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REPUBLIC OF LIBERIA)


MONTSERRADO COUNTY)





























MINERAL EXPLORATION AGREEMENT


BETWEEN





THE REPUBLIC OF LIBERIA





AND





CRATON DEVELOPMENTS INC.


 THIS MINERAL EXPLORATION AGREEMENT is entered «ito. by end


between the REPUBLIC OF LIBERIA through its Government represented


by the Deputy Minister for Operations of the Ministry of Lands Mines &


Energy (hereinafter referred to as the "Government" |


AND


CRATON DEVELOPMENTS INC., a corporation existing and doing business





under the laws of Libena represented by Lon Lindstrom its Chief Executive


Officer (hereinafter referred to as the “Operator"), hereby:








WITNESSETH:


WHEREAS, title to Minerals within the territory of the Republic of Liberia is


vested in the Republic of Libena (the Republic) and all rights related to the


exploration for and exploitation of such minerals pertain exclusively to the


Republic, and


WHEREAS the Ministry of Lands. Mines & Energy through the Minister of


Lands. Mutes & Energy is by law charged with tlie responsibility of


administering the mineral laws of the Republic and m that process to ensure


the efficient development of the mining industry, and


WHEREAS, the Operator has successfully completed a program of


WHEREAS the Government is determaied to accelerate the development of


the mining industry of Ltoena. and therefore desires to promote the


Development of minerals which may exist m exploration areas for the


economic and social benefit of L*>ena and recognizes that a large capital


expenditure is necessary to ensure that such minerals are economically and


efficientty developed, and





WHEREAS Government agrees to grant the Operator such rruneral rights


and privileges in consideration of the undertaking by the Operator to make


annual payments, and to pay rents, royalties and other fees hereinafter


prescribed and to perform and observe the terms and conditions of this


agreement.





NOW, THEREFORE, for and m consideration of the premises, the mutual


promises exchanged between the parties hereto (the Parties) terms and


conditions herein contained the Parties hereto mutually agree as fo«ows

















2


 1.0 DEFINITIONS





Unless the context shall otherwise clearly indicate, the following terms


wherever used in this Agreement shall have the respective meanings


set forth below:


1.1 Affiliate: Means a Person that controls, is controlled by or is under


common control with the Operator 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 the voting power in another person


1.2 Associated Minorals: The term “Associated Minerals" means any


mineral, metal element or precious or semi-precious stone(s) other than


Gold which is found, discovered, mined, removed, extracted or otherwise


produced as an incident to the Operator's activities in exploiting a Gold


Deposit or Deposits.


1.3 Centro: tho term "Centre'' means the International Centre for Settlement


of Investment Disputes established under the auspices of the


International Dank for Reconstruction and Development


1.4 Convention the term ‘Convention* means the Convention on the


Settlement of Investment Disputes between States and Nationals of


Other States opened to signature at Washington. DC, United States of


America on March 18. 1965


1.5 Effective Date The term "Effective Date" means the date provided in


Section 26. on which this Agreement shall become effective


1.6 Exploration Area: The term "Exploration Area" means at any particula


time the area or areas then designated in accordance with Section 3 2.


but only during the Exploration Period.


1.7 Exploration Period: The term “Exploration Period" means the period


described in Section 2.1.


1.8 Gold Deposit: The term "Gold Deposit" means a deposit whose


predominate economic value, as determined by the result of exploratory


drilling, is attributable to the Gold contained therein and which is of such


character as to permit the economic production thereof.


1.9 Government: The term "Government" includes all of the branches


divisions, instrumentalities and agencies of the Government of the


Republic of Liberia.














3


1.10 Infrastructure: The term "infrastructure" means assets of the following


types


(a) Immovable transportation and communication facilities (including


roads bridges, railroads, airports, landing stnps and landing pads


for aircraft, hangars 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 facilities and warehouses, and loading and


unloading facilities);


(c) Immovable power, wuter 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 other facilities (including offices machine shops.


foundries, repair shops and warehouses); and.


(f) Movable facilities and equipment affixed to and used as an integral


part of the immovable facilities descnbed m paragraphs (a) through


(e)


1.11 Operations and Activities The term 'Operations and Activities' means


the exploration, mining and management operations of CRATON


DEVELOPMENTS INC


1.12 Operator The term "Operator" means CRATON DEVELOPMENTS INC.


1.13 Plant and Equipment The term "Plant and Equipmenr means the


following assets (other than infrastructure) used for Operations and


Activities


(a) Movable and immovable facilities and equipment to mine, crush,


sluice, dredge, wash, screen, dry. benefoate and otherwise


explore for or produce Gold and/or Associated Minerals


(b) Movable and mmovable fac*ties and equipment used primarily m


connection with the operation of the foregoing (including offices,


machine shops, foundries, repair shops and warehouses).


(c) Movable and mmovab*® faabbea and eqmpmant lor the


maintenance of personnel (including dwellings, stores, mess halls


and recreational facilities); and


(d) Movable facilities and equipment used in connection with any of the


infrastructure


1.14 Produce The term "Produce" as used in reference to Gold Associated


Minerals or any other mineral deposit shall include drill, develop, extract,


strip, mine, sluice, dredge process (including beneficiate. concentrate or


otherwise treat), stockpile, transport, load, sell and export, for the


account of the operator


1.15 Production The term "Production" as used in reference to GoU


Associated Minerals or any other minerals, shall mean the commercial


exploitation of Minerals found in the Exploration Area and al activities m


respect of or incidental thereto, including the design, construction,


installation, fabrication, operation, maintenance, dnlling. development


extraction, stripping, mining sluicing, dredging, processing (including


beneficiation, concentration or other treatment). stockpiling


transportation, loading saiu and exportation by the Operator








2.0 TERM OF THE AGREEMENT


2.1 The term of this Agreement shall commence on the Effective Date and


shall expire at the earlier of (a) such time as the Operator shall have


completed exploration actnnbes or (b) three (3) years after the


Effective Date with an extension of another (2) years at the option of


the Operator ptus any period of renewal to which the Government may








3 0 EXPLORATION RIGHTS


3 1 Grant of Exploration Rights On the terms and conditions here ■»


provided the Government hereby grants to the operator, aurmg me


period hereinafter defined commencing with the Effective Date plus


any extension of such period to which the Government may agree


(referred to herein as the "Exploration Period") the exclusive right to


explore for Gold. Diamonds Associated Minerals and any other


mineral deposit (except iron ore) m the Exploration Area




















5


3.2 Exploration Area





(a) The Exploration areas shall lie in Gibi Mountain Aroa. as


identified on the attached map. with metes and bounds or


coordinates attached hereto as Appendix "A".


(b) The Operator shall commence exploration as soon as possible


after the Effective Date but not later than 180 days after the


Effective Date




cease to exist


3.3 Surrender of Exploration Aroa Unless the Minister and the Operator


otherwise agree:


(a) At or before the end of the initial term of the Exploration Period,


the Operator shall surrender a minimum of fifty percent (50%) of


the Original exploration aroa


(b) At or before the end of the extension of the Exploration Penod. the


Operator shall surrender the remainder of the Exploration Area


and. upon such surrender, the Exploration License shall


automatically terminate.


(c) Notwithstanding paragraphs 3.3 (b) above, if the Operator wishes


to retain all of. or any part of, the Exploration area upon expiry of


the exploration period, it shall have the right to do so by applying


for a mineral development agreement over the area


3.4 Minimum Expenditures


(a) Commencing no later than six (6) months after the Effective Date


the Operator shall diligently and without inteiruption explore for


gold, associated minerals and any othui mineral deposit within the


Exploration Area; and should the Operator fail to so comply in


accordance with the provisions of this section, then this


Agreement shall be liable to cancellation


(b) During the Exploration Period, the Operator shall expend not less


than Two United States Dollars (US$2 00) per acre during each


calendar year as Exploration Costs, the latter being defined to


comprise all of the Operator’s managerial and corporate costs


related to exploration














(•


4.0 Pilot Mining Rights





The Operator, in addition to exploration, is hereby also granted the


right to produce gokJ. associated minerals and any other mineral under


a pilot mining plan to be approved by the Minister of Lands, Mines and


Energy


5.0 Mineral Development Agreement


During or by the expiry of the Exploration Ponod. the Operator may


apply for a Mineral Development Agreement. This agreement shall de


concluded in accordance with the Minerals and Mining Laws and


Regulations of Liberia.





6.0 INCIDENTAL RIGHTS


6.1 Grant of Rights: Subject to the terms and conditions herein provided,


and solely for the purposes incidental to the exercise of the rights


granted to the Operator under Sections 3 and 4 of this Agreement, the


Government hereby grants lo the Operator the right, within the


Exploration Areas


(a) To acquire, build, and construct Infrastructure. Plant and


Equipment, and other facilities, and to maintain and operate the


same.


(b) To remove, extract and use. solely for its own exploration


purpose, free of tax or other charge or fee imposed by the


Government, any water, gravel, sand, clay, stone and timber


(except protected fauna and flora); provided however, that where


any land, villages, houses, person, or watering places for anxnals


have been supplied water by right through custom, the Operator


shad not deprive them of a constant and reasonably supply of


usable water, nor shall the Operator, without the Government's


consent, interfere with any water or other rights enjoyed by


anyone under any agreement with the Government


6.2 Reservation of Rights: The Government reserves the right on


reasonable notice to and after consultation with, the Operator, to


construct roads, highways rairoads telegraph and telephone lines and


other lines of communication within the Exploration Area




















7


6.3 Condemnation If the use of any pnvatety owned or occupied property


within the Exploration Area is reasonably required for the conduct of


operations hereunder, and the Operator is unable to come to an


agrooment with the owner or occupant of such property for such use.


the Operator may request the Government, which request shall not be


unreasonably denied, to exercise its right of eminent domain with


respoct to such property The Operator shall reimburse the


Government for any compensation paid or payable to the pnvate owner


01 occupant us u result ol the Government’s exorcise of such right








7.0 INFRASTRUCTURE


7.1 Construction by Operator The Operator shall, at its own cost,


undertake the construction, installation and improvement of all or any


pari of the infrastructure. A* such Infrastructure shall be maintained


and operated by the Operator tn a reasonably good manner.


7.2 The Government warrants not to exercise its rights to expropriate land


In the Exploration Area if such expropriation shall in any way hinder the


development of the Operation and Activities








8.0 CONDUCT OF OPERATIONS


8.1 Best Exploration Practices The Operator shall conduct all of its


operations hereunder using appropriate modem and effective Plant


and Eqixpment. Infrastructure, materials and methods Such


operations shall be conducted in a proper and workmanlike manner,


with due diligence, efficiency end economy, in accordance with the


laws of Liberia and wdh the best maung and engaieenng practices


used by effoent operators at sanaar operations etsewhere ai the


world











8.2 Maximum Economic Operation





(a) The Operator shall use its best efforts to produce Gold and


associated minerals from each Pitot Mining Aiea and at the


maximum capacity oI each Production Aiea consistent with the


optimum economic devetopmeni of all Production Areas


Production shal not be restricted to high grades ol Goto and other


minerals, to the neglect of lower grades




















K


 (b) The Operator shall use its best efforts to sell Gold and any


Associated Minerals produced at the maximum prices possible in


the light of the prevailing international market prices ana


conditions, and in accordance with good competitive business


practices generally accepted at the time The Operator hereby


undertakes to sell at least 95% of all Gold or Associated Minerals


within forty- five (45) days after their production Notwithstanding


the foregoing, with the prior approval of the Government, the


Operator shall have the right to delay the sale of a greater


proportion of the Gold, and/or Associated Minerals produced


beyond the said forty five (45) day penod, upon such terms and


conditions as the partios may agree








9.0 HEALTH AND SAFETY


The Operator shall install, maintain and use modem health and safety


devices and shall practice modern health and safety procedures and


precautions (including, regular safety training instruction for its


employees) as are in accordance with the best exploration and mining


engineering practices, and acceptable labor safety standard In this


respect, the Operator shall comply with health and safety rules,


regulations, and Laws of the Government.








10.0 EMPLOYMENT, TRAINING AND SECONDMENT


10.1 Employment of Liberians: The Operator shall not employ foreign


unskilled labor. To the maximum extent feasible, the Operator shall


employ Liberian citizens at all levels.


10.2 Training of Liberians: The Operator shall provide on a continuing


basis for the training of its Libenan employees, in order to qualify them


for skilled, technical administrative and managerial positions


10.3 At least two (2) professionals (mining engineers/geologists) from


the Ministry shall be seconded to the Operator's operations at the


expense of the Operator.








11.0 CONSERVATION


11.1 The Operator shall encourage economic and social development


during the term of his operation and shall provide for meetings on a


regular basis between representatives of the Operator and the loca


communities for the purposes of considering and making


recommendations to the Operator and to the Government with respect


to matters of community interest, such that it shall not hinder the


Operator's work.


9


11.2 Natural Rosourcos The Operator shall take preventive, corrective


and/or restorative measures to ensure that all streams and water


bodies within or bordering Liberia, all dry land surfaces, and the


atmosphere be protected Irom pollution, contamination or damage


resulting from operations hereunder, as per Section 7.0 hereof, and


that any existing pollution, contamination and damage of or to such


water bodies, land surfaces, and atmosphere resulting from operations


hereunder be rectified, and that the terrain, in general, be restored to


and left In a usable state for purposes which are economically or


socially desirable.








12.0 ADEQUATE CAPITAL AND STOCK OWNERSHIP


The Operator shall provide all capital necessary for the economic and


profitable exploration for Gold and Associated Minerals and the


production of these Minerals under this Agreement. In this connection,


the Operator shall at all times maintain a reasonable and prudent


capital structure








13.0 TAXATION


13.1 In General The Operator shall be kabie to aN taxes fees, duties,


excises, and other charges imposed by Liberian Laws of general


application, except as may be otherwise provided by other laws and


administrative regulations granting exemptions from customs duties


and excise taxes,


13.2 INCOME TAX The Operator shai be subject to Ubenan Income Tax


Law of General Application, except that notwithstanding any provisions


of such laws, the rate of tax applicable to all the taxable income of the


Operator shall be thirty percent (30%).








14.0 ROYALTIES


14.1 Gold: The Operation shall pay to the Government a royalty in respect


of all gold discovered during exploration and produced under pilot


mining. The amount of such royalty shall be 3% of the se*ng prices


f o b. Monrovia for the Gold and Diamond The royalty shall be paid


within thirty days of export




















10


14.2 Associated Minerals and other Mineral Deposits The Operator


shall also pay to the Government a Royalty In respect of any


Associated Minerals or any other mineral, as defined in Section 12


produced hereunder and shipped or otherwise disposed of by the


Operator The amount of said royalty shall be negotiated and agreed


upon by the parties


15.0 Exploration Foes and SURFACE RENTAL








15.1 The Operator shall make an annual payment of Five Thousand


United States Dollars (US$5.000 00) for the grant or renewal of the


Exploration License


16.2 The Operator shall make annual lump sum rental payments of


US$20,000.00 to the Government for all unsurrendered portions of the


Exploration Area in the first two years and Eighteen US Cents (US$0.18) per


acre thereafter The Operator shall also make a payment of Three United


States Dollars (US$3.00) per acre for all areas operated under pilot mining


15.3 The first payment for the exploration license fee and surface


rental shaH be made In accordance with a plan to be mutually agreed between


the parties Subsequent payments shall be made within thirty (30) days alter


each subsequent anniversary of the Effective Date


16.0 RECORDS. REPORTS. AND INSPECTION


16.1 Availability of Records The Operator shafl mamtam at its


principal office In Liberia, or at such other office as the Government


may approve


(a) Copies of all maps, geological, mmmg. or other earth science


reports and mineral analysis (together with al field data which


supports such reports or data), production records, marketing


report and any other data obtaned or compiled by the Operator


as a result mining Operations and Activities Al rdormabon. data


and material specified in this paragraph shafl be in a form


suitable for reproduction, use or processing as the case may


be The Operator shafl have the nght 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

















II


(b) The Operator shaH 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 pitot mmmg operations and Activities from time to


time and a reasonable number of Government personnel may.


upon prior notice to the Operator, at reasonable times and subject


to compliance w4h the Operator's security requirements attend


and inspect Mining Operations and Activities conducted m Liberia


(c) Within thirty (30) days after the end of each calendar quarter the


Operator shall provide the Government with a report on all


Operations and Activities for that calendar quarter including


Minerals recovered and sold. Within ninety (90) days after the end


of each Financial Year the Operator shall furnish the Government


with a report on all Mining Operations for that Financial Year


including Minerals recovered and sold


16.3 Report* The Operator shaH submit such reports to the Government, m


such form, in such detail, and at such hme. as may be required by law.


or as the Government may otherwise require with respect to


exploration, production, employment and training, marketing and such


other matters as may be related to the conduct of operations


hereunder


16.4 Inspection: The Government may. upon reasonable notification to the


Operator, inspect the books and records of the Operator, and any all


facilities and area related to the Operator's operation as provided


hereunder The Operator shall make its appropriate employee available


to render assistance with respect to any such inspection


16.5 Confidentiality of Operator's Reports The Government shall treat all


information supplied by the Operator hereunder as confidential and


shall not reveal such information to a third party without the prior


written consent of the Operator, which consent shall not be


unreasonably withheld.





Financial information about the Operator shall however be treated as


confidential for a period of one (1) your, commencing as of the date of


submission of such information. The Government may nevertheless


use any such information received from the Operator tor the purpose of


preparing and publishing general records or statistics on natural


resources or other conditions in Liberia, and m connection with any


dispute between the Government and the Operator


17.0 NON-ASSIGNABILITY





This Agreement and any interest therein may not be transferred or


assigned, or mortgaged, pledged or otherwise encumbered, in whole or


In part, without the Government’s prior written approval unless to an


affiliate However, any request to joint-venture any rights to a third


party, will be fully allowed and any assignment that is legally required


to protect the interest of the joint-venture partner will be accepted








18.0 FORCE MAJEURE


18.1 Except as provided in this Section, failure on the part of the Operator to


comply with any of the conditions hereof (except the obligation to make


payment of monies to the Government) shall not be grounds for


cancellation or give the Government any claim for damages insofar as


such failure arises from force majeure. if the Operator has taken all


appropriate precautions, due care and reasonable alternative


measures with the objective of avoiding such failure and of carrying out


its obligations hereunder.


The Operator shall take all reasonable measures to cure such failure


and to fulfill the terms and conditions hereof with a minimum of delay.


The Operator shall notify the Government within fourteen (14) days of


an event of force majeure affecting its ability to fulfill the terms and


conditions hereof or any event, which may endanger the natural


resources of Liberia and similarly notify the Government of efforts


being made to rest normal conditions within twenty four (24) hours


thereof. For purpose of this Section 17. force majeure includes an act


of God. war. insurrection, civil commotion, earthquake, storm, flood or


any other extraordinary event which the Operator could not reasonably


be expected to prevent or control, but shall not include any event


caused by a failure to observe the best mining and engineering


practices or by the negligence of the Operator or any of its employees


or contractors. If; as a consequence of force majeure. operations


hereunder remain m substantially total suspension for an uninterrupted


period of more than six months, the duration of the term of this


Agreement shall be extended by the time of such suspensions


18.2 Except as hereinafter provided, the time for the performance of any


obligation (except the obligation to make payment of money) of the


Operator under or arising out of this Agreement, which performance is


hindered, prevented or delayed by force majeure, as well as any other


time periods and dates set forth In this Agreement, shall be extended


by the period of delay, but not longer than the continuance thereof and


such additional period as may be reasonable in the circumstances, and


the Operator shall not be liable in damages or otherwise to the other


nor shall any action, claim or demand be taken or made against the


Operator by reason solely of such delay in the performance of such


obligation.


18.3 1 tie Operator shall use all reasonable d-ugence to remove the cause of


the force majeure as qmckty as practicable after notice of the same


shall have come to its attention, save and except that this provision


shall not, In and of itself require the Operator to settle any stnke.


lockout, ban “go slow" activity, stoppage restraint of labor or other


similar ("Industrial Dispute").





19.0 SURRENDER OF OPERATOR S RIGHT


During the Exploration Period, the Operator may surrender by not less


than sixty (60) days notice to the Government, all its rights hereunder


In respect of all or any part of the Exploration Area, and the Operator


shall be relieved of all obligations in respect of area so surrendered


except those obligations that may have accrued prior to the Effective


Date of, or arising out of or related to tho surrender








20.0 SECTION 24: FINANCIAL REPORTING AND CURRENCY


24.1 Accounting. All of the Operator's accounting under this Agreement


shall be in Dollars and all amounts paid or received, and obligations


Incurred or transactions carried out. in currency that is legal tender in


the Republic or in any Foreign Currency other than Dollars shall be


converted to Dollars in accordance with and pursuant to generally


accepted accounting principles in the United Kingdom, Canada or


internationally accepted (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.




















14


24.2 Exchange Control. I'he Operator shall at all times have the right


without restriction, directly or indirectly, of the Government, to obtain


hold, deal with and disburse funds in such manner, currencies and


places as it chooses Without prejudice to the generality of the


foregoing, the Operator shall have the unrestricted and unencumbered


right to sell and receive payment for Minerals in any currency, Including


the currency in which the Minerals are sold, and all proceeds therelrom


may be deposited In bank accounts outside of the Republic and held


there or remitted therefrom to anywhere in the world, in any currency


Notwithstanding the foregoing, the Operator shall maintain at least one


bank account with a bank or financial institution in the Republic The


Operator 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 transactions


between the Government and the Operator dealing with or referring to


currency that is legal tender in the Republic 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 20 shall


be determined by reference to the Prevailing Market Rate of Exchange.


24.3 Currency of Payment. Payment of the Operator's direct obligations to


the Government for laxes and Duties payable under Sections 20. 21.


22 and 23 of this Agreement shall be in Dollars, unless the Parties


otherwise agree Any obligation originally stated m currency that is


legal tender in the Republic, 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 part, or shall fall due whichever » earlier


However, the Operator shall make payments of sums it cokects on


behalf of the Government including, but not hmited to. taxes withheld


from the salaries or wages of the employees of the Operator, and any


other sums payable to other Persons from which a portion is required


by Law to be withheld or retained by the Operator on behalf of the


Government, in the currency which such salaries or wages or such


other sums are collected The Operator shall have the right to make all


other payments whether to the Government or to other Persons m


currency that is legal tender in the Republic.


24.4 Right to Remit and Receive Payments. The Operator shall have the


nght to remit and receive in Dollars all payments of dividends, interest


principal and other property payable items anting 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 restrictions on such remittances or receipts

















15


24.5 Audit





a The Operator shall cause its books ol accounts to be audited


within three (3) months or such longer period ol lime as the


Minister may approve, alter the dose ol each Financial or Fiscal


Year by an internationally recognized independent auditor


selected by the Operator and satisfactory to the Government and


a copy ol the annual financial statement duly certified by said


auditor shall be furnished to the Government within twenty (20)


days after its receipt by the Operator 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 accounts but at the Government’s expense





b. 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 ol accounts at its own


expense and as provided under Law. provided that the


Government shall provide the Operator with a copy of any such


audit within torty five (45) days of receipt However once either


the Government or the Operator has audited any book of


accounts, the 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


ninety (90) days after its receipt of a copy of the audited financial


statement


c. If the Operator has, pursuant to this Agreement, underpaid its


liability for Taxes and Duties, the Government may. subject to the


Revenue and Finunce Low, 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 rale to be applied shall be another agreed


substitute rote If the Operator has overpaid its liability for Taxes


and Duties then, at its option, it may elect either to be reimbursed


by the Government or to apply such overpayment against future


Taxes and Duties


d. In case a review of records or books outside of the Republic is


required, the Operator 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.











16


SECTION 25: INCIDENTAL RIGHTS





25.1 Grant of Rights: Subject to the terms and conditions herein provided


and solely for the purposes incidental to the exercise of the rights


granted to the Operator under Sections 3 and A of this Agreement the


Government hereby grants to the Oporator the light, within the


Exploration Areas:


(a) To acquire, build, and construct Infrastructure, Plant and


Equipment, and other facilities, and to maintain and opemte the


same:


(D) lo remove, extract and use. solely lor its own exploration


purpose, free of tax or other charge or fee imposed by the


Government, any water, gravel, sand, clay, stone and timber


(except for protected species, insofar as they do not interfere with


or hinder Operations); provided however, that where any land,


villages, houses, person, or watering places for animals have


been supplied water by right through custom, the Operator shall


not deprive them of a constant and reasonably supply of usabk-


water, nor shall the Operator, without the Government's consent


interfere with any water or other rights enjoyed by anyone undet


any agreement with the Government The Government will


provide information to the Operator of any such agreements


affecting the Exploration Area upon the Operator's request


25.2 Imports. The Operator shall be entitled to vnport and use m respect o'


Operations, and subsequently export any and all machinery.


equipment consumable items, fuels, explosives and any other tmny


whatsoever reasonably required with respect to Operations and in


accordance with the terms of this Agreement provided, however, that


the Operator shall not re-export fuels and explosives surplus to


requirements if such surplus can be sold af competitive Internationa!


prices within the Republic The Operator shai at al time comply with


Law regarding the safe use. sale, disposal and security of explosives


25.3 Taxes on Resale. The Operator may sell m the Republic, all imported


items that are no longer needed for Operations (However, if suen


imports were exempted from Taxes and Duties, the Operator Shan fulfill


all formalities required in connection with the payment by the purchaser


of all Taxes and Duties on the depreciated value of the imports


imposed on such sales by Law




















17


SECTION 26: ASSIGNMENT AND ENCUMBRANCE





26.1 Right of Assignment The Operator shall have the right to assign or


otherwise depose of al or part of its interest under this Agreement with


the prior written consent of the Government (which consent she! not be


unreasonably withheld) provided, however that such consent sha" not


be required in the case of an assignment or other disposition to an


Affiliate m which latter event the Operator shall not be relieved of its


obligations under this Agreement other than to the extent fulfilled by the


Affiliate


26.2 Right to Encumber. The Operator shall have the right to mortgage,


charge or otherwise encumber all or part of its interest under this


Agreement lor the 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


26.3 Notice of Assignment or Encumbrance. The Operator shall


promptly give Notice to the Minister of any assignment mortgage,


charge or other disposition or encumbrance pursuant to this Section


26








SECTION 27: TERMINATION


27.1 Termination by the Operator. During llie Exploration Period the


Operator may surrender by not less than sixty (60) days notice to the


Government, all its rights hereunder in respect of all or any part of the


Exploration Areu, and the Operator shall be relieved of all obligations in


respect of area so surrendered except those obligations that may have


accrued prior to the Effective Date of. or arising out of or related to the


surrender.


27.2 Termination by tho Government. Subject to the provisions of


Section 29. the Government shall have the right to terminate tins


Agreement if any of the following events (hereinafter called "Events of


Default") shall occur and be continuing


a) where the Operator shall fail to make any of the payments


described in this Agreement on the due payment date, and such


default is not cured within thirty (30) days after notice by the


Government (or within such longer peiiod as may be specified in


saio nooce).














IK


 b)


obligations or any other conditions under this Agreement and such


tenure »naii iui»e a maUMMby uu.eise effect on the Covemmcni


and a not cured w«hm ranety (90) days ate* notice oy the


Government or withm such period as may be specified m said


notice.





c) where the Operator shall (i) voluntarily dissolve, liquidate or wind


up its affairs, or 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 ordinaly course of


business. (M) file a petition or application to any tribunal for the


appointment of a trustee or receiver for all or any substantial pan


of the Operator s assets, (m) commence any proceedings for its


bankruptcy. reorganization. arrangement insolvency or


readjustment of debt 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 shall


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 Operator bankrupt or insolvent, or


approving the petition m any such proceedings, and provided that


the Operator shall fail to take corrective measure(s) to have such


order removed or lifted within sixty (60) days..


d. where the Operator shall fail to carry out Exploration as required


by Section 5.1. cease Exploration for a period of twelve (12)


consecutive months or mm Production with respect to a l


Production Areas for a period of twenty lour (24) consecutive


months unless such failure or cessation m consented to by the


Government or is caused by a stale of force ma/oure in particular


relating to security issues preventng safe access to the


Exploration or Production Areas


27.3 Opportunity to Cure. In the case trf an aSeged Event of Default


described in Section 272. the Government before tatung any further


action shafl provide Notice to the Operator of the aleged occurrence of


such Event of Default and of the Government's views m that regard


and shall offer the Operator 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 Operator Notice of Iho Government s intention to


terminate this Agreement If the Event of Default « not cured withm


sixty (60) days after said Notice, or within such longer period as may


be necessary to aiow a reasonable period of bme to effect such cure,


then the Agreement shafl be termmated








iv


 27.4 Disputes Regarding Events of Default Notwithstanding the


provisions of Sections 27.2 and 27 3. if the Operator disputes whether


there has been an Event of Default deecnbed in Section 27 2 and


w*h*i sixty (60) days after recent by the Operator of the Government»


Notice of Its intention to ten innate ret*** such depute to arbrtrauon at


accordance with Section 29. then termination of this Agreement sha.i


not take effect until the finality of, and in accordance with, an arbitration


award upholding the Government s right to terminate








SECTION 29: ARBITRATION


29.1 Submission to Arbitration Any dispute between the Government


and the Operator ansmg out of m rotation to or si connection wdh this





Agreement or «* formation, or the vafcdity. interpretation, performance


termination, enforceability or breach of this Agreement (including any


dispute concerning whether the Government or the Operator has


violated or is m breach of this Agreement or of any Law affecting the


rights, obligations or duties of any Party under Ihis Agreement), for


which resolution by submission to an expert is not specifically provided





elsewhere in this Agreement shall be exclusively and finally settled by


binding arbitration pursuant to the Convention in accordance with the


rules of the Centre m effect on the Effective Date except to the extern


in conflict with this Section 29 which shall prevail in that event The


Parties agree that this Agreement and the Operator s Operations





pursuant thereto const* ute an ’nvestmenr by reason of the


expendrture of a considerable amount of money m the Repubhc and





that for purposes of Article 25(1) of the Convention any dispute subject


to this Section 29 n a legal dispute arising directly out of an


investment Either of the Parties to such dispute may institute


arbitration proceedings by giving Notice to the other Party and Notice


to the Secretary-General of the Centre mdudng m each a statement of


the issues in dispute








29.2 Nationality for Purposes of Arbitration he Operator


incorporated m uoena and nocwrtnstanotfiy the -^corporation si tne


Republic of any of the Operator's successors or assignees, or of any of


its other AffiSates all such entities shall be treated for purposes of


arbitration under this Section 29 as nationals of the United States of


America for purposes of the Convention and of this Agreement, except


that the Operator and any other such entity may. alternatively, elec? to


be treated instead as a national of any other state of which, under the


Convention, international law or the law of such state, it is a national























20


29.3 Arbitrator* 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 Operator and one


(1) arbitrator, who shall be the president ot the tribunal and shall be a


citizen neither of the Republic nor of the United States of America (or of


any other state of which a Party is a national under Section 29.2). to be


appointed by the Secretary-General of the Centre No such arbitrator


shall have an interest m the matters in dispute


29.4 Referee. At the request of a Party, any matter otherwise subject to


arbitration under this Agreement shall insload be referred for resolution


to a single referee to be appointed by the Secretary-General of the


Centre, or of any successor entity as provided for by Section 29.10


below, except for any dispute arising out of or related to Sections 3. 4,


5. 6. 20. 21. 23. 24. 27. 29. 31 and 33 and Sections 18.7. 18.8 and


18.9 of this Agreement, which must be referred to arbitrators appointed


pursuant to Section 29.3 above unless the Parties jointly agree that any


such dispute is not material, in which event it may be referred to the


referee for decision at the option of either party. The decision of the


referee shall be rendered pursuant to Section 29.6 of this Agreement


(except as regards the requirement for a decision by majority vote) and


shall be final and binding unless appealed by any Party to arbitrators


appointed as provided in this Section 29.3, who shall examine the


referee s decision only as to manifest error of law. findings of fact that


are not supported by any credible evidence, and abuse of authority,


misconduct or other unauthorized act by the referee


29.5 Venue. Arbitration proceeumgs cunOuciea pursuant to this Agreement


shad be held in Washington. D C or such other place as the Parties


may agree and shall be conducted in the English language The costs


of the proceedings 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 Centre shall be determined


pursuant to applicable law as set forth in Section 33 below


29.6 Award. The arbitrators shall, by majority vote, render a written


decision stating the reasons for their award within three (3) months


after any hearing conducted has been concluded Any monetary


award shai be assessed and payable in Doters (determined at the


Prevailing Market Rate of Exchange as of the date of the award if the


award involved an obligation expressed in any currency other than


Dollars) through a bank designated by the recipient and m the case of


an award to the Operator, shall be exempt from any Taxes and Duties


imposed by Government Each Party snail bear its own costs ana


attorney foes.














21


Neither Party shall have any liability (or either consequential damages


(except (or purposes o( set off) or exomplary or punitive damages, but


interest at a rate not to exceed the London Inter-bank Offering Rate


(LIBOR) existing at the time of such award, plus one (1) percentage


point, multiplied by the amount of the award, shall be assessed from


the date of any monetary award until its satisfaction It LIBOR should


cease to be reported, then the rate to be applied shall be another


substitute rate agreed to by a majority o( the arbitrators In any case,


the liability of the Operator shall be limited to the net book value of its


investment in the Republic at the time of the award. If the decision of


the arbitral tribunal is adverse to the Operator, then tlie arbitral tribunal


may. in its discretion, specify a reasonable period of grace to cure any


defect or default on the part of the Operator, provided that such period


of grace snail not exceed one hundred eighty (IUO) days tor the in.iking


of any payment required by such award,


29.7 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 service


of process and immunity from the junsdiction of any court situated In


any state, country or nation


29.8 Reservation 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 toss or injury that is the object of the claim or dispute, and


any such other Person may partiopate m such proceedings by right of


subrogation


29.9 Nature of Award. The Parties agree that the arbitral award of any


arbitral tribunal const*uted pursuant to this Agreement may contain


such orders (induding orders for specific performance other equitable


relief or monetary damages) m respect of or affecting any of the Parties


(and any toss or damage suffered by any of them) as such arbitral


tribunal determines to be appropnate in the circumstances The


Parties, subject to their respective obligations contained elsewhere in


this Agreement shall take all such actions as are necessary to give full


and complete effect to the award which, m accordance with its terms,


shall be binding upon and enforceable against them


























22


29.10 Successors. The consent to the jurisdiction of the Centre as set forth


in this Section 29 shall equally bind any successor of or successors-m-


interest to either Party to this Agreement Should the Centre be


replaced by. or its functions bo substantially conferred upon 01 bo


liansleiiud to, any new international body of a similar typo and


competence, the Parties shall have the right to submit any disputo to


such body for settlement by arbitration in accordance with the


foregoing provisions of this Section 29





23.0 NOTICES


(a) All notices, requests, reports, approvals, consents, designations


or other communications (collectively referred to herein as


“communications") required by, provided for. in. or relative to this


Agreement shall be in writing All communications shall be


delivered, in case of the Government to


The Minister of Lands, Mines 4 Energy


Ministry of Lands, Mines & Energy


P.O. Box 10-9024


1000 Monrovia 10, Liberia


And In the case of the Operator to:


The President


CRATON DEVELOPMENTS INC.


Monrovia, Liberia





or such other address as may be designated in writing by the


Operator


A delivery of a communication shall be deemed effective only


when mailed postage prepaid and return receipt requested,


telefaxed; or. hand-delivered and receipt


(b) Nothing in this Section shall be deemed to relieve the Operator





from filing any report, return or other communication required by


Liberian Laws of general application at the time and in the mannei


therein prescribed


24.0 NONWAIVER





The failure of either party at any time to require performance Dy the


other party of any provisions hereunder shall in no way affect the hghi


of that party thereafter to enforce the same or shall it effect the party s


right to enforce any of the other provisions of this Agreement: nor stem


the warver by either party of the breach of any provisions hereof be


taken or held to be a waiver of any subsequent breach of such


provision or as a wavier of the provision itself


25.0 AFFIRMATIONS


25.1 The Operator shall during the term of this Agreement and for sue •


period thereafter as may be reasonable continue to have corporate


existence as weS as ad corporate rights, powers, purposes and duties


set forth and described in this Agreement, and m its Articles of


Incorporation and By-Laws, as the same may from time-to-time be


amended in accordance with their terms


25.2 The ownership of any Mineral shall pass from the Government to the


Opciau* at U«i Hoc tiiut the Maierai in the Expiration Area is


excavated by the Operator.


25.3 Subject to the obligations of the Operator and the Government


elsewhere contained in this Agreement, the Operator shall ensure that


it complies with the Agreement


25.4 The Government and Operator shall each be the beneficiary of the


nghts granted to it under this Agreement No other person shall have


any rights under this Agreement unless a Party or unless otherwise


specifically provided in this Agreement


25.5 Each Party shall execute such documents and do such further things


as may be necessary to give full and complete effect to the provisions


of this Agreement.





26.0 EFFECTIVE DATE This Agreement shall become effective and be


binding on the Parties when executed by them


























24


IN WITNESS WHEREOF, the Parties have executed this Agreement, through


their respective duly authorized representatives, on the day, month and year


indicated below.


day of


Signed in originals on the C*-Tc>££'&'tK D 2005

















IN PRESENCE QF: FOR THE GOVERNMENT OF THE


REPUBLIC OFLIBERIA:












































FOR THE OPERA! OR:


























CRATON DEVELOPMENTS INC.




































































25


Mineral and Exploration Area for Craton Developments Inc, Gibi Mountain














3*0000 350000 360000 370000 360000 3S0CC0


 UTM Coordinates of the Mineral and Exploration Area for Craton


Developments Inc., Gibi Mountain








I- I


Point Easting Northing_


0 35000C TSOSO _


1 365000 750000


2 365000 745000


3 360000 745000


4 360000 735000


5 390000 735000


s 390000


375000 715000


8 3/5000 ,'20000


9 370000 720000


10 370000 725000


11 360000 7250C0


12 360000 7200D0


13 350000 720000


14 350000 710000


15 340000 710000


16 340000 730000


17 350000 730000


0 350000 750000





Area = 1000 Sq Km