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REPUBLIC OF LIBERIA)
MONTSERRADO COUNTY)
RESTATED AND AMENDED
MINERAL DEVELOPMENT
AGREEMENT
BETWEEN
THE REPUBLIC OF LIBERIA
AND
BEA MOUNTAIN MINING
CORPORATION
4
TABLE OF CONTENTS
SECTION 1: DEFINITIONS......................,.....................................................................................2
1.1 "Affiliate"...............................................................................................................................2
1.2 "Agreement"........'.......................................................'.............................................................2
1.3 "Associates".............................................................................................................................2
1.4 "Class A Mining License"...................................................:......................................................2
1.5 "Company"......................................................................-.......................................................2
1.6 "Contract Area".......................................................... 3
1.7 "Contract Year"............................ 3
1.8 "Dependent"..................................................... 3
1.9 "Development"............. 3
1.10 "Development Plan"........................................................................■■........................................3
1.11 "Dollar" and/or "US$"..............................................................................................................3
1.12 "Effective Date".......................................................................................................................3
1.13 "Exploration".......................... 3
1.14 "Exploration Area"...................................................................................................................3
1.15 "Exploration License"...............................................................................................................3
1.16 "Extended Term".....................................................................................................................3
1.17 "Feasibility Report"................... 3
1.18 "Financial Year"............................................................................. 3
1.19 "Foreign Currency"....................................................... 3
1.20 "Gold"....*......... 4
1.21 "Government".......................................... 4
1.22 "Infrastructure" .......................................................................................................................4
1.23 "IFRS".......................................................................................................................................5
1.24 "International Standards"........................................................................................................5
1.25 "Law"................ 5
1.26 "Mine".....................................................................................................................................5
1.27 "Mineral".................................................................................................................................5
1.28 "Mining Law"... 5
1.29 "Mining License' 5
1.30 "Mining Plant".. 5
1,31- "Minister^.....,.., i nvtvk 5
1.32 "Ministry"......... 5 .
1.33 "Notice"........:...
1.34 ''Operations"............:...................................
1.35 "Original Agreement"...................................
1.36 "Original Term"............................................
1.37 "Party".........................................................
1.38 "Person"..................................:...................
1.39 "Pre-Feasibility Report".................................
1.40 "Prevailing Market Rate of Exchange"..........
1.41 "Probable Mineral Reserve"........................
1.42 "Production"................................................
1.43 "Production Area".........................................
1.44 "Proven Mineral Reserve".............................
1.45 "Qualified Person"........................................
1.46 "Revenue Code"............................................
1.47 "Selected CR1RSCO Code"..............................
1.48 "Taxes and Duties"........................................
1.49 Included Words............................................
1.50 Headings.......................................................
1.51 References.....................................................
1.52 Severability....................................................
SECTION 2: EFFECTIVE DATE................................
SECTION 3: TERM OF THE AGREEMENT..............
3.1 Original Term.................................................
3.2 Extended Term...............................................
SECTION 4: EXPLORATION LICENSE AND AREA
4.1 Exploration License.........................................
4.2 Exploration Area.............................................
4.3 Surrender of Exploration Area..................................;........... 9
4.4 Retention of Exploration Area....................................... 10
4.5 Surrender Right.................................................................... 10
7 4.6 - Gredlt Areas., irnnnrr....-..*-."...................
4.7 Minimum Size................................................. ..10
4.8 Right to Purchase Samples....................................;............... ..10
4.9 Pilot Mining Operations........................................................ .11
4.10 Right to Additional Areas....................................................... .11
4.11 Dealership License................................................................ .11
SECTION 5: EXPLORATION WORK PROGRAMS......................... .12
5.1 Commencement................................................................... .12
5.2 Minimum Expenditure.......................................................... .12
5.3 Operation Reports, Records and Inspection........................... .12
SECTION 6: CLASS A MINING LICENSE AND AREA.................... .13
6.1 Class A Mining License............................................................ .13
6.2 Production Areas.................................................................... 13
6.3 Government Mineral Appraisal Office.................................... 14
6.4 Pre-Feasibility Report and Feasibility Report.......................... 14
6.5 Term of the Class A Mining License........................................ 19
6.6 Surrender of Production Area................................................. 19
6.7 Reports to the Central Bank of Liberia.................................... 19
6.8 Class B and C Mining Licenses.................................................. .19
SECTION 7: CONFIDENTIALITY...................................................... .20
7.1 Confidential Information......................................................... .20
7.2 Public Information................................................................... .20
SECTION 8: PRODUCTION WORK PROGRAMS...........:................. .20
SECTION 9: CONDUCT OF CONSTRUCTION AND OPERATIONS ,20
9.1 Conduct of Operations............................................................ 20
9.2 Construction and Mineral Production....................................... 20
9.3 Mining Term Operations.......................................................... 20
9.4 Recovery Shortfalls.................................................................. 22
9.5 Company Reporting Requirements...........................................
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SECTION 10: LAND AND FACILITIES..................,......................-..............................................25
10.1 Public Land................................-................................................................................25
10.2 Private Land..........................................................................................25
-103 Umitation on-Exploration and Production. 26
10.4 Facilities................................................................................................................................. 26
10.5 Communications Facilities, Systems and Frequencies..................:................................ ...... 27
SECTION 11: HEALTH AND SAFETY..............................................................................................28
11.1 Health, Safety Procedures and Notifications........................................................................28
11.2 Security...................................................................................................................................28
11.3 Sanitation...............................................................................................................................29
11.4 Water Supply; Clean and Safe Drinking Water......,.................................................................29
11.5 Employee Housing.................................................................................................................30
SECTION 12: HEALTH CARE AND EDUCATION..........................................................................30
12.1 Healthcare............................................................................................................................30
12.2 Education...............................................................................................................................31
SECTION 13: EMPLOYMENT, SECONDMENT AND TRAINING...................................................31
13.1 Employment................................................ 31
13.2 Secondment..................................................................... 32
13.3 Training of Liberians...............................................................................................................32
13.4 Project Linkages Plan..............................................................................................................33
SECTION 14: USE OF LIBERIAN SERVICES AND MATERIALS...................................................33
SECTION 15: COMMUNITY RESOURCES.......................................................................................35
15.1 Community Development Fund..............................................................................................35
SECTION 16: ENVIRONMENTAL PROTECTION AND MANAGEMENT......................................36
16.1 Environmental Impact Statement............. ...36
16.2 Damage and Restoration..................................................................................... ....36
16.3 Plans......................................................................................................................................37
SECTION 17: TECHNICAL. COMMITTEE..........................................................................................37
17.1 Formation........................ 37
17.2 Costs......................................................................................................................................37
17.3 Functions......................................................... 37
SECTION 18: UNDERTAKINGS OF THE GOVERNMENT..............................................................37^,
18.1 Access to Information. 37
18.2 Provision of Documents.......................................
18.3 Use of Aircraft..........................................................
.- - -18:4- -Use-ofAirpqrts-and-Ports.. ......;h.:„......
18.5 Electricity Generation and Transmission..................
18.6 Issuance of Necessary Authorization.......
18.7 Protection Against Nationalization or Expropriation.
18.8 Peace Enjoyment............;..................................;....
18.9 Non-Derogation.......................................................
18.10 Most Favorable Treatment...................................
SECTION 19: INDEMNIFICATION.....................................
19.1 Indemnification for Breach of Agreement..................
19.2 Company's Indemnification of the Government.......
19.3 Government's Indemnification of the Company......
SECTION 20: BOOKS AND RECORDS...:...'........................
20.1 Books and Records...................................................
20.2 Adequate Capital......................................................
20.3 Provision of Funds....................................................
20.4 Guarantee.................................,................................
20.5 I nsurance..........................................................................
SECTION 21: INCOME TAXATION..................-................
21.2 Rate and Basis. .........................................
21.3 Carry Forward Permitted...........................
21.4 Additional Deductions...............................
21.5 Computation of Taxable Income in Dollars.
SECTION 22: ROYALTIES...................................
22.1 Royalty Rate......................
22.2 Royalty Basis.......................
22.3 Payment.............................
SECTION 23: SURFACE RENTAL
23.1 Contract Area.....................
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1)
23.2 Payment.................................................................j...............................................................43
SECTION 24: OTHER PAYMENTS TO THE GOVERNMENT..............................I..:........................43
24.1 Import Duties and Excise Taxes...........................................................^..................................48
-r.24.2 O ihcr Pay. me fits. ..i.... ............. ...... ............---... ---........ 4 8 - ■
. 24.3 Exemption From Other Taxes and Duties.................................../..................I..;..................1...49
24.4 Non-Application of Section 24.3. The provisions of Section 24.3 shall not apply, however, to
the Associates of the Company with respect to the following:...........................................................49
, SECTION 25: FINANCIAL REPORTING AND CURRENCY....................................................50
25.1 Accounting..............................................:..............................................................................50
25.2 Exchange Control...................................................................................................................50
25.3 Currency of Payment..............................................................................................................51
25.4 Right to Remit and Receive Payments....................................................................................51
25.5 Audit......................................................................................................................................51
SECTION 26: INCIDENTAL RIGHTS................................................................................................52
26.1 Use of Resources.................................................................................................................... 52
26.2 Imports..................................................................................................................................52
26.3 Taxes on Resale........................................................................................................ 52
SECTION 27: ASSIGNMENT AND ENCUMBRANCE......................................................................53
27.1 Right of Assignment...............................................................................................................53
27.2 Right to Encumber.................................................................................................................53
27.3 Notice of Assignment or Encumbrance......................................................................:............53
SECTION 28: TERMINATION...........................................................................................................53
28.1 Termination by the Company...................................................................... 53
28.2 Termination by the Government............................................................... 53
28.3 Opportunity to Cure...............................................................................................................54
28.4 Disputes Regarding Events of Default................................... 55
28.5 Winding-up Commission.............. 55
SECTION 29: DISPOSITION OF ASSETS.........................................................................................56
29.1 Immovable Assets......................... 56
29.2 Movable Assets.................................... 56
29.3 Removal of Movable Assets.......................................................... 56
29.4 Financing Operations............................................... 56
»
SECTION 30: ARBITRATION..........................................................................................-..................57
30.1 Submission of Arbitration.......................................................................................................57
30.2 Arbitrators..............;...........................:.........................................................................58
30.3 “Venue......................................■..---.............---58
30.4 Waiver of Sovereign Immunity.............................................................................58
30.5 Reservation of Rights.! ..............................: ---............................58
SECTION 31: NOTICES... ...................- ...............................................................................58
31.1 Written Communication............................,...........................................................................58
31.2 Delivery................................................................................*.................................................58
31.3 Address................................ ,59
31.4 Copies of Communication......................................................................................................59
31.5 Change of Address.................................................................................................................59
SECTION 32: FORCE MAJEURE............................-........................................................................60
32.1 Application.............................................................................................................................60
32.2 Definition.................................................. 60
32.3 No Required Settlement........................................................................................................- 60
SECTION 33: LIBERIAN PARTICIPATION IN OWNERSHIP..........................................................61
33.1 Government Ownership of Equity................................................................................. 61
33.2 Liberian Participation in Equity................................................ 61
SECTION 34: GOVERNING LAW.....................................................................................................61
SECTION 35: ENTIRE AGREEMENT - MODIFICATIONS...............................................................61
35.1 Entire Agreement...................................................................................................................61
35.2 Amendment.......................................................-...................................................................61
SECTION 36: PERIODIC REVIEW.....................................................................................................62
36.1 Modification and Review........................................................................................................ 62
36.2 Good Faith.............................................................................................................................62
SECTION 37: NON-WAIVER OF RIGHTS.........................................................................................62
SECTION 38: SUCCESSION...............................................................................................................62
SECTION 39: SURVIVAL PROVISION..............................................................................................62
I Q
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THIS Mineral Development Agreement, (the “AGREEMENT”), made and entered into this 7th
day of September, 2013, by and between the Government of the Republic of Liberia, represented
by the Minister of Lands, Mines and Energy, Hon. Patrick Sendolo; Minister of Finance, Hon.
Amara M. Konneh; and Chairman of the National. Investment Commission, Hon. O. Natty B.
DavisII. and.attestedrtaJjy the.Minister.pf Justice and Attorney General, H<>n. Christiana P..Tah
(herein referred to as the “GOVERNMENT”); and Bea Mountain Mining Corporation, a
corporation organized and existing under the laws of the Republic of Liberia, (herein referred to
as the “COMPANY”), represented by and through Chairman of the Board, Mr. David Reading;
and its General Manager, Debar W. Allen, together the “Parties.”
WITNESSETH:
WHEREAS, title to Minerals within the territory of the Republic of Liberia is vested in
the Republic of Liberia (the “Republic” or “Liberia”) and all rights related to the exploration for
and exploitation of such minerals pertain exclusively to the Republic; And
WHEREAS, die Ministry of Lands, Mines & Energy is by Law charged with the
responsibility of administering the mineral laws of the Republic and in that process to ensure the
efficient development of the mining industry; And
WHEREAS, the Government is determined to accelerate the development of the mining
industry of Liberia, and therefore desires to promote the exploration for and development and
production of minerals in the Republic for the economic and social benefit of Liberia and
recognizes that a large capital expenditure is necessary to ensure that such minerals are
economically and efficiently developed; And
WHEREAS, on November 28, 2001, the Government entered into a Mineral
Development Agreement (the “Original Agreement”) with the Company, pursuant to which the
Company was granted the right, power and authority to engage in exploration for and
development and production of minerals of the Bea Mountain in Grand Cape Mount County;
And
WHEREAS, the Original Agreement was not submitted to the National Legislature for
ratification; And
WHEREAS, the Company has requested the Government to amend the Original
Agreement so as to provide for a stabilization period, harmonization of the fiscal provisions
consistent with the Revenue Code, and certain tax incentives; And
WHEREAS, the Government is also proposing changes to some provisions of the MDA
including the following; Section 3 on the Terms of the Agreement; Section 4 on Exploration
License Area; Section 10 on Land and Facilities; Section 12 on Health Care and Education;
Section 13 on Employment, Secondment and Training; Section 15 on Community Resources;
Section 16 on Environmental Protection and Management; Section 24 on Other Payments to the
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Government; Section 27 on Assignment and Encumbrance;- Section 30 on Arbitration; and
Section 32 on Force Majeure; And
WHEREAS, the amendments proposed by the Parties are consistent with Section 35 of
. the .Original Agreement, which provides.that the agreement-shall subject to periodic review
once every five years in light of any substantial changes .in the circumstances which may have
occurred during the previous five years; And . , ;
WHEREAS, no review of the Original Agreement has taken place since it was made
and entered into on November 28, 2001, thus making the review contemplated a requirement in
light of Section 35 of the Original Agreement and the interest of the Parties; And
WHEREAS, The Parties have determined that since the Original Agreement was never
ratified, it would be prudent to restate and amend the said MDA so that the terms of the entire
agreement and not only the amendments, would be ratified by the national Legislature; And
WHEREAS, following a series of negotiations and consultations, the Parties have agreed
to restate and amend the said Original Agreement to accommodate their respective proposals and
requests in light of substantial changes in the circumstances which have occurred over the past
12 years; And
WHEREAS, the Original Agreement provides under Section 34.2 that any modification
or amendment of any of the terms of the Original Agreement shall be by mutual written
agreement of the Parties thereto.
NOW, THEREFORE, and in consideration of their mutual obligations, promises, and
covenants, the Parties have mutually agreed to restate and amend the Original Agreement as
follows:
SECTION 1: DEFINITIONS
1.1 “Affiliate” means a Person that controls, is controlled by or is under common
control with the Company. For purposes of this section, control means the
possession, directly or indirectly, by one Person of more than fifty percent (50%)
of the equity of or voting power in another Person.
1.2 “Agreement” means this restated and amended agreement granting a mining
right to the Company and any amendments to it made pursuant to its terms as
well as all exhibits and appendices to it.
1.3 “Associates” means the Affiliates, shareholders, financiers and sub-contractors
(including suppliers of goods and services) of the Company and the directors,
officers, agents and employees of the Company and of any of the foregoing.
1.4 “Class A Mining License” has the meaning given in Section 6.1.
1.5 “Company” means Bea Mountain Mining Corp and any other Person to which.
2
pursuant to Section 27, it may assign all or. any part of its interest under this
Agreement.
1.6 . “Contract Area” means the Exploration Area and all Production areas.
1.7 ‘ “Contract Year” means a period of twelve (12) consecutive months according to
the Gregorian calendar starting on the Effective Date or on any .anniversary of
the Effective Date.
1.8 “Dependent" means a person registered as such with the Company and who is
the spouse or a child aged eighteen (18) years or younger of an employee of the
Company or a person determined to be a dependent by virtue of a legally
binding agreement of the Company such as a collective bargaining agreement,
provided however, that in the event any such spouse or minor child become an
employee of the Company, such person shall be treated as an employee rather
than a dependent during such period of employment.
1.9 “Development” means all preparation for the removal and recovery of Minerals,
including the construction or installation of a mill or any other improvements to
be used for the mining, handling, milling, beneficiation or other processing of
Minerals.
1.10 “Development Plan” has the meaning given to it in Section 6.4(b)(2)(iv).
1.11 “Dollar” and/or “US$” means the lawful currency of the United States of
America.
1.12 “Effective Date” means, in respect of this Agreement, the date of the last to
occur of the following events: (1) attestation of the Agreement by the Minister of
Justice of the Republic of Liberia; (ii) Ratification of the Agreement by the
National Legislature; (iii) approval into law by the President of the Republic of
Liberia; and (iv) printing of the law into hand bills.
1.13 “Exploration” means activities directed toward ascertaining the existence,
location, quantity, quality or commercial value of deposits of Minerals.
1.14 “Exploration Area” means the area mentioned in and subject to Section 4.2.
1.15 “Exploration License” has the meaning given in Section 4.1.
1.16 “Extended Term” has the meaning given in Section 3.2.
1.17 “Feasibility Report” has the meaning given in Section 6.4.
1.18 “Financial Year” means January 1 through December 31} or such other period as
the Parties may agree.
1.19
‘Foreign Currency” means Dollars and any other currency except currency that
Is legal tender in Liberia.
1.20 “Gold” means a dense, inert, bright yellow element (atomic number 79) that is a
highly malleable and ductile metal, occurring in rocks and alluvial deposits; and
. _ any other minerals mined and/or recovered as a result of the extraction and
processing of the gold.
1.21 “Government” means the Republic of Liberia, its government, and all political
subdivisions, branches, divisions, instrumentalities, authorities and agencies
thereof.
1.22 “Infrastructure” means the following:
a. Immovable transportation and communication facilities (including roads,
bridges, railroads, airports, landing strips and landing pads for aircraft, hangers
and other airport facilities, garages, channels, tramways, pipelines and radio,
telephone, telegraph, telecommunications, and electronic or other forms of
communications facilities);
b. Immovable port facilities (including docks, harbors, piers, jetties, breakwaters,
terminal tacilities and warehouses, and loading and unloading facilities);
c. Immovable power, water and sewerage facilities (including electrical
generating plants and transmission lines, dams, water drains, water supply
systems and systems for disposing of tailings, plant waste and sewage);
d. Immovable public welfare facilities (including schools, hospitals and public
halls);
e. Miscellaneous immovable facilities used primarily in connection with the
operation of any of the foregoing (including offices, machine shops, foundries,
repair shops and warehouses);
f. Other immovable facilities used primarily in connection with or as an incident
to Operations; and
g. Movable facilities and equipment used as an integral part of the immovable
facilities described in paragraphs (a) through (i) above.
For purposes of this Agreement, immovable items include all tangible items
that are securely affixed and attached to the land or to buildings or other
structures on the land. All other items shall be movable items.
1
1.23 “IFRS” means generally accepted accounting principles as reflected in
International Financial Reporiing Standards as published from time to time by
the.International Accounting Standards Board.
: 1 ^ “International. Standards” means generally accepted world mining industry
standards and procedures, due allowance being made for any special
circumstances.
1.25 “Law” means any constitution, law, statute, decree, rule, regulation, judicial act
or decision, judgment, order, proclamation, directive, executive order dr
sovereign act of the Government other than this Agreement.
1.26 “Mine” means any mining and/or extraction facility within the Contract Area.
1.27 “Mineral” means a naturally occurring, non-living substance having a definite
chemical composition and physical characteristics and having economic value,
but excluding oil, gas, coal and geothermal resources. For the avoidance of
doubt and for the purposes of this Agreement, the term shall refer exclusively to
Gold.
1.28 “Mining Law” means the Minerals and Mining Law 2000 Part I of Title 23 of
the Liberian Code of Law Revised, as from time to time amended, supplemented
or modified.
1.29 “Mining License” means any license granted in accordance with Section 6.
1.30 “Mining Plant” means any production plant or facility located within the
Contract Area.
1.31 “Minister” means the Minister of Lands, Mines & Energy of the Republic and
his or her successors.
1.32 “Ministry” means the Ministry of Lands, Mines and Energy of Liberia and any
other ministry, department or agency of Liberia that succeeds to its
responsibilities of supervising the undertaking of Mineral exploration and
mining activities in Liberia.
1.33 “Notice” means notice given pursuant to Section 30.
1.34 “Operations” means all activities and transactions conducted by or on behalf of
the Company with respect to, under or incidental to this Agreement including
Exploration, Development and Production, restoration and remediation, and the
financing of any of the foregoing.
1.35 “Original Agreement” means the Mineral Development Agreement entered into
on November 28, 2001 between the Republic of Liberia, represented by and
through the Minister of Finance; the Minister of Lands, Mines and Energy; the
Chairman of the National Investment Commission; and attested to by the
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Minister of Justice and Attorney General and approved by the President of the
Republic of Liberia, and Bea Mountain Mining Corporation represented by its
Co-Chairman.
-4,36-“Originaf-Terro” has tJ>e-meaning.-given to it in Section 3.1 '• .
L37 “Party” means either the Government or the Company and, in the plural forms,
both the Government and the Company (and any permitted assignee of the
Company).
1.33 “Person” means any individual, partnership, limited liability company, joint
venture, association, corporation, trust, estate, unincorporated or other entity,
government or state and any branch, division, political subdivision,
instrumentality, authority or agency of any government or state.
1.39 “Pre-Feasibility Report” means the report described in Section 6.4(a)(1).
1.40 “Prevailing Market Rate of Exchange” means the predominant rate, expressed in
Dollars, at which willing sellers and willing buyers, acting at arm’s length and in
the ordinary course of business, purchase or sell, or agree to purchase or sell,
currency of another nation.
1.41 “Probable Mineral Reserve” has the meaning given in and is to be determined as
prescribed in the Selected CRIRSCO Code.
1.42 “Production” means the commercial exploitation of Minerals found in the
Contract Area and all other activities incidental thereto including the design,
construction, installation, fabrication, operation, maintenance and repair of
Infrastructure, facilities and equipment and the mining, excavation, extraction,
recovery, handling, beneficiation, processing, milling, stockpiling,
transportation, export and sale of Minerals.
1.43 “Production Area” means an area selected as such by the Company pursuant to
Section 6.2.
1.44 “Proven Mineral Reserve” has the meaning given in and is to be determined as
prescribed in the Selected CRIRSCO Code.
1.45 “Qualified Person” means an individual who is an engineer or geoscientist with
at least five years of experience in mineral exploration, mine development or
operation or mineral project assessment, or any combination of these; has
experience relevant to the subject matter of the mineral project and the technical
report; and is a member or licensee in good standing of a professional
association.
1.46 “Revenue Code” means the Revenue Code of Liberia of 2000 and the
Consolidated Tax Amendment Act 2010 and the regulations made thereunder, all
as from time to time modified, amended or supplemented, except as expressly ,
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provided herein.
1.47 “Selected CRIRSCO Code” means a Committee for Mineral Reserves
International Reporting Standards (CRIRSCO) recognized mineral evaluation
____ • L . code such as JORC_or SAMREC agreed upon by the Parties, as from time to.-,.-
time in effect. Initially, the Selected CRIRSCO Code is NI 43-101, as from time
to time in effect. If the Selected CRIRSCO Code is no longer in effect or no
longer defines a term defined herein by reference to it, the Parties will agree on a
CRIRSCO-compliant replacement code or if none exist a functionally and
substantively similar replacement code.
1.48 “Taxes and Duties” means any and all direct and indirect income, profit, gains,
capital gains, corporation, net worth, sales, transaction, payroll, import, export,
customs, consul, inspection, value added, consumption, supply, use, turnover,
severance, stumpage, cash flow, rental, land rental, surface rental, property,
stamp and other taxes, duties, fees, levies, excises, rates, charges, imposts,
surcharges, royalties and other Government imposed revenue payments of
whatever nature and however called and whether similar or dissimilar to the
foregoing.
1.49 Included Words. This Agreement shall be read with such changes in gender or
number as the context shall require.
1.50 Headings. The headings to the clauses and sections of this Agreement are
inserted for convenience only and shall not affect the construction hereof.
1.51 References. Unless otherwise stated, a reference herein to a numbered or
lettered section or appendix refers to the section or appendix bearing that
number or letter in this Agreement. A reference to “this Agreement,” “hereof,”
“hereunder,” “herein,” or words of similar meaning, means this Agreement,
including the appendices hereto, together with any amendments thereof. The
words “and” and “or” will include the conjunctive and disjunctive, as the context
may require or permit. The word “include” (and any variation) is used in an
illustrative sense rather than in a limiting sense.
1.52 Severability. If any provision of this Agreement is or shall become illegal,
invalid or unenforceable, in whole or in part, the remaining provisions shall
nevertheless be and remain valid and subsisting and the said remaining
provisions shall be construed as if this Agreement had been executed without the
illegal, invalid or unenforceable portion.
SECTION 2: EFFECTIVE DATE
This Agreement shall become binding on the Parties on the Effective Date as
stipulated in Section 1.11 of this Agreement.
SECTION 3: TERM OF THE AGREEMENT
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effective November 28, 2001 (the “Original Term”). Therefore, the Restated and
Amended Agreement shall commence on the Effective Date, and, subject to
Section 3.2 below, shall terminate on the thirteenth (13th) anniversary of the
3.2 Extended Term. ■ ' - • '
a. Notwithstanding the provisions of Section 3.1 above* the Company shall have
the right to extend the term of this Agreement for an additional term not
exceeding twenty7five (25) years (the “Extended Term”) based upon the
commercial value of the remaining deposit and upon providing the Government
with Notice, at least one year prior to the termination of the Original Term and
upon terms and conditions to be mutually agreed upon. Within ninety (90) days
after such Notice, the Company shall provide the Government with a Feasibility
Report which shall set forth the type and quantity of Minerals that are estimated
to exist in the Contract Area or any part thereof, and describe in reasonable
detail a proposed plan for the efficient and economic Production of such
Minerals (in accordance with International Standards and the provisions of this
Agreement), including a detailed description of the proposed mining and
processing methods, tire design, cost and.construction schedules for the
proposed facilities and equipment, the financing arrangements contemplated,
and the Company’s best estimate in good faith of the date upon which
Production of such Minerals will cease (the “Extended Date”), but not later than
25 years after the end of the Original Term.
b. Approval for the Extended Term through the Extended Date will be granted
upon terms and conditions to be mutually agreed upon and compliance of the
Feasibility Report with International Standards and the provisions of this
Agreement. The Government shall, in the event of any delay in or denial of
approval of a Feasibility Report, promptly give to the Company full details, in
Writing of its reasons for withholding or delaying approval. If the Parties
cannot agree on the Feasibility Report, then an independent consultant,
appointed by and agreeable to both Parties, will determine the appropriate
course of action. Should the Parties be unable to agree the choice of
independent consultant then the Parties agree to accept the recommendation of
the Chairman of the Canadian Institute of Mining, Metallurgy and Petroleum
for a suitable independent consultant.
SECTION 4: EXPLORATION LICENSE AND AREA
4.1 Exploration License.
a. By this Agreement and subject to its terms, the Government hereby grants to
the Company the exclusive right and license (the “Exploration License”) to
conduct exploration for Mineral on all public and .(subject to Section 10.2)
. r - private lands in the Contract Area and to conduct pilot mining operations
- -.....rtO'Section4r9rprovided that the Bea Mountains iron ore deposits do
not form part of this Agreement.
b. . On the Effective Date, the initial and extended term of the Exploration License
as stipulated in the Original Agreement, shall be deemed to have expired.
c. The Exploration License shall automatically terminate on the expiration of its
term and the Exploration Area shall thereupon be surrendered, unless renewed
in accordance with Section 5.3g of the Mining Law.
4.2 Exploration Area. The original Exploration Area is as shown on the map
attached as Appendix “A”, the coordinates of which are specified in Appendix
“B”.
4.3 Surrender of Exploration Area. Unless the Minister and the Company
otherwise agree and subject to the Company receiving full credit towards the
surrender requirement for all areas declared to be Production Areas pursuant to
Section 4.6 below:
a. that at, or before the end of the initial term of the Exploration License, the
Company may select the entire Exploration Area or any portion thereof as a
proposed Production Area;
b. that in the event the Company decides to apply for an extension of the
Exploration License, the Company shall be obliged to surrender a minimum of
fifty percent (50%) of the original Exploration Area at the end of the initial term
of the Exploration License.
c. That at or before the end of the extension period, the Company shall declare the
entire remaining area or any portion thereof as a proposed Production Area. In
the event the Company declares only a portion of the Exploration Area as
Production Areas, the remaining portion of the Exploration Area must be
surrendered to Government and the Exploration License shall then cease to
exist.
d. If the Company wishes to carry out additional Exploration within a proposed
Production Area it may do so for the Mineral covered by this Agreement
Regulations. No budget or annual expenditure requirements apply to such
. work, but all other provisions of the Exploration Regulations as to the manner
r ~.-^|jc^ying out such work and as to reporting the results of such work remain
applicable. Ekplofation may.continue within a,proposed Production Area for
the duration of this Agreement, in accordance-with the Exploration Regulations
and subject to all applicable fees.
e. If during Exploration, the Company discovers a mineral other than Gold, the
Company must immediately report such discovery to the Ministry. The
Ministry may allow the Company to sell such mineral or upon application, the
Company shall have the right to obtain an Exploration License for the mineral.
Prior to the sale of any mineral, the Company and the Minishy shall reach an
agreement defining the terms and conditions upon which Company will be
allowed to sell or otherwise dispose of such mineral. The failure of Company
to disclose the discovery of any mineral to the Ministry in accordance with this
Section 4.3, regardless of its commercial value, shall constitute an event of
default and the Government may invoke the provisions of Section 28.2.
4.4 Retention of Exploration Area. The Company may retain all or any part of the
Exploration Area by declaring the area it wishes to retain as a Production Area,
whether or not Minerals which the Company wishes to produce have been found
in that area. The Company shall make such declaration by written Notice to the
Government not more than sixty (60) days (or such additional days as the
Government may allow) after the expiration of the initial or any extended term
of the Exploration License.
4.5 Surrender Right. The Company shall have the right, upon giving the
Government sixty (60) days prior written Notice (or such lesser period of time as
the Government allows), at any time to surrender all or any part of the
Exploration Area and all such voluntary surrenders shall be credited towards the
mandatory surrenders specified in Section 4.3 above.
4.6 Credit for Production Areas. All Production Areas declared pursuant to
Sections 4.4 and 6.2 shall be fully credited towards and therefore reduce the size
of the mandatory surrenders specified in Section 4.3 above.
4.7 Minimum Size. Unless the Minister and the Company otherwise agree, or until
such time as the remaining Exploration Area is ten percent or less of the original
Exploration Area, each separate part of the Exploration Area surrendered shall
be not less than ten percent (10%) of the original Exploration Area as provided
in Section 4.3(b) and (c) herein.
4.8 Right to Purchase Samples. In connection with Exploration, the Company
may, with the consent of the Minister (which consent will not be unreasonably
withheld), purchase, in sample quantities for analysis, Minerals recovered from
* 10-
the Contract Area by other Persons and shall have the right to sell such Minerals
when no longer required for analysis. Upon any such sale by the Company, the
Company shall pay royalty on the value of such samples sold as provided in
Section 21. less any royalty or like payment paid or payable to the Government
:_by the vendor in connection with the sale of the samples to the Company.
4.9 Pilot Mining Operations. While the Exploration License remains in effect, the
Company shall have the further right to conduct pilot mining operations in the
Exploration Area. The provisions of Sections 21, 22, 23, and 24 shall apply, as
. appropriate, to the pilot mining operations and any income derived therefrom.
4.10 Right to. Additional Areas.
a. The Company shall have the right to add to the Contract Area as additional
Exploration Areas (the “Additional Areas”) unencumbered public land
requested by the Company that have a proven geological relationship to
adjoining Production Areas or into which extend geological trends from the
Contract Area or from the geographic boundaries of any Mineral body
discovered in the Contract Area. This additional area shall not exceed twenty
percent (20%) of the original Exploration Area granted.
b. On and from the date of such election or request by the Company pursuant to
Section 4.10(a) above, the Additional Areas shall become part of the Contract
Area, and the obligations of the Company under Section 22 shall be increased
pro rata temporis. Furthermore, the obligation of the Company under Section
5.2 shall also be increased pro rata temporis beginning in the Contract Year of
such election, provided that the Company shall not be required to fulfill such
increased obligation until the following Contract Year, and provided further
that the Company shall be deemed to have fulfilled its obligation under Section
5.2 in any Contract Year in which it has expended at least an aggregate amount
equivalent to US$1.40 per acre on any Exploration Pursuant to Section 5.2.
c. With respect to each separate area within the Additional Areas which may be
added to the Contract Area pursuant to this Section 4.10, the initial term of the
Exploration License grated for such area shall commence on the date that such
area becomes a part of the Contract Area and shall in all other respects be
governed by the terms of this Section 4.
4.11 Dealership License. By this Agreement, and subject to the payment of such
fees as may be required by Law, the Company is hereby granted the right but not
the obligation to acquire a dealership license to purchase Minerals within the
Contract Area, the Additional Areas and other areas adjacent to those areas
directly from third party miners for'export, sale or other lawful purposes. The
dealership license hereby granted the Company shall also entitle the Company to
purchase Minerals outside the Contract Area, the Additional Areas and areas
adjacent to those areas pursuant to Law.
Sz &XgJLQBApoti WORK PROGRAMS
5.1 Commencement. As of "the--Effective Date, the Exploration obligations
stipulated in the Original Agreement are deemed to -have -been fulfilled- The
Company may continue to conduct Exploration pursuant to a proposed-
Exploration Program and in compliance with the Exploration Regulations. The
Company shall revise the proposed Exploration Program hot later than sixty (60)
days after the end of each Contract Year to the extent necessary to take into
account changes in the proposed Exploration Program that the Company deems
appropriate in light of the prior year’s Exploration activity and results.
5.2 Minimum Expenditure.
Beginning on the Effective Date, all Exploration minimum expenditure
requirements shall be deemed to have been met. If the Company adds any
Additional Area to the Contract Area pursuant to Section 4.10 above, the Company
shall incur in connection with Exploration in that Additional Area, costs and
expenses of at least One Dollar and Forty United States Cents ($1.40) per acre of
Additional Area.
5.3 Operation Reports, Records and Inspection
The Company shall maintain at its principal office in Liberia, or at such other
offices as the Government may approve:
a. Copies of all maps, geological, mining or other earth science reports and
mineral analysis (together with all field data which support such reports or
data), production records, marketing reports and other data obtained or
compiled by the Company as a result of exploration and/or mining Operations
and activities. All information, data and material specified in this paragraph
shall be in a form suitable for reproduction, use or processing as the case may
be. The Company shall have the right to temporarily remove such samples and
other data from such location and (on prior notice to the Government) from
Liberia for the purpose of study and evaluation.
b. The Company shall keep the Government fully informed of all Operations and
activities, wherever conducted, and of its plans in respect thereof. The
Government shall have the right to monitor Exploration and Mining Operations
and activities from time to time and a reasonable number of Government
personnel may, upon prior Notice to the Company, at reasonable time and
subject to compliance with the Company’s security requirements, attend and
inspect Exploration and Mining Operations and activities conducted in Liberia.
V
c. Within thirty (30) days after the end of each calendar quarter, the Company
shall provide the Government with a report on all Exploration and Mining
Operations and activities for that calendar quarter, including financial reports
and.mineraJs^ recovered ami sold. Within ninety (90) days after the end of each
Financial Year, the Company shall furnish the Govemmentwith a report on all
Exploration and Mining Operations and activities for that Financial Year, -
including financial reports and minerals recovered and sold.
SECTION 6: CLASS A MINING LICENSE AND AREA
6.1 Class A Mining License. Upon receipt of Notice from the Company, during or
at the end of the Exploration period, of a discovery of exploitable deposits, the
Minister shall grant a Class A Mining License for the proposed Production Area
applied for subject to the following terms and conditions:
a. that the Company shall have successfully completed a proposed exploration
program and submitted to the Minister a detailed map and descriptive
statements on the boundaries and size for the deposits from which minerals
are to be extracted pursuant to Section 6.2(b) below.
b. that the Company shall have completed a Pre-Feasibility Report pursuant to
Section 6.4 below.
c. that the Minister shall have approved the Feasibility Report, and
d. that the Minister shall have been satisfied that the Company possesses the
appropriate technical skill and experience and the financial resources to carry
out mining Operations in keeping with the requirements of a Class A Mining
License.
e. The Parties acknowledge that the Company has been granted a Class A
Mining License dated 29th July 2009.
6.2 Production Areas.
a. Each Production Area shall consist of such part of tire Contracl Area as, in the
light of International Standards, and subject to Section 4.4, is reasonable, taking
into account the extent and nature of the Minerals found and the requirements
for efficient and economic Production of such Minerals and the conduct of
other Operations.
* 13 -
J
b. Subject to Sections 4.4 and 6.4, the Company, in order to select a Production
Area, shall submit to the Government a detailed map and descriptive statement
based on actual surveys which shall set forth the boundaries of the Production
Area which shall be identified by meters and bounds, and the boundaries and
sfzbofthe Mineral deposit or deposits’which the Company intends to produce.
The maps shall be of such scale and contain such detail, including geographical
and topographical information, as may reasonably be-necessary to identify
accurately the Production Area and the boundaries of the Mineral deposits.
c. Upon selection as such, a Production Area shall cease to form part of the
Exploration Area.
d. If During Production, the Company discovers a mineral other than Gold, the
Company must immediately report such discovery to the Ministry of Lands,
Mines and Energy. The Ministry of Lands, Mines and Energy may allow the
Company to sell minerals or upon application, the Company shall have the right
to obtain an Exploration License for the mineral. Prior to the sale or disposal of
any minerals, the Company and the Ministry of Lands, Mines and Energy shall
reach an agreement defining the terms and conditions upon which Company
will be allowed to sell or otherwise disposal of such minerals. The failure of
Company to disclose all a discovery of minerals shall constitute an event of
default and the Government may invoke the provisions of Section 28.2.
6.3 Government Mineral Appraisal Office. In the Production Area, a Government
Mineral Appraisal Office shall be established to facilitate the valuation of
Mineral commodities produced and/or intended for export.
6.4 Pre-Feasibility Report and Feasibility Report
a. Pre-Feasibility Report
(1) Within ninety (90) days after the submission of the map and
descriptive statement mentioned in Section 6.2(b) above and before
commencing Production in connection with a Production Area, the
Company shall submit a Pre-Feasibility Report to the Government.
The Pre-Feasibility Report shall describe, in reasonable detail, a
proposed plan for the efficient and economic Production (in
accordance with International Standards and the provisions of this
Agreement) of the Mineral deposits found, including a detailed
description of the proposed mining and processing methods, the
design, costs and construction schedules for the proposed facilities and
equipment and the marketing arrangements contemplated. The
14
the Pre-Feasibility Report and shall grant its approval if the Pre-
Feasibility Report, or any amendment made to it by the Company,
reasonably complies with International Standards and the provisions of
this Agreement. ' ■
{ (2) The Government shall, in the event of any delay in/or denial of
approval of a Pre-Feasibility Report, promptly give to the Company
full details, in writing, of its reasons for withholding or delaying
approval. If the Parties cannot agree on the Pre-Feasibility Report,
then an independent consultant, appointed by and agreeable to both
Parties, will determine the appropriate course of action. Should the
Parties be unable to agree the choice of independent consultant then
the Parties agree to accept the recommendation of the Chairman of the
Canadian Institute of Mining, Metallurgy and Petroleum for a suitable
independent consultant.
b. Feasibility Report
(1) Within thirty (30) months after the submission of the Pre-Feasibility
Report mentioned in Section 6.4(a) above (or such longer period as the
Minister may allow, not to exceed six (6) months), and before
commencing Production in connection with a Production Area, the
Company shall submit a Feasibility Report to the Government.
(2) The Feasibility Report for a Production Area shall comply with
applicable Law and International Standards, shall include the basic
technical and financial components described in this Section 6.4(b)
and shall also include the additional components set forth in Sections
6.4(c) through 6.4 (e):
(i) a description of the Mineral to be mined, the mining and
processing methods proposed to be used, and the quality of
the Mineral Produces) to be marketed;
(ii) a statement of the expected recovery rate for the Mineral to
be mined over the term of the Mining License and for the
output of the expected mineral produces);
(iii) a report of a Qualified Person setting forth his or her
conclusion as to the amount of Gold constituting the
Proven Mineral Reserves and Probable Mineral Reserves in
the Production Area, and the basis for such conclusion, in
the form required by the Selected CRIRSCO-compliant
code for the public reporting of mineral resources;
15
(iv) a development plan setting forth the basic design and
operating specifications for each proposed Mine and related
Mining Plant, Infrastructure and equipment (the
“Development Plan”), which shall, among other things,
1) implement the requirements of Section 6;
2) include maps at the scale required by the Ministry
setting forth the proposed location of each proposed
Mine and related Mining Plant and Infrastructure, and
any other activities or improvements described in
Section 6.7(e) or 11.6 of the Mining Law and, in the
case of each activity referred to in Section 6.7(e) or
Section 11.6(c), (e) or (f) of the Mining Law, setting
forth the capacity expected to be available for public
utilization, provided that activities described in Section
11.6(a) or 11.6(b) of the Mining Law must be limited to
those reasonably necessary for the implementation of
the Development Plan;
3) include a capital development plan (in reasonable
detail); and
4) include a proposed construction (or acquisition),
completion and commencement of Operations schedule
for each proposed Mine and all related Mining Plant,
Infrastructure and equipment proposed in the
Development Plan
(3) a plan for Operations (an “Operations Plan”) that sets forth the
Company’s plan for operating each proposed Mine and related Mining
Plant, Infrastructure and equipment, including a manpower
development plan setting forth expected human resource and staffing
requirements;
(4) The Operations Plan must also set forth the Company’s plan:
(i) to produce marketable Mineral of the quality
specified in the approved Feasibility Report, in an
amount equal to at least 85% of Mine design
capacity from each proposed Mine as specified in
the Feasibility Report over a 30-day period; and
(ii) to move an amount of Mineral equal to 30 days’
production at 85% of Mine design capacity from all
proposed Mines to the point of sale within a 30 day
per"'1
(5) The Feasibility Report shall include copies of the approved
Environmental and Social Impact Assessment (“ESIA”) and
Environmental and Social Management Plan (“ESMP”) and copies of
the Environmental Impact Assessment Permit granted by the EPA.
(6) The Feasibility Report shall include an opinion of the Feasibility
Consultant substantially to the effect that;
(7) the Company has the design, procurement and construction
management capacity necessary to implement the proposed
Development Plan, or has identified contractors with which it will
contract for the design, procurement and production of each proposed
Mine and related Mining Plant, Infrastructure and equipment that have
the capacity to carry out such activities;
(i) the Company has the management capacity to
operate each proposed Mine and related Mining
Plant, Infrastructure and equipment in accordance
with the proposed Operations Plan;
(ii) each proposed Mine and related Mining Plant, as
designed, will if constructed in accordance with the
designs and maintained in accordance with good
maintenance practices, support the planned
operating levels of such Mine for the period of time
planned to mine Mineral;
(iii) the geotechnical survey work done in connection
with locating all proposed Mining Plant and
Infrastructure is sufficient to support the conclusion
that the sites of such proposed Mining Plant and
Infrastructure are suitable for the construction and
operation of those facilities;
(iv) the ESIA done in connection with the proposed
siting of, and the subsequent Operations of, each
----------------ptroposocHVfirrermTd related Mining Plant,---~ -
Infrastructure and equipment was conducted in a
matter consistent with the World Bank/IFC
“Environmental Health and Safety Standards for
Mining”, applicable Law, and otherwise complies
with the requirements of Section 16;
(v) the design of each proposed Mine and related
accordance with contemporary best practice for the
design of mines and related facilities of similar size
and type and is appropriate for the climate and
geography of Liberia(x) to accommodate in, an
environmentally sound manner in accordance with
International Standards and applicable Law all
Mining Plant and Infrastructure expected to be
necessary for the Mining and all proposed
processing of Minerals in accordance with the
proposed Development Plan, (y) reasonably to
insulate surrounding areas in accordance with
International Standards from possible adverse
impacts of Operations, and (z) to provide for all
activities proposed to be undertaken as part of its
ongoing Environmental Management Plan;
(vi) the completion verification procedures and the
capacity demonstration procedures set forth in the
proposed Development Plan are sufficient
reasonably to demonstrate that each proposed Mine
and all related Mining Plant and Infrastructure have
been completed in accordance with the proposed
Development Plan and can reasonably be expected
to have the operating capacity specified in the
proposed Development Plan;
(vii) tire EMP, if implemented as proposed, will limit the
likely amount of environmental damage to limits
established in the World Bank/IFC “Environmental
Health and Safety Guidelines for Mining”, the
Company’s mine closing plan meets the standards
established by World Bank/IFC “Environmental
Health and Safety Guidelines for Mining”, the “UN
International Guidelines on Mercury Management
in Artisanal and Small-Scale Gold Mining” if
artisanal or small-scale mining is to continue on the
final Contract Area, and other International
Standards and the estimated cost for such plan
(valued in current Dollars) is reasonable, and such
plan otherwise complies with the requirements of
Section 16; ar J
- 18 -
c. The Minister shall be deemed to have approved the Feasibility Report, unless
the Minister shall have notified the Company in writing of the disapproval of
the Feasibility Report not later than sixty (6Q) days after the Ministry receives
... from tbe'Company tlie'Feasibility Report and all related and required materials’
complying with Section 6.4(b). For the avoidance of doubt, the sixty (60) days
approval period shall commence from date the Feasibility Report and all
supporting documentation is received by the Ministry.
d. Following any disapproval by the Minister and the resubmission by the
Company of an amended, modified or supplemented application for a Class A
Mining License or Feasibility Report, the Minister shall be deemed to have
approved the Feasibility Report unless within forty-five (45) days of such
amendment, modification or supplement the Minister has notified the Company
in writing of the disapproval Feasibility Report.
e. If the Parties cannot agree on a Feasibility Report, then an independent
consultant, appointed by and agreeable.to both Parties, will determine the
appropriate course of action. Should both Parties be unable to agree the choice
of independent consultant, then the Parties agree to accept Ihe recommendation
of the Chairman of the Canadian Institute of Mining, Metallurgy and Petroleum
for a suitable independent consultant.
6.5 Term of the Class A Mining License. Subject to Section 6.6 below, the Class A
Mining License for a Production Area selected by the Company shall remain
valid and effective for the unexpired portion of the term of this Agreement and
any extensions thereof.
6.6 Surrender of Production Area. The Company shall have the right, upon giving
the Minister sixty (60) days prior written Notice (or such lesser period of time as
the Minister allows), at any time to surrender all or any part of a Production
Area. Upon cessation of Production (as defined in section 28.2(f)) in connection
with all of a Production Area, the Production Area shall be surrendered. Upon
surrender of all or part of a Production Area, the Class A Mining License shall
terminate in respect of the area surrendered.
6.7 Reports to the Central Bank of Liberia. The Company shall report all sales of
Minerals made pursuant to Section 6.1 or otherwise under this Agreement, to the
Central Bank of Liberia, or any successor institution, in such detail and manner
as may be required by Law.
6.8 Class B and C Mining Licenses. The Government undertakes not to grant any
Class B Mining Licenses in respect of the Exploration Area and furthermore
warrants that any and all mining Operations taking place with the F.xnloratinn
19
Area under any Class C type licenses will not be allowed to interfere with or
hinder the exploration and/or mining activities of the Company.
SECTION 7: CONFIDENTIALITY
___________2J----Confidential. Information. All information exchanged between the-Parties in
the context of this Agreement shall be considered and treated as confidential
information, subject to Section 7.2 below. The Parties agree not to divulge such
information to any other Person without the prior written consent of the other
Party, which consent shall not be unreasonably withheld.
7.2 Public Information. The obligation of confidentiality set forth in Section 7.1
above shall not apply either to information exchanged between the Parties which
is in the public domain or to information exchanged by the Parties which the
Company is required to reveal to any other Person by Law.
SECTION 8: PRODUCTION WORK PROGRAMS
Subject to Sections 5 and 6, the Company shall use commercially reasonable efforts to
commence and continue construction, acquisition and installation of facilities and equipment,
and otherwise to produce Minerals, substantially in accordance with the Feasibility Report unless
such Production becomes uneconomic, in which event the provisions of Section 32 shall apply.
SECTION 9: CONDUCT OF CONSTRUCTION AND OPERATIONS
9.1 Conduct of Operations
The Company shall have the right to conduct Operations by itself or through agents
and contractors using facilities, equipment, materials and methods, in a proper and
workmanlike manner, with due diligence, efficiency and economy and in accordance
with International Standards and the terms of this Agreement.
9.2 Construction and Mineral Production
a. All Mining, processing or treatment of Minerals by the Company shall be
conducted in accordance with International Standards and applicable Law.
b. The Company shall commence Mineral Production from each defined and
approved Production Area, consistent with the Feasibility Study, within three
(3) years from the Effective Date. In the event that the Company cannot
commence Mineral Production, consistent with the Feasibility Study, within
three (3) years from the Effective Date, the Company shall apply to the Minister
requesting an extension, and such request shall not be unreasonably withheld.
9.3 Mining Term Operations
a. The Company undertakes to use all reasonable efforts as required by the
applicable standards and Law to maintain the production of marketable
Minerals of the quality and in the quantity contemplated by the Feasibility
Report and the Annual Operating Plan, and on a yearly basis, shall submit a
report to the Minister, reflecting on its performance against the Annual
Operating Plan and giving reasons where targets were not met.
b. . TheATiWalOperating Plan will update the approved Feasibility Study pursuant
to Section 6.4(b) of the Agreement.
c. The Company may not undertake any activity referred to in Section 6.7 or
Section 11.6 of the Mining Law except to the extent expressly covered in the ■
Company’s ESIA and approved in the context of the Company’s ESMP and,
then only within a Production Area or an area in which the Company is
otherwise entitled by Law and by agreement with any relevant landowner to
carry on such activities. The preceding sentence does not authorize the
Company to take any action that would violate Section 10.1 of the Mining Law.
The Company may not transfer to any Person timber removed from the land
within the Production Area pursuant to Section 6.7(d)(4) or 11.6(a) of the
Mining Law without the consent of the Forest Development Authority.
d. The Company shall maintain all Mines, Mining Plant, Infrastructure and
equipment constructed, renovated or acquired by it throughout the term of this
Agreement in a safe and sound condition in accordance with International
Standards and the requirements of insurers.
e. The Company shall operate all Mines, Mining Plant, and Infrastructure and
equipment in accordance with the Operations Plan set forth in the approved
Annual Operating Plan. In the event that the Company makes material changes
in the Operations Plan in the approved Annual Operating Plan, the Company
shall promptly inform the Minister of such changes, giving appropriate
justifications for said material changes and seek approval from the Minister for
the appropriate amendments to such plans, which approval shall not be
unreasonably withheld.
f. In the event of any loss or damage to the property of the Company, the
Company shall use all commercially reasonably efforts to promptly proceed to
restore such property to the extent necessary to begin or resume Operations as
contemplated by the Annual Operating Plan.
g. The Company may contract the operation of all or any portion of its
construction phase, completed Mine, Mining Plant or Infrastructure to any
Person, who is not a Prohibited Person, organized under the Laws who has the
technical expertise and financial ability to conduct such operation and who is
not a shareholder of the Company or an Affiliate of a shareholder of the
Company. If the Company contracts any operation in accordance with the
foregoing sentence, the Company is responsible to the Government for the
requirements of this Agreement applicable to the operations undertaken by such
contractor or sub-contractor as though such operations were undertaken by the
Company. The percentage requirements of Section 13.1(a) shall apply to the
operations of any such eontractor(s). Material operating contracts must be
"■disclosed ih each anriuaToperating report of the Company under Seetion 9.5(e).
9.4 Recovery Shortfalls
a. Up to sixty (60) days following the submission of the annual operating report, if
(i) there is a material difference in the recovery rate between such report and the
Annual Operating Plan and (ii) in the opinion of the Government, the Company
is unable without good cause (including, but not limited to, due to climate
conditions, the price of gold, fuel availability, fuel distribution or any force
majeures) to produce and transport Mineral Products at not less than 75% of the
rate indicated in the approved Annual Operating Plan, it may engage the
Company in discussions to determine if remedies can be taken to improve the
situation to increase the recovery and production. The Company will, in good
faith, make best efforts to improve the recovery shortfall, provided that the
Company shall in-no event be obliged to conduct Mining, processing or
treatment activities otherwise than is economically and technically feasible at
the time, pursuant to Section 9.3(a). The Company shall submit to the
Government details of the steps being taken to improve the recovery and the
Production.
b. If the Government, after any necessary further discussions with the Company,
remains unsatisfied with the Company’s response to such notice, the
Government may commission an independent technical study (the “Study”) to
determine a fair average recovery and/or shipment rate taking into account the
nature of the reserves then being mined, the nature of the Mines, Mining Plant,
Infrastructure and other equipment (assuming they arc of the design and quality
set forth in the Operating Plan and have been prudently maintained and
operated), and the economic and technical feasibility of achieving increased
recovery and/or shipment of Mineral Product(s) by the Company in accordance
with the standards set forth in Section 9.3(a) taking into consideration all of the
factors, including, but not limited to, due to climate conditions, the price of
gold, fuel availability, fuel distribution and any force majeures. Such Study
shall be carried out by an internationally recognized independent mining
engineering consultant, who will be jointly appointed by the Government and
the Company from a list of three such consultants, none of whom shall be
affiliated with the Company or any of its principle direct or indirect
shareholders, named by the Company on the request of the Government. Rach
-22-
of the Government and the Company may submit information to the consultant.
The fees and expenses of such consultant shall be borne by the Company, but
unless the consultant concludes the performance of the Company’s Production
is at least 5% less than the fair average recovery rate pursuant to Section 9.3(b),
the Company shall be entitled to offset the fees and expenses of such consultant
against the royalty payable to the Government in accordance with Section 22 of
this Agreement.
c. Following the completion of such Study, the Company shall implement the
recommendations of said study, if it is economically and technically feasible at
that time, within six (6) months in order to achieve the fair average recoveiy
rate indicated by the Study.
d. If either Party disputes the findings and recommendations of the Independent
Technical Expert, the Parties will engage in reasonable dialogue as a way of
resolving the matter. Thereafter, if the Parties cannot agree with the findings
and recommendations of the Independent Technical Expert, either Party may
resort to or take recourse to Arbitration pursuant to Section 30.
9.5 Company Reporting Requirements.
The Company shall comply with the reporting requirements stipulated in the Mining Law
and Exploration Regulations and provide the following reports to the Government:
a. prior to commencement of mineral Production for commercial sales, a quarterly
report on the progress of construction of the Mining Plant and Infrastructure
provided for in the approved Feasibility Report indicating progress and
expenditures to date, and estimated date of commencement of mineral
production for commercial sales;
b. a quarterly statistical report (which shall be delivered for every quarter,
including quarters ending on an annual reporting period) beginning with the
quarter in which commencement of the Production Operating Period occurred,
setting forth (i) the amounts of Minerals mined, the amounts of Minerals
processed, the amounts of Mineral Product(s) shipped, the amounts of Mineral
Product(s) exported, the amounts of Mineral Product(s) otherwise disposed of
and the stocks of mined Minerals and Mineral Product(s) at the end of the
period at the Mines and at other stockpile locations, (ii) the number and
location of the workings on which Work was performed during the preceding
quarter, (iii) the number of workmen employed thereon at the end of the
quarter, (iv) a list of the major equipment working at the end of the quarter, and
(v) a brief description of the work in progress at the end of the quarter and of
the work contemplated during the following quarter;
23
c. a quarterly operating report, beginning with the calendar quarter in which the
commencement of the Production operating period occurred, concerning the
progress of its operations in the Production Areas that are the subject of the
Mining License issued pursuant to this Agreement, specifying in full those
workings in which Mineral is considered to have been found, regardless of
whether the deposits are deemed to be commercial or not (together with all data
relative to the estimated volumes of the reserves, the kind or kinds of such
Mineral encountered and the analyses thereof), the number and description of
workings which have been placed in commercial production and full particulars
concerning the disposition of such production, the number of workmen
employed on each of such workings, the work in progress at the end of the
quarter in question, and the work contemplated during the ensuing quarter;
d. a quarterly financial report beginning with the calendar quarter in which the
commencement of the Production Operating Period occurred, setting forth the
quantity of Mineral Product(s) produced and sold or transferred to a third party
during the quarter and the computation of the Royalties paid or remaining to be
paid on such shipments or transfers;
e. an annual operating report, beginning with the Financial Year in which the
commencement of the Production operating Period occurred, which shall
include:
(i) the number and description of the workings which were in progress at the
end of the Financial Year preceding the Financial Year in question (with a
showing as to which were then in commercial production), the number and
description of workings abandoned during the Financial Year in question;
the production of each of the workings, regardless of whether in
commercial production or not, with a full description of the kind and
quality and analyses of Mineral produced from each working, and the
number of workings on which activities are continuing at the end of the
Financial Year in question, but which have not gone into commercial
production; and
(ii) the total volume of Mineral Product, broken down into volumes mined,
volumes processed from the Mines and volumes actually shipped from
Liberia (with full details as to purchaser, destination and terms of sale).
f. an annual financial report for each and every Mining License subject to this
Agreement, beginning with the Financial Year in which the commencement of
the Production Operating Period occurred, setting forth the quantity of Mineral
Product(s) produced from within the Mining License area and sold or.
- 24 -
Transferred to a third party during the Financial Year and the computation of
the Royalties or any other Taxes or Duties imposed with respect to the quantity
of Mineral Produces) so sold or so Transferred, in each case paid or remaining
to be paid on such sales or Transfers.
The Company shall also provide such additional information as is necessary to keep the
Government fully informed of all operations and activities, wherever conducted in Liberia, and
of its plans in respect thereof. All quarterly reports required under this Section 9.5 shall be
submitted within 30 days of the end of the quarter in question, and all annual reports required
under this Section 9,5 shall be submitted within 60 days of the end of the Financial Year in
question. Each report referred to in Section 9.5 shall be certified as true and correct by the
designated senior authorized representative of the Company.
SECTION 10: LAND AND FACILITIES
10.1 Public Land.
a. The Company shall have the right to enter upon and utilize all public land
within the Contract Area for purposes of and incidental to Operations, without
cost except as provided for by Section 23.1 below.
b. To the extent that it does not involve an unreasonable interference with the
rights of other Persons, the Government shall grant the Company the right to
enter upon, utilize and possess, without cost, any public land not within the
Exploration Area or a Production Area and which is reasonably required by the
Company for purposes of and incidental to Operations including areas required
for plant and equipment, Infrastructure and other facilities and equipment.
Possession of such land shall be returned to the Government following the
termination of this Agreement, if not earlier returned, and such land shall be
deemed part of the Contract Area during any such period of occupancy and use
by the Company.
10.2 Private Land.
a. The Company shall endeavor by direct agreement with the owners to enter
upon and utilize private land within the contract area required for or incidental
to the Operations.
b. If the Company and the owner(s) of private land in the contract Area which the
Company reasonably requires for operations cannot agree, the Government
shall assist the Company in acquiring the required private land and all
improvements thereon from the relevant land owner(s). The Company shall
reimburse the Government for all costs paid in connection with such acquis''*™1
-25-
including fair compensation to the rightful owners, provided however, that the
amount reimbursed by the Company to the Government with respect to
compensation paid by the Government to the owner shall not exceed the
reasonable value of the owners’ interest in such land and any improvements
thereon determined without regard to the value of any Minerals which may be
contained herein, by means of an appraisal conducted by a qualified Person
mutually agreed to by the Parties. Title to the property thus acquired shall vest
in the Government and the Government shall grant the Company the right to
enter upon, utilize and possess such land which shall be deemed part of the
Contract Area.
c. If the Company reasonably requires private land outside the Contract Area for
Operations, the Company will endeavor to enter upon and utilize such land by
direct agreement with the owner, and such land shall be deemed part of the
Contract Area during any period of occupancy and use by the Company.
d. For the purposes of this Agreement:
(1) Private land shall mean any land (including any creeks, streams, rivers or
bodies of waters contained thereon, and their residue) owned by a Person
other than the Government; and
(2) Public land shall mean all land other than private land.
10.3 Limitation on Exploration and Production. Nothing contained in this Section
10 shall be construed to permit the Company to explore for Minerals, or to
produce Minerals found, in any land which is not within the Exploration Area or
a Production Area.
10.4 Facilities.
a. The Company shall have the right to acquire, construct, install and operate plant
and equipment, Infrastructure and other facilities and equipment reasonably
required for Operations.
b. The Company shall have the right to use public Infrastructure, whether owned,
operated or provided by the Government or by any other Person under license
or authority of the Government, to the extent adequate (taking into account the
public use thereof) to meet the Company’s needs with respect to Operations.
The Government shall ensure that all charges for, and other terms and
conditions-of, the use by the Company of public Infrastructure are fair and
reasonable, taking into account the cost of providing such Infrastructure, and
are not more onerous than those that are generally applicable to others using
similar public infrastructure in a similar manrr-
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c. To the extent reasonable in connection with Operations, the Company shall
have the right, subject to prior consultation with Government, to integrate any
item of its own Infrastructure with similar items of public. Infrastructure.
d. To the extent that the Company’s Infrastructure is not utilized by the Company
to its full capacity, the Government shall have the right to use it on reasonable
Notice to the Company, provided that such use does not impair the efficient and
economic conduct of Operations. The Government shall pay reasonable
compensation to the Company (other than in the case of roads and highways
unless the use causes material damage thereto) within sixty (60) days after
invoice from the Company in connection with such use.
e. The Government reserves the right, on reasonable Notice to and after
consultation with the Company, to construct roads, highways, railroads,
telegraph and telephone lines and other lines of communication within the
Contract Area, provided that such construction does not unduly burden
Operations. In the event of such construction, the Government shall, within
sixty(60) days after receiving an invoice from the Company, compensate the
Company for all damage thereby caused to the Company and its property and
hereby indemnifies and saves harmless the Company from all claims by third
parties arising therefrom.
10.5 Communications Facilities, Systems and Frequencies.
a. The Company shall have the right, as licensee or assignee, to operate for its
own use and that of any Affiliate, such communications systems as it deems
necessary for internal communications and communications with its Affiliates,
including radio, telecommunications, satellite networks, cellular systems,
microwave devices and other communications devices and systems, and to
receive from the Government such rights, licenses, registrations, permits and
other authorizations as may be required by Law in connection with the
possession, use, importation or purchase of the foregoing.
b. The Government agrees that it will make available, for use by the Company, an
adequate number of broadcast and communications frequencies for both
domestic and international use, and shall grant to the Company such rights,
licenses, registrations, permits and other authorizations as may be required in
order to comply with any Law regarding the possession, use, importation or
purchase of related equipment or of any telecommunications devices or other
communications equipment or devices subject to the prevailing requirements by
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Government shall consult together from time to time as to the specific
frequencies to be assigned consistent with international regulations.
SECTION 11: HEALTH AND SAFETY
11.1 Health, Safety Procedures and Notifications.
a. In connection with Operations, the Company shall install, maintain and use
such modem health and safety devices, work gear and equipment, and shall
practice such modem health and safety procedures and precautions (including
regular safety training instructions for its employees) as appropriate in
accordance with applicable Law and International Standards.
b. The Company shall establish and implement a health, safety and environment
plan (the “HSE Plan”) in a manner consistent with applicable Law and
International .Standards. The Ministry, F.PA and all relevant Government
ministries and agencies may from time to time review details of the Company’s
HSE Plan and the Company’s implementation thereof,
c. The Company shall notify the Government promptly of any major incident(s),
regardless of whether death or serious injury occurs to any employee of the
Company or any of its contractors that occurs as a result of Operations. For the
purposes of this Section 11.1, a serious injury means an injury that is likely to
cause the injured Person to lose seven or more working days.
11.2 Security.
a. The Company may, directly or by contract with a responsible provider of
security services, establish, manage and maintain its own asset and employee
security and protection service for the purpose of protecting assets in the
Production Area and in the immediate vicinity of other locations at which
Company has or maintains property and assets through its own security force
and to do so always in accordance with Law and rules and regulations
promulgated by the Ministry of Justice relating to security forces. Such
security force shall not bear arms and shall at all times operate subject to the
authority of, and coordination with the Liberia National Police.
b. In the event the Company deems it absolutely necessary to have armed guards
for the purpose of protecting assets in the Production Area and in the immediate
vicin ity of other locations at which Company has or maintains property and
assets, the Company shall make a written request to the Government. The
Government shall provide armed guards as needed, which expense shall be
borne by the Companv
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c. The Company’s security force will have (i) the power of apprehension and
detention in accordance with applicable Law for conduct or incidents occurring
within its Production Area and in the immediate vicinity thereof. If any person
is detained by the Company’s security force, the Liberian National Police must
be notified the soonest, and the person detained must be handed over to such
authority as soon as practicable and in no case later than the earlier of 24 hours
from the time of arrest, detention, or when requested by Liberian National
Police. The Company’s security force may not use unreasonable force in
arresting and detaining persons, and any detention facilities maintained by the
Company must be adequately ventilated, reasonably clean and with access to
sanitary toilet facilities and must be approved by the Minister of Justice prior to
the commencement of Operations.
d. The Company must coordinate the activities of the Company security force
with the Government’s police and law enforcement authorities and report
monthly to the Minister of Justice (with a copy to the Minister) on the activities
of the Company security force, including number of persons detained, the
reason for, the place of and the period of any detention, and the disposition of
the case of each detained person. Each such report shall be certified by the
Chairman of the Board or an authorized designee of the Company to be true
and correct.
e. The Company is fully responsible for the compliance of the members of its
security force, whether its employees or the employees of a contractor,
subcontractor, affiliate, or subsidiary, with all requirements of this Section and
for all consequences of any breach of those requirements.
11.3 Sanitation
The Company shall provide its employees and subcontractors with clean and accessible
flush toilet facilities and, where the nature of the work makes it appropriate, shower
facilities at its workplaces.
11.4 Water Supply; Clean and Safe Drinking Water
The Company shall provide, maintain and ensure a convenient and uninterrupted supply of clean
and safe drinking water for its employees and subcontractors. All drinking water shall meet or
exceed the approved Government standards and International Standards for drinking water
29
11.5 Employee Housing
a. The Company shall establish a company town comprising of at least 325 family
homes and community facilities including recreational and religious facilities
within the Concession Area as more specifically planned in the Resettlement
Action Plan approved by the Ministry of Lands, Mines and Energy and attached
hereto as Appendix “C”.
b. The Company shall, either directly or indirectly, provide housing for the
employees of the Company living within the Production Area and shall ensure
that such housing has provisions for bathroom facilities with a toilet, sink, and
shower and conforms to minimum standards as agreed between the
Government and the Company.
SECTION 12: HEALTH CARE AND EDUCATION
12.1 Health Care.
a. The Company shall construct, operate and maintain, or cause to be constructed,
operated and maintained adequate health facilities to ensure the availability in
each Production Area of 24 hour emergency medical treatment, care and
attention in accordance with applicable health standards, and such other
improved standards as may be agreed between the Parties. All such emergency
health facilities shall be staffed with qualified medical personnel and shall be
properly equipped and supplied for the level of service required in accordance
with international medical standards.
b. The Company shall provide to its employees, their spouses and immediate
family Dependents health services at either its own facilities or through
Company provided health insurance or payment arrangements with third party
facilities. Such health services shall include the “Basic Package of Health
Services” for primary healthcare as established by the MoHSW in 2008 as
modified and developed over time. Where the Company does not directly
provide Basic Package of Health Services at its own facility it shall have in
place a program including transportation plan to transport employees, their
spouses and immediate family Dependents to health care facilities where such
services are provided. Such health services and transportation shall be at the
Company’s expense with no cost to the Company’s employees, their spouses
and immediate family Dependents. If such services are not provided at a health
care facility within a three (3) mile radius, the Company must provide those
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c. Government officials, civil servants and representatives assigned to and
■" regularly employed in the Production Area in an official capacity, who are
resident in or adjacent to the Production Area, and their resident spouses and
resident Dependents, shall, during the time of such assignment, employment
and residence, also be entitled to receive healthcare, including emergency care
on the same basis as the Company employees who receive their healthcare from
Company provided facilities.
d. The Company shall provide reasonable access to its own health facilities and
for emergency ambulatory care to members of local communities. It is
understood that “reasonable access” may include the imposition of fees that are
reasonable in light of the economic level of such communities, it being
understood that such fees are unlikely to cover the cost of service.
12.2 Education.
Dependents of the Company’s employees (excluding spouses), as well as minor children
of Government officials assigned to, resident in and assigned to work in the Developed
Areas for a prolonged period, being not less than 90 consecutive days in an official
capacity, who have been registered as such with the Company, shall, during the time of
such assignment and residence, be entitled to receive free education through the
Company. The Company agrees to provide primary education through high school
education free of charge to each Dependent, subject to verification of eligibility status by
the Company or its representative. The Company may, at its option, build new schools in
the Concession Area or invest in existing local schools to meet the requirement of this
Section, such that such local existing schools, together with any such new schools, are (1)
sufficient in number to educate all Dependents in addition to existing students, (ii) not
overcrowded and (iii) are within the Production Areas or within a reasonable distance of
the employee housing units in the Production Areas. With respect to any Dependent,
unless otherwise agreed between the Company and the Ministry of Education in writing,
a reasonable distance from a Dependent’s home to the school such a Dependent is
assigned to attend shall not be more than fifteen (15) miles in the case of a newly
constructed school, and no more than thirty (30) miles in the case of an existing local
school. The Company shall provide free transportation to Dependents who attend any
such local schools that are more than five (5) mile from the Dependent’s home. If there
are no existing schools that satisfy the criteria set forth above, the Company shall
construct new educational facilities in the Developed Areas for primary school grades and
for high school grades, at a rate and in a number approved by the Ministry of Education.
Such educational facilities shall be in conformity with Laws, rules, regulations and
standards generally applicable to schools in Liberia.
SECTION 13: EMPLOYMENT, SECONDMENT AND TRAINING
13.1 Employment.
a. Employment practices of the Company shall conform to applicable labor
practices Law and other applicable Law. The Company shall not hire
individuals who are not citizens of Liberia for unskilled labor positions. The
Company shall employ and give preference to the employment of qualified
citizens of Liberia for financial, accounting, technical, administrative,
supervisory, managerial, executive and other skilled positions, as and when
they become available, it being the objective of the Parties as soon as is
practicable that the activities of the Operations should be conducted and
managed primarily by citizens of Liberia. In furtherance of the Company’s
obligations under the preceding sentence, the Parties shall agree prior to the
approval of the Feasibility Report on progressive implementation of an
employment schedule with the aim that citizens of Liberia will hold at least
30% of all management positions including 30% of its ten most senior positions
within 8 years of the initial grant to the Company of a Mining License, and at
least 70% of all management positions including 70% of its ten most senior
positions within fifteen years of such date.
b. Subject to the above, the Company may at all times choose its employees and
shall be free to employ such Persons who are not nationals of Liberia as are
required for the efficient conduct of Operations. Where applicable Law
stipulates minimum technical qualifications and/ or minimum levels of
competence for any technical post, the Government undertakes to recognize
equivalent technical qualifications and/or certificates of competency held by
Persons who are not nationals of Liberia, provided that such qualifications
and/or certificates of competency shall have been issued by a recognized
institution or statutory authority in any other country having a substantial
mining industry. For the avoidance of doubt, this Section 13.1 applies to the
Company as well as its contractors or sub-contractors.
13.2 Secondment.
a. In order to affect the policy of technology transfer, at all times during
Operations, the Ministry shall second at least two (2) professionals
(geologists/mining engineers) to participate in the technical aspects of the
Operations.
b. The Company shall provide said professionals assigned on secondment daily
allowances at a rate to be mutually agreed upon between the Parties.
13.3 Training of Liberians. Following the grant to the Company of a Mining
License under this Agreement, the Company must establish a capacity
development program under which it shall provide on a continuing basis
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undergraduate and graduate training abroad for its Liberian staff and qualified
Liberians in order to train them for financial, accounting, supervisory,
managerial, executive positions and other skilled positions in the Company. The
Company shall also establish vocational training facilities, provide on-the-job
training and utilize whatever other measures are necessary and reasonable to
build capacity and transfer knowledge and skills to Liberian employees to enable
them to work in skilled trades and to supervise other tradesmen and laborers.
The Company agrees that it shall continue to hire and train Liberian geologists,
including funding their CRIRSCO accreditation as and when they qualify. The
Company shall furthermore facilitate applications by its own Liberian geologist
employees for accreditation and subsequent registration under CRIRSCO
guidelines as gold Qualified Persons. The Company agrees that it shall continue
to hire and train Liberian geologists, including funding their CRIRSCO
accreditation as and when they qualify.
13.4 Project Linkages Plan
a. Within one hundred and eighty (180) days of the Effective Date, the Company
shall provide the Ministry with a project linkages plan (the “Exploration Period
Project Linkages Plan”) as contemplated covering the period prior to the
commencement of construction of any Mine. The Exploration Period Project
Linkages Plan must (i) identify the potentials for local suppliers, contractors
and service providers to provide goods and services to the project, (ii) identify
key interventions to grow the minerals input industrial sector, and (iii) sets out a
local project purchase plan with clear milestones identified in terms of an
increasing percentage of local purchases of goods and services, and provide for
bidding preferences for local suppliers, contractors and service providers.
b. Simultaneously with the submission of the Feasibility Report under Section 6.4,
the Company shall provide the Ministry with a project linkages plan or an
updated project linkages plan, as the case may be (the “Production Period
Project Linkages Plan”) covering the period after the commencement of Mine
construction. The Production Period Project Linkages Plan must (i) identify
the potentials for local suppliers, contractors and service providers to provide
goods and services to the project, (ii) identify key interventions to grow the
minerals input industrial sector, and (iii) set out a local project purchase plan
with clear milestones identified in terms of an increasing percentage of local
purchases of goods and services, and providing for bidding preferences for
local suppliers, contractors and service providers.
SECTION 14: USE OF LIBERIAN SERVICES AND MATERIALS
a. When purchasing goods and services related to Operations, the Company must,
and must cause its major contractors to, (i) organize their procurement
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practices so as to give meaningful opportunities to bid for contracts to those
entitled to preference pursuant to clause (ii) of this sentence, and (ii) give
preference to the maximum extent possible to materials and goods produced in
Liberia and services provided by citizens resident in Liberia or entities
incorporated or formed in Liberia where citizens of Liberia resident in Liberia
are entitled to receive 60% or more of all profits from such entities. The
Company shall use and cause its major contractors to use materials, goods, and
services produced or provided by Liberian citizens resident in Liberia or
entities incorporated as described in the last sentence in all cases except in
those where the Company can demonstrate it is not reasonable and
economically practicable to do so.
b. No later than 60 days before the start of the Financial Year that the Company
expects Production to commence on any Class A Mining License area held by
the Company, the Company shall submit to the Minister a Plan for
Procurement of Local Goods and Services by the Company and its major
contractors in the next Financial Year for its Operations, and the Company
shall no later than 60 days before the start of every subsequent Financial Year
submit a revised Plan for Procurement of Local Goods and Services.
c. A “Plan for Procurement of Local Goods and Services” for the purposes of this
Section 14 shall (i) identify the potential for local suppliers, contractors and
service providers to service the project, (ii) identify key interventions to grow
the minerals input industrial sector, and (iii) set out a project local purchase
plan with clear milestones identified in terms of an increasing percentage of
local purchases of goods and services.
d. Annually after Production commences on any Class A Mining License area
held by the Company, the Company shall submit a report, no later than sixty
(60) days after its Financial Year has closed, detailing the Company’s and its
major contractors’procurement of local goods and services during the prior
Financial Year and whether its annual plan was succeeding, and if not, why not.
e. A “major contractor” for the purposes of this Section 14 is a contractor or a
subcontractor who received more than US$250,000 directly or indirectly from
the Company in that year and who had significant operations in Liberia in that
year.
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f. operations such as maintaining a representative office, or the presence of
supervisory personnel to inspect or direct work performed by other contractors,
do not constitute “significant operations” for the purposes of this Section 14.
g. For the avoidance of doubt, non-compliance with this Section 14 shall be
considered substantial non-compliance with the Feasibility Report. If the
Company does not meet the clear milestone as defined in the Plan for
Procurement of Local Goods and Services, a “Failure to Procure Local Goods”
penalty fee may be assessed by the Minister. If the Company fails to meet the
clear milestones Plan for Procurement of Local Goods and Services in any five
years, not necessarily consecutive, this failure will be a basis for termination
under Section 28.
SECTION 15: COMMUNITY RESOURCES
15.1 Community Development Fund.
a. Company shall make the following contribution into a fund established for
community development purposes (the “Community Development Fund”):
(1) Contract Year 1 - 2, a contribution of US$100,000
(2) Contract Year 3-4, a contribution of US$150,000
(3) Contract Year 5-10, a contribution of US$200,000
(4) Contract Year 11 through the end of the Original Term, a contribution
of $250,000.
b. All such contributions into the Community Development Fund shall be payable
annually to the Government in advance on or before February 1st of the year
for the period for which payment is being made. The first payment into the
Community Development Fund shall be due for the Contract Year immediately
following the Effective Date.
c. All contributions into the Community Development Fund will be with full
credit toward such contribution to be given for expenses for social services
performed by Company outside of Production Area or for benefits conferred on
non-employees and their Dependents, subject to approval by the Government
of the eligibility of such social services and benefits for such credit. For the
avoidance of doubt, expenses incurred by the Company to fulfill its
obligations under this Agreement, including expenses related to the provision
of housing, education, medical care and other social services, shall not be
deducted from the Community Development Plan or reduce the Company’s
contributions to the Community Development Fund. Contributions to the
35-
4 (
Community Development Plan shall be tax deductible and such deductions
may be carried forward for an indefinite period during the Term.
d. The Community Development Fund shall be administered by a committee
consisting of not more than ten (10) members, half of whom shall be
nominated and selected by the surrounding community and Government, and
half by the Company. The Company shall pay US$5,000.00 annually as
committee contribution.
e. Funds held by the Community Development Fund shall be placed in an interest
bearing depository account reasonably acceptable to Government. The budget
for and the actual disbursements from the segregated account shall be public
and shall be subject to the same audit procedures provided for expenditures by
Government and as may be further provided by Law.
SECTION 16: ENVIRONMENTAL PROTECTION AND MANAGEMENT
16.1 Environmental Impact Statement. The Parties recognize that Operations may
result in some pollution, contamination or other environmental damage to land,
water and the atmosphere within the Contract Area and elsewhere. Tn
accordance with applicable Law, the Company must submit to the Minister
before the commencement of Exploration and Production, and to EPA for
approval an Environmental and Social Impact Assessment (“ESIA”), an
Environmental and Social Management Plan (“ESMP”), satisfying the
procedures and requirements set out in the EPML, EIA Procedural Guidelines,
International Standards and all other applicable Laws, considering, inter alia, the
individuals, communities and towns that will be affected by Mining and
construction activities. The environmental component of the ESIA must at a
minimum identify pre-existing environmental conditions and set forth detailed
plans for the mitigation of environmental harm attributable to and the restoration
or remediation of the environment to the extent affected by the implementation
of Mining Exploration and Production, as the case may be.
16.2 Damage and Restoration. The Operation shall take reasonable preventive,
corrective and restorative measures to limit pollution or contamination of, or
damage to, streams, water bodies, dry land surfaces and the atmosphere as a
result of Operations. Subject to the foregoing, at the conclusion of Operations in
a part of the Contract Area, the Company shall undertake reasonable efforts, in
keeping with International Standards, to restore the terrain to a state in which it
is usable for economically and socially desirable purposes. Illustratively, the
Company shall level the surface wherever reasonable and, if leveling is not
reasonable, shall contour, grade and terrace all exposed artificial gradients and
declivities which have been created as a result of Operations; shall reopen
natural water courses (or, where such have been obliterated, shall open new
substitute surface water courses to the end that the area shall continue to be
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drained by natural runoff with a minimum of erosion); and, at its option, shall
engage in reforestation activities in areas where Operations have required the
large-scale felling of trees.
16.3 Plans, From time to time, the Company shall submit to the Government detailed
plans consistent with the foregoing for the protection, correction and restoration
of the water, land and the atmosphere. If the Company fails to comply with any
such plan (as the same may be amended by the Company from time to time) the
Government may, on reasonable Notice to and after consultation with the
Company, and at the Company’s expense, implement the plan as amended.
SECTION 17: TECHNICAL COMMITTEE
17.1 Formation. Upon the commencement of Production pursuant to Section 6, a
Technical Committee comprising not more than five (5) members appointed by
the Government and not more than five (5) members appointed by the Company
shall be formed to review current and planned Operations, and to report jointly
thereon to the Government and the Company. The Technical Committee shall
meet twice in every Contract Year or otherwise, as the members shall agree. No
meeting of the Technical Committee shall be held unless at least three (3)
members appointed by each of the Government and the Company are present.
The Company shall appoint the first Chairman of the Technical Committee (and
any successor if he or she does not complete the initial term) who shall hold
office until the second anniversary of the Effective Date. Thereafter, the
Government and the Company shall have alternating rights to appoint the
Chairman of the Technical Committee, who shall hold office until the next
succeeding anniversary of the Effective Date.
17.2 Costs. All costs of meetings of the Technical Committee (including reasonable
expenses incurred by the members and as approved both by the Government and
the Company) shall be borne by Company. Members of the Technical
Committee shall be entitled to sitting fees (payable by the Company) in an
amount to be approved by the Government and Company for attendance in
person at all meetings of the Committee.
17.3 Functions. The Technical Committee shall have no managerial responsibility or
role, nor shall it be empowered to take any action on behalf of, or with respect
to, the rights of any Party. The Technical Committee shall determine the content
of its report by a consensus of all of its members present. If the members of the
Technical Committee cannot reach a consensus on any issue, majority and
minority reports shall be submitted to the Parties.
SECTION 18: UNDERTAKINGS OF THE GOVERNMENT
18.1 Access to Information. The Government undertakes and affirms that the
Company shall be entitled to use and to have access to all geological or other
information relating to the Contract Area that is owned by the Government or
may be in or subject to the Government’s control. The Government agrees to
37
provide such information upon the Company’s request for a minimal fee and
within a reasonable time. For purposes of this Agreement, minimal costs shall
mean the cost of reproduction and any additional unrecovered cost actually
incurred by the Government in obtaining such information but not to exceed
rates charged other Persons.
18.2 Provision of Documents. Subject to Section 13.1 and except to the extent any
such Person may be disqualified by Law, the Government shall promptly furnish
to each employee of the Company and of its Associates who is not a citizen of
the Republic, and to the spouse and minor children of each such employee, all
documents and visas necessary to enable such Person to enter and to leave, or
travel within, the territory of the Republic.
18.3 Use of Aircraft. The Government undertakes and affirms that the Company and
its Associates shall be entitled to use, in accordance with Law, an aircraft,
whether owned or rented, for journeys within the Republic and into and out of
the territory. Moreover, the Company and its Associates shall have aircraft
landing and parking rights in all airports, airfields and landing .strips with the
Republic, except for those used exclusively as military bases, and shall pay the
lowest applicable fees and tariffs for such use.
18.4 Use of Airports and Ports. The Government shall permit the Company and its
Associates to obtain access to and use all airport and port installations in the
Republic, except those reserved for military and national security related
activities, at the lowest prices paid by any other Person, for all aircraft and ships
whose presence in Liberian territorial airspace or waters is required by the
Company and its Associates in connection with Operations. These aircraft and
ships shall have the right to enter and to leave the territorial airspace and waters
of the Republic, without restriction, in accordance with Law.
18.5 Electricity Generation and Transmission. The Government undertakes and
affirms that the Company and its Associates shall be entitled, at their own cost
. but free of any further Taxes or Duties or other payments to any Person and/or
Government for or in connection with the exercise of such entitlement, to
generate, transmit and use electricity, and use and provide water, in accordance
with Law regulating such use, as may be required for Operations. In the event
that the Company and its Associates purchase electric power or water from the
Government for any purpose associated with Operations, they shall be charged at
the lowest rates applicable in the Republic to industrial users.
18.6 Issuance of Necessary Authorization. The Government undertakes and affirms
that it shall issue all licenses, permits, mining titles, easements, and other
authorizations, including but not limited to the rights and titles referred to in
Section 4 and 6 above, which are or may be necessary for the Company to
conduct Operations.
18.7 Protection Against Nationalization or Expropriation. The Government
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undertakes and affirms that it shall not nationalize or expropriate:
a. any Infrastructure or other property, movable or immovable, of the Company
or its Associates to the extent connected with or affecting Operations;
b. Minerals in any form resulting from Operations;
c. any equity, shares or ownership interests of whatever nature held in or issued
by the Company;
d. any Infrastructure put in place or used by the Company in connection with
Operations; and
e. any capital invested by the Company or its Affiliates in the Republic.
18.8 Peace Enjoyment. The Government hereby warrants and defends the
Company’s title to, possession and peaceful enjoyment of all rights granted to it
by this Agreement and all of its property in the Republic against expropriation,
confiscation, destruction, disruption, wrongful possession or interference by any
Person.
18.9 Non-Derogation. The Government undertakes and affirms that at no time shall
the rights (and the full and peaceful enjoyment thereof) granted by it under this
Agreement be derogated from or otherwise prejudiced by any Law or by the
action or inaction of the Government, the Minister or any other official of the
Government, or any other Person whose actions or inactions are subject to the
control of the Government.
18.10Most Favorable Treatment. In the event that the Government grants to any
other Person terms or conditions that are more favorable than those provided in
this Agreement with respect to Operations, exploration or production of the same
Minerals, or in the event that the Government enacts any Law or adopts any
practice or policy that permits more favorable treatment of any other Person than
that accorded to the Company by this Agreement with respect to exploration and
production of similar Minerals being explored for, developed or produced by the
Company, then the Government shall grant the same more favorable treatment to
the Company, with effect from the date of its application to such other Person or
of its entry into force, as the case may be.
SECTION 19: INDEMNIFICATION
19.1 Indemnification for Breach of Agreement. Any breach by either Party to this
Agreement of any obligation provided for in this Agreement, shall entitle the
Party aggrieved by the breach to be indemnified by the defaulting Party in an
amount equal to the damage suffered by the aggrieved Party.
39
i
19.2 Company’s Indemnification of the Government. The Company shall at all
times indemnify and hold harmless the Government and its officers and agents
from all claims and liabilities for death or injury to Persons or damage to
property from any cause whatsoever arising out of Operations or as a result of
the Company’s failure to comply with any Law to which it is subject.
19.3 Government’s Indemnification of the Company. The Government shall
indemnify and hold harmless the Company from all costs, expenses, losses and
damages suffered by it (whether arising by operation of Law or contract
voluntarily, made, or otherwise reasonably assumed by it) as a result of any
failure of the Government to honor any provision or undertaking expressed in
this Agreement.
SECTION 20: BOOKS AND RECORDS
20.1 Books and Records. The Company shall maintain proper books of record and
account in conformity with IFRS and with all applicable requirements of Law.
20.2 Adequate Capital.
a. After the issuance of a Mining License to the Company under this Agreement
and up to the commencement of mineral production for commercial sales, the
Company must maintain a ratio of Indebtedness to Net Worth that is equal to
or lower than 3:1, and may make no Restricted Payment.
b. After the commencement of mineral production for commercial sales, the
Company may make no Restricted Payment unless after giving effect thereto,
the ratio of Indebtedness to Net Worth of the Company does not exceed 3:1.
For purposes of this Section 20.2 the amount of any Restricted Payment made
in property is to be the greater of (x) the fair market value of such property (as
determined in good faith by the board of directors of the Company) and (y) the
net book value thereof on the books of the Company, in each case determined
as of the date on which such payment is made.
c. "Indebtedness” means, at any time, without duplication,
(i) the liabilities of the Company for borrowed money and the
redemption obligations of the Company in respect of mandatorily
redeemable shares or other securities of the Company that are
entitled to preference or priority over any other shares of the
capital stock of such corporation in respect of payment of
dividends or distribution of assets upon liquidation;
(ii) the liabilities of the Company for the deferred purchase price of
arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);
(iii) all liabilities appearing on the Company’s balance sheet in
accordance with IFRS, as applicable under Section 25.5 in respect
of leases with respect to which the Company is required
concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with IFRS, as applicable
under Section 25.5;
(iv) all liabilities for borrowed money secured by any Lien upon or
with respect to any property or asset of the Company (whether or
not it has assumed or otherwise become liable for such liabilities);
(v) all liabilities of the Company in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions representing or
supporting the payment of obligations referred to in clauses
(i) through (iv) hereof; and
(vi) any guarantee or similar undertaking of the Company with respect
to liabilities of a type described in any of clauses (i) through
(v) hereof.
(vii) Indebtedness of the Company shall also include all obligations of
the Company of the character described in clauses (i) through
(vi) to the extent the Company remains legally liable in respect
thereof notwithstanding that any such obligation is deemed to be
extinguished under IFRS, as applicable under Section 25.5.
d. “Net Worth” means:
(i) The total assets of the Company which would be shown as assets
on a balance sheet of the Company as of such time prepared in
accordance with IFRS, as applicable under Section 25.5, minus
(ii) The total liabilities of the Company which would be shown as
liabilities on a balance sheet of the Company as of such time
prepared in accordance with IFRS, as applicable under
Section 25.5.
(iii) The Net Worth means the difference between the Total Assets as
noted in d(i) and the Total Liabilities as noted in d(ii).
e. “Restricted Payment” means, with the exception of the issuance to the
Government of shares pursuant to Section 33.1:
(i) Any dividends or other distributions or payments of capital stock
or other equity interest of the Company and the redemption or
acquisition of any stock or other equity interests in the Company or
of warrants, rights or other options to purchase such stock or other
equity interests that would have the effect of reducing and or
diluting the shareholder’s equity interest in the Company, and
(ii) Any payment, repayment, redemption, retirement, repurchase or
other acquisition, assignment whether or not direct or indirect, by
the Company of, on account of, or in respect of, the principal of
any intragroup subordinated debt (or any installment thereof)
extended by the Company, any shareholder of the Company, any
Affiliate of the Company, or any Affiliate of any 10% shareholder
of the Company that has the effect of diluting any one of the
shareholders interest in the Operations.
f. The deductibility or other treatment of any interest payments by the Company
for purposes of Taxes and Duties shall be governed by applicable Law and
shall be unaffected by this Section 20.2.
20.3 Provision of Funds.
The Company shall ensure that it has a prudent capital structure and is provided with
adequate funds as and when needed to ensure timely Development and performance of
the Operations in accordance with and within the limits defined in the approved
Feasibility Report and compliance with the requirements of Section 20.2.
20.4 Guarantee.
The Company shall provide the Government, within sixty (60) days of the Effective
Date, an executed guarantee from its parent, guaranteeing the obligations of the
Company under Sections 9, 16 and 20.3. The Mining Guarantee shall remain in effect
following termination of this Agreement or until all legitimate obligations of the
Company under this Agreement and covered by the Mining Guarantee are fulfilled.
pL
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20.5 Insurance
a. At all times during the Original Term (including during the construction
period) the Company will maintain with financially sound and reputable
insurers, insurance with respect to its assets and operations under this
Agreement against casualties and contingencies, of such types, on such terms
and in such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business. The said insurances (the “Insurances”) shall cover the following:
(i) assets belonging to the Company, over which creditors may have
liens;
(ii) assets belonging to the Government of Liberia;
(iii) assets belonging to third parties; and
(iv) assets which qualify' as social infrastructure.
b. In the event of destruction or damage to any, all or a substantial portion of the
assets covered by the Insurances, the proceeds paid by the insurers to the
Company under the Insurances shall be applied to each category of assets set
out in section 20.5(a)(i)-(iv) proportionately based on the coverage; it being
understood and agreed that:
(i) the insurance proceeds received by the Company in respect of loss
or damage to assets belonging to the Company shall belong to the
Company and the Company and its creditors shall be entitled to re¬
invest or retain the insurance proceeds as they shall determine in
their sole discretion. In the event that the Company decides to re¬
invest the insurance proceeds towards the reinstatement and/or
replacement of the lost or damaged assets, the Company shall have
24 months from the date of the receipt of the insurance proceeds to
commence the re-instatement and/or replacement of the lost or
damaged assets. If at the expiration of the 24 month period the
Company does not commence the re-instatement and/or
replacement of the lost or damaged assets without reasonable
cause, then, upon the request of the Government/Minister, the
Company shall relinquish the Mining License applicable to such
Production Area;
(ii) the insurance proceeds received by the Company in respect of
destruction of the assets leased to the Company by Government or
assets to which the Government has title, shall be applied only in
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♦
reimbursement for the costs of restoration or replacement of such
assets or as the Government otherwise consents; and
(iii) the insurance proceeds received by the Company in respect of
damage to assets belonging to third parties and assets which
qualify as social infrastructure shall be applied to cover such
damage.
c. Should the Company and/or its creditors, following an insured event which led
to the destruction of the material assets of the Company, find it economically
viable and feasible to construct the Processing Plant in another part and/or area
of the Licensed Area, the Company shall seek the consent of the
Govcmment/Minister to construct infrastructure and utilize the ore in the
original Production Area at the process plant in another Production Area. Such
consent shall not be unreasonably withheld by the Govemment/Minister.
SECTION 21: INCOME TAXATION
The Company shall pay all Taxes and Duties pursuant to applicable Law except as may
otherwise be provided in this Agreement. In the event of any discrepancy between the specific
provisions of this Agreement that are inconsistent with the Revenue Code as in effect on the
Effective Date, this Agreement shall govern.
21.1 The applicable Taxes and Duties set out in this Agreement shall be stabilized as
of the Effective Date for the period of fifteen (15) years. After the Effective
Date, should the Government reduce the applicable Taxes and Duties below
those applicable to the Company then the Company shall become entitled to
such reductions.
21.2 Rate and Basis. The Company shall be liable to taxation under provisions of
the Revenue Code on its net taxable income, which shall include capital gain, as
follow:
a. Commencing on the Effective Date, the Company shall be taxed on its net
taxable income pursuant to Law; provided however, that during the fifteen (15)
year period following the effective Date such rate shall not exceed twenty-five
percent (25%).
b. The Company and its shareholders shall not incur in the Republic, any taxation
in connection with the distribution of dividends or any other reserves or assets;
provided that, in the event that any new class of shares of the Company is
issued to third parties, dividends paid to such third parties shall be subject to
taxation in accordance with all provisions of law (including the Revenue
Code).
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c. For the whole term of the Agreement, payments made by Company or any
person acting on behalf of the Company to nonresident and resident (Affiliates
or non-Affiliate) for activities directly related to the Operations of the
Company or the operating company, the withholding tax provided for by
Sections 806 or 905 of the Revenue Code, will apply as follows:
a. For interest payment described in Section 806(1) (1) and Section 905(h)
(1), tax shall be withheld at the rate of five percent (5%) of such
payments.
b. For other payments described in Section 806(f) (3) and Section 905(h)
(3), tax shall be withheld at the rate of six percent (6%) of such
payments.
c. Except as provided in this Section or elsewhere herein (namely the
exemption on withholding tax on dividends as provided at Section
21.2(b), the withholding tax will be governed by the provisions of the
Revenue Code.
d. The Company’s net taxable income shall be computed in accordance
with Law, unless otherwise provided in this Agreement, the net taxable
income of the Company shall be determined in Dollars.
e. in computing the Company’s net taxable income, the following shall be
allowed as deductions from its gross income:
(i) in the year incurred, all expenditures on Operations, other than
the capital cost of items of plant, equipment and Infrastructure
and other than any payment made to an expatriate employee by
the Company as reimbursement for Taxes and Duties paid by
such employee to the Government, or otherwise as specifically
provided below;
(ii) commencing in the year of construction, acquisition or
installation is completed, an allowance for depreciation of the
items of plant, equipment and Infrastructure referenced in this
Section 21.2(e), to be computed on a straight line basis;
(iii) in the year sold, the difference between the adjusted basis and
the selling price of any asset to the extent the latter is less
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the former or, if any asset is declared to be scrap or obsolete or if
construction, acquisition or installation of any asset is declared
to be scrap or obsolete or if construction, acquisition or
installation of any asset is abandoned prior to completion, the
adjusted basis of the asset in the year the asset is declared scrap
or obsolete or if construction, acquisition or installation of any
asset is abandoned prior to completion, the adjusted basis of the
asset in the year the asset is declared scrap or obsolete by the
Company or in which construction, acquisition or installation of
the asset is abandoned;
(iv) in the year incurred, all interest and other financing charges on
any proved indebtedness of the Company incurred in connection
with Operations;
(v) in the year paid or incurred, whichever is earlier, any and all
payments of Taxes and Duties other than those paid pursuant to
this Section 21.2;
(vi) in each year, all actual bad debts in excess of any reserve against
bad debts existing in such year and allowed as a deduction
against gross income;
(vii) in each year, currency exchange losses and accounting
translation losses when realized;
(viii) any prior year losses, to the extent not used to offset taxable
income in a previous year, but not to exceed five years except as
provided by Law;
(ix) all costs incurred prior to the Effective Date with respect to this
Agreement and the Contract Area and paid for by the Company,
subject to the review of such costs for accuracy by the Minister
of Finance and the Minister, which shall be capitalized and
amortized over five (5) Contract Years from the Effective Date;
and
(x) all charitable contributions made in Liberia for educational,
religious or medical purposes or for other social services
approved by Government to the extent that, with respect to any
46
tax year, such charitable contributions do not exceed twenty
percent (20%) of the Company’s gross income as defined in
Section 21.2(e).
21.3 Carry Forward Permitted. To the extent that, for any reason, any deduction is
not claimed in a year in which it is claimable, it may be carried forward pursuant
to the Revenue Code or for such other period as may be provided by any
amendment of such Law.
21.4 Additional Deductions. There shall be allowed as a deduction in the current
taxable year adjustments for any items charged to reserves, prior year charges,
and exceptional and extraordinary items in keeping with the Revenue Code:
21.5 Computation of Taxable Income in Dollars. Except as otherwise provided in
this Agreement, the net taxable income of the Company shall be determined in
Dollars in accordance with generally accepted accounting principles.
SECTION 22: ROYALTIES
22.1 Royalty Rate. The Company shall pay to the Government in Dollars a royalty
at the percentage rate specified below on the proceeds paid to the Company from
the sale of minerals recovered from a Production Area and sold by the Company:
a. Gold, silver and diamonds, three percent (3%)
b. all other minerals to be agreed but not to exceed five percent (5%)
22.2 Royalty Basis. Royalty shall be determined on a Net Smelter Return basis for
gold and silver, and Gross Revenue basis for diamonds.
22.3 Payment. Royalty shall be paid within thirty (30) days after the end of the
month in which the Mineral was shipped.
SECTION 23: SURFACE RENTAL
23.1 Contract Area. The Company shall pay to the Government, during each
Contract Year, a surface rental equal to Eight United States Cents ($0.08) per
acre for land in the Exploration Area and Two Dollars and Ninety Cents United
States Cents ($2.90) per acre for land in a Production Area. However, the
obligation to pay surface rentals with respect to any land leased to the Company
pursuant to Section 10.2(b) shall accrue beginning on January 1st of the year
following the year in which the land was either leased to the Company or
acquired by the Government, whichever is later. Surface rentals under this
Section shall not be payable with respect to Private Land in the Contract Area, or
land in the Contract Area dedicated to use as schools, hospitals, clinics and roads
or for other public or charitable purposes during the period of such dedication.
The Company shall receive a credit against surface rentals to the extent of any
payments it has made to reimburse the State pursuant to Section 10.2(b).
47
23.2 Payment. All such surface rentals shall be payable annually to the Government
in advance on or before January 15 of the year of period for which payment is
being made, according to the classification of land as Exploration Area or
Production Area as of January 1 of such year. With respect to land which is
thereafter declared to be a Production Area, the Company shall pay to the
Government, on January 1 of the following year, such additional amount (if any)
as is necessary to cause the effective rate of surface rental for such land for the
year in which it is declared to be a Production Area (the “Declaration Year”) to
be per acre, prorated for the number of calendar months in the year during which
such land is declared to be a Production Area (beginning with the month in
which such land is declared to be a Production Area).
SECTION 24: OTHER PAYMENTS TO THE GOVERNMENT
24.1 Import Duties and Excise Taxes. Pursuant to provisions of the Investment
Incentive Code of Liberia, the Company and Associates shall pay no Taxes and
Duties with respect to the import, use or purchase of goods, equipment, vehicles
and supplies (including medical training mid education supplies and housing and
office materials, furniture and supplies), and any other items required for and
used in Exploration, Development and Production. The Company and
Associates shall, with regard to items not used in Exploration, Development and
Production or otherwise exempt pursuant to this Section 24, pay import duties
and excise taxes under Law but, without prejudice to Section 18.10, at rates no
higher than those payable by any other producer of Minerals in the Republic.
24.2 Other Payments.
a. In respect of Operations and activities the Company and Associates shall pay to
the Government:
(i) Import duty and excise tax, pursuant to the Revenue Code, on fuel at the
rate of fifty percent (50%) of the import duty and excise tax provided by
Section 1708(c) of the Code. When power generation is made available
in said Contract Area by the Government or an agent of the Government
that is (i) at a cheaper rate than is currently available with the use of fuel
and (ii) is supplied in a quantity in excess of the Company’s peak power
requirements on a consistently available basis, then the Parties will
discuss and make the necessary adjustments considering that the fuel
duty discount will only be applied to the remainder of the fuel
consumption necessary for mining operations and which cannot utilize
grid power;
(ii) Ten percent (10%) of the import duty and excise tax under Laws, on
consumables (other than fuels and oils);
-48-
(iii) During the term of the Agreement, be required to pay 10% of the
Goods and Services Tax (GST) on consumables;
(iv) During the term of the Agreement, the Company and its Associates shall
be responsible for the payment of the BIVAC fees;
(v) Commencing on the Effective Date and thereafter for the period of five
(5) years following the Effective Date, the Company shall pay an annual
lump sum amount of Three Hundred Thousand Dollars (US$300,
000.00) to be paid in two installment of One Hundred and Fifty
Thousand Dollars (US$150,000.00) each on January 15 and July 15 of
each Contact Year, in lieu of Customs User Fees (CUF) on items
imported by the Company and its Associates into the Republic for use in
the Operations; and
(vi) Surtax. During the term of this Agreement, the Company shall pay a
Surtax on income as provided for under Section 730 of the Revenue
Code. For the purposes of this Agreement, the Project’s pretax rate of
return on total investment is set at 40% or greater, the threshold rate of
return for application of Surtax.
24.3 Exemption From Other Taxes and Duties. The Taxes and Duties and other
amounts specifically provided in this Agreement to be paid to the Government
are in lieu of all other Taxes and Duties and other amounts (except for ordinary
taxes, fees and revenue charges of general application that are minor in nature
and amount and that are not imposed upon or derived from Operation, such as,
for example, business and auto registration and driver’s license fees) which,
directly or indirectly, at any time, under any sovereign revenue or other Law or
otherwise, would be levied upon or payable to the Government by the Company
or its Associates with respect to any activity or transaction engaged in by any of
them, or any items or materials possessed, owned, transported, imported,
exported, processed, refined or otherwise dealt with by any of them. The above
shall apply, without limitation as to the generality of the foregoing, to any Taxes
and Duties that might be paid to the Government by any of the foregoing
Persons resulting from the subscription of equity or loan capital to or by any of
them; the payment or receipt of interest and dividends by any of them; the
import, export, acquisition, supply, sale, disposition or other dealing with
property and any payment, receipt, income, profit or gain made, received, earned
or realized by any of them as a result thereof. The above shall further apply, but
not be limited, to any payments made to non-residents, including payments for
goods and services, and payments of interest, dividends and other fixed and
determinable income.
24.4 Non-Application of Section 24.3. The provisions of Section 24.3 shall not
-49-
apply, however, to the Associates of the Company with respect to the following:
a. their Taxes and Duties measured by reference to their net income, profit and
gain under Law unless any such Person was resident in Liberia for less than one
hundred eight-three (183) days in the tax year;
b. subject to Section 24.4(a) above, their Taxes and Duties measured by reference
to their net income, profit and gain under Law, and earned by them in Liberia
except that no Taxes and Duties shall be payable with respect to any payments
made to any of them by the Company as reimbursement for Taxes and Duties;
or
c. the import into (mid subsequent re-export from) Liberia of personal and
household goods and effects except as to one motor vehicle per family and as to
their first move to Liberia to establish residency.
SECTION 25: FINANCIAL REPORTING AND CURRENCY
25.1 Accounting. All of the Company’s accounting under this agreement shall be in
dollars and all amount paid or received, and obligation incurred or transactions
carried out, in currency that is legal tender in Liberia or in any foreign currency
other than Dollars shall be converted to Dollars in accordance with and pursuant
to generally excepted accounting principle in the United States (except to the
extent inconsistent with the terms of this Agreement) based upon the prevailing
market rate of exchange of dollars and any such currency at the date of the
applicable transaction.
25.2 Exchange Control. The Company shall at all times have the right, without
restriction, directly or indirectly, of the Government, to obtain, hold, deal with
and disburse fund in such manner, currencies and places as it chooses. Without
prejudice to the general of the forgoing, the Company shall have the unrestricted
and unencumbered right to sell and receive payments for Minerals in any
currency, including the currency in which the minerals are sold, and proceeds
therefrom may be deposited in bank accounts outside of the Republic and held
there and remitted therefrom to any in the world, in any currency.
Notwithstanding the forgoing, the Company shall maintain at least one;bank
account with a bank or financial institution in the Republic. The Company; shall
also have the right to acquire from, and sell to, any person currency that is legal
tender in the Republic at the Prevailing Market Rate of exchange. Additionally,
any and all transaction between the Government and the Company dealing with
or referring to a currency that is legal tender in Liberia will be converted to
dollars at the Prevailing Market Rate of exchange on the date of such
transaction. Currency gains or losses for purposes of Section 21 shall be
determined by the Prevailing Market Rate of Exchang“
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25.3 Currency of Payment. Payment of Company’s direct obligations to the
Government for Taxes and Duties payable under section 21, 22,23 and 24 of this
Agreement shall be in Dollars, unless the parties otherwise agree. Any obligation
originally stated in currency that is legal tender in Liberia, or in any currency
other than Dollars, will be converted to Dollars at the Prevailing Market Rate of
Exchange on the date such obligation is paid, or shall fall due, whichever is
earlier. However, the Company shall make payments of sums it collect on behalf
of the Government, including, but not limited to, taxes withheld from the salaries
or wages of the employees of the Company, and any other sum payable to other
person from which a portion is required by law to be withheld or retained by the
Company on behalf of the Government, in the currency in which such salaries or
wages or other sums are paid. The Company shall have the right to make all
other payments whether to government or to other person in currency that is
legal tender in the Republic.
25.4 Right to Remit and Receive Payments. The Company shall have the right to
remit and receive in Dollars all payments of dividend, interest, principle and
other payable items arising from, as a result of, or related to Operations, and to
do so free of Taxes and Duties on such remittances or receipts, and without
penalties, any required total or partial surrender, exchange or confiscation of
such Dollars, or other direct or indirect transactions on such remittances or
receipts.
25.5 Audit.
a. The Company shall cause a book of account to be audited within three months,
or such longer period of time as the Minister and the Minister of Finance may
approve, after the close of each Financial Year by an independent auditor
selected by the Company, and a copy of the annual financial statement duly
satisfied by said auditor shall be furnished to the Government within (20) days
after its receipt by the Company. The Government shall have the right freely to
discuss with said auditor the result of the audit and certification, and the
Company shall take all reasonable measures to ensure that said author shall
cooperate fully in such discussions. The foregoing shall not in any way imply
acceptance of any such audit or certification by the Government or preclude the
Government from auditing such books of account as provided under Law,
provided that the Government shall provide the Company with a copy of any
such audit within forty five(45) days of receipt. However, once either the
Government or the Company has audited any book of accounts, financial
statement thus audited shall be considered acceptable and the audit results
binding and conclusive as to its findings, unless a Party shall have indicated to
the contrary within three (3) years after its receipt of a copy of the audited
financial statement.
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b. If the Company has, pursuant to this Agreement, underpaid its liability for
Taxes and Duties, the Government may, subject to the Revenue Code and
applicable Law, assess interest and penalties but not to exceed the London
Interbank Offering Rate (LIBOR) existing at the time of such assessment, plus
one (1) percentage point, multiplied by the amount underpaid. If LIBOR
should cease to be reported, then the rate to be applied shall be another agreed
substitute rate. If the Company has oveipaid its liability for Taxes and Duties
the, at its option, it may elect either to be reimbursed by the Government or to
apply such overpayment against future Taxes and Duties.
c. In case a review of records or books outside of Liberia is required, the
Company will cooperate to provide the Government with copies of the
information, books and records needed to complete the audit. If the
Government nonetheless deems it necessary for any part of such audit to be
performed outside of the Republic, the cost of associated travel will be borne by
the Government.
SECTION 26: INCIDENTAL RIGHTS
26.1 Use of Resources. Except as otherwise provided in Section 26, the Company
shall have the right to remove, extract and use water, gravel, sand, clay, stone
and timber (except for protected species, insofar as they do not interfere with or
hinder Operations) provided however that the Company shall not deprive any
Person of a constant and reasonable supply of usable water from a previously
utilized traditional source without replacing it, nor shall the Company, without
the Minister’s consent, interfere with any water rights enjoyed by any user under
any agreement with the Government made prior to the Effective Date of this
Agreement.
26.2 Imports. The Company shall be entitled to import and use in respect of
Operations, and subsequently export, any and all machinery, equipment,
consumable items, fuels, explosives and any other thing whatsoever reasonably
required with respect to Operations and in accordance with the terms of this
Agreement, provided, however, that the Company shall not re-export fuels and
explosives surplus to requirements if such surplus can be sold at competitive
international prices within the Republic. The Company shall at all times comply
with Law regarding the safe use, sale, disposal and security of explosives.
26.3 Taxes on Resale. The Company may sell, in Liberia, all imported items that are
no longer needed for Operations. However, if such imports were exempted from
Taxes and Duties, the Company shall fulfill all formalities required in
connection with the payment by the purchaser of all Taxes and Duties imposed
on such sales by Law.
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4
SECTION 27: ASSIGNMENT AND ENCUMBRANCE
27.1 Right of Assignment.
a. The Company shall have the right to assign or otherwise dispose of all or part
of its interest under this Agreement with the prior written consent of the
Government, which consent shall not be unreasonably withheld, or in
accordance with Section 29.4 .
b. In the event of the assignment or transfer of the rights of the Company, any
income derived therefrom shall be subject to tax under the Revenue Code,
however, in the case of an assignment or other disposition to an Affiliate,
Section 27.1(a) shall not apply.
27.2 Right to Encumber. The Company shall have the right to mortgage, charge or
otherwise encumber all or part of its interest under this Agreement for die
purpose of raising, from one or more Affiliates or third parties, financing for its
obligations under this Agreement, but any power of sale arising under any such
mortgage, charge or other encumbrance shall only be exercised with the prior
written consent of the Minister, which consent shall not be unreasonably
withheld.
27.3 Notice of Assignment or Encumbrance. The Company shall promptly give
Notice to the Minister of any assignment, mortgage, charge or other disposition
or encumbrance pursuant to this Section 27 and on any financing for Operations
pursuant to Section 29.4.
SECTION 28: TERMINATION
28.1 Termination by the Company. Notwithstanding any other provisions of this
Agreement, the Company shall have the right to terminate this Agreement at any
time, either in its entirety or as to any part of the Contract Area, thirty (30) days
after giving Notice to the Government if such Notice to the Government is given
within five (5) years of the Effective Date, or one hundred eighty (180) days
after giving Notice to the Government if such Notice is given more than five (5)
years after the Effective Date. The Company may also terminate this Agreement
pursuant to Section 32.1.
28.2 Termination by the Government. Subject to the provisions of Section 30, the
Government shall have the right to terminate this Agreement if any of the
following events (hereinafter called “Events of Default”) shall occur and be
continuing:
a. the Company shall have failed to make any payment due under Section 21,
22, 23, and 24 and such failure is not cured within 30 days of Notice from
b. the Company shall have failed to make any other payment due under this
Agreement, the Exploration Regulations, any Mining License issued
pursuant to this Agreement or any undertaking of the Company provided for
in this Agreement and such failure is not cured within 30 days of Notice
from the Minister or the Minister of Finance; or
c. If the guarantee delivered pursuant to Section 20.4 shall for any reason no
longer be enforceable in accordance with its terms, and the Company shall
have failed to provide a replacement guarantee within sixty (60) days after
having notice or actual knowledge thereof; or
d. Where the Company shall fail to comply with its material obligations under
this Agreement and such failure shall have a materially adverse effect on the
Government;
e. Where the Company shall (i) voluntarily make an assignment of all or
substantially all of its assets for the benefit of creditors other than an
assignment made to secure indebtedness incurred in the ordinary course of
business, (ii) file a petition or application to any tribunal for the appointment
of a trustee or receiver for all or any substantial part of the Company’s assets,
(iii) commence any proceedings for its bankruptcy, reorganization
arrangement or insolvency under the laws of any jurisdiction, whether now
or hereafter in effect, or if any such petition or application is filed, or any
such proceedings are commenced against it, indicate its approval thereof,
consent thereto or acquiescence therein, or (iv) if any order is entered
appointing any such trustee or receiver, or adjudicating the Company
bankrupt remain in effect for more than ninety (90) days;
f. Where the Company shall fail to carry out Exploration as required by
Section 5.1, cease Exploration for a period of twelve (12) consecutive
months or cease Production with respect to all Production Areas for a period
of twenty four (24) consecutive months unless such failure or cessation is
consented to by the Government or is caused by force majeure.
28.3 Opportunity to Cure. In the case of an alleged Event of Default described in
Section 28.2 and upon the expiry of the cure periods set out therein, the
Government, before taking any further action, shall provide Notice to the
Company of the alleged occurrence of such Event of Default and of the
Government’s views in that regard and shall offer the Company a fair
opportunity to consult with the Government to resolve the matter. If, after a
reasonable period of time of consultation, the Government is of the reasonable
opinion that the matter cannot be resolved by further consultation, the
Government may then send to the Company Notice of the Government’s
intention to terminate this Agreement (the ‘Termination Notice”). If the Event of
Default is not cured within sixty (60) days after the Termination Notice, or
within such longer period as may be necessary to allow a reasonable period of
time to effect such cure, then this Agreement shall be terminated.
28.4 Disputes Regarding Events of Default. Notwithstanding the provisions of
Sections 28.2 and 28.3, if the Company disputes whether there has been an
Event of Default described in Section 28.2 and, within sixty (60) days after
receipt by the Company of the Government’s Notice of its intention to terminate,
refers such dispute to arbitration in accordance with Section 30, then termination
of this Agreement shall not take effect until the finality of, and in accordance
with, an arbitration award upholding the Government’s right to terminate.
28.5 Winding-up Commission.
a. That at the time of Notice of any termination of this Agreement, and pursuant
to its terms, the Parties shall set up a winding-up commission (hereinafter
referred to as the “Commission”) which shall consist of the Technical
Committee and two (2) additional members, one each to be appointed by the
Government and the Company. The chairman of the Commission shall be
appointed by the Government from among the members of the Commission.
Each member of the Commission, including the chairman, shall have only one
(1) vote.
b. That the chairman of the Commission shall issue a Notice and agenda for the
first meeting of the Commission, which shall be held no later than three (3)
weeks after the establishment of the Commission. Thereafter, the Commission
shall hold periodic meetings at least once a calendar month.
c. That the Company shall present to the Commission a detailed report on the
status of the Operations of the Company under this Agreement so that the
Commission will be able to make recommendations to the Government on
steps which the Government might take under the circumstances with a view
to preserving the viability of the enterprise, employment in the area and the
centers of population.
d. That at the request of the Government, the Commission shall establish plans
for the full or partial cessation of Operations including the disposition of
assets and their demolition or removal according to Section 29.
e. That at the request of either Party, any meeting of the Commission shall be
held outside Liberia, and the requesting Party shall be responsible for the
travel cost of the participants.^
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f. That the Company may elect not to participate on the Commission, in which
event its obligations under this Section 28 shall be limited to providing the
information required in Section 28.5 (c) above.
SECTION 29: DISPOSITION OF ASSETS
29.1 Immovable Assets. Subject to Section 29.4, upon termination of this
Agreement, except for termination resulting from a breach of this Agreement by
the Government, or termination pursuant to Section 32.1, all permanent
immovable assets of the Company in the Contract Area that are not otherwise
the property of the Government shall become the property of the Government
without charge. In the . event of a breach by either Party, the value of the non¬
movable assets shall be taken into account in any award of damages under
Section 30.5.
29.2 Movable Assets. Subject to Section 29.4, at any time after termination of this
Agreement and with respect to each movable asset of the Company in Liberia,
which the Company desires to sell (other than to an Affiliate at fair market
price), the Government Shall have the first option to purchase such asset at the
fair market price thereof, such price to be paid in Dollars. If the Government
does not exercise such option within one hundred twenty (120) days after being
informed by the Company that it desires to sell such asset, then the Company
may sell such asset to any other person, including the Government, for such
price as it may be able to obtain therefore, or remove such asset from Liberia
without Taxes and Duties or other liability to the Government. The proceeds of
any such sale shall accrue to the Company. If the Government purchases any
such asset, it shall pay the purchase price within sixty (60) days after such price
has been agreed upon or determined, unless the Parties otherwise agree.
29.3 Removal of Movable Assets. The Government, by Notice to the Company
within a reasonable period but not to exceed one (1) year after termination of
this Agreement, except for termination resulting from a breach by the
Government, may require reasonable disposal or removal, in accordance with
Law, of any or all assets, including unusable assets, remaining within the
Contract Area after total disposition of assets in accordance with this Section 29,
and if the Company does not reasonably dispose of or remove such assets within
a reasonable period after said Notice, the Government may effect such
reasonable disposal or removal at the expense of the Company, but the Company
shall be entitled to any income realized from the salvage value of such assets.
29.4 Financing Operations. The Government acknowledges that the Company may
use debt financing (“Finance”) provided by international banks (“Finance
Parties”) to finance the development and operation of the Company’s
Operations, consistent with the provisions of Section 27 in respect of
Government’s approval.^.
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a. The Finance Parties will have an uncontested first ranking claim against the
assets of the Company (including its rights under this Agreement) which are
subject of the security associated with the Finance.
b. If the Finance Parties were to request the enforcement of the security over the
mining license or the rights under this Agreement (together the “Mining
Rights”), it may create an entity in order to acquire the Mining Rights (and
possibly also the other assets of the Company if so ordered by a court, arbitral
tribunal, or voluntarily relinquished by the Company). In the event of a
default, the Government shall give its authorization for the transfer of the
Mining Rights (and shall not exercise the right of pre-emption or first refusal
as regards the mining installations, machines, equipment or other assets that
this entity might wish to acquire), provided however that, in the reasonable
opinion of the Government, the new entity has the technical and financial
capacity to take over the Mining Rights.
c. If the Finance Parties proceed with the enforcement of the security over the
Mining Rights but do not want to create an entity to acquire the Mining
Rights, the Government agrees to give its authorization for the transfer of the
Mining Rights to any transferee that might be proposed to it by the Finance
Parties or dial might be awarded the Mining Rights, provided that said
transferee:
(i) has the technical and financial capacity to take over the Mining
Rights; and
(ii) agrees to assume all the rights and obligations of the grantor arising
from Mining Rights and applicable Law. The technical and
financial capacity of the transferee shall be assessed in accordance
with the international standards applicable in the mining sector.
SECTION 30: ARBITRATION
30.1 Submission of Arbitration. Any dispute between the Government and the
Company arising out of, in relation to or in connection with this Agreement or its
formation, or the validity, interpretation, termination, enforceability or breach of
this Agreement (including any dispute concerning whether the Government or
the Company have violated or is in breach of this Agreement or any law
affecting the rights, obligation or duties of any party under this Agreement), for
which resolution by submission to an independent expert is not specifically
provided elsewhere in this Agreement shall be exclusively and finally settled by
binding Arbitration, pursuant to the rules of UNCITRAL. Either of the Parties to
such dispute may institute Arbitration proceedings by giving Notice to the other
party, including in each a statement of the issue in dispu^
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d
l.
30.2 Arbitrators. Any arbitral tribunal constituted pursuant to this Agreement shall
consist of one (1) arbitrator to be appointed by the Government, one (1)
arbitrator to be appointed by Company and one (1) arbitrator who shall be
appointed jointly by the first two arbitrators and shall not be a citizen of a
country to which either party belongs. No such arbitrator shall have an interest
in the matter in dispute, nor of the Parties thereof.
30.3 Venue. Arbitration proceedings conducted pursuant to this agreement shall be
held in Monrovia, Liberia or London, United Kingdom, and shall be conducted
in the English Language. The cost of the proceeding shall be assessed and borne
in such manner as the arbitral tribunal shall decide. Any procedural issues that
cannot be determined under the arbitral rules of the UNCITRAL shall be
determined pursuant to applicable laws as set forth in section 34 below.
30.4 Waiver of Sovereign Immunity. The Government hereby irrevocably waives
all claims of immunity from the Arbitrators’ jurisdiction, and from the
enforcement of any arbitral award rendered by a tribunal constituted pursuant to
this Agreement including immunity from services of process and immunity from
the jurisdiction of any court situated in any state, country or nation.
30.5 Reseivation of Rights. The right to refer a claim or dispute to arbitration
hereunder shall not be affected by the fact that a claimant or respondent has
received full or partial compensation from another Person for a loss or injury
that is the object of the claim or dispute, and any such other Person may
participate in such proceedings by right of subjugation.
SECTION 31: NOTICES
31.1 Written Communication. All orders, approvals, declarations and Notices of
any kind between the Parties which are required, expressly authorized or
provided for under this Agreement (hereinafter each referred to as a
“Communication”) shall be in writing and delivered by hand, by telefax, by
postage prepaid registered mail, by any other means of communication agreed
upon by the Parties, or pursuant to Section 31.4. The Communication shall also
be signed by a duly authorized representative of the Party dispatching the
Communication.
31.2 Delivery. A delivery of a communication to a Party shall be deemed to have
occurred in any of the following circumstances:
58
a. When an official of the Government, in the case of the Government, or a
director of the Company, in the case of the Company, has signed a return
receipt of registered mail;
b. When a telefax confirmation of receipt has been electronically issued to the
sender by a receiving telefax device at a telefax number authorized hereby
indicating receipt of a Communication sent via telefax;
c. When verification of receipt of the Communication has been obtained in any
manner specifically agreed to in writing by the Parties; or
d. When a Party has directly or indirectly acknowledged receipt of the
Communication in writing.
31.3 Address. All Communications from the Government to the Company shall be
addressed as follows:
Bea Mountain Mining Corporation
Allison Street (behind Lone Star Communication office)
Congo Town, Liberia
31.4 Copies of Communication.
All Communications from Company to Government shall be addressed to the
Minister of Lands, Mines & Energy, Monrovia, Liberia, with copies to:
The Minister of Finance The Chairman, National Investment Commission
Ministry of Finance National Investment Commission
Monrovia, Liberia Monrovia, Liberia
31.5 Change of Address. Either Party may, upon prior Notice to the other Party, at
any time change the designation of the Person named to receive
Communications from the other Party, the address or telefax number of the
office in Liberia, or elsewhere authorized to receive such Communications or the
address or addresses or telefax number or numbers of the offices to which copies
of Communications from one party to the other are to be delivered.
SECTION 32: FORCE MAJEURE
32.1 Application. In the event either of Party being rendered unable in whole or in
part, by force majeiire to carry out any obligation under this agreement other
than an obligation to make payments or money that accrued prior to thd
commencement of force majeure, such person shall give notice and the
particulars of such force majeure in writing to the other party as soon as
practicable after occurrence of the cause relied on , and the obligation of the
party giving such notice in so far as it is affected by such force majeure, shall be
suspended during the continuance of any such inability; However, any such
inability, shall as far as practicable be remedied with all reasonable dispatch. All
time periods specified in this agreement for the performance of obligations or
the enjoyment of any rights that are affected by force majeure, except in
connection with an obligation to make payments of money that accrued prior to
the commencement of force majeure, but including the term of this Agreement,
shall be extended by the period of time the inability caused by such force
majeure exists. Sixty (60) days after giving Notice to the Government, ;thc
Company shall have the right to terminate this Agreement without further
obligations or cost (except for any obligation and cost that accrued prior to the
commencement of the force majeure) if a condition of force majeure has existed
for a period of one (1) year or more which renders Production impracticable or
unprofitable, or prevents Production, the export or sale of Minerals, or the
Company’s exercise of a substantial part of its rights under this Agreement.
32.2 Definition. The term “force majeure” as used in this Agreement shall mean acts
of God, accidents, wars, acts of war, invasions, acts of public enemies, hostilities
(whether war is declared or not), restrictions on trade or other activities imposed
by any sovereign, embargoes, blockades, revolutions, riots, civil commotions,
sabotage, strikes and/or other industrial, labor oremployer-employee disputes (if
not cured for a period of more than two (2) months) fires, explosions,
earthquakes or any natural disasters, expropriation of facilities or goods,
epidemics, and any similar cause, provided any such cause was not within the
reasonable control of the Party claiming suspension and could not have been
avoided or overcome by such Party through the exercise of due diligence.
32.3 No Required Settlement. Nothing in Sections 32.1 or 32.2 above shall, in and
of itself, be construed to require the Company to settle any strike, lockout or
other labor or industrial dispute except as may be required by Law.
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SECTION 33: LIBERIAN PARTICIPATION IN OWNERSHIP
33.1 Government Ownership of Equity. Government shall receive, free of charge,
an equity interest in the Company’s Operations equal to ten percent (10%) of its
authorized, issued and outstanding share capital existing at any time and from
time to time, without dilution. Dividends to shareholders will be payable only
once all the project capital investment and any related project loan and interest
have been fully recovered.
i
33.2 Liberian Participation in Equity. Not later than one hundred eighty (180) days
after the expiration of the final term of the Exploration License, the Company
shall notify the Minister that a number of shares of its stock equivalent to ten
percent (10%) of any offering of the stock of the Company made to any other
person on of subsequent to the expiration of the final term of the Exploration
License is available for purchase by Government of Liberian citizens at fair
market value and upon reasonable terms. This offer shall remain open for one
hundred twenty (120) days.
SECTION 34: GOVERNING LAW
This Agreement and the rights, obligation and duties of the Parties hereunder shall be
construed and interpreted in accordance with Law and by such rules and principles of generally
accepted international law as may be applicable, particularly with regards to an investment by
nationals of one country in another country. Notwithstanding the foregoing, in the event of a
conflict between this Agreement or the rights, obligations and duties of a Party under this
Agreement, and any other Law, including administrative rules and procedures and matters
relating to procedure, and applicable'intemational law, then this Agreement shall govern the
rights, obligations and duties of the Parties.
SECTION 35: ENTIRE AGREEMENT - MODIFICATIONS
35.1 Entire Agreement. This Agreement, including the Appendices attached hereto;,
represents the entire agreement between the Parties and supersedes all previous
oral and written negotiations and agreements.
35.2 Amendment. Any modification or amendment of any terms of this Agreement
SECTION 36: PERIODIC REVIEW
36.1 Modification and Review. The Parties agree that this Agreement: shall be
subject td periodic review once every five years after file commencement of
production for the purpose of good faith discussions to effect such modifications
to the Agreement as may be necessary or desirable in the light of any substantial
changes in circumstances which may have occurred during the previous five
years.
36.2 Good Faith. It is understood that this clause subjects the Parties to a simple
obligation to consider in good faith the proposed modification of the Agreement*
subject to section 35.2. This Agreement shall remain unaltered and in force
during any such period of consideration.
SECTION 37: NON-WAIVER OF RIGHTS
The non-exercise or partial exercise by one or the other of the parties of any of its rights
under the terms of this Agreement shall not in any case constitute a waiver of that right.
SECTION 38: SUCCESSION
The terms and conditions of this Agreement shall inure to the benefit of and be binding in
addition to the parties themselves upon the successors, beneficiaries and assignees of the Parties
including, without limitation, all future manifestations or forms of public power exercising
sovereign authority over all or part of the present territory of the Republic.
SECTION 39: SURVIVAL PROVISION
Notwithstanding termination of this Agreement by either Party or for any reason,
including a termination due to a finding that this Agreement of a portion thereof is void, invalid,
or unenforceable, Sections 1,20.4, 29,30, 34 and 39 shall survive such termination and shall
remain effective as to any matters which are the subject of this Agreement or which arise out of, ■
in relation to or in connection with this Agreement. Moreover, any such termination shall be
without prejudice to rights, duties and obligations that have accrued prior to termination and,
notwithstanding such termination such provisions of this Agreement as are reasonably necessary
for the lull enjoyment and enforcement of such rights, duties and obligations shall survive such
termination for the period necessary.
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I 1' 'I *.
IN WITNESS WHEREOF, the Parties haye.signed this Agreement, through their respective duly
authorized representatives, on I
Signed in 5 Originals on the 7* day of September 2015.
[Signature]
XR. CHRISTIANA P. TAH
MINISTER OF JUSTICE, R.L.
APPROVED:
PRESIDENT OF THE REPUBLIC OF LIBERIA
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