my knowledge
that the attached is an accurate English translation of the Option and Joint
Venture Agreement dated June 26, 1996 between Societe de Travaux Publics et de
Mines Aurifiere en Guyane, Societe Guyanaise des Mines (collectively
"SOTRAPMAG"), a 100% owned subsidiary of Guyanor Ressources S.A., LaSource
Developpement, SAS and ASARCO Exploration Company.
/s/ Louis O. Peloquin
----------------------
Louis O. Peloquin
Vice President, General
Counsel and Secretary
State of Colorado )
County of Denver ) ss.
Subscribed and sworn to before me this 12th day of March, 1997 by
Louis O. Peloquin.
/s/ Nathalie Defferard
-----------------------
Notary Public
My Commission Expires: October 25, 1999.
PAUL ISNARD OPTION AND JOINT VENTURE AGREEMENT
AMONG
SOTRAPMAG
AND
ASARCO EXPLORATION COMPANY
AND
LA SOURCE DEVELOPPEMENT
1
THIS AGREEMENT IS MADE AMONG:
SOCIETE DE TRAVAUX PUBLICS ET DE MINES AURIFERES EN GUYANE ("SOTRAPMAG"), a
societe a responsabilite limitee, with capital of F2,000,000 and registered
office at Aerodrome de Saint-Laurent, Route de Saint-Maurice, 97320
Saint-Laurent du Maroni, French Guiana, a wholly owned subsidiary of GUYANOR
RESSOURCES S.A., acting on its behalf and for its own account and for both on
behalf of and for the account of:
SOCIETE GUYANAISE DES MINES ("SGM"), societe en nom collectif, with
capital of 1,000,000 FF and registered office at PK 9 Route de
Saint-Jean, 97320 Saint-Laurent du Maroni, French Guiana pursuant to
special power of attorney dated _____ ).
Herein represented by D.A. Fennell, President and CEO, Golden Star Resources,
hereinafter individually referred to as "SOTRAPMAG" and "SGM" respectively and
collectively referred to as "SOTRAPMAG"
AND:
ASARCO EXPLORATION COMPANY, a New York corporation acting on its behalf and for
its own account as well as on behalf of and for the account of:
ASARCO GUYANE FRANCAISE, a societe a responsabilite limitee with a
capital of 50,000 FF and registered office at PK 7 Route de Montjoly,
97343 Cayenne, French Guiana, a wholly owned subsidiary of Asarco
Exploration Company Inc. pursuant to a special power of attorney
dated N/A.
herein represented by G.D. Van Voorhis, President, hereinafter individually
referred to as "ASARCO" and "ASARCO GUYANE" respectively and collectively
referred to as "ASARCO"
AND:
LA SOURCE DEVELOPPEMENT SAS, a societe anonyme simplifiee, with capital of
250,000 francs and registered office at 16/18 avenue George V, 75008 Paris,
France pursuant to a special power of attorney dated ______________
herein represented by _______________ , and hereinafter referred to as "LA
SOURCE".
WITNESSETH:
Whereas by agreement dated March 25, 1994 SOTRAPMAG obtained from Alcatel
Alsthom Compagnie Generale d'Electricite the title and exclusive rights to
eight (8) concessions in the Paul Isnard area of Guyane, a Departement of
France ("French Guiana"), subject to the grant of necessary administrative
authorizations to the transfer on or before December 31, 1995;
Whereas by a decree dated December 27, 1995 published in the Journal Officiel
of December 29, 1995, the French Minister of Industry, Post and
Telecommunications approved the transfer of the Paul Isnard Concessions;
2
Whereas the concessions transferred to SOTRAPMAG were subject to option rights
held by the BUREAU DE RECHERCHES GEOLOGIQUES ET MINIERES, BP 6009, Avenue
Claude Guillemin, 45060 Orleans, France ("BRGM") which by an agreement between
BRGM and GUYANOR RESSOURCES S.A. ("GUYANOR") dated September 26, 1994 were
automatically converted, upon the grant of necessary administrative
authorizations to transfer, into a 25% interest in the exploration and
exploitation rights in any primary deposits located within the concessions;
Whereas SOTRAPMAG also holds, directly or indirectly, four Type "B" exploration
permits in the Paul Isnard area and GUYANOR has under application one Type "A"
exploration permit in this area, and SOTRAPMAG has agreed to extend BRGM's 25%
interest to include the four Type "B" and, if granted, the one Type "A"
exploration permits;
Whereas BRGM, pursuant to the terms of the agreement between BRGM and GUYANOR,
has assigned its rights to the concessions and permits to LA SOURCE, of which a
significant part of the share capital is held by BRGM;
Whereas SOTRAPMAG and LA SOURCE have agreed to organize two joint ventures
("societes en participation") one to explore the Paul Isnard Concessions and
the other the Eau Blanche Permits and to jointly develop and mine any Primary
Deposits found therein;
Whereas SOTRAPMAG has agreed to grant ASARCO two separate options to earn
interests equal to 50% of SOTRAPMAG's interests in each joint venture (which is
equivalent as of the date hereof to a 37.5% interest in each such joint venture
organized pursuant to this Agreement) by preparing a feasibility study on the
Property or any part thereof of such Joint Venture and by funding SOTRAPMAG's
portion of the initial expenditures on Operations to be undertaken by such
joint venture on all or part of such Property;
Whereas ASARCO shall also have, under the conditions set forth below, the
option, once the First Feasibility Study has been delivered, to merge the
Paul-Isnard and the Eau Blanche Properties into one joint venture.
NOW, THEREFORE, the parties have agreed, under certain conditions, to enter
into this joint venture agreement which shall define the terms and conditions
of their cooperation as participants in the joint ventures established by this
Agreement and the terms on which ASARCO will earn its interest(s) and be vested
as a participant in the joint venture(s).
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
The following terms are used in this agreement as defined below:
1.1 "Accounting Procedure" means the procedures set forth in Exhibit II.
1.2 "Adopted Program and Budget" means any Program and its corresponding
Budget adopted or approved by the Management Committee according to the
procedure described in Articles 8.3 and 8.4.
3
1.3 "Affiliate" of a Participant means (i) any person who, directly or
indirectly, controls, is controlled by, or is under common control with,
one of the Participants. The control concept includes control of the de
facto or de jure management or direction by holding equity securities or
by contract. "Control" may exist without possession of 50% or more of
its voting rights or capital stock provided always that direct or
indirect ownership of fifty percent (50%) or more of such voting rights
or capital stock gives rise to a presumption of control; (ii) any
Subsidiary.
1.4 "Agreement" means this agreement and all Exhibits thereto and future
addenda hereto and amendments hereof.
1.5 "Alluvial Deposit" means an unconsolidated deposit of ores, minerals or
mineral resources located at or near the surface formed where the
concentration of ore minerals was caused by the physical or mechanical
separation of heavier from lighter weight minerals during the surficial
flow of running water in stream channels.
1.6 "Area of Interest" means the Property and all land part or all of which
is located within ten kilometres of any point on the surrounding
outermost boundary of the Property described in Exhibit I. The part of
the Property to the East of a Northsouth line drawn along the Eastern
boundary of the Paul Isnard Concessions (which line is shown on the map
that forms part of Exhibit I) shall be included as part of the Eau
Blanche Permits and the property to the West of such line shall be
included as part of the Paul Isnard Concessions.
1.7 "ASARCO'S Exploration Expenditure Requirement" means the funds required
to be contributed by ASARCO under Article 7 through SOTRAPMAG to conduct
Operations enabling ASARCO to earn a Participating Interest equal to 50%
of SOTRAPMAG's Participating Interest in either Property or in both.
1.8 "Assets" means the Properties and all the Facilities, Products, land and
other assets and rights conveyed or assigned to or placed at the disposal
of either of the Joint Ventures by the Participants and all the other
Facilities and assets and rights acquired by the Manager or the
Participants on behalf and for account of either of the Joint Ventures
and all data and information resulting from the conduct of Operations and
the proceeds of disposition of any of the foregoing.
1.9 "BRGM Agreement" means that agreement dated September 26, 1994 between
GUYANOR and BRGM.
1.10 "Budget" means a detailed estimate of all the probable Expenditures to be
entailed by the Operations to complete a Program, supplemented, if need
be, by a timetable of cash advances to be made.
1.11 "Development" means all the work preparatory to extraction and recovery
of the Products from Primary Deposits, including construction or
installation of a treatment plant or any other Facility for extraction,
transport or treatment of the Products by any process.
1.12 "Effective Date" means the date of execution of this Agreement.
1.13 "Expenditures" means all of the costs, disbursements, debts and expenses,
calculated according to the accounting procedure described in Exhibit II
hereto, incurred in relation to Operations carried out under the
Agreement on any account.
4
1.14 "Exploration" means all the activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of Primary
Deposits including completing any Feasibility Study and including any
costs for the maintenance of the applicable Mining Titles.
1.15 "Facility" means any equipment, machine, capital asset or other tangible
or other asset.
1.16 "Feasibility Study" means a report and the work required to prepare such
report for either of the Joint Ventures in respect of a Primary Deposit
(including the First Feasibility Study) as described in Exhibit III
hereto which recommends the Development and Exploitation of a Primary
Deposit on the basis that it has a positive net present value using a
reasonable discount rate and includes such information and is in such
form as is generally required to secure all construction and mining
permits necessary for the Mining of a Primary Deposit and to obtain a
project loan on reasonable terms from a major lending institution to
develop Mining Operations on the Primary Deposit that is the subject of
the reports.
1.17 "First Feasibility Study" means the First of the Initial Feasibility
Studies whereby ASARCO may decide to vest in one of the Properties and
has the option to combine the Properties into one Joint Venture.
1.18 "Initial Feasibility Study" means a Feasibility Study prepared for either
of the Joint Ventures in respect of a Primary Deposit on either the Paul
Isnard Concessions or the Eau Blanche Permits which reaches one of the
following conclusions:
(a) if made during the first and second years after the Effective
Date, it concludes to the existence of at least five million
ounces of minable gold;
(b) if made during the third and fourth years after the Effective
Date, it concludes to the existence of at least two million ounces
of minable gold; and
(c) if made during the fifth year after the Effective Date, it
concludes to the existence of at least one million ounces of
minable gold.
1.19 "Initial Participating Interest" means the interests of each Participant
set forth in Article 6.6.
1.20 "Initial Period" means the period beginning with the Effective Date and
ending on the earlier of the date ASARCO earns its Participating Interest
or the date its option terminates without ASARCO having earned its
Participating Interest.
1.21 "Joint Venture" means either of the joint ventures established by this
Agreement and all the rights, obligations and other relations relating to
a Property between the Participants in such joint venture pursuant to
this Agreement.
1.22 "Joint Account" means any account or accounts opened in accordance with
the Accounting Procedure set forth in Exhibit II hereto.
1.23 "Eau Blanche Permits" means the four Type "B" permits and, if and when
granted, the one Type "A" permit currently under application, all as more
particularly described in Exhibit I hereto.
5
1.24 "Management Committee" means the committee provided for in Article 8.
1.25 "Manager" means the natural person or legal entity designated pursuant to
Article 9 to manage Operations or any successor Manager.
1.26 "Mining" means extraction, production, transport, treatment or other
processing of Products from Primary Deposits and includes marketing of
Products.
1.27 "Mining Titles" means each of the individual titles to the Paul Isnard
Concessions and the Eau Blanche Permits and "Mining Title" means any one
of them.
1.28 "Net Proceeds" means the amount calculated in the manner described in
Exhibit IV.
1.29 "Operation" means any Exploration, Development or Mining and other
activities and their administration carried out in respect of a Property.
1.30 "Participant" means a natural person or legal entity who from time to
time holds a Participating Interest in either of the Joint Ventures.
1.31 "Participating Interest" means the undivided portion or share of a
Participant of the aggregate ownership interest in either of the Joint
Ventures and its assets expressed as a percentage. A Participating
Interest shall be calculated as a percentage to three decimal places and
rounded to two, e.g. 30.519% rounded to 30.52%. Decimals of .005 or
more shall be rounded up to .01 and decimals of less than .005 shall be
rounded down.
1.32 "Parties" means collectively SOTRAPMAG, SGM, ASARCO, ASARCO GUYANE and LA
SOURCE, and their representatives, successors and assigns.
1.33 "Paul lsnard Concessions" means the eight concessions in the Paul Isnard
area more particularly identifed and described in Exhibit I.
1.34 "Primary Deposit" means a deposit of ores, minerals or mineral resources
which is not an Alluvial Deposit.
1.35 "Products" means all metals, ores, minerals, concentrates and other
mineral resources produced from the land covered by the Property.
1.36 "Program" means the description in writing and in reasonable detail of
the Operations to be conducted and objectives to be accomplished on any
of the Properties by a Manager for a six month period or any longer
period.
1.37 "Property" means either of the Paul Isnard Concessions or the Eau Blanche
Permits, as the context requires, except that if an election is made
pursuant to Article 7.3 to combine the Paul Isnard Concessions and the
Eau Blanche Permits then the "Property" means the Paul Isnard Concessions
and the Eau Blanche Permits.
6
1.38 Any legal entity is deemed to be another's "Subsidiary" if:
(a) it is directly or indirectly controlled by the other entity; or
(b) it is the Subsidiary of a Subsidiary of such other entity.
A legal entity is presumed to be another's Subsidiary if the latter:
(c) directly or indirectly holds 50% of its capital stock or voting
rights;
(d) directly or indirectly controls its management de facto or de
jure; or is entitled to elect or appoint its executives.
1.39 "$" and "dollars" means dollar in the currency of the United States of
America unless otherwise stated.
2. PURPOSES
2.1 PURPOSES. The sole purpose of this Agreement is to (i) create two Joint
Ventures, one covering the Paul-Isnard Property, and the other covering
the Eau Blanche Property, (ii) set forth the terms under which
Exploration, Development and Mining Operations shall be conducted in
respect of the Paul-Isnard and Eau Blanche Properties or any additional
properties acquired within the Area of Interest by the said Joint
Ventures and to perform any other activity necessary, appropriate or
incidental to any of the foregoing and (iii) set forth the terms upon
which ASARCO shall earn a Participating Interest in either or both of
said Joint Ventures.
2.2 LIMITED PURPOSES. Unless the Participants expressly agree otherwise, the
only purpose of this Agreement is the attainment of the objectives in
Article 2.1 above and nothing herein below shall be construed as
extending the same.
3. TERM
3.1 TERM. The term of this Agreement shall be for an unlimited period.
4. CONTRIBUTIONS
4.1 ASSETS TO BE PLACED AT THE DISPOSAL OF THE JOINT VENTURE. SOTRAPMAG
shall place, upon execution of this Agreement, the Paul Isnard
Concessions and the Eau Blanche Permits and all geological data relating
thereto to which it has rights at the exclusive disposal of the
applicable Joint Venture, for Exploration, Development and Mining, in
accordance with the provisions hereof. As of the date hereof, SOTRAPMAG
warrants and represents, except as disclosed in Exhibit I hereto, that
each of the Mining Titles and all of the geological data are held by
SOTRAPMAG (with the exception of the Type "A" permit which GUYANOR has
under application) and that such rights are free from all claims and
encumbrances or any other interests of a third party of any nature
whatsoever which might have a material adverse effect on the rights of
the Parties hereunder and that the Property is in good standing under the
applicable laws and regulations. So long as either of the Joint Ventures
remains in existence SOTRAPMAG agrees not to transfer all or part of the
Mining Titles placed at the disposal of that Joint Venture without the
prior written consent of all of the Participants in such Joint Venture.
In the event of
7
withdrawal from either of the Joint Ventures by SOTRAPMAG, SOTRAPMAG
agrees to take all steps necessary to transfer all or part of the Mining
Titles relating to such Joint Venture to the remaining Participants at
the request of such Participants.
Subject to the provisions of Article 12 below:
(a) SOTRAPMAG shall retain legal title to the Paul Isnard Concessions
and the Eau Blanche Permits for the benefit of the applicable
Joint Venture and nothing in this Agreement shall be construed as
a conveyance or transfer of any of the Mining Titles to such Joint
Venture or anyone else;
(b) During the term of this Agreement each Joint Venture shall have
the exclusive right to conduct Exploration, Development and Mining
Operations on or in respect of Primary Deposits on its Properties,
it being understood however that the Exploration, Development and
Mining rights may in relation to a specific Primary Deposit be
transferred in whole or in part as provided in Article 12.
4.2 FINANCING. Subject only to Articles 4.3 and 4.4, the Participants shall
contribute to the financing of Exploration by contributing to the Adopted
Program and Budget which has been adopted by a Joint Venture in
proportion to their Participating Interests in such Joint Venture. Once
the decision to commence Development and Mining in respect either of the
Properties is taken in accordance with Article 12.2, financing of the
Development and Mining shall be undertaken as described in Articles 7 and
12.
4.3 INITIAL SOTRAPMAG CONTRIBUTION. Prior to proportional contribution for
Operations by LA SOURCE in accordance with its Participating Interest,
SOTRAPMAG shall first have contributed one million United States dollars
(U.S.$1,000,000) to the financing of the Adopted Programs and Budgets on
either or both of the Joint Ventures. LA SOURCE acknowledges that said
first U.S.$1,000,000 will be paid by SOTRAPMAG by way of the
contributions of ASARCO under Article 7 towards earning 50% of
SOTRAPMAG's Participating Interest as of the date of exercise of ASARCO's
option, in either of the Joint Ventures. Thus, for example, once
SOTRAPMAG has contributed or shall be deemed to have contributed through
ASARCO $400,000 to the Paul-Isnard Joint Venture and $600,000 to the Eau
Blanche Joint Venture, it shall have fulfilled its obligation under the
terms of this Article.
4.4 PROPORTIONAL CONTRIBUTIONS. ASARCO's right and obligation to make
proportional contributions that are required by either Joint Venture
directly, and not indirectly through SOTRAPMAG, for such Joint Venture's
Operations will begin after it has earned a Participating Interest equal
to 50% of SOTRAPMAG's Participating Interest as of the date of exercise
of ASARCO's option, in this Joint Venture through SOTRAPMAG as provided
under Article 7 unless SOTRAPMAG has withdrawn from such Joint Venture
prior to ASARCO's having earned its interest in such Joint Venture in
which case (a) ASARCO shall have the option to immediately vest in a
Participating Interest equal to 50% of SOTRAPMAG's Participating
Interest, and (b) the remaining 50% of SOTRAPMAG's Participating Interest
shall be transferred to ASARCO and LA SOURCE pursuant to Article 13.1.
Unless the Participating Interests have been adjusted in accordance with
the terms of this Agreement, LA SOURCE shall contribute 25% of the costs
of Operations after SOTRAPMAG shall have first contributed U.S.$1,000,000
as aforesaid and the
8
contributions made by ASARCO pursuant to Article 7 to earn its
Participating Interest will, until ASARCO has earned its Participating
Interest, constitute the 75% percent contribution due from SOTRAPMAG.
5. OPERATIONS
5.1 TWO PHASES. The Operations under this Agreement shall be undertaken in
two phases. The initial phase shall consist of carrying out by each
Joint Venture of Exploration Operations as described in Articles 6
through 11 including the completion of an Initial Feasibility Study for
prospective Primary Deposits found on all or part of the Property of such
Joint Venture.
In the event a decision is taken by the Management Committee to proceed
to the Development of a Mine, the second phase shall consist of the
Mining of the Primary Deposits on the Property, according to the
conditions set out in Article 12.
5.2 PARALLEL OPERATIONS. It is understood by the Parties that the different
phases of Exploration, Development and Mining may be carried out in
parallel on the Paul Isnard Concessions and the Eau Blanche Permits, with
the Development and Mining of a Primary Deposit being started by a Joint
Venture while Exploration by the Joint Venture continues for the
discovery of other Primary Deposits on the same Property or for the
purpose of increasing the reserves of active Primary Deposits.
EXPLORATION PHASE
6. RELATIONS AMONG THE PARTIES AND THEIR PARTICIPATING INTERESTS
6.1 CREATION OF SOCIETES EN PARTICIPATION. For the purpose of the carrying
out of the Operations in respect of the Paul Isnard Concessions, the
Participants hereby establish a societe en participation bearing the name
"Syndical Paul Isnard" governed by Articles 1871 and 1873 of the French
Civil Code and by this Agreement. A societe en participation bearing the
name "Syndical Eau Blanche", governed by Articles 1871 and 1873 of the
French Civil Code and by this Agreement, is also established by the
Participants in order to carry out the Operations in respect of the Eau
Blanche Permits. Each Participant shall be responsible only for its own
obligations as herein set out and shall be liable only for its share of
the costs and expenses as provided herein. None of the Participants
shall have any authority to act for or to assume any obligation or
responsibility on behalf of any other Participant or to bind another
Participant, with the exceptions of the powers attributed to the Manager
under the terms of this Agreement. The rights, duties, obligations, and
liabilities of the Participants shall be several and not joint or
collective. Each Participant shall indemnify, defend, and hold harmless
the other Participants, their directors, officers, and employees from and
against any and all losses, claims, damages and liabilities arising out
of any act or any assumption of liability (except if undertaken or
assumed pursuant to the authority expressly granted herein or otherwise
agreed in writing between the Participants) by the indemnifying
Participant or any of its directors, officers, or employees, done or
undertaken, or apparently done or undertaken, on behalf of the other
Participants, with the exception of the prerogatives granted to the
Manager if exercised in the context of his mandate.
6.2 NO PARTNERSHIP. The Participants agree that it is not their intent to
create a partnership, and nothing contained in this Agreement shall be
deemed to cause either one of the Participants to be considered the
partner of the other, as such terms are defined in US law.
9
6.3 TAX PARTNERSHIP. Without changing the effect of Article 6.2, the
Participants agree that, to the extent permitted under applicable laws,
their relationship shall be treated as a tax partnership having the same
effect for tax purposes as if their relationship constituted a tax
partnership within the meaning of Section 76(a) of the United States
Internal Revenue Code of 1954, as amended. Tax elections and allocations
shall be made in a manner to carry out this intent. The Manager shall be
the Tax Matters Partners who shall file, after approval of the Management
Committee any tax returns or forms required.
6.4 MANAGEMENT. Each Joint Venture shall be managed and administered by its
Manager who is appointed pursuant to Article 9.1. The Manager shall
contract in its own name and shall be the only Participant known to third
parties. The Participants in a Joint Venture shall disclose their Joint
Venture to third parties only to the extent required to fulfill
contractual or legal requirements (including securities requirements and
stock exchange regulations applicable to the Participants).
6.5 ASSETS PLACED AT DISPOSAL OF JOINT VENTURE. The Participants in a Joint
Venture agree that the Assets, including the Mining Titles, concessions
and permits, contributed to or put at the disposal of such Joint Venture
by the Participants will continue to be owned exclusively by the
Participant holding legal title thereto. Only Assets acquired for the
account of a Joint Venture by the Manager or by a Participant in one of
the Joint Ventures if one or more Participants are duly qualified to make
acquisitions (see Article 8.2) will be deemed held as indivisible
property ("en indivision") by the Participants to the Joint Venture,
provided, however, that ASARCO shall be deemed not to hold legal title to
any Assets acquired for the account of a Joint Venture until and after
ASARCO has earned its Participating Interest in such Joint Venture.
6.6 INITIAL PARTICIPATING INTERESTS. The Initial Participating Interests in
each of the Joint Ventures as of the Effective Date are fixed at:
- SOTRAPMAG: 75.0%
- ASARCO: 0%
- LA SOURCE: 25.0%
Nevertheless, until an Initial Feasibility Study relating to a Property
has been completed and ASARCO has earned its Participating Interest in
the Joint Venture relating to such Property in accordance with Article 7,
ASARCO shall have the right to participate in the management of such
Joint Venture and its representatives on the Management Committee of such
Joint Venture shall be deemed to have voting rights equivalent to half of
SOTRAPMAG's Participating Interest in such Joint Venture as of the date
of the applicable vote.
These percentages, subject to adjustments that may be made periodically
as provided elsewhere in this Agreement, represent all of the rights and
obligations of the Participants in either Joint Venture established
pursuant to this Agreement.
6.7 OTHER ADJUSTMENTS. The Participating Interests fixed in Article 6 for
each of the Joint Ventures, will be adjusted periodically as provided in
Articles 6.7, 6.8, and 6.9 provided however that until ASARCO shall have
earned a Participating Interest in a Joint Venture pursuant to Article 7,
its voting rights under Article 6.6 shall be adjusted periodically to be
equal to 50% of
10
SOTRAPMAG's Participating Interest in such Joint Venture, as adjusted
from time to time as between SOTRAPMAG and LA SOURCE.
6.8 Voluntary Reduction of an Interest. It is understood that until ASARCO
has earned its Participating Interest in a Joint Venture pursuant to
Article 7, (i) contributions to such Joint Venture's Adopted Programs and
Budgets are the obligations of SOTRAPMAG and LA SOURCE in accordance with
their Initial Participating Interests in such Joint Venture set out in
Article 6.6 and (ii) the payments made by ASARCO pursuant to Article 7
before it earns its Participating Interest in such Joint Venture are
payments made to satisfy or reimburse SOTRAPMAG's said contribution
obligations. After ASARCO has earned its Participating Interest in such
Joint Venture in accordance with Article 7, contributions shall be
required to be made by the Participants in such Joint Venture in
accordance with their Participating Interests in such Joint Venture, as
they may have been or will be adjusted from time to time in accordance
with this Agreement.
Calculations of adjustments of Participating Interests for each Joint
Venture upon voluntary reductions shall be as follows:
A. During the period beginning on the Effective Date and ending on
the date (the "Vesting Date") when ASARCO has earned its
Participating Interest in a Joint Venture in accordance with
Article 7, if a Participant in such Joint Venture voluntarily
limits the amount of its contribution to the financing of an
Adopted Program and Budget in such Joint Venture by:
(a) electing to contribute less than an amount proportional to
its Interest in such Joint Venture; or
(b) electing not to contribute thereto;
the amount of its Participating Interest in such Joint Venture
shall be adjusted by use of a fraction the numerator of which is
the sum of (i) its Original Contribution in such Joint Venture (as
defined below), (ii) the sum of all of its contributions ("Program
Contributions") to preceding Adopted Programs and Budgets in such
Joint Venture between the Effective Date and the date on which
such Participant chooses to voluntarily limit the amount of its
contribution, and (iii) its partial contribution if any to the
current Adopted Program and Budget in such Joint Venture, and the
denominator of which is the sum of (i), (ii) and (iii) for all the
Participants in such Joint Venture.
The result of such fraction shall be such Participant's new Participating
Interest in such Joint Venture and the balance shall be the Participating
Interest in such Joint Venture of the other Participant in such Joint
Venture who did not make any such election.
For the purpose of calculating adjustments of Participating Interests in
such Joint Venture as between SOTRAPMAG's initial 75% Participating
Interest in such Joint Venture and LA SOURCE's initial 25% Participating
Interest in such Joint Venture under Article 6.6 prior to the Vesting
Date, the Original Contribution of SOTRAPMAG to such Joint Venture, after
SOTRAPMAG has contributed the first U.S.$1,000,000 referred to in Article
4.3, shall be equal to the portion of the first U.S.$1,000,000
contributed by SOTRAPMAG to such Joint Venture
11
and the Original Contribution of LA SOURCE to such Joint Venture shall be
one third of SOTRAPMAG's contribution
B. After ASARCO has earned its Participating Interest in such Joint
Venture the formula for calculating the adjustments of
Participating Interests in clause A above shall continue to apply
but Original Contributions and Program Contributions shall be
revised for the purposes of that formula as of ASARCO's Vesting
Date for such Joint Venture as follows:
(a) the Original Contribution of LA SOURCE on and from ASARCO's
Vesting Date with respect to such Joint Venture shall be
deemed to be the aggregate of its Original Contribution to
such Joint Venture in accordance with clause A plus the sum
of all of its Contributions to Adopted Programs and Budgets
between the Effective Date and ASARCO's Vesting Date for
such Joint Venture. The Original Contributions of each of
ASARCO and SOTRAPMAG to such Joint Venture as of ASARCO's
Vesting Date for such Joint Venture shall be deemed to be
one-half of the amount that is the aggregate of (i) the
amount of SOTRAPMAG's Original Contribution to such Joint
Venture under clause A and (ii) the sum of all of
SOTRAPMAG's Program Contributions to such Joint Venture
since the Effective Date and up to ASARCO's Vesting Date for
such Joint Venture (it being acknowledged that such
contributions may have been fully funded by SOTRAPMAG
pursuant to Article 7);
(b) Contributions to Adopted Programs and Budgets on and from
ASARCO's Vesting Date for such Joint Venture shall in
respect of each Participant be the sum of its contributions
to preceding Adopted Programs and Budgets between ASARCO's
Vesting Date for such Joint Venture and the date of the
calculation of the adjustment of such Joint Venture's
Participating Interests. It is acknowledged that the
Exploration Expenditures which ASARCO pays or reimburses to
SOTRAPMAG pursuant to Article 7.2(a) shall not be Original
Contributions or Contributions to a Joint Venture's Adopted
Program and Budget for the purpose of calculating its
Participating Interest in such Joint Venture and adjustments
thereto.
After ASARCO's Vesting Date for such Joint Venture, additional
contributions of ASARCO under Article 7, including contributions of
Holdover Amounts, shall be deemed to be contributions to such Joint
Venture's Adopted Programs and Budgets by ASARCO and SOTRAPMAG in the
proportions between them that, at the time of contribution, their
respective Participating Interests in such Joint Venture are of the
aggregate of their Participating Interests. In the event ASARCO
exercises its right to combine both Joint Ventures into a single Joint
Venture pursuant to Article 7.3, the Participating Interests of the
Participants in the unified Joint Venture so created shall be calculated
on the basis of the Contributions made to date by the Participants in the
Paul Isnard and Eau Blanche Joint Ventures including the Original
Contributions deemed made pursuant to Article 6.8 (a).
6.9 DEFAULT IN MAKING CONTRIBUTIONS. If a Participant defaults in making a
contribution or cash call required by an Adopted Program and Budget of a
Joint Venture after having elected to so contribute, the non-defaulting
Participant in such Joint Venture may advance the defaulted contribution
on behalf of the defaulting Participant in such Joint Venture and treat
the same, together with any accrued interest, as a demand loan bearing
interest from the date of the advance at the rate provided in Article
11.3. If there is more than one non-defaulting Participant and all
non-defaulting Participants wish to advance defaulted contributions on
behalf of the
12
defaulting Participant or Participants, the non-defaulting Participants
shall agree between themselves as to the amounts each of them shall
advance to the defaulting Participant or defaulting Participants. The
failure to repay any such loan upon demand shall be a default. Each
Participant hereby grants to the other a lien upon its share of Products
or Net Proceeds of such Joint Venture to secure any loan made hereunder,
including interest thereon, attorney's fees, and all other reasonable
costs and expenses incurred in enforcing such lien or security interest,
or both. Each Participant hereby irrevocably appoints the other its
attorney-in-fact to execute, file, and record all instruments necessary
to perfect or effectuate the above provisions of this Article 6.9.
The Participants acknowledge that if a Participant defaults in making a
contribution after making an election to contribute pursuant to Article
10.5, or a cash call, or in repaying a loan, as required hereunder, it
will be difficult to measure the damages resulting from such default. In
the event such default is not cured within ninety (90) days, as
reasonable liquidated damages, the defaulting Participant shall be deemed
to have withdrawn from such Joint Venture and shall transfer to the
non-defaulting Participant its Participating Interest in such Joint
Venture and Mining Titles, provided, however, the defaulting Participant
shall thereupon be entitled to one percent (1%) of Net Proceeds of such
Joint Venture for every ten percent (10%) of Participating Interest in
such Joint Venture so transferred.
6.10 ELIMINATION OF A MINORITY PARTICIPANT. Pursuant to Article 6.8, if a
Participant's Interest in a Joint Venture falls below ten percent (10%),
it shall be deemed to have withdrawn from such Joint Venture.
Consequently, in consideration of payment of the nominal sum of one
French Franc, such withdrawing Participant shall lose all of the rights
appurtenant to its Participating Interest, which shall be divided among
the other Participants in proportion to their respective Participating
Interests in such Joint Venture on the date of elimination of the
minority Participant in such Joint Venture. In such event, the withdrawn
Participant shall however retain the right to two point five percent
(2.5%) of the Net Proceeds of such Joint Venture.
7. CONTRIBUTIONS BY ASARCO TO EARN ITS PARTICIPATING INTERESTS
7.1 ASARCO'S OPTIONS. SOTRAPMAG hereby grants to ASARCO, subject to Articles
7.2 and 7.3 below, the irrevocable right and option to earn a
Participating Interest in each of the Joint Ventures (equal to 50% of
SOTRAPMAG's Participating Interest as of the date of the exercise of
ASARCO's option in each such Joint Venture) by delivering to SOTRAPMAG
and the Management Committee of each such Joint Venture an Initial
Feasibility Study (on the Property relating to such Joint Venture) based
upon Operations on such Property to which ASARCO has contributed in
accordance with Article 7.2., provided that such Initial Feasibility
Study is delivered within five years of the Effective Date (subject to
any extensions of time available pursuant to the terms of this
Agreement). It is acknowledged that such contributions by ASARCO will
satisfy the contributions otherwise required to be made by SOTRAPMAG in
accordance with its Participating Interest of 75% (unless the
Participating Interests have been adjusted in accordance with this
Agreement) of the amounts required under Adopted Programs and Budgets of
such Joint Venture from time to time, pursuant to Article 4.2. Subject
to Article 4.3, the remaining 25% (unless the Participating Interests
have been adjusted in accordance with this Agreement) are to be
contributed by LA SOURCE.
13
7.2 PARTICULARS OF CONTRIBUTIONS BY ASARCO. ASARCO, in order to maintain its
option and earn a Participating Interest in a Joint Venture equal to 50%
of SOTRAPMAG's Participating Interest in such Joint Venture, shall do and
be responsible for the following:
(a) Until the earlier of (i) the adoption by the Management Committee
of the first Adopted Program and Budget for Exploration on the
Property of such Joint Venture or (ii) ASARCO's withdrawal
pursuant to Article 7.5, ASARCO shall pay to SOTRAPMAG and its
Affiliates all Exploration Expenditures incurred by them after
January 1, 1995 in connection with the Property of such Joint
Venture (except for the costs of acquiring the Mining Titles of
such Joint Venture), provided that SOTRAPMAG or its Affiliates
shall, at the request of ASARCO, provide a statement of receipts
and other documentary evidence as may be reasonable to confirm
such Expenditures. Such payment shall be deducted from ASARCO's
funding obligation under Article 7.2(d)(v) for such Joint Venture
and, to the extent applicable, from any Holdover Amount as set
forth in Article 7.3 and 7.4 for such Joint Venture.
(b) After the Management Committee of such Joint Venture has adopted
its first Adopted Program and Budget, pay to SOTRAPMAG or as
SOTRAPMAG directs, SOTRAPMAG's share of all Expenditures to
complete Exploration as provided for in the Adopted Programs and
Budgets of such Joint Venture and such other expenses as are
approved by the Management Committee of such Joint Venture,
including the cost of the Initial Feasibility Study on the
Property of such Joint Venture, but subject to the provisions of
this Article.
(c) With respect to such Joint Venture's Mining Titles, pay to or on
behalf of SOTRAPMAG or at SOTRAPMAG's request and direction,
whenever the same became due, all amounts required to be paid by
SOTRAPMAG or for which SOTRAPMAG is responsible under the terms of
the applicable Mining Titles for such Joint Venture or otherwise
as required by law to maintain the Mining Titles in good standing
and free of defaults (subject to abandonment by mutual agreement
of the Participants in the Joint Venture) and generally be
responsible to fund all payments required for a Joint Venture's
Mining Titles however designated, except for payments to BRGM by
GUYANOR pursuant to the BRGM Agreement.
(d) In particular, pay SOTRAPMAG pursuant to sections (b) and (c)
above, and in accordance with the Adopted Programs and Budgets of
such Joint Venture, the following minimum amounts:
(i) $500,000 during the first year after the Effective Date;
(ii) an additional $1,000,000 during the second year after the
Effective Date;
(iii) an additional $1,500,000 during the third year after
the Effective Date;
(iv) an additional $2,000,000 on or before the fourth anniversary
after the Effective Date; and
(v) an additional $5,000,000 on or before the fifth anniversary
after the Effective Date less any payment made pursuant to
Article 7.2(a).
(e) During the first three years after the Effective Date, ASARCO
shall pay or incur the minimum provided for above irrespective of
previous Expenditures (i.e. no amount may be carried forward
during the first three years). In years four and five,
Expenditures made in
14
previous years in excess of the minimum for such previous years
with respect to the Property of such Joint Venture shall be
credited against the required minimum payments for years four and
five.
(f) The said Expenditures, whether paid or incurred by ASARCO, during
the Initial Period, shall be made in accordance with Adopted
Programs and Budgets for the applicable Joint Venture pursuant to
Article 10.4 of this Agreement. Any failure to expend the full
minimum amount specified in Article 7.2(d) above for any of the
above years as aforesaid through no fault of ASARCO (for example,
by reason of insufficient staff, equipment or supplies to carry
out an Adopted Program and Budget of the applicable Joint Venture,
or Force Majeure interfering therewith, or otherwise) shall not
have any consequences on the rights of ASARCO hereunder and any
amounts not so expended shall be added to the required Expenditure
amount for the following year. In the event the fifth year's
minimum Expenditures are not expended in the fifth year through no
fault of ASARCO, the period during which ASARCO may exercise its
option to earn a Participating Interest in such Joint Venture will
be extended to a sixth year to complete such Expenditures and
Initial Feasibility Study on the Property of such Joint Venture.
(g) Subject to Article 7.3, if and when an Initial Feasibility Study
has been delivered to SOTRAPMAG and the Management Committee,
together with a written notice (the "Notice of Vesting") from
ASARCO that it wishes to exercise its option and be vested with
50% of SOTRAPMAG's Participating Interest in a Joint Venture,
ASARCO shall be deemed to be vested with a Participating Interest
in such Joint Venture equal to 50% of SOTRAPMAG's Participating
Interest in such Joint Venture as of that date.
7.3 ASARCO's Election on First Feasibility Study. Upon delivery of an
Initial Feasibility Study on one of the Properties and of the Notice of
Vesting to SOTRAPMAG and the Management Committee of the Joint Venture
for such Property (such Initial Feasibility Study shall be designated for
purposes of this Agreement as the "First Feasibility Study"), ASARCO
shall have the right but not the obligation, as long as its options to
earn Participating Interests in both Joint Ventures have not terminated
and within 180 days after delivery of such Initial Feasibility Study, to
elect by notice in writing to the other Parties to either (I) combine the
Paul Isnard Concessions and the Eau Blanche Permits into a single Joint
Venture, or (II) to hold them separately in independent joint ventures
(societes en participation).
(I) If ASARCO combines the Paul Isnard Concessions and the Eau Blanche
Permits as one Joint Venture then ASARCO's Participating Interest shall
be vested in respect of the entire Property which shall include the Paul
Isnard Concessions and the Eau Blanche Permits, and if the amount of the
aggregate Expenditures incurred on the Properties relating to Adopted
Programs and Budgets of the two Joint Ventures (including the costs of
completing the First Feasibility Study) is less than U.S.$20,000,000,
SOTRAPMAG shall have no obligation to contribute to the Adopted Programs
and Budgets of the new Joint Venture resulting from the merger of the
Paul Isnard and Eau Blanche Joint Ventures until ASARCO has contributed
to the Joint Venture an amount (the "Holdover Amount") equal to the
difference between U.S.$20,000,000 and the aggregate amount of such
Expenditures incurred by the two Joint Ventures.
(II) If ASARCO elects not to combine the Properties into one Joint
Venture and the Expenditures corresponding to the completion of the
Initial Feasibility Study on the Property of the Joint Venture for which
such Initial Feasibility Study was completed are less than
15
U.S.$10,000,000, SOTRAPMAG will have no obligations to contribute to the
Expenditures for such Joint Venture until ASARCO shall have contributed
an amount (the "Holdover Amount") equal to the difference between
U.S.$10,000,000 and said aggregate Expenditures.
ASARCO's obligations under Article 7.2(d) to pay or incur Expenditures
with respect to a Joint Venture, shall be suspended at ASARCO's option,
during the time required to complete an Initial Feasibility Study on the
Property of such Joint Venture but such suspension shall not, under any
circumstances, exceed a total of six (6) months from the time such
Initial Feasibility Study was commissioned. In the event such Initial
Feasibility Study has not been completed and ASARCO has commissioned the
preparation of such Initial Feasibility Study by the fifth anniversary of
the Effective Date, then the time for completing such Initial Feasibility
Study will be extended for six months to allow it to be completed.
7.4 PAYMENT OF HOLDOVER AMOUNTS. After the completion of an Initial
Feasibility Study on a Property, the monies required to carry out Adopted
Programs and Budgets for Exploration, Development or Mining on such
Property shall be provided by the Participants in the proportions of
their Participating Interests in the Joint Venture related to such
Property save and except that if there shall be a Holdover Amount as
described in Article 7.3, such amount shall be first contributed by
ASARCO alone on behalf of ASARCO and SOTRAPMAG to carry out the Adopted
Programs and Budgets until the Holdover Amount has been fully paid.
Thereafter, contributions shall be made by ASARCO and SOTRAPMAG in the
proportions of their Participating Interests in such Joint Venture. For
the purpose of accounting and allocating the Holdover Amounts as between
SOTRAPMAG and ASARCO, contributions of Holdover Amounts by ASARCO shall
be deemed to have been contributed, and be allocated between SOTRAPMAG
and ASARCO, pro rata in the same proportions as their respective
Participating Interests are of the aggregate Participating Interests in
such Joint Venture.
If ASARCO fails to make any Holdover Amount Expenditures as provided
herein and fails to cure such failure within thirty (30) days of the
receipt of the notice provided for in Article 7.5 hereof, ASARCO shall be
deemed to have withdrawn from the Joint Venture for which the Holdover
Amount was payable and to have forfeited its rights in respect of such
Joint Venture and to be divested of its Participating Interest in such
Joint Venture and its Mining Titles and shall be deemed to have
transferred such interests to SOTRAPMAG for FRF 1.00.
7.5 WITHDRAWAL BY ASARCO. ASARCO may withdraw at any time from a Joint
Venture and terminate its right to vest its Participating Interest in
such Joint Venture after the first six months from the Effective Date by
giving a written notice of withdrawal to SOTRAPMAG and LA SOURCE (the
"Withdrawal Notice") at least 90 days prior to the end of the Budget
period for such Joint Venture in progress that specifies the date on
which ASARCO's withdrawal is to be effective (the "Withdrawal Date")
which Withdrawal Date shall be not more than 30 days after the end of
such Budget period. On the Withdrawal Date, ASARCO's current obligations
and right to vest its Participating Interest in such Joint Venture under
Article 7.2 herein shall be at an end save and except that ASARCO shall
remain obligated to complete the funding of the Adopted Program and
Budget for the Budget Period in progress when the Withdrawal Notice was
given and shall remain obligated in respect of reclamation as stated in
Article 7.7.
Notwithstanding the giving of a Withdrawal Notice, ASARCO shall have the
option, exercisable by notice in writing given during the period between
the end of the Adopted Program and Budget Period in progress when the
Withdrawal Notice was given and the Withdrawal Date, to elect to
16
rejoin, without penalty, such Joint Venture and remain a party to the
Joint Venture Agreement, which option may be exercised by written
notification to SOTRAPMAG and LA SOURCE from ASARCO.
As of the receipt by SOTRAPMAG and LA SOURCE of ASARCO's Withdrawal
Notice with regard to a Joint Venture, SOTRAPMAG shall be free to search
for a new Participant to replace ASARCO in such Joint Venture, provided,
however, that in view of the preceding option granted to ASARCO to retain
an interest in such Joint Venture, SOTRAPMAG shall not have the right to
definitively commit itself or the Joint Venture to grant to such new
Participant any rights to, or in, such Joint Venture until after the
Withdrawal Date and ASARCO's option under this Article 7.5 has lapsed.
7.6 TERMINATION OF ASARCO'S OPTION. If ASARCO (i) fails, other than with the
written consent of SOTRAPMAG, to fund when due all or any part of any
Adopted Program and Budget of a Joint Venture or to fulfill ASARCO's
Exploration Expenditure Requirement (whether or not an Adopted Program
and Budget was adopted) before its Participating Interest in such Joint
Venture has vested, or (ii) fails, other than with the written consent of
SOTRAPMAG in any event to complete an Initial Feasibility Study on a
Property of such Joint Venture within the time required by this Agreement
(or within such lesser or greater period as ASARCO and SOTRAPMAG may by
further written agreement fix) and if ASARCO shall fail to cure any such
default within 30 days of the giving of written notice by SOTRAPMAG to
ASARCO describing the default and requesting that ASARCO remedy the
default, ASARCO's right and option to acquire a Participating Interest in
such Joint Venture, the existence of which was conditioned on the
completion of an Initial Feasibility Study on a Property of such Joint
Venture and all rights in respect of such Participating Interest in such
Joint Venture shall, after expiration of this 30 day period, be
terminated, provided that ASARCO shall nevertheless remain obligated and
indebted to SOTRAPMAG and such Joint Venture for the amount of the
funding required to complete such Adopted Program and Budget for the
Property within which the termination date occurs, and ASARCO shall be
obligated in respect of reclamation as stated in Article 7.7.
7.7 RECLAMATION COSTS. Whenever ASARCO has defaulted during the Initial
Period as stipulated in Article 7.6 above, in addition to any obligation
of ASARCO to complete the funding for the current Adopted Program and
Budget of such Joint Venture as provided in Article 7.5, ASARCO shall, if
the Property of such Joint Venture is thereupon or within one year
thereafter abandoned or surrendered due to ASARCO's default, pay 75% of
the costs of all remediation and reclamation work in relation to the work
funded by ASARCO on the Property of such Joint Venture, from the
Effective Date up to the time of the termination of ASARCO's option with
respect to such Property, that is required pursuant to the Mining Rights
by any Government or Regulatory Authority or otherwise under applicable
law, except to the extent such reclamation costs are generated by
SOTRAPMAG's willful misconduct or gross negligence. An independent
contractor acting for the account of ASARCO will be appointed by the
Participants of such Joint Venture and will prepare a report on the
status of the work performed on the Property of such Joint Venture up to
the date of such termination. This report will bind ASARCO and
SOTRAPMAG.
8. MANAGEMENT COMMITTEE
8.1 ORGANIZATION OF MANAGEMENT COMMITTEE. Upon the Effective Date of this
Agreement, a Management Committee shall be established for each Joint
Venture to determine overall policies,
17
objectives and procedures and methods of Operations of each of the Joint
Ventures, subject to the authority granted to the Manager.
Each Management Committee shall be composed of one representative of each
Participant. Each Participant will notify the other in writing of the
name of its representative within thirty (30) days from the Effective
Date of the present Agreement. Each Participant will have the right to
replace the representative at any moment by advising the other
Participants in writing, and will have the right to have their
representative be assisted during meetings of the Management Committee by
such other persons as they shall choose.
Each representative of a Participant on the Management Committee shall
have one vote for each 1% Participating Interest of the Participant it
represents in each Joint Venture. However, from the Effective Date until
ASARCO has earned its Participating Interest in such Joint Venture as
provided in Article 7 above, ASARCO's representative on the Management
Committee of such Joint Venture shall be entitled to vote and take part
in all the meetings of the Management Committee, with a voting interest
equal to 50% of SOTRAPMAG's Participating Interest in such Joint Venture
at the time of the vote.
8.2 AUTHORITY OF MANAGEMENT COMMITTEE. The Management Committee of a Joint
Venture alone is authorized to adopt the Programs and Budgets relating to
the Operations on the Property of such Joint Venture.
The Management Committee is also alone empowered to authorize its Manager
or a Participant to acquire any Assets on behalf and for the account of
the Joint Venture.
More generally, the Management Committee of a Joint Venture oversees the
administration and management of a Joint Venture by its Manager and has
for this purpose the broadest powers to take action in keeping with the
object of the Agreement.
The Manager of a Joint Venture shall attend every meeting of the
Management Committee of such Joint Venture, at which it shall submit an
operations report on the Properly of such Joint Venture.
8.3 DECISIONS OF MANAGEMENT COMMITTEE. Except as otherwise delegated to its
Manager in Article 9.2, the Management Committee of a Joint Venture shall
have exclusive authority to determine all management matters related to
such Joint Venture.
All decisions of a Joint Venture's Management Committee are made by a 66
2/3% majority vote, except that the following decisions may only be made
unanimously:
(a) amendments of the Joint Venture's operating rules,
(b) abandonment of a Mining Title placed at the disposal of such Joint
Venture.
(c) pledge, mortgage or give a security interest in the Assets owned
by or placed at the disposal of such Joint Venture to a banking or
other institution as security for financing,
18
(d) sale or disposal of all or part of the Assets owned or placed at
the disposal of the Joint Venture with a value in excess of
100,000 U.S. Dollars, and sale or disposal of the Property of
such Joint Venture,
(e) dissolution or liquidation of the Joint Venture.
(f) approval of a Program and Budget for the Joint Venture; however,
in the event that a Program and Budget proposed by the Manager
(the "Manager's Program and Budget") should not be approved by a
unanimous vote, the Participants shall have a period of thirty
(30) days to review the proposals made by the dissenting
Participant(s) and to propose a new Program and Budget. The
Participants will exert their best efforts in good faith to take
into account the comments and proposals made by the dissenting
Participant(s); however, the Participants shall in no event be
obligated to modify the Manager's Program and Budget in a manner
which the majority of the Participants reasonably determines to be
counter to the goals of the Manager's Program and Budget. The new
Program and Budget will be approved by a majority vote (more than
50%) of the Participants and any Participant voting against its
approval shall have the right to choose to not contribute to it,
which would entail a reduction of that Participant's Participating
Interest in such Joint Venture pursuant to the terms of this
Agreement.
The Manager appointed as provided in Article 9 shall be responsible for
executing the Management's Committee's decisions and shall comply
therewith.
8.4 MEETINGS, MAIL VOTES, MINUTES AND RESOLUTIONS. The Management
Committee's members shall consult as often as necessary and at least
twice a year on the Manager's initiative to approve the Programs and
corresponding Budgets, as provided in Article 10.4 below, as well as to
discuss such other matters as are placed on the agenda by a Participant.
The Management Committee may meet on call by one of its members or by the
Manager and on 15 days written notice to the Management Committee's
members. In case of emergency, 48 hours' notice may be given. If all
the Participants so agree, a meeting may be validly held instanter on
oral call or by telephone conference calls, if such meeting is confirmed
in writing by all of the Participants. The Participants' agreement shall
then be entered in the minutes of the meeting.
The person calling a meeting of the Management Committee sets the agenda
of the meeting. The notice specifies the date, place and agenda of the
meeting.
The decisions are made at actual meetings (in person or by telephone
conference) or by written resolutions signed by all of the members. All
decisions of the Management Committees must be expressed in minutes.
The Management Committee may meet in Cayenne or any other place agreed on
by all of the Participants. Business may be transacted at a Management
Committee meeting if the representatives of two Participants are present
but in any event the representative(s) of a Participant holding a voting
interest of 37.5% or more must be present.
At the close of every meeting, whether held in person or by phone, the
Manager shall prepare minutes, or have minutes prepared, and serve them
on the Participants within 30 days.
19
Each Participant shall have 15 days from receipt of the minutes to
request amendments or enter reservations. Its amendment shall be made
or, if not made, the request for such amendment shall be mentioned in the
minutes. The minutes shall also mention all of the Participants'
reservations.
The minutes so supplemented or amended by the Manager shall be the
definitive minutes containing the decisions officially made.
All expenses relating to participation in Management Committee meetings,
including travel expenses, shall be for the account of the Participants.
9. THE MANAGER
9.1 APPOINTMENT. SOTRAPMAG or an Affiliate and/or a natural person or legal
entity designated by SOTRAPMAG shall be appointed the initial Manager of
each Joint Venture with authority on behalf of the Participants and the
Management Committee of such Joint Venture to manage Exploration
Operations and to otherwise fulfill the specific duties herein delegated
to the Manager and generally to attend the implementation of the Adopted
Programs and Budgets of the Management Committee. The Manager shall be
deemed an independent contractor and not an employee.
Upon the completion of an Initial Feasibility Study on a Property of a
Joint Venture, the Participant with the greatest Participating Interest
in such Joint Venture shall have the right to become Manager by giving a
notice in writing to that effect to the Management Committee of such
Joint Venture, provided however that as between SOTRAPMAG and ASARCO, if
their Participating Interests in such Joint Venture are equal, ASARCO
shall be deemed to have the greatest Participating Interest for the
purpose of settling which of them has the right to become Manager of such
Joint Venture. If upon the completion of an Initial Feasibility Study
ASARCO is entitled to become Manager of such Joint Venture and gives
required notice then SOTRAPMAG shall be deemed to have resigned as
Manager of such Joint Venture and ASARCO shall be deemed to have been
appointed as Manager of such Joint Venture on the 30th day following the
giving of such notice by ASARCO. ASARCO will thereafter be Manager until
such time as it shall actually have resigned or shall be deemed to have
resigned or until its Participating Interest shall no longer be or be
deemed to be, the greatest Participating Interest in such Joint Venture.
9.2 POWERS AND DUTIES OF MANAGER. Subject to the terms and provisions of
this Agreement, the Manager shall have the following powers and duties
which shall be discharged in accordance with Adopted Programs and
Budgets:
(a) The Manager shall manage, direct and control Exploration
Operations, including the drafting of Programs and Budgets to be
submitted to the Management Committee for approval.
(b) The Manager shall implement the decisions of the Management
Committee, shall make all Expenditures necessary to carry out
Adopted Programs and Budgets, and shall promptly advise the
Management Committee if it lacks sufficient funds to carry out its
responsibilities under this Agreement.
20
(c) The Manager shall: (i) acquire all material, supplies, equipment,
utility and transportation services required for Operations, such
purchases and acquisitions to be made on the best terms available,
taking into account all of the circumstances; (ii) obtain water
supplies; (iii) obtain such customary warranties and guarantees as
are available in connection with such purchases and acquisitions;
and (iv) keep the Assets free and clear of all liens and
encumbrances, except for those existing at the time of, or created
concurrently with, the acquisition of such Assets, or mechanics'
or materialmen's liens which shall be released or discharged in a
diligent manner, or liens and encumbrances specifically approved
by the Management Committee.
(d) The Manager shall conduct such title examinations and cure such
Mining Title defects as may be necessary or useful in the judgment
of the Manager.
(e) The Manager shall: (i) make or arrange for all payments required
by leases, licenses, permits, contracts, and other agreements
related to the Assets; (ii) pay all taxes, assessments, and like
charges on Operations and Assets except taxes determined or
measured by a Participant's sales revenue or net income. If
authorized by the Management Committee, the Manager shall have the
right to contest, in the courts or otherwise, the validity or
amount of taxes, assessments, or charges if the Manager deems same
to be unlawful, unjust, unequal, or excessive, or to undertake
such other steps or proceedings as the Manager may deem reasonably
necessary to secure a cancellation, reduction, readjustment, or
equalization thereof before the Manager shall be required to pay
same, but in no event shall the Manager permit or allow title to
the Assets to be lost as the result of the non- payment of any
taxes, assessments, or like charges; and (iii) shall do all other
acts reasonably necessary to maintain the Assets.
(f) The Manager shall: (i) apply for all necessary permits, licenses,
and approvals, (ii) comply with all applicable laws and
regulations, (iii) promptly notify the Management Committee of any
allegations of substantial violation thereof and (iv) prepare and
file all reports or notices required for Operations. Even though
the Manager shall not be in breach of this provision if a
violation has occurred in spite of the Manager's good faith
efforts to comply with the laws and regulations in force, the
Manager must remedy such violation through performance or payment
of fines and penalties on behalf of the Joint Venture.
(g) The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings arising out of Operations. The
non-managing Participants shall have the right to participate, at
its own expense, in such litigation or administrative proceedings.
The non-managing Participants shall approve in advance any
settlement involving in excess of One Hundred Thousand Dollars
($100,000.00) in cash or value.
(h) The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit II.
(i) The Manager may dispose of Assets owned by the Joint Venture,
whether by abandonment, surrender or Transfer in the ordinary
course of business. However, without prior authorization from the
Management Committee, the Manager shall not: (i) dispose of Assets
in any one transaction having a value in excess of One Hundred
Thousand Dollars
21
($100,000.00); (ii) begin a liquidation of the Joint Venture; or
(iii) dispose of all or a substantial part of the Assets necessary
to achieve the purposes of the Venture.
(j) The Manager shall have the right to carry out its responsibilities
hereunder through agents, Affiliates, or independent contractors.
(k) The Manager shall keep and maintain in US dollars and in French
Francs all required accounting and financial records pursuant to
the Accounting Procedure and in accordance with customary cost
accounting practices in the mining industry.
(l) The Manager shall keep the Management Committee advised of all
operations by submitting in writing to the Management Committee:
(i) within 15 days of the end of each month, monthly progress
reports which include statements of Expenditures and comparisons
of such Expenditures to the Adopted Program and Budget and which
shall include a summary of work completed and data acquired: (ii)
copies of reports concerning Operations, and (iii) such other
reports as the Management Committee may reasonably request. At
all reasonable time the Manager shall provide the Management
Committee or the representative of any Participant, upon the
request of any member of the Management Committee, access to, and
the right to inspect and copy all maps, drill logs, core tests,
reports, surveys, assays, analyses, production reports,
Operations, technical, accounting, and financial records, and
other information acquired in Operations. In addition, the
Manager shall allow the non-managing Participants, at
Participants' sole risk and expense, and subject to reasonable
safety regulations, to inspect the Assets and Operations at all
reasonable times, so long as the inspecting Participant does not
unreasonably interfere with Operations.
(m) The Manager shall undertake any necessary or useful action to
implement the foregoing provisions.
The Manager shall not be in default of its obligations if its inability
to perform results from the failure of the non-managing Participant to
perform acts or to contribute amounts required of it by this Agreement.
9.3 STANDARD OF CARE. The Manager shall conduct all Operations in a good,
workmanlike, and efficient manner, in accordance with sound mining and
other applicable industry standards and practices, and in accordance with
the terms and provisions of leases, licenses, permits, contracts, and
other agreements pertaining to the Assets. The Manager shall not be
liable to the non-managing Participants for any act or omission resulting
in damage or loss to the Joint Venture except to the extent caused by or
attributable to the Manager's willful misconduct or gross negligence.
9.4 RESIGNATION OF THE MANAGER. The Manager of a Joint Venture may resign by
notice given to the Management Committee and the Participants of such
Joint Venture at least ninety (90) days prior to the effective date of
the resignation. If the Manager is a Participant who elects pursuant to
Article 10.5 to contribute less than its Participating Interest to an
Adopted Program and Budget, such Participant shall resign as Manager with
effect at the end of the Program and Budget period during which such
Participant makes such election and, if there is only one other
Participant at such date, that other Participant shall thereupon become
Manager or at its option appoint the
22
successor Manager. Otherwise, upon resignation of the Manager, the
Management Committee of each Joint Venture shall appoint a successor
Manager.
9.5 DEEMED RESIGNATION OR OFFER TO RESIGN. If a Manager is a Participant and
there is only one other Participant, the Manager shall be deemed to have
resigned as Manager on the occurrence, in respect of the Manager, or any
of the events or circumstances that are set out in the following clauses,
(a) to (e) inclusive. If there are at least two Participants other than
the Manager, the Manager shall be deemed to have tendered its resignation
as Manager to the Management Committee on the occurrence, in respect of
the Manager, of any of the following events or circumstances set out in
the following clauses (a) to (e) inclusive:
(a) if the Manager is a Participant in the Joint Venture and its
Participating Interest in the Joint Venture becomes less than any
of the other Participants; or
(b) the Manager commits a breach of this Agreement, which breach
materially and adversely affects the business of the Venture for
which it serves as Manager and, after being notified of the breach
by the Management Committee or any Participant in such Joint
Venture, the Manager does not remedy the breach within thirty (30)
days of such notification; or
(c) the Manager fails to pay or contest in good faith bills and
invoices received with respect to Operations of the Joint Venture
within sixty (60) days after they are due; or
(d) except as set forth in Schedule 9.5 hereto, the Manager becomes
insolvent, commits an act of bankruptcy, makes an assignment for
the benefit of its creditors or makes a proposal, application or
petition under any applicable bankruptcy law or legislation, or a
receiver, receiver-manager, trustee, liquidator or person having
similar powers is appointed with respect to the Manager or any
substantial part of the Manager's property; or
(e) entry is made against the Manager of a judgment, decree or order
for relief affecting a substantial part of its property by a court
of competent jurisdiction in an involuntary case commenced under
any applicable bankruptcy, insolvency or similar law in any
jurisdiction.
Subject to Article 9.1 the Management Committee of a Joint Venture shall
appoint the successor to the Manager of such Joint Venture whose
resignation shall have been accepted as aforesaid. If the Manager who
has tendered its resignation as aforesaid is a Participant in the Joint
Venture, its representatives on the Management Committee of the Joint
Venture shall not have a vote on the question of the acceptance of the
Manager's resignation and a quorum shall be deemed to be present when the
Management Committee is determining any such question if, except in the
absence of representatives of the Participant who is Manager, there would
otherwise be a quorum. Similarly, an instrument in writing signed by the
Management Committee representatives of all Participants except such
Manager whereby the Manager's resignation is accepted and/or a new
Manager is appointed and/or a successor Manager is appointed shall be of
the same force and effect as if such determination was made at a meeting
of the Management Committee duly called and constituted and at which a
quorum was present and acting throughout.
9.6 COMPENSATION TO MANAGER. In addition to payment of direct Expenditures,
the Manager shall be entitled to compensation for indirect costs incurred
in relation to providing its management services that are not directly
chargeable as Expenditures (including but not limited to a portion of the
salaries, employee benefits and other Expenditures of management,
supervisory,
23
administrative, clerical and other employees of the Manager and a portion
of the Expenditures of the Manager in operating and maintaining its
offices and facilities not required exclusively for the Joint Venture),
by way of an administration charge as more particularly described in
Exhibit II.
9.7 TRANSACTIONS WITH AFFILIATES. If the Manager engages Affiliates to
provide services hereunder, it shall do so on terms no less favorable
than would be the case with unrelated persons in arm's-length
transactions.
9.8 ACTIVITIES DURING DEADLOCK. If the Management Committee of a Joint
Venture for any reason fails to adopt a Program and Budget, subject to
the contrary direction of the Management Committee and to the receipt of
necessary funds, the Manager of such Joint Venture shall continue
Operations on the Property of such Joint Venture at levels comparable
with the last Adopted Program and Budget. For purposes of determining
the required contributions of the Participants and their respective
Participating Interests in such Joint Venture, the last Adopted Program
and Budget shall be deemed extended but in no event during the Initial
Period shall be less than the minimum expenditures set forth in Article
7.2(d) for the Property of such Joint Venture. If a Program and Budget
is not adopted by the Management Committee within sixty (60) days of the
execution of this Agreement, a Program and Budget equal to the minimum
amount set forth in Article 7.4(d) shall be deemed to have been adopted
until the formal adoption of a Program and Budget has taken place.
10. PROGRAMS AND BUDGETS
10.1 PROGRAMS AND BUDGETS. Each Program and Budget of a Joint Venture shall
be subject to the approval of the Management Committee of such Joint
Venture. Each Program shall include a Budget and shall describe in
sufficient detail the complete nature and size of the proposed
Operations, as well as an estimate of the time needed to accomplish such
Operations.
All Adopted Programs and Budgets of a Joint Venture shall be staffed by
the Manager of such Joint Venture. Charges for employees of the Manager
assigned to Adopted Programs and Budgets shall be included in the said
Adopted Programs and Budgets and shall be at rates consistent with their
experience and position, and all costs incurred in the Operations shall
be at rates consistent with market conditions at the time they were
incurred or contracted.
10.2 OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS. Except as otherwise
provided in Article 10.8, Operations shall be conducted, Expenditures
shall be incurred, and Assets shall be acquired on behalf of a Joint
Venture only pursuant to Adopted Programs and Budgets of such Joint
Venture.
10.3 PRESENTATION OF PROGRAMS AND BUDGETS. Proposed Programs and Budgets
shall be prepared by the Manager in consultation with the other
Participants, and must cover a period of six (6) months until the
delivery of an Initial Feasibility Study and for one (1) year periods
thereafter unless otherwise agreed by the Management Committee. Each
Adopted Program and Budget, regardless of length, shall be reviewed at
least once a year by the Management Committee. During the period
encompassed by any Adopted Program and Budget, and at least two (2)
months prior to its completion, a proposed Program and Budget for the
succeeding period shall be prepared by the Manager and submitted to the
Management Committee.
10.4 REVIEW AND APPROVAL OF PROPOSED PROGRAMS AND BUDGETS. Within thirty (30)
days after submission to the Management Committee of a proposed Program
and Budget or an amendment
24
to an Adopted Program and Budget, or within such other period as the
Participants shall agree upon, the Management Committee shall convene a
meeting in order to approve, modify or reject the proposed Program and
Budget or amendment.
10.5 ELECTION TO PARTICIPATE. Subject to Article 7, by notice to the
Management Committee within twenty (20) days after the final vote
adopting a Program and Budget, a Participant may elect to contribute to
such Program and Budget in some lesser amount than its Participating
Interest, or not at all, in which cases its Participating Interest shall
be recalculated as provided in Article 6. If a Participant fails to
notify the Management Committee of such an election within said time
period, the Participant shall be deemed to have elected to contribute to
such Program and Budget in proportion to its respective Participating
Interest as of the beginning of the period covered by the Program and
Budget.
10.6 DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS. Except during the Initial
Period if the Participants to a Joint Venture fail to approve a Program
and Budget for such Joint Venture at the end of a period of more than
twelve (12) months, except in the event of Force Majeure, this Agreement
will terminate in accordance with the provisions of Article 13.
10.7 BUDGET OVERRUNS: PROGRAM CHANGES. (A) The Manager shall notify the
Management Committee within fifteen (15) days of becoming aware of any
increase in or other material departure from an Adopted Program and
Budget and a meeting of the Management Committee shall be held within
thirty (30) days of such notice to consider amendment to the current
Program and Budget to accommodate such increase or other departure. The
Management Committee shall vote on such amendment in accordance with
Article 8.3 and this Article 10.
(B) If actual Expenditures of a Joint Venture made in accordance with an
Adopted Program and Budget during the period covered by a Program exceed
the amount authorized by the corresponding Adopted Program and Budget by
more than ten percent (10%), then the excess over ten percent (10%) shall
be for the sole account of the Manager of such Joint Venture and such
excess shall not be included in the calculations of the Participating
Interests in such Joint Venture, unless these expenditures were
authorized by the Management Committee of such Joint Venture or directly
caused by an emergency or an unexpected expenditure incurred pursuant to
Article 10-8., provided, however, that before Net Proceeds or Products of
such Joint Venture are distributed to the Participants in such Joint
Venture in accordance with their Participating Interests, the Manager of
such Joint Venture shall be entitled to receive from Net Proceeds or
Products reimbursement of such excess paid by the Manager. Budget
overruns of ten percent (10%) or less shall be borne by the Participants
in such Joint Venture in proportion to their respective Participating
Interests in such Joint Venture as of the beginning of the period covered
by the Program subject to the overrun. Authorized Budget overruns
advanced by the Manager shall be forthwith reimbursed to it by the Joint
Venture or by the Participants in proportion to their Participating
Interests, on demand, by virtue of a special call for funds as provided
for in Article 11.2.
10.8 EMERGENCY OR UNEXPECTED EXPENDITURES. In case of emergency, the Manager
may take any action it deems necessary to protect life, limb, or
property, to protect the Assets, or to comply with law or governmental
regulation. Likewise, the Manager may make Expenditures for unexpected
events which are beyond its reasonable control and which do not result
from a breach by it of its standard of care. In the case of either an
emergency or unexpected expenditure, the Manager shall promptly notify
the Participants of the emergency or unexpected expenditure, and
25
the Manager shall be reimbursed therefor by the Participants in
proportion to their Participating Interests as of the beginning of the
period covered by the then current Adopted Program and Budget.
11. ACCOUNTS AND SETTLEMENTS
11.1 MONTHLY STATEMENTS. Within fifteen (15) days after the end of each
month, the Manager shall promptly submit to the Management Committee of
the Joint Venture monthly statements of account reflecting in reasonable
detail the charges and credits to the Joint Account of the Joint Venture
during the preceding month.
11.2 CASH CALLS. On the basis of the Adopted Program and Budget, but subject
to Article 7 the Manager shall submit to each Participant prior to the
last day of each month, a billing for estimated cash requirements for the
next month. Within ten (10) days after receipt of each billing, each
Participant shall advance to the Manager an amount in proportion to its
Participating Interest of the estimated amount if each Participant has
received an accounting with documentation for the previous months'
expenditures (i.e. a Cash Call for June need not be met until the
accounting for April has been submitted). If such accounting has not
been provided, the payment of such billing shall be required ten (10)
days after such accounting is received by each Participant. Time is of
the essence in the payment of such billings. The Manager shall at all
times maintain a cash balance approximately equal to the rate of the
disbursement for up to thirty (30) days. All funds in excess of
immediate cash requirements of the Joint Venture shall be invested in
interest-bearing accounts with a bank selected by the Manager for the
benefit of the Joint Account.
11.3 FAILURE OF A PARTICIPANT TO MEET CASH CALLS. A Participant that fails to
meet cash calls in the amount and at the time specified in Article 11.2
shall be in default, and the amounts of the defaulted cash call shall
bear interest from the date due at an annual rate equal to two (2)
percentage points over the Taux Interbancaire Offert a Paris ("TIOP"),
but in no event shall said rate of interest exceed the maximum permitted
by French law. The non-defaulting Participant shall have those rights,
remedies and elections specified in Article 6.9.
11.4 AUDITS. Upon request of any Participant made within six (6) months
following the end of any calendar year (or, if the Management Committee
has adopted an accounting period other than the calendar year, within six
(6) months after the end of such period), the Manager shall order an
annual audit of the accounting and financial records for such calendar
year or other accounting period, to be paid by such requesting
Participant. All written exceptions to and claims upon the Manager for
discrepancies disclosed by such audit shall be made not more than three
(3) months after receipt of the audit report. Failure to make any such
exception or claim within the three (3) month period shall mean the audit
is correct and binding upon the Participants. The audits shall be
conducted by a firm of certified public accountants of international
repute selected by the Manager, and in accordance with the Accounting
Procedure described in Exhibit II hereto unless otherwise unanimously
agreed by the Management Committee.
26
MINING PHASE
12. MINING
12.1 DECISION TO PREPARE A FEASIBILITY STUDY. The scope, timing and
preparation of the Initial Feasibility Study on a Property shall be
determined solely by ASARCO (or, if ASARCO no longer has a Participating
Interest in the Joint Venture relating to such Property, by the
Participant who has the highest Participating Interest in such Joint
Venture), and its preparation shall be included in corresponding Adopted
Programs and Budgets adopted by the Management Committee of such Joint
Venture.
After the Initial Feasibility Study, if the Management Committee of the
Joint Venture considers that the Exploration work has revealed one or
several additional ore bodies on the Property of such Joint Venture, that
Committee may decide by a qualified majority of 66 2/3% to make further
Feasibility Studies on such Property. If one or more Participants wish
to perform a Feasibility Study on such Property and the others do not,
such Participant(s) may do so at their own expense and risk, and if such
Feasibility Study is completed and Development and Mining takes place,
such Participant(s) shall have the right to be the Manager thereof.
In this event, if the other Participant(s) subsequently wish to take part
in Mining within at most three (3) months following completion of the
Feasibility Study on such Property, they must reimburse the cost of the
Feasibility Study on such Property, in proportion to its or their
Participating Interests in the Joint Venture relating to such Property
plus thirty percent (30%).
The completion of such Feasibility Study shall be officially attested by
the Management Committee of the Joint Venture relating to such Property
and recorded in minutes thereof.
12.2 DECISION TO MINE. Within six (6) months of delivery of the attestation
of completion of a Feasibility Study on a Property and on the basis of
positive technical and commercial conclusions of such Feasibility Study,
each Participant in the Joint Venture relating to such Property shall
elect either:
(a) to participate in the Development and finance such Development of
the Primary Deposit(s) covered by such Feasibility Study in
proportion to its Participating Interest in the Joint Venture
relating to such Property; or
(b) to forfeit all rights to such Primary Deposit(s) by not
participating in the financing of the Development thereof, except
that such Participant shall retain a royalty of 1% of the Net
Proceeds from the Property which was the subject of the
Feasibility Study for each 10% of Participating Interest in the
Joint Venture relating to such Property forfeited.
12.3 ALL PARTICIPANTS ELECT TO BEGIN MINING. If all the Participants in a
Joint Venture decide to begin Development under a structure separate from
the Joint Venture relating to the Property which was the subject of the
Feasibility Study, the Participants must conclude an agreement for the
organization, financing, management and functioning of an entity (the
"Operating Entity") which will extract, produce and commercialize the ore
within the limits of the pertinent Mining Title(s) containing the Primary
Deposit(s). The Participants respective interests in the Operating
Entity will be the same as the respective Participating Interests in the
Joint Venture relating to the Property where the Feasibility Study was
conducted when the Operating Entity is organized.
27
Upon the creation of such Operating Entity, the present Agreement shall
terminate with respect to the Mining Title(s) containing the Primary
Deposit(s) to be mined but shall remain in effect for the areas outside
of such Mining Title(s).
The legal form of the Operating Entity shall be chosen by agreement among
the Participants in the Joint Venture relating to the Property which was
the subject of the Feasibility Study. It may or may not be incorporated.
The structure chosen will best take into account the tax liability and
other consideration of the Participants and must meet the necessary
governmental approvals.
Unless agreed otherwise by the Participants, the purpose of the Operating
Entity shall be the extraction and marketing of ores, concentrate or
finished products within the limits of the Property which was the subject
of the Feasibility Study and which will be attributed or transferred to
the new Operating Entity, as well as Exploration within the limits of
such Property.
The Participants to a Joint Venture agree that this Agreement shall
continue, with respect to the Property which was the subject of the
Feasibility Study, to govern the relations between the Participants until
the Participants have organized the Operating Entity.
12.4 FINANCING OF OPERATIONS AFTER FEASIBILITY STUDY. If a Feasibility Study
demonstrates to the satisfaction of the Management Committee of the Joint
Venture owning the Property which was the subject of such Feasibility
Study that Development and Exploitation of a Primary Deposit offering a
positive net present value using a reasonable discount rate is possible
on the Property, the Manager shall use its reasonable best efforts to
arrange for financing to be provided by third parties (the "Third Party
Financing") as shall be required to bring a Primary Deposit into
production on all or part of the Property, substantially on the terms set
forth in the Feasibility Study and with a goal of obtaining at least
eighty percent (80%) of project development costs from such financing.
During the arrangement of such financing, each Participant shall not be
obligated to provide such financing or to provide a guarantee for such
financing by third parties but shall use reasonable best efforts to cause
the financing to be on a project basis. All costs, tees and expenses
incurred in order to obtain and implement such Third Party Financing
shall be borne by the Operating Entity. Likewise, each Participant shall
be entitled to subscribe for investment insurance, if necessary, foreign,
of the type normally provided by the Export Development Corporation
(Canada) or other similar agencies in respect of such part of the Third
Party Financing as shall be guaranteed by such agency, and all premiums
and other costs, fees and expenses incurred in respect thereof shall be
borne by the Operating Entity. Each Participant shall do everything
reasonably within its power to assist in securing such financing. The
Manager of the Operating Entity will provide all necessary completion
guarantees with respect to Development of the project in order to obtain
such financing.
12.5 NO PARTICIPANT ELECTS MINING. If no Participant elects the Mining of the
Primary Deposit(s) covered by an Initial Feasibility Study, the Agreement
shall continue to govern such Primary Deposit(s) located on the Property
of the Joint Venture in which they have a Participating Interest for
three years from the date of the attestation of completion of the Initial
Feasibility Study on such Property unless the Management Committee of
such Joint Venture decides otherwise.
12.6 ONLY ONE PARTICIPANT ELECTS MINING. If only one Participant in a Joint
Venture elects Mining he shall be entitled to do so alone, after notice
to the other Participants, and such other
28
Participants shall each retain a royalty of 1% of Net Proceeds of the
Property of such Joint Venture for every 10% of Participating Interest he
held in such Joint Venture.
12.7 ADJUSTMENTS AFTER ELECTIONS. If the Participants which elected
Development thereafter reduce the costs as estimated in the Feasibility
Study by more than twenty percent (20%) or change the mining and
metallurgical recovery technology, they shall so notify the other
Participants, which shall have ninety (90) days from receipt of such
notice to notify the other Participants of their definitive decision to
join them in the Mining under the new conditions.
If the Participant(s) which elected Development do not actually begin the
Development within twelve (12) months, all the other Participants shall
regain all their rights to the Primary Deposit(s).
However, if the Development could not be commenced for a reason not
attributable to the Participant(s), such as Force Majeure or delay in
approval of the Mining by the appropriate government agency, the twelve
(12) month period shall be suspended pending the Force Majeure or
governmental decision.
Subject to the above, the Participant(s) who did not elect to develop
shall loose all rights to the Primary Deposit(s) being developed. Their
rights, which shall be purchased from them for the nominal sum of one
franc and shall be divided among the other Participants in proportion to
their Participating Interests, such Participants retaining in any event a
royalty of five percent (5%) of Net Proceeds.
12.8 DECISION TO MINE. As soon as it is decided to Mine a Primary Deposit(s),
the Manager of the Operating Entity with respect to that Primary Deposit
shall take all necessary steps to procure the administrative or other
authorizations necessary for mining such Primary Deposit(s).
The Manager shall also undertake to place the pertinent Property at the
Operating Entity's disposal and to procure all of the administrative
authorizations necessary for that purpose. The manner by which the
Mining Title(s) shall be placed at the disposal of the Operating Entity
shall be either:
(a) by outright transfer of the Mining Title to the Operating Entity,
or
(b) by a lease Assignment ("Amodiation") to the Operating Entity of
such pertinent Mining Title.
The Participants shall decide the most advantageous means to be used
prior to the establishment of the Operating Entity.
In case the Primary Deposit(s) to be mined is located totally or, if
ASARCO has exercised its right to merge the Joint Ventures, partially on
the Eau Blanche Permits, SOTRAPMAG agrees to transfer the applicable
research permits to the Operating Entity, upon its creation, in order to
allow the Operating Entity to directly apply for the appropriate Mining
Titles.
SOTRAPMAG shall retain title to all Mining Titles until such time as the
Management Committee decides the transfer of all or part of them.
29
12.9 ALLUVIAL DEPOSITS. At least twelve (12) months prior to the start of
Mining of a Primary Deposit(s) by an Operating Entity, the Manager shall
provide a mine plan to SOTRAPMAG. If it is determined by the Management
Committee that SOTRAPMAG's continuation of the Mining of Alluvial
Deposits within the Property attributed to the Operating Entity would
interfere with the Mining of the Primary Deposit by the Operating Entity,
SOTRAPMAG will remove the Alluvial Deposit within such twelve (12) month
period, failing which such Alluvial Deposit will be removed by the
Operating Entity during initial stripping of the Primary Deposit and
stockpiled for removal and treatment by SOTRAPMAG at its sole convenience
and expense. Upon presentation of a mine plan to SOTRAPMAG, SOTRAPMAG
may wish to propose other methods of treating the Alluvial Deposit
material such as custom milling by the Operating Entity, or sale of
contained gold by the Operating Entity, or such other proposal as the
parties find mutually agreeable.
12.10 DISTRIBUTION OF PROCEEDS AND PRODUCTS. The distribution of Net Proceeds
extracted from a Property may take the form of (i) the distribution of
the Net Proceeds of the sale of Products, or (ii) the distribution of the
Products in kind to the Participants. In any case such distribution
shall be made to the Participants in accordance with and the proportions
of each Participant's Participating Interest or ownership interest in the
Operating Entity. Any extra Expenditures in the taking in kind or
separate disposition by any Participant of its proportionate share of
Products shall be borne by the Participant requesting in kind
distribution. Nothing in this Agreement shall be construed as requiring
a Joint Venture or Operating Entity to organize or manage any joint or
corporate marketing or selling of Products of such Joint Venture or
Operating Entity or the processing of any Products of such Joint Venture
or Operating Entity at processing facilities other than those constructed
by the Joint Venture or Operating Entity pursuant to this Agreement.
GENERAL PROVISIONS
13. WITHDRAWAL/TERMINATION
13.1 WITHDRAWAL. A Participant may elect to withdraw as a Participant from
any of the Joint Ventures by giving notice to the other Participants of
the effective date of withdrawal, which notice shall not be later than
the meeting for the Management Committee of the Joint Venture from which
they intend to withdraw to approve the next Program and Budget. Upon
such withdrawal or a withdrawal pursuant to Article 6, the withdrawing
Participant will lose all its rights under this Agreement, and the
withdrawing Participant shall be deemed to have transferred pro rata in
proportion to the remaining Participating Interest to the remaining
Participants, at the withdrawing Participant's cost (except for legal
fees and expenses incurred by the remaining Participants) and free and
clear of royalties, liens, or other encumbrances arising by, through, or
under such withdrawing Participant, except those to which all
Participants have given their written consent after the date of this
Agreement, all of its Participating Interest.
Any withdrawal under this Article 13.1 shall not relieve the withdrawing
Participant of its share of liabilities including reclamation and other
environmental liabilities directly arising out of Operations conducted
prior to such withdrawal except to the extent that such liabilities are
the direct or indirect result of gross negligence or willful misconduct
by the Manager or another Participant, in which case the withdrawing
Participant cannot be held liable (except if the withdrawing Participant
was the Manager when the damage was caused).
30
13.2 CONTINUING OBLIGATIONS - TERMINATION. On termination of a Joint Venture,
the Participants in such Joint Venture shall remain liable for the
obligations of such Joint Venture until final settlement of all accounts
and for any liability, whether it accrues before or after termination, if
it arises out of Operations of the Joint Venture during the term of the
Agreement. Any environmental liabilities will be the obligation of the
Participants in proportion to their Participating Interest in the
terminated Joint Venture as it existed at the time of termination,
subject to the limitations set forth above in Article 13.1 above. In
case of gross negligence or willful misconduct of a Participant or a
Manager of a Joint Venture leading to damages or claims, then such person
shall be solely liable and shall bear all consequences, including
financial ones.
13.3 DISPOSITION OF ASSETS ON TERMINATION. Promptly after termination of a
Joint Venture, the Manager shall take all action necessary to wind up the
activities of the Joint Venture and all costs and expenses incurred in
connection with the termination of the Joint Venture shall be expenses
chargeable to the Joint Venture. The assets owned by the Joint Venture
shall first be paid, applied, or distributed in satisfaction of all
liabilities of the Joint Venture to third parties and then to satisfy any
debts, obligations, or liabilities relating to Operations related to the
activity of the Participants; provided, however, that the foregoing shall
not be construed to include the repayment of any Participant's capital
contributions. Thereafter, any remaining cash and all other assets shall
be distributed (in undivided interest unless otherwise agreed) to the
Participants in proportion to their respective Participating Interests,
subject to any dilution, reduction, or termination of such Participating
Interests as may have occurred pursuant to the terms of this Agreement.
13.4 NON-COMPETE COVENANTS. A Participant that withdraws pursuant to Article
13.1, or withdraws or is deemed to have withdrawn pursuant to any other
provisions of this Agreement, shall not directly or indirectly acquire
any interest in property within the Area of Interest for twenty four (24)
months after the date of withdrawal. If a withdrawing Participant, or
the Affiliate of a withdrawing Participant, breaches this Article 13.4,
such Participant or Affiliate shall be obligated to convey to the
non-withdrawing Participant(s), at no cost, any such property or interest
acquired in such breach. The request from the remaining Participant(s)
must be made in writing and shall be considered accepted by the
withdrawing Participant within forty-five (45) days of receipt of such
request.
Throughout the term of the Agreement as it may be extended, until closing
of the books upon the Joint Venture's liquidation, no Participant,
whether serving as manager or not, shall have a direct or indirect
interest, as a partner, through an intermediary or otherwise, in an
activity liable to compete with the Participant's mutual interests within
the Area of Interest.
Unless otherwise provided herein, not other non-compete or information
obligation shall be imposed on the Participants.
13.5 CONTINUING AUTHORITY. On termination of a Joint Venture or the deemed
withdrawal of a Participant pursuant to Article 6 or 7 or the withdrawal
of a Participant pursuant to Article 1 3.1, the Manager shall have the
power and authority, subject to control of the Management Committee, if
any, to do all things on behalf of the Participants which are reasonably
necessary or convenient: (a) to winding up Operations of the Joint
Venture and (b) to completing or disposing of any transaction or
obligation, unfinished or unsatisfied, at the time of such termination or
withdrawal, if the transaction or obligation arises out of Operations
prior to such termination or withdrawal. The Manager shall have the
power and authority to grant or receive
31
extensions of time or change the method of payment of an already existing
liability or obligation, prosecute and defend actions on behalf of the
Participants, mortgage Assets, or take such other reasonable action in
any matter in which the former Participants continue to have a common
interest and are under a common liability.
14. TRANSFER OF INTEREST
14.1 GENERAL RULE. Except as permitted under the provisions of this Article
14 or required by the provisions of this Agreement, a Participant shall
not sell, assign or transfer all or any of its interest in this
Agreement, its Participating Interest in the Joint Venture in which it is
a Participant or the Assets of such Joint Venture without the consent of
the other Participants. All transfers will be subject to obtaining any
necessary French government approval. A change of control of a
Participant through any transfer involving shares in the capital of a
Participant shall be deemed to be a sale, assignment or transfer of such
Participant's Participating Interest for the purposes of this Article.
14.2 TRANSFERS. Each Participant shall have this right to freely transfer all
or part of its Participating Interest in a Joint Venture to an Affiliate
of such Participant.
a) A Participant in a Joint Venture intending to transfer all or any
part of its Participating Interest in such Joint Venture to a
third party (a "Third Party") shall promptly notify the other
Participants of its intentions. The notice shall state the price
and all other pertinent terms and conditions of the intended
transfer and the name of the purchaser and the other Participants
shall have 90 days from the date such notice is delivered to
notify the transferring Participant whether they elect to acquire
the offered interest at the same price and on the same terms and
conditions as set forth in the notice. If they do so elect, the
transfer shall be consummated promptly after notice of such
election is delivered to the transferring Participant.
b) If the other Participants fail to so elect within the period
provided for in above, the transferring Participant shall have 30
days following the expiration of such period to consummate the
transfer to a Third Party at a price and on terms no less
favorable than those offered by the transferring Participant to
the other Participants in the notice.
c) If the transferring Participant fails to consummate the transfer
to a Third Party within the period set forth above, the preemptive
right of the other Participant in such offered interest shall be
deemed to be revived. Any subsequent proposal to transfer such
interest shall be conducted in accordance with all of the
procedures set forth in this Article 14.2.
d) If more than one Participant exercises its preferential right, the
transferred Participating Interest shall be distributed pro rata
among the Participants who have exercised their preferential
rights in accordance with their Participating Interests.
In addition, LA SOURCE shall have the right to freely transfer all or
part of its Participating Interest to any company directly or indirectly
controlled by BRGM or Normandy Mining Limited.
32
15. ACQUISITION WITHIN AREA OF INTEREST
15.1 GENERAL. Any interest or right to acquire any interest in a mining
rights contract or in any real property wholly or partially within the
Area of Interest acquired during the term of this Agreement by or on
behalf of a Participant or any Affiliate or Subsidiary of a Participant
shall be subject to the terms and provisions of this Agreement.
15.2 NOTICE TO NON-ACQUIRING PARTICIPANTS. Within twenty (20) days after the
acquisition of any interest or right to acquire any interest in any
Mining Rights Contract or real property wholly or partially within the
Area of Interest (except acquisitions by the Manager pursuant to a
Program and for the benefit of the Joint Venture), the acquiring
Participant shall notify the other Participants of such acquisition,
provide the other Participant with full information of the acquisition,
including the nature of the interest acquired, the minerals involved, the
cost thereof and the reasons why such interest was acquired. In addition
to such notice and such information, the acquiring Participant shall also
make any and all information that the acquiring Participant has
concerning the acquired interest available for review and inspection by
the other Participants.
15.3 OPTION EXERCISED. If within 30 days after receiving the acquiring
Participant's notice pursuant to this Article 15 the other Participant
or, if more than one, each of the other Participants, notifies the
acquiring Participant that it or they, as the case may be, so require,
such interest shall become subject to the terms of this Agreement, shall
be deemed to be part of the Property on which it is located and shall be
transferred to the Joint Venture to which it relates at the acquiring
cost.
15.4 OPTION NOT EXERCISED. If each other Participant does not give such
notice within before the expiration of the period set forth in Article
15, then the acquired interest shall not be part of the Assets of the
Joint Venture or otherwise be subject to this Agreement.
16. GENERAL
16.1 CONFIDENTIAL INFORMATION. The Participants in a Joint Venture agree that
all information they may receive as a result of or in connection with the
Operations of such Joint Venture shall be the exclusive property of the
Joint Venture, shall be classified as confidential and treated as
property and shall not be shared or traded by a Participant with others
without the prior consent of other Participants in such Joint Venture,
this obligation remaining applicable even after the departure of a
Participant; provided that the foregoing shall not apply in any of the
following cases:
(a) disclosure on a confidential basis to consultants or advisors of a
Participant to assist that Participant in the carrying out of the
terms of this Agreement;
(b) disclosure to any Government or Regulatory Authority having
jurisdiction over a Property or Participant;
(c) disclosure in compliance with any applicable law or regulation,
including without limitation securities laws and regulations and
the policies of applicable securities or regulatory authorities;
or
(d) disclosure in connection with a bona fide sale or transfer of a
Participating Interest; provided that the person to whom
disclosure is made shall agree with the Participant making it to
be bound by and observe the provisions of this Article 16.1.
33
Except as otherwise required by law, no news releases or similar public
announcements respecting Operations, the Property or the Joint Venture
shall be made by any Participant in a Joint Venture without first
obtaining the approval from the other Participants in such Joint Venture
of the content of such news release or public announcement, which
approval shall not be unreasonably withheld or delayed. The Participant
seeking such approval shall provide the other Participants with the text
of any proposed news release or public announcement by 3:00 p.m. at the
other Participants' place for receiving notices on a business day
immediately preceding the proposed news release or public announcement
and if the other Participant has not objected to such text within 24
hours of the receipt thereof, the other Participant shall be deemed to
have given its express written approval as required hereunder.
16.2 PARTIAL INVALIDITY. Invalidity of any provision of the Agreement shall
not entail the invalidity of the other provisions, paragraphs and
sections or affect the validity of the Agreement itself.
16.3 PRIOR AGREEMENTS - ADDENDA. The Agreement shall supersede any and all
prior written or oral understanding between the Participants, including
the BRGM Agreement (but excepting the sum of FRF 750,000 payable by
GUYANOR which was still unpaid as of the date of this Agreement). No
change, amendment, cancellation or revision of the Agreement shall be
valid unless reduced to a written addendum and signed by the Participants
and the other Participants if any.
16.4 FORCE MAJEURE. The non-performance by the Manager or a Participant of
any obligations under this Agreement, with the exception of payment and
notification obligations, shall be excused to the extent that such
non-performance is due to an event of force majeure. If the execution of
an obligation is delayed, the time period contemplated in this Agreement
for the performance of same, notwithstanding any contrary provisions in
this Agreement, shall automatically be extended for the duration of the
delay caused by the force majeure. The Participants agree that they
cannot claim as force majeure any act or omission to act for which they
are responsible.
For purposes of this Agreement, the term "Force Majeure" shall mean any
event, act or circumstances beyond the reasonable control of a
Participant, including without limitation, acts of war or conditions
caused by war, insurrection, civil strife, embargoes, labor strikes,
riots, epidemics, earthquakes, floods, or adverse weather conditions,
explosions, lightening, terrorist acts. It is the intention of the
Participants that Force Majeure be interpreted as closely as possible in
accordance with the principles and customs of international law.
Should one of the Participants be unable to perform any of its
obligations as a result of Force Majeure, the affected Participant shall
promptly give written notice to the other Participants of the suspension
of performance, stating therein the nature of the suspension, the reasons
therefor, and the expected duration thereof. The Participants shall take
all available measures to resume performance of obligations affected by
the Force Majeure as soon as reasonably possible, provided that a
Participant shall not have to resolve conflicts with third parties,
including labor conflicts, unless the conditions are acceptable to it or
unless the resolution of such dispute is required by a final arbitral
sentence or by decision of a competent court of law. Should a case of
Force Majeure persist, all deadlines provided herein shall be suspended
during the entire period such force majeure persists.
34
If an event of Force Majeure persists for longer than three (3) years
from the giving of the notice, the Management Committee shall meet to
evaluate the possibility of continuing the Operations of the Joint
Venture affected by the Force Majeure or the termination of such Joint
Venture. The termination of such Joint Venture shall require the
unanimous vote of the Management Committee.
16.5 SURVIVAL OF PROVISIONS. The following articles shall survive the
termination of this Agreement to the full extent necessary for their
enforcement and the protection of the Participant in whose favor they
run: Articles 6.9, 13.1, 13.2. and 16.6.
16.6 SUPPLEMENTAL STEPS. Each Participant shall take all steps necessary or
appropriate to implement the spirit and letter of the Agreement. Each
Participant shall also report to the other Participants forthwith any
occurrence liable to affect the attainment of that object. At any
Participant's request, the Manager shall prepare a summary of the
Agreement not containing any technical or financial information, for
disclosure to third parties if need be. Except to the extent otherwise
provided in Article 16, this Agreement shall be kept in confidence.
16.7 CONDITION PRECEDENT. This Agreement is subject to the condition
precedent that the government does not object to performance hereof as
provided by paragraph 4 of Article 15 of Decree 55-586 of May 20, 1955.
16.8 APPLICABLE LAW. This Agreement shall be governed by and construed
according to law in force in France.
16.9 ARBITRATION. All disputes arising in connection with this Agreement
which cannot be amicably resolved by the Participants shall be submitted
for binding arbitration, according to the Rules of Arbitration of the
International Chamber of Commerce, by three arbitrators appointed in
accordance with said Rules, except that where there are more than two
parties to the arbitration, the three arbitrators shall be appointed
pursuant to the procedure set forth below:
(i) The three arbitrators, one of whom shall serve as President of the
Arbitral Tribunal, shall be chosen unanimously by all the parties
to the arbitration; such agreement must take place within thirty
(30) days of the receipt of the request for arbitration by the
last respondent party to receive same.
(ii) In the event that the parties to the arbitration are unable to
agree within the above time period, the three arbitrators, one of
whom shall serve as President of the Arbitral Tribunal, shall be
appointed by the International Court of Arbitration of the
International Chamber of Commerce.
Unless the parties to the arbitration agree otherwise, (a) such
arbitration shall take place in Paris; (b) the language of the
arbitration shall be French, with English translation, it being
understood that the parties to the arbitration shall be at liberty to
submit evidence as well as written pleadings in English; and (c) the
arbitration costs shall be payable by the losing party.
The arbitral decision shall be definitive and binding on the parties to
the arbitration.
35
16.10 NOTICES. All notices, payments and other required communications
("Notices") to the Participants shall be in writing, and shall be
addressed respectively as follows:
If to ASARCO: ASARCO Exploration Company, Inc.
180 Maiden Lane
New York, New York 10038
Attention: President
Facsimile: (212)510-1978
With a copy to: ASARCO GUYANE FRANCAISE
P.K. 7 route de Montjoly
B.P. 1015
97343 Cayenne Cedex
French Guiana
Attention: D.A. Fournier
Facsimile: 594.380.247
If to GUYANOR: SOTRAPMAG SARL
Lotissement Calimbe 2
Route de Tigre
BP 750 - 97300 Cayenne
French Guiana
Attention: The Manager
Facsimile: (594)37 92 24
With a copy to: SOTRAPMAG SARL
Norwest Center
1700 Lincoln Street
Suite 1950
Denver, Colorado 80203 U.S.A.
Attention: General Counsel
Facsimile: (303)830-9022
If to LA SOURCE: LA SOURCE DEVELOPPEMENT SAS
Division Exploration
16/18 avenue George V
75008 Paris France
Attention: M. Etienne Wilhelm
With a copy to: BUREAU DE RECHERCHES GEOLOGIQUES ET MINIERES
Direction du Service Minier National
Avenue Claude Guillemin
45060 Orleans, France
Attention: M. Michel Leleu
All Notices shall be given (i) by personal delivery to the Participant,
or (ii) by electronic communication, with a confirmation sent by
registered or certified mail return receipt requested, or (ii) by
registered or certified mail return receipt requested.
36
All Notices shall be effective and shall be deemed delivered (i) 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; (ii) if by electronic
communication, on the next business day following receipt of the
electronic communication; and (iii) if solely by mail, on the next
business day after actual receipt. Any Participant must notify the other
Participants of any change of address.
16.11 LA SOURCE, on behalf of BRGM, hereby ratifies and confirms BRGM's
renunciation, set forth in the BRGM Agreement, of any and all of its
rights and interests, direct or indirect, in and to the Paul Isnard
Concessions which BRGM held or may have held prior to the date of the
BRGM Agreement.
In witness whereof, the Participants hereto have executed this Agreement on the
date hereafter indicated.
SOCIETE DE TRAVAUX PUBLICS
ET DE MINES AURIFERES EN GUYANE AND
SOCIETE GUYANAISE DES MINES
By: /s/ David A. Fennell, June 4, 1996
ASARCO EXPLORATION COMPANY, Inc. on its own behalf and
on behalf of ASARCO GUYANE FRANCAISE SARL
By: /s/ Gerald Van Voorhis, June 4, 1996
LA SOURCE DEVELOPPEMENT SAS
By:
37
EXHIBIT I
38
APPENDIX 1
DESCRIPTION OF MINING TITLES
1. Location
The Paul-lsnard Concessions and Eau Blanche Permits are located in the commune
of Saint-Laurent-du-Maroni, in western French Guiana, about 250km from Cayenne.
You will find attached a map indicating the exact location of these concessions
and permits.
2. Paul-Isnard Concessions
Originally, the eight (8) concessions (Nos. 692, 25, 214, 215, 216, 217, 218,
219) were held by the Compagnie Equatoriale des Mines ("CEM");
1) No. 692 pursuant to a decision of the "Gouverneur" of French Guiana dated
10 October 1919,
2) No. 25 pursuant to a decision of the "Gouverneur" of French Guiana dated
27 November 1924,
3) No. 214, 215 and 216, pursuant to a decision of the "Gouverneur des
Colonies", "Gouverneur" of French Guiana and of the Territoire de l'Inini
dated 21 May 1946,
4) and, No. 217, 218 and 219 pursuant to an "arrete" of the "Prefet" of
French Guiana dated 14 June 1948.
Pursuant to the decision of the 18 December 1972 Extraordinary General Meeting
of shareholders, the corporate name of CEM was changed to Occidentale de
Participations ("ODP")
Pursuant to the resolution of 28 December 1972 Extraordinary General Meeting of
ODP shareholders, a merger of the Banque Occidentale pour l'Industrie et le
Commerce ("BCPIC") into ODP was approved and the name of the BCPIC was adopted.
Pursuant to the resolution dated 22 October 1981, the Extraordinary General
Meeting of BCPIC shareholders modified the company's corporate purpose so as to
eliminate all references to banking activity, such activity having been sold to
another entity, and readopted the corporate name ODP.
Pursuant to the resolution dated 21 December 1981, the Extraordinary General
Meeting of ODP shareholders approved the merger into the General Occidentale
("GO") and the latter company stepped into the rights of ODP, which was
dissolved and liquidated.
Pursuant to the resolution dated 27 June 1991, the Extraordinary General
Meeting of the shareholders of Alcatel Alsthom Compagnie Generale d'Electricite
("Alcatel") approved the absorption of GO through a merger. Alcatel stepped
into all the rights of GO, which was dissolved and liquidated.
Pursuant to a deed registered by Maitre Lucien Prevot, "notaire", on 25 March
1994, Alcatel sold to SOTRAPMAG the eight concessions together with all
exclusive rights appurtenant thereto for the price of FF. 1,200,000.
Pursuant to a contract between SOTRAPMAG and the SARL CERMI dated 29 October
1994, SOTRAPMAG granted to CERMI the exclusive right to mine the alluvial
deposits of the Elysee Creek Valley (concessions Nos. 218 and 219) for a period
of three years (automatically renewable for a
39
maximum duration of seven years) in consideration of a payment representing
2.5% of the gross sales of the gold coming from this valley.
The sale was made subject to the condition precedent of the approval of the
transfer by the government before 31 December 1995. The approval was granted
by "decret" of the Conseil d'Etat dated 27 December 1995, published in the
Journal Officiel of 20 December 1995.
Paul-Isnard is the name of the exploration project being conducted on the eight
(8) concessions (Nos. 692, 25, 214, 215, 216, 217, 218 and 219).
TYPE "B" RESEARCH PERMIT
SOTRAPMAG directly or indirectly holds four type B research permits for gold
and related substances, these include:
- Three (3) held directly by SOTRAPMAG - Nos. 20/93, and 06/95.
- One (1) - No. 02/94 - held by the Societe Guyanaise des Mines ("SGM")
owned 99.7% by SOTRAPMAG and 0.3% by Guyanor)
These permits have a surface of twenty-five km(2) each.
The SGM research permit obtained on 1 June 1994 expires 30 May 1996. An
application for renewal was filed on 3 May 1996.
TYPE "A" RESEARCH PERMITS
Guyanor filed an application for a type "A" research permit on 21 December
1994. Following discussions with the French administrative authorities (DRIRE
- Ministere de l'Industrie), this application was revised with regard to the
surface area requested. An updated application was presented to the prefecture
on 31 January 1996.
Eau-Blanche is the name of the exploration project being conducted on the four
permits held by SOTRAPMAG and SGM (and on the type "A" permit if it is
obtained).
40
SEE ORIGINAL DOCUMENT FOR MAP
41
EXHIBIT II
ACCOUNTING PROCEDURE
The financial and accounting procedures to be followed by the Manager
and the Participants under the Option and Joint Venture Agreement between
SOTRAPMAG, ASARCO and LA SOURCE (the "Agreement") are set forth below.
References in this Accounting Procedure to sections and Articles are to those
located in this Accounting Procedure unless it is expressly stated that they
are references to the Agreement.
Unless otherwise noted, all capitalized terms used in the Exhibits shall
have the meanings set forth in the Agreement. Furthermore, in the Exhibits,
defined terms, including but not limited to the terms "Joint Venture",
"Participant", "Manager", "Adopted Program and Budget", and "Management
Committee", shall refer either to the Paul Isnard Joint Venture or the Eau
Blanche Joint Venture, as the case may be, and the term "Property" shall refer
to either the Paul Isnard Concessions or the Eau Blanche Permits, or both, as
the case may be.
ARTICLE 1
GENERAL PROVISIONS
1.1 General Accounting Records. The Manager shall maintain detailed and
comprehensive cost and general accounting records in accordance with this
Accounting Procedure, including general ledgers, supporting and subsidiary
journals, invoices, checks and other customary documentation, sufficient to
provide a record of revenues and expenditures and periodic statements of
financial position and the results of operations for managerial, tax,
regulatory or other monthly financial reporting purposes. Such records shall
be retained for the duration of the period allowed the Participants for audit
or the period necessary to comply with tax or other regulatory requirements.
The records shall reflect all obligations, advances and credits of the
Participants.
1.2 Bank Accounts. The Manager shall maintain one or more separate bank
accounts for the payment of all expenses and the deposit of all cash receipts
in relation to Operations during the Initial Period and for each Joint Venture
if and when it is created.
1.3 Statements and Billings. The Manager shall prepare statements and bill
the Participants as provided in the Agreement. Payment of any such billings by
any Participant, including the Manager, shall not prejudice such Participant's
right to protest or question the correctness thereof for a period not to exceed
twenty-four (24) months following the Operating Year during which such billings
were received by the Participant. All written exceptions to and claims upon
the Manager for incorrect charges, billings or statements shall be made upon
the Manager within such twenty- four (24) month period. The time period
permitted for adjustments hereunder shall not apply to adjustments resulting
from periodic inventories as provided in Article 4.
1.4 Applicable Law. In addition to the specific requirements of the Exhibit
II, the Manager shall be obliged to maintain the books of each syndicate in
accordance with the Plan Comptable Francais and under Canadian GAAP.
42
ARTICLE 2
CHARGES TO JOINT ACCOUNT
Subject to the limitations hereinafter set forth, the Manager shall charge the
Joint Account with the following:
2.1 Rentals, Royalties and Other Payments. All property maintenance and
holding costs, including filing fees, license fees, costs of permits and
assessment work, delay rentals, production royalties, including any required
advances, and all other payments made by the Manager which are necessary to
acquire or maintain title to the Assets.
2.2 Labour and Employee Benefits.
(a) Salaries and wages of the Manager's employees directly engaged in
Operations including salaries or wages of employees who are
temporarily assigned to and directly employed by same.
(b) The Manager's cost of holiday, vacation, sickness and disability
benefits and accrual of severance or termination costs pro-rated
for only time employed worked on either Paul Isnard or Eau Claire
project from the signing of this Agreement, and other customary
allowances applicable to the salaries and wages chargeable under
Sections 2.2(a) and 2.12. Such costs may be charged on a "when
and as paid basis" or by "percentage assessment" on the amount of
salaries and wages. If percentage assessment is used, the rate
shall be applied to wages or salaries including overtime and
bonuses. Such rate shall be based on the Manager's cost
experience and it shall be periodically adjusted at least annually
to ensure that the total of such charges does not exceed the
actual cost thereof to the Manager.
(c) The Manager's actual cost of established plans for employees'
group life insurance, hospitalization, pension, retirement, stock
purchase, thrift, bonus (except production or incentive bonus
plans under a union contract based on actual rates of production,
cost savings and other production factors, and similar non-union
bonus plans customary in the industry or necessary to attract
competent employees, which bonus payments shall be considered
salaries and wages under Sections 2.2(a) or 2.12; rather than
employees' benefit plans) and other benefit plans of a like nature
applicable to salaries and wages chargeable under Sections 2.2(a)
or 2.12, provided that the plans are limited to the extent
feasible to those customary in the industry.
(d) Cost of assessments imposed by governmental authority which are
applicable to salaries and wages chargeable under Sections 2.2(a)
and 2.12, including all penalties except those resulting from the
willful misconduct or gross negligence of the Manager.
2.3 Materials. Equipment and Supplies. The cost of materials, equipment and
supplies (herein called "Material") purchased from unaffiliated third parties
or furnished by the Manager or any Participant as provided in Article 3. The
Manager shall purchase or furnish only so much Material as may be required for
immediate use in efficient and economical Operations. The Manager shall also
maintain inventory levels of Material at reasonable levels to avoid unnecessary
accumulation of surplus stock.
2.4 Equipment and Facilities Furnished by Manager. The cost of machinery,
equipment and facilities owned by the Manager and used in Operations or used to
provide support or utility services to
43
Operations charged at rates commensurate with the actual costs of ownership and
operation of such machinery, equipment and facilities. Such rates shall
include costs of maintenance, repairs, other operating expenses, insurance,
taxes, depreciation, mobilization and demobilization and interest, at a rate
not to exceed the average commercial rates currently prevailing in the vicinity
of the Operations.
2.5 Transportation. Reasonable transportation costs incurred in connection
with the transportation of employees and material necessary for the Operations.
2.6 Professional Consultants and Other Services. The cost of other services
procured from outside sources and the cost of professional consultants services
required from outside sources. The cost of professional consultant services
procured from outside sources in excess of $25,000 per year per consultant
shall not be charged to the Joint Account unless approved by the Management
Committee.
2.7 Insurance Premiums. Net premiums paid for insurance required to be
carried for Operations for the protection of the Participants. A Participant
who requests additional insurance coverage will be billed to his own account.
2.8 Damages and Losses. All costs in excess of insurance proceeds necessary
to repair or replace damage or losses to any Assets resulting from any cause
other than the willful misconduct or gross negligence of the Manager. The
Manager shall furnish the Management Committee with written notice of damages
or losses as soon as practicable after a report thereof has been received by
the Manager.
2.9 Legal and Regulatory Expense. Except as otherwise provided in Section
2.13, all legal and regulatory costs and expenses incurred in or resulting from
the Operations or necessary to protect or recover the Assets of the Venture.
All attorney's fees and other legal costs to handle, investigate and settle
litigation or claims, including the cost of legal services provided by the
Manager's legal staff, and amounts paid in settlement of such litigation or
claims in excess of $25,000 shall not be charged to the Joint Account unless
approved by the Management Committee.
2.10 Audit. Cost of annual audits, subject to Article 6 below.
2.11 Taxes. All taxes (except income taxes) of every kind and nature assessed
or levied upon or in connection with the Assets, the production of Products or
Operations, which have been paid by the Manager for the benefit of the
Participants. Each Participant is separately responsible for income taxes
which are attributable to its respective Participating Interest. For the
purposes of this section, tax on income of a corporation owning the Assets and
conducting the Operations shall be deemed not attributable to the Participants'
Participating Interests.
2.12 District and Camp Expense (Field Supervisions and Camp Expenses). A pro
rata portion of (i) the salaries and expenses of the Manager's superintendent
and other employees serving Operations whose time is not allocated directly to
such Operations, and (ii) the costs of maintaining and operating an office
(herein called the "Manager's Project Office") and any necessary sub-office and
(iii) all necessary camps, including housing facilities for employees, used for
Operations. The expense of those facilities, less any revenue therefrom, shall
include depreciation or a fair monthly rental in lieu of depreciation of the
investment. The total of such charges for all properties served by the
Manager's employees and facilities shall be apportioned to the Joint Account on
the basis of a ratio, the numerator of which is the direct labour costs of the
Operations and the denominator of which is the total direct labour costs
incurred for all activities served by the Manager. Examples of such employees
include but are not limited to surveyors, logisticians and draftsmen.
44
2.13 Administrative Charge.
(a) Each month, the Manager shall charge the Joint Account a sum for
each phase of Operations as provided below, which shall be a
liquidated amount to reimburse the Manager for its home office
overhead and general and administrative expenses to conduct each
phase of the Operations, and which shall be in lieu of any
management fee:
(i) During Exploration phase - eight percent (8%) of Allowable
Costs as described below.
(ii) During Development phase - six percent (6%) of Allowable
Costs as described below.
(iii) During Mining phase - six percent (6%) of the operating
costs of the Mine including the cost of contracts services
but excluding capital expenditures.
(b) The term "Allowable Costs" as used in this Section 2.13 for the
Exploration phase and the Development phase of Operations shall
mean all charges to the Joint Account excluding (i) the
administrative charge referred to herein; (ii) depreciation,
depletion or amortization of tangible or intangible assets; (iii)
amounts charged in accordance with Sections 2.1 and 2.9.; (iv)
capital expenditures and; (v) during a Development phase but not
during an Exploration phase, amounts paid to outside contractors.
The Manager shall attribute such Allowable Costs to a particular
phase of Operations by applying the definitions of "Exploration",
"Development" and "Mining" as set forth in Article 1 of the
Agreement.
(c) The monthly administration charge determined for each phase of
Operations shall be equitably apportioned among all of the parts
of the Property served under the Joint Venture during such monthly
period on the basis of a ratio, the numerator of which is the
direct labour costs charged to a particular part of the Property
and the denominator of which is the total direct labour costs
incurred for all parts of the Property served by the Manager.
(d) The following is a representative list of items comprising the
Manager's principal business office expenses that are expressly
covered by the administrative charge provided in this Section
2.13:
(i) Administrative supervision, which includes services rendered
by managers, department supervisors, officers and directors
of the Manager for operations, except to the extent that
such services represent a direct charge to the Joint
Account, as provided for in Section 2.2;
(ii) Accounting, data processing, personnel administration,
billing and record keeping in accordance with governmental
regulations and the provisions of the Agreement, and
preparation of reports (excluding audit);
(iii) The services of the Manager's tax administration employees
for all tax matters, including any protests, except any
outside professional fees which the Management Committee may
approve as a direct charge to the Joint Account;
45
(iv) Routine legal services rendered by the Manager's legal staff
not otherwise charged to the Joint Account under Section
2.9; and
(v) Rentals and other charges for office and records storage
space, telephone service, office equipment and supplies not
directly related to or provided principally for Operations
and therefore not appropriate as a direct charge to the
Joint Account.
(e) The Management Committee shall annually review the administration
charges and shall amend the methodology or rates used to determine
such charges if they are found to be insufficient or excessive.
2.14 Other Expenditures. Any reasonable direct expenditure, other than
expenditures which are covered by the foregoing provisions, incurred by the
Manager for the necessary and proper conduct of Operations.
ARTICLE 3
BASIS OF CHARGES TO JOINT ACCOUNT
3.1 Purchases. Material purchased and services procured from third parties
shall be charged to the Joint Account by the Manager at invoiced cost,
including applicable transfer taxes, less all discounts taken. If any Material
is determined to be defective or is returned to a vendor for any other reason
the Manager shall credit the Joint Account when an adjustment is received from
the vendor.
3.2 Material Furnished by or Transferred to the Manager or a Participant.
Any Material furnished by the Manager or a Participant from its stocks or
transferred to the Manager or a Participant shall be priced on the following
basis:
(a) New Material. New Material transferred from the Manager or
Participant shall be priced F.O.B. the mine site, at the current
replacement cost of the same kind of Material, exclusive of any
available cash discounts, at the time of the transfer (herein
called, " New Price " ) .
(b) Used Material. Used Material transferred by the Manager or
Participant shall be priced at fair value not to exceed
seventy-five percent (75%) of the New Price.
3.3 Premium Prices. Whenever Material is not readily obtainable at published
or listed prices because of national emergencies, strikes or other unusual
circumstances over which the Manager has no control, the Manager may charge the
Joint Account for the required Material on the basis of the Manager's direct
cost and expenses incurred in procuring such Material and making it suitable
for use and moving it to the Property. The Manager shall give written notice
of the proposed charge to the Participants prior to the time when such charge
is to be billed, whereupon any Participant shall have the right, by notifying
the Manager within ten days of the delivery of the notice from the Manager, to
furnish at the usual receiving point all or part of its share of Material
suitable for use and acceptable to the Manager.
3.4 Warranty of Material Furnished by the Manager or Participants. Neither
the Manager nor any Participant warrants the Material furnished beyond any
dealer's or manufacturer s warranty and no credits shall be made to the Joint
Account for defective Material until adjustments are received by the Manager
from the dealer, manufacturer or their respective agents.
46
ARTICLE 4
DISPOSAL OF MATERIAL
4.1 Disposition Generally. The Manager shall have no obligation to purchase
a Participant s interest in Material. The Management Committee shall determine
the disposition of major items of surplus Material, provided the Manager shall
have the right to dispose of normal accumulations of junk and scrap Material
either by sale or by transfer to the Participants as provided in Section 4.2.
4.2 Distribution to Participants. Any Material to be distributed to the
Participants shall be made in proportion to their respective Participating
Interests, and corresponding credits shall be made to the Joint Account on the
basis provided in Section 3.2.
4.3 Sales. Sales of Material to third parties shall be credited to the Joint
Account at the net amount received. Any damages or claims by the Purchaser
shall be charged back to the Joint Account if and when paid.
ARTICLE 5
INVENTORIES
5.1 Periodic Inventories. Notice and Representations. At reasonable
intervals, inventories shall be taken by the Manager, which shall include all
such Material as is ordinarily considered controllable by operators of mining
properties and the expense of conducting such periodic inventories shall be
charged to the Joint Account. The Manager shall give written notice to the
Participants of its intent to take any inventory at least thirty (30) days
before such inventory is scheduled to take place. A Participant shall be
deemed to have accepted the results of any inventory taken by the Manager if
the Participant fails to be represented at such inventory.
5.2 Reconciliation and Adjustment of Inventories. Reconciliation of
inventory with charges to the Joint Account shall be made, and a list of
coverages and shortages shall be furnished to the Management Committee within
two (2) months after the inventory is taken. Inventory adjustments shall be
made by the Manager to the Joint Account for coverages and shortages, but the
Manager shall be held accountable to the Venture only for shortages due to lack
of reasonable diligence.
ARTICLE 6
AUDITS
Unless otherwise mutually agreed to by the Participants, an audit of the
financial affairs of the Joint Venture shall be conducted at least once in each
year by one or more firms of chartered or certified public accountants selected
and engaged by the Manager to audit financial statements of the Joint Venture
under both the United States and Canadian generally accepted accounting
principles and, if required by law, under French generally accepted accounting
principles. The cost of such audits or any audit that is required by the law
applicable to the Manager shall, only to the extent that it is related to the
Joint Venture, be chargeable to a Joint Venture Account as a Joint Venture
expense. Copies of audit reports shall be provided to the Participants.
47
EXHIBIT III
FEASIBILITY STUDY
"FEASIBILITY STUDY" means a detailed report, and the work required to prepare
such report, showing the feasibility of placing any part of the Property into
production and demonstrates a positive net present value using a reasonable
rate of return on invested capital, in such form and detail and using such
assumptions as to metal prices as are customarily required by institutional
lenders of major financing for mining projects, and shall include a reasonable
assessment of the minable ore reserves and their amenability to metallurgical
treatment, a complete description of the work, equipment and supplies required
to bring such part of the Property into production and the estimated cost
thereof, a description of the mining methods to be employed and a financial
appraisal of the proposed operations including without limitation the
following:
(a) a description of that part of the Property to be covered by the
proposed mine;
(b) the estimated recoverable reserves of minerals and the estimated
composition and content thereof;
(c) the proposed procedure for Development, Mining and Production;
(d) ore amenability tests (if any) and the results thereof;
(e) the nature and extent of the facilities proposed to be acquired which
may include mill facilities, if the size, extent and location of the
ore body makes such mill facilities feasible, in which event the study
shall also include a preliminary design for such mill;
(f) the total costs, including capital budget, which are reasonably
required to purchase, construct and install all structures, machinery
and equipment required for the proposed mine, including a schedule of
timing of such requirements;
(g) all environmental impact studies and costs;
(h) the period in which it is proposed the Property shall be brought into
production;
(i) such other data and information as are reasonably necessary to
substantiate the existence of a Primary Deposit of sufficient size and
grade to justify development of a mine, taking into account all
relevant business, tax and other economic considerations; and
(j) working capital requirements for the initial four-month operations of
the Property as a mine or such longer period as may be reasonably
justified in the circumstances.
Feasibility work begins when exploration drilling and related activities have
established the presence, size, and grade of a mineral resource to the extent
that economic extraction is thought possible. Feasibility work consists of
fill-in drilling for mine planning and scheduling, bulk metallurgical sampling
and testing, and the various related activities and studies included but not
limited to (a) through (j) above.
48
EXHIBIT IV
NET PROCEEDS CALCULATION
1. Income and Expenses. Net Proceeds shall be calculated by deducting from
the gross revenue realized (or deemed to be realized) from the sale (or deemed
sale) of Products, such costs and expenses attributable to Exploration,
Development, Mining, and the marketing of Products as would be deductible under
generally accepted accounting principles and practices consistently applied as
employed by the Manager of the Property, including without limitation:
(a) all costs and expenses of replacing, expanding, modifying, altering or
changing from time to time the Mining facilities. Costs and expenses
of improvements (such as haulage ways or mill facilities) that are
also used in connection with workings other than the Properties shall
be charged to the Properties only in the proportion that their use in
connection with the Properties bears to their total use;
(b) ad valorem real property and unsecured personal property taxes, and
all taxes, other than income taxes, applicable to Mining of the
Property, including without limitation all state mining taxes, sales
taxes, severance taxes, royalties, license fees and governmental
levies of a similar nature:
(c) allowance for overhead and/or administrative charges in accordance
with the Accounting Procedure;
(d) all expenses incurred relative to the sale of Products, including an
allowance for commission at rates which are normal and customary in
the industry;
(e) all amounts payable to the Manager of the Property during Mining
pursuant to any applicable operating or similar agreement in force
with respect thereto;
(f) the actual cost of investment prior to beginning of Mining which shall
include all expenditures for Exploration and Development of the
Property incurred by the nonwithdrawing Participant subsequent to the
withdrawing Participant acquiring a Net Proceeds interest;
(g) actual interest paid on monies borrowed for costs and expenses and
with respect to monies advanced for operating costs and expenses and
working capital, interest at an annual rate equal to 2 percentage
points above the Taux Interbancaire Offert in Paris ("TIOP"), but in
no event in excess of the maximum permitted by law;
(h) an allowance for reasonable working capital and inventory;
(i) reasonably anticipated reclamation costs.
It is intended that each Participant shall recoup pro rata from net cash flow
all of its contributions for Exploration, Development, Mining, and marketing
Products before any Net Proceeds are distributed to any person holding a Net
Proceeds interest. No deduction shall be made for income taxes, depreciation,
amortization or depletion. If in any year after the beginning of Mining of the
Property an operating loss relative thereto is incurred, the amount thereof
shall be considered as and be included with outstanding costs and expenses and
carried forward in determining Net Proceeds for subsequent periods. If
Products are taken in kind by a Participant, or are processed by the Manager of
the
49
Property, or are sold to an Affiliate of the Manager, then, for purposes of
calculating Net Proceeds, such Products shall be deemed conclusively to have
been sold at a price equal to fair market value to arm's length purchasers FOB
the concentrator for the Property or such Products, as the case may be, and Net
Proceeds relative thereto shall be calculated without reference to any profits
or losses attributable to smelting or refining.
2. Payment of Net Proceeds. Payments of Net Proceeds shall commence in the
calendar quarter next following the calendar quarter in which Net Proceeds are
first realized, and shall be made 45 days following the end of each calendar
quarter during which Net Proceeds are realized, and shall be subject to
adjustment, if required, at the end of each calendar year. The recipient of
such Net Proceeds payments shall have the right to audit such payments within
the time and in the manner provided in Article 6 of Exhibit II of the
Agreement.
3. Definitions. All capitalized words and terms used herein have the same
meaning as in the Agreement to which this Exhibit IV is attached.
50
EXHIBIT V
ORGANIZATION OF AN OPERATING ENTITY
1. OPERATING ENTITY
The parties acknowledge that at any time after the date of this Agreement they
may determine it would be advantageous to form a corporation and cause it to
become the owner and operator of the Primary Deposit(s) to be developed on the
Property (the "Operating Entity"). If ASARCO and SOTRAPMAG agree that an
Operating Entity should be formed, the respective Participating Interests of
the Participants in an Operating Entity shall be equal to their then respective
Participating Interest in the applicable Joint Venture. SOTRAPMAG and ASARCO
and LA SOURCE agree that upon the formation of the Operating Entity their
relationship as joint venturers as to the Primary Deposit(s) being developed by
the Operating Entity shall cease and shall be that of shareholders in the
Operating Entity.
2. FURTHER ASSURANCES
If a decision is made to form an Operating Entity the Participants will
negotiate in good faith the terms for such further agreements, conveyances and
assurances as may be required for such purposes and to effectually carry out
the intent of the Agreement as a result of the formation of the Operating
Entity. The Participants further acknowledge and agree that they will have a
community of interest in respect to their shareholdings in the Operating Entity
and will take all reasonable steps required to ensure that the Manager under
this Joint Venture has management control over all Operations of the Operating
Entity.
3. SHAREHOLDERS AGREEMENT
The Participants acknowledge that many of the provisions of the Agreement would
be inapplicable upon the formation of the Operating Entity and should be
replaced by comparable provisions in a shareholders' agreement. The
Participants acknowledge and agree to negotiate in good faith to reach
agreement on all the terms and conditions of a shareholders' agreement which
will reflect as closely as practicable the rights, duties and obligations of
the parties set out in the substantive provisions of the Agreement and in
particular, they agree in principle that the Shareholders' Agreement should
provide for the following:
(a) no shareholder shall hold a direct beneficial interest in and to the
Property but shall hold an indirect interest in the Property and
Assets through their respective shareholdings in the Operating Entity
(but this shall not prohibit a shareholder from holding any legal
title as a bare trustee or nominee for the Operating Entity);
(b) the respective Participating Interests of each Participant shall be
transferred to the Operating Entity forthwith upon the formation
thereof in consideration of shares of the Operating Entity;
(c) subject to any agreement the parties may make with respect to
financing generally or with respect to financing Development or Mining
Operations of the Operating Entity (including seeking financing by
third-party debt as determined by the directors of the Operating
Entity), the Participants as shareholders shall be required to fund
the Adopted on Programs and Budgets of the Operating Entity and if any
shareholder fails to contribute its pro rata share the provisions of
the Agreement in respect of reductions and adjustments of
Participating Interests shall apply, mutatis mutandis;
51
(d) the functions of a Management Committee will be performed by the board
of directors of the Operating Entity;
(e) the directors of the Operating Entity shall be the nominees of the
shareholders and the constitution of the board of directors shall at
all times reflect on a pro rata basis, as closely as possible, the
shareholdings of the shareholders of the Operating Entity; provided
however that so long as a person holds at least 20% of the shares in
the Operating Entity it shall be entitled to at least one
representative on the board of directors.
(f) the net revenue of the Operating Entity shall be distributed to
the shareholders by way of dividend, including dividends in specie in
the form of Product subject to applicable law. The policy of the
board of directors of the Operating Entity will be to maximize the
payment of dividends while maintaining adequate working capital,
sufficient funds to carry out exploration and development of the
Property and for the benefit of any Mine, and reserve, if deemed
necessary, for additional capital expenditures.
The Participants acknowledge and agree that it is impracticable to provide in
this Appendix for all possible situations, circumstances and contingencies that
may exist or arise in respect of and following the formation of an Operating
Entity, and covenant and agree to use their reasonable efforts in good faith to
act in concert as shareholders in the Operating Entity and otherwise in
relation to an Operating Entity, and to do all other things reasonably
necessary to ensure that the aims and objectives of the Joint Venture and the
operation of the Agreement survive the formation of an Operating Entity.
52
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 10/25/99 | | 1 |
| Filed on: | | 3/31/97 | | | | | | | 10-Q |
| For Period End: | | 12/31/96 |
| | 6/26/96 | | 1 |
| | 6/4/96 | | 38 |
| | 12/31/95 | | 3 |
| | 12/29/95 | | 3 |
| | 12/27/95 | | 3 |
| | 1/1/95 | | 15 |
| | 9/26/94 | | 4 | | 5 |
| | 3/25/94 | | 3 |
| List all Filings |
↑Top
Filing Submission 0000950134-97-002542 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Mon., Apr. 29, 9:44:53.1am ET 