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DEVELOPMENT AGREEMENT
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF MALAWI
PALADIN (AFRICA) LIMITED
AND
PALADIN ENERGY MINERALS NL
ON THE KAYELEKERA URANIUM PROJECT
TABLE OF CONTENTS
1. DEFINITIONS, INTERPRETATION AND COMPLIANCE 3
2. DEVELOPMENT AND OPERATION 16
3. DUTY FREE STATUS, IMPORT AND EXPORT 18
4. PROCUREMENT 20
5. LOCAL BUSINESS DEVELOPMENT 21
6. ROADS 22
7. AERODROME 24
8. ELECTRICITY 24
9. WATER 25
10. LANDS 27
11. RAILWAYS AND SHIPPING 27
12. TRAINING AND HUMAN RESOURCES MANAGEMENT 27
13. INSURANCE 29
14. SUSPENSION AND CURTAILMENT OF PRODUCTION 29
15. SURFACE RIGHTS AND INFRASTRUCTURE 30
16. RECORDS AND OPERATIONS REPORTS 31
17. FOREIGN EXCHANGE 34
18. ENVIRONMENTAL MATTERS 38
19. EMPLOYMENT, OCCUPATIONAL, SAFETY AND HEALTH MATTERS 43
20. SOCIAL RESPONSIBILITY 45
21. FISCAL REGIME 47
22. ROYALTY REGIME 49
23. STABILITY 51
24. DISTURBANCE AND RESETTLEMENT 52
25. ZONING 53
26. NO DISCRIMINATION 53
27. EXPORT AND IMPORT LICENCES, CONSENTS AND APPROVALS 54
28. ASSIGNMENT 55
29. EXTENSIONS TO TIME 57
30. TERMINATION 58
31. DISPUTES 61
32. AMICABLE SETTLEMENT OF DISPUTES (NEGOTIATION AND
MEDIATION) 61
33. ARBITRATION 62
34. EXPROPRIATION 63
35. EXPERT DETERMINATION 65
36. PERFORMANCE TO CONTINUE 66
37. APPLICABLE LAW 66
38. FORCE MAJEURE 66
39. INDEMNITY BY THE COMPANY 67
40. VARIATION/AMENDMENTS 67
41. LIAISON COMMITTEE 68
42. NOTICES 70
43. WAIVER 71
44. SEVERABILITY 71
45. FURTHER ACTS 72
46. REPRESENTATIONS AND WARRANTIES 72
ATTACHMENT "A"
ATTACHMENT "B"
ATTACHMENT "C"
THIS DEVELOPMENT AGREEMENT IS MADE on the 7T* day of 2007
BETWEEN:
THE GOVERNMENT OF THE REPUBLIC OF MALAWI, acting through the Minister
of Energy, Mines and Natural Resources whose office is at the Ministry of Energy, Mines and
Natural Resources, Private Bag 350 at Capital Hill, Lilongwe 3, in the Republic of Malawi
("Mines Minister") and the Minister of Finance whose office is at the Ministry of Finance,
P.O. Box 30049 at Capital Hill, Lilongwe 3, in the Republic of Malawi ("the Finance
Minister") (the "Government");
AND
PALADIN (AFRICA) LIMITED, a company incorporated in the Republic of Malawi and
whose registered office is situated at its offices in First House which is situated on land held
under Title Numbers Blantyre Central 759-760, Blantyre in the said Republic of Malawi (the
"Company" and which shall include any permitted assigns or successors of the rights and
obligations of the Company);
AND
PALADIN ENERGY MINERALS NL ACN 073 700 393 a company incorporated in
Australia and whose registered office is Level 1, Grand Central, 26 Railway Road, Subiaco in
the State of Western Australia, in the Commonwealth of Australia ("Paladin" and which shall
include any permitted assigns or successors of the rights and obligations of Paladin).
RECITALS:
A. The Company is at the date of this Agreement a wholly owned subsidiary of Paladin.
B. The Company obtained an interest in the Tenement in August 1999 and became the
holder of the Tenement in August 2002 and is now undertaking a Bankable Feasibility
Study in relation to the establishment of a uranium mine on the Tenement.
C. The Government wishes to ensure that the establishment and operation of the Project
benefits the Company, and adequately contributes to the advancement and the social
and economic welfare of the people of Malawi, including the people in the vicinity of
the Contract Area, in a manner consistent with their needs and the protection of the
environment and which attracts foreign investment and secures an appropriate return
on investment commensurate with the risks involved to the Company.
D. Pursuant to section 10 of the Mines Act the Government through the Mines Minister
has power to enter into an agreement with the holder of a tenement granted under the
Mines Act with respect, amongst other things, to the grant of that tenement.
E. As part of the agreement the Company and the Government have negotiated a fiscal
and equity regime for both the Company and Project.
F. The Company is seeking to obtain the comfort from the Government that the
Government fully supports the terms under which the Company is proposing to
undertake the Project and for this purpose the cabinet of the Government has met and
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fully approved the Government entering into this Agreement in the manner and on the
terms proposed.
G. The Government and the Company have agreed on a number of matters which are set
out in this Agreement which is being entered into pursuant to section 10 of the Mines
Act and generally and wish the matters agreed upon to be an enduring arrangement of
national interest and to provide stability for the Company's investment in Malawi.
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PART A
GENERAL
1. DEFINITIONS, INTERPRETATION AND COMPLIANCE
1.1 In this Agreement, unless the context otherwise requires:
"Act" means an act of the Parliament of Malawi;
"Additional Minerals" mean all minerals other than the Mineral;
"Affiliate", "Affiliated Party", or "Affiliated Parties" means:
(a) any person in which the Company or a Shareholder (as the case may be)
holds one hundred per cent (100%) of the ordinary voting shares and
which holds one hundred per cent (100%) of the Company’s or a
Shareholder’s (as the case may be) ordinary shares; or
(b) any person which, directly or indirectly, is controlled by or Controls, or
is under Common Control of, with or over the Company or a
Shareholder (as the case may be);
"Agreement" means this Agreement as varied from time to time in accordance
with the terms of this Agreement;
"Agreement Date" means the date of signing this Agreement;
"Approved Programme of Operations" means the proposals submitted by the
Company in accordance with section 37(3) of the Mines Act as may be
amended or varied as a consequence of the terms and conditions on which the
Tenement is granted;
"Arbitration" means determination of a dispute by arbitration in accordance
with clause 33, subject to clauses 31 and 32;
"Arbitrator" means an independent body appointed pursuant to clause 33 to
make a determination on a matter the subject of a Notice of Dispute;
"Arms’ Length Terms" means a transaction where:
(a) the parties in negotiating the transaction have sought to promote their
own best interests in accordance with fair and honest business methods;
(b) the consideration expressed in the agreement for the transaction entered
into is the only consideration for the transaction;
(c) the price and other terms of the transaction have not been affected by,
nor determined as a consequence of, any other agreement or any direct
or indirect relationship (other than the relationship created by the
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transaction agreement between the selling party or shareholders of the
selling party, or a company in which the selling party is a shareholder,
and buying party or shareholders of the buying party, or a company in
which the buying party is a shareholder); and
(d) neither the selling party, nor any person or company connected with it
through shareholding or otherwise, has any direct or indirect interest in
the subsequent disposal, if applicable, by the buying party of any of the
products or services obtained pursuant to the transaction agreement;
"Assets" means the assets of the Company;
"Bankable Feasibility Study" means a bankable feasibility of a standard that
would be acceptable in a project financing by a prime bank whose business
includes lending to resources projects and which will include:
(a) from appropriate sampling programmes estimates of the tonnes of
proven and probable reserves of ore and the Mineral grades thereof;
(b) estimates of both capital costs and operating costs likely to be incurred
in establishing and conducting Mining operations, including costs to be
incurred in Project development, pre-production and crushing and
treatment;
(c) an analysis of how to proceed with a Mining operation to economically
and commercially extract, transport and export, yellowcake;
(d) an environmental impact assessment and a management plan to manage
the outcomes of the assessment;
(e) references to relevant marketing and financial aspects;
(f) an analysis of the risks associated with the Project and the alternative
methods and costs for dealing with such risks;
(g) a statement whether or not the establishment of the proposed Mining
operation is commercially viable, the recommended parameters for the
most viable form of Mining operation and a statement as to what the
Life of Mine is expected to be;
(h) a schedule of relevant approvals necessary before production may
commence;
(i) the proposed Local Business Development Programme;
(j) the proposed Employment and Safety Plan; and
(k) the proposals called for in section 37(3) of the Mines Act;
"Best Endeavours" means the taking by the relevant Party of all lawful,
reasonable steps in such Party's power which a prudent and reasonable person
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acting in his own interest and anxious to achieve what is required would have
taken under the circumstances;
"Best Mining, Ore Processing and Environmental Practices" means
acceptable mining and metal treatment practices conducted internationally
(including the right to process and treat material twenty four (24) hours a day,
three hundred and sixty five (365) days a year (including public holidays), if
required) which shall, in any event, be no less than internationally accepted
mining and metal treatment practices;
"Business" means the business to be carried on by the Company from time to
time namely, all or some of the following:
(a) prospecting, exploration and development;
(b) mining of ore and waste;
(c) treatment of ore to produce yellowcake and by-products;
(d) selling of yellowcake outside of Malawi and by-products whether
within or outside Malawi; and
(e) such other activities including production of reagents, consumerables,
and related transport and trading of yellowcake and by-products,
incidental and or conducive to the foregoing which may be approved by
the Company from time to time;
"Business Day" means any day (other than a Saturday, a Sunday or a public
holiday) on which commercial banks are generally open for business in
London, New York, and Malawi;
"Calendar Month" means a month commencing on the first (1st) day of any
month and ending on the thirtieth (30th) or thirty first (31st) day of such month
or, in the case of February, the twenty eighth (28th) or twenty ninth (29th) day
as the case may be;
"Centre" has the meaning given to that term in clause 33.1;
"Change in Law" means any enactment, domestic or subject to adoption by
the Government any international agreement or treaty, any legislation or
regulation or policy or interpretation of any such matter by a court or other
authority that arises after the execution of the Agreement;
"Commercial Operations" means the commercial operation of the Project
carried on in accordance with the Approved Programme of Operations and all
other Mining or Mining related activities of the Company or Affiliates of the
Company in Malawi, including all activities and operations ancillary to Normal
Operations fisted in paragraphs (a) to (f) of the definition of that terms;
"Commissioner" shall have the meaning given to that term under the Mines
Act;
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"Companies Act" means the Companies Act (Cap 46:03 of the Laws of
Malawi);
"Confidential Information" means all information provided under section 7
of the Mines Act;
"Contract Area" means that land area covered by the Tenement from time to
time;
"Control" means:
(a) the power (whether directly or indirectly) and whether by the ownership
of share capital, the possession of voting power, contract or otherwise
to appoint and/or remove all or such of the board of directors or other
governing body of a person as are able to cast a majority of the votes
capable of being cast by the members of that board as body, or
otherwise to control or have power to control the policies and affairs of
that person; and/or
(b) the holding and/or the ownership of the beneficial interests in and/or the
ability to exercise the voting rights applicable to shares or other
securities in any person which confer in aggregate on the holders
whether directly or by means of holding such interests in one or more
other persons (either directly or indirectly) more than fifty per cent
(50%) of the voting rights exercisable at general meetings of that
person,
and "controlled by" shall be construed accordingly and "Common Control"
means the circumstances where two or more persons or bodies corporate are
controlled by the same person or body corporate;
"Convention" has the meaning given to that term in clause 33.1;
"Default Notice" has the meaning given to that term in clause 30.3;
"Dispute" means any dispute, disagreement, controversy or claim arising out
of or relating to this Agreement, or the interpretation or performance of
provisions of this Agreement or the breach, termination or validity of this
Agreement or the claim by a Party that it is experiencing Hardship but does not
include a matter which by operation of this Agreement is referred to an
Independent Expert;
"Distributable Profits" means accumulated after tax profits and reserves of
the Company, available for distribution as dividends in accordance with section
74 of the Companies Act, as shown in the financial statements of the Company
from time to time;
"Economic Equilibrium" means the fiscal regime in Malawi, including the
duties, imposts, royalties and taxes applicable to both the Business and the
Company as at the Agreement Date or as provided for in this Agreement;
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"Employment and Safety Laws" has the meaning given to that term in clause
19.1;
"Employment and Safety Plan" means the final plan which the Company is
complying with in accordance with clause 19.3;
"Enabling Legislation" means all the relevant acts of Parliament including the
following legislation:
(a) the Mines Act;
(b) the Exchange Control Act (Cap. 45:01 of the Laws of Malawi);
(c) the Companies Act;
(d) the Land Legislation;
(e) the Taxation Act (Cap. 41:01 of the Laws of Malawi);
(f) the Customs and Excise Act (Cap. 42:01 of the Laws of Malawi);
(g) the Investment Promotions Act (Cap. 39:05 of the Laws of Malawi);
(h) the Environmental Laws;
(i) the Occupational Safety, Welfare and Health Act (Cap. 55:07 of the
Laws of Malawi);
(j) the Employment Act (Cap. 55:02 of the Laws of Malawi);
(k) the Water Resources Act (Cap. 72:03 of the Laws of Malawi); and
(l) the Water Works Act (Cap. 72:01 of Laws of Malawi);
"Environment" shall have the meaning set out in the Environmental Laws or
any statutory amendment or re-enactment of it;
"Environmental Laws" means the Environment Management Act (1996)
(Cap. 60:02 of the Laws of Malawi) and any other written law or regulations in
force from time to time in Malawi (including the common law) which
promotes sustainable management and use of the environment and natural
resources or prevention of harm to the environment or to human health and/or
the provision of remedies for harm or damage to the environment or to human
health. Such laws include but are not limited to the Mines Act, the Forestry
Act (Cap.63:01 of the Laws of Malawi), the Water Resources Act, the
Fisheries Conservation and Management Act (Cap.66:05 of the Laws of
Malawi), the National Parks and Wildlife Act (Cap.66:07 of the Laws of
Malawi and the Land Legislation;
"Environmental Management Plan" means the final plan approved by the
Government in accordance with clause 18;
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"ESCOM" means Electricity Supply Company of Malawi Limited;
"Expropriation" means either:
(a) the seizure, nationalisation, expropriation or compulsory acquisition by
the Government or Governmental Agency of the:
(i) capital in the Company; or
(ii) the assets of the Company which leads to the effective loss of
control over the Project; or
(iii) the receipt of a binding order from a Governmental Agency
requiring the Company to sell or divest itself of all or a material
part of the Project,
or within 30 days of a request from the Company to remove any
insurgent group or local group, the failure of the Government to use
reasonable endeavours to remove any insurgent group or local group
that may have seized the assets of the Company resulting in the
Company effectively losing control of the Project; or
(b) change in the Economic Equilibrium which has a Material Adverse
Effect on the Company or Business and the Government failing to
either:
(i) act in the manner contemplated in clause 23.2; or
(ii) pay the compensation contemplated in clause 23.3 in a timely
manner;
"Force Majeure" means an event which is beyond the reasonable control of a
Party and includes act of war (whether declared or undeclared), invasion,
armed conflict, act of foreign enemy, act of terrorism, martial law, military or
usurped power, insurrection, revolution, civil disturbances, blockades, riot,
embargoes, strikes, lock-outs and other labour conflicts (except where such
strikes, lock-outs and other labour conflicts are within the power of the Party
invoking clause 38), sabotage, criminal damage, land disputes, epidemics,
plague, earthquakes, subsidence, heave, landslip, collapse, rock falls, storms,
cyclones, floods, explosions, fires, lightning or other adverse weather
conditions, radioactive or chemical contamination or ionising radiation or
confiscation or any other action by a Government Agency or an agency of any
foreign government but does not include:
(a) any event which is caused by the negligence of intentional action of a
Party or such Party's sub-contractor or agents or employees;
(b) any event which a diligent Party could reasonably have expected to:
(i) take into account at the time of this Agreement; or
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(ii) avoid or overcome in the carrying out of its obligation under
this Agreement; or
(c) insufficiency of funds or failure to make payment required under this
Agreement;
"Government" means the Government of Malawi and where the context
requires, Governmental Agency;
"Governmental Agency" means a government or a governmental, semi-
governmental, administrative, fiscal or judicial body, department, commission,
authority, tribunal, agency or entity of the Government;
"Hardship" means the occurrence of events that fundamentally alter the
financial equilibrium of the Agreement either because the cost of a Party's
performance has increased or because the value of the performance a Party
receives has diminished, and:
(a) the events occur or become known to the disadvantaged Party after the
Agreement Date;
(b) the events could not reasonably have been taken into account by the
disadvantaged Party at the Agreement Date;
(c) the events are beyond the control of the disadvantaged Party; and
(d) the risk of the events was not assumed by the disadvantaged Party,
but nothing is intended to result in a change in the sale price of yellowcake
being an event which may give rise to a Hardship;
"IAEA" means the International Atomic Energy Agency;
"Independent Expert" means such independent person, as is agreed between
the Parties or failing agreement within 20 Business Days as is appointed at the
request of any Party by the President for the time being of the Institute of
Mining and Metallurgy in the United Kingdom who shall ensure that the
appointed Independent Expert is sufficiently qualified and experienced to apply
the necessary skill required to make the decision and/or determination for
which that Independent Expert is being engaged under this Agreement;
"Interest" has the meaning given to that term in clause 34.1(c);
"Investment Commitment" means the aggregate of capital expenditure by the
Company and Affiliates on the Approved Programme of Operations and other
Scheduled Programmes;
"Kayelekera Community" means the community identified by the census
undertaken as part of the environmental impact statement which the Company
has submitted to the Government;
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"Kwacha" or "K" means the lawful currency of Malawi;
"Land Legislation" means the Land Act (Cap. 58:01 of the Laws of Malawi),
Land Acquisition (Amendment) Act (Cap 58.04 of the Laws of Malawi), and
the Registered Land Act (Cap. 58:01 of the Laws of Malawi) as from time to
time amended and in effect;
"Life of Mine" means the life of the proposed Mining operation on the
Tenement as proposed in the Bankable Feasibility Study or until Normal
Operations cease, whichever is the longer;
"Local Business Development Programme" means the programme for local
business development which is to be developed in accordance with clause 5;
"Material Adverse Effect" means a material adverse change to:
(a) a Party's ability to comply with its obligations under this Agreement;
(b) the value of a Party's property the subj ect of this Agreement;
(c) the rights of a Party under this Agreement; or
(d) the Business or financial conditions of the Company;
"Mines Act" means Malawi Mines and Minerals Act (1981) (Cap. 61:01 of the
Laws of Malawi);
"Mine Product" means the yellowcake and any Additional Mineral produced
by Normal Operations;
"Mineral" means uranium oxide located in the Contract Area;
"Minister" means the person for the time being entitled to exercise the powers
of the Minister responsible for mines under the Mines Act;
"Ministry" means the Ministry responsible for mines from time to time;
"Mining" has the meaning given to the term "mine" in the Mines Act and, for
the purpose of this Agreement, includes all treatment, ancillary and
consequential operations associated with such operations;
"Mining Area" means that part of the Contract Area on which Mining
operations are or are intended to be conducted;
"Mining Water Requirements" has the meaning given to that term in clause
9.1(a);
"Normal Operations" means the commercial operation of the Project carried
on in accordance with the Approved Programme of Operations and all other
Mining or Mining related activities of the Company or Affiliates of the
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Company in Malawi carried on in accordance with Malawi law, including all
activities and operations ancillary to Normal Operations including:
(a) exploration for and development of a mineral resource;
(b) Mining and mineral processing;
(c) operation of Mining fleets (either for the Company or its Affiliates);
(d) management of Mining, mineral processing and mineral exploration
activities;
(e) toll treatment of ores and concentrates; and
(f) any other activity reasonably associated with Mining, mineral
processing and mineral exploration;
"Notice" means any written communication, consent, demand, approval or
other communication required or permitted to be given under clause 42;
"Notice of Dispute" has the meaning given to that term in clause 31.1;
"Parties" means the parties who are for the time being original parties to this
Agreement or parties added or substituted pursuant to clause 28 and "Party"
means any one of them;
"proceeds of production" means the gross revenues received from the sale at
arms-length of Mine Product mined or otherwise recovered, including
concentrates derived therefrom, from any mine or mines on the Mining Area
and if not at Arms' Length Terms, the gross revenues which would have been
received had the sale been at Arms' Length Terms;
"Production Commencement Date" means the date on which the Company
first commenced commercial Mining operations on the Mining Area;
"Project" means the preparation of the Bankable Feasibility Study and any
Mining operations (including any expansion of such operations) of the
Company on the Tenement, which operations comprise what is known as the
Kayelekera Project;
"Project Lenders" mean third party international project financiers which lend
money to the Company or an Affiliate for the sole purpose of the Company
developing the Project and where such lending is seemed against the Project
and this does not include loans from Paladin or any of its Affiliates;
"Public Land" means any land as defined by the Land Act (Cap 58:01 of the
Laws of Malawi);
"Purchase Price" has the meaning given to that term in clause 34.1(c);
"Quarter"; means:
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(a) January, February and March; or
(b) April, May and June; or
(c) July, August and September; or
(d) October, November and December;
"Reserve Bank" means the Reserve Bank of Malawi or any successor;
"Royalty" has the meaning given to that term in clause 22.1;
"Scheduled Programmes" means the Approved Programme of Operations, the
Environmental Management Plan, the Training and HRM Programme, the
Local Business Development Programme, the Employment and Safety Plan
and the Social Responsibility Plan;
"Shareholders Agreement" means an agreement to be entered into between
Paladin, Affiliates of Paladin and the Government as shareholder and proposed
shareholder respectively in the Company, and the Company;
"Social Responsibility Plan" means a plan for capital expenditure on the
social infrastructure described in clause 20.2;
"Speculative Currency Transaction" means a transaction involving the
purchase or sale of Malawian currency, the primary object of which is the
making of a profit on the exchange of currency, but does not include the taking
out of forward cover against reasonably predictable inflows or outflows;
"Stability Period" means the period commencing on the Production
Commencement Date and ending on the 10th anniversary of the Production
Commencement Date;
"Taxes" means has the same meaning as used in the Taxation Act (Cap 41:01
of the Laws of Malawi);
"Tenement" means:
(a) exclusive prospecting licence 070;
(b) any mining tenement which may be in force or issued in lieu of or in
relation to the same or part of the ground as the tenement referred to in
paragraph (a) of this definition; and
(c) includes all rights to mine and other privileges appurtenant to the
tenement and all ore and mineral-bearing material, sand, slimes, tailings
and residues of whatsoever nature located on and under the Tenement;
"Term Contract" is an agreement to sell Mine Product in which the volume
and delivery periods are fixed in advance but the actual delivery price is
calculated at the time of each delivery by reference to a price formula specified
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in the contract. Price formulae typically comprise a combination of published
market price indices and sometimes include an escalating base or floor price
component;
"Termination Date" has the meaning given to that term in clause 30.4;
"Termination Notice" has the meaning given to that term in clause 30.4;
"Thin Capitalisation Agreement" means the agreed debt equity ratio for the
Company that is referred to in clause 21.5;
"Training and HRM Programme" means the employment and training
programme for those citizens of Malawi who are to work at the Project, which
programme is to be submitted by the Company in accordance with section
37(3)(k) of the Mines Act and approved by the Minister and such modified, or
alternative plan as is approved from time to time by the Minister;
"Treaty" means the Treaty on the Non-Proliferation of Nuclear Weapons;
"Tribunal" has the meaning given to that term in clause 33.1;
"US$", "US dollars" or "United States dollars" means the lawful currency of
the United States of America;
"UNCITRAL" means United Nations Committee on International Trade Laws;
and
"yellowcake" means a concentrate of uranium ore which is ready to be
dispatched for sale.
In this Agreement, unless the context otherwise requires:
(a) monetary references are references to United States dollars unless
otherwise specifically expressed;
(b) the headings do not affect the interpretation or construction;
(c) references to an Act includes the amendments to the Act for the time
being in force and also to any Act passed in substitution for the Act and
any regulations for the time being in force under the Act;
(d) words importing the singular include the plural and vice versa;
(e) words importing any gender include the other gender;
(f) references to a person include a partnership, firm or corporation and any
instrumentality of the Government or any political sub-division of it;
(g) the recitals form part of this Agreement; and
(h) the meaning of general words is not limited by specific examples
introduced by including or similar expressions.
13
1.3 Without derogating from the effect and operation of clauses 23, 34 and 40 if
there is any inconsistency between the terms of this Agreement and an Act then
this Agreement or the relevant provision of it shall be read down to the extent
of the inconsistency to ensure that this Agreement is not otherwise rendered
void or unenforceable.
1.4 Notwithstanding any other provision of this Agreement, until by or under an
Act provision is made with respect to the matters contained in the codes
described in this clause the Company shall observe those codes and any
amendments thereof or any codes substituted therefore:
(a) "Occupational Radiation Protection in the Mining and Processing of
Raw Materials" IAEA Safety Guide No. RS-G-1.6 published by the
International Atomic Energy Agency Vienna 2004;
(b) "Regulations for the Safe Transport of Radioactive Material", IAEA
Safety Guide No TS-R-1 published by the International Atomic Energy
Agency Vienna 2005;
(c) "Management of Radioactive Waste from the Mining and Milling of
Ores", IAEA Safety Guide WS-G-1.2 published by the International
Atomic Energy Agency Vienna 2002;
(d) the Malawi Bureau of Standards on transportation of hazardous
materials and the Health Act, provided these standards do not
compromise the IAEA Safety Guide WS-G-1.2; and
(e) the Code of Practice on Radiation Protection in the Mining of
Radioactive Ores which was drawn up by the Commonwealth in
accordance with the recommendations of the International Commission
on Radiological Protection.
1.5 Malawi is a signatory to the Treaty and the Government covenants with the
Company that it will:
(a) do all necessary to expeditiously conclude all appropriate safeguard
systems and regulations to enable Malawi to meet die requirements
which are required to ensure the Mine Product can be transported
internationally and if possible, designated as yellowcake for peaceful
purposes;
(b) do all appropriate to ensure it has in place the appropriate
administrative procedures to satisfy the Government obligations under
the Treaty;
(c) promptly enter into whatever agreements and pass whatever laws are
necessary to give effect to any international treaty or protocol which has
or may have impact on the mining and export of yellowcake and to
ensure Malawi as a party to the Treaty moves from a country which has
a "small quantities protocol" agreement with the IAEA to a country
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which fully satisfies the IAEA requirements for a country producing
and exporting yellowcake; and
(d) consult with its neighbouring countries through which the Mine Product
shall pass in order to ensure the Mine Product can be transported to the
purchasers of the Mine Product.
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PART B
OPERATIONAL AND EMPLOYMENT MATTERS
2. DEVELOPMENT AND OPERATION
2.1 The Company shall, subject to the terms of the Mines Act, the Tenement and
this Agreement implement the Approved Programme of Operations in
accordance with the timetable contained in the Approved Programme of
Operations and in accordance with Best Mining, Ore Processing and
Environmental Practices.
2.2 Without prejudice to the obligations contained in clause 2.1, but subject to
clauses 2.3 and 14, the Company shall expend the Investment Commitment
substantially in the manner, on die terms and in the amounts set out in the
Scheduled Programmes.
2.3 The Company's obligation to expend the Investment Commitment in
accordance with clause 2.2 shall be suspended where an event of Force
Majeure has been declared and for so long as such event of Force Majeure is
continuing.
2.4 Subject to the provisions of this Agreement, the Government acknowledges it
will in good faith and in a timely manner give due consideration to the
programmes, which when approved become the Scheduled Programmes when
submitted in accordance with section 37 of the Mines Act or otherwise and
further acknowledges, without limitation, that compliance with the Scheduled
Programmes will be deemed to constitute compliance with sections 44(l)(a),
(b) and (c) of the Mines Act and any other applicable Act.
2.5
(a) The Government confirms that practices undertaken in accordance with
the Approved Programme of Operations are prima facie deemed not to
constitute "wasteful mining practices" for the purposes of section 45(1)
of the Mines Act and any other applicable Act.
(b) Nothing contained in clause 2.5(a) shall prevent or restrict or otherwise
limit the Government from taking all actions within its power to protect
public health safety and the Environment.
2.6 Subject to the Company lodging an application for a mining licence in
accordance with section 37(1) of the Mines Act which application will include
a copy of the Bankable Feasibility Study, the Government will consider the
application in good faith and in a timely manner. In granting the mining
licence the Government must ensure that for the purposes of section 86(2)(a) of
the Mines Act, the terms of the mining license include the Royalty referred to
in item 2 of attachment "B".
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2.7
(a) On the grant of the mining licence referred to in clause 2.6 and subject
to the satisfaction or waiver of the condition precedent referred to in
clause 21.7 the Government shall be entitled to fifteen (15) percent of
the issued capital of the Company. The shares issued to the
Government are to be of a class which is the same in all respects as the
shareholding which Paladin and Paladin's Affiliate hold in the Company
from time to time, save that the shares which Paladin and its Affiliates
hold are to require them to provide all equity contributions to the
Company to enable the Company to fund the Project through the use of
a combination of debt and equity and having regard to the Thin
Capitalisation Agreement.
(b) During the term of this Agreement and in order to ensure the Company
complies with the Thin Capitalisation Agreement, Paladin and/or its
Affiliated Parties will subscribe for additional shares in the Company
and when this occurs the Company will at no additional costs to the
Government, issue additional shares to the Government (being shares of
the same class as then held by the Government) in order to ensure the
Government maintains fifteen (15) percent of the issued capital of the
Company
(c) The terms and conditions pursuant to which the Government, Paladin
and Paladin's Affiliated Parties are to hold their shareholding in the
Company are to be the subject of the Shareholders Agreement.
2.8 Any disagreement in relation to the manner, terms, timing or amount of
expenditure of the Investment Commitment, may be referred by either Party to
the Independent Expert.
2.9 Where the Company:
(a) discovers an Additional Mineral and irrespective of whether or not
clause 2.9(b) applies, the Company shall inform the Government of
such discovery, which constitutes a mineral deposit of possible
commercial value, within 30 days of the discovery; and
(b) in the course of searching for or mining the Mineral, to which this
Agreement and the Tenement relates, discovers any Additional Mineral
the Minister will in good faith consider any application made by the
Company in accordance with section 67 of the Mines Act.
2.10
(a) The Parties acknowledge that during the currency of this Agreement the
Company may carry out additional exploration outside the Contract
Area and during the period when exploration is being undertaken
outside the Contract Area, the Company shall comply with both the
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Mines Act and the conditions of grant of the relevant mining tenement,
but nothing in this Agreement will apply to that mining tenement.
(b) Notwithstanding clause 2.10(a), if the Company discovers any uranium
oxide outside the Contract Area or containing the uranium oxide it may,
at the discretion of the Company but in compliance with the Laws of
Malawi, be treated at the plant located on the Contract Area.
2.11 If during the course of the exploration referred to in clause 2.10(a), the
Company makes a discovery of uranium oxide and:
(a) submits a notice of that discovery to the Minister in accordance with
section 35(c) of the Mines Act; and
(b) makes application for a mining licence in accordance with section 37 of
the Mines Act,
then immediately on the grant of that mining licence, such mining licence shall
be subject to the Mines Act and the Parties will consider in good faith whether
and on what basis the mining licence may become subject to this Agreement
and unless the Parties so agree, this Agreement shall not apply to that mining
licence.
2.12 The Government acknowledges that the Company may when Mining for the
Mineral, extract Additional Minerals to the extent they are part of the Mine
Product and where it does so it may sell the Additional Minerals, subject to the
payment of a royalty calculated in accordance with clause 22.3
2.13 In addition to the Government's rights under the Mines Act, the Government
may carry out inspections of the Company's activities on the Contract Area in
order to ensure the Company is discharging its obligations under this
Agreement, provided that:
(a) the Government gives notice to the Company of its intention to conduct
such an inspection; and
(b) the representatives of the Government who are to carry out such
inspections strictly observe the lawful directions of the Company’s
mine manager or authorised representative.
3. DUTY FREE STATUS, IMPORT AND EXPORT
3.1 Subject to clauses 4 and21, the Company may import and export materials,
consumables to be used in the Mining and processing of ore, equipment and
services to be used in implementing the Scheduled Programmes, subject to the
issuance of any requisite licences by the Government, which the Government
shall do in a timely manner and provided that the Government has not notified
the Company that the import and export of such materials and equipment
would give rise to the matters specified in clauses 3.2(b)(i) or 3.2(b)(ii). When
importing materials, consumables to be used in the Mining and processing of
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ore, equipment and services to be used in the implementing of the Scheduled
Programmes the Company is not required to undertake any pre-shipment
inspection as otherwise required by Interek and to the extent required, the
Government will provide to the Company a certificate of exemption from such
a requirement.
3.2 The Company may market or cause an Affiliate Party to market and the
Company may export all Mine Product and subject to clause 3.4, shall have
sole control and management of sale of such Mine Product, including by Term
Contract, and shall assume all risks therefore, provided that:
(a) the Company sells its products on Arms’ Length Terms; and
(b) the Government has not notified the Company that the export of the
Mine Product would:
(i) breach an obligation of the Government arising under
international law (including mandatory sanctions imposed by the
United Nations); or
(ii) result in dealing or contracting with nationals of a state with
which the Government is in a state of declared war,
3.3 and the Company has obtained whatever licences or consents are required in
accordance with clause 27.The Company shall advise the Government of each
material agreement concerning sales or processing of Mine Product, marketing,
patent licensing, engineering, construction or management services which is
entered into with an Affiliate. Such agreements shall be on Arms’ Length
Terms. Copies of such agreements shall be copied to the Government. If, in
the opinion of the Government, which opinion the Government shall form in
good faith, any such agreement is not on Arms’ Length Terms, the Government
may, within thirty (30) days of receipt of such agreement, give notice to the
Company of the terms which the Government considers to be Arms’ Length
Terms. If the Company disagrees with the terms so considered by the
Government, it may refer the dispute to the Independent Expert for a
determination in accordance with clause 35 as to what are Arms’ Length
Terms. Upon receipt of the Independent Expert's determination, the Company
shall renegotiate the agreement, if necessary, to embody those terms decided
by the Independent Expert to be Arms’ Length Terms or terminate the
agreement.
3.4 The Government acknowledges that Arm's Length Terms may not comprise a
sale of the Mine Product at the highest price obtainable on the date of the
Company entering into a sales contract as it may be that the Company either
determines, or is otherwise required to sell the Mine Product through a series of
spot sales and Term Contracts.
3.5 It shall be a condition of each contract for the sale of Mine Product that such
contract is subject to the approval of the Commissioner and the Company shall
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submit each such contract to the Commissioner for such approval. The
Commissioner has thirty (30) days from his receipt of such a contract to either:
(a) approve the contract; or
(b) in good faith disapprove the contract, which notice of disapproval shall
be accompanied by reasons for such a determination.
3.6 If the Commissioner either:
(a) disapproves of the contract as contemplated by clause 3.5(b) then where
the Company considers the Commissioner has not acted in good faith or
otherwise disagrees with the reasons for the Commissioner's
determination then the matter may be referred to the Independent
Expert in accordance with clause 35, for determination; or
(b) fails to make a timely determination as required by clause 3.5 then he
shall be deemed to have approved the contract in accordance with
clause 3.5(a).
3.7 The Company shall keep all Mine Product under adequate security on its
premises in Malawi, when being transported, and at points of export. Accurate
weights and numbers of drums in which the Mine Product is packed shall be
recorded and copies supplied to the Commissioner at the time of consignment
or as otherwise agreed. The Company shall submit a procedure to the
Government for safeguarding the Mine Product for approval and the
Government agrees to facilitate the implementation of that procedure.
3.8 The Government will, in addition to discharging its obligation under clause
1.5(d), use its best endeavours to assist the Company to export Mine Product
from Malawi through Government negotiated transport corridors across either
Mozambique and/or Tanzania to a port in any of those countries and this
includes whenever necessary assisting the Company to obtain export licences
from the country from which Mine Product is to be shipped.
4. PROCUREMENT
4.1 On an annual basis, the Company shall invite the registration of legitimate
established businesses in Malawi by reasonably effective means which would
ensure adequate dissemination of the registration opportunity and which would
include advertising in the local press or on the Company's website (particularly
in the vicinity of the Contract Area and with particular emphasis on businesses
directly or indirectly majority owned by Malawi citizens) which are capable of
supplying materials, consumables used in the Mining and processing of ore,
equipment and services to the Company. To the extent the Company enters
into a supply contract having a term of greater than 12 months then for the term
of such contract the Company does not have to comply with this clause for the
services the subject of that contract.
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4.2 Where materials, equipment and services required for the implementation of
the Scheduled Programmes are manufactured or substantially assembled (or in
the case of services, are procurable) within Malawi from business(es) pre¬
qualified pursuant to clause 4.1, such businesses shall have the opportunity to
tender and if a tender submission from such businesses:
(a) meets the specifications of the invitation to tender;
(b) is competitive in cost with international sources;
(c) meets the delivery requirements of the Project;
(d) meets the quality requirements of the Project; and
(e) is bonafide,
then the Company shall give preference to such businesses in its award of such
tender.
4.3 The supply of materials, equipment and services may be tendered for and
procured internationally without restrictions, provided that where such
materials, consumables used in the Mining and processing of ore, equipment
and services are procurable within Malawi from businesses registered pursuant
to clause 4.1, such businesses shall have the opportunity to tender and, if a
tender submission from such business meets the specifications of the invitation
to tender, such businesses shall be given preference over any tender submitted
by an international supplier.
4.4 In assessing the tenders from local contractors and suppliers, the Company
shall consider among other things, the extra costs it would incur if it were to
grant the contract to a foreign supplier or contractor. These extra costs shall
include wharfage costs, shipping costs, stevedoring costs, customs clearance
costs, customs duties, and demurrage charges.
5. LOCAL BUSINESS DEVELOPMENT
5.1 The Company shall:
(a) develop a programme for the establishment or expansion, as the case
may be, of Malawian businesses which may be capable of providing
goods and services to the Business ("Local Business Development
Programme") and this programme is to be part of the Bankable
Feasibility Study, but nothing in this clause requires the Company to
propose the establishment or expansion of a business which will be
uncompetitive with another non-Malawian supplier;
(b) comply with the Local Business Development Programme, so as to
encourage and assist the establishment of businesses within Malawi
(particularly in the district of Karonga and with a particular emphasis
on businesses directly or indirectly majority owned by Malawi citizens)
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to supply materials, equipment and services to the Company, provided
that the Company shall not be obliged to train, supply, manage or
supervise or grant or lend money to any person or organisation;
(c) conduct an annual review of progress being made on the
implementation of the Local Business Development Programme and
make such variations to it as required by changing circumstances;
(d) at all times designate a nominee to be the responsible person to:
(i) assist Malawi citizens who wish to or have set up businesses to
service the Company and the Project;
(ii) implement the Local Business Development Programme;
(iii) liaise with the appropriate officials from the Government; and
(iv) provide advice and assistance in the development and
implementation of long term business enterprises which can
continue after the Approved Programme of Operations is
completed; and
(e) inform the Government annually on the implementation and results of
the Local Business Development Programme.
6. ROADS
6.1
(a) The Government shall at its sole cost upgrade the unsealed road from
Karonga townsite to the Mwesia River and then from the North Rukuru
River to the turnoff to the Contract Area from the Karonga/Chitipa
Road, as shown on the plan attached and marked "A" to the standard,
but for sealing, of a Class 1 Malawian road and such road works are to
commence from the point closest to Karonga. The Government is to
use its reasonable endeavours to complete the unsealed upgrade within
18 months of the Agreement Date and thereafter the sealing of the
upgraded road as soon as funding and scheduling permit.
(b) The Company may negotiate with the Government's construction
contractor for the purpose of determining the construction priorities
associated with the works referred to in clause 6.1(a) and if the
Company requires that any part of such works needs to be to a higher
standard than contemplated in clause 6.1(a) then the Government
acknowledges that the Company can negotiate a separate contract with
the Government's contractor to carry out such work at no extra cost to
the Government.
6.2 The Government shall gazette a road from the turnoff to the Contract Area
from the Karonga/Chitipa Road to at least the Contract Area, the standard of
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which road is to be first agreed between the Government and the Company.
The Company is to construct the road to the standard of what is gazetted and is
to thereafter maintain that road for the term of this Agreement.
6.3 The Government shall endeavour to maintain or cause to be maintained those
public roads under the control of the National Roads Authority or the Karonga
Town Assembly or their respective successors which may be used by the
Company for the purposes of its Business and in the case of the road referred to
in clause 6.1, to a standard but for sealing, of a Class 1 Malawian road.
6.4 The Government will support initiatives to improve supporting infrastructure
and essential services.
6.5 In the event that for, or in connection with, the Business the Company or any
person engaged by the Company uses or wishes to use a public road (whether
referred to in clause 6.3 or otherwise) which is inadequate for the purpose, or
any use by the Company or any person engaged by the Company of any public
road results in excessive damage to or deterioration of it (other than fair wear
and tear) the Company shall pay to the Government, National Roads Authority
or Karonga Town Assembly (as the case may require) the whole or an
equitable part of the total cost of any required upgrading or making good the
damage or deterioration as may be reasonably required by the National Roads
Authority having regard to the use of such public road by others.
6.6 The Company shall:
(a) be responsible for the cost of the construction and maintenance of all
private roads which shall be used in its Business activities and the
standard for such construction and maintenance shall be equivalent to
that applying to similar sized roads in Malawi;
(b) at its own cost erect signposts and take other steps that may be
reasonable in the circumstances to prevent any persons and vehicles
other than those engaged upon the Company's activities and its invitees
and licensees from using the private roads; and
(c) at any place where any private roads are constructed by the Company so
as to cross any railways or public roads provide at its cost such
reasonable protection and signposting as may be required by the
National Roads Authority or the Karonga Town Assembly as the case
may be.
6.7 If the public roads are not maintained to the standard required by the Company
then the Government authorises the Company, at the Company's expense, to
undertake or to engage contractors to undertake maintenance work on the
public roads which are of concern to the Company.
6.8 Where a road constructed by the Company within the Contract Area for its own
use is subsequently required for public use, the Government may, after
consultation with the Company and so long as resumption shall not unduly
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prejudice or interfere with the Business, resume and gazette such road as a
public road.
6.9 In the event that the Company is unable to procure wayleaves or other rights
over land required for the purposes of constructing and maintaining roads on
reasonable terms, the Government shall assist the Company to such extent as
may be reasonably necessary to enable it to procure the said wayleaves or other
rights over land.
7. AERODROME
7.1 The Company shall confer with the Minister responsible for transport and
public works and the Department of Civil Aviation about:
(a) any upgrading of existing aerodrome facilities and services in the
Karonga district that the Company considers it requires as a result of the
Business and the Government will do all that is necessary to assist the
Company to obtain the facilities and services it requires; and
(b) the establishment of an unsealed airstrip on the Contract Area and the
Government will do all that is necessary to enable the Company to
construct and operate an air service to and from the Karonga air field
including the granting of any authorisation or provision of any consent
pursuant to the Aviation Act (Cap. 70:01 of the Laws of Malawi).
8. ELECTRICITY
8.1 For the purposes of facilitating integration of electricity generation and
transmission facilities in the area of the Mining Area, the Company may either:
(a) purchase up to 12 megawatts of electricity from ESCOM for the
payment by the Company of an equitable contribution (having regard to
the amount of electricity required by the Company and whether such
supply needs to be continuous) towards the augmentation of the
facilities at Karonga or to enable it to continuously supply such
electricity to the Company. Electricity supplied to the Company
pursuant to this clause shall be at rates and on terms and conditions to
be agreed between ESCOM and the Company; and/or
(b) generate its own power from a facility constructed by or on behalf of
the Company on the Mining Area.
8.2 In the event of the Company determining it does not wish to procure all or any
of its electricity from ESCOM in accordance with clause 8.1(a) the Company
may:
(a) in accordance with its Approved Programme of Operations, install and
operate without cost to ESCOM, at an appropriate location equipment
of sufficient capacity to generate electricity for its activities at the
Mining Area; and
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(b) transmit power within the Mining Area,
as contemplated in clause 8.1(b). In the event the Company requires any
licence under the Electricity Act (Cap. 73:01 of the Laws of Malawi) from the
Malawi Energy Regulatory Authority for the purposes of giving effect to any
of the matters referred to in this clause 8.2 then the Government is to provide
the Company with whatever assistance it can in order to procure from ESCOM
a grant of any such licence.
8.3 In the event that the Company is unable to procure wayleaves or other rights
over land required for the purposes of transmitting electricity on reasonable
terms the Government shall assist the Company to such extent as may be
reasonably necessary to enable it to procure the said wayleaves or other rights
over land.
8.4 In exercising any power which is held either directly or indirectly over
ESCOM, the Government will facilitate to the extent which is consistent with
the relationship between the Government and ESCOM that ESCOM meets its
obligations as detailed in the power supply agreement to be entered into
between ESCOM and the Company.
9. WATER
9.1
(a) The Government and the Company shall agree upon the amounts (and
qualities) of the Company's annual and maximum daily water
requirements for use in the Mining operations (which amounts or such
other amounts as shall from time to time be agreed between the Parties
to be reasonable called the "Mining Water Requirements").
(b) To the fullest extent reasonably practicable, the Company shall use
water obtained from dewatering on the Tenement for its purposes under
this Agreement.
(c) Nothing in this Agreement shall be construed to exempt the Company
from any liability to the Government or to third parties arising out of or
caused by extraction of, water from the Tenement by dewatering or any
discharge or escape from the Tenement of water obtained by
dewatering.
9.2 Subject to clause 9.3, the Company is at its cost and in collaboration with the
Government entitled to take water from any of the North Rukuru, Sere or
Muswanga Rivers in order to meet its requirements, provided that the
Company shall employ and retain experienced hydrological consultants to
provide advice on the sustainability of taking such water. The Company shall
furnish to the Minister details of the results of its investigations and copies of
the reports of such consultants as they become available.
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9.3 If the investigations referred to in clause 9.2 prove to the satisfaction of the
Minister acting reasonably that water can continue to be drawn on by the
Company without seriously affecting either the sustainability or quality of
water in that water source or either the availability (to the extent utilised by
local villagers) or quality of water in the adjacent areas the Government shall,
subject to the Company making application to the Ministry of Irrigation and
Water Development, consider the grant to the Company of the necessary
licence by the Minister responsible for the administration of the Water
Resources Act (Cap. 72:03 of the Laws of Malawi)_to develop and draw from
that source at the Company's cost but at a prescribed fee, the Mining Water
Requirements. The licence, if granted, is to be on such terms and conditions as
are necessary to ensure good water resource management as the Government
may from time to time require and dining the continuance of this Agreement
grant renewals of any such licence, provided however, that should that source
in the opinion of the Government prove hydrologically inadequate to meet the
Mining Water Requirements, the Government may on at least 6 months prior
notice to the Company (or on at least 48 hours notice if in the opinion of the
Government an emergency situation exists) limit the amount of water which
may be taken from that source at any one time or from time to time to the
maximum which that source is hydrologically capable of meeting as aforesaid.
The Government agrees to act in good faith and to observe the principles of
natural justice when exercising the discretion referred to in this clause 9.3.
9.4 In the event of water supplies from available sources proving insufficient to
meet the Mining Water Requirements the Company shall, notwithstanding the
provisions of clause 9.3, collaborate with the Government in an investigation
of ground water, surface water, water catchments and storage dams.
9.5 The Company shall at its cost or with finance arranged by it construct to
standards and in accordance with designs approved by the Government and
operate and maintain in accordance with the relevant approved proposals all
necessary dams, bores, valves, distribution pipelines, reticulation, meters,
tanks, equipment and appurtenances necessary to draw, transport, use,
reticulate and dispose of water obtained by the Company pursuant to this
clause.
9.6 The Government shall ensure that in granting rights to minerals, petroleum or
other substances over the area of any water sources from which the Company
is drawing water from time to time conditions are imposed on the third party to
whom such rights are being granted in order to minimise any material prejudice
or interference with the Business or the Company's access to the water source.
9.7 The Company acknowledges that if the Northern Region Water Board takes
over responsibility for the supply of water to the Kayelekera village it will pass
over to the Northern Region Water Board the facilities which the Company
may have installed in order to facilitate the supply of water to the Kayelekera
village. Nothing in this clause requires the Company to pass over any facilities
which are used to supply water to the Mining operations.
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10. LANDS
10.1 In accordance with the Approved Programme of Operations the Government
shall grant to the Company, or arrange to have the appropriate authority or
other interested instrumentality of the Government grant, for such periods and
on such terms and conditions including rentals and renewal rights as shall be
reasonable having regard to the requirements of the Company and as are
consistent with the terms of this Agreement and approved proposals, leases and
where applicable licences, easements, wayleaves and rights of way for all or
any of the purposes of the Business including any of the following namely -
accommodation areas, rail spur lines, railway lines, conveyors, private roads,
tailings areas, water pipelines, pumping installations and reservoirs, power
transmission lines, radio and communication sites, plant site areas and borrow
pits for stone sand clay and gravel.
10.2 The Government shall use its express powers under the Land Act (Cap 58:01
of the Laws of Malawi) to grant wayleaves or rights of way or to dispose of or
lease customary land to the Company, provided that the Company can
demonstrate to the Government acting reasonably, that such actions are
essential for the development and operation of the Project.
11. RAILWAYS AND SHIPPING
11.1 Subj ect to the Company complying with the laws relating to the handling of the
Mine Product the Government shall do all within its power to enable the
Company to use if it considers appropriate all existing fail and port facilities in
Malawi for the transport of the Mine Product, plant, equipment and
consumables, it being acknowledged by the Company that the Government has
granted concessions to private organisations to run both the railways and ports
in Malawi and access to such facilities will require the Company to reach
agreement with the concession holder of such facilities.
11.2 The Government shall, if it has any residual power to do so given its grant of
concessions to private organisations to run both the railway and ports in
Malawi if called upon by the Company to do so, set aside or cause the
concession holder to set aside a separate secure area at the rail head and port on
which the Company can store its Mine Product before shipment.
12. TRAINING AND HUMAN RESOURCES MANAGEMENT
12.1
(a) The Company shall employ and train Malawi citizens in and for the
operations, development and extraction of yellowcake in accordance
with the Mines Act and any instrument appended to the Tenement and
such instrument is to contain requirements which are reasonable in all
the circumstances. The Commissioner shall promptly grant permission
to the Company to employ non-Malawi citizens in any post only if:
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(i) the skills and experience required in respect of the holder of that
post are not obtainable from the employment of a Malawi
citizen from the Malawi labour market; or
(ii) notwithstanding such skills and experience being available from
a Malawi citizen within the Malawi labour market, where the
Company determines that such candidate is not a fit and proper
person to be employed by the Company and there are no other
suitable candidates from within the Malawi labour market.
(b) For the purposes of the training referred to in clause 12.1(a), the
Company shall establish training programmes prior to the Production
Commencement Date and shall implement such programmes on an as
needs basis after that date.
(c) Where in the reasonable opinion of the Commissioner for Labour,
which opinion the Commissioner for Labour shall detail in writing to
the Company, the Company has, in breach of its undertaking continued
to employ a non-Malawi citizen in any post where a suitably skilled and
experienced Malawi citizen is available to fulfil that role, he may call
upon the Company to show cause why the employment of such a non-
Malawi citizen in a particular post should not be discontinued at the
first available opportunity under that person's contract of employment
and that such person be replaced by a suitably skilled and experienced
Malawi citizen. Without limitation to rights of the Company to show
cause, it shall be conclusive evidence of the Company not having to
employ a particular Malawi citizen if the Company can demonstrate
that the candidate is not a fit and proper person.
(d) In addition to the obligations of the Company to train Malawi citizens
as described in clause 12.1(a), the Company may in its sole discretion
but as part of any such training, second some of its Malawi employees
to operations of the Company or its Affiliates in other countries.
12.2 The Government undertakes to:
(a) promptly grant the necessary entry visas, work permits and similar
authorisations to expatriate personnel who are bona fide employees of
the Company, its consultants, contractors and sub-contractors;
(b) allow expatriate personnel to remit from Malawi in each year of their
employment two thirds of their net salary and upon termination of their
contracts in Malawi, the balance of their savings together with any
bonus or gratuity payment or other sums paid to them from any
provident or similar fund on termination of their employment; and
(c) allow such expatriate personnel to import into Malawi, within six
months of arrival to take up employment in Malawi, their personal and
household effects, free of any import duty and other related taxes and
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charges freely to export the same upon termination of their employment
in Malawi,
provided that, upon written application by such expatriate personnel, the
Commissioner General of Malawi Revenue Authority may allow the applicant
to either import the aforementioned items beyond the specified period of six
months or to import and at the end of their employment in Malawi, export a
motor vehicle for private usage, duty free.
13. INSURANCE
13.1 The Company shall ensure those aspects of its operations that are normally and
commercially insurable (and where such insurance is customarily obtained in
the mining industry) are insured in accordance with the Laws of Malawi and
Best Mining, Ore Processing and Environmental Practices and occupational
health and safety practices.
13.2 The Company shall forward copies of insurance policies to the Government as
and when they are renewed. The Company shall take out whatever insurance is
required by the Laws of Malawi with a Malawi insurance company otherwise
the Company is free to take out insurance coverage where it is most
commercially appropriate to do so and with insurers in whatever jurisdiction
they are located and the Government undertakes to permit the Company to
secure such insurance.
14. SUSPENSION AND CURTAILMENT OF PRODUCTION
14.1 Subject to the succeeding provisions of this clause 14, the Parties acknowledge
that the Company’s right to suspend and curtail production is governed by
section 46 of the Mines Act and that, in the event of any such suspension or
curtailment, the Minister may exercise powers under section 44(2) of the Mines
Act.
14.2 The Government agrees that:
(a) the Commissioner's approval shall be given in accordance with section
47(a) of the Mines Act upon compliance by the Company with this
clause; and
(b) in such event, any direction capable of being given pursuant to section
47(b) of the Mines Act will only be given either:
(i) in compliance with this clause; or
(ii) if the Company has not complied with any provision of this
clause and has not remedied such non-compliance within thirty
(30) days of being given notice of such non-compliance by the
Government.
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14.3 If the Company gives notice to the Government in accordance with section 46
of the Mines Act the Government will cause the Commissioner to consider
such action in good faith.
14.4 Where the Company makes an application to suspend or curtail production
based on Government action, the Commissioner shall consider in good faith
whether the action of either the legislative or executive arms of Government
has resulted in or caused a Material Adverse Effect on either the Economic
Equilibrium or operational conditions as they existed at the Agreement Date.
14.5 Where pursuant to section 47 of the Mines Act the Commissioner approves the
Company suspending or curtailing production in respect of any part of its
operation, the Company shall maintain, subject to fair wear and tear, the assets
comprising the relevant plant so as to prevent significant deterioration until
Normal Operations are resumed.
14.6 In assessing whether production should be curtailed or suspended because of
Government action having a Material Adverse Effect on either the Economic
Equilibrium or operational conditions as they affected the Company on the
Agreement Date or whether such production should be recommenced due to
the reversing of such acts of Government, the Commissioner or the Arbitrator
(as the case may be) shall have regard to the impact of such actions on the costs
and expenses of the Mining operation or the Company's ability to undertake the
Approved Programme of Operations.
15. SURFACE RIGHTS AND INFRASTRUCTURE
15.1 The Company shall allow the public and the Government to use, free of charge,
any roads within the Contract Area constructed and/or maintained by the
Company which by custom and practice have been freely available for public
use, provided, however, that such use shall not unduly degrade security of mine
facilities or equipment or prejudice or interfere with the Company’s operations
under this Agreement, and provided further that the Company may restrict
access or limit the use of such roads in the interest of public health and safety.
15.2 The Company may in its sole discretion allow or consider allowing the general
public to have access over the Contract Area, provided that such access neither
degrades the security of mine facilities or equipment, nor unduly prejudices or
interferes with the Company's operations and in exercising his powers under
section 104 of the Mines Act the Minister shall have regard to the rights of the
Company under this clause 15.
15.3 The Company may allow the Government to place, for a reasonable charge and
at its own expense, telephone wires on the poles of the lines of the Company,
provided that such installation is carried out with prior notice to the Company,
and in cooperation with the Company and does not unduly interfere with the
Company's efficient use of such poles and lines.
15.4 The Government shall facilitate the granting of a licence to the Company by
the Malawi Communications Regulatory Authority to establish and operate
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satellite and other wireless communications both within Malawi and
internationally.
16. RECORDS AND OPERATIONS REPORTS
16.1 The Company shall keep the Government through the Ministry, advised
concerning the Company's operations through submission of annual reports,
the first report to be submitted three (3) months after the first financial year end
of the Company following the Production Commencement Date, as to the
progress and results of the Company's Mining and processing operations
including any prospecting and appraisal activities (such reports to contain any
information relating to the progress of operations as the Ministry may from
time to time reasonably require).
16.2 The Company shall provide quarterly reports to the Minister, the first report to
be submitted within one (1) month after the first of 31 March, 30 June, 30
September or 31 December from the Production Commencement Date and
thereafter on a quarterly basis. The quarterly reports shall contain information
relating to:
(a) quantities of ore mined and average head grades;
(b) the quantities of Mine Product won from the Contract Area and the
prices obtained on sales of the Mine Product;
(c) quantities of waste mined;
(d) operating costs; and
(e) progress in implementing the Scheduled Programmes, the extent of any
continuing non-compliance by the Company with Environmental Laws
and progress made in remedying this in accordance with the
Environmental Management Plan.
16.3 The Company shall provide monthly reports as required by the Mines Act.
16.4 All information furnished to the Government pursuant to clauses 16.2 and 16.3
shall be in the English language and any reference to currency shall be in K or
US$ but in the case of the currency being US$ the report shall contain a
statement of the US$/K exchange rate at the end of the relevant period.
16.5 The Company shall file with the Ministry annual reports summarising any
geological and metallurgical investigations and such other material data as may
be obtained from any of its activities.
16.6 The Company shall maintain all original records and reports relating to its
activities and operations from the Production Commencement Date including
all documents relating to financial and commercial transactions with
independent parties and Affiliates in its principal office in Malawi. These
records and reports shall be open to inspection by the Government through an
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authorised representative during normal working hours. Such reports and
records shall be maintained in the English language and all financial data shall
be recorded in K or US$.
16.7 Copies of any records, reports, plans, maps, charts, accounts, and information
which the Company is or may be from time to time reasonably required to
supply under the provisions of this Agreement shall be supplied at the expense
of the Company to the Government.
16.8 The Government shall in relation to any Confidential Information:
(a) use such Confidential Information only for the purpose for which it was
supplied to the Government and not for any other purpose in
accordance with the laws of Malawi;
(b) treat and safeguard as strictly private and confidential all Confidential
Information including without limitation, the Confidential Information
supplied to the Government as a shareholder in the Company being
used by the Government solely in that capacity; and
(c) ensure proper and secure storage of all Confidential Information.
16.9
(a) Compliance by the Company in all material respects with the provisions
of this clause 16 shall be deemed to constitute compliance with the
provisions of the Mines Act relating to matters provided for in this
clause 16.
(b) For the avoidance of doubt and subject to the Mines Act nothing
contained in this Agreement other than as provided for in clause 16.8(b)
shall preclude the Government from using any such information as
supplied by the Company under clause 16.2 of this Agreement for
purposes of preparing the Government statistics and data or from
publishing the same in statistical format.
16.10 Any information supplied by the Company shall (except with the consent in
writing of the Company which shall not be unreasonably withheld) be treated
by all persons in the service of the Government as confidential, but the
Government shall nevertheless other than as provided for in clause 16.8(b) be
entitled at any time to make use of any information received from the
Company for the purpose of preparing and publishing aggregated returns and
general reports on the extent of prospecting or ore Mining operations in
Malawi and for the purpose of any arbitration or litigation between the
Government and the Company. In addition, the Government may other than as
provided for in clause 16.8(b) prepare and publish aggregated returns and
general reports which do not disclose Confidential Information specific to the
Company on the extent of prospecting or ore Mining operations in Malawi.
16.11 Any information supplied by the Government to the Company which is
Confidential Information (except with the consent in writing of the
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Government) shall be treated by the Company and all persons in the
employment or who are consulting to the Company as confidential.
16.12 All records, reports, plans, maps, charts, accounts, and information which the
Company is or may be from time to time required to supply under the
provisions of this Agreement shall be supplied at the expense of the Company.
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PART C
UNDERTAKINGS NECESSARY
17. FOREIGN EXCHANGE
17.1 The Parties acknowledge that under legislation and practice currently in force
in Malawi, the Company is free to remit foreign currency accruing to or earned
by it outside Malawi into Malawi.
17.2 Subject to the Company making the appropriate applications including
registration with the Reserve Bank of Malawi of its investment in Malawi, be it
cash or equipment and providing to the Government a copy of the facility
agreement between the Company's international project financier as lender and
the Company as borrower, the Government will:
(a) in accordance with its exchange control regulations permit the
Company to:
(i) remit foreign currency out of Malawi;
(ii) maintain a foreign currency account outside of Malawi,
provided that such permission shall be for a period of 7 years
after the establishment of such account or for so long as the
Company has borrowed money from the Project Lenders,
whatever is the earlier;
(iii) maintain a foreign currency account within Malawi into which
foreign currency not required to meet the Company’s
obligations to the Project Lenders are transferred; and
(iv) retain reasonable amounts of foreign currency from the sale of
Mine Product, in its foreign currency account outside Malawi as
required by the Company to meet its loan obligations including
the payment of interest, principal and the establishment and
maintenance reserves as required by the Project Lenders. All
foreign currency which is held to the credit of the Company and
which is not required to meet its loan obligations shall be
repatriated to Malawi as required by law. All other external
payments by the Company shall, subject to clause 17.9, be made
from the foreign currency account maintained within Malawi;
and
(b) enter into a tripartite agreement between the Company, the Government
and the Project Lenders in order to give effect to the arrangements
referred to in this clause 17.2.
17.3 In the event foreign exchange controls are amended or re-introduced where
they do not currently apply in Malawi within the Stability Period and to the
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extent those controls may vest discretion in relation to the imposition of such
controls in the Reserve Bank of Malawi, the Government will in good faith
urge the Reserve Bank of Malawi to exercise its discretion such that the
Company shall, notwithstanding such amendment or reintroduction as the case
may be (and without requiring further approvals from the Government or any
entity of the Government) have the right to:
(a) retain a foreign currency account outside Malawi for a period of 7 years
after its establishment, or for so long as the Company has borrowed
money from the Project Lenders, whatever is the earlier, in an account
established for that purpose and maintain in such account amounts
arising from all verifiable sources associated with sale proceeds of the
Mine Product and foreign loan proceeds. Such proceeds shall be used
for purposes of servicing foreign loans and establishing and maintaining
foreign currency reserve accounts as required by the Project Lenders.
All foreign loans procured by the Company shall be registered by the
Reserve Bank of Malawi through authorised dealer banks in Malawi
prior to the loans being effective;
(b) retain a foreign currency account within Malawi which has been
established, for the Project, and maintain in such account amounts
arising from all verifiable sources associated with the Business,
including the following:
(i) that portion of the sale proceeds which are not permitted to be
held in the account referred to in clause 17.3(a);
(ii) payments made by insurers or re-insurers not resident in Malawi
under contracts of insurance in the Company’s favour;
(iii) profits;
(iv) proceeds of any disposal of capital assets;
(v) foreign loan proceeds and intercompany loans;
(vi) proceeds of the issue of share capital (payable by non-residents
of Malawi); and
(vii) proceeds of swaps and hedges (payable by non-residents of
Malawi); and
(c) subject to the prevailing Exchange Control Regulations and clauses
17.5 and 17.9, freely use the foreign currency accounts maintained by
the Company in Malawi to:
(i) service payments of principal and interest, service charges and
other fees and expenses in respect of any loans arranged with
non Malawi entities other than for those entities being repaid
from the account referred to in clause 17.3(a);
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(ii) make payments due to suppliers not resident in Malawi for the
supply of goods and services to the Company;
(iii) remit profits (in currency or otherwise) and repatriate capital (in
cash or assets) outside Malawi (which right shall be extended to
the Company's shareholders in respect of the proceeds of the
disposal or liquidation of all part of their investment/shares in
the Company);
(iv) pay expatriate employees whose contracts of employment
specify that a portion of their salary be paid in a currency other
than Kwacha, that portion of their salary which it is permissible
under the laws of Malawi to be paid in a currency other than
Kwacha;
(v) effect such other payments in foreign currency to persons not
resident in Malawi for foreign exchange purposes as may be
necessary or desirable in the ordinary course of the Business;
(vi) effect any other payments as may be required from time to time
in the ordinary course of business; and
(vii) payments of swaps and hedges (payable to non-residents of
Malawi).
17.4 The Company shall submit to the Reserve Bank of Malawi:
(a) within fifteen (15) days of the end of each calendar month:
(i) a statement of foreign currency amounts repatriated to Malawi
within the previous month from accounts maintained overseas
by the Company; and
(ii) a statement of the balance of the Company's foreign currency
accounts at the end of the previous month both in and outside
Malawi;
(b) audited financial statements within five (5) months following the year
to which audited financial statements relate which comply with
Malawian law and regulations; and
(c) any other information or reports as may be requested under regulation 6
of the Exchange Control Regulations made under section 3 of the
Exchange Control Act (Cap 45:01 of the Laws of Malawi).
17.5 In the absence of exchange controls in Malawi, the Company shall have the
same rights to buy and sell currencies from authorised dealers as other
commercial concerns in Malawi and enter into swaps and hedging agreements
(which agreements will include arrangements for taking out forward cover
against local or other currency fluctuations or other fluctuations in outflows or
inflows incurred as part of the management operations and solely for the
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purposes of the Company covering such fluctuations as they may affect the
Company and its operations but shall not include Speculative Currency
Transactions). In the event exchange controls were to be reimposed (and
without prejudice to the Company’s rights under clause 17.3) such controls
shall not be applied to the Company in a manner less favourable to it than the
manner in which they are generally applied to other large commercial concerns
in Malawi. The Company shall be entitled to buy and sell foreign exchange for
its own use in accordance with such controls at rates of exchange no less
favourable than those available to other commercial buyers and sellers of the
currency concerned.
17.6 The Company shall remit to Malawi and convert them into K for credit to a
hank account in the name of the Company such portion of foreign currency
earnings arising from the sale of Mine Product as required by the Reserve Bank
of Malawi to pay all such commitments as the Company may have incurred in
K (including obligations to pay dividends to any local shareholders payable in
local currency, taxes and royalties) which cannot be met by its K balances from
time to time. The Company shall use its reasonable endeavours to notify the
Reserve Bank of Malawi through the Company's local bankers of transfers of
substantial amounts which are not in accordance with the normal pattern of
transfers.
17.7 The Company shall not engage in or use any provisions of this clause 17 or any
authority or approval given by the Reserve Bank of Malawi to engage in
Speculative Currency Transactions. For the avoidance of doubt, this clause
shall not prohibit or prevent normal risk management operations discussed in
clause 17.5. If the Company is in breach of this clause it shall pay to the
Government as liquidated damages an amount equal to the amount of any net
after tax profit or gain which the Company makes on the Speculative Currency
Transaction and any cost incurred by the Government in establishing that the
transaction was a Speculative Currency Transaction.
17.8 Where any right or assurance given to the Company under this clause 17
requires the Reserve Bank of Malawi to approve any act, matter or thing or to
grant authority under applicable law and regulations for its exercise or
performance, and the Company has supplied any necessary information to the
Reserve Bank of Malawi and otherwise met the conditions of this clause 17,
the Government will in good faith urge the Reserve Bank of Malawi to grant
such approval or authority.
17.9 The Company and the Government through the Reserve Bank of Malawi are
to establish a procedure by which the Company can, where required, make
payments from its foreign exchange accounts established inside of Malawi for
either:
(a) the importation of equipment, spare parts, materials and services in
advance of the Company's receipt of such equipment, spare parts,
materials and services and either without having to first obtain the
approval of the Reserve Bank of Malawi for such payments and to
subsequently be able to seek the approval of the Reserve Bank of
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Malawi for such payment or otherwise some other streamlined
procedure for making such payments; or
(b) the importation of equipment, spare parts, materials and services having
a value not exceeding US$1,500,000 in cases of emergency without the
Company's authorised dealer bank in Malawi having to seek the prior
approval of the Reserve Bank of Malawi. If the Company needs to
spend in excess of US$1,500,000 in the event of an emergency then
subject to such expenditure being approved by the Government's
nominee on the board of the Company, which approval must not be
unreasonably withheld, then the Company's authorised dealer bank
must make the payment without having to seek the prior approval of the
Reserve Bank of Malawi.
17.10 In circumstances where the Company instructs its authorised dealer bank in
Malawi to make a payment in accordance with clause 17.9(b) then the
Company through that authorised dealer bank must justify to the Reserve Bank
of Malawi, acting reasonably, that the expenditure was emergency expenditure.
If the Government forms the view that the Company has on no less than two
occasions made payments in accordance with clause 17.9(b) in circumstances
which are not as a consequence of an emergency and after referring the matter
to the Independent Expert in accordance with clause 35, for determination, the
Independent Expert finds in favour of the Government then the Company shall
cease to enjoy the benefit of clause 17.9(b).
17.11 For the purposes of giving effect to clause 17.9, the Government, the Company
and the authorised dealer bank in Malawi will enter into a tripartite agreement
to give effect to the agreed procedures.
17.12 The Company shall, upon application in writing to the Reserve Bank of
Malawi through the Company's local bankers, be entitled to export capital
goods originally purchased and brought into Malawi by the Company with
external funds, provided, however that the Government shall first be given the
option to purchase the said capital goods.
17.13 The Company shall keep records and accounts of all transactions which have
involved the right of set off and such records and accounts shall be available to
the Government.
17.14 The Company agrees to establish separate bank accounts being K and foreign
currency accounts within Malawi for Mining operations and any exploration
operations which the Company intends to undertake from time to time.
18. ENVIRONMENTAL MATTERS
18.1 Subject to the provisions of this clause 18, the Company shall comply with:
(a) the Environmental Laws enacted or promulgated within Malawi from
time to time which are of general application including, section 24 of
the Environmental Management Act;
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(b) the Environmental Management Plan applicable from time to time; and
(c) reporting requirements on the implementation of the Environmental
Management Plan and any other environmental problems arising as a
result of the activities of the Company as provided in the Environmental
Management Plan.
18.2 Subject to compliance by the Company with the Environmental Management
Plan applicable from time to time and save as provided in clause 18.5, the
Government will take action in enforcing any applicable Environmental Laws
with the intent of:
(a) securing the Company's earlier compliance with Environmental Laws
and those envisaged by the timetable and conditions set out in the
Environmental Management Plan as applicable from time to time;
(b) imposing fines or penalties upon the Company payable under
Environmental Laws (or enacting new fines and penalties under those
Environmental Laws) which are payable in respect of the Company's
non-compliance with such Environmental Laws and where the
Environmental Management Plan applicable from time to time provides
for the remedy of the same in accordance with a specified timetable, if
any, and the Company is substantially in compliance with that
timetable; and
(c) imposing fines or penalties in respect of the Company's breach of
existing Environmental Laws.
18.3 Any dispute regarding non-compliance with the Environmental Management
Plan and any other related Environmental Laws may be referred by either Party
to the Independent Expert for determination in accordance with clause 35.
18.4 The Minister responsible for environmental affairs on behalf of the
Government may propose an amendment to the Environmental Management
Plan applicable from time to time if:
(a) at any time the conduct of Normal Operations in accordance with such
Environmental Management Plan for whatever reason poses a material
danger to public health and safety or may result in significant damage to
the ecology of the area which was not contemplated in such
Environmental Management Plan and is or may become irreversible or
only become reversible or only be reversed after the end of the Life of
Mine; or
(b) the environmental impact of Normal Operations shall prove
substantially more adverse than anticipated in such Environmental
Management Plan; or
(c) technology or procedures, or improvements of them shall have been
available and economic subsequent to the adoption by the Company of
such Environmental Management Plan and, if applied to the operation
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of the Project, could materially mitigate the environmental impact of
Normal Operations.
18.5 In the event of a variation to the Environmental Management Plan proposed by
the Minister on behalf of the Government under the circumstances set forth in
clause 18.4, the Company undertakes to consider the proposed variation in
good faith and, unless by notice of objection served on the Minister the
Company objects to the proposed variation, the proposed variation shall be
deemed to have been agreed to by the Parties. Any notice of objection by the
Company shall include a written statement of the reasons why the Company
considers the proposed variation to be unreasonable and shall set out amongst
other things its analysis of the variation and the environmental impact that
would be effected by such change.
18.6 Following receipt of a notice of objection under clause 18.5, the Minister shall,
as soon as possible, inform the Company by notice in writing whether or not
the Minister’s proposal for a variation of the then applicable Environmental
Management Plan is or is not withdrawn. In the event that the Minister’s
proposal for a variation is not withdrawn it will be deemed to have been agreed
unless the Company elects to submit the question of whether the Government’s
proposal for a variation is unreasonable to the Independent Expert for
determination. Should the Company make that election, the opinion of the
Independent Expert will be binding on the Parties with effect that if the
Independent Expert determines that the Government’s proposal for a variation
is:
(a) reasonable, the proposal for a variation will be deemed to have been
agreed; or
(b) unreasonable, the proposal will be deemed to have been withdrawn.
18.7 Where a variation to an Environmental Management Plan proposed by the
Minister has been agreed by the Company or is deemed to have been agreed to
by the Company pursuant to this clause 18, the then applicable Environmental
Management Plan shall be amended accordingly.
18.8 The Company:
(a) may, in consultation with the Minister, amend the Environmental
Management Plan from time to time; or
(b) shall amend the Environmental Management Plan where either the
IAEA standards for management of the environment as it is affected by
Mining operations are changed, or
(c) shall amend the Environmental Management Plan where either of the
Environmental Laws are changed,
provided that following such amendment the Environmental Management Plan
conforms to specifications and practices established by Malawian and IAEA
standards for the management of the Environment as it is affected by Mining
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operations, so as to reflect changes in operations and other circumstances
considered to be appropriate by the Company and shall deliver a copy of such
amended plan or obligations to the Minister whereupon it shall become part of
the Scheduled Programmes.. If, however, the Government considers that any
such amendment would constitute a Material Adverse Effect, the provisions of
clause 40 shall apply.
18.9 Notwithstanding the provisions of this clause 18, the Company shall, at the
invitation of the Minister, participate either individually or on an industry-wide
basis, in discussions relating to the impact and effectiveness of the
Environmental Laws or on any prospective changes to the Environmental
Laws.
18.10 The Company shall, to the extent that it fails to meet the environmental
management and monitoring standards set for the Project and the Tenement
pursuant to the applicable Environmental Laws and relevant IAEA codes and
Malawi national environmental standards, at its own expense promptly clear
any area of any such excess contamination and compensate, according to the
applicable laws of Malawi, those adversely affected.
18.11 The Government shall undertake regular monitoring of the Project during its
implementation phase to:
(a) determine effectiveness of mitigation measures proposed in the
Environmental Management Plan;
(b) determine changes, if any, in the environmental conditions that the
Government recommends be made to the Project, which changes are to
be with respect to potential additional mitigation measures but such
changes are not to depart materially from the conditions applied to the
mining licence at the time of grant. These changes are to be based on a
baseline survey conducted by the Government at no cost to the
Company before the Production Commencement Date but any failure of
the Government to conduct or complete the baseline study shall not
delay the Production Commencement Date; and
(c) assess compliance with the Environmental Management Plan, IAEA
codes and the Environmental Laws and the relevant Malawian
environmental standards pertaining to uranium mining.
18.12 On the Government recommending any changes in accordance with clause
18.11(b), the recommendations will be placed before the committee to be
established pursuant to clause 41.1 and it is only on the decision of that
committee, but subject to the rights of the Company in clause 18.13 to contest
the materiality of changes, that the Company is obliged to make the changes to
the Project.
18.13 If the Company considers that any of the changes proposed by the Government
pursuant to clause 18.11 depart materially from the conditions applied to the
mining licence at the time of grant then the Company may refer the issue to the
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Independent Expert to be determined in accordance with clause 35. If the
Independent Expert agrees with the Company then to the extent of that
agreement the proposed changes shall not apply.
18.14
(a) The Company shall maintain an environmental performance bond,
equivalent from time to time to the specified amount in the Bankable
Feasibility Study for undertaking rehabilitation of the Mining Area.
The environmental performance bond is to be in the form of an
irrevocable letter of credit, with a commercial bank in Malawi and is to
be in favour of the Director of Environmental Affairs. The
environmental performance bond shall:
(i) cater for costs of rehabilitation in areas where the Company or
its activities shall show signs of default during and after the
mine life. Such activities shall include but no limited to failure
in performance of tailings storage facilities, contamination of
water resources and the environment and their clean up,
sensitisation of the general public on the potential dangers
associated with radioactive substances and procedures to prevent
the general public from the negative effects of radioactive
substances and revegetation; and
(ii) be increased or decreased as the case may be every 2 years over
the Life of Mine, in order to ensure the size of the environmental
performance bond is equivalent to the rehabilitation costs
projected in the Bankable Feasibility Study for the relevant 2
year period.
(b) The environmental performance bond shall further be used for covering
payments for any breaches by the Company of its duty to either prevent
pollution which might give rise to circumstances provided for under
clause 18.14(a) or to undertake rehabilitation work.
18.15 The environmental performance bond shall be released:
(a) progressively, in the circumstances contemplated in clause 18.13; and
(b) at the end of the term of this Agreement provided that the Company has
met the requirements of the mine closure plan which the Company will
have to submit to the Commissioner and which the Commissioner will
have to approve either before or at the time of the Company making an
application to surrender the Tenement pursuant to section 55 of the
Mines Act.
18.16 The Company shall assist the Government (in a manner and to an extent yet to
be agreed) with:
(a) the provision of an office and the purchase of equipment for monitoring
of the Environmental Management Plan;
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(b) educating Malawi citizens on the nuclear industry generally, and the
Mining of ore, the production of yellowcake and the Business
specifically; and
(c) capacity building in environmental management and monitoring of
effects on both human health and the environment arising from uranium
mining.
18.17 Where the Government is of the view that the Company is in breach of its
obligations under this clause 18 and as such the Government wishes to access
all or part of the environmental performance bond to make good the breach,
then before accessing that bond the Government shall give thirty (30) days
prior notice of the breach to the Company along with reasonable details of the
breach. Thereafter, where the Company has either failed to remedy the breach
or undertake material efforts to do so or has sought a determination of the
Independent Expert in accordance with clause 35 and the Independent Expert
has found that the Company is in breach of its obligations then the Government
may access the environmental performance bond in order to remedy the breach.
19. EMPLOYMENT, OCCUPATIONAL, SAFETY AND HEALTH MATTERS
19.1 The Company shall conduct its Business in compliance with the Occupational
Safety Welfare and Health Act (Cap. 55:07 of the Laws of Malawi), the
Workers Compensation Act (Act No.74 of 2000 of the Laws of Malawi) and all
applicable regulations ("Employment and Safety Laws").
19.2 Nothing in clause 19.8 shall be deemed to limit the right of the Government to
take such other actions within its power, such as those rights under the Mining
(Safety) Regulations of the Mines Act, to protect the employee health and
safety.
19.3 Subject to the provisions of clause 19.6, the Company shall comply with the
Employment and Safety Plan applicable from time to time, which plan will
take into account the provisions of the International Labour Organization
Convention No 155: Occupational Safety and Health, 1981.
19.4 Subject to compliance by the Company with the Employment and Safety Plan
applicable from time to time the Government confirms that it will not for the
Stability Period, take any action (and will procure no action is taken by any
Government Agency over which it has operational control acting on its behalf)
under, or in enforcing, any applicable Employment and Safety Laws with the
intent of discriminating against the Company or the Project.
19.5 The Minister on behalf of the Government may propose an amendment to the
Employment and Safety Plan applicable from time to time if:
(a) at any time the conduct of Normal Operations in accordance with such
Employment and Safety Plan for whatever reason poses a material
danger to employee health and safety; or
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(b) technology or procedures, or improvements of them shall have been
available and economic subsequent to the adoption by the Company of
such Employment and Safety Plan and, if applied to the operation of the
Project, could materially mitigate any impact of Normal Operations on
employee health and safety.
19.6 Li the event of a variation of the Employment and Safety Plan proposed by the
Minister on behalf of the Government under the circumstances set forth in
clause 19.5, the Company undertakes to consider the proposed variation in
good faith and, unless by notice of objection served on the Minister it informs
the Minister that it considers the proposed variation to be unreasonable it shall
be deemed to have agreed the same. A notice of objection shall include a
written statement of the reasons why the Company considers the proposed
variation to be unreasonable setting out amongst other things:
(a) its analysis of the impact of the change on the employment and safety
levels; and
(b) its appraisal of the economic and other effects of the change proposed
by the Government.
19.7 Following receipt of a notice of objection under clause 19.6, the Minister shall,
as soon as possible, inform the Company by notice in writing whether or not
the Minister’s proposal for a variation of the then applicable Employment and
Safety Plan is or is not withdrawn. In the event that the Minister’s proposal
for a variation is not withdrawn it will be deemed to have been agreed unless
the Company elects to submit the question of whether the Government’s
proposal for a variation is unreasonable to the Independent Expert for
determination. Should the Company make that election, the opinion of the
Independent Expert will be binding on the Parties with effect that if the
Independent Expert determines that the Government’s proposal for a variation
is reasonable, the proposal for a variation is either:
(a) reasonable, the proposal for a variation will be deemed to have been
agreed; or
(b) unreasonable, the proposal will be deemed to have been withdrawn.
19.8 Where a variation to an Employment and Safety Plan proposed by the Minister
has been agreed by the Company or is deemed to have been agreed by them
pursuant to this clause 19.8, the then applicable Employment and Safety Plan
shall be amended accordingly.
19.9 The Company shall amend the Employment and Safety Management Plan from
time to time to ensure it conforms to:
(a) the Employment and Safety Laws; and
(b) the specifications and practices established by Malawi for the
management of employment and safety standards in Mining operations,
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so as to reflect changes in operations and other circumstances
considered to be appropriate by the Company,
and shall deliver a copy of such amended plan or obligations to the Minister
whereupon it shall become part of the Scheduled Programmes.
19.10 Notwithstanding the provisions of clause 19.8, the Company shall, at the
invitation of the Minister, participate either individually or on an industry-wide
basis, in discussions relating to the impact and effectiveness of the
Employment and Safety Laws or on any prospective changes to the
Employment and Safety Laws.
19.11 The Company shall, to the extent that it fails to meet the employment and
safety standards set for the Project pursuant to the Mining Act and any other
applicable Laws of Malawi, at its own expense promptly compensate,
according to the applicable Laws of Malawi, those employees adversely
affected.
19.12 The Company shall be responsible for and pay compensation as a result of any
ill health effects to the citizens of Malawi which arise as a consequence of the
Mining operations, where it can be proven that those ill health effects were
caused by the Mining operations.
20. SOCIAL RESPONSIBILITY
20.1 In addition to constructing, upgrading and maintaining the facilities and
infrastructure as shall be necessary to undertake the Approved Programme of
Operations or otherwise complying with the provisions of this Agreement, the
Company shall:
(a) pay for two (2) qualified Malawi doctors to come to Australia and be
trained in the health effects of radiation, provided such doctors agree to
return to Malawi and service the communities at Karonga and
Kayelekera although nothing obliges the Company to be responsible for
those doctors remaining at Karonga, Kayelekera or otherwise in
Malawi;
(b) construct at Kayelekera a primary school, housing for 4 teachers, an
office for teachers working at the primary and secondary schools and a
clinic to a typical standard for such facilities in Malawi using local
labour to the extent practical; and
(c) use its best endeavours to carry out the activities set out in attachment
C.
20.2 The Company shall expend and/or cause third party governments or agencies
to spend the sum of US$10million on the construction and fit out of:
(a) education facilities which are likely to include a boarding secondary
school with teachers housing; and
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(b) if after the construction of the facilities referred to in clause 20.2(a)
there is any portion of the US$10 million which has not been expended,
medical facilities,
within the northern region of Malawi ("Social Responsibility Plan"), it being
the intention of the Company that the facilities be proximate to or be able to
benefit the Kayelekera Community, and be of a standard consistent with
similar recently constructed facilities in Malawi.
20.3 The Company is not required to commence construction under the Social
Responsibility Plan until the third anniversary of the Production
Commencement Date and if, subject to clause 2.3, by the fifth anniversary of
the Production Commencement Date the Company has not expended or caused
to be expended the sum of US$10 million in the manner contemplated in clause
20.2 then the difference between what has been expended and US$10 million
shall be placed into a joint bank account at an authorised dealer bank in Malawi
and shall be drawn down by the Company and the Government to complete the
said works.
20.4 The Company may commence incurring expenditure in satisfaction of its
obligations under clause 20.2 prior to the third anniversary of the Production
Commencement Date in order to ensure the appropriate planning and
management of the proposed works is complete in time for the commencement
of the physical construction.
20.5 In contracting for, managing and paying for the Social Responsibility Plan the
Company shall provide to the Government regular reports on work done, and
moneys expended and the Government shall have the right to inspect all
contracts and accounting records relating to the Social Responsibility Plan.
20.6 Prior to the commencement of the Social Responsibility Plan the Company
shall seek the assistance of the committee referred to in clause 41.1 regarding
the type, location, size and the standard of the facilities to be constructed as
part of the Social Responsibility Plan and this committee shall make
recommendations to the Government which, having regard to the intent of
clause 20.2, will determine the type, location, size and standard of the proposed
facilities, provided that where such determination results in total costs of the
facilities exceeding US$10 million the Company does not have any obligation
to fund or find the funds for that portion of the costs which exceed US$10
million.
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PARTD
GENERAL STABILITY, TAXATION, ROYALTIES AND CONSENTS
21. FISCAL REGIME
21.1 In accordance with the provisions of the Taxation Act (Cap. 41:01 of the Laws
of Malawi) and all other applicable legislation the Company is to be subject to
the fiscal regime detailed in item 1 of attachment "B". The Government shall
do all necessary and perform all acts in a timely manner to ensure the Company
is able to enjoy this fiscal regime and without limitation, the Government shall
either amend its existing legislation or alternatively, exercise whatever
discretions that are available to it and publish all notices in order to ensure,
subject to clause 21.3, the fiscal regime is valid and enforceable for the
Stability Period.
21.2 The Parties acknowledge that at the Agreement Date the Company is not able
to specify in detail the materials, equipment and consumables to be used in
equipping and operating the Business but that it shall do so progressively and
the Parties shall determine how best to ensure that the benefit of the fiscal
regime referred to in item 1 of attachment "B" are able to be enjoyed by the
Company in these circumstances. Without limitation to this clause the
Government will cause the Malawi Revenue Authority to provide a duty
exemption in writing and for that duty exemption to be provided to the Malawi
Investment Authority.
21.3 If during the Stability Period there is a Change in Law and this has the
consequence, but for this Agreement, of creating a more favourable fiscal
regime for the Company than that detailed in item 1 of attachment "B" then the
Parties shall amend this Agreement such that the Company can enjoy the fiscal
benefits of any such Change in Law.
21.4 The Parties agree that it is in their best interests to have the Taxation Act (Cap.
41:01 of the Laws of Malawi) amended to acknowledge that the Government
can enter into agreements such as this Agreement for the purposes of providing
the fiscal regime and stability as contemplated in this Agreement and the
Government shall use its best endeavours to have a law enacted to give effect
to this intention. The Government also acknowledges and will not prevent or
attempt to hinder the right of the Company to take whatever action it is
lawfully capable of taking with a view to have the amount paid by the
Company pursuant to the Social Responsibility Plan being treated by the
Malawi Revenue Authority as tax deductible against the income of the
Company.
21.5 For the purposes of the Company being able to fund the Project and enjoy the
fiscal regime set out in this Agreement the Company agrees that other than for
the money provided by the Project Lenders, all other funding provided to the
Company for the purposes of the Project will be provided in the following
form:
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(a) 20% by way of equity subscribed in the Company by Paladin or an
Affiliate; and
(b) 80% by way of debt provided to the Company by Paladin and/or an
Affiliate of Paladin or such other parties that are prepared to lend
money to the Company on Arms' Length Terms,
("Thin Capitalisation Agreement").
21.6 Nothing in this Agreement is intended to prevent the Government from
negotiating and entering into agreements with other countries for the purposes
of enabling the Government to transfer to or obtain from those other countries
information on or affecting any individual taxpayer in Malawi, including
without limitation, the Company.
21.7
The Government:
(a) is, as a condition precedent to the issue of shares to it as contemplated
in clause 2.7(a), to do what is required to ensure the fiscal regime
referred to in paragraphs (b) and (e) of item 1 of attachment "B" is valid
and enforceable;
(b) in order to satisfy the condition precedent referred to in clause 21.7(a),
the Government is to ensure:
(i) that a validly constituted board of the Malawi Revenue
Authority passes a resolution, in the form substantially similar to
that detailed in item 3 of attachment “B” making a
recommendation in accordance with section 16(1) of the Malawi
Revenue Authority Act, to the Minister of Finance:
A. containing the criteria or factors for the grant of any
exemption, mitigation, deferment or remission of any
revenue, and the procedures to be followed for that
purpose; and
B. that the Minister of Finance shall by Order publish in the
Government Gazette such criteria or factors and
procedures; and
(ii) that the Minister of Finance will then exercise his powers under section
16(2) of the Malawi Revenue Authority Act in such a manner as to
ensure the fiscal regime referred to in paragraphs (b) and (e) of item 1
of attachment “B” is valid and enforceable and by Order published in
the Government Gazette exempt that revenue from the taxes referred to
in paragraph (b) and (e) of item 1 of attachment "B".
21.8 Where the Parties determine in good faith that the mechanism in clause 21.7(b)
is no longer appropriate or achievable, then the Government will adopt such
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other mechanisms as may be recommended by the Parties to achieve a valid
and enforceable fiscal regime, as contemplated in paragraphs (b) and (e) of
item 1 of attachment “B”.
21.9 Paladin may waive the condition precedent referred to in clause 21.7 in which
circumstance the provisions of clause 23 which create the requirement for an
Economic Equilibrium, apply.
22. ROYALTY REGIME
22.1 The Company is to pay a gross royalty to the Government, the amount of such
royalty being referred to in item 2 of attachment "B" and this gross royalty is to
be calculated by reference to the gross value (as that term is defined in the
Mines and Minerals (Royalty) Regulations Act) (and computed at the rate of
exchange prevailing on the date of receipt by the Company of the purchase
price in respect of the Mine Product sold) of Mine Product ("Royalty"). The
Government will ensure that in accordance with regulation 3(i) of the Mines
and Minerals (Royalty) Regulations the Commissioner will only demand the
payment of the Royalty on receipt of the return referred to in clause 22.4 and
the Company shall pay that Royalty the subject of the Commissioner's demand
in the manner contemplated by clause 22.4.
22.2 The Government will ensure that the Commissioner will, for the purposes of
determining the gross value of yellowcake as contemplated in the Mines Act,
allow the following deductions calculated on Arms' Length Terms:
(a) during the period the Company is obliged to pay a Royalty of 1.5%, any
additional costs or expenses incurred by the Company as a consequence
of a country, other than Malawi and through which the yellowcake is to
pass for the purposes of export, imposing such costs or expenses on the
transport and export of that yellowcake; and
(b) during the period the Company is obliged to pay a Royalty of 3% the
costs or expenses:
(i) directly related discounts, commissions and marketing costs;
(ii) of ocean freight;
(iii) of marine insurance;
(iv) costs of compliance with international safeguard requirements;
(v) of port and handling charges at port of discharge;
(vi) of delivery (including warehousing costs) from port of discharge
to the purchaser;
(vii) of weighing, sampling, assaying, inspection and representation
costs incurred on discharge or delivery;
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(viii) of shipping agency charges;
(ix) of import taxes payable in the country of the port of discharge;
(x) of demurrage incurred after loading and at port of discharge; and
(xi) of any transport costs or expenses imposed on the Company by a
country through which the yellowcake is exported.
22.3 The Company shall pay to the Government in respect of all Additional
Minerals produced from the Tenement and sold by it, a gross royalty at the rate
from time to time prescribed under or pursuant to the provisions of the Mines
Act.
22.4 The Company shall during the continuance of this Agreement within 14 days
after the end of each Quarter (referred to as "the due date") furnish to the
Minister a return showing the quantity of all minerals on which the Royalty is
payable and sold during the Quarter immediately preceding the due date of the
return and shall not later than two (2) months after such due date pay to the
Minister the amount of the Royalty payable in accordance with this Agreement
calculated on the basis of the invoices or provisional invoices (as the case may
be) rendered by the Company to the purchaser (which invoices the Company
shall render without delay and simultaneously shall furnish copies of them to
the Minister) and shall from time to time when the gross value realised in
respect of the sale has been ascertained in the next following appropriate return
and payment, make (in the return and by cash) all such necessary adjustments
and give to the Minister full details of the calculations.
22.5
(a) The Company shall permit the Minister or his nominee at all reasonable
times to inspect the books of account and records of the Company
relative to the Company operations under this Agreement and to any
sale of yellowcake and any Additional Mineral, including sales
contracts, and to take copies or extracts of them.
(b) For the purpose of determining the gross value payable in respect of any
sale of Mine Product under this Agreement, the Company shall take
reasonable steps (either by the certificate of a competent independent
party acceptable to the Minister or otherwise to the Minister's
satisfaction) to satisfy the Government as to the correctness of all
relevant weights, assays and analyses and shall give due regard to any
objection or representation made by the Minister or his nominee as to
any particular weight assay or analysis that may affect the amount of
Royalty payable under this Agreement.
(c) The information obtained by the Minister or his nominee as a result of
any such inspection shall be used only for the purposes of verifying the
amount of the Royalty payable by the Company and for no other
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purpose and shall not be disclosed by the Government, the Minister or
his nominee to any other party for any other purpose.
(d) For all accounting not provided in this Agreement, all debits and credits
to the Account shall be computed in accordance with the generally
accepted accounting practices and principles recognised by the
International Financial Reporting Standards.
22.6 The provisions of this clause 22 of this Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of the Company.
22.7 In the event that any person acquired after the Agreement Date an interest in
the Tenement, then such person shall bear its proportionate share of the
obligations to pay the Royalty in the proportion that each such party’s interest
bears to the sum of the interests, and the rights, duties, obligations of the party
and the Company shall be several and not joint and none of them shall be
obligated to discharge any duty or obligations of any other of them under this
Agreement.
22.8 The Government shall perform or cause to be performed all acts and things
required to ensure that the arrangements for payment of the Royalty as set out
in item 2 of attachment "B" shall be valid and enforceable.
23. STABILITY
23.1 The Government agrees that throughout the Stability Period, it will, in good
faith and wherever possible, seek to ensure that any enactment, domestic or
international agreement or treaty, any legislation or regulation or policy, as
interpreted by a court or other authority, does not impair, conflict or interfere
with Commercial Operations or adversely affect the value of the Commercial
Operations or any returns or receipts from Commercial Operations to the
Company or its shareholders.
23.2 If because of a Change in Law other than as a consequence of any Change in
Law necessary to give effect to the codes referred to in clause 1.4, or there is a
failure by Government to take the actions referred to in clause 21.7 in order to
establish the fiscal regime proposed in paragraphs (b) and (e) of item 1 of
attachment "B" or Government subsequently takes any action which results in
an adverse impact on that fiscal regime the Economic Equilibrium is disrupted
or negatively affected, the Government shall, in good faith, use its Best
Endeavours to take all actions available to it to restore the Economic
Equilibrium.
23.3 If the Government is unable to establish or restore the Economic Equilibrium
within five (5) months of the date of the issue by the Company of a notice of a
Change in Law or a notice detailing the Government's failure to act and such
notice claims a negative effect on either the Business or the Company or its
shareholders, the Government shall indemnify or pay monetary compensation
for any loss or damage which is caused or arises from any failure, whether due
to action or inaction, to establish or to maintain the Economic Equilibrium and
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the level of compensation shall be what is required to place the Company, its
shareholders or the Business in the position it or they would have been in had
the Economic Equilibrium been established or maintained as the case may be.
23.4 Upon expiry of the Stability Period, the Government shall, in any event, ensure
that no law, statute, regulation or enactment is passed or made which would
discriminate against the Company or Affiliates of the Company in respect of
any such matters as are referred to in clauses 21 and 22 or otherwise in its
conduct of Normal Operations or any other circumstances under this
Agreement when compared to other mining companies or joint ventures
conducting similar operations to those conducted by the Company in Malawi
and will ensure that all employees (regardless of their country of citizenship) of
the Company or of Affiliates of the Company are dealt with in a uniform way
(including with respect to taxation matters) provided that the Government will
be at liberty to pass or make any such law, structure, regulation or enactment to
enable the performance or amendment of a development agreement entered
into by it and another mining company or joint venture prior to the expiry of
such period.
23.5 The Government undertakes for the Stability Period to do all things in its
power to prevent any local or other authority of Government from interfering
with or imposing levies on ore movements. Without limitation to this clause
the Government agrees to lease to the Company that part of the area of land the
subject of the Tenement which is customary land and such lease is to be for the
term of the Tenement.
23.6 The Government will use all reasonable endeavours to negotiate, settle and
execute and investment promotion and protection agreement with the
government of the Commonwealth of Australia.
24. DISTURBANCE AND RESETTLEMENT
24.1 Subject to the performance by the Company of its obligations under this
Agreement, the Government shall not during the currency of this Agreement
without consent of the Company resume nor suffer nor permit to be resumed
by any Governmental Agency any of the works, installations, plant, equipment
or other property for the time being belonging to the Company and the subject
of or used for the purpose of this Agreement or any of the works on the lands
the subject of any lease or licence granted to the Company in terms of this
Agreement or any works, installations, plant, equipment or other property on
such lands and belonging to a contractor to the Company and being used in the
Business and without such consent (which shall not be unreasonably withheld)
the Government shall not create or grant or permit or suffer to be created or
granted by any instrumentality or authority of the Government as aforesaid
any road, right-of-way, water right or wayleave of any nature or kind
whatsoever over or in respect of any such lands which many unduly prejudice
or interfere with the Business.
24.2 The Government shall at the request of the Company permanently remove any
person occupying any unauthorised structure in the Mining Area or any such
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unauthorised structure, the contents of that structure any materials or fixtures in
the area of the structure from the Mining Area and the Company is not required
to provide any indemnity to the Government with respect to the removal of
such person or structure.
24.3 If in the course of establishing the Project or whenever in the course of Normal
Operations any disturbance of a third party results in damage to any crops,
trees, buildings, stock or works thereon then the Company shall be liable to
that party in accordance with section 105 of the Mines Act. If the disturbance
or damage is caused to land the subject to the Land Act (Cap. 58:01 of the
Laws of Malawi), and this results in the Government being liable in accordance
with section 28(a) of the Land Act (Cap. 58:01 of the Laws of Malawi), to pay
to such person fair and reasonable compensation for such disturbance or
damage according to their respective rights or interests, if any, in the property
concerned, and the Company shall indemnify the Government against any such
compensation provided it is determined in accordance with the applicable law.
24.4 In the event the proposed disturbance referred to in clause 24.3 requires the
resettlement of any owner or occupier to some alternative location, then the
Company shall meet the reasonable costs of resettlement and any associated
compensation. The Parties agree that the reasonable costs are intended to be
limited to the costs which are, in accordance with the then relevant
Government policy, determined by the relevant District Commissioner.
24.5 Where the disturbance caused by the Company is to any village infrastructure
and the Government is required to replace such infrastructure then the
Company shall indemnify the Government against the cost to the Government
of having to replace that infrastructure.
24.6 Each Party shall render whatever assistance it is able to, to give effect to this
clause and to enable the other to obtain a determination of compensation and,
if required, the resettlement of any affected owners or occupiers in a timely
manner.
25. ZONING
The Government shall ensure after consultation with the Karonga District Assembly
that the Tenement and any lands the subject of any lease, licence or easement granted
to the Company under the applicable laws shall to the extent required, be and remain
zoned for use or otherwise protected during the currency of the licence, easement,
wayleave or lease so that the Business, when conducted in accordance with the
applicable law, may be undertaken and carried out on such land without any
interference or interruption by the Government or by a Governmental Agency on the
ground that such activities are contrary to any zoning by-law regulation or order.
26. NO DISCRIMINATION
Except as provided in this Agreement the Government shall not:
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(a) during the Stability Period impose, nor shall it permit or authorise any
Governmental Agency to impose discriminatory taxes, rates or charges
or undertake any discriminatory act of any nature whatsoever on or in
respect of the titles, property or other assets, products, materials or
services used or produced by or through the activities of the Company
in the conduct of its Business nor shall the Government take or permit
to be taken by any such Governmental Agency any other discriminatory
action which would deprive the Company of full enjoyment of the
rights granted and intended to be granted under this Agreement; or
(b) after the Stability Period undertake any of the actions referred to in
clause 26(a) where to do so would discriminate between the Company
and any other party mining any of the minerals which are part of Mine
Production in Malawi. For the purposes of this clause the Company
will not be deemed to be discriminated against where at the end of the
Stability Period another party who may have entered into an agreement
with the Government with respect to its mining project enjoys rights
which are different to those being then enjoyed by the Company.
27. EXPORT AND IMPORT LICENCES, CONSENTS AND APPROVALS
27.1 The Company shall from time to time make application to the Government or
to a Governmental Agency concerned for the grant to it of any licence or
consent under the Laws of Malawi necessary to enable or permit the Company
to perform any of its obligations under this Agreement and to export Mine
Product or to import into Malawi geological samples or products arising from
the testing of geological samples where the Company previously exported such
geological samples from Malawi.
27.2 Subject to any such application as referred to in this clause being in the
required form and the Company not being in breach of this Agreement, the
Government or instrumentality concerned for the grant to the Company of any
licence or consent mentioned in this clause 27 shall act in good faith and in a
timely manner with respect to the application for such a licence or consent by
the Company.
27.3 The Parties acknowledge that this Agreement does not deal with every consent
or approval which shall be required to establish the Project and undertake the
Business. The Government agrees with the Company that to the extent any
such consent or approval is required then the Government shall consider any
application for such consent or approval in good faith and in a timely manner.
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PARTE
GENERAL PROVISIONS
28. ASSIGNMENT
28.1 The Company may, with the consent of the Minister in accordance with section
60 of the Mines Act, assign the whole or part only of its rights and obligations
under this Agreement and its interest in the Tenement and the Government
covenants that the consent of the Minister to such an assignment will not be
withheld in the circumstances set out in clauses 28.5 and 28.8. No assignment
of an interest in a Tenement may be made without the assignment to such
person of a comparable interest in this Agreement and vice versa.
28.2 If the Company assigns its entire interest in the Tenement and its rights and
obligations under this Agreement in accordance with clause 28.1 then upon the
assignee becoming party to this Agreement, the Company shall be discharged
from any further liability in respect of any obligation which accrues after the
date of that assignment, without prejudice to pre-existing rights accrued to the
Government against the Company.
28.3 Where an assignment tabes effect pursuant to clause 28.1, the Company shall
enter into an agreement with the assignee pursuant to which the assignee agrees
with the Company and undertakes to the Government that it will:
(a) become a Party to this Agreement; and
(b) assume, observe and comply with all obligations of the Company under
this Agreement.
28.4 If the Company assigns only part of its interest in the Tenement and the rights
and obligations attaching to it under this Agreement, then the Company shall
be discharged from any further liability which accrues after the date of that
assignment in respect of any obligation which accrues after such date as it
relates to the interest so assigned, without prejudice to pre-existing rights
accrued to the Government against the Company.
28.5 Notwithstanding the foregoing provisions of this clause 28, the Company may
mortgage and charge by way of fixed or floating charge the whole or any part
of its undertaking and assets whether located within Malawi or elsewhere
including the Tenement, any Mine Product and uncalled capital (and
premiums) to secure the repayment of principal, and payment of interest and
other fees, costs and expenses relating to all loans made to the Company in
respect of the Contract Area or an Affiliate to finance or refinance Mining
operations by the Company or an Affiliate or to guarantee the performance of
an Affiliate whether in Malawi or elsewhere. The Government covenants that
the Minister will consider in good faith and in a timely manner the request for
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him to consent to such mortgages and charges provided that such mortgages
and charges are notified to the Minister upon their grant (and in any event,
within sixty (60) days of their grant).
28.6 Subject to clause 28.5:
(a) any mortgagee or chargee under a mortgage or charge given by the
Company pursuant to this clause may exercise all rights of sale and
other rights included in such instrument of mortgage or charge provided
it shall first give to the Government at least thirty (30) days' notice of its
intention to exercise any rights of sale and fourteen (14) days' notice of
its intention to exercise all other rights; and
(b) the Government may exercise all of its rights under the Mines Act in
the event of a default by the Company provided that it gives at least
fourteen (14) days' notice of its intention to do so to the mortgagee or
chargee,
and for the purposes of this clause 28.6 the Parties will enter into whatever
documents are necessary with the mortgagee or chargee to give effect to the
intention of this clause.
28.7 The rights of any mortgagee or chargee under a mortgage or charge given by
the Company pursuant to clause 28.5 with respect to the rights of the Company
pursuant to this Agreement, shall be subject to and limited by the rights of the
Company under this Agreement and to the Government’s right to terminate
those rights under clause 30.2.
28.8 Where the Minister’s consent is necessary to effect:
(a) an assignment under section 60 of the Mines Act or a change of control
under section 70 of the Mines Act; or
(b) an assignment pursuant to clause 28.1,
the Government will procure that the Minister will consider in good faith and
in a timely manner the request for him to consent where, in the case of an
assignment, the proposed assignee is reputable and bona fide and has
demonstrated financial capacity and technical ability to meet the obligations
under this Agreement. In the event that the Company considers that a proposed
assignee has demonstrated such capacity as referred to in clause 28.8 and the
Minister has refused or failed to provide the consent referred to in clause 28.8,
it may refer the issue to the Independent Expert to be determined in
accordance with clause 35. If the Independent Expert determines that the
proposed assignee has demonstrated the requisite levels of capacity and ability
or financial standing (as the case may be) the consents referred to in clauses
28.8(a) or 28.8(b) (as the case may be) shall be deemed given and, if not, the
Minister's determination shall stand.
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29. EXTENSIONS TO TIME
29.1 Notwithstanding any provision of this Agreement, the Parties by agreement
between the persons responsible for giving Notices under clause 42, may from
time to time extend any period referred to in this Agreement, or substitute for
any date referred to in this Agreement such later date, as they think fit.
29.2 If the Company is prevented or hindered either by:
(a) Force Majeure; or
(b) a reference to an Arbitrator; or
(c) non-availability of suitable shipping or transport facilities or corridors,
electrical power, gas, water or other utilities other than due to the
negligence or default of the Company, restrictions imposed by the
Government or other authorities of any country which has jurisdiction
either over the Company or its operations or the transport of the Mine
Product (provided that the Government will not be entitled to claim a
Force Majeure event as a result of restrictions imposed by the
Government or Governmental Agencies) or destruction of, damage to or
unavailability of materials, equipment or supplies, the result of any
client of the Company failing to take delivery of the Mine Product,
from undertaking all or any of its obligations under this Agreement or
exercising any right granted, the period of time allowed for the performance of
that obligation or exercise of that right and all periods of time after then
allowed for the performance of obligations or exercise of rights which are
dependent upon the first mentioned obligation or right, shall be extended by a
period equal to the period during which such prevention or hindrance continues
or during the period from the time when the question, dispute or difference
arose until the time it is determined by arbitration. .
29.3
(a) Where any period is, or is deemed to be, extended or any later date
substituted for an earlier date under this clause, that extended or
substituted period or date shall be deemed to constitute the period or
date referred to in this Agreement (notwithstanding that at the time of
such extension or substitution such period may have expired or such
date may have passed).
(b) Notwithstanding the foregoing, the provisions of clauses 29 and 33
shall not in any way be construed so as to, or be deemed to, extend the
term of the Stability Period or any other time periods set out in clause
18, or in the Environmental Management Plan.
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29.4 Subject to the terms of the Agreement, this Agreement shall remain in force for
a minimum period equal to the term of the Tenement and for such further
period as the Tenement may be renewed from time to time.
30. TERMINATION
30.1 This Agreement shall automatically terminate in the event the Company
surrenders the Tenement in accordance with section 55 of the Mines Act and in
exercising its powers under the Mines Act, when considering an application to
surrender the Tenement, the Commissioner shall act in good faith and in a
timely manner and shall otherwise observe the principles of natural justice.
The Agreement remains in force where the Company surrenders a portion of
the area the subject of the Tenement.
30.2 The Government may terminate this Agreement by notice to the Company if:
(a) the Tenement has expired by effluxion of time and has not been
renewed or is not the subject of an application for renewal; or
(b) subject to clause 14, all of the land the subject of the Tenement is
abandoned or at the end of the term of the Tenement where the Minister
gives notice under section 51(4) of the Mines Act that he does not
intend to renew the Tenement.
30.3 In addition to a default, breach or failure as contemplated and dealt with in
clause 18.17, if:
(a) any Party is in default of the performance of its obligations set forth in
this Agreement or the Mines Act; or
(b) any Party fails to treat as binding and comply with any determination
by the Independent Expert or award made in any Arbitration; or
(c) in the case of the Company, it is in breach of any material provision of
any Enabling Legislation,
then where the default is of the sort contemplated in section 57(1) of the Mines
Act, the provisions of section 57 apply otherwise where the Party has not
remedied such default or failure within thirty (30) days of receiving a notice
from the other Party to do so, the other Party may give notice of such default or
failure ("Default Notice") to the defaulting Party which shall specify the
alleged default, failure or breach. If the Company receives a Default Notice,
the Government shall at the same time give a copy of the Default Notice to
each Project Lender, where the name and address of that Project Lender has
previously been notified to the Government, and to each mortgagee or chargee
of any of the Company’s assets under any mortgage or charge notified to the
Minister in accordance with clause 28.5. If the Company disputes the subject
matter of the Default Notice it may refer the issue to Arbitration. On giving a
Default Notice to the Company, the Government agrees to copy to each Project
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Lender, mortgagee or chargee all relevant correspondence it sends to the
Company during the period the Company remains in default or breach.
30.4 If within a period of thirty (30) days following a Default Notice either:
(a) the default, failure or breach specified in the Default Notice has not
been remedied (or active steps have not been commenced and continued
to remedy the default, failure or breach if it is not capable of speedy
remedy); or
(b) compensation is not paid in respect of the default, failure or breach (in
the case of a default, failure or breach not capable of being remedied
but where payment of compensation would be adequate recompense to
the Government),
then, subject to clause 30.5, the non-defaulting Party may by notice
("Termination Notice") to the defaulting Party (which shall be copied to each
Project Lender, mortgagee or chargee who was given a copy of the Default
Notice) bring about the termination of this Agreement ("Termination Date").
30.5 A Party shall not serve a Termination Notice while the Arbitration is in
progress and any Termination Notice already served will be suspended
immediately upon the commencement of such Arbitration for the duration of
any such Arbitration. On the Arbitrator finding in favour of a Party, or within
the period fixed by the Arbitrator the default, failure or breach is substantially
remedied or the compensation is paid, the other Party shall not serve a
Termination Notice and any Termination Notice already served shall be
deemed withdrawn.
30.6 If the Company or the Government contest:
(a) the grounds for the issue of the Default Notice; or
(b) whether the default, failure or breach has been remedied; or
(c) the adequacy of any compensation paid pursuant to clause 30.4(b),
the matter shall be submitted for Arbitration. If the Arbitrator finds in the case
of clause 30.6(a) that adequate grounds exist for the issue of the Default Notice
or in the case of clause 30.6(b) that the default, failure or breach has not been
remedied, then the provisions of clause 30.4 apply from the date of that
finding. If the Arbitrator finds in the case of clause 30.6(c) in favour of the
non-defaulting Party, he shall fix the amount of compensation payable and the
period for its payment.
30.7 If this Agreement is terminated by the Government pursuant to clauses 30.2 to
30.4 and subject to clause 33.12:
(a) the Company will surrender to the Government the Tenement but
without prejudice to the liability of any of the Parties in respect of any
antecedent breach or default under this Agreement or in respect of any
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indemnity given and without prejudice to the rights of the Company to
remove and recover any of the remaining assets of the Company for the
purposes of clause 30.7(d);
(b) each Party shall forthwith pay to the other Party all monies that may be
owing to the other Party under this Agreement;
(c) the Government shall have the option to purchase (subject to any
encumbrances on it), exercisable by notice to the Company within thirty
(30) days following termination of this Agreement; and
(d) the Company shall have the right where the Government does not
exercise its option referred to in clause 30.7(c) to acquire all or any of
the Assets, within the one (1) year period following the thirty (30) day
notice period referred to in clause 30.7(c):
(i) to assign or otherwise dispose of all or any portion of the
remaining Assets not acquired by the Government under clause
30.7(c) to any person; or
(ii) to remove and recover from the Mining Area and export from
Malawi any of the remaining Assets from the Mining Area.
30.8 If this Agreement is terminated by the Company pursuant to clause 30.1 the
Company shall have the right, within the one (1) year period following the
notice of termination referred to in clause 30.1:
(a) to assign or otherwise dispose of all or any portion of the Assets to any
person; or
(b) to remove and recover from the Mining Area and export from Malawi
any of the Assets from the Mining Area should the Government not
within thirty (30) days following termination of this Agreement give
notice to the Company that it wishes to purchase (subject to
encumbrances on it) all or any portion of the Assets at a price
equivalent to the fair market value of the Assets, which fair market
value shall be determined and paid in US dollars and shall be
determined by agreement between the Government and the Company
but failing such agreement by a mediator or Arbitrator in accordance
with clauses 32 and 33.
30.9 Where this Agreement is terminated for any reason the Company shall leave
the Mining Area in a safe and stable condition as required by the Mines Act
having regard to natural conditions in the area and applying generally accepted
standards of good mining practice, provided that the Company shall not be
required to alter the physical condition of the mine, any tailings disposal site,
or other Project facilities beyond the requirements of the Environmental
Management Plan applicable from time to time.
30.10 Upon the expiry of the one (1) year period referred to in clause 30.7(d), all
Assets which remain on the Mining Area shall become the property of the
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Government without any cost to the Government or any liability for the
Government to pay compensation therefore.
30.11 Clauses 30.7, 30.10, 31, 32, 33, 34, 37 and 38 shall continue in force
notwithstanding the termination of the rest of this Agreement and termination
under this Agreement shall not otherwise in any way affect a Party's accrued
rights and obligations at the date of termination.
31. DISPUTES
31.1 A Dispute shall be deemed to arise when one Party serves on the other Party a
notice ("Notice of Dispute") stating the nature of the Dispute.
31.2 If the subject of a Notice of Dispute is a matter arising from events
contemplated in clause 40.1 then the subject matter of that Notice of Dispute
does not constitute an event of Force Majeure.
32. AMICABLE SETTLEMENT OF DISPUTES (NEGOTIATION AND
MEDIATION)
32.1 The Parties shall in good faith and using their Best Endeavours take all steps as
may be necessary or desirable to settle any Dispute through negotiations and
other constructive discussions. The Parties shall not in any event be required to
continue with such negotiations for a period in excess of 10 Business Days
from the date of service of the Notice of Dispute.
32.2 Upon the expiry of 15 Business Days from the date of service of the Notice of
Dispute, or on earlier agreement, either Party may require that the Dispute be
attempted to be resolved through mediation. In such a case, the Parties shall
agree to appoint a mediator, and attend the mediation. The Parties shall agree
on the appointment of a mediator, and the terms of such appointment, but in the
absence of an agreement, the mediator shall be a person nominated by the
Secretary-General of the Centre in accordance with the conciliation rules of
UNCITRAL in existence on the Agreement Date. Such mediation, unless the
Parties otherwise agree, shall take place in Washington D.C. As far as
practicable the Government and the Company shall continue to implement this
Agreement during the period while the Arbitration is pending and during the
Arbitration. Any mediation shall be held within 20 Business Days of the
appointment or nomination as the case may be of the mediator in Washington
D.C.
32.3 This clause 32 and any steps which take place pursuant to this clause 32 shall
be without prejudice to any right or remedy which any Party may ultimately
have, should the matter in dispute fail to be resolved by the taking of such
steps.
32.4 The provisions of clauses 33 and 34 shall not apply to any Dispute until a
period of 20 Business Days, or any longer period agreed between the Parties,
/ has elapsed following service of a Notice of Dispute.
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33. ARBITRATION
33.1 Subject to clauses 31 and 32, the Government and the Company consent to
submit to the International Centre for Settlement of Investment Disputes (the
"Centre") any Dispute for settlement by arbitration pursuant to the Convention
on the Settlement of Investment Disputes between States and Nationals of
Other States (the "Convention"). Arbitration proceedings shall be held in
Washington D.C. if the arbitral tribunal ("Tribunal") after consultation with
the Secretary-General of the Centre agrees. The language of the Arbitration is
to be English and to the extent the Convention does not detail a matter of
procedural law the law of Malawi shall apply.
33.2 Where the Company obtains an award from the Centre, the Government agrees
not to appeal or otherwise challenge the decision based on a claim that such a
decision cannot bind Malawi or Malawi cannot otherwise be made the subject
of such a decision as to do so would be against or otherwise challenge the
sovereignty of Malawi.
33.3 If a Party refers to Arbitration a Dispute as contemplated in clause 40.2(b) then
the Arbitrator is empowered by this Agreement when making an award to
amend the Agreement to ensure that as best as the Arbitrator is able the
Economic Equilibrium that was intended at the Agreement Date, is achieved.
33.4 It is agreed that, although the Company is a national of Malawi, it is controlled
by an entity incorporated and resident in the Commonwealth of Australia and
the Company shall be treated as a national of the Commonwealth of Australia
for the purposes of the Convention.
33.5 Any Tribunal constituted pursuant to this Agreement shall consist of a total
number of three Arbitrators, one appointed by each Party, and an Arbitrator,
who shall be President of the Tribunal, appointed by agreement of the Parties
or, failing such agreement by the secretary-general of the Centre.
33.6 The Tribunal shall decide on the basis of the law of Malawi, the provisions of
this Agreement, as well as rules of international law, as may be applicable.
33.7 Any Arbitration proceeding pursuant to this Agreement shall be conducted in
accordance with the arbitration rules of the Centre in effect on the date on
which the proceeding is instituted.
33.8 An award in any Arbitration proceedings held pursuant to the Convention shall
be binding on the Parties and judgment thereon may be entered in any court
having jurisdiction for the purpose.
33.9 The Government irrevocably waives any claim to immunity:
(a) in respect of proceedings to enforce any such award including immunity
from service of process and from the jurisdiction of the Court; and
(b) in respect of execution of any such award against the property of the
Government outside Malawi.
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33.10 The waiver of immunities referred to in this Agreement constitutes only a
limited and specific waiver for the purposes of this Agreement and under no
circumstances shall it be interpreted as a general waiver by the Government or
a waiver with respect to proceedings unrelated to this Agreement. The
Government has not waived such immunity in respect of property which is:
(a) located in Malawi;
(b) used by a diplomatic or consular mission of the Government (except as
may be necessary to effect service of process); and
(c) property of a military character and under the control of a military
authority or defence agency.
33.11 Unless otherwise agreed or provided, the cost of any Arbitration procedure will
be borne:
(a) equally by the two Parties to the Dispute where it has been referred
jointly by them, or otherwise; or
(b) by the unsuccessful Party.
33.12 Where a Dispute has been referred to the Centre for arbitration then the Parties
to the extent practicable may otherwise exercise their rights and perform their
obligations under this Agreement. Neither Party shall be entitled to exercise
any rights of election arising in consequence of any alleged default by the other
arising out of the subject matter of the Dispute until the Dispute has been
resolved by the decision of the Arbitrators.
34. EXPROPRIATION
34.1
(a) The Company may advise the Government if it considers an event of
Expropriation has occurred. If the Company and the Government
cannot agree on whether or not Expropriation has occurred either Party
may refer the issue to the Arbitrator for final determination in
accordance with clause 33.
(b) If Expropriation has occurred then for the purposes of international law
the Parties acknowledge that this is illegal.
(c) If it has been agreed or if the Arbitrator has determined that
Expropriation has occurred, the Parties will seek to agree the amount to
be paid by the Government to the Company in US dollars ("Purchase
Price") for the interest held by the Company under this Agreement
("the Interest") and where agreement cannot be reached within ten (10)
days, or such longer period as may be agreed, either Party may request
the Arbitrator to determine the Purchase Price. The Purchase Price is to
be determined:
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(i) assuming a willing seller and a willing buyer and taking account
of the effect of the Expropriation;
(ii) on the full and fair value of the Interest; and
(iii) as at the first day of the month following the nomination of the
Arbitrator and the Arbitrator is to complete its valuation within
sixty (60) days after the date of its nomination and to deliver a
copy of its valuation to the Parties.
(d) After Expropriation the Government shall purchase the whole but not
part of the Interest from the Company.
(e) Payment of the Purchase Price shall, unless a court of competent
jurisdiction otherwise orders, be made by the Government first
discharging any statutory charges and liens on the Interest of the
Company and then paying or crediting the balance in the following
priority:
(i) first, on behalf of the Company, all legal costs, taxes, duties of
other imposts or any increases thereof which are or will be
incurred as a result of the transfer of the Interest of the Company
to the Government;
(ii) second, in discharge of any encumbrance that is registered over
the Interest; and
(iii) third, to the Company.
(f) The Government shall pay the Purchase Price within an agreed period
but no later than six (6) months after the Purchase Price is agreed or
determined as the case may be and in so making those payments the
Government shall ensure payment in accordance with the priorities
referred to in clause 34.1(e), if amounts are not otherwise paid directly
by the Company.
(g) The completion of any purchase under this clause shall take place on a
date, not later than an agreed period but not later than six (6) months
after the date the Purchase Price is agreed or determined and at a place
in Malawi, selected by the Company. At that settlement the Interest of
the Company shall be transferred to the Government free and clear of
all encumbrances which may have been given by the Company.
(h) If as a result of Expropriation, the Interest of the Company is
transferred to or assumed by a Government Agency then the
Government Agency shall, for the purposes of this clause, be treated as
if it is the Government and the provisions of this clause shall be applied
to it (with all necessary changes).
34.2 If the event of Expropriation relates to the capital of the Company then the
rights of the Company under this clause may be pursued by the shareholders of
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the Company and the Government shall ensure the shareholders can obtain the
benefit of this clause as if they were parties to this Agreement.
35. EXPERT DETERMINATION
35.1 If the need arises for an Independent Expert to make a determination pursuant
to any express provision of this Agreement then:
(a) the Parties shall ensure that the Independent Expert is appointed on
each occasion as soon as is reasonably practicable;
(b) the Independent Expert shall have access to all information relating to
the Project and the subject matter of the request for a determination and
each Party shall provide every reasonable assistance at its own cost to
ensure that the Independent Expert is fully informed (as required by the
Independent Expert) of the subject matter of the determination;
(c) the Independent Expert may travel to and view the Project;
(d) each Party may (expeditiously) make written submissions to the
Independent Expert with respect to the matter and shall promptly copy
all submissions to the other Party;
(e) all costs of the Independent Expert's determination shall be borne as
determined by the Independent Expert;
(f) the Independent Expert may seek the opinion of:
(i) a chartered accountant from one of the international accounting
firms practising in Malawi in respect of financial matters; and
(ii) a legal practitioner admitted to practice in Malawi and practising
in the area of commercial law for at least 10 years, in respect of
legal matters,
and shall be entitled but not obliged to rely upon any such opinion or
opinions in making his determination;
(g) the Parties shall indemnify the Independent Expert from and against any
payment, expense, loss or damage incurred by the Independent Expert
as a result of any act or omission by the Independent Expert in the
course of performance, or attempted performance of his appointment,
howsoever arising;
(h) the Independent Expert shall be requested to deliver his determination
in writing to all Parties within 45 days of the date of his acceptance of
appointment;
(i) the Independent Expert shall not be obliged to have regard to any
particular information or evidence in reaching his determination and
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may in his discretion procure and consider such information and
evidence and in such form as he sees fit;
(j) each Party shall comply promptly with any request of the Independent
Expert for information in such form as the Independent Expert requires;
(k) subject to this clause 35 the Independent Expert may in his complete
discretion decide upon the procedure he will adopt in reaching his
determination and each Party shall comply with any requirement of the
Independent Expert in connection with such procedures; and
(l) the Independent Expert shall be acting as an expert, not an arbitrator,
and his decision shall be final and binding on the Parties except in the
case of manifest error.
36. PERFORMANCE TO CONTINUE
36.1 Unless the Agreement has already been repudiated or terminated, the Parties
shall continue to observe and perform all the obligations contained in and may
exercise their rights under, this Agreement notwithstanding the reference of
any Dispute for resolution under clauses 32 or 33. Neither Party shall be
entitled to exercise any rights of election arising in consequence of any alleged
default by the other arising out of the subject matter of the Dispute until the
Dispute has been resolved in accordance with clauses 32 or 33.
37. APPLICABLE LAW
37.1 This Agreement shall be governed by the laws of Malawi and any reference in
this Agreement to any such laws shall be deemed to be to those in force from
time to time, including the rules of international law and for the avoidance of
doubt to the extent the Company has any dispute disagreement controversy or
claim with a party in Malawi other than the Government then that matter shall
be subject to the jurisdiction of the courts of Malawi.
38. FORCE MAJEURE
38.1 Any failure on the part of a Party to comply with any of the terms, conditions
and provisions of this Agreement (except any obligation of a Party to make
payment of money to the other Party) shall not be grounds for termination or
give the other Party to this Agreement any claim for damages insofar as such
arises from Force Majeure, if the first-mentioned Party:
(a) has taken all appropriate precautions, due care and reasonable
alternative measures with the objective of avoiding such failure and of
carrying out its obligations under this Agreement; and
(b) has given notice to the other Party of:
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(i) the occurrence of Force Majeure on becoming aware of such an
event; and
(ii) the event of Force Majeure having or having the potential to
have a Material Adverse Effect on the Party affected by the
Force Majeure.
The first-mentioned Party shall take all reasonable measures to overcome the
Force Majeure and to fulfil terms and conditions of this Agreement with the
minimum of delay (provided that no Party has an obligation to settle a labour
dispute or to test the constitutionality of any legislation or law) and shall give
notice to the other Party on the restoration of normal conditions.
38.2 If a Party should dispute:
(a) whether or not an event constituting Force Majeure has occurred; or
(b) whether or not a Party is in breach of its obligations to avoid an event of
Force Majeure,
it shall be entitled to refer the matter to the Independent Expert in accordance
with clause 35.
39. INDEMNITY BY THE COMPANY
39.1 Except as otherwise provided in this Agreement, the Company shall indemnify
and hold harmless the Government against all claims made by or on behalf of
any third party in respect of injury, loss or damage resulting from work carried
out or goods or services supplied by the Company pursuant to this Agreement.
39.2 In the absence of negligence of the Company, its servants or agents, the
Company shall not be liable to indemnify and hold harmless the Government
pursuant to clause 39.1 except where injury, loss or damage was caused to a
third party by work carried out or goods or services supplied by the Company
of a kind or in circumstances in respect of which the law of Malawi imposes
liability for injury, loss or damage without proof of negligence.
40. VARIATION/AMENDMENTS
40.1 In entering into this Agreement the Parties recognise that the determination of
the amount of the Royalty and the structuring of the flow of foreign exchange
and the setting of the fiscal regime affecting the Company's Mining operations
referred to in clauses 17,21 and 22 have been set by the Government in the full
knowledge of the potential impact of a rise or fall in the pricing of yellowcake.
40.2 If required by one Party then the Parties are to hold discussions in good faith
on whether this Agreement should be reviewed either:
(a) to take into account:
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(i) new advances in the scientific and technological fields relative
to Mineral exploration and mining and processing; or
(ii) other than as a consequence of any Change in Law, new
financial circumstances which would in any material respect
adversely affect the viability of the Project,
it being the intention of the Parties to ensure that to the extent
circumstances permit each will be in a similar financial position by
operation of this Agreement as was envisaged at the Agreement Date;
or
(b) to accommodate:
(i) matters for which it was impractical to make provisions on the
Agreement Date; and
(ii) Hardship which is experienced during the course of the
performance of this Agreement,
it being the intention of the Parties that this Agreement operate between
them with fairness and without prejudice to the interest of the other and
operate in a manner to achieve the Economic Equilibrium,
and where it is shown that the Agreement should be amended to either take
account of the matters referred to in clause 40.2(b) then the Parties will use
their Best Endeavours to agree on the appropriate amendments to this
Agreement. If the Parties cannot reach an agreement with respect to any
matter referred to in clause 40.2(b) then the Dispute may be referred to
Arbitration.
40.3 This Agreement shall not be set aside, amended or modified except by a
written agreement between the Parties to this Agreement although the Parties
acknowledge that the Approved Programme of Operations will be waived
where there has been or there is anticipated to be a change which has or will
have a Material Adverse Effect on a Party. Any change to the Approved
Programme of Operations will be to attempt to place the Parties in a similar
position (circumstances permitting) to that they expected to be in as at the
Agreement Date.
41. LIAISON COMMITTEE
41.1 The Minister shall establish a committee which shall consist of the:
(a) the Permanent or Principal Secretaries or their representatives from the
Ministries responsible for Energy, Mines and Natural Resources*
Labour and Vocational Training, Industry Trade and Private Sector
Development, Finance, Justice and Home Affairs and also a
representative of the President and Cabinet, Karonga District
Commissioner's office and Karonga District Assembly respectively; and
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(b) two representatives of the Company.
41.2 The committee referred to in clause 41.1 shall, whenever it deems appropriate
invite representatives from such other Ministries or affected parties to attend
any of its meetings.
41.3 The Company can invite specialist consultants, whenever it deems appropriate,
to attend any of the meetings of the committee referred to in clause 41.1.
41.4 The chairperson of the committee shall be the representative from the Ministry
of Energy, Mines and Natural Resources.
41.5 The committee shall operate during the term of this Agreement and the
Company shall furnish the committee with quarterly reports outlining:
(a) its activities;
(b) the problems encountered;
(c) its plans;
(d) the number of Malawians employed;
(e) a list of successful tenderers which shall include the items supplied,
residence of tenderers and the reasons for awarding the tender; and
a list of unsuccessful Malawian or foreign based tenderers which shall
(f) include reasons for not awarding the tender.
41.6 The committee shall monitor the Company's activities and adherence to the
Approved Programme of Operations and any other issues related to it.
41.7 The committee referred to in clause 41.1 shall:
(a) formulate their own rules of procedure;
(b) not make decisions and recommendations that are binding on the
Company;
(c) monitor the implementation of their respective plans where such have
been approved and accepted by the Government; and
(d) ensure that the institutions nominating members will be responsible for
the costs and expenses incurred by the members in the execution of
their duties.
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42. NOTICES
42.1 Any notice, consent, demand, approval, request or other communication (a
"Notice") required or permitted to be given shall be in writing and shall be
deemed to have been given if:
(a) in the case of a Notice given by the Government, such Notice is signed
on behalf of the Government by either the Minister or Permanent or
Principal Secretary to the Ministry as their respective responsibilities
require; or
(b) in the case of a Notice to be given by the Company, such Notice is
signed by a director or by the Secretary of the Company.
42.2 Each such Notice shall, as elected by the Party giving such notice, be
personally delivered or transmitted by facsimile to the other Party as follows:
A Notice to the Government
If by facsimile - (265) 1788 689
If by post- Principal Secretary
Minister of Energy, Mines and Natural Resources
Private Bag 350,
Lilongwe 3
Malawi
If by hand Principal Secretary
Minister of Energy, Mines and Natural Resources
Capital Hill, Lilongwe
Malawi
A Notice to the Company and or Paladin
If by facsimile - (61) 89381 4978
If by post -
Company Secretary
Private Bag 32
Lilongwe
Malawi
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If by hand: Mama Kadzamma Estate
15/4B Lilongwe
Malawi
Copy to: Grand Central
Level 1,
26 Railway Road
Subiaco
Western Australia 6008
42.3 Except as otherwise specified in this Agreement, all Notices and other
communications shall be deemed to have been duly given on the earlier of:
(a) the date of receipt if delivered personally; and
(b) the date of receipt if sent by facsimile; and
(c) ten (10) days after the date of posting if sent by air mail or courier
services.
Either Party may change its address by Notice to the other Party in accordance
with the provisions of this clause. All Notices and all documents or
instruments delivered in connection with this transaction shall be in the English
language.
42.4 Where the Company is required to submit any plans, proposals or other
material for the approval of the Government, the date of submission shall be
deemed to be the date on which the Government received the said plans,
proposals or other materials.
43. WAIVER
43.1 The failure of any Party to enforce at any time any of the provisions of this
Agreement shall in no way be construed to be a waiver of the provision or any
part of this Agreement or the right of any Party to enforce each and every part
of the provision in respect of any subsequent default or breach.
44. SEVERABILITY
44.1 The provisions of this Agreement shall be separate and severable each from the
other to the extent that if any portion or any one provision or portion is deemed
to be inoperative, unenforceable or contrary to any provision of an Act then
that provision will be of no force or effect and the remainder of this Agreement
shall remain binding upon and enforceable by the Parties. Nothing in this
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Agreement shall preclude one Party from requesting the other Party to
renegotiate any provision in this Agreement.
45. FURTHER ACTS
45.1 The Parties shall execute such documents and do and perform such acts that lie
within their power and are necessary to give full effect to this Agreement.
46. REPRESENTATIONS AND WARRANTIES
46.1 Except as expressly stated in this Agreement, no representation, inducement or
warranty was, prior to the execution of this Agreement, given or made by one
of the Parties to this Agreement with the intent of inducing the other Party to
enter into this Agreement, and any representations, inducements or warranties
that may have been so given are denied and negated.
EXECUTED as an agreement by the Parties
SIGNED by THE MINISTER FOR
ENERGY, MINES AND NATURAL
RESOURCES for and on behalf of
THE GOVERNMENT OF THE
REPUBLIC OF MALAWI
Address:
Una
Occupation:
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EXECUTED by PALADIN (AFRICA)
LIMITED by its duly appointed attorney
MICHAEL GERRARD BLAKISTON
in the presence of:
My^---£
Witness
A&rrn A-> ^
Name:
Address:
dfepAJh _
Occupation:
SIGNED by the THE MINISTER )
FOR FINANCE for and on behalf )
of THE GOVERNMENT OF )
THE REPUBLIC OF MALAWI )
in the presence of: )
AA/itnpQQ
LwAlhjAL
Address: - ^
Occupation:
EXECUTED by PALADIN ENERGY
MINERALS NL by its duly appointed
Attorney MICHAEL GERRARD BLAKISTON
In the presence of:
Witness Q
Name:
Address: ^
Occupation:
of* i
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ATTACHMENT "A"
PLAN
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ATTACHMENT "B"
Item 1 Fiscal Regime
The Company will be subject to the fiscal regime in existence in Malawi as at the Agreement
Date save as follows:
(a) the Taxation Act (Cap. 41:01 of the Laws of Malawi) imposes a corporate tax rate
of 30% on the net profit of mining companies. In calculating the net profit the
Company is to be allowed to:
(i) immediately depreciate the full amount of all capital expenditure it incurs
on the Business; and
(ii) write off against any of its profits all exploration costs incurred by the
Company (both prior to and after the Agreement Date) on any mining or
exploration tenement( issued pursuant to the Mines Act)in which the
Company may hold either a direct or indirect interest, together with all
losses which the Company may have accrued while operating in Malawi;
(b) the Taxation Act (Cap 41:01 of the Laws of Malawi) imposes a resources rent tax
of 10% shall be levied on profits after tax if the Company's rate of return exceeds
20% per annum; but in the case of the Company, the resources rent tax is not to be
payable by the Company for the Life of Mine;
(c) for the Stability Period the Company is exempted from paying Tax (being both
import duty and import value added tax) on the costs, insurance and the freight
value of all equipment, consumables used in the Mining and processing of ore,
materials, fuels and lubricants which are acquired for and utilised in the Business
but does not include equipment, consumables or materials imported by any person
working for the Company;
(d) for the Stability Period the Company is exempted from any thin capitalisation
rules that may be introduced by the Government after the Agreement Date; and
(e) the consideration for the issue of fifteen (15) percent equity in the Company to the
Government is the advance payment by the Company of:
(i) two and a half (2!4) percent of the corporate tax rate referred to above; and
(ii) the rent resource tax referred to in (b) above,
the net impact of which is that the Company is only required to pay a twenty seven
and a half (27 Vi) percent corporate tax rate on the profits of the Company,
whatever they may be.
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Item 2 - Royalty
The Company will pay the Royalty as follows:
Years post commencement of sale of yellowcake Royalty Rate
1 to 3 1.5 %
4 and onwards 3 %
Item 3
MINISTER’S ORDER
SECTION 16 (2) OF THE MALAWI REVENUE AUTHORITY ACT
THAT pursuant to the Order published in the Gazette dated [..........................], and in
consideration of an arrangement between the Government, Paladin (Africa) Limited and its
shareholders for the equity of Paladin (Africa) Limited for the Government of a comparable
value to the revenue being foregone, the Minister of Finance has to that extent exempted the
revenue of Paladin (Africa) Limited from tax to the extent contained in the Development
Agreement between the Government, Paladin (Africa) Limited and Paladin Energy Minerals
NL.
DRAFT RESOLUTION ON GRANT OF REMISSION OF TAX
The Board of Directors of the Malawi Revenue Authority have resolved to recommend to the
Minister of Finance that there be granted an exemption, mitigation, deferment or remission of
any revenue where:
(a) there is and in consideration of an arrangement between the Government and
shareholders of an entity, for equity of an entity; and
(b) the equity of the entity is of comparable or more value to tax revenue liability of the
entity.
CHAIRMAN
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ATTACHMENT "C"
MEDICAL AND SOCIAL SERVICES
Medical Services
1. The Company will conduct regular HIV/AIDS awareness campaigns in order to
sensitise employees, their dependents and members of the Kayelekera Community as
to the dangers of AIDS and assist with the implementation of preventative measures.
2. The Company's approach to medical services would entail the compliance with
Malawian regulations regarding supply of a community clinic. However, the
Company wishes to be a mine developer and operator and does not see itself as a
provider of medical facilities or services to the broader community beyond the
employees and dependents and members of the Kayelekera Community but will
endeavour to fulfil the above obligations, nor does it see itself as having to provide
staff to the clinic to be constructed as contemplated in clause 20.1(b).
Social Services
1. The Company recognises the absence of good standards of hygiene and regular water
access and will endeavour to support projects within the Kayelekera Community that
improve the quality of life and local economy of the Kayelekera Community through
construction of wells and sinking of boreholes.
2. The Company recognises that the Kayelekera Community requires assistance in
developing improved agricultural production practices.
3. The Company recognises that social amenities have to be made available if highly
skilled employees are to be retained within the Company and to benefit the Kayelekera
Community. The Company shall evaluate on a case-by-case basis the need to support
the various social structures.
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