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 MINERAL DEVELOPMENT AGREEMENT





Between


THE GOVERNMENT OF


THE REPUBLIC OF LIBERIA,


CHINA-UNION (HONG KONG) MINING CO., LTD.





and


CHINA-UNION INVESTMENT


(LIBERIA) BONG MINES CO., LTD.





Dated as of January 19, 2009


 Table of Contents





Section Page





SECTION I - DEFINITIONS. TERMINOLOGY AND INTERPRETATION.................2


SECTION 2-EFFECTIVE DA TE...................................................................................14


SECTION 3 - CONCESSION AREA: TERM OF I I IE AGREEMEN T.........................14


3.1 Concession Area Defined. Obligation of the Government to


Hand-Over Concession Area...............................................................14


3.2 Conlimious Area..................................................................................15


3.3 O lher Minerals.....................................................................................15


3.4 Term of the Agreement........................................................................16





SECTION 4 - EXPLORATION RIGH TS........................................................................16


4.1 Exploration Rights...............................................................................16


4.2 Termination oT Exploration Riuhts and Lapse of Exploration


Area......................................................................................................17


4.3 Establishment of Retained Areas.........................................................18





SECTION 5 - DESIGNATION OF PROPOSED PRODUCTION AREAS AND


GRANT OF MINING LICENSES......................................................18


5.1 License for Non-Goma Deposits Area: Proposed Production


Areas Tor the Goma Deposits Area. Additional Concession


Area or Contiguous Area.....................................................................18


5.2 Feasibility Study..................................................................................21


5.3 The Environmental Impact Assessment Study Report and the


Environmental Management Plan........................................................22


5.4 Social Impact Assessment and Social Action Plan..............................23


5.5 Skills and Tcchnolouv Development Plan...........................................24


5.6 Compliance with Bid Materials and Other Plans: Amendment


of SAP and STDP: Investment Schedules and Commitments.............24


5.7 Approval oC the Feasibility Study and Grant of Minima License.........24


SECTION 6 - CONSTRUCTION AND OPERA TIONS.................................................25


6.1 Capital Expenditures: Construction.....................................................25


6.2 Completion...........................................................................................27


6.3 Minima Term Operations......................................................................27


6.4 Recovery Shortfalls..............................................................................29


6.5 Increasing Liberia-Based Value-Added Production Capacity.............30


6.6 Railroad. Port and Road Renovations: General Maintenance


Obligations...........................................................................................31

















i


 6.7 Third Party Access lo Roads, the Railroad and the Port


Facility.................................................................................................33


6.8 Concessionaire Reporting Requirements.............................................34


6.9 Access to Books and Records..............................................................37


6.10 Inspection.............................................................................................37


6.1 1 Insurance..............................................................................................37





SECTION 7- LAND AND FACILITIES.........................................................................38


7.1 Rights within Concession Area............................................................38


7.2 Surface Rights......................................................................................38


7.3 Limitation on Exploration and Production..........................................38


7.4 Acquisition of Land Use Rights Outside a Production Area...............38


7.5 Acquisition oft.and Not Owned bv the Government..........................39


7.6 UNiVlll. Warehouse.............................................................................39





SECTION 8 - COMMUNI TY RESOURCES..................................................................40


8.1 Community Responsibility..................................................................40


8.2 Community Funding Obligation..........................................................40





SECTION 9-PUBLIC HEALTH AND SAFETY...........................................................40


9.1 Safely Procedures and Notifications....................................................40


9.2 Security................................................................................................41


9.3 Employee Housing...............................................................................42


9.4 Sanitation.............................................................................................42


9.5 Water Supply: Clean and Safe Drinking Water...................................42





SEC TION 10- MEDICAL CAR1-:....................................................................................42


SECTION 1 I - EMPLOYMENT. TRAINING AND FOUNDA TION............................43


11.1 Employment.........................................................................................43


1 1.2 Training of Liberians..........................................................................43


I 1.3 General Education funding.................................................................44





SECTION 12- USE OF LIBERIAN GOODS AND SERVICES....................................44


SECTION 13 - ENVIRONMENTAL PROTECTION AND MANAGEMEN T..............45


13.1 The Concessionaire's Duty..................................................................45


13.2 Annual Environmental Audit...............................................................45


13.3 Government Environmental Inspections..............................................45


13.4 Updating the El As and the EMPs........................................................46


13.5 Scope of Duty to Cease Operations during Remediation....................46





SECTION 14 - TAXATION.............................................................................................46


14.1 l.ayy of General Applicability..............................................................46


 14.2 Fiscal Regime.......................................................................................46


14.3 Special Provisions................................................................................47





14.4 Stabilization.........................................................................................48


14.5 Taxation of Associates.........................................................................48





14.6 Single Project.......................................................................................49





SECTION 1 5 - ROYALTIES AND SURFACE RENT...................................................49


15.1 Royalties..............................................................................................49


15.2 Advance Pricing Agreement................................................................50


1 5.3 Royalties on Minerals Purchased by the Concessionaire for


Sale or Processing and Sale.................................................................50


15.4 Surface Rent.........................................................................................50


15.5 Water Use Levy...................................................................................50





SECTION 16 - OTHER PAYMENTS TO THE GOVERNMENT..................................51


16.1 ECOWAS Trade Levy.........................................................................51


I 6.2 Inspection Fees.....................................................................................51


16.3 Regulatory Fees...................................................................................51


16.4 Mineral Development and Research Fund...........................................51


16.5 Other Support.......................................................................................51


16.6 Up-front Payment.................................................................................51





SECTION 17 - FINANCIAL REPORTING. CURRENCY AND OTIIER


MATTERS REGARDING PAYMENTS............................................52


17.1 Accounting...........................................................................................52


17.2 Exchange Control.................................................................................52


17.3 Currency of Payment...........................................................................52


17.4 Right to Remit and Receive Payments.................................................53


17.5 Compliance with LEITI.......................................................................53


17.6 Financial Statements and Audit...........................................................53





SECTION 1 8 - INCIDENTAL RIGHTS AND OTHER MATTERS..............................55


18.1 Imports.................................................................................................55


1 8.2 Taxes on Resale of Imported Items.....................................................55


18.3 Right to Export Minerals and Other Rights.........................................55


18.4 Dealership Licenses.............................................................................55





SECTION 19 - ADDITIONAL. UNDERTAKINGS OF THE GOVERNMENT.............56


19.1 Access to Information..........................................................................56


19.2 Provision of Documents.......................................................................56


19.3 Electricity Generation and Transmission.............................................56


19.4 Communications Facilities. Systems and Frequencies........................57


19.5 Expropriation.......................................................................................57


19.6 Covenant of Quiet Enjoyment.............................................................58


 19.7 Use of Existing Public Utilities and Facilities: Integration with


Concessionaire In Ira structure..............................................................58


19.8 Indemnification oflhc Concessionaire and the Operating





Company bv the Gov eminent..............................................................59


19.9 Non-Discrimination.............................................................................59





SECTION 20 - O i l IER UNDERTAKINGS OF THE CONCESSIONAIRE AND


TI IE OPERATING COMPANY.........................................................59


20.1 Indemnification ofThc Government bv the Concessionaire and


the Opcraliim Company.......................................................................59


20.2 Books and Records..............................................................................60


20.3 Subsidiaries: Investments.....................................................................60


20.4 Adequate Capital..................................................................................60


20.5 Provision of Funds...............................................................................62


20.6 Transactions with Affiliates.................................................................63


20.7 Jurisdiction of Organization: Maintenance of Existence.....................63


20.8 Application Cor SAFE Approval..........................................................63


20.9 Production of Products Other Than Iron Ore Concentrates.................63





SECTION 21 - REPRESENTATIONS AND WARRAN TIES........................................63


2 E I Representations and Warranties of the Concessionaire.......................63


21.2 Representations and WarraiHies of the Government...........................66





SECTION 22-ASSIGNMENT. ENCUMBRANCE AND CHANGE OF


CONTROi............................................................................................66


22.1 General Rules.......................................................................................66


22.2 Transfers to Ope ratine Company.........................................................66


22.3 Other Transfers permitted Without Prior Consent...............................67


22.4 Transfers with Consent........................................................................68


22.5 Right to Encumber...............................................................................68


22.6 Permitted Transferee............................................................................69


22.7 Responsibility of Concessionaire.........................................................70


22.8 Disclosure: Consents: Exceptions: Fees..............................................70


22.9 Terms used in Section 22.....................................................................70





SECTION 23 - SUSPENSION 72


23.1 Power of Minister to Suspend Work 72


23.2 Order Suspending Work.................. 73


23.3 Compliance with Suspension Order. 73


73


23.4 Resumption of Work........................





SECTION 24 - TERMINATION......................................................................................74


24.1 Government Event of Default..............................................................74


24.2 Concessionaire Events of Default........................................................74


 24.3 Nature of Notice of Default.................................................................75


24.4 Notice of Termination; Termination When a Mortgage Exists;


Arbitration of Disputes as to Existence of Event of Default...............75


24.5 Winding-up Commission.....................................................................76





SECTION 25 - DISPOSITION OF ASSETS...................................................................77


25.1 General Provision.................................................................................77


- 25.2 Disposition of Assets on Termination bv the Government or


Expiration of the Term.........................................................................77


25.3 Special Provisions for Public Use Infrastructure.................................80


25.4 Certain Insurance and Maintenance Obligations of the


Concessionaire.....................................................................................80


25.5 Determination of Movable Asset Fair Market Value........:.................80


25.6 Disposition of Mining Plant and Infrastructure on Termination


bv the Concessionaire..........................................................................81


25.7 Miscellaneous......................................................................................81


25.8 Liens.....................................................................................................81





SECTION 26 - ARBITRATION.......................................................................................81


26.1 Submission to Arbitration....................................................................81


26.2 Nationality for Purposes of Arbitration...............................................82


26.3 Arbitrators............................................................................................82


26.4 Single Arbitrator..................................................................................82


26.5 Venue and Other Items........................................................................83


• 26.6 Award...................................................................................................83


26.7 Reservation of Rights...........................................................................83


26.8 Nature of Award..................................................................................83


26.9 General.................................................................................................84





SECTION 27 - NOTICES.................................................................................................84


27.1 Written Communications.....................................................................84


27.2 Delivery................................................................................................84


27.3 Addresses.............................................................................................85


27.4 Change of Address...............................................................................86


27.5 Quantities.............................................................................................86





SECTION 28 - FORCE MAJEURE.................................................................................86


28.1 Application...........................................................................................86


28.2 Definition.............................................................................................86


28.3 No Required Settlement.............................. 87


28.4 Surface Rentals....................................................................................87





SECTION 29 - GOVERNING LAW................................................................................87


29.1 Applicability of Liberian Law.............................................................87


 29.2 Construction and Interpretation...........................................................87





SECTION 30 - PERIODIC REVIEW...............................................................................87


30.1 Profound Changes in Circumstances...................................................87


30.2 Five Year Review................................................................................87


30.3 Other Consultation...............................................................................88





SECTION 31 - WAIVER OF SOVEREIGN IMMUNITY..............................................88


SECTION 32 - CONFIDENTIALITY..............................................................................88


32.1 Confidential Information.....................................................................88





SEC TION 33 - MISCELLANEOUS................................................................................89


33.1 Entire Agreement.................................................................................89


33.2 Amendment..........................................................................................89


33.3 Limitation of Liability..........................................................................90


33.4 Non-Waiver of Rights..........................................................................90


33.5 Assignment and Succession.................................................!...............90


33.6 Survival................................................................................................90


33.7 Severability..........................................................................................90


33.8 Joint and Several Liability...................................................................91


33.9 Publication..........................................................................................91











Schedule 1 Index of Bid Materials


Schedule 2A Initial Concession Area


Schedule 2B Initial Concession Area and Additional Concession Combined


Schedule 3.1 Goma Deposits Area and Non-Goma Deposits Area





Schedule 5 Port Facility


Schedule 6 Proposed Fiscal Regime for Mining


Schedule 7.1 1 999 Lists of Concession Area Assets


Schedule 21.1(c) Shareholders. Affiliates and Related Matters


Exhibit 1 Form of Exploration License


Exhibit 2 Form of Mining License









































VI


 MINERAL DEVELOPMENT AGREEMENT





This Mineral Development Agreement (hereinafter referred to as the


“Agreement”) is made the 19th day of January, 2009 by and among


THE GOVERNMENT OF THE REPUBLIC OF LIBERIA


represented by the Minister of Lands, Mines and Energy, the Minister of Finance, and the


Chairman of the National Investment Commission, and attested to by the Minister of


Justice, and





CHINA-UNION (HONG KONG) MINING CO., LTD.,


a corporation organized under the laws of Hong Kong,


and





CHINA-UNION INVESTMENT


(LIBERIA) BONG MINES CO., LTD.





a corporation organized under the laws of Liberia.


Capitalized terms used in this Agreement without other definition have the respective


meanings assigned thereto in Section 1 of this Agreement.


WITNESSETH:





A. Every Mineral on the surface of the ground or in the soil or sub-soil, rivers, water


courses, territorial waters and continental shelf of Liberia is the property and


national wealth of Liberia and all rights related to the exploration for and


exploitation of M inerals belong exclusively to Liberia.


B. The Government desires to encourage the further Exploration and Development


of Minerals in Liberia, and wishes to promote and facilitate the operation of


Mining companies in connection therewith.


C. The Government also desires, through the operation of Mining companies, to


benefit regions in which Minerals are developed, including facilitating growth


centres and education for sustainable regional development, to create more


employment opportunities, to encourage and develop local business and ensure


that skills, know-how and technology are transferred to citizens of Liberia, to


acquire basic data regarding and related to the country’s Mineral resources and to


preserve and rehabilitate the natural environment for further development of


Liberia.














DC - 090334 0!CG7h - 2833X00 vM


I). On or about January 23. 2008. the Government issued a general solicitation for


bid proposals for the exploration and mining of Iron Ore in the so-called “Bong


Range" of Liberia (the "Bona Project"), as described in Tender Documents dated


January 23. 2008. as amended (the "Bone Range Tender").


E. On or about May 23, 2008. China Union Investment Co. Ltd, a company


organized under the laws of the People's Republic of China and an Affiliate of the


Concessionaire and the Operating Company ("China UniorT), submitted a bid in


response to the Bong Range Tender as set forth in the Bid Materials, and on or


about December 8, 2008. the Government notified China Union that its bid had


been accepted by the Government.


F. Since the Bong Range 'lender and the submission of the bid by China Union and


acceptance thereof by the Government, the world financial system has been


subject to a systemic crisis which has substantially adversely affected the iron and


steel industry in all countries, including the Republic and the People's Republic of


China, and in consideration of which the Government agrees to make certain


modifications in the terms and conditions of the grant of rights and other related


terms and conditions with respect to the Bong Project.


G. The Government is willing to grant the Concessionaire and the Operating


Company rights w ith respect to the proposed Exploration and Mining of Iron Ore


in the Bong Range pursuant to such modified terms and conditions.


H. The Concessionaire and the Operating Company are willing to accept the rights


granted by the Government under this Agreement and to assume the obligations


imposed upon them hereunder.





NOW. 11lEREFORE. the parties hereby agree as follows:





SECTION 1 - DEFINITIONS, TERMINOLOGY AN1)


INTERPRETATION


The following terms wherever used in this Agreement shall have the respective meanings


set forth below:


"Additional Concession Area" has the meaning given in Section 3.1.


"Additional Concession Area I land-Ovcr Date" means the date, which may be any day


beginning on the Effective Date and ending on the first anniversary of the


Effective Date, the Government notifies the Concessionaire that the rights of the


Concessionaire to use the Additional Concession Area in accordance with the


terms of this Agreement shall be effective.


"Additional Concession Area Mine" means any Mine located in the Additional


Concession Area.


"Affiliate" of any Person means any other Person that directly, or indirectly through one


or more intermediaries. Controls, or is Controlled by. or is under common Control


with, such Person.


"Approved Feasibility Study'' means any Feasibility Study referred to in Section 5.1(b)


that has been approved by the Government.


"Associate" means (x) each Affiliate, shareholder, financier or contractor who works


solely and exclusively for the Concessionaire or the Operating Company in


Production and Operations and (v) each director, officer, agents and employee of


the Concessionaire or the Operating Company.


"Agreement" means this Mineral Development Agreement and any amendments to it


made pursuant to its terms as well as all schedules and exhibits annexed to it.


"Bid Materials" means all the documents listed on the Index of Bid Materials attached


hereto as Schedule 1, as submitted by CU to the Government on May 23, 2008.


"Bong Project" has the meaning given in the Recitals.


"Bong Project Operating Agreement has the meaning given in Section 22.2.


"Bong Range Tender7 has the meaning given in the Recitals.


"Business Dav" means any day other than a Saturday or Sunday or a holiday declared by


the Government.


"Change in Control’’ has the meaning given in Section 22.9(b).


"China Union" has the meaning given in the Recitals.


"Commission" has the meaning given in Section 24.5.


"Communication’' has the meaning given in Section 27.1.


"Concessionaire" means China-Union (Hong Kong) Mining Co., Ltd., a corporation


organized under the laws of Hong Kong, and its permitted successors by


operation of law and its permitted assigns.


"Concessionaire Event of Default" has the meaning given in Section 24.2.











j


"Competent Person" is a Person not directly connected to any party to this Agreement


(whether in terms of affiliation, commercial relationship or otherwise) who has at


least 5 years experience relevant to the style of mineralization and type of deposit


under consideration and the activity which a party to this Agreement is


undertaking which is the subject of review by such Person. If the Competent


Person is estimating or supervising the estimation of Mineral Resources, the


relevant experience must he in the estimation, assessment and evaluation of


Mineral Resources. If the Competent Person is estimating or supervising the


estimation of Mineral Reserves, the relevant experience must be in the estimation,


assessment, evaluation and economic extraction of Mineral Reserves.


"Concession Area" has the meaning given in Section 3.1.


"Conlidcntial Information'' has the meaning given in Section 32.1(a).


"Contiguous Area" has the meaning given in Section 3.2.


"Contiguous Area Determination Date" has the meaning given in Section 3.2.


"Contiguous Area Mine" means any Mine located in the Contiguous Area.


"Control" (including the terms "Controlled bv" and "under common Control with" and


•'Controls”) means the possession, directly or indirectly, of the ability to direct the


management and policies of a Person. Without limiting the generality of the


preceding sentence, such ability is presumed to exist as to a Person if another


Person or Group holds or can direct the exercise of at least 25% of the


Management Rights with respect to such first Person and no other Person or


Group holds or can direct the exercise of a greater percentage of the Management


Rights of such first Person.


"CVRD" means the Vale Mining Company, known until 2007 as Companhia Vale do


Rio Doce.


"Development" means all preparation for the removal and recovery of Minerals.


including the construction, installation of all Mining Plant. Infrastructure and


other equipment to be used in connection with the mining, handling, milling,


bcneficialion or other processing or transportation of Minerals.


"Dollar” and "USS” mean the lawful currency of the United States of America.


"l'lfcctive Date" means the date upon which this Agreement becomes effective as


provided in Section 2.


"P1A" has the meaning given in Section 5.2(b).








4


r


"EMP” has the meaning given in Section 5.2(a).





"EPA” means the Environmental Protection Agency of Liberia and any other ministry,


department or agency of Liberia that succeeds to its environmental protection


functions.


"Event of Default" means a Government Event of Default or a Concessionaire Event of


Default.


"Exploration" means activities directed toward ascertaining the existence, location.


quantity, quality or commercial value of deposits of Minerals using geological,


geophysical and geochemical methods, including without limitation drilling, bore


holes, test pits, trenches, surface or underground headings, drifts or tunnels, as


.veil as non-obtrusive methods, in order to distinguish the nature, shape and grade,


physical and chemical characteristics, and size of Mineral deposits, and unless the


context shall otherwise require, includes laboratory testing and assays carried out


in connection with the foregoing activities. "Explore” has a corresponding


meaning.


“Exploi ition Budget" means, with respect to Exploration to be conducted pursuant to an


Exploration License issued pursuant to this Agreement, the budget approved by


the Government pursuant to the Exploration Regulations.


"Exploration License” means a license substantially in the form of Exhibit I attached


hereto.


“Exploration Regulations” means the regulations of the Ministry from time to time in


effect governing Exploration for Minerals in Liberia, whether pursuant to a


license or otherwise, provided that pending the formal adoption by the Minister of


such regulations. "Exploration Regulations” means the draft Exploration


Regulations as noticed for hearing on November 1 7. 2008, or any subsequent


draft Exploration Regulations noticed for hearing.


“Exploration Term” means the term of an Exploration License issued pursuant to this


Agreement, including as modified or extended from time to time.


“Exploration Work Program” means, with respect to Exploration to be conducted


pursuant to an Exploration 1 iccnse issued pursuant to this Agreement, the work


program approved b\ the Government pursuant to the Exploration Regulations.


“Feasibility Study" has the meaning given in Section 5.2














5


"Financial Year" means January 1 through December 31, or such other period of twelve


calendar months ending on March 31, June 30 or October 31 as may be agreed by


the parties.


"First Payment Date" has the meaning given in Section 16.6.


"Force maieure" has the meaning given in Section 28.2.


"Forfeitable Area" has the meaning given in Section 4.2.


"GAAP" has the meaning given in Section 17.6(a).


"Geological Exploration” means Exploration to define, localize and quantify unknown


Iron Ore bodies for the purpose of identifying a Proposed Production Area.


"Goma Deposits Area" has the meaning given in Section 3.1.


"Goma Mine" means any Mine located in the Goma Deposits Area.


"Goma Roads" has the meaning given in Section 6.6(c).


"Government" means the Government of Liberia, including all of the branches, divisions,


political subdivisions, instrumentalities, authorities and agencies of its


government.


"Government Event of Default" has the meaning given in Section 24.1.


•'Group" means two or more Persons who are acting together for the purpose of


acquiring, holding, voting or disposing of Management Rights of a Person. The


parties to a shareholders agreement with respect to a corporation that establishes


how directors of the corporation are to be chosen or how the parties must vote


their shares in certain cases, and the parties to any similar agreement with respect


to any other business entity, are in each case members of a Group.


"1 lolder" has the meaning given in Section 22.9(d).


"Hydro-Power Plant" has the meaning given in Section 19.3.


"ICC" means the International Chamber of Commerce.


‘'IFRS" has the meaning given in Section 17.6(a).


"Immovable" means, when referring to tangible property, all improvements to the land,


.such as roads, dams, and canals, and all items of tangible property that are


 securely affixed and attached to the land or lo buildings or other structures on the


land. All other items of tangible properly are “Movable".





"Indebtedness" has the meaning given in Section 20.5(e).


"Index Price" has the meaning given in Section 15.1(b).





“Indicated Iron Ore" has the meaning of "Indicated Mineral Resource" given in and


determined as prescribed in SAMREC. as applied to Iron Ore.


‘‘Indicated Mineral Resource" has the meaning given in and is to be determined as


prescribed in SAMREC.


"Inferred Mil'era I Resource" has the meaning given in and is to be determined as


prescribed in SAMREC.


"Infrastructure" includes all facilities and. to the extent provided below, equipment


acquired, constructed or leased by the Concessionaire (other than Mining Plant)


and used by the Concessionaire in connection with Operations (other than in


Exploration), including (by way of example):


a. Immovable transportation and communication facilities (including roads,


bridges, railroads, airports, landing strips and landing pads for aircraft,


hangars and other airport facilities, garages, channels, tramways, pipelines


and Immovable installations for radio, telephone, telegraph,


telecommunications, and electronic or other forms of communications).


b. Immovable port facilities (including docks, harbours, piers, jetties,


breakwaters, terminal facilities and warehouses, and loading and


unloading facilities).


c. Immovable power, water and sewerage facilities (including electrical


generating plants and transmission lines, dams, water drains, water supply


systems and systems for disposing of tailings, plant waste and sewage).


d. Immovable public welfare facilities (including schools, clinics and public


halls).


e. Miscellaneous Immovable facilities used primarily in connection with the


operation of any of the foregoing (including offices, machine shops,


foundries, repair shops, employees' housing and warehouses).


f. Movable equipment used as an integral part of the Immovable facilities


described above.











7


"Initial Concession Area" has the meaning given in Section 3.1.


"Initial Railroad Renovations’' has the meaning given in Section 6.6(a).


"International Standards" means any of the standards of professional care, skill,


diligence, practices and methods generally followed by prudent internationally


recognized professionals regarding the conduct of similar activities or the


provision of similar services.


"Iron Ore" means ore of which the principal economic value is its iron content.


"Land" means any land in Liberia including any creeks, streams, rivers or bodies of water


(and their residue) contained on or within all such land.


'Landowner" has the meaning given in the Mining Law.


"Law’- means any constitution, treaty obligation, law, statute, decree, rule, regulation,


judicial act or decision, judgment, order, proclamation, directive, executive order


or other sovereign act of the Government other than this Agreement.


"Liberian Currency” means any currency, except Dollars, that is legal tender in Liberia,


or circulates freely in any part of Liberia by virtue of any Law or authority as a


medium of exchange for the purchase or sale of goods and services.


“LIBOR” has the meaning given in Section 26.6.


"Lien" means any mortgage, lien, pledge, charge, security interest or other encumbrance


on any property or asset, or any interest or title of any vendor, lessor, lender or


other secured party in or to any property or asset under any conditional sale or


other title retention agreement.


"Management Rights" means, with respect to a Person not an individual, the right to


participate in the direction of the management and policies of such Person,


whether through the ownership of securities, by contract or otherwise, including


(by way of example and not limitation) (i) the power to direct the vote of shares


entitled to participate in the election of directors of such Person, (ii) any other


right to participate in the designation of the directors of such Person, (iii) the


power to act as, or to direct the vote of a voting partner of, any such Person that is


a partnership, or (iv) the contractual right to act as a manager or operator of any


such Person that is a limited liability Concessionaire or similar entity, or to


participate in the direction of such manager or operator.


"Mine" when used as a verb, means to intentionally extract or win Minerals and includes


any Operations directly or indirectly incidental thereto. “Mining," when used as a


verb, has a corresponding meaning. “Mine." when used as a noun, refers to the


tangible shafts, cuttings, excavations and diggings from which or through which


Minerals are extracted from the earth.


'’Mineral” or "Minerals" means a naturally occurring element or compound having an


orderly internal structure and characteristic chemical composition, crystal form,


and physical properties, formed by or subject to a geological process, including


Iron Ore but not including hydrocarbons.


'‘Mineral Reserves” has the meaning given in SAMREC


"Mineral Resources” has the meaning given in SAMREC.


“Mining Law” means the Minerals and Mining Law 2000 Part 1 of Title 23 of the


Liberian Code of Law Revised, as from time to time amended, supplemented or


• modified, and the Regulations.


“Mining License” means a Class A Mining License, substantially in the form of Exhibit 2


attached hereto.


“Mining License Area” means the area subject to the Mining License.


“Mining Plant” means all facilities and equipment acquired, constructed or leased by the


Concessionaire that are directly used in the extraction, milling, beneficiation or


other processing of Minerals into the form in which they are marketed by the


Concessionaire, including both Immovable items and Movable items. For the


avoidance of doubt, facilities and equipment used to transport Minerals after


extraction and through the final stage of processing by the Concessionaire


(including direct Mineral load-out facilities integrated into the final processing


facility and transport from the final processing facility to adjacent storage areas)


constitute Mining Plant, while such things as facilities and equipment used to load


and transport Minerals onward from the point of final processing constitute


• Infrastructure.


"Mining Term” means the term of a Mining License issued pursuant to this Agreement,


including as modified or extended from time to time.


"Minister” has the meaning given in the Mining Law.


"Ministry” means the Ministry of Lands, Mines and Energy of Liberia and any other


ministry, department or agency of Liberia that succeeds to its responsibilities of


supervising the undertaking of Mineral exploration and Mining activities in


Liberia.


"Modified Bid Materials" means the Bid Materials as modified by the Non-Goma


Deposits Area Feasibility Study as approved by the Government pursuant to


Section 5.1(a)(i).


'‘Mortgage" has the meaning given in Section 22.5(a).


■‘Movable" has the meaning given in the definition of “Immovable" above.





“mtpa" means million metric tons per annum.


"Net Worth" has the meaning given in Section 20.4(d).


“Non-Goma Deposits Area" has the meaning given in Section 3.1.


“Non-Goma Area Deposits Feasibility Study" has the meaning given in Section 5.1 (a)(i).





"Non-Goma Mine" means any Mine located in the Non-Goma Deposits Area.


“Non-Goma Roads" has the meaning given in Section 6.6(c).


“Occupant of Land" has the meaning given in the Mining Law.





“Operating Company" means China Union Investment (Liberia) Bong Mines Co., Ltd., a


corporation organized under the laws of Liberia, and its permitted successors by


operation of law and its permitted assigns.


“Operations" means all activities and transactions conducted by or on behalf of the


Concessionaire and/or the Operating Company with respect to, under or incidental


to this Agreement including Exploration, Development, Production and


restoration or remediation.


“Party" means either the Government, the Concessionaire or the Operating Company


and. in the plural form, the Government, the Concessionaire and the Operating


Company.


“Permitted Liens" has the meaning given in Section 22.5(c).





“Permitted Transferee" has the meaning given in Section 22.6.


“Person" means any natural person and any partnership, joint venture, corporation.


limited liability company, trust, estate or other entity that is recognized by the


laws of any jurisdiction as a distinct body possessing the right to enter into


contracts or to own. lease or possess real or personal property, as well as a


government or stale, and any branch, division, political sub-division,


instrumentality, authority or agency of any government or state.








10








n


"Phase I Capacity Test" has the meaning given in Section 6.1(a).


"Phase 1 Capacity Test Date” has the meaning given in Section 6.1(a).


"Phase 11 Capacity Test” has the meaning given in Section 6.1(a).





"Phase 11 Capacity Test Date'' has the meaning given in Section 6.1(a).


"Pledged Assets7' has the meaning given in Section 22.5(a).





“Port Facility" means the portion of the Freeport of Monrovia, Liberia described in


Schedule 5 attached hereto, the coordinates of which will be provided by the


government no longer than 90 days after the effective date and shall be


incorporated into Schedule 5.





“Prevailing Market Rate of Exchange” means the predominant rate, expressed in Dollars,


at which willing sellers and willing buyers, acting at arms length and in the


ordinary course of btisiness, are, on the day that the transaction takes place (or, if


that day is not a business day, the preceding business day), prepared to purchase


or sell (as appropriate for the applicable transaction) any currency issued by


authority of the Central Bank of Liberia or any successor governmental agency of


Liberia or any relevant currency of another jurisdiction (as the case may be) in


New York, New York, U.S.A. and “business day” means a day on which banks


are open for normal banking business in New York, New York . U.S.A.


"Product(s)” means the Iron Ore concentrates produced by the Concessionaire under the


authority of a Mining License issued pursuant to this Agreement to the extent that


such products have commercial value and such product or products are destined


for sale by the Concessionaire.


"Production” means the commercial exploitation of Minerals found in the Concession


Area and authorized to be exploited under a Mining License issued pursuant to


this Agreement and all other activities incidental thereto including the design,


construction, installation, fabrication, operation, maintenance and repair of


Mining Plant, Infrastructure and any other equipment, and the Mining, processing,


stockpiling, transportation, export and sale of such Minerals.





"Production Area” means any of the areas in the Concession Area designated by the


Concessionaire as a “Proposed Production Area” in a Mining License issued


pursuant to this Agreement.





“Production Exploration” means Exploration to define, localize and quantify known Iron


Ore bodies in a Proposed Production Area for the purpose of developing and


implementing a plan to Mine such Iron Ore bodies.

















/ON


••Production Operating Period” means the period of time during which the Mining Plant


is being operated, maintained and repaired and the Mining, processing,


stockpiling, transportation, export and sale of Minerals is occurring.


•‘Profound Changes in Circumstances'* means such changes, since the relevant base


period under Section 30.1. in the economic conditions of the Mineral and Mining


industry vvorldw ide or in Liberia, or such changes in the economic, political or


social circumstances existing in Liberia specifically or elsewhere in the world at


large as to result in such a material and fundamental alteration of the conditions,


assumptions and bases relied upon by the parties at such base period that the


overall balance of equities and benefits reasonably anticipated by them will no


longer as a practical matter be achievable.


“Prohibited Person” has the meaning given in Section 22.6.


‘•Property List” has the meaning given in Section 25.2(a).


“Proposed Production Area" means an area designated as such in a Mining License


issued pursuant to this Agreement.


“Railroad" has the meaning given in Section 6.6(a).


‘•RAP" has the meaning given in Section 5.4(b).


‘•Reference Price'" has the meaning set forth in Section 15.2.


“Regulations" means the regulations at the time in effect issued by the Minister pursuant


to Chapter 21 of the Mining Law.


“Restricted Payment" has the meaning given in Section 20.5(e).


“Retained Area" has the meaning given in Section 4.3


“Revenue Code1’ means the Revenue Code of Liberia 2000, (“Phase One of the Reform


Tax Code") of Liberia, as from time to time amended, supplemented or modified,


or any successor revenue code of Liberia.


“Royalty” or “Royalties" has the meaning given in Section 15.1.


"SAFI7." means State Administration for Foreign Exchange of the People's Republic of


China.


“SAFL7 Approval" means has the meaning given in Section 20.8.








12


"SAMREC” means The South African Code for the Reporting of Exploration Results,


Mineral Resources and Mineral Reserves as from time to time in effect. If


SAMREC is no longer in effect or no longer defines a term defined herein by


reference to SAMREC, the Minister will by regulation after providing the holders


of licenses issued under the Mining Law with opportunity to comment provide


qualitatively similar sources for or definitions of terms defined in this Agreement


by reference to SAMREC.


"SAP” has the meaning given in Section 5.2(c).


"S1A" has the meaning given in Section 5.2(c).


“STDP” has the meaning given in Section 5.2(d).


"Subsequent Railroad Renovations” has the meaning given in Section 6.6(a).


"Subsidiary” means, as to any Person, any other Person in which such first Person or one


or more of its Subsidiaries or such first Person and one or more of its Subsidiaries


owns sufficient equity or voting interests to enable it or them (as a group)


• ordinarily, in the absence of contingencies, to elect a majority of the directors (or


Persons performing similar functions) of such second Person, and any partnership


or joint venture if more than a 50% interest in the profits or capital thereof is


owned by such first Person and/or one or more of its Subsidiaries.


"Surface Rent” means a fee payable to the Government for the right to explore for or


exploit Mineral resources of Liberia.


'Taxes and Duties” means any and all direct and indirect income, profit, gains, capital


gains, corporation, dividend, interest, financing, net worth, sales, transaction,


payroll, import, export, customs, consul, inspection, value added, consumption,


supply, use. turnover, severance, stumpage, cash flow, rental, land rental. Surface


Rent, property, stamp, withholding and other taxes, duties, fees, levies, excises,


rates, charges, imposts, surcharges, royalties and other Government imposed


revenue payments of whatever nature and however called and whether paid to the


Government or to any other Person at its directive or pursuant to Law.


"Term” means the term of this Agreement set forth in Section 3.4, as it may from time to


time be extended in accordance with the provisions of this Agreement.


TJNC1TRAL” means the United Nations Commission on International Trade Law.


"UNC1TRAL Rules” has the meaning given in Section 26.1.





TJNM1L Warehouse” has the meaning given in Section 7.6.


 "Years” means, for any period of years not otherwise tied to a specific date, a period of


years measured from the first day of the month in which the Effective Date falls.


This Agreement shall be read with such changes in gender or number as the context shall


require. Headings to the clauses and sections of this Agreement are inserted for


convenience only and shall not affect its construction. All references to Law or to any


specific laws or regulations of Liberia shall mean such laws and/or regulations as are at


the time in effect. References to “Sections,” “Appendices,” “Schedules” and “Exhibits”


without other attribution are references to Sections. Appendices, Schedules and Exhibits


forming part of this Agreement.


Unless otherwise stated, a reference to “hereof,” “hereunder,” “herein." or words of


similar meaning, means this Agreement. The words “and” and “or” will include the


conjunctive and disjunctive, as the context may require or permit. The word “include”


(and any variation of that word) means “including but not limited to.” All of the parties


having participated in its negotiation and drafting, this Agreement shail not be construed


against any party as the drafting party.


SECTION 2 - EFFECTIVE DATE


This Agreement, after having first been signed on behalf of the parties as provided on the


signature pages of this Agreement shall become effective and be binding on them on the


date (the “Effective Date”) of the last to occur of the following events: (i) attestation by


the Minister of Justice of the Republic, (ii) ratification by the National Legislature,


(iii) approval by the President of the Republic and (iv) publication in handbills.


SECTION 3 - CONCESSION AREA; TERM OF THE


AGREEMENT


3.1 Concession Area Defined. Obligation of the Government to Hand-Over


Concession Area. This Agreement constitutes a grant of rights to the


Concessionaire to conduct Operations within the Concession Area, as specified


herein. The term “Concession Area” shall mean the following: (a) beginning as


of the Effective Date, a portion of Land of approximately 59,000 acres


corresponding to the coordinates specified in Schedule 2A attached hereto (the


“Initial Concession Area”) that shall be expanded (b) on the Additional


Concession Area Hand-Over Date, to include an additional surrounding portion of


Land of approximately 94,000 acres (the “Additional Concession Area") and that


shall be expanded (c') on the Contiguous Area Determination Date to include any


Contiguous Area. Following the Additional Concession Area Hand-Over Date,


the Concession Area shall consist of a portion of land of approximately 153,000


acres comprised of both the Initial Concession Area and the Additional


Concession Area and corresponding to the coordinates specified in Schedule 2B


attached hereto, and shall be subject to expansion per addition of a Contiguous








14


Area under the terms of Section 3.2 below. Effective as of the Effective Date, the


Government grants the Concessionaire the exclusive right to use the Initial


Concession Area in accordance with the terms of this Agreement. Effective as of


the Additional Concession Area Hand-Over Date, the Government grants the


Concessionaire the exclusive right to use the Additional Concession Area in


accordance with the terms of this Agreement. Effective as the Contiguous


Determination Date, the Government grants the Concessionaire the exclusive


right to use the Contiguous Area in accordance with the terms of this Agreement.


The Initial Concession Area shall be comprised of (a) the “Goma Deposits Area."


which consists of the unexplored mineralized areas in and around Goma Peak


located east of the North/South coordinated line set forth on Schedule 3.1 and (b)


the “Non-Goma Deposits Area,” which consists of the mineralized areas in and


around Zaweah 1, Zaweah 2 and Bong Peak located west of the North/South


coordinated line set forth on Schedule 3.1 as to which the Government estimates


contains approximately 304 million tons of Iron Ore. Within 120 days of the


Effective Date, the parties will prepare a more detailed description (including


metes and bounds) of the Goma Deposits Area and the Non-Goma Deposits Area,


which shall be attached to Schedule 3.1.


3.2 Contiguous Area. At any time after the Additional Concession Area Hand-Over


Date, the Concessionaire may submit in writing a proposal to the Government to


acquire additional Land that is contiguous to the Concession Area in accordance


with the requirements of the Mining Law and Exploration Regulations (the


“Contiguous Area”), which proposal shall include a metes and bounds description


of the proposed Contiguous Area, and the Government shall issue a ruling either


accepting or rejecting the proposal within 1 80 days of receipt thereof. The parties


agree that such proposal shall not be unreasonably rejected by the Government


and should the Government decide to reject the proposed Contiguous Area and


the parties fail to reach agreement with respect to establishing a Contiguous Area


within 90 days following the Government’s initial decision to reject the proposed


Contiguous Area, the parties shall submit the matter for resolution pursuant to


Section 26. The term “Contiguous Area Determination Date’’ shall mean the date


a Contiguous Area is determined, either by Government acceptance of a proposal


or pursuant to Section 26. Beginning on the Contiguous Area Determination


Date, the Government shall assist the Concessionaire in acquiring rights to Land


within the Contiguous Area, provided that (a) the Government shall provide to the


Concessionaire without cost any such Land that is owned by the Government, and


(b) the Concessionaire shall undertake at its own expense negotiations for, and


acquisition of rights to, any such Land that is not owned by the Government.


3.3 Other Minerals. If the Concessionaire or any other Person discovers Minerals


other than Iron Ore within the Concession Area, the Concessionaire shall be given


the right of first refusal to undertake Exploration, and, as appropriate.








1 S


 Development and Mining with respect to such other Minerals in accordance with


applicable Law (including Section 6.7(c) of the Mining Law).





3.4 'Term of the Agreement. I he Term of this Agreement commences on the


Effective Date. The Term oI* this Agreement is 25 years, subject to earlier


termination as provided in this Agreement, and will be automatically extended to


match any extension of the term of any Mining License issued pursuant to this


Agreement.





SECTION 4 - EXPLORATION RIGHTS











a. I he Government hereby confirms its estimation set forth in the


Bong Range Tender that there are approximately 304 million tons of Iron


Ore reserve with a grade of he 36.5% located in the Non-Goma Deposits


Area. The Concessionaire is hereby granted the right to conduct, and shall


conduct. Production exploration with respect to Iron Ore within the Non-


Coma Deposits Area as specified in the Modified Bid Materials, including


without limitation in accordance with the timetable set forth therein, and in


accordance with the terms of this Agreement and the terms of the


Lxploraiion Regulations.


b. At any time following the effective Date, within 3 Business





Days follow ing the filing of an application therefor that complies with


applicable Law. the Government shall issue to the Concessionaire an


Lxploralion License granting the Concessionaire the right to conduct


Geological exploration and Production exploration with respect to Iron


Ore within the (Ionia Deposits Area in accordance with the terms of this


Agreement and the terms of the exploration Regulations. At any time


follow ing the Additional Concession Area I land-Ovcr Date, within 3


Business Days following the filing of an application therefor that complies


with applicable Law. the Government shall issue to the Concessionaire an


exploration License granting the Concessionaire the right to conduct


Geological exploration and Production exploration with respect to Iron


Ore within the Additional Concession Area in accordance with the terms


of this Agreement and the terms of the exploration Regulations. At any


time following the Contiguous Area Determination Date, within 3


Business Days following the filing of an application therefor that complies


with applicable Law. the Government shall issue to the Concessionaire an


exploration License granting the Concessionaire the right to conduct


Geological exploration and Production exploration with respect to Iron


Ore w ithin the Contiguous Area in accordance w ith the terms of this


Agreement and the terms ol the exploration Regulations. The

















~X


\





/


 Concessionaire shall conduct Exploration pursuant to each Exploration


License issued to it pursuant to this Section 4.1(b) in accordance with


applicable Law and as specified in the applicable Exploration Work


Program, including without limitation in accordance with any timetables


set forth therein, and the applicable Exploration Budget.


c. This Agreement shall supersede any conflicting provisions of





the Exploration Regulations only to the extent such provisions are (i)


enacted following the Effective Date and (ii) are materially more


burdensome than the conflicting obligations under this Agreement;


provided, however, that, notwithstanding any conflicting provision of the


Exploration Regulations, the Concessionaire shall have no obligation to


file a work program for Production Exploration in the Non-Goma Deposits


Area.





d. The Concessionaire may conduct only such Production


Exploration or Geological Exploration as does not require a filing with or


application to. or the obtaining of any consent, approval, license or permit


from, the EPA unless such filing or application has duly occurred and any


such consent, approval, license or permit has been duly obtained. A copy


of each such consent, approval, license or permit obtained by the


Concessionaire from the EPA shall be promptly filed with the Minister.


The Minister may approve the Concessionaire’s work program under the


Exploration Regulations in the absence of compliance by the


Concessionaire with the provisions of the Exploration Regulations relating


to filings with the EPA, provided that the Concessionaire’s work program


includes an “environmental management program” reasonably satisfactory


to the Minister.


4.2 Termination of Exploration Rights and Lapse of Exploration Area. On the fifth


anniversary of the Effective Date, (i) the rights of the Concessionaire to conduct


Exploration in the Goma Deposits Area, the Additional Concession Area and the


Contiguous Area shall terminate except as provided in Section 5.1(e) with respect


• to Exploration conducted in a Proposed Production Area timely designated in


accordance with the requirements of Sections 5.1(b) and 5.1(d). and (ii) the


Concessionaire shall have no further rights under this Agreement or any prior


agreement with, or license or permit from the Government with respect to, any


portion of the Goma Deposits Area, the Additional Concession Area and the


Contiguous Area, other than any portion thereof that is encompassed by Proposed


Production Areas timely designated in compliance with the requirements of


Sections 5.1(b) and 5.1(d) or has been designated as a Retained Area pursuant to


Section 4.3 (the '‘Forfeitable Area”) and shall forfeit all rights to (x) any


Immovable property thereon and (y) any Movable property thereon owned or











17


leased by the Concessionaire that is not removed from such Forfeitable Area prior


to the termination of the Concessionaire’s rights under this Section 4.2.


Establishment of Retained Areas. At any time that is between 270 days and 1 80


days prior to the date set forth in Section 4.2 or Section 5.1(h) for the expiration


of the Concessionaire’s rights described therein, as applicable, the Concessionaire


may give the Government a declaration describing any portion of a Forfeitable


Area (including providing a metes and bounds description thereof) that is (x) used


by the Concessionaire in connection with Development or Production activities


then currently conducted by the Concessionaire with respect to a Mining License


Area or reasonably required to be used by the Concessionaire in connection with


future Development or Production activities with respect a Mining License Area,


including without limitation for purposes of creating a reasonable “buffer zone”


for promotion of health or safety or protection of the environment or (y) used for,


or reasonably required to be used for, the Concessionaire’s obligations under any


SAP or STDP. Such portion shall be designated as a “Retained Area” in the event


that the Government does not notify the Concessionaire within 90 days following


the date of such declaration that the Government objects to such designation. In


the event the Government provides a timely notice of objection, the parties shall


attempt to resolve their differences within 30 days of such notice and the Retained


Area shall be designated in accordance with the parties’ agreement. In the event


that the parties fail to reach agreement within such 30 day period, either party


may submit their dispute to arbitration pursuant to Section 26. Pending resolution


of such arbitration, subject to the provisions of Section 23, the Concessionaire


may continue to use that portion of the Forfeitable Area described in the


declaration as currently being used by the Concessionaire in the manner being


used at the time of delivery of such declaration.


SECTION 5 - DESIGNATION OF PROPOSED PRODUCTION


AREAS AND GRANT OF MINING LICENSES


License for Non-Goma Deposits Area; Proposed Production Areas for the Goma


Deposits Area. Additional Concession Area or Contiguous Area.


a. At any time following the Effective Date provided that the


Concessionaire has complied with the provisions of Section 5.1 (a)(i),


within 3 Business Days following the filing of an application therefor that


complies with applicable Law, the Government shall issue to the


Concessionaire a Mining License with respect to the Mining of Iron Ore


within the Non-Goma Deposits Area in accordance with the terms of this


Agreement and the terms of the Mining Law.


i) No later than 90 days following the Effective Date, the


Concessionaire shall submit to the Minister for approval a


Feasibility Study with respect to Mining, Mineral processing and


related Infrastructure in or for the Non-Goma Deposits Area (the


"Non-Goma Deposits Area Feasibility Study”). The Non-Goma


Deposits Area Feasibility Study shall be in compliance with the


requirements of Section 5.2 through 5.5. The Minister may (i)


reasonably request additional information with respect to any


aspect of the Non-Goma Deposits Area Feasibility' Study, and (]i)


reasonably recommend changes in any component of the Non-


Goma Deposits Area Feasibility Study. The Concessionaire shall


deliver such additional information to the Minister no later than 15


days following such request. The Minister shall be deemed to have


approved the Non-Goma Deposits Area Feasibility Study unless


the Minister has notified the Concessionaire in writing of his


disapproval and the reasons therefor not later than 90 days after the


Ministry receives from the Concessionaire the Non-Goma Deposits


Area Feasibility Study and related materials substantially


complying with the requirements of this Agreement. Following


any initial or subsequent disapproval of the Non-Goma Area


Feasibility Study and the resubmission by the Concessionaire of an


amended, modified or supplemented Non-Goma Deposits Area


Feasibility Study, the Minister shall be deemed to have approved


the Non-Goma Deposits Area Feasibility Study unless within 60


days after the Ministry receives such amendment, modification or


supplement the Minister has notified the Concessionaire in writing


of his disapproval and the reasons therefor.


b. If the Concessionaire identifies potentially exploitable Iron Ore





deposits in the Goma Deposits Area, the Additional Concession Area or


the Contiguous Area it may designate by notice to the Minister that all or


one or more portions of the Goma Deposits Area, the Additional


Concession Area or the Contiguous Area, as applicable, is a Proposed


Production Area, provided that no such notice may be given at any time


following the sixth anniversary of the Effecti ve Date. The Concessionaire


may give more than one notice under this Section 5.1 (h). Each such


notice must set forth


i) the proposed boundaries of each Proposed Production Area





covered by such notice, and


ii) the nature, location and estimated quality of the Indicated Iron Ore


Resources in, and the Iron Ore proposed to be extracted from, such


Proposed Production Area.





























/


Each such notice must be accompanied by (x) the report of a Competent


Person setting forth his or her conclusion that the identified Iron Ore


deposit(s) constitute Indicated Mineral Resources, and the basis for such


conclusion, in the form required by SAMREC for the public reporting of


Mineral resources, and setting forth the scope of any Inferred Mineral


Resources located within the Proposed Production Area and (y) an


application fora Mining License to permit the Mining of such deposits,


such application to be in the form required by the Mining Law and such


Regulations as are then in effect.


c. Each Proposed Production Area within the Goma Deposits





Area, the Additional Concession Area or the Contiguous Area (]) shall


consist of such part of the Goma Deposits Area, the Additional


Concession Area or the Contiguous Area, as applicable, as in light of


International Standards is reasonable, taking into account the extent and


nature of Iron Ore deposits that constitute the Indicated Mineral Resources


and any Inferred Mineral Resources, for the Mining and recovery of such


Mineral Resources, and (h) shall form a compact block as much as


possible, with the borders aligned to the true north-south and east-west.


d. The Concessionaire shall submit to the Government within 60


days following the notice given under Section 5.1(b) detailed maps for the


applicable Proposed Production Area, based on actual surveys using the


most current technology, that set forth the boundaries and coordinates of


the area containing the deposits from which Iron Ore is expected to be


Mined, which maps shall be of such scale and contain such detail,


including geographical and topographical information, as may reasonably


be necessary to identify accurately the boundaries of the Iron Ore deposits


and as may otherwise reasonably be required by the Minister, (ii) a


Feasibility Study for Operations (other than Exploration) in such Proposed


Production Area and (Hi) a certificate of the chief executive officer of the


Concessionaire dated the date of submission to the effect that (x) the


Concessionaire has complied through the date of such certificate in all


material respects with its obligations under this Agreement (except as to


such defaults in the performance by the Concessionaire of any of such


obligations that have been cured to the reasonable satisfaction of, or


waived by, the Minister), and (y) the Concessionaire is prepared to


develop the Mine, Mining Plant and Infrastructure in the manner set forth


in the Feasibility Study (other than as may reasonably be required to


respond to facts and circumstances not known to the Concessionaire at the


time the Feasibility Study was filed), and setting forth the manner in


which the Concessionaire proposes to finance the construction and


acquisition of the Mine, the Mining Plant, the Infrastructure and the








20














/


related equipment (including the proposed proximate and ultimate sources


of such funds).


e. If the Concessionaire wishes to carry out additional


Exploration within a Proposed Production Area it may do so provided that


the work is covered by an exploration work program that has been


approved under the terms of the Exploration Regulations. No budget or


annual expenditure requirements apply to such work, but a!! other


provisions of the Exploration Regulations as to the manner of carrying out


such work and as to reporting the results of such work remain applicable


f. The Concessionaire may apply for renewal of a Mining


License not more than three };ears and not less than one year prior to the


date of expiration of thereof.


g. The Concessionaire may relinquish a Mining License issued


pursuant to this Agreement (and be relieved of further obligations under


this Agreement) on at least 180 days notice to the Government if (i) on the


date of such notice and the date set as the effective date of relinquishment


there is no payment default and no other material default unwaived by the


Government in the performance by the Concessionaire of its obligations


under this Agreement, (H) the Concessionaire confirms in such notice its


obligation to and willingness to carry out the approved closure


management plan applicable to the relinquished license, and (in) the


Minister, the Minister of Finance and EPA have reasonably determined


that (x) the arrangements made by the Concessionaire for funding the


performance of its approved closure management plan are sufficient to


secure such performance, and (y) as of the date of termination the


Concessionaire has complied with Section 25 in all materia! respects.


h. Any Mining Licenses issued with respect to a Goma Deposits


Area Mine, an Additional Concession Area Mine or a Contiguous Area


Mine shall be terminated on the seventh anniversary of the Effective Dale


if the Concessionaire shall not have commenced Production with respect


to such Mine prior to such date.


Feasibility Study.


a. The Concessionaire shall, at its own expense, file with the


Minister a feasibility study setting forth a plan for efficient and economic


Operations (other than Exploration) in a Proposed Production Area


(“Feasibility Study”), prepared by an internationally recognized mine


engineering consulting firm not affiliated with the Concessionaire or any


of its principal direct or indirect shareholders substantially complying with





21


 Sections 5.2 (b) through 5.7 and in accordance with applicable Law and


International Standards.





b. The Feasibility Study shall include an Environmental Impact


Assessment Study Report (“ElA”) and an Environmental Management


Plan (“EMP”) complying with Section 5.3 and applicable Law, as filed by


the Concessionaire with the EPA.


c. The Feasibility Study shall include a Social Impact Assessment





(“SLA”) and Social Action Plan (“SAP”) complying with Section 5.4 and


applicable Law.


d. The Feasibility Study shall include a skills and technology


development plan (an “STOP”) complying with Section 5.5 and any


applicable Law.


The Environmental Impact Assessment Study Report and the Environmental





Management Plan.





a. The Concessionaire shall prepare an EIA and an BMP in


accordance with the Bid Materials and in compliance with applicable


requirements imposed by the EPA. The Concessionaire shall additionally


prepare a supplemental EIA and a supplemental EMP in compliance with


applicable requirements imposed by the EPA regarding any Proposed


Production Area covered by an approved Goma Deposits Area Work Plan.


b. Each EMP must include a closure management plan and a


closure management budget designed to ensure that upon closure (i) the


Mining Plant and Infrastructure shall not present any health or safety


issues (including provision for the control of acid drainage and other long


term environmental hazards) and (u) the Production Area and the


surroundings of any Mining Plant or Infrastructure not located in a


Production Area shall be restored to productive use or reforested or where


restoration is impractical, suitably remediated. The closure management


plan must include a list and assessment of risk and any uncertainties


associated with the preferred closure option, address the social aspects of


closure and rehabilitation, and provide a process for participation by the


community and management and monitoring. The closure management


budget shall provide a realistic initial estimate of the expected closure


cost, broken down by principal activities.


c. Each EMP must also set Forth the means by which the


Concessionaire proposes to ensure the availability of funds to finance its


environmental restoration and remediation obligations under Sections 8.2


and 8.3 of the Mining Law so that the cost of closure will be borne by the


Concessionaire and not the public or the Government. If the


Concessionaire does not agree in writing with the Government to a '‘pay-


as-you-go” funding scheme, then a funding guarantee reasonably


satisfactory-' to the Minister of Finance from a third party financial


institution with a long-term credit rating of at least A (or its equivalent)


from at least two internationally recognized credit-rating agencies with


provision reasonably acceptable to the Minister of Finance and the


Minister for redetermination of estimated closure costs at least triennially


and adjustments in the amount of the funding guarantee will normally be


acceptable. In the case of third party credit support, if the party supplying


the funding guarantee no longer has a long-term credit rating of at least A


(or its equivalent) from at least two internationally recognized credit-


rating agencies, the funding guarantee must provide that if the


Concessionaire does not within 90 days thereafter secure a substitute


funding guarantee from another third party financial institution satisfying


the requirements of this Section, the funding guarantee may be called upon


for the maximum amount then available thereunder, subject to the


requirement that such amount be deposited in a trust account from which it


may be withdrawn only for the purposes of financing the Concessionaire’s


environmental restoration and remediation obligations.


Social Impact Assessment and Social Action Plan.


a. The Concessionaire shall conduct an SI A and produce an SAP


in accordance with the Bid Materials. The SIA shall set forth the potential


adverse impact of the construction and operation of the Mining Plant and


the Infrastructure on the individuals and communities resident in and


around (a) such Proposed Production Area and any Mining Plant or


Infrastructure not located on such Proposed Production Area, or (b) areas


affected by the proposed processing or transport of Product whether using


Concessionaire-provided Infrastructure or equipment or facilities or


equipment provided by the Government or third parties.


b. The SAP shall set forth reasonable procedures, in light of the


costs involved, for the mitigation of such adverse impact. The SAP shall


include a Resettlement Action Plan (“RAP”) component if communities


located in or adjacent to such Proposed Production Area or to Mining


Plant or Infrastructure not located in the Proposed Production Area should


under International Standards be resettled for health or safety reasons.


The RAP shall provide for (hut not be limited to) suitable area(s) of


resettlement with key emphasis on shelter and livelihood continuity


 c. The Concessionaire shall hold public hearings on the S1A and


the SAP in Monrovia and in Gbarnga, Bong County, and shall provide the


Minister with a report the means taken to publicize the hearings, the


names and affiliations of the persons who attended such hearings, a


summary of the issues raised at such hearings, and a discussion of the


actions taken by the Concessionaire in response to such hearings.





Skills and Technology Development Plan. The Concessionaire shall implement


an STDP in accordance with the Bid Materials.


Compliance with Bid Materials and Other Plans: Amendment of SAP and STDP:


Investment Schedules and Commitments.


a. The Concessionaire hereby commits that it will undertake all the activities


specified in the Modified Bid Materials, all Approved Feasibility Studies,


all EMPs, all SAPs and all STDPs, in each case in accordance with the


respective timetables and other terms specified therein, except to the


extent otherwise required by this Agreement or by applicable Law or as


otherwise agreed by the parties in writing. The Concessionaire further


agrees that the SAPs and STDPs shall be amended from time to time as


requested by the Government, provided, that, without the Concessionaire’s


prior written consent (which consent may be withheld by the


Concessionaire in its sole discretion), the Concessionaire’s financial


obligations under this Agreement shall not be increased as a result of any


such amendment.


b. Ail investment schedules and commitments shall be in accordance with


the schedules contained in the Modified Bid Materials except as otherwise


determined by each Approved Feasibility Study.


Approval of the Feasibility Study and Grant of Mining License.


a. The Minister may (i) reasonably request additional information with


respect to any aspect of the Feasibility Study, and (Ji) reasonably


recommend changes in any component of the Feasibility Study to the


extent the Minister deems the changes necessary to satisfy applicable


requirements of this Agreement.


b. The Minister may not unreasonably withhold approval of the Feasibility


Study if:


i) the Feasibility Study complies with the provisions of the Mining


Law and the terms of this Agreement,


 ii) a Competent Person reasonably selected jointly by the Government


and Concessionaire has concluded that the basic design and


material and operating specifications, the capital expenditure plan


and construction schedule included in the Feasibility Study and the


Concessionaire's plans are sufficient if implemented as


contemplated by the Feasibility Study to support the efficient and


economic Operations, processing and marketing of the Minerals


proposed to be Mined from such Proposed Production Area,


iii) the El A and the EMP have received the approval of the EPA,


iv) the proposed SIA and RAP satisfy the requirements of Section 5.4,





v) the proposed STDP satisfies the requirements of Section 5.5,


vi) the capital expenditure plan shows that the debt/equity ratio of the





investment taking into account initial working capital at


commencement should not exceed 3:1. and





vii) the Feasibility Study and proposed plan are financially viable.


c. The Minister shall be deemed to have approved the Feasibility Study


unless the Minister has notified the Concessionaire in writing of the


reasons for disapproval not later than 120 days after the Ministry receives


from the Concessionaire a Feasibility Study and related materials


substantially complying with the requirements of this Agreement.


Following any such disapproval and the resubmission by the


Concessionaire of an amended, modified or supplemented application or


Feasibility Study, the Minister shall be deemed to have approved the


Feasibility Study unless within 60 days of such amendment, modification


or supplement the Minister has notified the Concessionaire in writing of


the reasons for disapproval.


d. Upon the approval of the Feasibility Study, the Minister must grant the


Concessionaire a Mining License covering the Proposed Production Area


that was the subject of the license application filed under Section 5.1 (b), in


which case the Proposed Production Area shall become an approved


Production Area. Notwithstanding the preceding sentence, a Proposed


Production Area may not include land the use of which for Mining


operations would violate Section 10.1 of the Mining Law.





SECTION 6 - CONSTRUCTION AND OPERATIONS





6.1 Capital Expenditures: Construction.


The Concessionaire shall use commercially reasonable efforts


to incur capital expenditures and commence and continue construction,


acquisition and installation of the relevant Mines, Mining Plants,


Infrastructure and related equipment, all in accordance in all material


respects with the Modified Bid Materials and all applicable Feasibility-


Studies. The Concessionaire shall use commercially reasonable efforts in


good faith to cause capacity demonstration tests to occur if sufficient


reserves have been found (i) for the Non-Goma Mines, (x) on or prior to


the fourth anniversary of the Effective Dale (such test, the ''Phase I


Capacity l est” and such date, the "Phase 1 Capacity Test Date") and (y)


on or prior to the sixth anniversary of the Effective Date (such test, the


"Phase II Capacity Test” and such date, the "Phase II Capacity Test DaleH


and (il) for each of the Goma Mines, the Additional Concession Area


Mines and the Contiguous Area Mines, within the period of time provided


in the applicable Approved Feasibility Study. The Concessionaire may


not make material changes in the schedules, expenditures, capacity, or


other production plans from those set forth in the Modified Bid Materials


or applicable Approved Feasibility Study unless it applies for and receives


the approval of the Minister, which approval may not be unreasonably


withheld.





The Concessionaire must deliver, prior to undertaking each


required capacity demonstration set forth in Section 6.2,


i) a certificate of an independent mining engineering firm acceptable





to the Concessionaire and the Minister to the effect that (x) such


firm has reviewed the Modified Bid Materials or applicable


Approved Feasibility Study, as applicable, and the records of the


Concessionaire pertaining to such construction, acquisition and


installation and has inspected the applicable Mine, Mining Plant,


Infrastructure and equipment and (y) based on such review and


inspection, such firm believes that the construction, acquisition and


installation of such Mine, Mining Plant, Infrastructure and


equipment has been completed in accordance in all material


respects with the designs, plans and specifications set forth in the


Modified Bid Materials or applicable Approved Feasibility Study,


as applicable, (except to the extent not scheduled for completion


until after the commencement of production of Product(s) in


commercial volumes), and


ii) a certificate of the chief executive officer of the Concessionaire to





the effect that the construction, acquisition and installation of the


applicable Mine, Mining Plant, Infrastructure and equipment has


been completed in accordance in all material respects with the


designs, plans and specifications set forth in the Modified Bid


Materials or applicable Approved Feasibility Study, as applicable,


(except to the extent any portion thereof is not scheduled for


completion until after the commence of production of Product(s) in


commercial volumes).


6.2 Completion. The Concessionaire shall demonstrate the capacity to


produce marketable Product of the quality specified in the Modified Bid Materials


in an amount equal to (x) for the Phase 1 Capacity Test, at least I mpta of


concentrate containing TFe 64.5% and 8 mtpa of concentrate containing TFe


65%, and (y) for the Phase II Capacity Test, at least 1 mpta of concentrate


containing TFe 64.5% and 16 mtpa of concentrate containing TFe 65%, in each


case as measured by shipments out of the Port Facility over a 30-day period


within the six-month period ending on the Phase 1 Capacity Test Date or Phase II


Capacity Test Date, as applicable, subject to delay on account of force majeure.


With respect to each of the Goma Mines, Additional Concession Area Mines and


Contiguous Area Mines, the Concessionaire shall demonstrate capacity to produce


marketable Product of the quality specified in the applicable Approved Feasibility


Study, in each case as measured by shipments out of the Port Facility over a 30-


day period within the six-month period ending on the relevant date specified in


the applicable Approved Feasibility' Study. The Concessionaire shall give the


Ministry notice of, and the opportunity to have representatives witness, the


capacity tests and shall evidence the satisfaction of the required capacity


demonstration by the timely delivery to the Minister of a certificate of the


engineering firm referred to in Section 6.1 to the effect that the Concessionaire


has demonstrated the required capacity (setting out the requirements and the time


period covered by the demonstration and certifying specifically as to the actual


results of the demonstration). For the avoidance of doubt, the obligations of


Concessionaire under this Section 6.2 shall be subject to the relevant Approved


Feasibility Study.


6.3 Mining Term Operations.


a. The Concessionaire shall use commercially reasonable efforts


to produce Iron Ore and Products during the Mining Term at the rates


contemplated by the Modified Bid Materials and any Approved Feasibility


Studies, as applicable.


b. The Concessionaire may not undertake any activity referred to


in Section 6.7(d), 6.7(e) or Section 11.6 of the Mining Law except to the


extent expressly provided for in the Modified Bid Materials or any


Approved Feasibility Study, as applicable, or covered in any EIA of the


Concessionaire and approved in the context of any EMP of the


27


Concessionaire and, then only within a Production Area or an area in


which the Concessionaire is otherwise entitled by Law and by agreement


with any relevant Landowner to carry on such activities. The


Concessionaire may not transfer to any Person timber removed from the


Land pursuant to Section 6.7(d)(4) or I 1.6(a) of the Mining Law except in


compliance with Law and with the express consent of the applicable


Government authorities. For the avoidance of doubt, the Concessionaire


shall not deprive any Person of a constant and reasonable supply of usable


water from a previously utilized traditional source without replacing it, nor


shall the Concessionaire, without the Minister’s consent, interfere with


any water rights enjoyed by any user under any agreement with the


Government made prior to the date of execution of this Agreement.


c. Before entering upon and utilizing any Land, the


Concessionaire shall make reasonable inquiries as to the existence of. and


shall not use, Land of long standing socio-cultural or sentimental value


except wdth the consent of the officials authorized by Law or by custom to


administer or control the affairs of such Land and the approval of the


Minister.


d. All Mining, processing or treatment of Iron Ore by the


Concessionaire shall be conducted in accordance with International


Standards and applicable Law. The Concessionaire undertakes to use all


reasonable efforts in accordance with such standards and Law to optimize


the recovery of Iron Ore from each of the Non-Goma Mines, the Goma


Mines, the Additional Concession Area Mines and the Contiguous Area


Mines, provided it is economically and technically feasible to do so, and


on request shall submit evidence to the Minister of compliance with this


undertaking.


e. The Concessionaire must cause each of the Non-Goma Mines,


the Goma Mines, the Additional Concession Area Mines and the


Contiguous Area Mines and all Mining Plant, Infrastructure and


equipment constructed or acquired by it to be maintained throughout the


Mining Term in a safe and sound condition in accordance with


International Standards.


f. The Concessionaire may not make any material changes in any


of the Non-Goma Mines, the Goma Mines, the Additional Concession


Area Mines or the Contiguous Area Mines, Mining Plant or Infrastructure


or in the Modified Bid Materials or any Approved Feasibility Study, as


applicable, unless it applies for and receives the approval of the Minister


to appropriate amendments to the Modified Bid Materials or an Approved


Feasibility Study, as applicable.





28


g. The Concessionaire shall construct and operate each of the


Non-Goma Mines, the Gonna Mines, the Additional Concession Area


Mines and the Contiguous Area Mines, the Mining Plant and the


Infrastructure in accordance with the Modi lied Bid Materials or the


applicable Approved Feasibility Study, as applicable, unless it receives the


approval of the Minister to appropriate amendments to the Modified Bid


Materials or an Approved Feasibility Study, as applicable.


h. In the event of any loss or damage to the property of the


Concessionaire, the Concessionaire shall promptly proceed to restore such


property to the extent necessary to resume Operations as contemplated by


the Modified Bid Materials or the applicable Approved Feasibility Study,


as applicable.


i. If the Concessionaire does not itself operate any portion of any


Non-Goma Mine, Goma Mine, Additional Concession Area Mine.


Contiguous Area Mine, Mining Plant or Infrastructure but instead


contracts its operation to a third party, the Concessionaire is responsible to


the Government for the compliance of such third party with all


requirements of this Agreement applicable to the activities of such


contractor as though such Operations were performed by the


Concessionaire. The percentage requirements of Section 11.1 (a) shall


apply to the Operations in the aggregate of the Concessionaire and any


such contractor(s). Any such contracting must have been disclosed in the


Modified Bid Materials or the applicable Approved Feasibility Study, as


applicable.


6.4 Recovery Shortfalls.


a. If the Concessionaire is failing without good cause to produce


Product(s) at the rate indicated in the Modified Bid Materials or the


applicable Approved Feasibility Study, as applicable, the Government


may give notice in writing to the Concessionaire. Within three months of


the receipt of this notice the Concessionaire must (a) commence work to


improve its Mining method, treatment and processing facilities to the


reasonable satisfaction of the Government, provided that the


Concessionaire shall in no event be obliged to conduct Mining, processing


or treatment activities otherwise than is economically and technically


feasible at the time, and (b) submit to the Government evidence that the


steps it is taking will lead to compliance with Section 6.3(a) and the


second sentence of Section 6.3(d).


b. If the Government remains unsatisfied with the


Concessionaire’s response to such notice, the Government may








29


commission an independent technical stud)' to determine a lair average


recovery rate taking into account the nature of the reserves then being


mined, the nature of the applicable Non-Goma Mine, Goma Mine,


Additional Concession Area Mine, Contiguous Area Mine, Mining Plant,


Infrastructure and other equipment (assuming they are of the design and


quality set forth in the Modified Bid Materials or the applicable Approved


Feasibility Study, as applicable, and have been prudently maintained and


operated), and the economic and technical feasibility of achieving


increased recovery by the Concessionaire in accordance with the standards


set forth in Section 6.3(a) and the second sentence of Section 6.3(d). Such


study shall be carried out by an independent mining engineering


consultant appointed by the Government from a list of three such


consultants named by the Concessionaire on the request of the


Government. Each of the Government and the Concessionaire may


submit information to the consultant. The fees and expenses of such


consultant shall be borne by the Concessionaire, but unless the consultant


concludes the performance of the Concessionaire’s Production is at least


10% less than the fair average recovery rate referred to in the first


sentence of this Section 6.4(b), the Concessionaire shall be entitled to


offset the fees and expenses of such consultant against Royalties


subsequently payable by the Concessionaire under Section 15.1 of this


Agreement.


c. If following the completion of such study, the Concessionaire


fails within a reasonable period to achieve the fair average recovery rate


indicated by such study, the Government may increase the Royalty


applicable to such Products under Section 15.1 in proportion to the extent


that recovery of such Products by the Concessionaire is less than 90% of


the fair average rate indicated by such studies, provided that at no time


shall the payment of such increased Royalty free the Concessionaire from


its obligation to satisfy Section 6.3(a) and the second sentence of Section


6.3(d).


6.5 Increasing Liberia-Based Value-Added Production Capacity.


a. The Concessionaire will work towards and assist the


Government in achieving the pol icy of the establishment or expansion of


downstream metals processing facilities in Liberia in relation to smelting,


refining and/or metals manufacturing and fabricating (to the extent not


already carried out by the Concessionaire pursuant to the Modified Bid


Materials or any Approved Feasibility Study) if, in light of recognized


economic, technical and scientific standards, the Iron Ore to be mined by


the Concessionaire is of sufficient tonnage and is amenable to smelting.








30


 refining or metal manufacturing and provided it is economically and


practically feasible to do so.





b. At any time if the Concessionaire wishes to establish its own


smelting, refining or manufacturing facilities in Liberia, it can do so


pursuant to applicable Law, provided that any such smelting or refining


facilities shall be deemed additional Mining Plant for which the


Concessionaire must first submit to the Minister a work plan including


appropriate amendments to the existing ELAs, EMPs. SlAs, SAPs and


STDPs in accordance with applicable Law and International Standards and


obtain the Minister's approval, provided further that the approval by the


Minister shall not be unreasonably withheld.





c. The Concessionaire shall submit to the Minister copies of any


studies relating to the feasibility of establishing in Liberia the facilities as


described in Section 6.5(a) prepared by or at the direction of the


Concessionaire.


d. In the event that smelting, refining or manufacturing facilities





are proposed to be established in Liberia by an entity other than an


Affiliate of the Concessionaire for the further processing of products of


the type produced by the Concessionaire, the Concessionaire shall agree to


make its Product(s) available to that entity for further processing on


conditions not less favourable than the conditions that can be obtained by


the Concessionaire for such products outside of Liberia. This obligation


of the Concessionaire is subject and subordinate to any smelting, refining,


manufacturing or marketing contracts with third parties entered into by the


Concessionaire prior to the Concessionaire's receipt of a request to


commit Product(s) to such facilities, but in the case of any such contract,


only for such period of time as the Concessionaire has no right to


terminate (or to decline to renew or extend) such contract.


6.6 Railroad. Port and Road Renovations: General Maintenance Qbliaations.





a. During the Term of this Agreement, the Government hereby


grants the Concessionaire the right to develop, use, operate and maintain


the railway linking the Non-Goma Mines to the Port Facility (the


“Railroad”), subject to existing third party rights and applicable Law. No


later than 5 years after the Effective Date, the Concessionaire shall


complete the renovation and extension of the Railroad in accordance with


the Modified Bid Materials and the other provisions of this Section 6.6(a)


to result in transportation capacity of 12 mtpa of concentrate produced by


the Concessionaire plus common carrier freight and passenger service (the


"‘Initial Railroad Renovations”). Should the Concessionaire elect to





31 i








rv


V


designate a Proposed Production Area in the Goma Deposits Area and a


Mining License be issued with respect to such Proposed Production Area,


no later than 6 years after the Effective Dale, the Concessionaire shall


extend the Railroad to the Goma Mines in accordance with the Modified


Bid Materials and any applicable Approved Feasibility Study with respect


to the Goma Deposits Area (the "Subsequent Railroad Renovations^').


The Government (i) hereby grants the Concessionaire a right to use all


Land necessary for the construction of the Initial Railroad Renovations


and the Subsequent Railroad Renovations, provided that such right to use


shall be limited in accordance with applicable Law and in a similar


manner to the Concessionaire’s use of other public Infrastructure referred


to in Section 19.7 and (ii) shall take such steps, including without


limitation, exercising its powers of eminent domain, to relocate any


Occupants of Land located on, and extinguish the rights of Landowners or


other third parties to, land that is within a distance of 25 meters from each


side of the proposed track of the Railroad for that portion of the Railroad


which extends outside the Concession Area to the Port Facility, provided


that the Government shall bear the relocation, reimbursement or other


costs associated with removing such Occupants of Land or extinguishing


the rights of Landowners or other third parties with respect to such land. In


addition to the foregoing, the Concessionaire agrees that, upon request of


the Government, it shall undertake in good faith negotiations with respect


to the further renovation and expansion of the Railroad by the


Concessionaire so as to provide capacity for the transport of Minerals or


products thereof Mined or produced by third parties, it being understood


that the Concessionaire shall be entitled to equitable compensation for any


obligations undertaken by it in this regard. The parlies agree that should


they fail to reach agreement with respect to any such further renovation


and expansion within 180 days following the Government’s request that


the parties enter into negotiations, they shall submit such matter for


resolution pursuant to Section 26.


b. During the Term of this Agreement, the Government hereby


grants the Concessionaire the right to develop, use, operate and maintain


the Port Facility, subject to third party rights existing as of the Effective


Date. Within 120 days after the Effective Date, the Government will


provide the Concessionaire a list of such third party rights. The


Concessionaire shall complete the renovation of the Port Facility in


accordance with the Modified Bid Materials and any other Approved


Feasibility Study, as applicable. The Government shall use commercially


reasonable efforts to terminate the existing arrangements regarding the use


of the Port Facility. The Government shall use commercially reasonable


efforts to assist the Concessionaire in acquiring an additional parcel of up








32


to 2.000 acres of Land outside the Port Facility that is approved by both


the Government and the Concessionaire as sufficient to be used for vehicle


maintenance, the construction and operation of a railway station and other


purposes related to Operations at the Port Facility. The Government shall


bear any relocation, reimbursement or other costs associated with


removing or reimbursing Landowners, Occupants of Land or other third


parties occupying, or holding rights to, any additional such parcel of Land


acquired.


c. No later than 2 years after the Effective Date, the


Concessionaire shall complete the renovation of all existing roads in the


Non-Goma Deposits Area (the “Non-Goma Roads") in accordance with


the provisions of the Modified Bid Materials. Should the Concessionaire


elect to designate a Proposed Production Area in the Goma Deposits Area


and a Mining License is issued with respect to such Proposed Production


Area, no later than 4 years after the date of approval of the applicable


Approved Feasibility Study, the Concessionaire shall complete the


renovation of all existing road in the Goma Deposits Area (the “Goma


Roads") in accordance with the applicable Approved Feasibility Study.


The Government hereby grants the Concessionaire a right to use ail Land


necessary for the renovation of the Non-Goma Roads and Goma Roads,


provided that such right to use shall be limited in accordance with


applicable Law and in a similar manner to the Concessionaire's use of


other public Infrastructure referred to in Section 19.7. The Concessionaire


shall renovate, extend and build the Kakata to Hyendi Road in accordance


with the Modified Bid Materials.


d. The Concessionaire shall, during the Term, keep the


Infrastructure, the Mining Plant, the Goma Mines, the Non-Goma Mines,


the Additional Concession Area Mines, the Contiguous Area Mines and


Movables in good repair and condition, except to the extent of wear and


use in the ordinary course of the Concessionaire’s business. As further set


forth in Section 6.10, the Ministry and other agencies of the Government


shall have the right to, without prior notice, but at reasonable times of day


and without materially interfering with the normal conduct of the


Concessionaire’s business, visit and inspect any of the facilities and


Operations of the Concessionaire in Liberia.


6.7 Third Party Access to Roads, the Railroad and the Port Facility. The


Concessionaire shall permit third parties to have access, without charge, to all roads


within in the Concession Area. With respect to the Railroad and the Port Facility





i) The Government shall, in consultation with the Concessionaire,


and on reasonable notice to the Concessionaire, authorize third








33


parties’ use of excess capacity of the Railroad (including the


portion of the Railroad located within the Concession Area) and


the Port Facility, provided that the Concessionaire confirms that


excess capacity exists and third party use of such excess capacity


does not unreasonably interfere with the efficient and economic


conduct of the Operations.


ii) The technical and commercial terms for such third party use of the


excess capacity of the Railroad and the Port Facility shall be


mutually agreed to, in good faith, among the Government, the


Concessionaire and such third parties in accordance with


applicable use and International Standards, it being understood that


third parties shall be treated on a non-discriminatory basis. A


formula to proportionately share the revenue fees to be derived


from such third party use of the Railroad shall be agreed upon in


good faith between the Government and Concessionaire.


iii) Such third party access and use shall be at no cost to the


Concessionaire and all related costs shall be borne by the third


party.


iv) In the event that the Government believes that the Concessionaire


is withholding third party access to the Railroad or the Port Facility


in contravention of this Agreement, the Government may request a


review of the Concessionaire's decision not to grant access. The


review shall be heard by the Committee described in paragraph v


below.


v) There shall be constituted a Committee with five (5) members.


Two (2) members of the Committee shall be appointed by the


Government and two (2) members shall be appointed by the


Concessionaire. The final member shall be appointed jointly by


the Government and the Concessionaire. The Committee shall


hear and review all complaints regarding third party access to. and


third party modernization or expansion of, the Railroad and shall


forward its recommendations, together with an explanation of its


rationale for such recommendations, to the Parties to this


Agreement.


Concessionaire Reporting Requirements.


The Concessionaire shall submit to the Minister (and the Minister of


Finance, in the case of Sections 6.8(d) and (f)) the following Production and


financial reports, in addition to the financial statements required by Section 17.6:


prior to satisfaction of the capacity demonstration requirement


set forth in Section 6.2, a quarterly report on the progress of construction


of the Mining Plant and Infrastructure provided for in the Modified Bid


Materials or the applicable Approved Feasibility Study, as applicable,


indicating progress and expenditures to date, and estimated date of


satisfaction of the capacity demonstration requirement;


with respect to each working Mine, a quarterly statistical report


beginning with the month in which commencement of the Production


Operating Period occurred, setting forth (i) the amount of Iron Ore Mined


and processed from each Mine, the amount of process Iron Ore shipped to


the Port Facility, the amount of processed Iron Ore exported from the Port


Facility and the stocks of processed Iron Ore on hand at the Mines and at


the Port Facility at the end of the month, (if) the number and location of


the workings on which work was begun during the preceding month.


(HD the number of workmen employed thereon at the end of the month,


(jv) a list of the equipment at each working at the end of the month, and


(v) a brief description of the work in progress at the end of the month and


of the work contemplated during the following month;


a quarterly operating report, beginning with the calendar


quarter in which the commencement of the Production Operating Period,


concerning the progress of the Concessionaire's Operations in the


Production Areas that are the subject of a Mining License issued pursuant


to this Agreement specifying in full:


i) those workings in which Mineral/ore is considered to have been


found, regardless of whether the deposits are deemed to be


commercial or not (together with all data relative to the estimated


volumes of the reserves, the kind or kinds of such ore encountered


and the analyses thereof), the number and description of workings


which have been placed in commercial production and full


particulars concerning the disposition of such production, the


number of workmen employed on each of such workings, the work


in progress at the end of the quarter in question, and the work


contemplated during the ensuing quarter; and


ii) the work accomplished during the quarter in question with respect,


to all installations and facilities directly or indirectly related to its


exploitation program, together with the work contemplated for the


ensuing quarter with respect to the same installations and facilities


and indicating both actual and estimated investment in such


installations and facilities made, committed or to be committed


with respect to such installations and facilities;


d. a quarterly financial report beginning with the calendar quarter


in which the commencement of the Production Operating Period occurred,


setting forth the quantity of Iron Ore produced and shipped from Liberia


or transferred to a third party in Liberia during the quarter and the


computation of the Royalties paid or remaining to be paid on such


shipments or transfers;





e. an annual operating report, beginning with the Financial Year


in which the commencement of the Production Operating Period occurred,


which shall include:


i) the number and description of the workings which were in progress





at the end of the Financial Year preceding the Financial Year in


question (with a showing as to which were then in commercial


production), the number and description of workings abandoned


during the Financial Year in question; the production of each of the


workings, regardless of whether in commercial production or not,


with a full description of the kind and quality and analyses of ore


produced from each working, and the number of workings on


which activities are continuing at the end of the Financial Year in


question, but which have not gone into commercial production;


ii) with respect to each working Mine, the total volume of Minerals,





kind-by-kind, broken down into volumes Mined, volumes


transported from such Mine and their corresponding destination,


volumes stockpiled at such Mines or elsewhere in Liberia, volumes


sold or committed for export (whether actually shipped from


Liberia or not), volumes actually shipped from Liberia (with full


details as to purchaser, destination and terms of sale), and if known


to the Concessionaire after diligent inquiry volumes refined,


processed and or manufactured within Liberia with full


specifications as to the intermediate products, by-products, or final


products, out turned within Liberia (with full showing as to the


disposition of such intermediate products, by-products or final


products and of the terms on w'hich they were disposed);


iii) work accomplished and work in progress at the end of the year in


question with respect to all of the installations and facilities related


to the production program, together with a full description of all


work programmed for the ensuing Financial Year with respect to


such installations and facilities including a detailed report of all


investment actually made or committed during the year in question


and all investment committed for the ensuing Financial Year or


Financial Years; and





36








V





iv) a report on all other Production and activities for that Financial


Year; and


f. an annual financial report, beginning with the Financial Year in


which the commencement of the Production Operating Period occurred,


setting forth the quantity of Iron Ore produced and shipped from Liberia


or transferred to a third party in Liberia during the calendar year and the


computation of the Royalties paid or remaining to be paid on such


shipments or transfers.


1 he Concessionaire shall also provide such additional information as is necessary


to keep the Government fully informed of all Operations and activities, wherever


conducted in Liberia, and of its plans in respect thereof. All quarterly reports


required under this Section 6.8 shall be submitted within 30 days of the end of the


quarter in question, and all annual reports required under this Section 6.8 shall be


submitted within 60 days of the end of the Financial Year in question. Each


report referred to in Sections 6.8(a), 6.8(b), 6.8(c) and 6.8(e) shall be certified as


true and correct by the chief executive officer and the chief operating officer of


the Concessionaire. Each report referred to in Sections 6.8(d) and 6.8(f) shall be


certified as true and correct by the chief executive officer and the chief financial


officer of the Concessionaire.


6.9 Access to Books and Records. The Operating Company shall maintain at its


principal office in Liberia, or at such other offices within Liberia as the Minister


may approve, copies of all maps, geological, mining or other earth science reports


and mineral analyses (together with all field data which support such reports or


data), production records, marketing and financial reports and other data obtained


or compiled by the Concessionaire as a result of exploration and/or mining


Operations. The Government shall have full access to all such information, data


and material, on at least two Business Day’s prior written notice to the Operating


Company.


6.10 Inspection. The Ministry and other agencies of the Government having


jurisdiction (such as the EPA and any Governmental entity at the time responsible


for employee safety and welfare) shall have the right to monitor the


Concessionaire’s Operations from time to time and may, without prior notice but


at reasonable limes of day and without materially interfering with the normal


conduct of the Concessionaire's business, visit and inspect any of the facilities


and Operations of the Concessionaire in Liberia.


6.1 1 Insurance. At all times during the Mining Term (including during the


construction period) the Concessionaire will maintain with financially sound and


reputable insurers, insurance with respect to its properties against such casualties


and contingencies, of such types, on such terms and in such amounts (including





37


deductibles, co-insurance and self-insurance, if adequate reserves are maintained


with respect thereto) as is customary in the case of entities of established


reputations engaged in the same or a similar business in the Republic. The


Concessionaire must provide the Government at least annually with evidence as


to the existence of such insurance.


SECTION 7 - LAND AND FACILITIES


7.1 Rights within Concession Area. The Concessionaire shall have the exclusive


right to use the Land within the Concession Area, provided that such right to use


shall be limited in accordance with the terms of this Agreement and applicable


Law, provided, further that the Government shall have no obligation in respect of


the rights of third parties in the Contiguous Area with whom the Concessionaire


has negotiated as described in Section 3.2. The Government shall be responsible


for all costs associated with the removal and relocation of all Occupants of Land


or other Persons within the Additional Concession Area and the release of all


rights of Landowners or other third parties to any portion thereof provided that


the Concessionaire will pay the Government US$100,000 toward compensation


for such costs. Any existing assets and facilities of the former Bong Mining


Company located within the Concession Area shall be provided to the


Concessionaire for the conduct of Operations in accordance with this Agreement,


on an “as is, where is” basis and free and clear of all Liens. Schedule 7.1 contains


lists of such assets prepared in 1999. The Concessionaire hereby acknowledges


and agrees that these lists are being provided to it for information purposes only


and that the Government is not making any representation regarding the continued


existence of such assets or their present condition.


7.2 Surface Rights. Subject to Sections 6.3(b) and (c), the Concessionaire shall have


the right, subject to the requirements of applicable Law, to enter upon and utilize


Land included in a Concession Area for purposes of and incidental to Operations


covered by the relevant license.


7.3 Limitation on Exploration and Production. This Agreement may not be construed


to permit the Concessionaire to explore for Iron Ore or any other Minerals outside


of the Land included in the Concession Area or, following the end of the


Exploration period under this Agreement, other than in a Proposed Production


Area or actual Production Area, or to produce Iron Ore or any other Minerals


from outside an approved Production Area.


7.4 Acquisition of Land Use Rights Outside a Concession Area.


a. To the extent otherwise permitted by applicable Law and


relevant Landowners or Occupants of Land, the Concessionaire is


permitted to acquire surface Land use rights sufficient to entitle it to





38


construct, install and operate Mining Plant or Infrastructure provided for


in the Modified Bid Materials or in an Approved Feasibility Study on


Land located outside of a Concession Area, and the Government will


make available to the Concessionaire for such purposes Land owned by


the Government and not otherwise required for the achievement of other


Government programs, provided that any duty of the Government under


this Section 7.4 shall arise only if there is insufficient Land to construct,


install and operate the Mining Plant or Infrastructure within such


. Concession Area. If the Government cannot make available to the


Concessionaire surface rights in Land controlled by it for such purposes


and the Concessionaire is unable to acquire sufficient surface Land use


rights from relevant Landowners or Occupants of Land on reasonable


terms and conditions, the Concessionaire may apply to the Government


for assistance in acquiring sufficient rights for such purposes. If no other


surface rights are reasonably available to the Concessionaire for such


purposes the Government will use its powers of eminent domain to obtain


such rights from an unwilling Landowner or Occupant of Land.


b. Surface rights made available by the Government from its own


stock of Land shall be made available without cost to the Concessionaire


on the condition that the Concessionaire may not utilize such surface


rights for any commercial purpose other than the production and sale of


Product(s) and the conduct of Operations permitted or required under this


Agreement.


* c. All costs incurred by the Concessionaire or by the Government


at the request of the Concessionaire in connection with the acquisition by


the Concessionaire from parties other than the Government of rights in


Land sufficient to permit it to acquire, construct, install and operate


Mining Plant or Infrastructure provided for in the Modified Bid Materials


or an Approved Feasibility Study shall be for the account of the


Concessionaire.


7.5 Acquisition of Land Not Owned by the Government. If the Concessionaire


reasonably must acquire Land outside the Concession Area that is not owned by


the Government for purposes of and incidental to Operations, the Concessionaire


will endeavour to negotiate directly with the relevant Landowners for acquisition


of the Land and the Concessionaire may apply to the Government for reasonable


assistance in conducting such negotiations.


7.6 UNMIL Warehouse. The Government hereby grants the Concessionaire the right


to use the warehouse located within the old Bong Mines area at the Freeport of


- Monrovia and used by the United Nations Mission in Liberia (the “UNMIL


Warehouse”1), effective upon the future evacuation from Liberia of the United








39


 States Mission in Liberia, provided that such right to use shall be limited in


accordance with applicable Law and in a similar manner to the Concessionaire’s


use of other public Infrastructure referred to in Section 19.7. The Concessionaire


acknowledges that the UN MIL, Warehouse shall be made available to it on an “as


is” basis.





SECTION 8 - COMMUNITY RESOURCES


Community Responsibility, it is the policy of the Government and the obligation


of the Concessionaire that Operations shall be carried out by the Concessionaire


in a manner that is consistent with the continuing economic and social viability of


centres of population that have formed and which may form as a result of


Operations during the term of this Agreement. Upon request of the Government


at any time, the Concessionaire shall consult with the Government and the local


communities affected by the Concessionaire's Operations to mutually establish


plans and programs for the implementation of this objective, and thereafter the


Concessionaire shall in good faith cooperate with the Government with regard to


its efforts concerning the realization of such plans and programs.


Community Funding Obligation. To that effect, the Concessionaire shall provide


an annual social contribution of US$3.5 million which shall be managed and


disbursed for the benefit of Liberian communities in the counties affected by its


Operations. The first annual payment shall be made to the general revenue


account on the First Payment Date and each subsequent payment shall be made to


the general revenue accounts on the anniversary date of the Effective Date. A


development committee shall be appointed by or selected in accordance w-ith


procedures established by the Government from time to time. Such committee


shall develop an annual budget in consultation with the Government and the


Concessionaire, and the Government shall make disbursements from the general


revenue account in which such funds are deposited in accordance with such


budget and the instructions of the committee. The budget and disbursements by


the Government shall be public and shall be subject to the same audit procedures


provided for expenditures by the Government and as may be further provided by


Law. Periodic reports and audit reports shall be made available to the


Concessionaire and to the public.


SECTION 9 - PUBLIC HEALTH AND SAFETY


Safety Procedures and Notifications. In connection with Operations, the


Concessionaire shall install, maintain and use such modern health and safety


devices, work gear and equipment, and shall practice such modern health and


safety procedures and precautions (including regular safety training instruction for


its employees) as are in accordance with applicable Law and International


Standards. The Concessionaire shall notify the Government promptly of any death


 of or serious injury to any employee of the Concessionaire or any of its


contractors that occurs as a result of Operations. For the purposes of this


Section 9, a serious injury means an injury that is likely to cause the injured


Person to lose 3 or more working days.





9.2 Security.





a. The Concessionaire may, directly or by contract with a


responsible provider of security services, establish, manage and maintain


its own asset and employee security and protection service for the purpose


of maintaining law, order and security in each Production Area and in the


immediate vicinity of other locations at which Concessionaire has or


maintains property and assets through its own security force and to do so


always being subject to applicable Law (including all Laws relating to


apprehension and detention and human rights) and the “Voluntary


Principles on Security and Human Rights” (as of December 2008 located


at: http://www. voluntary principles, org). Those members of the


Concessionaire’s (or such contractor’s) security force certified by name by


the Concessionaire to the Ministry of Justice as being literate, as having


have received adequate full lime training in police and law enforcement


procedures given by an outside contractor satisfactory to the Ministry of


Justice and as having been provided with operating manuals approved by


the Ministry of Justice shall have enforcement powers within the areas


described in the preceding sentence, always being subject to applicable


Law.





b. The Concessionaire’s security force will have (j) the power of


apprehension and detention in accordance with applicable Law, and


(ij) the power, subject to applicable Law, to search and exclude or evict


unauthorized Persons from the areas described in Section 9.2(a). If any


Person is detained by the Concessionaire’s security force, the appropriate


Government authority must be notified immediately, and the Person


detained must be handed over to such authority as soon as practical and in


no case later than the earlier of 24 hours from the time of detention or


when requested by Liberian National Police. The Concessionaire’s


security force may not use unreasonable force in detaining, excluding or


evicting Persons, whatever the nature of their intrusion, and any detention


facilities must be adequately ventilated, reasonably clean and with access


to sanitary toilet facilities.


c. The Concessionaire must coordinate the activities of the





Concessionaire security force with the Government’s police and law


enforcement authorities and report monthly to the Minister of Justice (with


a copy to the Minister) on the activities of the Concessionaire security





41


force, including numbers of persons detained and excluded or evicted, the


reason for, the place of and the period of any detention, and the disposition


of each detained person.


d. The Concessionaire is fully responsible for the compliance of


the members of its security force, whether its employees or the employees


of a contractor, with all requirements of this Section and for all


consequences of any breach of those requirements.


9.3 Employee Housing. The Concessionaire shall provide housing for its employees


and shall ensure that all such housing shall conform to the International


Standards, standards required by applicable Law or approved by the Ministry of


Public Works, and the applicable requirements of Sections 9.4 and 9.5.


9.4 Sanitation. The Concessionaire shall construct bathroom facilities with a


minimum shower and toilet for each unit of Concessionaire-provided housing


units. The Concessionaire shall also provide clean and accessible toilet (and.


where the nature of the work makes it appropriate shower) facilities at its


workplaces.


9.5 Water Supply; Clean and Safe Drinking Water. The Concessionaire shall provide


clean and safe pipe borne water system in all Concessionaire-provided housing


units. In addition, the Concessionaire shall construct hand pumps or other sources


of water at its workplaces that ensure a convenient and uninterrupted supply of


clean and safe drinking water. All drinking water shall meet or exceed the


approved Government standards for drinking water quality.


SECTION 10 - MEDICAL CARE


During its Operations, the Concessionaire shall maintain and operate or cause to be


operated, health facilities to ensure the availability in each Production Area of medical


treatment, care and attention in accordance with applicable Law, and such other improved


standards as may be agreed between the parties. Such treatment, care and attention shall


be free of charge for the Concessionaire’s employees and their resident spouses and


dependents. Government officials and/or employees assigned to and regularly employed


in the Production Area in an official capacity, and resident in or adjacent to the


Production Area, and their resident spouses and dependants, shall, during the time of such


assignment, employment and residence, also be entitled to receive medical care on the


same basis as Concessionaire employees. The Concessionaire shall further provide


reasonable access to such health facilities to members of local communities for


ambulatory or emergency care. It is understood that “reasonable access” may include the


imposition of fees that are reasonable in light of the economic level of such communities,


it being understood that such fees are unlikely to cover the cost of service.











42


 SECTION II - EMPLOYMENT, TRAINING AND


FOUNDATION





11.1 Employment.


a. Employment practices of the Concessionaire must conform to


applicable labor practices Law and other applicable Law. The


Concessionaire may not hire individuals who are not citizens of Liberia


for unskilled labour positions. The Concessionaire must employ and give


preference to the employment of qualified citizens of Liberia for financial,


accounting, technical, administrative, supervisory, managerial and


executive positions and other skilled positions as and when they become


available, it being the objective of the parties as soon as is practicable that


the Operations of the Concessionaire under this Agreement should be


conducted and managed primarily by citizens of Liberia. In furtherance of


the Concessionaire’s obligations under the preceding sentence, the parties


shall agree on progressive implementation of an employment schedule so


as to cause citizens of Liberia to hold at least 30% of all management


positions, including 30% of its ten most senior positions, within five years


of the Effective Date, and at least 70% of all management positions,


including 70% of its ten most senior positions, within ten years of such


date. Appointment of a citizen of Liberia to a particular position does not


preclude subsequent employment of a citizen of another country in such


position as long as the percentage requirements are otherwise met.


b. Subject to Section 11.1 (a), the Concessionaire may at all times





choose its employees and shall be free to employ such Persons who are


not citizens of Liberia as are required for the efficient conduct of


Operations in Liberia. Where applicable Law stipulates minimum


technical qualifications and/ or minimum levels of competence for any


technical post, the Government undertakes to recognise equivalent


technical qualifications and/ or certificates of competency held by Persons


who are not citizens of Liberia, provided that such qualifications and/ or


certificates of competency shall have been issued by a recognised


institution or statutory authority in any other country having a substantial


mining industry.


c. Subject to Section 11.1 (a) and consistent with applicable Law,


the Government, upon request of the Concessionaire or any of its


employees, will use reasonable efforts to facilitate the resolution of any


dispute that arises between the Concessionaire and any of its employees.


11.2 Training of Liberians. The Concessionaire must provide on a continuing basis tor





the training of citizens of Liberia in order to qualify them for financial,


&


43 A








°\





accounting, supervisory, managerial, executive positions and other skilled


positions and as required by the Concessionaire's Operations provide on-the-job


training, operate vocational training facilities, and utilize whatever other measures


arc necessary and reasonable to achieve the objectives stated in Section 11.1


(including, subject to operational needs and economic conditions, scholarships for


qualified employees who are citizens of Liberia to pursue relevant advanced


studies abroad).


I 1.3 General Education Funding. The Concessionaire shall (a) provide through a


Concessionaire administered program a total of US$200,000 annually in


scholarships, one quarter of such amount to be reserved for students who are


permanent residents of the county or counties in which the Concessionaire's


Production Areas are located, (b) provide a US$50,000 contribution annually


towards the creation and operation of a Mining and Geology Institute at the


University of Liberia for students majoring in mining engineering and geology,


the first annual payment to be made on the First Payment Dale, and subsequent


payments to be made on each anniversary of the Effective Date, and (c) promote


graduate training programs in Geology and Mining Engineering or other related


disciplines at the University of Liberia or such other stale operated higher


education institutions and facilitate graduate training of and sponsor exchange


programs for said students in universities in other parts of the world (it being


understood that such programs should be structured to provide reasonable


incentive for such employees to return to Liberia on completion of their training).


The amount referred to in clause (b) shall be paid to the general revenue account


and earmarked for the University of Liberia.


SECTION 12 - USE OF LIBERIAN GOODS AND SERVICES


When purchasing goods and services related to the Concessionaire's Operations, the


Concessionaire must, and must cause its major contractors to, give preference to the


maximum extent possible to materials and goods produced in Liberia and services


provided by Liberian citizens resident in Liberia or entities incorporated or formed in


Liberia where citizens of Liberia resident in Liberia are entitled to receive 60% or more


of all profits from such entities, provided that such goods and services are at least


comparable in quality, terms, delivery, service, quantity and price to goods and services


obtainable from other sources. The Concessionaire agrees to require its major contractors


to follow the policy of the Government to encourage the purchase of Liberian goods and


services as set forth in this Section 12. Subject to the foregoing, the Concessionaire and


its major contractors may freely contract with any Person. The Concessionaire must


report to the Minister within 60 days following the end of each Financial Year on the


extent to which the Concessionaire and its major contractors acquired during such year


materials, goods and services from the preferred sources described in the first sentence of


this Section.











44


 SECTION 13 - ENVIRONMENTAL PROTECTION AND


MANAGEMENT





13.1 The Concessionaire's Duty. The Concessionaire must conduct its Operations in


accordance with Sections 8.1 through 8.3 of the Mining Law, other applicable


environmental Law, International Standards, the approved EMPs and this


Agreement. The Concessionaire must in any event take appropriate preventive


measures to protect all streams and water bodies within or bordering Liberia, all


dry Land surfaces, and the atmosphere from pollution, contamination or damage


resulting from Operations. If the Concessionaire’s Operations violate any


requirement referred to in the two previous sentences or otherwise damage the


environment, the Concessionaire must proceed diligently to restore the


environment as much as possible to its original and natural state (or to remediate


the damage where restoration is impractical) and must take appropriate preventive


measures to avoid further damage to the environment.


13.2 Annual Environmental Audit. The Concessionaire must deliver to the Minister,


w ithin 60 days after (a) each anniversary of the date of issue to it of a Mining


License and (b) the last day of the Mining Term if it does not end on an


anniversary of such date of issue, an environmental audit and assessment of the


Production Areas under such license plus all areas outside of the Production Areas


in which the Concessionaire conducts Operations. The audit must be performed


or supervised by an environmental consultant who is not a regular employee of


the Concessionaire or an Affiliate of the Concessionaire and who is a registered


engineer with at least 10 years of experience in making environmental compliance


assessments and audits in the mining industry. The audit and assessment are for


the purpose of determining whether the Concessionaire’s Operations since the


beginning of the current year of the Mining Term are being conducted in


conformity with applicable environmental Law and the other requirements of this


Agreement and the Concessionaire’s approved EMPs. Such audit and assessment


will also include an assessment of the status of the Concessionaire's provision for


restoration or remediation of the Production Areas and such other areas in which


the Concessionaire conducts or has conducted Operations and its conformity with


the requirements of the approved EMPs. The audit and assessment must also


include a full accounting for all changes during such year in the balance of any


account established pursuant to the approved EMPs to fund such restoration and


reclamation. If any such audit and assessment for any year identifies any failure


to comply with the requirements of Section 13.1 or the applicable EMPs, the


Concessionaire must promptly remedy such situation at its own expense.


13.3 Government Environmental Inspections. The Minister or the EPA may conduct


periodic inspections of the Concession Area (but the failure of either to make any


such inspection or ascertain in any such inspection the existence of any breach by











45











c > -





the Concessionaire of its obligations under this Section 13 or the EMP shall not


affect the ability of the Minister or the EPA to require full compliance by the


Concessionaire with such obligations).


13.4 Updating the EIAs and the EMPs. The Concessionaire shall periodically (not less


frequently than every 4 years, or as may otherwise be required by applicable Law)


update the EIAs and the EMPs to reflect the actual status of the Concessionaire’s


Operations at the time, updated risk assessments, any additional requirements of


applicable Law generally applicable with respect to Mine closure, and updated


estimates of the cost of carrying out the closure management plan. The


Concessionaire shall also update the EIAs and the EMPs as a condition to making


any material changes in Operations, Mining Plant or Infrastructure. The updated


EIAs and EMPs (including an updated closure management plan and budget) are


to be submitted to, and are subject to, the review and approval of the EPA in


accordance with then-applicable environmental Law. As a condition of approval,


the Minister or the EPA may require additional financial assurances or security,


including financial deposit, if it determines that such action is required to assure


adequate and secure funding of estimated closure costs. The Concessionaire shall


in any event comply with its undertakings contained in the most recently-


approved E1A and EMP.


13.5 Scope of Duty to Cease Operations during Remediation. Any environmental


remediation required by applicable Law or this Agreement to occur during the


Mining Term, shall not require the Concessionaire to cease Operations during the


restoration or remediation period (except to the extent necessary to correct a


violation of applicable Law or to carry out such restoration or remediation) so


long as the Concessionaire is proceeding diligently to undertake the required


restoration or remediation and has ceased any activities that constituted a


violation of applicable Law or a breach of the obligations of the Concessionaire


under Section 13.1. This Section does not limit the right of the Minister to


suspend Operations under Section 23 when Operations are causing environmental


damage.


SECTION 14-TAXATION


14.1 Law of General Applicability. The Concessionaire shall pay all Taxes and Duties


pursuant to applicable Law except as otherwise provided in this Agreement.


14.2 Fiscal Regime. Schedule 6 to this Agreement sets forth the Government’s


proposed fiscal regime for Mining. This regime is set forth as proposed


amendments to the Revenue Code and shall be read in conjunction with the


Revenue Code as if such proposed amendments were in force for the purpose of


determining the liabilities of the Concessionaire under the Revenue Code. Except


as specifically provided in Section 14.3 (Special Provisions), Section 15.1


46





7


(Royalties), Section 15.3 (Royalties on Minerals Purchase by the Concessionaire


for Sale or Processing and Sale), and Section 15.4 (Surface Rent), the


Concessionaire shall pay all Taxes and Duties in accordance with Schedule 6 and


as otherwise provided by applicable Law.


14.3 Special Provisions. The following special fiscal provisions shall be applicable to


the Concessionaire.


a. The income tax rate applicable to the Concessionaire shall in


no case during the first 25 Years exceed 25 percent provided that taxable


income shall be computed in accordance with Schedule 6 and otherwise


by applicable Law. For the avoidance of doubt, should the Government


amend the Revenue Code so as to reduce the rale of income tax below 25


percent, the Concessionaire shall be entitled to the benefit of such a


change.


b. The Concessionaire shall during the first 25 Years be exempt


from the Surtax on high yield projects imposed by Sections 730-732 of


Schedule 6.


c. In lieu of the withholding rates provided by Section 806 of


Schedule 6 for non-residents and as provided by the Revenue Code for


residents, the Concessionaire shall withhold tax on payments made to non¬


residents and residents at the following rates for the first 12 Years:


i) Dividends, 0 percent.


ii) Interest, 5 percent.


iii) Payments for services, 5 percent.


Thereafter withholding shall be at the rates provided by Section 806 of


Schedule 6 for non-residents and as otherwise provided by applicable Law for


residents.


d. As provided by Section 1001 of Schedule 6, the Concessionaire


shall be exempt during the first 25 Years from the payment of the Goods


and Services tax on capital goods used in (x) the conduct of Operations or


(y) the construction and equipping of facilities in connection with


performing its obligations under Section 8, Section 9.3 or Section 10.


e. The Concessionaire shall be exempt during the first 25 Years


from the payment of export taxes, if any, on Iron Ore.


f. The Concessionaire shall be exempt from all import duties on


all goods related to Production or Operations during the first 10 Years but


shall pay customs service (user) fees on any imports not subject to duty as


provided in subsection (g) of this Article 14. During the remainder of the


Term, the Concessionaire shall pay duties as provided by applicable Law.


g. The Concessionaire shall pay custom user fees as provided by


applicable Law on all items not subject to duty, including those items


exempted from duty pursuant to subsection (0 of this Section 14.3,


provided that such custom user fees shall be capped at $400,000 per year


during the first 10 Years. For the avoidance of doubt, the Concessionaire


will not pay the Customs User Fee on those goods for which it is paying


import duty.


h. The Concessionaire shall be exempt from real property tax as


provided by Section 2009 of Schedule 6 including real property used for


Production provided further that the Concessionaire shall be exempt from


real property tax on residences or improvement thereon where such


residences are primarily utilized by employees.


14.4 Stabilization. The Government hereby undertakes and affirms that at no time


shall the rights (and the full and peaceful enjoyment thereof) granted by it


pursuant to this Agreement be derogated from or otherwise prejudiced by any


Law or the action or inaction of the Government, or any official thereof, or any


other Person whose actions or inactions are subject to the control of the


Government. To the extent there is inconsistency between the Revenue Code and


this Agreement (including Schedule 6), this Agreement shall govern. All matters


governed by the Revenue Code (or any similar Law) but not specifically


addressed in this Agreement (including Schedule 6) shall be governed by the


Revenue Code (or any similar Law) as in effect as of the Effective Date. For the


avoidance of doubt, any amendments, additions, revisions, modifications or other


changes to the Revenue Code (or any similar Law) made after the Effective Date


shall not be applicable to the Concessionaire except as this Agreement


specifically provides for the matter to be governed by applicable Law.


Furthermore, any future amendment, additions, revisions, modifications or other


changes to any Law' (other than the Revenue Code (or any similar Law))


applicable to the Concessionaire or the Operations that would have the effect of


imposing an additional or higher tax, duty, custom, royalty or similar charge on


the Concessionaire shall not apply to the Concessionaire to the extent it would


require the Concessionaire to pay such additional tax, duty, royalty or charge.





14.5 Taxation of Associates. Any Associate of the Concessionaire or the Operating


Company engaged within Liberia solely in Production or Operations exclusively


for the Concessionaire or (he Operating Company (other than incidental activity)








48


shall be entitled to the same income tax and customs duty treatment as the


Concessionaire and the Operating Company, provided that its activities otherwise


conform to the requirements of this Agreement applicable to Concessionaire or


the Operating Company, including without limitation auditing and reporting


provisions. Incidental activity shall be limited to services to the Government,


local community groups and residents local to the concession area other than


major commercial entities. Such incidental activity, even if for profit, shall not


cause such Associate to lose the tax and customs treatment provided pursuant to


this Section 14.5 with respect to imports lor and income from Production and


Operations. The Government shall have the right to treat the Concessionaire, the


Operating Company and their Affiliates (but not Associates who are not


Affiliates) as a single consolidated entity for purposes of Liberian tax. Any


activities of such Affiliates within Liberia that are outside of Production and


Operations other than incidental activity shall be disaggregated from the taxable


income of the single consolidated entity.


14.6 Single Project All Class A Mining licenses granted pursuant to this Agreement


may be treated as a single “project" as defined in Section 700(c)(2) of Schedule 6


and a single “mining project” as defined in Section 740 of Schedule 6.


SECTION 15 - ROYALTIES AND SURFACE RENT


15.1 Royalties.


a. Except as may be provided by amendment to the Revenue


Code subsequent to the Effective Date, the Concessionaire shall no later


than 30 days following the date of (i) shipment (in the case of exports by


the Concessionaire); or (ji) of sale or other disposition (whichever is


earlier), in the case of transactions in which the Concessionaire transfers


title to Product(s) before the Product(s) leave Liberia, pay to the general


revenue account of the Government a royalty for Product(s) in that


shipment (or subject to such sale or other disposition) at the percentage


rate stated in subsection (b) times the Reference Price for each unit of


Product, FOB Liberia (such payment collectively, the “Royalty"). Each


payment shall be accompanied by a statement from the Concessionaire


showing in such reasonable detail as the Ministry of Finance may require


the basis of computation of Royalties due.


b. The royalty rate for shipments or sales of Iron Ore in any


month during the Term shall be as follows: (i) when the Index Price is


US$100 per metric ton or less the royalty will be 3.25%, (ii) when the


Index price is greater than US$100 per metric ton and less than US$125


per metric ton, the royalty will be 3.5%. (iii) when the Index Price is


greater than US$125 per metric ton and less than US$150 per metric ton.








49











/


the royalty will be 4.0%, and (jv) when the Index Price is US$150 per


metric ton or more the royalty will be 4.5%. The “Index Price” shall be


the CVRD spot price FOB Brazil for shipment to China for the same


product of equivalent grade and quality produced at Bong.


15.2 Advance Pricing Agreement. As provided for in Sections 702(a) and 702(c) of


Schedule 6 attached hereto the parties shall enter into an Advance Pricing


Agreement no later than one-hundred twenty days after the Effective Date


establishing the deemed value of Iron Ore shipped or sold FOB Monrovia for


income tax and royalty purposes (the “Reference Price,?). The Reference Price


shall be equal to the CVRD annual contract price FOB Brazil for shipments to


China of the Product adjusted for the quantity, transportation and quality of the


same Product produced by the Concessionaire. The Advanced Pricing Agreement


shall set out in detail how such adjustments shall be calculated. The Parties


hereto agree that if either Party believes the Reference Price established by the


Advance Pricing Agreement is no longer representative of arms-length prices for


export sales, they will agree upon a new index and methodology for determining


the deemed value of the Product(s) which shall be reflected in a revised Advance


Pricing Agreement. Failing agreement between the parties, the Reference Price,


which shall be an arms-length price for export sales, shall be determined by a


single arbitrator as provided by Section 26.4, such arbitrator to be a recognized


expert in the pricing of Iron Ore. The Advance Pricing Agreement and any


revisions thereof shall be made public as provided in Section 702(c) of Schedule


6.


15.3 Royalties on Minerals Purchased bv the Concessionaire for Sale or Processing


and Sale. Unless otherwise provided in generally applicable regulations issued by


the Minister of Finance, Royalties will not be payable by the Concessionaire on


purchases of Minerals and materials locally from other parties for processing,


smelting, refining or manufacturing by the Concessionaire, provided that the


Concessionaire may be required to act as a withholding agent in accordance with


generally applicable regulations issued by the Minister of Finance. The


Concessionaire shall maintain such records as the Minister of Finance may


require with respect to such purchases.


15.4 Surface Rent. In lieu of the amounts prescribed by Schedule 6, Surface Rent for


all Land within the Concession Area shall be US$100,000 per year for the first 10


years after the Effective Date and US$250,000 per year for the next 15 years.


15.5 Water Use Levy. The Concessionaire shall not be subject to any water use levy or


similar charge for water use in connection with Operations.














50


 SECTION 16 - OTHER PAYMENTS TO THE GOVERNMENT





16.1 ECOWAS Trade Levy. The Concessionaire shall be subject to the ECOWAS


Trade Levy on all goods from non-ECOWAS states which it imports into Liberia


at the rate established by applicable Law.


16.2 Inspection Fees. The Concessionaire shall be subject to inspection on all imports


and exports. The Concessionaire shall utilize the services of BIVAC or another


internationally recognized inspection service. The selected inspection service


shall report all information in accordance with the requirements of the Ministry of


Finance.


16.3 Regulatory Fees. The Concessionaire shall pay such Taxes and Duties Q) as are


generally applicable under Law in Liberia with respect to driver’s licenses,


vehicle registrations, corporate registration, residency and work permits and other


such regulatory fees, licenses and permits that arise either from the grant by the


Government of regulatory fees, licenses or permits or from the requirement under


Law for registration with the Government incident to doing business or


conducting activities in Liberia or (ii) as are reasonably related to the cost of


providing the service to which the fee applies.


16.4 Mineral Development and Research Fund. On the First Payment Date and


pursuant to Section 18.4 of the Mining Law, the Concessionaire shall make a one¬


time payment to the Government of US$50,000. Such amounts shall be paid into


the general account of the Minister of Finance for the Mineral Development Fund.


16.5 Other Support. The Concessionaire shall also make an annual contribution of


US$100,000 during the Term of this Agreement, with the first annual payment


due on the First Payment Date. Subsequent contributions shall be made on each


anniversary of the Effective Date. Such amounts shall be paid into the general


revenue account of the Government for the Scientific Research Fund.


16.6 Up-front Payment. In consideration of the rights granted to it hereunder, the


Concessionaire shall pay the Government US$40,000,000 in cash, of which


US$20,000,000 shall be paid on the later of 3 days after the Effective Date or 3


days after the issuance of the SAFE approval for purchase of requisite foreign


currency (“SAFE Approval”) and the remaining US$20,000,000 shall be paid on


the later of 120 days after Effective Date or 3 days after the issuance of SAFE


Approval, provided that, prior thereto (i) the Government shall have handed over


the Initial Concession Area to the Concessionaire and made the Railroad and Port


available to the Concessionaire in accordance with the terms of this Agreement,


(ii) the Minister of Justice shall have delivered to the Concessionaire an opinion


stating that the Initial Concession Area is free of encumbrances (which opinion











51

















y/'


shall be authenticated by a local justice of the peace) and (iii) the fact that the


actions described in the foregoing clauses (ii) and (iii) shall have been published.


SECTION 17 - FINANCIAL REPORTING, CURRENCY AND


OTHER MATTERS REGARDING PAYMENTS


17.1 Accounting. All of the Operating Company’s accounting under this Agreement


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


transactions carried out, in currency that is Liberian Currency or in any other


currency other than Dollars shall be converted to Dollars in accordance with and


pursuant to GAAP or IFRS, as applicable, based upon the Prevailing Market Rate


of Exchange of Dollars and any such currency at the date of the applicable


transaction.


17.2 Exchange Control. The Concessionaire shall at all times have the right, without


restriction, directly or indirectly, to obtain, hold, deal with and disburse funds in


such manner, currencies and places as it chooses. Without prejudice to the


generality of the foregoing, the Concessionaire shall have the unrestricted and


unencumbered right to sell and receive payment for Product(s) in any currency,


including the currency in which the Product(s) are sold, and all proceeds


therefrom may be deposited in bank accounts outside of Liberia and held there or


remitted therefrom to anywhere in the world, in any currency. Notwithstanding


the foregoing, the Concessionaire shall maintain at least one account with a bank


or financial institution in Liberia. The Concessionaire shall also have the right to


acquire from, and sell to, any Person currency that is legal tender in Liberia at the


Prevailing Market Rate of Exchange. Additionally, any and all transactions


between the Government and the Concessionaire dealing with or referring to


currency that is legal tender in the Liberia will be converted to Dollars at the


Prevailing Market Rate of Exchange on the date of such transaction. Currency


gains or losses for purposes of Section 14 shall be determined by reference to the


Prevailing Market Rate of Exchange.


17.3 Currency of Payment. Except as otherwise expressly provided in this Agreement,


payment of the Concessionaire’s obligations to the Government under this


Agreement, including obligations for Taxes and Duties payable as a consequence


of the Concessionaire’s Operations, shall be in Dollars. Any obligation originally


stated in Liberian Currency shall be converted to Dollars at the Prevailing Market


Rate of Exchange. The Concessionaire shall make payments of sums the


Concessionaire collects on behalf of the Government, including, but not limited


to, taxes withheld from the salaries or wages of its employees, and any other sums


payable to other Persons from which a portion is required by applicable Law to be


withheld or retained by the Concessionaire on behalf of the Government, in the


currency in which such salaries or wages or such other sums are paid. For


purposes of determining compliance by the Concessionaire of required payments








52


in Liberian Currency under any applicable Law (including without limitation any


Law determining minimum wages), the amount of any payment by the


Concessionaire made in Dollars shall be converted to Liberian Currency at the


Prevailing Market Rate of Exchange as of the date of payment.


17.4 Right to Remit and Receive Payments. The Concessionaire shall have the right to


remit and receive in Dollars all payments of dividends, interest, finance charges,


principal, management fees and other properly payable items arising from, as a


result of, or related to Operations. All remittances and receipts of such payments


shall be free of any penalties in connection with such remittances or receipts, any


required total or partial surrender, exchange or confiscation of Dollars received or


to be remitted, and any other direct or indirect restriction on such remittances or


receipts.


17.5 Compliance with LEITI. The Concessionaire shall comply with requirements of


the Liberian Extractive Industries Transparency with respect to all payments to be


made by it pursuant to this Agreement.


17.6 Financial Statements and Audit.





a. Each of the Concessionaire and the Operating Company shall


deliver to the Government within 90 days after the end of each of its


respective Financial Years, or within such shorter period as may then be


required by applicable Law:


i) a balance sheet of the Concessionaire or the Operating Company,


as applicable, as at the end of such year, and


ii) statements of income, changes in shareholders’ equity and cash





flows of the Concessionaire or the Operating Company, as


applicable, for such year,





setting forth in each case in comparative form the figures for the previous


fiscal year, all in reasonable detail, and certified by the chief financial


officer of the Concessionaire or the Operating Company, as applicable, as


having been prepared in accordance with generally accepted accounting


principles in the United States (“GAAP”) or International Financial


Reporting Standards (“IFRS”), consistently applied except as otherwise


noted.





b. Such financial statements shall be accompanied by an opinion


thereon of independent public accountants of recognized international


standing, which opinion shall state that such financial statements present


fairly, in all material respects, the financial position of the companies








53

















&


being reported upon and their results of Operations and cash flows and


have been prepared in conformity with GAAP or IFRS, consistently


applied except as otherwise noted, that the examination of such


accountants in connection with such financial statements has been made in


accordance with generally accepted auditing standards, and that such audit


provides a reasonable basis for such opinion in the circumstances.


Each year’s financial statements shall be accompanied by a


certificate of the chief financial officer of the Concessionaire or the


Operating Company, as applicable, to the effect that during the Financial


Year then ended the Concessionaire or the Operating Company, as


applicable, was in compliance with (1) Section 20.3, (2) Section 20.5


(setting forth in such certificate the value of the ratio provided for in such


Section as at the end of each quarter of such Financial Year) and


(3) Section 20.8 (or setting forth the extent of non-compliance at such time


(if any) and the actions taken and being taken to remedy such non-


compliance), and has made all deposits or contributions (if any) required


by the closure management component of the applicable approved EMP.


Each year’s financial statements shall be accompanied by a


listing of all transactions with Affiliates of the Concessionaire or the


Operating Company, as applicable, or any of its respective shareholders,


whether or not reflected in such financial statements, identifying the


amount of the transaction, the Affiliate involved, the shareholder of which


such entity is an Affiliate, and the nature of the transaction, certified by


the chief financial officer of the Concessionaire or the Operating


Company, as applicable, as being correct and complete. Transactions of


the same type with the same entity that are individually immaterial may be


aggregated rather than separately listed. Each of the Concessionaire and


the Operating Company shall maintain contemporaneous documentation


of each such transaction with an Affiliate evidencing that the pricing of the


transaction was negotiated at arms-length.


If the Minister or the Government determines that it is


necessary for it to cause an independent review or audit of the


Concessionaire’s or the Operating Company’s own records or books or


those of any Affiliate outside of Liberia, the Concessionaire will cooperate


to provide the Government with copies of the information, books and


records needed to complete the review or audit. If the Government


nonetheless deems it necessary for any part of such audit to be performed


outside of Liberia, the cost of associated travel will be borne by the


Government except to the extent that the Concessionaire or the Operating


Company is unable to provide the information, books or records needed to


 complete the audit in Liberia, in which case the Concessionaire or the


Operating Company, as applicable, shall bear both the reasonable travel


cost of a reasonable number of auditors selected by the Government to


travel to the place where such information, books and records may be


obtained and their accommodation costs for a reasonable amount of time


necessary to complete their review.





SECTION 18 - INCIDENTAL RIGHTS AND OTHER MATTERS





18.1 Imports. The Concessionaire may, in accordance with applicable Law, import


and use for Operations, and subsequently export, any and all machinery,


equipment, vehicles, supplies, consumable items, fuels, petroleum products,


explosives and any other thing whatsoever reasonably required with respect to


Operations. The Concessionaire must at all times comply with applicable Law


regarding the safe use, sale, disposal and security of fuels, petroleum products,


and explosives.


18.2 Taxes on Resale of Imported Items. The Concessionaire may sell, in Liberia, all


imported items that are no longer needed for Operations, except that the


Concessionaire may not sell explosives, gasoline or diesel within Liberia to third


parties without the Government’s consent. If such imported items were exempted


in all or in part from Taxes and Duties on import into Liberia, then the


Concessionaire must, upon their sale, pay to the Government those Taxes and


Duties that would otherwise have been payable under applicable Law on such


items and fulfil all formalities required by Law in connection with such sales.


18.3 Right to Export Minerals and Other Rights. The Concessionaire (i) may, directly


or through appropriate contractual arrangements, market and sell the Product(s)


obtained from Operations during the Term of the relevant Mining License to any


Person in any country or state, subject in all cases to applicable Law and the


provisions of this Agreement, and (ii) subject to its obligations to pay Royalty,


Taxes and Duties and such other payments to the Government under this


Agreement, may receive all income and proceeds from such sales and deposit


them in banks within Liberia and outside of Liberia of its own choosing (provided


that the approval of the Central Bank of Liberia for the choice of external bank, if


required by applicable Law, shall be obtained in accordance with applicable


Law).


18.4 Dealership Licenses. The Concessionaire is not entitled to acquire a dealership


license under the Mining Law. This restriction does not bar an Affiliate of the


Concessionaire from acquiring such a license if the Affiliate does not purchase


Minerals or Products from the Concessionaire.











55


 SECTION 19 - ADDITIONAL UNDERTAKINGS OF THE


GOVERNMENT





19.1 Access to Information. The Concessionaire is entitled to obtain access to all


geological or other information relating to the Concession Area that is owned by


or subject to the control of the Government, except for information required to be


kept confidential pursuant to the terms of applicable Law or specific arrangements


with third parties. The Government agrees to provide such information within a


reasonable time after receipt of notice of a request for such information. The costs


charged by the Government shall not exceed the rates generally charged other


holders of Exploration Licenses or Class A mining licenses, as the case may be,


for similar information in similar quantities.


19.2 Provision of Documents. Subject to Section 11.1 and except to the extent any


such Person may be disqualified by applicable Law, the Government shall


promptly furnish to each officer, director and employee of the Concessionaire or


the Operating Company who is not a citizen of Liberia, and to the spouse and


minor children of each such Person, all documents and visas necessary to enable


such Person to enter and to leave, or travel within, the territory of Liberia.


19.3 Electricity Generation and Transmission.


a. The Concessionaire is entitled to provide for the installation of


electric generating capacity to meet its reasonable needs for conducting


Operations in Liberia and in connection therewith to construct necessary


Infrastructure in accordance with the Modified Bid Materials, including (i)


construction of a heavy-oil power plant, (H) development of a


hydroelectric power plant at station SP1 on the St. Paul River near Hyendi


town with a generating capacity of 130 MW (the “Hydro-Power Plant”),


and (Hi) the purchase of another 100 MW of power from other


hydroelectric power plants in the St. Paul River Basin, leading to a total


capacity of 230MW of power as a result of the activities described in


clauses (ii) and (Hi). The Hydro-Power Plant shall be designed,


constructed and operated in compliance with the National Power


Development Plan for the St. Paul River Basin. The Concessionaire shall


provide technical information regarding development plans for the Hydro-


Power Plant to the Government’s technical advisors, and shall also enter


into additional agreements with the Government and other third party


developers regarding technical, operational, ownership and economic


matters related to the Hydro-Power Plant. In all cases, the Concessionaire


will be subject to the requirements of any applicable Law regulating the


manner in which any such facilities shall be constructed and operated for


the safety of the public or protection of the environment.








56


 b. To the extent power is solely for the Concessionaire’s own use,


(including use in housing constructed by the Concessionaire for its


employees and in community facilities constructed or funded by the


Concessionaire) the Concessionaire shall have no liability for any


franchise, license or similar fees otherwise imposed by applicable Law on


or in connection with the generation, transmission or sale of electricity.


Except as otherwise restricted by Law, if the Concessionaire produces


more electricity than it can utilize, it shall sell the extra production to the


Government, and if the Government declines to buy, to other third party


users, in each case at a price equal to costs plus a reasonable profit margin


to be agreed upon by the Concessionaire and Government. The Minister


may impose by regulation such reporting and audit requirements as are


reasonable for the fair determination of running and capital costs required


by the preceding sentence. To the extent power is sold to third parties in


accordance with this Section 19.3, the Concessionaire shall have no


liability for any franchise, license or similar fees otherwise imposed by


applicable Law on or in connection with the generation or transmission of


electricity, but shall be liable for any tax or fees imposed by applicable


Law on the sale of electricity, including any service tax.





19.4 Communications Facilities. Systems and Frequencies. Provided that the


Concessionaire complies with applicable Law, the Government will use its


reasonable efforts to facilitate (a) the receipt by the Concessionaire from the


Government of such rights, licenses, registrations, permits and other


authorisations as may be required by applicable Law in connection with the


possession, use, importation or purchase of such communications systems as are


necessary for internal communications, including radio, telecommunications,


electronic mail systems, satellite networks, cellular systems, microwave devices


and other communications devices and systems, and (b) to the extent available


from the Government, the obtaining by the Concessionaire of the right to utilize,


at generally available rates, of a number reasonably adequate for Operations of


broadcast and communications frequencies for both domestic and international


use.


19.5 Expropriation. Subject to Article 24 of the Constitution of Liberia, the


Government undertakes not to expropriate except upon payment of prompt and


adequate compensation:


a. any Mining Plant, Infrastructure or other property of the


Concessionaire to the extent used in, connected with or affecting


Operations; or


 b. Minerals the Mining of which is authorized under the Mining


License(s) resulting from Operations or the Product(s) derived therefore;


or





c. any equity, shares or ownership interests of whatever nature


held in or issued by the Concessionaire.


19.6 Covenant of Quiet Enjoyment. The Government hereby warrants, and defends


the Concessionaire’s title to, possession and peaceful enjoyment of all rights


granted to it by this Agreement, provided that the Government makes no warranty


with respect to any claim that may arise out of any rights of third parties in the


Contiguous Area with whom the Concessionaire has negotiated as described in


Section 3.2.


19.7 Use of Existing Public Utilities and Facilities; Integration with Concessionaire


Infrastructure.





a. The Concessionaire may purchase services from public utilities


and other facilities (such as toll bridges, airports and harbour facilities)


operated or provided by the Government, or by any other Person under


license or authority of the Government, to the extent adequate (after taking


into account the public use thereof) in the reasonable judgment of the


Government to meet the Concessionaire’s needs with respect to


Operations. The Government shall ensure that all charges for, and other


terms and conditions of, the use by the Concessionaire of public


Infrastructure are fair and reasonable, taking into account the cost of


providing such Infrastructure and the relative availability of alternatives to


the Concessionaire and to other users of such Infrastructure. The


Government may limit the access of the Concessionaire to any such public


Infrastructure to the extent necessary to meet the demands of the general


public, but in any such case of insufficient capacity to provide for the


needs of both the general public and the Concessionaire (and users


similarly situated with the Concessionaire), the Minister and the


Concessionaire (and such similarly situated users) shall in good faith


consider how additional capacity can be provided in a manner that fairly


allocates the additional costs of providing and operating capacity in excess


of that required by the general public to the Concessionaire (and others


similarly situated).


b. The Government shall use its reasonable efforts to assist the


Concessionaire to integrate any item of Infrastructure acquired or


constructed by the Concessionaire and described in the Modified Bid


Materials or an Approved Feasibility Study with similar existing public


utilities or facilities operated or provided by the Government, or by any


other Person under license or authority of the Government, to the extent


reasonable in connection with Operations and consistent with the needs of


the general public.


c. The Government reserves the right (either directly or through


such state owned or controlled corporations or entities as are permitted by


applicable Law to exercise such a right), on reasonable notice to and after


consultation with the Concessionaire, to construct roads, highways,


railroads, power, telegraph and telephone lines and other lines of


communication within the Concession Area or the Production Areas if


such action is in the public interest. The Government will take account of


the reasonable concerns of the Concessionaire, and seek to minimize any


disruption or interruption to the conduct of Operations. In the event of


unavoidable disruption or interruption to Operations in a Production Area


attributable to such construction, the Government shall compensate the


Concessionaire for any verifiable direct, out of pocket additional costs


incurred by the Concessionaire and attributable to such disruption or


interruption and shall indemnify and hold harmless the Concessionaire


from all claims by third parties for damages attributable to the negligence


or misconduct of the Government or contractors retained by the


Government in connection with such construction.


19.8 Indemnification of the Concessionaire and the Operating Company bv the


Government. The Government shall at all times indemnify and hold harmless


each of the Concessionaire and the Operating Company from all claims and


liabilities arising out of a breach of the covenant set forth in Section 19.6 or a


breach of its representation and warranty set forth in Section 21.2(b).


19.9 Non-Discrimination. The Government shall not enact any Law specifically


intended to discriminate against the Concessionaire or the Operating Company, or


any Affiliates.


SECTION 20 - OTHER UNDERTAKINGS OF THE


CONCESSIONAIRE AND THE OPERATING COMPANY


20.1 Indemnification of the Government bv the Concessionaire and the Operating


Company. Each of the Concessionaire and the Operating Company shall at all


times indemnify and hold harmless the Government and its officers and agents


from all claims and liabilities for death or injury to Persons or damage to property


from any cause whatsoever arising out of its Operations (except liability arising or


in connection with the environmental or safety hazard existing before the


handover of the relevant assets by the Government to the Concessionaire or


Operating Company) or as a result of its failure to comply with any Law to which


it is subject.





59





l





20.2 Books and Records. Each of the Concessionaire and the Operating Company will


maintain proper books of record and account in conformity with GAAP or IFRS,


as applicable under Section 17.6(a), and with all applicable requirements of Law.


20.3 Subsidiaries: Investments. Except for the Concessionaire’s investment in the


Operating Company, neither the Concessionaire nor the Operating Company may


have Subsidiaries or make investments in others. For the purposes of this Section


20.3, an “investment” includes any investment, made in cash or by delivery of


property, by the Concessionaire or the Operating Company, as applicable, in any


Person, whether by acquisition of stock, Indebtedness or other obligation or


security of any Person, or by loan, guarantee, advance, capital contribution or


otherwise in favour of any Person, or in any property other than property,


including equity shares, acquired in connection with any Operations described in


the Modified Bid Materials or an Approved Feasibility Study. This Section does


not limit the ability of the Concessionaire or the Operating Company to invest


excess funds in debt instruments, money market funds, or similar obligations


issued (in each case) by entities that are not Affiliates of the Concessionaire or the


Operating Company, or to make reasonable prepayments and progress payments


in connection with the construction of any Non-Goma Mine, Goma Mine,


Additional Concession Area Mine, Contiguous Area Mine, Mining Plant or


Infrastructure.


20.4 Adequate Capital.


a. The Concessionaire and the Operating Company, on a


consolidated basis, must at all times maintain a ratio of Indebtedness to


Net Worth that is equal to or lower than 3:1. Prior to satisfaction of each


of the Phase I Capacity Test and the Phase II Capacity Test, the


Concessionaire may make no Restricted Payment.


b. After satisfaction of each of the Phase I Capacity Test and the


Phase II Capacity Test, the Concessionaire may not make any Restricted


Payment unless after giving effect thereto, the ratio of Indebtedness to Net


Worth of the Concessionaire and the Operating Company, on a


consolidated basis, does not exceed 3:1. For purposes of this Section 20.5,


the amount of any Restricted Payment made in property is be the greater


of (x) the fair market value of such property (as determined in good faith


by the board of directors of the Concessionaire and of the Operating


Company) and (y) the net book value thereof on the books of the


Concessionaire and of the Operating Company, in each case determined as


of the date on which such payment is made.


c. “Indebtedness” means, at any time, without duplication,











60


i) the liabilities of the Concessionaire and the Operating Company,


on a consolidated basis, for borrowed money and the redemption


obligations of the Concessionaire and the Operating Company in


respect of mandatorily redeemable shares or other securities of the


Concessionaire and the Operating Company that are entitled to


preference or priority over any other shares of the capital stock of


the Concessionaire and the Operating Company in respect of


payment of dividends or distribution of assets upon liquidation;


ii) the liabilities of the Concessionaire and the Operating Company,


on a consolidated basis, for the deferred purchase price of property


acquired by the Concessionaire or the Operating Company


(excluding accounts payable arising in the ordinary course of


business but including all liabilities created or arising under any


conditional sale or other title retention agreement with respect to


any such property);


iii) all liabilities appearing on the Concessionaire’s or the Operating


Company’s balance sheets in accordance with GAAP or IFRS, as


applicable, under Section 17.6(a) in respect of leases with respect


to which the Concessionaire or the Operating Company are


required concurrently to recognize the acquisition of an asset and


the incurrence of a liability in accordance with GAAP or IFRS, as


applicable, under Section 17.6(a);


iv) all liabilities for borrowed money secured by any Lien upon or


with respect to any property or asset of the Concessionaire or the


Operating Company (whether or not it has assumed or otherwise


become liable for such liabilities);


v) all liabilities of the Concessionaire and the Operating Company in


respect of letters of credit or instruments serving a similar function


issued or accepted for its account by banks and other financial


institutions representing or supporting the payment of obligations


referred to in clauses (]) through (jv) hereof; and


vi) any guarantee or similar undertaking of the Concessionaire or the


Operating Company with respect to liabilities of a type described


in any of clauses (i) through (v) hereof.


Indebtedness of the Concessionaire and the Operating Company shall also


include all obligations of the Concessionaire and the Operating Company


of the character described in clauses (i) through (v) to the extent the


Concessionaire or the Operating Company remains legally liable in


respect thereof.


d. ''Net Worth” means:


i) the total assets of the Concessionaire and the Operating Company,


on a consolidated basis, which would be shown as assets on a


balance sheet of the Concessionaire or the Operating Company as


of such time prepared in accordance with GAAP or IFRS, as


applicable under Section 17.6(a), minus


ii) the total liabilities of the Concessionaire and the Operating


Company, on a consolidated basis, which would be shown as


liabilities on a balance sheet of the Concessionaire or the Operating


Company as of such time prepared in accordance with GAAP or


IFRS, as applicable under Section 17.6(a),


e. “Restricted Payment” means Q) any dividends or other


distributions or payments on capital stock or other equity interest of the


Concessionaire or the Operating Company (except distributions in such


stock or other equity interest); (jj) the redemption or acquisition of any


stock or other equity interests in the Concessionaire or the Operating


Company or of warrants, rights or other options to purchase such stock or


other equity interests (except when solely in exchange for such stock or


other equity interests) unless made, contemporaneously, from the net


proceeds of a sale of such stock or other equity interests, including,


without limitation, any such action resulting in the acquisition by the


Concessionaire or the Operating Company of securities that would


constitute treasury stock, or (iii) any payment, repayment, redemption,


retirement, repurchase or other acquisition, direct or indirect, by the


Concessionaire or the Operating Company of, on account of, or in respect


of, the principal of any subordinated debt (or any instalment thereof)


issued by the Concessionaire or the Operating Company, any shareholder


of the Concessionaire or the Operating Company, or any Affiliate of


either.


f. The deductibility or other treatment of any interest payments


by the Concessionaire for purposes of Taxes and Duties shall be governed


by applicable Law and shall be unaffected by this Section 20.5.


20.5 Provision of Funds. The Concessionaire shall ensure that each of it and the


Operating has a prudent capital structure and is provided with adequate funds as


and when needed to ensure timely Development and performance of Operations


in accordance with and within the limits defined in the Modified Bid Materials


 and any Approved Feasibility Study and in compliance with the requirements of


Section 20.5.





20.6 Transactions with Affiliates. Neither the Concessionaire nor the Operating


Company will enter into directly or indirectly any transaction or group of related


transactions (including without limitation the purchase, lease, sale or exchange of


properties of any kind or the rendering of any service) with any Affiliate, except


in the ordinary course and pursuant to the reasonable requirements of its


respective business and upon fair and reasonable terms no less favourable to it


than would be obtainable in a comparable arm’s-length transaction with a Person


not an Affiliate. In addition, any transaction between the Concessionaire or the


Operating Company, on the one hand, and an Affiliate or either of them, on the


other hand, involving Product(s) shall be on the basis of competitive international


prices and such other terms and conditions as would be fair and reasonable had


the transaction taken place between unrelated parties dealing at arms’ length and


shall otherwise comply with Section 15.2.


20.7 Jurisdiction of Organization: Maintenance of Existence. The Concessionaire must


at all times be a corporation organized under the laws of Hong Kong and shall not


be wound up prior to the completion of the closure management plan referred to


in Section 5.2(b), provided the Concessionaire may be wound up prior to the


completion of such plan if the Concessionaire provides full funding for such plan


in the amount and in the manner approved by the Minister of Finance in its sole


discretion as sufficient to fund the closure management budget referred to in


Section 5.2(b) as well as any other reasonable closure costs.


20.8 Application for SAFE Approval. Within 90 days of the Effective Date, the


Concessionaire shall obtain the approval of the People’s Republic of China State


Administration for Foreign Exchange of the first payment due under Section 16.6


of this Agreement and of the first installments of the other payments due under


this Agreement (the “SAFE Approval”).


20.9 Production of Products Other Than Iron Ore Concentrates. Without the prior


written approval of the Government, the Concessionaire shall not produce any


product containing Iron Ore other than concentrates.





SECTION 21 - REPRESENTATIONS AND WARRANTIES





21.1 Representations and Warranties of the Concessionaire. The Concessionaire


represents and warrants to the Government as follows:





a. The Concessionaire is a corporation duly organized, validly


existing and in good standing under the laws of the jurisdiction of its











63


formation, and has the corporate power and authority to execute, deliver


and perform its obligations under this Agreement.


b. This Agreement has been duly authorized by all necessary


corporate action on the part of the Concessionaire, and this Agreement


constitutes a legal, valid and binding obligation of the Concessionaire


enforceable against the Concessionaire in accordance with its terms,


except as such enforceability may be limited by (i) applicable bankruptcy,


insolvency, reorganization, moratorium or other similar laws affecting the


enforcement of creditors’ rights generally and (ii) general principles of


equity (regardless of whether such enforceability is considered in a


proceeding in equity or at law).


c. Schedule 21.1 (c) contains (except as noted therein) complete


and correct lists or tables setting forth:


i) the Concessionaire’s Shareholders,


ii) the Concessionaire’s and each shareholder’s Affiliates showing


forth, in each case, its relationship to the Concessionaire or the


Shareholder and the jurisdiction in which it is organized,


iii) the directors and senior officers of the Concessionaire, each


shareholder of the Concessionaire, and each Person or Group


deemed to Control the Concessionaire, and


iv) each Person or Group that is the ultimate beneficial owner of 5%


or more of (x) the voting rights ordinarily empowered to control


the management of the Concessionaire or (y) the rights to share in


the profits of the Concessionaire, and the chain through which such


rights are exercised.


d. None of the Affiliates, directors, officers or other Persons


identified in Schedule 21.1(c) is a Prohibited Person and the


Concessionaire, each of its shareholders and each of their respective


officers and directors is an “Eligible Applicant” under the Mining Law.


e. The execution, delivery and performance by the


Concessionaire of this Agreement will not (i) contravene, result in any


breach of, or constitute a default under any agreement or instrument to


which the Concessionaire is a party or by which or any of its properties are


bound or affected, (n) conflict with or result in a breach of any of the


terms, conditions or provisions of any order, judgment, decree, or ruling of


any court, arbitrator or governmental authority applicable to the








64


Concessionaire or (iii) subject to the issuance of the SAFE Approval,


violate any provision of any statute or other rule or regulation of any


governmental authority applicable to the Concessionaire.


f. There are no actions, suits, investigations or proceedings


pending or, to the knowledge of the Concessionaire, threatened, against or


affecting the Concessionaire or any property of the Concessionaire in any


court or before any arbitrator of any kind or before or by any


governmental authority that call into question the right of the


Concessionaire to enter into and perform its obligations under this


Agreement or that would, if resolved against the Concessionaire, would


materially adversely affect its ability to perform its obligations under this


Agreement.


g. Except as has previously been disclosed to the Minister and the


EPA in writing, neither the Concessionaire nor any Affiliate of the


Concessionaire has been determined under any order, judgment, decree or


ruling of any court, arbitrator or governmental authority to be in material


violation of (!) any applicable law, ordinance, rule or regulation relating to


the protection of the environment of any governmental authority or


(li) any agreement pursuant to which it is entitled to extract Minerals or


hydrocarbons under the laws of any jurisdiction.


h. The Concessionaire has the experience, finance, expertise,


technical know-how and systems required for the conduct of the activities


contemplated by this Agreement.


i. None of the Concessionaire, any Affiliate of the


Concessionaire or any Person acting on behalf of the Concessionaire or


any Affiliate of the Concessionaire has made or promised to make any


payment or transfer of anything of value, directly or indirectly, to or for


the benefit of an Official or an Official’s family member or to an


intermediary for payment to or for the benefit of an Official or an


Official’s family member in connection with this Agreement or the


transactions contemplated hereby. (For the purposes of this paragraph,


“Official” means any employee or officer of the Government, including


any regional or local department or agency thereof, any enterprise owned


or controlled by the Government, any official of a political party in


Liberia, any official or employee of a public international organization,


any other person acting in an official capacity for, or on behalf of, any


such entity, or any candidate for political office in Liberia.)














65





?





21.2 Representations and Warranties of the Government. The Government represents


and warrants to the Concessionaire and the Operating Company as follows:


a. On the Effective Date, the execution, delivery and performance of


this Agreement will have received all necessary governmental approvals


and authorizations and will constitute the legal, valid and binding


obligation of the Government.


b. Any portion of the Concession Area granted to the Concessionaire


shall be state owned land, free and clear of all Liens and other rights of


third parties as of the date the use of that portion of the Concession Area is


granted to the Concessionaire pursuant to Section 3.1, provided that the


Government makes no representation or warranty hereunder in respect of


the rights of third parties in the Contiguous Area with whom the


Concessionaire has negotiated as described in Section 3.2.


SECTION 22 - ASSIGNMENT, ENCUMBRANCE AND


CHANGE OF CONTROL


22.1 General Rules. Except as provided in this Section 22, (a) no sale, assignment,


pledge or other transfer of the rights of the Concessionaire or the Operating


Company under this Agreement or under any Exploration License or Mining


License issued under this Agreement, by operation of law or otherwise, (b) no


direct or indirect transfer of Management Rights with respect to the


Concessionaire or the Operating Company, or of the right to share in profits of the


Concessionaire or the Operating Company, by operation of law or otherwise, and


(c) no transfers by the Concessionaire or the Operating Company other than in the


ordinary course of renewal and replacement of its properties of any interest in any


Non-Goma Mine, Goma Mine, Mining Plant or Infrastructure to any Person is


valid unless it has received the prior written consent of the Government. Terms


used in this Section 22 are defined in Section 22.9.


22.2 Transfers to Operating Company. The Concessionaire may appoint the Operating


Company to conduct the Operations on its behalf in accordance with the terms


and conditions of this Agreement and of any operating or other agreement


between the Concessionaire and the Operating Company (the “Bong Project


Operating Agreement”), provided, that at all times the Operating Company shall


be a wholly-owned subsidiary of the Concessionaire and shall be incorporated in


Liberia. Prior to the Effective Date, the Concessionaire shall deliver to the


Government a complete and accurate copy of the Bong Project Operating


Agreement and subsequent to the Effective Date, the Concessionaire shall deliver


to the Government a complete and accurate copy of any and all amendments to


the Bong Project Operating Agreement, in each case within 3 Business Days after











66






















the effective date thereof. AH rights, obligations and undertakings of the


Concessionaire provided in this Agreement in connection with the Operations


shall be deemed assigned to and assumed by the Operating Company to the extent


applicable and appropriate for purposes of conducting the Operations and, except


for any provision of this Agreement that specifically refers to the Operating


Company, for purposes of this Agreement, other than in this Section 22, the term


“Concessionaire” shall be deemed to mean the Operating Company when


referring to any activities undertaken by the Operating Company pursuant to the


Bong Operating Agreement, provided that the Operating Company may not


engage in any transaction described in Section 22.3 or 22.4 without the prior


consent of the Government.


22.3 Other Transfers Permitted Without Prior Consent.





a. The transfer of rights under this Agreement and under any


Exploration License or Mining License issued under this Agreement as a


consequence of a merger or consolidation of the Concessionaire with


another entity does not require such consent if the transaction does not


result in a Change of Control, the surviving entity is a corporation


organized under the laws of Hong Kong that delivers to the Minister


concurrently with such merger or consolidation written representations


and warranties as to such corporation as set forth in Section 21.1


immediately after giving effect to such merger or consolidation and


assumes in a writing satisfactory to the Government all liabilities of the


Concessionaire under this Agreement and under any Exploration License


or Mining License issued under this Agreement, and (i) the survivor is an


“Eligible Applicant” under the Mining Law and a Permitted Transferee


under Section 22.6, and (ii) the survivor has in the reasonable judgment of


the Minister the technical skills, experience, and financial resources


necessary to carry out its obligations under this Agreement and under any


such Exploration and Mining Licenses.





b. A transfer by the Concessionaire of all of its interest in this


Agreement and under any Exploration License or Mining License issued


under this Agreement and to the related Mine, Mining Plant and


Infrastructure to an Affiliate of the Concessionaire at a time at which the


Concessionaire is not in default in the performance of its obligations under


this Agreement does not require such consent if the beneficial owners of


the right to share in profits of the Affiliate and the holders of Management


Rights with respect to the Affiliate are the same as for the Concessionaire


immediately prior to such action, the Affiliate that delivers to the Minister


concurrently with such transfer written representations and warranties as


to such corporation as set forth in Section 21.1 made immediately after











67 (}











O'


t


giving effect to such transfer and assumes in a writing satisfactory to the


Government all liabilities of the Concessionaire under this Agreement and


such Mining Licenses, and (i) the Concessionaire remains jointly and


severally liable for the performance of its obligations under this


Agreement, and (ii) the transferee is an “Eligible Applicant” under the


Mining Law and a Permitted Transferee under Section 22.6.


c. A direct or indirect transfer of Management Rights in the


Concessionaire independently of any transfer or purported transfer of any


interest in this Agreement and under any Exploration License or Mining


License issued under this Agreement does not require such consent if it


does not result in a Change of Control, or in a Prohibited Person acquiring


Management Rights in the Concessionaire.


d. A direct or indirect transfer of any right to share in the profits


of the Concessionaire does not require such consent if it does not result in


a Prohibited Person or the members of the immediate family of such


Prohibited Person being deemed entitled to receive in excess of 5% of the


profits of the Concessionaire.


22.4 Transfers with Consent. Any other transfer referred to in Section 22.1 and not


covered by Section 22.5 requires the prior written consent of the Government,


provided that the consent of the Government shall not be unreasonably withheld


in the case of a transfer after completion of both the Phase I Capacity Test and


Phase II Capacity Test as described in Section 6.2 of all of the Concessionaire’s


interest under this Agreement, under any Exploration License or Mining License


issued under this Agreement and all Mining Plant, Infrastructure and other


property of the Concessionaire used in connection with this Agreement at a time


at which the Concessionaire is not in default in the performance of its obligations


under this Agreement if the transferee delivers to the Minister concurrently with


such transfer written representations and warranties as to such corporation as set


forth in Section 21.1 made immediately after giving effect to such transfer and


assumes in a writing satisfactory to the Government all liabilities of the


Concessionaire under this Agreement and such Exploration and Mining Licenses,


and (a) the transferee is an “Eligible Applicant” under the Mining Law and a


Permitted Transferee under Section 22.6 and (B) the transferee has in the


reasonable judgment of the Minister the technical skills, experience, and financial,


resources necessary to carry out its obligations under this Agreement and such


Exploration and Mining Licenses.


22.5 Right to Encumber.


a. Each of the Concessionaire and the Operating Company may


mortgage, charge or otherwise encumber (collectively, “Mortgage”) all or





68


any portion of its interest under this Agreement and under any Exploration


License or Mining License issued under this Agreement to finance a


portion of the cost of constructing and acquiring any Non-Goma Mine,


Goma Mine, Additional Concession Area Mine, Contiguous Area Mine,


Mining Plant, Infrastructure and other property contemplated by the


Modified Bid Materials or any Approved Feasibility Study upon receipt of


prior written consent thereto from the Government. Other than in the case


of Permitted Liens, (a) the Mortgage must extend to all rights of the


Concessionaire, or the Operating Company, as applicable, under such


Exploration or Mining Licenses and to substantially all of such Non-Goma


Mine, Goma Mine, Additional Concession Area Mine, Contiguous Area


Mine, Mining Plant, Infrastructure, and other property (including


intellectual property) necessary for Operations (“Pledged Assets”), and


(b) the holder of such Mortgage must agree in writing with the


Government to the terms of this Section 22.5 and to any transfer


restrictions set forth in such Exploration and Mining Licenses. Subject to


its confidentiality rights under this Agreement, the Government will


provide the Concessionaire, the Operating Company and any lender with


such documents as any of them shall reasonably request in connection


with any transaction with respect to such Mortgage.


b. Any foreclosure or other exercise of remedies under such


Mortgage must result in a transfer of the rights of the Concessionaire, or


the Operating Company, as applicable, under this Agreement and the


Pledged Assets to a single Person who satisfies all the requirements for an


assignee set forth in the proviso contained in Section 22.4.


c. “Permitted Liens” shall mean Liens created solely for the


purpose of securing Indebtedness incurred to finance or refinance the


purchase price or cost (including the cost of installation, repair, or


improvements) of Movable assets acquired after the Effective Date (by


purchase or otherwise), including after acquired inventory, equipment, or


other tangible or intangible Movable assets, provided that no such Lien


shall extend to or cover any assets other than the assets so acquired and


improvements thereof..


22.6 Permitted Transferee. A “Permitted Transferee” is a Person defined as such in


regulations issued by the Government specified as being for the purpose of


identifying eligible recipients of Mining Licenses issued under the Mining Law.


Pending the issuance of such regulations, a Person is a “Permitted


Transferee” if (i) it is not a Prohibited Person, does not have an officer or


director who is a Prohibited Person, and is not controlled by a Prohibited


Person, and (H) no Person or Persons holding in the aggregate (x) in








69


excess of 5% of the voting rights ordinarily empowered to control the


management of such Person or (y) in excess of 5% of the rights to share in


the profits of such Person is or are Prohibited Persons. A “Prohibited


Person” for the purposes of this Section 22.6 is a Person identified as such


in regulations issued under the authority of the Ministry of Finance and the


Ministry of Justice and applicable to the holders of licenses issued under


the Mining Law. Pending the issuance of such regulations, a “Prohibited


Person” is a Person with whom transactions are currently prohibited under


any Sanctions List published by a Sanctions Committee of the United


Nations Security Council or any equivalent measure issued by the World


Bank, the European Union or the United States of America, or any Person


that issues bearer shares or other instruments to evidence ownership of


such Person that do not permit the identification of the owners of such


Person.


22.7 Responsibility of Concessionaire. It is the responsibility of the Concessionaire


and its Controlling Persons to ensure that Management Rights with respect to the


Concessionaire and the rights to share in the profits of the Concessionaire are


structured and held in such a manner that transfers of such rights are made in


compliance with this Section 22.


22.8 Disclosure; Consents: Exceptions: Fees.


a. If the Minister questions whether a transfer occurred without a


required consent, the relevant transferor has the burden of demonstrating


that consent was not required.


b. A transfer does not comply with the requirements of this


Section 22 if any representations and warranties required to be delivered


in connection with such transfer were not true and correct as of the date as


of which they were made.


c. If the Concessionaire or the Operating Company determines


that a transfer occurred that did not comply with this Section 22, and


reports such transfer to the Minister promptly thereafter, the


Concessionaire or the Operating Company, as applicable, is not in breach


of its obligations under this Section 22 if within 60 days of such report it


takes such actions as will result in such unpermitted transfer being


reversed or otherwise remedied to the satisfaction of the Minister.


22.9 Terms used in Section 22. For the purpose of this Section 22:


a. a “Change of Control” with respect to the Concessionaire


occurs if a Person or Group other than the Person or Group that had








70


Control of the Concessionaire at the time it executed this Agreement was


granted acquires Control of the Concessionaire, or if there is a Change of


Control within the Group that Controls the Concessionaire;


b. a “Change in Control” within a Group is deemed to occur if


there is a change in the beneficial ownership of at least 33 1/3% of the


Management Rights of the Concessionaire held within such Group


(including both a change that comes about by expansion of a Group and a


change that comes about through a transfer of Management Rights within


a Group);


c. a “Controlling Person” is a Person who Controls the


Concessionaire or who is a member of a Group that Controls the


Concessionaire;


d. a “holder” of a Management Right includes any Person who,


directly or indirectly, through any contract, arrangement, understanding,


relationship, or otherwise has or shares the power to direct the exercise of


such Management Right;


e. a Person holding the right to share in distributions from a


Person that holds a right to share in the profits of the Concessionaire has


the right to share in the profits of the Concessionaire if the second Person


passes through distributions from the Concessionaire to the first Person


without reflecting in the distribution its own income and expenses, or if


the right to share in the profits of the Concessionaire represents a principal


asset of the second Person.


f. if a trust or other entity holds the rights to share in the profits of


a Person, the beneficiaries of such trust are deemed to hold the rights to


share in the profits of that Person.


If Person A Controls Person B, and Person B has a 25% voting interest in the


Concessionaire, then Person A is deemed to hold 25% of the Management Rights


in the Concessionaire. And if Person Z Controls Person A, then Person Z is


deemed to hold 25% of the Management Rights in the Concessionaire, and a


transfer of Person Z’s rights to a third party is within the scope of Section 22.2(c).


But if there is no Person (or Group) that Controls Person B, then the


Concessionaire does not have to look beyond Person B for persons who may be


said to have Management Rights with respect to the Concessionaire.


Similarly, if Person A is entitled to a 10% share of the profits of Person B, and


Person B’s sole asset is a 25% interest in the Concessionaire, then Person A is


deemed to hold the rights to share in 2.5% of the profits of the Concessionaire.








71


 SECTION 23 - SUSPENSION





23.1 Power of Minister to Suspend Work. The Minister may order the suspension of


all or the relevant portion of any Operations being carried on by the


Concessionaire under the authority of this Agreement or any Exploration License


or Mining License issued pursuant to this Agreement if any of the following


events or conditions relating to the Concessionaire has occurred and is continuing:


a. the Concessionaire did not pay Surface Rent when due and the


failure is not cured within 30 days after the Concessionaire receives notice


of the failure from the Minister or the Minister of Finance; or


b. the Minister has determined that continuation of such


Operations would constitute a material continuing violation of Section 9.1


or would otherwise pose significant risks to the health and safety of


workers engaged in or affected by such Operations or of individuals


residing in or near any Production Area or any other area in which the


Concessionaire is conducting Operations; or


c. an environmental assessment and audit under Section 13 has


demonstrated, or the Minister or the EPA, as the case may be, has


determined, that there exist material failures to comply with any approved


EMP and the Concessionaire has not remedied such failures to the


reasonable satisfaction of the Minister or the EPA, as the case may be,


within 60 days from notice to the Concessionaire from either of them as to


the nature of such failures; or


d. any representation or warranty of the Concessionaire made in


writing to the Minister proves to have been false or incorrect in any


material respect on the date as of which made; or


e. the Concessionaire is in violation of Section 6.3(b) or (c) (other


than an isolated immaterial violation); or


f. the Concessionaire is conducting Mining Operations outside of


the Production Area that is the subject of the Mining License; or


g. the Concessionaire is in breach of any its obligations under


Section 17.6, 20.3, 20.5 or 20.7 and has not cured such breach within 60


days after receiving notice from the Minister of such breach; or


h. the Concessionaire is in default of its obligation to pay


Royalties under Section 15.1 in excess of US$100,000, and such default











72


 has not been cured within 30 days after notice from the Minister or the


Minister of Finance.





23.2 Order Suspending Work. Except as provided in the following sentence, a


suspension order must be in writing and signed by the Minister, and will be


effective the Business Day following its receipt by the Concessionaire at its


address for notices, or, if delivered to a field office or other location at which the


Operations to be suspended are being performed and at which a person with


supervisory responsibilities is present, is effective on delivery. An order of


suspension based on a violation of Section 9.1 that has resulted in (or is


determined by the Minister to create a serious risk of resulting in) death or severe


personal injury may be given by telephone confirmed in writing within 24 hours,


and is effective immediately. Any suspension order (except a telephone order


under the preceding sentence) must set forth in a summary manner the facts relied


upon for the issuance of the order and the name, location and telephone number of


a responsible person at the Ministry (or the Ministry of Finance, as the case may


be) who may be contacted for additional information. Neither the


Concessionaire’s payment obligations under nor the term of this Agreement or the


term of the relevant Mining License are suspended by an order of suspension


under this Section.


23.3 Compliance with Suspension Order. The Concessionaire must comply with an





order of suspension properly given under this Section 23 until such order is


withdrawn (or deemed withdrawn) pursuant to Section 23.4 or is directed to be


withdrawn pursuant to a final administrative order in a hearing held pursuant to


the Administrative Procedure Act of Liberia, or a final order in a judicial


proceeding, or pursuant to an arbitration under Section 26.


23.4 Resumption of Work. The Concessionaire at any time submit a request that a


suspension order be withdrawn, setting forth in reasonable detail the facts and


circumstances relied upon to demonstrate the elimination or correction of the


event or condition that supported the issuance of the order. The Minister must


withdraw the order if the event or condition no longer exists or has been remedied


to the reasonable satisfaction of the Minister. If within 10 Business Days of


receiving such submission the Minister neither grants such request nor notifies the


Concessionaire of the reasons for not granting such request, the order involved


will be deemed withdrawn. If within 5 Business Days of receiving a resubmitted


request for withdrawal of the same order, the Minister does not either grant such


request or give notice to the Concessionaire setting forth reasons for not granting


such request, the order involved will be deemed withdrawn. The initial and each


subsequent resubmission (if any) shall be conspicuously marked to show all


changes (additions and deletions) from the previous submission.











73























SJ


 SECTION 24 - TERMINATION





24.1 Government Event of Default. A “Government Event of Default” shall exist if


the Government shall have failed in a serious and prolonged manner to comply


with its material obligations under this Agreement and such failure is continuing


for more than 90 days after notice thereof to the Government from the


Concessionaire or any representation or warranty of the Government continued in


Section 21.2 proves to be false or incorrect in any material respect on the date as


of which made.


24.2 Concessionaire Events of Default. A “Concessionaire Event of Default” shall


have occurred if any of the following conditions or events shall occur and be


continuing:


a. the Concessionaire shall have failed to make either of the


payments due under Section 16.6.


b. the Concessionaire shall have failed to make any payment due


under Section 15.4 and such failure is not cured within 150 days of notice


from the Minister or the Minister of Finance; or


c. the Concessionaire shall have failed to make any other


payment due under this Agreement, any Exploration License or Mining


License issued pursuant to this Agreement or any undertaking of the


Concessionaire provided for in this Agreement and such failure is not


cured within 30 days of notice from the Minister or the Minister of


Finance; or


d. any representation or warranty of the Concessionaire contained


in Section 21 proves to have been false or incorrect in any material respect


on the date as of which made; or


e. the Concessionaire shall default in the performance of its


obligation under Section 20.8; or


f. the Concessionaire shall default in the performance of any


other obligation of the Concessionaire under this Agreement, any


Exploration License or Mining License issued pursuant to this Agreement


or any undertaking of the Concessionaire provided for in this Agreement


and shall have failed to cure such default (x) within 60 days after notice


thereof from the Minister or from the Minister of Finance, or (y) in the


case of a failure to pay any Taxes and Duties within the grace period


provided by applicable Law; or











74


g. the Concessionaire shall (i) voluntarily make an assignment of


all or substantially all of its assets for the benefit of creditors other than an


assignment made to secure Indebtedness incurred in the ordinary course of


business, (n) file a petition or application to any tribunal for the


appointment of a trustee or receiver for all or any substantial part of its


assets, (iil) commence any proceedings for its bankruptcy, reorganisation,


arrangement (other than a scheme of arrangement not involving an


insolvent Concessionaire) or insolvency under any laws applicable it


whether now or hereafter in effect, or if any such petition or application is


filed, or any such proceedings are commenced against it, indicate its


approval thereof, consent thereto or acquiescence therein, or (iv) if any


order is entered appointing any such trustee or receiver, or adjudicating it


bankrupt or insolvent, or approving the petition in any such proceedings,


permit such order to remain in effect for more than 90 days.


24.3 Nature of Notice of Default. Any notice of an alleged Event of Default by either


party shall identify with reasonable clarity the principal provision or provisions


with respect to which the default arises and the facts alleged to constitute such


default.


24.4 Notice of Termination; Termination When a Mortgage Exists: Arbitration of


Disputes as to Existence of Event of Default.


a. If an Event of Default with respect to a party has occurred and


is continuing, the other party may give the defaulting party notice of


termination. This Agreement and each Exploration License and Mining


License issued pursuant to this Agreement shall terminate 30 days after


receipt of such notice by the defaulting party (or at such later time as may


be provided in such notice), subject to Sections 24.4(b) and (c).


b. If a Mortgage permitted under Section 22.5 exists, the notice of


termination will not be effective so long as the Concessionaire or the


Operating Company, as applicable, the holder of the Mortgage and the


responsible officer of any relevant tribunal are diligently seeking to


transfer the rights and obligations of the Concessionaire or the Operating


Company, as applicable, under this Agreement, the Mining License, any


Non-Goma Mine, any Goma Mine, any Additional Concession Area Mine,


any Contiguous Area Mine and substantially all of the Mining Plant,


Infrastructure and related property of the Concessionaire to a transferee


that would be permitted under Section 22.3 so long as (1) such a transfer is


completed within 18 months from the commencement of such


proceedings, (iT) the Operations of the Concessionaire or the Operating


Company, as applicable, continue on a commercial scale throughout such


period (subject to force majeure) in substantial compliance with the





75


requirements of this Agreement, the relevant Exploration or Mining


License and applicable Law, and (Hi) the Concessionaire or the Operating


Company, as applicable, becomes and remains in compliance with its


EMPs and its payment obligations under this Agreement.


c. If a party asserts the existence of an Event of Default under this


Agreement and the other party refers to arbitration in accordance with this


Agreement a dispute as to the existence of such Event of Default,


termination of this Agreement may not take effect other than after the


finality of, and in accordance with, an arbitration award upholding the


existence of such Event of Default. The Concessionaire shall reimburse


the Government for all expenses incurred by it in connection with


arbitration held pursuant to this Section 24.4 if the Government’s


determination that an Event of Default exists is upheld in the arbitration.


24.5 Winding-up Commission.


a. Except as provided in Section 24.5(d), if a notice of


termination has been given, the parties shall set up a winding up


commission (hereinafter referred to as the “Commission”) which shall


consist of two directors of the Concessionaire, two members appointed by


the Government and a member of an internationally recognized


accounting or law firm selected by the Government and reasonably


acceptable to the Concessionaire, who will be the Chairperson of the


Commission. The fifth member may not in the last ten years have


represented the interests of the Government and his or her firm may not in


the past five years have been regularly retained by the Government. The


Chairperson will be responsible for scheduling meetings, for establishing


the agenda of meetings, and for keeping the record of meetings.


b. The Chairperson of the Commission shall issue a notice and


agenda for the first meeting of the Commission, which shall be held no


later than three weeks after the establishment of the Commission.


Thereafter, the Commission shall hold periodic meetings at least once a


calendar month.


c. The Concessionaire shall present to the Commission within 30


days of its establishment a summary report, and within 60 days of its


establishment a detailed report, on the status of the Operations of the


Concessionaire under this Agreement as of the date of termination so that


the Commission will be able to make recommendations to the Government


as to whether the Commission and the Concessionaire should seek to


transfer the assets and Operations of the Concessionaire to a third party, or


should establish plans for the full or partial cessation of Operations








76


including the disposition of assets and their demolition or removal


according to Section 25 and the restoration of the Mining License Areas to


such condition as prescribed in the closure management plan provided for


in the EMPs.


d. The operation of this Section 24.5 is suspended under the


circumstances contemplated by Section 24.4(b) or during the pendency of


an arbitration challenging such termination commenced under Section 26.


SECTION 25 - DISPOSITION OF ASSETS


25.1 General Provision. Prior to the termination of this Agreement, the Concessionaire


shall have the right to control all its Mining Plant, Infrastructure and other assets,


whether or not the same may to revert and become the property of the


Government upon such termination, and, to the extent no longer required for


Operations or for compliance with any specific provision of this Agreement, to


dispose of in the ordinary course of its business any such assets (other than Land


leased from the Government or its rights under any Exploration License or


Mining License).


25.2 Disposition of Assets on Termination by the Government or Expiration of the


Term. Upon a termination of this Agreement for any reason other than


termination by the Concessionaire upon the occurrence and continuation of a


Government Event of Default, the following rules apply:


a. The Concessionaire shall deliver to the Government, not more


than 60 days after the termination date a list (the “Property List”)


describing in reasonable detail and locating


i) all Mining Plant and Infrastructure constituting structures or


installations of any land and any Movable assets or intellectual


property required for the full use or Operations of any such Mining


Plant and Infrastructure (such as, by way only of example, as


computers and computer programs controlling the operation of


Mine ventilation systems and elevators), but excluding other


Movable assets, identifying which thereof could be used in


continued Operations or otherwise and which in the good faith


judgment of the Concessionaire have no further utility,


ii) for each Non-Goma Mine, Goma Mine, Additional Concession


Area Mine and Contiguous Area Mine, any intellectual property


required for the full use or Operations of each such Mine and all


Mining Plant and Infrastructure constituting improvements to the











77


 Land (including such things as roads, earthworks, bridges and


dams), and





iii) all Movable assets not referred to in clause (i) of this


Section 25.2(a) (other than ordinary office equipment, furnishings


and supplies and consumables reasonably expected to be consumed


before the Termination Date) and any intellectual property required


for the full use or operation or such Movable assets.


The Property List shall also set forth the estimated fair market value and


book value of each Movable asset contained on such list.


Movable assets identified in clause (iii) of this Section 25.2 may be


grouped for valuation purposes by generic type of asset and physical


location, so that, for example, all Movable assets in a particular heavy


equipment maintenance shop might be classified for valuation purposes as


‘‘mine truck parts and supplies,” “dragline and shovel parts and supplies”


and “maintenance equipment,” but such grouping for valuation purposes


does not excuse the Concessionaire from the duty to describe such


Movable assets in reasonable detail.) The Property List shall be


accompanied by a certificate of the chief executive officer of the


Concessionaire to the effect that such list is complete and correct in all


material respects.


b. Failure of the Concessionaire timely to deliver the Property


List or delivery by the Concessionaire of a Property List that is


significantly deficient or incomplete shall be deemed an offer by the


Concessionaire to sell to the Government all assets referred to in clause


(iii) of Section 25.2(a) for a purchase price of US$1.00.


c. The Concessionaire shall, as part of its closure responsibilities,


remove all such structures and installations described in the Property List


pursuant to clause (i) of Section 25.2(a) except insofar as the Government,


within 90 days of receipt of such list, has directed the Concessionaire to


transfer to the Government such structures or installations, related rights to


Land (in the case of any such assets not located on Government land), and


any required Movable Assets or intellectual property identified in the


Property List. The Concessionaire shall transfer to the Government,


without charge, all of its right, title and interest in each structure or


installation and its related property promptly following its receipt of such


authorization or direction as to such property.


d. The Concessionaire shall transfer to the Government, without


charge, all of its right, title and interest in all property described pursuant


to clause (ii) of Section 25.2(a) within 10 days of the delivery of the


Property List.


e. The delivery of the Property List shall constitute an offer by


the Concessionaire to sell to the Government or its designee any or all


Movable assets and related intellectual property described pursuant to


clause (iii) of Section 25.2(a) at a purchase price equal to the lesser of the


fair market value or the depreciated book value of each such asset, on an


as is and where is basis. If the Government does not exercise such


purchase right as to any Movable asset included in the Property List by


notice to the Concessionaire within 90 days after delivery of the list, then


the Concessionaire may sell such asset to any Person for such price as it


may be able to obtain therefore or remove such asset from Liberia. If the


Government exercises its purchase right with respect to any Movable asset


and related intellectual property, it shall pay the purchase price within 90


days of the date upon which such purchase price is established, against


transfer by the Concessionaire to the Government of all of its right title


and interest in such Movable asset.


f. The Government, by notice to the Concessionaire within a


reasonable period but not to exceed one year after any termination of this


Agreement, may require the Concessionaire to dispose of in accordance


with applicable Law any Movable assets not sold to the Government that


remain on Government Land or in Mining Plant or Infrastructure that has


been transferred to the Government. If the Concessionaire does not


reasonably dispose of or remove such asset or assets within a reasonable


period after said notice, the Government may effect such reasonable


disposal or removal at the expense of the Concessionaire.


g. No transfer to the Government of any assets pursuant to this


section with or without compensation shall release the Concessionaire


from any of its environmental restoration or remediation obligations under


this Agreement or applicable Law, or entitle the Concessionaire to release


to it of any amounts set aside to fund the performance of such obligations.


However, if the Government arranges for a qualified replacement operator


to acquire all of the assets on the Property List and to continue the


operations of each Non-Goma Mine, Goma Mine, Additional Concession


Area Mine or Contiguous Area Mine, it will release the Concessionaire


from such obligations and make such set-aside amounts available to fund


the environmental restoration or remediation obligations of the


replacement operator. In any such case, the Concessionaire must at the


request of the Government transfer directly to such replacement operator


all assets otherwise to be transferred to the Government under this Section











79


25.2, in the manner provided for in this Section 25.2, provided that the


Concessionaire is not obligated to transfer assets for which payment is


required under this Section 25.2 except against payment of the purchase


price required by this Section 25.2.


25.3 Special Provisions for Public Use Infrastructure. To the extent the Concessionaire


has built and is operating under any Exploration License or Mining License issued


pursuant to this Agreement or this Agreement facilities required by the


Regulations, this Agreement or other applicable Law to be made available for use


by third parties (such facilities could include, by way of example and not


limitation, highways, railroads, port facilities, water supplies, electrical supplies,


hospitals or schools), the Government may, in lieu of the procedures set forth in


Section 25.2, require (by notice to the Concessionaire within 90 days after the


delivery of the Property List) the Concessionaire to transfer all of its right, title


and interest, in and to any such facility (including all Movable Assets normally


used in conjunction therewith and all intellectual property required for the full use


or operation of such facility) to a Person designated by the Government without


charge or for the purchase price attributable to such Movable assets and related


intellectual property determined as provided in Section 25.2(e), as applicable, on


an “as is, where is” basis. If the Government so designates a facility for purchase


by a third party, the third party must pay the relevant purchase price within 120


days of the later of the date upon which such purchase price is established and the


date such purchaser is designated.


25.4 Certain Insurance and Maintenance Obligations of the Concessionaire. The


Concessionaire shall insure in accordance with the requirements of this


Agreement and maintain (in accordance with applicable Law and the


requirements of this Agreement) each Non-Goma Mine, each Goma Mine, each


Additional Concession Area Mine, each Contiguous Area Mine, all Mining Plant


and Infrastructure and all Movable assets until (i) 30 days after title is transferred


to the Government by the Concessionaire, where transfer of the property is


required under this Section 25 without action by the Government, (ii) 30 days


after payment is to be made for such property under this Section 25, where such


transfer is required to be made against payment by the Government or a third


party following election of transfer by the Government, or (iii) at such time as the


right of the Government under this Section 25 to elect to require the transfer of


such property to it or a third party has expired, in the case of property the transfer


of which is not timely required by the Government.


25.5 Determination of Movable Asset Fair Market Value. Unless the Government


notifies the Concessionaire that it disagrees with the Concessionaire’s fair market


value estimates for a Movable asset (and related intellectual property) included in


the Property List at or prior to the time it notifies the Concessionaire of its desire











80


to acquire such asset, the Concessionaire’s valuation shall be final. If the


Government does give notice of disagreement, fair market value shall be


determined by internationally recognized appraisal firm experienced in the


valuation of mining Movable assets. The firm will be selected by the


Government, but must be from a list of three such firms selected by the


Concessionaire if the Concessionaire provides such list when it provides the


Property List. The costs of the appraiser in respect of each appraisal shall be


allocated by the appraiser and shall be borne by the Concessionaire unless the


valuation placed on the asset by the appraiser is at least 95% of the valuation


placed on the asset by the Concessionaire, in which case the cost of the appraiser


shall be by the Government. If the Concessionaire is unable or fails to provide for


the transfer of any intellectual property required for the full use or operation of


any Movable Asset (or if for any reason the Government or a purchaser


designated by the government elects not to acquire and such intellectual property),


its fair market value shall be determined based on its value to a Person who must


acquire in the marketplace the necessary intellectual property.


25.6 Disposition of Mining Plant and Infrastructure on Termination bv the


Concessionaire. Upon a termination of this Agreement by the Concessionaire


upon the occurrence and continuation of a Government Event of Default, all


Mining Plant and Infrastructure shall become the property of the Government


except to the extent the Government elects to transfer the relevant Land to the


Concessionaire. All Movable assets, to the extent not constituting Mining Plant


or Infrastructure, shall be and remain the property of the Concessionaire. The


Concessionaire must remove all such property from Land owned or leased by the


Government within two years of the date of termination and until removal must


maintain third party liability insurance as required by this Agreement.


25.7 Miscellaneous. In connection with any transfer of rights in property pursuant to


this Section 25, the Concessionaire shall execute such instruments of transfer


sufficient to transfer all right, title and interest of the transferor as the transferee


may reasonably request.


25.8 Liens. Any transfer of property to the Government or a third party pursuant to


this Section 25 shall be free and clear of Liens or other charges and encumbrances


of any kind arising out of any action or inaction of the Concessionaire or any


Person claiming by, through or under the Concessionaire.





SECTION 26 - ARBITRATION





26.1 Submission to Arbitration.





a. Any dispute, controversy, or claim between the Government


and the Concessionaire arising out of, in relation to or in connection with








81


 this Agreement or its formation, or the validity, interpretation,


performance, termination, enforceability or breach of this Agreement for


which resolution by submission to an expert is not specifically provided


elsewhere in this Agreement shall be exclusively and finally settled by


binding and enforceable arbitration under the then prevailing rules of


arbitration of LTNCITRAL (the “UNCITRAL Rules”). The law applicable


to any arbitration shall be determined pursuant to Section 29 below. In the


event of any conflict between the UNCITRAL Rules and this Section 26,


the provisions of this Section 26 shall govern. Arbitration hereunder shall


be the parties’ exclusive remedy and no party to arbitration shall be


required to exhaust any local administrative or judicial remedy, provided


that in a dispute involving a violation of Law, the Company shall not


initiate arbitration prior to a final administrative determination of a


violation.





b. Either of the parties to such dispute may institute arbitration


proceedings by giving Notice to the other party and notice to the


International Chamber of Commerce (“ICC”), including in each a


statement of the issues in dispute.





26.2 Nationality for Purposes of Arbitration. Notwithstanding the incorporation of the


Company in Liberia it shall be treated under this Section 26 as a Person that is a


national of China for purposes of any arbitration pursuant to this Agreement.


26.3 Arbitrators. Any arbitral tribunal constituted pursuant to this Agreement shall





consist of one arbitrator to be appointed by the Government, one arbitrator to be


appointed by the Company, and one arbitrator, who shall be the president of the


tribunal and shall be a citizen neither of Liberia nor of China (or of any other state


of which a Party owning shares in Company is a national), to be appointed by the


TCC. No such arbitrator shall have an interest in the matters in dispute.





26.4 Single Arbitrator. If the parties agree, they may jointly request that any matter


subject to arbitration under this Agreement shall instead be referred for resolution


by a single arbitrator to be appointed by agreement between them. In the absence


of agreement as to the choice of arbitrator the ICC, or of any successor entity as


provided for by Section 26.9 below, shall make the appointment. The decision of


the single arbitrator shall be rendered pursuant to Section 26.6 below (except as


regards the requirement for a decision by majority vote) and shall be final and


binding unless appealed by any party to a full panel of arbitrators appointed as


provided in this Section 26.3, who shall examine the single arbitrator’s decision


only as to manifest error of law, findings of fact that are not supported by any


credible evidence, and abuse of authority, misconduct or other unauthorized act


by the single arbitrator.











82


 26.5 Venue and Other Items. Arbitration proceedings conducted pursuant to this


Agreement shall be held in Singapore, Republic of Singapore, or such other place


as the parties may agree, and shall be conducted in the English language. The


parties submit to the jurisdiction of the Courts of Singapore for the limited


purpose of enforcing this agreement to arbitrate. Each party shall bear equally the


costs and fees incurred or imposed by the ICC; provided that the arbitral tribunal


may decide in its award how the costs and fees are allocated between the parties.


Any procedural issues that cannot be determined under UNCITRAL Rules shall


be determined pursuant to applicable Law as set forth in Section 29 below.





26.6 Award. The arbitrators shall, by majority vote, render a written decision which


shall be public stating the reasons for their award within 3 months after any


hearing conducted has been concluded. Any monetary award shall be assessed


and payable in Dollars (determined at the Prevailing Market Rate of Exchange if


the award involves an obligation expressed in any currency other than Dollars)


through a bank designated by the recipient. Each party shall bear its own costs


and attorney fees. Neither party shall have any liability for either consequential


damages (except for purposes of set-off) or exemplary or punitive damages, but


interest at a rate not to exceed the London Interbank Offering Rate (“LIBOR”)


existing at the time of such award, plus one percentage point, multiplied by the


amount of the award, shall be assessed from the date of any monetary award until


its satisfaction. If LIBOR should cease to be reported, then the rate to be applied


shall be another substitute rate agreed to by a majority of the arbitrators. If the


decision of the arbitral tribunal is adverse to either party, then the arbitral tribunal


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


default on the part of such party, provided that such period of grace shall not


exceed 180 days for the making of any payment required by such award.


26.7 Reservation of Rights. The right to refer a claim or dispute to arbitration


hereunder shall not be affected by the fact that a claimant or respondent has


received full or partial compensation from another Person for a loss or injury that


is the object of the claim or dispute, and any such other Person may participate in


such proceedings by right of subrogation.


26.8 Nature of Award. The parties agree that, subject to Section 26.6 hereof, the


arbitral award of any arbitral tribunal constituted pursuant to this Agreement may


contain such orders (including orders for equitable relief or monetary damages)


in respect of or affecting any of the parties (and any loss or damage suffered by


any of them) as such arbitral tribunal determines to be appropriate in the


circumstances, provided, that, the arbitrators may not award specific performance


or other similar equitable remedies against either party. The parties, subject to


their respective obligations contained elsewhere in this Agreement, shall take all











83


such actions as are necessary to give full and complete effect to the award which,


in accordance with its terms, shall be binding upon and enforceable against them.


26.9 General. The consent to the jurisdiction of the ICC as set forth in this Section 26


shall equally bind any successor or successors-in-interest to each party to this


Agreement. Should the ICC be replaced by, or their functions be substantially


conferred upon or be transferred to, any new international body of a similar type


and competence, each party shall have the right to submit any dispute to such


body for settlement by arbitration in accordance with the foregoing provisions of


this Section 26. The provisions of this Section 26 shall be severable from the


remainder of this Agreement and shall remain in full force and effect


notwithstanding termination of this Agreement.


SECTION 27 - NOTICES


27.1 Written Communications. All orders, approvals, declarations and notices of any


kind between the parties (hereinafter each referred to as a “Communication”)


shall be in writing and delivered by hand, by fax, by postage prepaid registered


mail, by prepaid internationally recognized courier service, or by any other means


of communication agreed upon by the parties. Communication by fax or


electronic mail is valid under this Agreement only to fax numbers or electronic


email addresses set forth below or identified as acceptable to a party by notice to


the other party pursuant to this Section 27.1. A Communication other than an


electronic mail shall bear an original or facsimile reproduction of the signature of


a representative of the sending party responsible for such Communication and all


Communications shall indicate the identity of such representative and state how


he or she may be reached by telephone and, if practical, electronic mail. A


Communication under this Agreement is not effective until delivery.


27.2 Delivery. Subject to Section 27.5, delivery of a Communication to a party shall





be deemed to have occurred in any one of the following circumstances:


a. Fax confirmation of receipt is electronically issued to the


sender by the fax receiving device.


b. Written confirmation of receipt is received by the postal or


courier service delivering the Communication.





c. The recipient has otherwise directly or indirectly


acknowledged receipt of the Communication in writing.


d. Verification of receipt of the Communication has been


obtained in any manner specifically agreed to in writing by the parties.











84


Other confirmation of receipt acceptable to the recipient is obtained by the


sending party.


27.3 Addresses. All Communications from the Government to the Concessionaire or


the Operating Company shall be addressed as follows:








CHINA-UNION (HONG KONG) MINING CO., LTD.


Units 3401-2, 34th Floor, AIA Tower





183 Electric Road, North Point, Hong Kong


Fax : (852) 2887 2054


All Communications from the Concessionaire to the Government shall be


addressed as follows:


The Minister of Lands, Mines and Energy





Ministry of Lands, Mines and Energy


Capitol Hill


Monrovia, Liberia


The Minister of Finance


Ministry of Finance


Broad Street


Monrovia, Liberia


And





And


The Chairman, National Investment Commission


National Investment Commission


12th Street Sinkor


Monrovia, Liberia


With a copy to


The Minister of Justice


Ministry of Justice


Ashmun & Center Street


Monrovia, Liberia





85


 27.4 Change of Address. Any party may, upon prior notice to the other party, at any


time change the designation of a Person named to receive Communications under


this Agreement, or the address or fax number of the office in Liberia or elsewhere


authorised to receive such Communications.





27.5 Quantities. All notices, reports, applications, feasibility reports, work plans and


related plans and documents, financial statements and similar materials furnished


to the Government by the Concessionaire under this Agreement shall be delivered


to each Government addressee provided for under Section 27.3 or Section 27.4


(but not more than five addressees at any one time) in duplicate paper copies, and,


if more than six pages long, shall be accompanied by a reproducible electronic


copy in Microsoft Word or Adobe PDF format that is compatible with versions of


such program that have been readily available in Monrovia for at least 48 months.


The Government may change the required electronic data format for such


documents to any other readily available format on at least 60 days prior notice to


the Concessionaire.


SECTION 28 - FORCE MAJEURE


28.1 Application. In the event of a party being rendered unable, in whole or in part, by


force majeure to carry out any obligation under this Agreement, other than an


obligation of the Concessionaire to make payments of money to the Government,


the party shall give notice and the particulars of such force majeure in writing to


the other party as soon as practicable after the occurrence of the cause relied on.


Thereafter, any obligation of the party giving such notice that such party is unable


to carry out because of such force majeure shall be suspended during the


continuance of any such inability so caused, but for no longer period, and such


inability shall, as far as practicable, be remedied with all reasonable dispatch. All


time periods specified in this Agreement for the performance of obligations or the


enjoyment of rights that are affected by force majeure, except in connection with


an obligation to make payments of money, but including the Exploration Term or


the Mining Term, as the case may be, shall be extended until the effect of such


force majeure is remedied as above provided or otherwise ceases.


28.2 Definition. The term “force majeure” as used in this Agreement shall mean acts


of God, accidents, wars, acts of war, invasions, acts of public enemies, hostilities


(whether war is declared or not), restrictions on trade or other activities imposed


by any sovereign nation or state, embargoes, blockades, revolutions, riots, civil


commotions, acts of terrorism, sabotage, strikes and/or other industrial, labour or


employer-employee disputes (if not cured for a period of more than two months),


fires, explosions, earthquakes or any other natural disasters, expropriation of


facilities or goods, epidemics, public health emergencies and any similar cause,








86


provided any such cause was not within the reasonable control of the party


claiming the benefit of force majeure and could not have been avoided or


overcome by such party through the exercise of due diligence.


28.3 No Required Settlement. Nothing in Sections 28.1 or 28.2 above shall, in and of





itself, be construed to require the Concessionaire to settle any strike, lockout or


other labour or industrial dispute except as may be required by applicable Law.





28.4 Surface Rentals. Notwithstanding Section 28.1, for so long as events of force


majeure constituting war, act of war, invasion, act of public enemies, hostilities


(whether war is declared or not), revolution, riot, civil commotion, or acts of


terrorism prevent the Concessionaire from carrying out Operations, the


Concessionaire shall be excused from the payment of Surface Rent due accruing


during such period under Section 15.


SECTION 29 - GOVERNING LAW





29.1 Applicability of Liberian Law. Except as explicitly provided in Section 14 to this


Agreement, the Concessionaire shall be subject to all of the internal laws of


Liberia as in effect from time to time, including with respect to labour,


environmental, health and safety, customs and tax matters, and shall conduct itself


in a manner consistent with Liberia’s obligations under international treaties and


agreements.


29.2 Construction and Interpretation. This Agreement and the rights, obligations and


duties of the parties hereunder shall be construed and interpreted in accordance


with Liberian law and by such rules and principles of international law as may be


applicable.


SECTION 30 - PERIODIC REVIEW


30.1 Profound Changes in Circumstances. For the purpose of considering Profound


Changes in Circumstances from those existing on the Effective Date or on the


date of the most recent review of this Agreement pursuant to this Section 30, the


Government on the one hand and the Concessionaire and the Operating Company


jointly on the other hand, shall at the request of the other consult together. The


parties shall meet to review the matter raised as soon after such request as is


reasonably convenient for them both. In case Profound Changes in


Circumstances are established to have occurred, the parties shall effect such


change in or clarification of this Agreement that they in good faith agree is


necessary.


30.2 Five Year Review. This Agreement shall be subject to periodic review once


every five (5) years after the date of the start of Production for the purpose of








87











A


good faith discussions to effect such modifications to this Agreement as may be


necessary or desirable in the light of any substantial changes in circumstances


which may have occurred during the previous five years.


30.3 Other Consultation. In addition to the consultation and review provided by


Section 30.1 and 30.2, each party may at any time request a consultation with the


other party with respect to any matter affecting the rights and obligations of the


parties pursuant to this Agreement or any matter relating to Operations. The


parties shall meet to review in good faith the matter raised as soon after such


request as is reasonably convenient for them both. Subsequent to such


consultation, the parties shall take such action, if any, that is mutually agreed to


address the matter.


SECTION 31 - WAIVER OF SOVEREIGN IMMUNITY


The Government hereby irrevocably waives all claims of immunity from the jurisdiction


of, and from the enforcement of any arbitral award rendered by, a arbitral tribunal


constituted pursuant to this Agreement as well as all claims of immunity from the service


of process or the jurisdiction of any court situated in any state, country or nation in aid of


the jurisdiction of such arbitral tribunal or in connection with the enforcement of any


such award.





SECTION 32 - CONFIDENTIALITY


32.1 Confidential Information.


a. Subject to the limitations below and subject to applicable Law,


for a period of three years from disclosure, each party agrees not to


divulge information designated in writing at the time of delivery as


confidential information (“Confidential Information”) by the other party to


any other Person without the prior written consent of the designating


party. By designation of information as Confidential Information a party


will be deemed to have represented that after review of such information it


has reasonably determined that the release of such information to third


parties would materially adversely affect the party or its economic well¬


being. In any event Confidential Information does not include information


that (a) was publicly available or otherwise known to a party prior to the


time of disclosure to it and not subject to a confidentiality obligation,


(b) subsequently becomes publicly known through no act or omission by a


party, (c) otherwise becomes known to a party other than through


disclosure to such party by the other party, (d) constitutes financial


statements delivered to the Government under Section 17.6 that are


otherwise publicly available, (e) is mainly of scientific rather than


commercial value, such as geological and geophysical data relating to








88




















/7.


areas \yy which the Concessionaire no longer holds a valid exploration


license and has not designated as a Proposed Production Area, or (f) has


been disclosed pursuant to generally applicable Law or a final order of any


court having jurisdiction that is not subject to appeal.


b. Each party will maintain the confidentiality of Confidential


Information disclosed to it in a manner consistent with procedures adopted


by such party to protect its own confidential information, provided that


such party may deliver or disclose Confidential Information to (i) its


financial, legal and other professional advisors (to the extent such


disclosure reasonably relates to the administration of this Agreement), or


(11) any other Person to which such delivery or disclosure may be


necessary or appropriate (I) to effect compliance with any law, rule,


regulation or order applicable to such party, (2) in response to any


subpoena or other legal process, (3) in connection with any litigation to


which such party is a party if reasonably delivered necessary to protect


such party’s position in such litigation or (4) if an Event of Default has


occurred and is continuing but only to the extent such party reasonably


determines such delivery and disclosure to be necessary or appropriate in


the enforcement or for the protection of the rights and remedies under this


Agreement.


c. This Agreement and any amendments thereto are not


confidential. The Concessionaire is not entitled to confidential treatment


of information relating to the timing and amount of royalties and other


payments specifically due under the terms of this Agreement or of Taxes


and Duties payable by the Concessionaire or the rates at which such


royalties, other payments or Taxes and Duties become due or are assessed,


or information that is necessary to compute the amount of such royalties or


other payments becoming due.


SECTION 33 - MISCELLANEOUS


33.1 Entire Agreement. This Agreement, including the Schedules and Exhibits


attached to it, represents the entire agreement between the parties and shall with


effect from the Effective Date, supersede all previous oral and written


negotiations and agreements between the parties or between any party and an


Affiliate of any other party.


33.2 Amendment. Any modification or amendment of any terms of this Agreement


shall be by the mutual written agreement of the parties and, except as otherwise


specifically provided in this Agreement, shall not become effective until approved


by the President of the Republic.








89


33.3 Limitation of Liability. No party shall have any liability under this Agreement for


consequential damages (except for purposes of set-off) or any form of exemplary


or punitive damages.


33.4 Non-Waiver of Rights. The non-exercise or partial exercise by any party of any


of its rights under the terms of this Agreement shall not in any case constitute a


waiver of that right.


33.5 Assignment and Succession. The terms and conditions of this Agreement shall


inure to the benefit of and be binding upon the permitted successors by operation


of law and permitted assignees of the parties including without limitation in the


case of the Government, all future manifestations or forms of public power


exercising sovereign authority over all or part of the present territory of Liberia.


33.6 Survival. Notwithstanding termination of this Agreement by any party or for any


reason, including a termination due to a finding that this Agreement or a portion


thereof is void, invalid, or unenforceable, Sections 1, 20.1, 20.6, 24.5, 25, 26, 27,


29, and 33 of this Agreement, all liabilities accruing prior to such termination and


all closure management and environmental remediation, restoration or


reforestation obligations of the Concessionaire under this Agreement or the EMPs


shall survive such termination and shall remain effective as to any matters which


are the subject of this Agreement or which arise out of, in relation to or in


connection with this Agreement. Moreover, any such termination shall be


without prejudice to rights, duties and obligations that have accrued prior to


termination and, notwithstanding such termination, such provisions of this


Agreement as are reasonably necessary for the full enjoyment and enforcement of


such rights, duties and obligations shall survive such termination for the period


necessary.


33.7 Severability. Should any Section of this Agreement, or any provision or term of


any section, be found to be void, invalid or unenforceable, in whole or in part,


then the remaining sections, and those unaffected provisions or terms of any other


sections which contain some void, invalid or unenforceable provisions or terms,


shall nevertheless remain valid and subsisting and shall be construed as if this


Agreement had been executed without such void, invalid or unenforceable


sections, provisions or terms. Any otherwise void, invalid or unenforceable


section, term or provision of this Agreement shall be so construed, or reformed, as


to alter, amend or change any such term, provision or condition to the extent


necessary to render it valid, lawful and enforceable, while also giving maximum


effect to the parties’ originally intended purpose or result, short of creating any


void, invalid or unenforceable provision, term or condition.














90


33.8 Joint and Several Liability. The Concessionaire and the Operating Company shall


be jointly and severally liable for the obligations of the Concessionaire and the


Operating Company under this Agreement.


33.9 Publication. The Government shall make public this Agreement and any


amendments thereof.








































































































91




















^7


 IN WITNESS WHEREOF, the parties have signed this Agreement, through their


respective duly authorised representatives, in ten originals, on the day, month and year





indicated above.











IN PRESENCE OF: FOR THE GOVERNMENT OF THE REPUBLIC


OP-LIBERIA














ly: Eugene H. Shannon


THE MINISTER OF LANDS, MINES AND


ENERGY
































By: Richard Tolbert


THE CHAIRMAN OF THE NATIONAL


INVESTMENT COMMISSION



















































































V'ADC - 090334/010276 - 2833800 v!4


FOR THE CONCESSIONAIRE:


























FOR THE OPERATING COMPANY:

















CHIEF EXECUTIVE OFFICER
































































































































93


ATTESTED TO BY:

















Phillip A.Z. Banks


MINISTER OF JUSTICE AND ATTORNEY


GENERAL














APPROVED BY:





H Jf








/ELLEN JOHSON SIRLEAF


PRESIDENT


REPUBLIC OF LIBERIA


DATE:


 EXHIBIT 1: FORM OF EXPLORATION LICENSE








See attached.


































































































































































































\\\DC - 090334/010276 - 2846328 v2


n


 MINERAL EXPLORATION LICENSE





This Mineral Exploration License (the “License”) is hereby granted by the Government of the


Republic of Liberia, through the Ministry of Lands, Mines and Energy (the “Ministry”), to


China-Union (Hong Kong) Mining Co., Ltd., a corporation organized under the laws of Hong


Kong with headquarters located at [_](the “Licensee”).


Capitalized terms used but not defined herein shall have the meaning ascribed to them in the


Mineral Development Agreement, dated January [_], 2009, among the Government of the


Republic of Liberia, China-Union (Hong Kong) Mining Co., Ltd. and China-Union


Investment (Liberia) Bong Mines Co., Ltd. (the “MPA”) or if not defined therein, in the New


Minerals and Mining Law of the Republic of Liberia, Part 1, Title 23, Liberian Code of Laws


Revised, as approved on April 3, 2000 and published by the Ministry of Foreign Affairs on


September 20, 2000 (the “Minerals and Mining Law”) or the Regulations.


SECTION 1. SCOPE OF LICENSE


1.1. This License entitles the Licensee to Explore for the minerals identified in Section 1.2 in


the Exploration Area defined in Section 3 of this License (the “Exploration Area”) in order to


ascertain the existence, location, quantity, and quality or commercial value of deposits in the


Exploration Area of such minerals, provided that such entitlement to Explore shall be limited


in accordance with the terms of this License and applicable Law.


1.2. The minerals covered by this License are the following:


(a) Iron Ore.





SECTION 2. EFFECTIVE DATE





The effective date of this License shall be [ 1 20[_j.





SECTION 3. EXPLORATION AREA


The Exploration Area covers approximately [_] sq km in area, [ ] County, being the area


defined by the Universal Transverse Mercator (“UTM”) coordinates based on the WGS84


UTM Grid Zone 29N set forth below:





[ insert chart ]











SECTION 4. CONCERNING THE LICENSE


4.1. This License and the rights of the Licensee hereunder are subject to





(a) exploration regulations to be issued by the Minister of Lands, Mines and


Energy (the “Minister”) pursuant to the authority granted the Minister under the Minerals and


Mining Law (the “Exploration Regulations”), provided that pending the formal adoption by


the Minister of such regulations, “Exploration Regulations" means the draft Exploration


Regulations as noticed for hearing on November 17, 2008, or any subsequent draft


Exploration Regulations noticed for hearing; and





1


\\\DC - 090334/010276 - 2846328 v2 f)





 (b) the Minerals and Mining Law, the Liberia Revenue Code of 2000, the


environmental laws and regulations of the Republic of Liberia and all other applicable Laws


and regulations of the Republic of Liberia;


as such laws and regulations may from time to time be amended, modified or supplemented;





and





(c) the provisions of the MDA.


4.2. The Exploration Area granted by this License excludes areas within the Exploration


Area excluded by Section 10 of the Minerals and Mining Law[ and areas subject to Class B


or Class C mining licenses previously granted by the Republic of Liberia, and the Licensee


shall not interfere with the activities of licensees under such licenses]. The Licensee shall not


Explore any Land within the Exploration Area to which Landowners or other third parties


have rights unless the Licensee first obtains the consent of such Landowners and other third


parties.


4.3. The Licensee may not commence Exploration until the Licensee’s work program and


budget have been filed with and approved by the Minister in accordance with the Exploration


Regulations. If the Licensee so files prior to the formal adoption of the Exploration


Regulations, the work program and budget will be reviewed based on the requirements of the


proposed Exploration Regulations currently existing, and the Licensee will not be required to


amend its filling or obtain a new approval if the requirements set forth in the Exploration


Regulations upon formal adoption are different from those set forth in the proposed


Exploration Regulations. However, the Licensee will be entitled to request an amendment of


its work program and budget to take advantage of any more favorable requirements of the


Exploration Regulations upon formal adoption.


4.4. The Licensee will be required under the Exploration Regulations to make detailed


quarterly reports of all field and laboratory sampling activities, and to make quarterly


deposits with the Ministry of all geological information and samples gained from its


Exploration work in the Exploration Area, other than that portion of the samples subjected to


destructive analysis or testing, in each case within specified periods after the end of a quarter.


4.5. Pilot mining will be permitted under this License only on application by the Licensee


following the discovery by the Licensee of potentially exploitable reserves in the Exploration


Area and compliance by the Licensee with the applicable requirements set forth in the


Exploration Regulations.


4.6. The initial term of this License is [three] years from the Effective Date, subject to the


ability of the Ministry in accordance with the Exploration Regulations to terminate this


License for non-compliance with the Exploration Regulations or other applicable Law and


further subject to termination as provided in the MDA. Except to the extent otherwise


required by the MDA, if the Licensee is in compliance with its obligations during the initial


term it will be entitled to a two-year extension of its License with respect to a portion of the


Exploration Area on the terms set forth in the Minerals and Mining Law and the Exploration


Regulations.








2


4.7. If the Licensee discovers in the Exploration Area exploitable deposits of the minerals


referred to in Section 1.2 and has complied during the exploration period with its obligations


under the Minerals and Mining Law, the Exploration Regulations, and other applicable Law,


it will have the right, subject to the provisions of the MDA, to obtain a Class A Mining


License for the mining of such deposits in accordance with the Minerals and Mining Law and


the applicable regulations of the Ministry governing the issuance of and operations under a


Class A Mining license.


SECTION 5. LICENSE BINDING ON GOVERNMENT.


This License is duly issued and binding on the Government of Liberia when signed by the


Assistant Minister for Mineral Exploration of the Ministry and approved by the Minister.








Signed:_


Assistant Minister for Mineral Exploration


Ministry of Land, Mines and Energy








Approved:_


Minister of Lands, Mines and Energy





DATE:







































































3





n i





 Schedule 6.6(a)





Railroad Coordinates








The attached map details the coordinates of the Railroad covered by this Agreement and


described in Section 6.6(a)


EXHIBIT 2: FORM OF MINING LICENSE








See attached.


 CLASS A MINING LICENSE





This CLASS A MINING LICENSE (this “Mining License”-) is dated January [_], 2009 and


made by and between the MINISTER OF LANDS, MINES & ENERGY OF THE


REPUBLIC OF LIBERIA (hereinafter referred to as the “MINISTER”), and CHINA-UNION


(HONG KONG) MINING CO., LTD., a corporation organized under the laws of Hong Kong


(hereinafter referred to as the “CONCESSIONAIRE”).





Capitalized terms used but not defined herein shall have the meaning ascribed to them in the


Mineral Development Agreement, dated January [_], 2009, among the Government of the


Republic of Liberia China-Union (Hong Kong) Mining Co., Ltd. and China-Union Investment


(Liberia) Bong Mines Co., Ltd. (the “MPA”) or, if not defined therein, in the New Minerals and


Mining Law of the Republic of Liberia, Part 1, Title 23, Liberian Code of Laws Revised, as


approved on April 3, 2000 and published by the Ministry of Foreign Affairs on September 20,


2000 (the “Minerals and Mining Law”) or the Regulations.





WITNESSETH:





WHEREAS, the Government and the CONCESSIONAIRE have concluded, and the


CONCESSIONAIRE is materially in compliance with, the MDA, which has become effective,


permitting Mining in the Proposed Production Area pursuant to its terms and conditions;


WHEREAS, the CONCESSIONAIRE has satisfied the requirement set forth in Section 6.5(b) of


the Minerals and Mining Law by completing an exploration program and submitting to the


MINISTER a detailed map and descriptive statement, attached hereto as Annex I, setting forth


the boundaries of the Proposed Production Area and the size of the Deposit from which the


Minerals are to be mined;


WHEREAS, the CONCESSIONAIRE has submitted a notice to the MINISTER requesting a


Class A Mining License for the Proposed Production Area in accordance with the Minerals and


Mining Law;


WHEREAS, the CONCESSIONAIRE'S application for a Mining License conforms in all


material respects to the requirements of the Minerals and Mining Law and the Regulations,


including:


(i) name, address, nationality and legal status of the applicant;


(ii) the Minerals expected to be mined;


(iii) the boundary of the area subject to the Mining License;


(iv) the metes and bounds (angles and distances) of the area; and


(v) an accurate survey of not less than 1:10,000 accompanied by a map showing the


geographic position of the claim with reference to adjacent natural landmarks.


WHEREAS, the CONCESSIONAIRE is an Eligible Applicant for a Class A Mining License


pursuant to the provisions of section 4.2 of the Minerals and Mining Law, and has demonstrated


the technical and financial capability required in respect of a Class A Mining License; )





WHEREAS, the MINISTER is satisfied that the CONCESSIONAIRE possesses the technical /) V


skills and experience, and the financial resources, necessary to permit it to carry out mining Sj-Ov


1


operations in keeping with the requirements of a Class A Mining License and of the Minerals


and Mining Law;


WHEREAS, the Proposed Production Area is not subject to a valid Mineral Right granted to


another Person;


WHEREAS, the Republic of Liberia is the owner of all Iron Ore Deposits within the territory of


Liberia, and all the rights related to the Development of all such Iron Ore Deposits[ including,


but not limited to, the Iron Ore Deposits within the Concession Area previously granted to


[_]; and


WHEREAS, in accordance with the Minerals and Mining Law, the MINISTER has the power to


grant the CONCESSIONAIRE a Class A Mining License as contemplated in the MDA, and to


permit the CONCESSIONAIRE to conduct the Operations as contemplated by the MDA;


NOW, THEREFORE, for and in consideration of the premises, the mutual promises made by


and between the Government and the CONCESSIONAIRE (hereinafter referred to as “the


Parties”), and the terms and conditions herein contained, it is hereby irrevocably provided as


follows:


Grant of Class A License


1. The MINISTER hereby grants to the CONCESSIONAIRE a Class A Mining License for


the Proposed Production Area, together with all related rights and privileges to allow the


CONCESSIONAIRE to conduct the Operations contemplated by the MDA. This grant is


subject to the provisions of the MDA.


Term of License


2. The initial term of the Mining License shall commence on the date first above written and


shall be for twenty-five (25) years unless earlier terminated pursuant to any of Sections


5.1(g), 5.1(h) or 24 of the MDA. The CONCESSIONAIRE shall have the right to extend


the Mining License as set forth in Section 5.1(f) of the MDA upon demonstration that


proven reserves exist and upon submission of a revised and updated Feasibility Study, for


consecutive additional terms not to exceed twenty-five (25) years each.


Discovery of Other Minerals


3. Pursuant to Section 6.7(c) of the Minerals and Mining Law, should the


CONCESSIONAIRE, in the course of Development or Mining discover that the Mine or


Deposits contain another Mineral not the subject of the Mining License, the


CONCESSIONAIRE shall have the right to Mine such additional Mineral. The Mineral


in question shall not be mined until an application has been submitted to, and approved


by, the MINISTER. A separate application shall be filed in respect of each Mineral


which has been discovered and is to be Mined, for permission to have its Mining License


amended to cover the new Mineral. The approval of the MINISTER shall be granted


promptly.





2 o





//4


Additional Exploration within the Proposed Production Area


4. If the CONCESSIONAIRE wishes to carry out additional Exploration within the


Proposed Production Area it may do so provided that the work is covered by an


exploration work program that has been approved under the terms of the Exploration


Regulations. No budget or annual expenditure requirements apply to such work, but all


other provisions of the Exploration Regulations as to the manner of carrying out such


work and as to reporting the results of such work remain applicable.


Surface Rights


5. Without prejudice to the generality of the rights provided in the MDA, the grant of the


Mining License shall, pursuant to the provisions of Section 6.7(d) of the Minerals and


Mining Law, carry the following surface rights:


(i) Erection of habitations, office buildings, mill buildings, engine houses, storehouses;


(ii) Building of dumps, ditches for drainage, roads within the surface boundaries of the


Proposed Production Area;


(iii) Making trenches and open cuts, constructed for and necessary Mining Operation;


(iv) Cutting of timber only insofar as it is necessary to clear for buildings and such w'orks as


are mentioned in (i) to (iii) above and to use in construction of the mining site; and


(v) Use of water and other resources necessary for the execution of the work.


Rights to Dispose of Minerals


6. The CONCESSIONAIRE shall have the right to freely dispose of within Liberia all


Minerals extracted under the terms of this Class A Mining License, and may export all


such Minerals in their original or changed form subject to the specific provisions of the


MDA.


Reports by the CONCESSIONAIRE


7. The CONCESSIONAIRE shall submit to the MINISTER not later than September 30 of


each year a report giving statistical and descriptive information concerning the operation


of the Mining License. The CONCESSIONAIRE shall demonstrate, upon request, to the


reasonable satisfaction of the MINISTER that the provisions of this Law and the


Regulations are being complied with. Such reports, if requested, shall be submitted not


later than December 15 of each year;


Inspection of Mining Premises and Books


8. The MINISTER shall have the right to order an inspection at any time of the Proposed


Production Area and, upon reasonable notice, of the books and records maintained at the


principal office of the CONCESSIONAIRE in Liberia;


Requirements for Maps





9. The MINISTER may order topographical maps and underground maps to be filed by the


CONCESSIONAIRE at any time, but not more often than once every six months. All


such maps must be sworn by a competent surveyor, who in his affidavit shall set forth a


statement of his training and ability.


Made in Monrovia, this _day of_, 20_.


MINISTER OF LANDS, MINES & ENERGY

















Name:








ACKNOWLEDGED AND AGREED:


By CHINA-UNION (HONG KONG) MINING CO., LTD.














Name:


Title:


 ANNEX I to the CLASS A MINING LICENSE





DEFINITION OF THE PROPOSED PRODUCTION AREA


The Proposed Production Area encloses [_J.





The boundary of the Proposed Production Area is shown on Drawing [_].





The co-ordinates of the Corner Points are given below in the [_] co-ordinate system:





Comer Point X Y


CPI


CP2


CP3


CP4


CP5


CP6


CP7


CP8





The Metes and Bounds of the Proposed Production Area are as follows:





Corner Points Distance (m) Direction Degrees Minutes Seconds Direction


Cl -C2


C2-C3


C3-C4


C4-C5


C5-C6


C6-C7


C7-C8


C8-CI





(See map on following page)


























\\\DC - 090334/010276 - 2837623 v2


 SCHEDULE 1








Index of Bid Materials





See attached.


 SCHEDULE 2A








Initial Concession Area








See attached.


 Bong Range Deposits Initial Concession Area








350oa*’-E 360 >70 >80 B50O>vE


I I i oBinda-Ta "Davld-Ta I


Sorloya oPorteh-ta UTM Coordinates


Fauta Tinmah


Zulu Hills Gbansug oKelepei Vertice Easting Northing


o Saw Mill 0 350150 752300


Warnalola Nevankea Mulbah Moo-taSoko-ta 350150 753800


o o o o 1


Dainenama Vileanyen-ta 2 352000 753800


Gbalala Kpanawon-tQ Paa Kellea-ta 3 352000 755820


D&vidta Siefa Korton-ta Dahn-&


'70- ► 3 0Solanpolu 4 360000 755820


Kpalota Bensansu D»net?ama Korneya Quelleh 5 360000 757270


Gwilly Farm0 New Zuanta Slngbe Yukuta 11 Dank par, 12


Luke Farm MM* 6 363820 757270


Vanjata Morihokpanyen


Wayarna fi vanjaia O____-- 7 363820 760000


o oHoiaer Farm __----- Nyentasackie Siapulo 10 Fa yala 8 370000 760000


J3oduala Gonota ° Junn-Ta ° WoySzomah i Mulbah-Ta 9 370000 764180


0 °Kpand>Saah-Ta Loma Village 0Tw' Dowita


. L. T SW/„. , Moli-Ta GbormonmaL° , T Gbeleta n- * . _ „ ., 10 374180 764180


BHItanla o Mftweli-Ta. oLW°'U a ° _ ° 7 _Gob!emu


jssss^ n ° _ „ J0 0i/e,eya^ ™ 11 374180 766360


JJanengm Benson-Ta^^ Kpmgbah-Ta Yabayai Wennie-ta 12 380000 766360


. Dubli0 °Zubah-Ta 14 13* 13 380000 768100


’ Kumu-Ta 6ta,lrt5 1leiteh-TaBo £,a'r* Darkor-Ta Ta 14 384900 768100


o Popoia Gonorkollle-TaGarkoloi Venla-Ta


%amah-Ta Gbakoyah-Ta o <*» 15 384900 762000


oo 0 5 Neipokoli-T


'60- °DJ=o,rday-Ta Gbelema-Ta Wapat -'60 16 380000 762000


Gbainkalta Yahkpoi-To (1) 15 17 380000 758500


Inhn7t>ie>nma Ta ^Vayata Wallace Village hbdUkpan-Tai®


John Zelenma-Tawima 8Zincla Gbatu-Ta Gbaikpan-TjC 18 372200 758500


0 Woitoaysu 3 ° Nyatainah 19 372200 757000


We - - - - 7v-«a»Kf!° ? 0


° oGorgolu^Ta Brooks-ta 20 370000 757000


Mortolkollie- TaWoiekpo. Ta 21 370000 750360


55- o -55 22 364200 750360


Vengeleta ^ KoJfenJ^IToe1a 23 364200 752300


Camp Waterfall 22* 2*1 T^Saw^" Tulamu Wahnta 24 361000 752300


* 25 Gbagozi o Yearned


Sagoleta YelenyatoiKffonta Felenta 25 361000 748500


° dayakpala Gbelekpanlah o Japanta 26 353500 748500


‘ "* • jbah Town oTeasaly 0 Kolleh Kangbano 27 353500 752300


'50- Linema Zarwakun a Wayen-ta 28 350150 752300


Gfcessay Village^orshlgbolor -'50


John Ta Bilrtanlah


SintL Balikohnr, °Gaygbai Camp A-9% Galinta Legend


R QkHi°so if c t i o n Mdbadee Farmo Geikorma Temata Fefelah


KplaKonleFarmZokf. oBoakarta o <


c“*«i5aul. Budu1a(2) Walla ° ° ‘ Saysayla


'Gboryormu(1f> £iex kejfer Farmkfotqf %pwno^^'ametl Salala Kulun-ta 0 Settlement


0 Sakokpota o (Serfemuh Wilmot-ta Tumutu-ta Wansue Cooper Town ° Vertice


Suakaisa QKombiFarm Gorglah Farm ° o °w£)lVaiee ° 0Yeabela Balenu * Wenetoorformu-45







Itoanka ^patomyau» o Vena ° Gbarta Gbayata


oPadmore Farm (2) Perry FarmNyafikaL° °^rifmat\^yanior1a GbanyakoliS'4,/fe'fa 0Kwatown BMC Railway (~ 76.6 sq.km /47.6 miles )





Moinia Herry farm °Neyakai ° 0 0Yahkpawolo o


Bbnjai town Beikeh Townf^^wesue^^0^ Farm<1> Jwuta Intial Concession Area (59,289.48 acres)


Z Blemu towi}Dwanta Naineta Weafdow/i Boeta o Qjpfjg Sackie Gbuma Town z


i- 0 Blumue Ansiah 011909EOS


l ° I 0 I 75 I I


350f“>-E 360 65 >70 >80 385®°~E


 SCHEDULE 2B








Initial Concession Area and Additional Concession Area Combined





See attached.


 INITIAL VS. FINAL





’SO^E 360 *70 ^once SSION AREAS


I oZulu Hills I


75 380 85 JgOtOOnvE


Wamalola Gbansug °Kelepei I





0 oSaw Mill


Gbalala JNeyankea Mulbah Moo-taQ q rt McKay





Cfhvidta Dainenama VHean\


Kpanawon-tS paa Galawulu-la


Kpalota Bensansu nSiefa


Gwilly Farm' o NewZuanta 0Solanpotu


Luke Farm Sali-Tac SaH-Tatf 0s

o Wayama Vanyafa Menla MonnokpanyenBoyea


QNyentaSackie Slapulo


3 oHomer Farm


Gonota Junn-Ta 0 KpotolomaBjaden


Boduala KpanfSaah-Ta LomaVillagl Fanyala


o Moll- Dowrta lo-ta


Bilitanla 0 °Gferta-r^V'e/eyan


Lomah-Tafcf „ ° T Dualuta%eeta Seep lu-ta


Geygemao Benson-Ta oz. . . , Yabai


o F£inutole


'Danerypn Dubli° „ _ , J^Zubah-Ta Wennie-ta


°Kumu-Ta Gbalnt%

%amah-Ta Gbakoyah-Ta ' opota irkollie-TaGarkolor-Ta





O


"b Nyaniquelleh


'60- Davidt-Ta jQbelema• Wapai 0Yahkpoi.To (1)


0 0Forday-Ta Wallace Village -'60


John Zelenma-Ta WllUta 0 Zincla QGt&ikpan-Ta


ysu Zuwulola Nyena-Ta


Tinkita (2) oKito °° Digul&-TaJa^Ta ^Nyatainah





7a Va/tu/o (2) 0 oGorgohPTa Brooks-ta


* Yakulo (1) Wolekpo-Ta








Vengeleta James BarclayJuwakai- . 'Veleahyei


YelenyatoiKpanta


Tulamu London


cBarclay


Felenta o


Gibanju Topr^ayakpala Gbelekpanlah Japanta Kolleh Kangban


Unema Zarwakuma Qbessay VH^j^bSwiageT o


Wayen-ta


'So¬ ^Teasaly o -'50


S orshigbolor Smith


Sinta Balikohnma °Gaygbai Camp BilHanlah o


---ft ~bade*lar(Q£. Baysah-taGaUnta Legend


KplaKonie Farmcjyofc0 o' °Fe?e!ah O Settlement


Molley Ko"ieMolley_Defeh Budutafl) ^ Stream


Saysayla


QSakokpota oGboryormu(1f>Aiex better Fa°rmf/tot<& Tprwnp_ Salala 0 Kulun-ta Aj. BMC Railway (74.2 km)


Seftemuh Wilmot-ta Tumutu-ta Wansue Cooper Town


45- Suakaisa QKombl Farm Gorglah Farm°o °v^Mafee 0 Yeabela Balenu °NenebSrlormu Inlial Concession Area (59,289.48 acres)


---45


zherman Farm (2) Kwalakoma o®ra4flotey Mardhansue Momo Wala Gbayata (ffl FINAL CONCESSION AREA (613.19 sq.km /151.521!


/ oPadmore Farm (2) Nyan§a 'ftaJoo/oyafa, Vena ° Gbarta 011909


. (.aValfc-ta Kwatown


GbanyakoliS °


Moinia


o Bbnjai town Jwuta 3.75 7.5 Kilome


Blemu Dwanta o o o Cipha Sackie Gbuma Town


Gulpeyetb^g Gbay towo°wanta yaineta ^ Weah&wn Dedeta Ansiah


Nyuma-Ta

,mu Mulbah TpwnLinerlah


n o


350°°°"'E 360 65 370 ^0 3g0“®"-E


 BONG RANGE IRON ORE DEPOSITS FINAL CONCESSION AREA ~ c^








35QO»mj=


I














770ooomN Cfavidta


o


Kpalota


Gwilly Farm


Luke Farm


Wayama ,, ^nfatu


o oHorder Farm











. „ anna


LomagTaQafm COORDINATES


Geggemao


Vertice Easting Norti


0 389694.78 77294


389536.06 75496


1


'60- -'60 2 385804.35 7549C


3 385879.44 74796


4 349556.76 74796





5 349450.95 74841


6 349450.95 7489


7 349486.22 74978


8 349697.84 75218





9 349380.4 75412


10 349944.74 75511


Kolleh Kangban 11 389694.78 7729/


Wayen-ta


-'50 Projection: WGS84 UTM Grid zone 29


Smith


Gatin t a Legend


relah o Settlement


KplaoKonieFarm^ok% 0 o Vertice


Motley Ko"ieMolley.Deteh 0 Buduta(2) ^//a o o o'---» Saysayla


Sakokpota Gboryormu(1f>Alex ketter Fa°rmf}fotqf j^^Namameh rnmil,,.taSala'a ° 0Kulun'ta Stream


° Seffemuh Wilmot-ta Tumutu-ta Wansue . Cooper Town BMC Railway (74.2 km)


S0a*,iSa o''"'’6'8 -45 FINAL CONCESSION AREA (613.19 sq.km /151,52


3SSSSS8 “a --- --- 01190


Vena ° Gbarta


_. ° . r0Val&-ta Kwatown


GbanyakoliS °


Moinia Beikeh Towng™*~ n

o Bbnjai town


Blemu _ . -Gbayi Dwanta ° 0 0 C'Rpa Sackie Gbuma Town


Gbaytowg Q J4aineta ^Weahoown o Ansiah


Gulpeyefi,Da/gr CondolonBlumue Konete Town


oNyuma-Ta ~ %elemu Mulbah Townunerlab a,3o Kenneh Town


i i ° i r0 i I


3S0a00m-E 55 ’60 65 370 75 580 JgQtoo-, £


Note: The boundary line defined by vertices 4 to 9 of the concession area fall on the eastern side of the Kakata-Hemdi Highway


 SCHEDULE 3.1








Goma Deposits Area and Non-Goma Deposits Area





See attached.


 et





Gomma and Non-Gomma Deposit Areas plus Coordinates





350000B.E 560 370 75 380 385«»mE


i I I 0 Blnda-Ta I - I I


Sonoya Porteh-ta Momo Kalne Village_ UTM Coordinates


Fauia Tinmah


Zulu Hills .“-i Vertice Northing Easting


o 0 363820 757270


Wamalola Neyankea Vileanven-taSoko-ta





° Dainenama ^l&ah Mop-ta 1 363840 752300


Gbalala Kpanawon-ta paa Kellea-ta Galawulu-ta


2 361000 752300


[fevidta Siefa Korlon-ta Dahn-ty 3 361000 748500


70- o 0 0Solanpolu DSnefiama Komeya Quelleh 4 353500 748500


Kpalota Bensansu


Gwllly Farm New Zuanta Singbe Yukuta QDankpansue8 Boyea 5 353500 752300


Luke Farm Menla Sali-Ta°


Wayama {}fanjJ,ta 5 Monnokpanyen 6 350150 752300


o o Homer Farm Nyentasackie Siapulo Bladen 7 350150 753800


Gonota ° Junn-Ta 0 l/Voyifeomah < Fa yala o


°Kpan£Saah-Ta Loma Village ,7We*i Mulbah-Ta 9 Gotolo-ta


Boduala D w/ia 8 352000 753800


, Moli-Ta Gbormonma, ° , T Gbeleta _• ? . Seepo/u-ta 9 352000 755820


, , „ Bihtanla o Mi?iwpli-Ta o ^ ° ~ DOnfal ° Goblemu


Lomah-Tan m o M’nwe" iao° • o °Gffarta- Tg \/e/eya/#f 10 360000 755820


G<*9 30 BinS°n-TaFeinut£\. Kpingbah-Ta' Yabayai Wennie-ta 11 360000 757270


Danenpn Gbainta~^7" °rSoa/a- Dubli0 . _ . fubah-Ta „ , 10 9° 363820 757270


Kumu-Ta o rleiteh-Ta o Darkor-Ta 12


_ - opota Gonorkollie-TaGarkolot Venla-Ta Non Gomma Deposit Area


°Samah-Ta Gbakoyah-Ta o \


760--- a o 0 1 Neipokoh-I


David-Ta Gbelema-Ta Yahkpoi-To (1) Vertice Northing Easting


QForday- Ta °Wayata Wallace Villai Gbainkaita ’bbdlkpan-Ta 11 0 363820 757270


JohnZelenma-Tawma(Q ° Zincla Gbatu-Ta 3 balkpan-Tfi


Woifiaysu 11 ° 10 Nyatalnah 1 363820 760000


NeveKelerf finkita (2f*o 12 Q^aiu'Ta Nyena D 2 370000 760000


cheyeKe!e(2) °Diguty- TaoGarm,layP<\usu / Brooks-ta 3 370000 764180


-g Yakufb ( Mortolkollie- TaWolekpo. Ta 4 374180 764180


55- .-55


Veleanyei


5 374180 766360


JpneKoienJuwakoalToeta Tulamu London 6 380000 766360


Gbagozi a Wahnta 7 380000 768100


Yearn elJ


bagoleta YelenyatoiKffknta Felenta o 384900 '768100


0 «£ayakpala Gbelekpanlah Japanta Kolleh Kangban 8


15 Legend ta 9 384900 762000


J Laa Linema Zarwakun a o rfblnqbah Towr 10 380000 762000


° Luula Settlement


John Ta Gbessay Village^orshigbolor nith 11 380000 758500


°Gaygbai Camp o


Sint Baiikohr Non-Gomma Vertices a 12 372200 758500


o Lomamita ° M^badee Farmo 13 372200 757000


./ Robinson Projection Buduta(2) oKplaoKonie Farm Gomma Vertices 14 370000 757000





Gboryormu(1pfiiex ketter FamiJbtor TpemoNaman Stream 15 370000 750360


JSakokpota ° Geftemu,


45- Suakaisa J

Sherman Farm (2) Kwalakoma a® Bokay 17 364200 752300


oPadmore Farm (2) Nyant/a OAo/op , (| Intial Concession Area (59,289.48 acres 363839.9 752300


18


Perry Farm %K**£ Gomma Deposit Area (161.47 sq.km / 39,899.15 acres) 19 363820 757270


Moinia NonGomma deposit (78.47 sq.km / 19,390.32 acres) Gomma Deposit Area


Bbnjai





MonogbamBaGbay towaDwan,yai°eta ° 0119


'bnWea£

3S0att-E 370 380


 SCHEDULE 21.1(c)








Shareholders, Affiliates and Related Matters





See attached.


 Names of shareholders of China-Union (Hong Kong) Mining Co., Ltd.


1 China-Africa Development Fund Co., Ltd. (CADFund)


2 Tianjin the Leader Group Co., Ltd.


3 Henan Jianghai Group Co., Ltd.


4 Hong Kong Gingko Group Co., Ltd.


5 Guizhou Jinda Group Co., Ltd.


SCHEDULE 5








Port Facility





See attached.


 BONG MINES IRON ORE PORT TERMINAL LAND AREA














:Z K- i V..; T.


Map I Satellite | Terrain


f?











Liberia FreeI !one


Authority (LIFZA) Area






































FORMER BMC





PORT LEASE M














V-




















Company (NIOC)








Tr-iHopr'iCih











REDUNE SHOWS BOUNDARIES OF THE FORMER BONG MINES IRON ORE TERMINAL AT FREEPORT OF MONROVIA


COORDINATES AND/OR METES AND BOUNDS SHALL BE PROVIDED WITHIN 60 DAYS





 SCHEDULE 6





Proposed Fiscal Regime for Mining


See attached.


 Fiscal Provisions


April 23, 2008





Preliminary Matter


Amendments


Section 10. Definitions


(t) Taxpayer. The term "taxpayer" means any person subject to a tax imposed by this Code, or


subject to a related obligation to pay interest, penalties, or fees. In the case of a mining or


petroleum exploration, development, or production activity carried out by a person authorized


under the Mining Law [citation] or Petroleum Law [citation] to conduct a mining or


petroleum project (the '‘producer’) -


(1) The producer is the taxpayer legally responsible for reporting, withholding, and paying


tax on behalf of a mining or petroleum project.


(2) If the producer is organized as a partnership or similar form of unincorporated joint


venture, each partner shall be considered a taxpayer with respect to the activities of the


project.


(3) A taxpayer is not permitted to consolidate projects for the purposes of determining


liability for any tax under this Code.


(w) Value. The term “value” means the fair market value as determined in an arm’s length


transaction by parties acting without obligation or coercion. Transactions between related


persons are assumed not to be at arm’s length, and the Minister by regulation may subject


them to disclosure and documentation requirements not applicable to transactions between


unrelated persons. The Minister shall follow OECD transfer pricing guidelines in


evaluating the validity of the price set in a related party transfer.


Section 17. Stability of Fiscal Regime for Mining and Petroleum


When entering into a mineral development agreement under the Mining Law [citation] or a


production sharing agreement under the Petroleum Law [citation], the Government of Liberia


is permitted to accept a clause stabilizing the following aspects of taxation to the terms under


Code provisions on the effective date of the agreement:


(1) The income tax rate;


(2) The rate of royalty on mineral production;


(3) The special rule for extended net operating loss carryforward;


(4) The special rule for depreciation and other cost recovery;


(5) The rate for withholding of tax on payments;


(6) The exemption provided in Section 1001(e)(6) and 1001(g)(2);


(7) The exemption provided in Section 1708(b); and


(8) The exemption provided in Section 2009(h).


Section 54. Confidentiality of Tax Return Information


(b) Exceptions. Information concerning a taxpayer may be disclosed to another person with


the taxpayer's written consent. Without the taxpayer's written consent, an officer, agent,


or employee of the Ministry of Finance (or former officer, agent, or employee) may








-2-











/


 iscal Provisions


April 23, 2008


disclose confidential information only to the following persons or agencies, and only to


the extent required for performance of their official functions---


(7) To the administrator of the Extractive Industries Transparency Initiative (EITI) to the


extent necessary for Liberia’s participation in and compliance with the EITI, including the


publication of disaggregated reports that may identify payments by persons or projects.


Part II. Income Tax


Section 200. Tax Imposed


(a) Resident Natural Persons.


(1) An annual income tax is hereby imposed on the annual taxable income of every


natural person resident in Liberia (including resident Liberian citizens employed by an


embassy, a diplomatic mission, or international organization).


(2) The tax is collected during the tax year in accordance with the withholding rules of


Section 905 or the advance payment rules of Section 904.


(3) The tax rate applicable to the income of a natural person is determined in accordance


with the following rate schedule, except for natural resource extraction income subject


to tax under Chapter 7:


(b) Resident Legal Persons.


(1) There is hereby imposed on the annual taxable income of every legal person resident


in Liberia for a tax year an annual income tax that is collected during the tax year in


accordance with the advance payment rules of Section 904.


(2) Except as may be otherwise provided in Chapter 7, for tax periods beginning on or


after July 1,2008, the tax imposed shall be at the rate of 30 percent of taxable income.


(3) In the case of a life insurance company, or mixed-type insurance company with 30


percent or more of business from life insurance, the rate in paragraph (2) does not


apply. Instead, tax is imposed according to the presumptive income tax rules of


subsection (c) using the rate and collection method for category 2 taxpayers whether or


not the company otherwise falls within that category.


(c) Presumptive Income Tax.


(1) In lieu of the regular income tax imposed under subsection (a) or subsection (b), a


natural or legal person operating a trade or business with turnover below $5,000,000 is


required to pay a presumptive income tax, except that the presumptive income tax of


this subsection does not apply in respect of activities subject to tax under Chapter 7.


























/


 Fiscal Provisions


April 23, 2008


Chapter 7. Income Taxation of Natural Resources


Subchapter A. Mining and Petroleum


Table of Sections





ANNEX B...........................................................................................................1


Fiscal Provisions..............................................................................................1


Bong Tender.....................................................................................................1


Section 17. Stability of Fiscal Regime for Mining and Petroleum.....................2


Section 54. Confidentiality of Tax Return Information.....................................3


Part II. Income Tax..........................................................................................3


Table of Sections.............................................................................................4


Subchapter A. Mining and Petroleum..............................................................5


Section 700. Scope of Chapter.........................................................................5


Section 701. Rate of Tax..................................................................................6


Section 702. Valuation.....................................................................................6


Section 703. Royalties and Surface Rent..........................................................6


Section 704. Determination of Taxable Income of Mining Projects..................7


Section 705. Determination of Taxable Income of Petroleum Project..............8


Section 706. Special Rule for Net Operating Loss Carryforward......................9


Section 707. Special Rule for Depreciation....................................................10


Section 709. Special Rule for Exploration Costs............................................10


Section 711. Treatment of Property Transfers................................................11


Section 712. Successor Agreement; Transfer of Interest in Project.................11


Section 713. Transactions Between Related Persons......................................12


Section 730. Surtax on Income from High-Yield Projects..............................13


Section 731. Determination of Expenditures for Section 730 Purposes..........14


Section 732. Determination of Total Revenues..............................................15


Section 740. Definitions.................................................................................16


Section 741. Cross-References.......................................................................17


Part III. The Goods and Services Tax.............................................................19


Part V. Customs Revenue Code.........................................................................20


Part VI1. Real Property Tax...............................................................................20


Chapter 20. Real Property Tax...........................................................................20





Subchapter A. Mining and Petroleum





Section 700. Scope of Chapter


(a) Income Taxation. In accordance with the provisions of Part II (to the extent applicable)





and as specifically provided in this Chapter, income tax is imposed on the taxable income


of a mining or petroleum project (as defined in Section 740). In case of inconsistency with


other provisions of this Code, the provisions of this Chapter are detenni native.


(b) Rate of Tax. Taxable income of a mining or petroleum project is subject to income tax at


the rate stated in Section 701 and, if the Section 730 income surtax applies, at the rate


determined under that section.














-4- W1MMTC-4/23/2008











A


 Fiscal Provisions


April 23, 2008


(c) Form of Organization Disregarded. Regardless of the legal form of organization adopted


by one or more persons having an interest in a mining or petroleum project, taxable


income shall be determined separately for each project, and a person with an interest in


more than one project shall not be permitted to consolidate income or loss of different


projects.


(1) For purposes of determining income tax, a project’s income is considered to be


income of a resident legal person or of a Section 803 permanent establishment


taxable according to rules applicable to a resident legal person. Taxable income


and income tax liability are determined under provisions of the regular income tax


of Chapter 2 subject to special rules provided in this Chapter.


(2) In accordance with Section 10(t), a person who holds a Class A mining license


(“license”) granted under the Mining Law and accompanied by a Mineral


development agreement (“MDA”) or a person who holds a Petroleum Production


Sharing Agreement (“PSA”), is considered to have an interest in the mining or


petroleum project that is the subject of the license or PSA (“project”), and is the


taxpayer legally responsible for paying tax with respect to income of the project.


(3) The Chapter 9 filing and advance payment rules for the regular income tax apply


to a resident person or persons having an interest in a mining or petroleum project.


(d) Mining. The Mining Law [citation] governs non-tax terms of extraction of minerals in


Liberia, including licenses and fees.


(e) Petroleum. The Petroleum Law [citation] governs non-tax terms of extraction of


petroleum in Liberia, including the sharing of production under a PSA, which determines


the “contractor’s share” of income from petroleum extraction.


(0 Valuation of Minerals. Extracted minerals shall be valued for all purposes of this Code


using the valuation method described in Section 702.


(g) US Dollar Accounting Permitted. Books and records of a project may be kept in US


Dollars and a project’s tax and taxable income may be determined in US Dollars, but tax


or taxable income shall be re-stated into Liberian dollars at the Minister’s request or under


conditions stated in regulations.


Section 701. Rate of Tax


(a) Rate. The rate of tax on a project's taxable income shall be 30 percent.


(b) Surtax on Income from High-Yield Projects. A high-yield mining project, as defined in


Section 730, shall be subject to a higher marginal rate of income tax on taxable income


under the conditions and using the calculation method set out in that section.


Section 702. Valuation


(a) Fair Market Value. Minerals extracted by a project are valued for all purposes at fair


market value as determined in an arm’s length transaction f.o.b. Liberia without reduction











-5- WIMMTC-4/23/2IKI8


 Fiscal Provisions


April 23, 2008


for claims, counterclaims, discounts, commissions, or any other asserted offset or


deduction.


(b) Gold. The fair market value of gold f.o.b. Liberia shall be the London afternoon gold price


fixing (“London PM fix”) for the day that gold is shipped from Liberia.


(c) Advance Pricing Agreement. The Government of Liberia may agree, by a clause in an


MDA or PSA or by a separate contract, to an index and methodology for determining the


deemed value of a product. Any reference price shall be public.


Section 703. Royalties and Surface Rent


(a) Royalties. A royalty is due and payable to the Government of Liberia at the time of


shipment and in the amount of the stated percent of the value of commercially shipped


mineral, regardless of whether the shipment is a sale or other disposition:


(1) Iron ore. 4.5 percent.


(2) Gold and other base metals. 3 percent.


(3) Commercial diamonds. 5 percent.


(b) Surface Rent. A producer who has entered into a mineral development agreement shall pay


an annual surface rent of US$0.20 (Twenty United States Cents) per acre for use of land in


the mining exploration contract area; for use of land in the Mining License Contract Area


the Producer shall pay an annual surface rent of US$5.00 per acre during years 1 to 10 and


US$10.00 per acre during years 11 to 25 years


(1) Annual payments are due in advance on 1 July of each year. An initial payment,


calculated for the period from the agreement’s effective date to the first annual


installment date, is payable on execution of the agreement.


(2) Surface rent shall be subject to inflationary adjustment in accordance with the “GDP


Implicit Price Deflator” as published from time to time by the U.S. Department of


Commerce, Bureau of Economic Analysis.


Section 704. Determination of Taxable Income of Mining Projects


(a) Gross Income. The gross income of a mining project includes---


(1) All revenues resulting from production and other operations carried out under the


project’s mining license;


(2) Any other income that the project receives from business activity or investment


accruing in, derived from, brought into or received in Liberia, including currency gains


when realized (but not gains from hedging transactions), less the deductions set forth in


subsection (b).














-6- UIMMTC-4/23/2008


 Fiscal Provisions


April 23, 2008


(b) Deductions Allowed from Gross Income. Expenses permitted as deductions from gross


income under Chapter 2, including but not limited to the following items, shall be allowed


as deductions from the project’s gross income to arrive at its taxable income:


(1) For the tax period, all expenditures incurred wholly, exclusively and necessarily for or


in connection with project operations (excluding the capital cost of items of mining


plant except to the extent this subsection provides an allowance for depreciation),


including non-capital operating costs.


(A) Royalties (as specified in Section 703) are deductible.


(B) Fees and rent paid for the privilege of a license for mineral extraction in


accordance with the Mining Law are deductible.


(2) A carryforward of net operating loss from a prior year to the extent permitted under


Section 203(e) as modified by Section 706.


(3) An allowance for depreciation of the items of mining plant in accordance with the


depreciation rules of Chapter 2, subject to the special rule of Section 707.


(4) Interest on any indebtedness of the project, and other financing costs incurred in


connection with operations and paid to an affiliate or to a third party, for the tax period


incurred, subject to the special rule of Section 708.


(5) Exploration expenditures as provided in Section 709.


(6) For the tax period incurred, payments to a Government-approved trust fund for mining


reclamation, subject to the specific limitations set out in Section 710.


(7) The amount of surtax determined under Section 730 and paid during the tax period.


(8) Subject to the provisions of Chapter 2, management fees paid, whether to an affiliate


or to a third party, but not any amount in excess of 2 percent of operating expenses


incurred for the tax period.


(9) In each year and subject to the provisions of Section 203(c), any bad debt incurred, so


long as the amount of such bad debt has previously been subject to income taxation in


a prior tax period.


(10) Charitable contributions made in Liberia to a qualifying organization within the


meaning of section 205 for educational or community development projects, social


welfare, or medical purposes or for the provision of other social services.


(11) Expenses related directly to the project’s “other income” under subsection (a)(2), to


the extent otherwise allowable as a deduction under Chapter 2 and this Chapter.


(c) Deductions Not Allowed. There shall not be allowed as a deduction from gross income---


(1) Any payment to an expatriate employee as reimbursement for taxes and duties paid by


such employee to the Government.





-7- WIMMTC-4/2 3/2008


 Fiscal Provisions


April 23, 2008





(2) Losses from hedging transactions.


(3) The incentive deduction of Section 204(d).


(4) Any deduction allowed as a special tax incentive under Section 204(e).


Section 705. Determination of Taxable Income of Petroleum Project


(a) Gross Income. The gross income of a petroleum project includes---


(1) The contractor’s cost share and profit share of income from a petroleum project as


specified in the Petroleum Law;


(2) Any other income that the project receives from business activity or investment


accruing in, derived from, brought into or received in Liberia, including currency gains


when realized, less the deductions set forth in subsection (b).


(b) Deductions Allowed from Gross Income. Expenses permitted as deductions from gross


income under Chapter 2, including but not limited to the following items, shall be allowed


as deductions from the project’s gross income to arrive at its taxable income:


(1) For the tax period, all expenditures incurred wholly, exclusively and necessarily for or


in connection with project operations (excluding the capital cost of plant and


equipment except to the extent this subsection provides an allowance for depreciation),


including non-capital operating costs.


(2) A carryforward of net operating loss from a prior year to the extent permitted under


Section 203(e) as modified by Section 706.


(3) An allowance for depreciation of plant and equipment in accordance with the


depreciation rules of Chapter 2, subject to the special rule of Section 707.


(4) Interest on any indebtedness of the project, and other financing costs incurred in


connection with operations and paid to an affiliate or to a third party, for the tax period


incurred, subject to the special rule of Section 708.


(5) Exploration expenditures incurred that are attributable to the project, to the extent


allowed by Section 709.


(6) For the tax period incurred, payments to a Government-approved trust fund for


reclamation and decommissioning, subject to the specific limitations set out in Section


710.


(7) Subject to the provisions of Chapter 2, management fees paid, whether to an affiliate


or to a third party, but not any amount in excess of 2 percent of operating expenses for


the tax period incurred.


(8) In each year and subject to the provisions of Section 203(c), any bad debt incurred, so














cs


 Fiscal Provisions


April 23, 2008


a prior tax period.


(9) Charitable contributions made in Liberia to a qualifying organization within the


meaning of section 205 for educational or community development projects, social


welfare, or medical purposes or for the provision of other social services.


(10) Expenses related directly to the project’s “other income” under subsection (a)(2), to


the extent otherwise allowable as a deduction under Chapter 2 and this Chapter.


Section 706. Special Rule for Net Operating Loss Carryforward


For the purposes of determining taxable income of a mining or petroleum project, the Section


203(e) period for carryforward of net operating loss shall begin with the First tax period in


which commercial production begins and shall be limited to seven years rather than five.


Section 707. Special Rule for Depreciation


(a) Commence merit of Period. For property placed in service before the start of commercial


production, the period for depreciation of property described in Section 204(b) shall begin


in the first tax period that commercial production begins.


(b) Five-Year Cost Recovery Period. In place of the 15-year period set out in Section 204(b)


for recovering the cost of tangible fixed property and intangible property, mining or


petroleum projects shall be entitled to recover the cost of this property on an asset-by-asset


basis over a five-year period at the rate of 20 percent per year.


(c) Other Cost Recovery Period. A project’s tangible fixed property outside the project’s


mining license contract area (or beginning inside and extending outside) shall be


depreciated over a 15-year period or the expected life of the mine (whichever is shorter)


using the straight-line method, except that if the project is terminated before the end of the


period the remaining unrecovered cost is treated as an expense deduction in determining


taxable income for the tax period in which the project is terminated.


Section 708. Special Rule for Interest Deduction


(a) Interest incurred in a tax period and subject to the limitation of Section 203(d) may be


carried forward to the next tax period.


(b) The amount of the carryforward is treated as interest incurred in the subsequent period,


and is deductible to the extent permitted under Section 203(d).


(c) The interest carryforward allowed by this section does not expire.


Section 709. Special Rule for Exploration Costs


The costs of exploration attributable to a project, as defined in Section 740, are deductible in


the first lax period in which commercial production begins.


Section 710. Special Rule for Decommissioning Expenses











-9- WIMM TC-I/23/200S








/


 Fiscal Provisions


April 23, 2008


(a) Qualification. A mining or petroleum project’s payment for decommissioning expenses is


deductible from gross income under Section 703(b) or Section 703(b) only in the amount


paid during the tax period---


(1) To defray reclamation or decommissioning expenses upon cessation of commercial


production, and remedying damage caused to land used by the project or


environmental damage the project may have caused (including damage that extends


beyond the contract area), but not if drawn from a trust fund described in paragraph


(2).


(2) To a trust fund established to defray future expenses of the type specified in paragraph


(1), but only if the fund has been approved by the Minister in regulations and subject


to any limitations or requirements provided in regulations.


(b) Recapture. An amount taken as a deduction under subsection (a) but not used for the


specified purpose---


(1) If remaining after the tax period in which commercial production ends, shall be


included in income for the following lax period; or


(2) If used for another purpose, shall be included in income in the tax period within which


the amount is so used.


Section 711. Treatment of Property Transfers


(a) Genera/ Rule. Unless an exception applies under this Chapter, a project’s gain or loss on


the transfer of depreciable property used by the project is treated in accordance with


section 204. Transfer of non-depreciable property used in the business, or transfer of


property other than property connected with mining or petroleum, is determined in


accordance with the property transfer rules of Section 207.


(b) Special Cases.


(1) Hedging. Hedging transactions by a mining or petroleum project are taxable as a


separate business activity, and hedging gains and losses incurred are not includible


or deductible in determining taxable income of the project or for the purposes of


Section 730.


(2) Investment Gain. Gain on property the project holds for investment is determined


under Section 207 and is includible in income of a project, except to the extent


reduced by investment loss under the rule of Section 203(b)(2).


Section 712. Successor Agreement; Transfer of Interest in Project


(a) Successor Agreement. If the development agreement for a project (the “original


agreement”) is terminated and a new agreement (the “successor agreement”) is entered into


with the same holder for the same contract area (the “successor project”), the project’s loss


carryforward existing at the termination date of the development agreement is deductible in


the first tax period of the successor project under the successor agreement, provided:














- 10- VvlMMTC-4/23/2008


 Fiscal Provisions


April 23, 2008


(1) The whole of the geographic area covered by the contract area of the successor


agreement is within the contract area of the original agreement; and


(2) The successor agreement entered into force immediately following the termination of


the original agreement.


(b) Transfer of Interest. If the holder of an interest in a project transfers that interest---


(1) The taxable income of the project shall continue to be determined by using the tax cost


and other tax attributes applicable at the date of the interest transfer; and


(2) The transferor of the interest shall determine gain or loss under Section 207, which also


applies to determine the transferee’s tax cost in the interest.


Section 713. Transactions Between Related Persons


(a) General Rule. A project’s gain, loss, and other tax consequences in transactions with


related persons are subject to in Section 10(v) (in Part I, General Provisions) and Section


208, Related Persons (in this Part).


(b) Transfer Pricing. A transaction with respect to production between the project, or a person


having an interest in the project, and a related person shall be on the basis of competitive


international prices and such other terms and conditions as would be fair and reasonable


had the transaction taken place between unrelated parties dealing at arms’ length.


(c) Advance Pricing Agreement. The Government of Liberia may enter into an advance


pricing agreement with a project, the holder of an interest in a project, and any person


related to the project under Section 208, to establish the method by which prices will be


determined in related-party transactions.


(d) Disclosure. Projects are required to disclose related party transactions and to


contemporaneously document the manner in which they set prices in transfers to related


parlies.


(e) Guidelines. The Minister shall follow OECD transfer pricing guidelines in evaluating the


validity of the price set in a related party transfer.


Section 714. Partnerships and Joint Ventures


(a) Pass-Through of Tax Attributes. If the person authorized to conduct a project is organized


as a partnership or similar form of unincorporated joint venture, the project’s income,


expenses, loss, credits, and character of income or loss shall be attributed to the partners in


accordance with their interests (including the items specified in Section 704 and Section


705), for the purpose of determining taxable income, loss, credits, and tax liability


separately for each partner.


(b) Application of Other Rides. If subsection (a) applies---


(1) The provisions of this Chapter shall apply separately to each partner;


(2) Each partner shall be considered a taxpayer for purposes of this Part (Part II, Income








- 11 - U1MMTC-4/23/2008


 Fiscal Provisions


April 23, 2008


Tax), and shall be liable for income tax on that partner’s share of project income as


determined under subsection (a) and this Chapter.














Sections 715-729 Reserved.


Section 730. Surtax on Income from High-Yield Projects


(a) Purpose. This section applies to determine whether a project licensed under the Mining


Law is sufficiently high-yield to be subject to surtax and, if so, the amount of tax.1


(b) Definition of High-Yield. A project is considered high-yield and thus subject to surtax


when the project’s pre-tax rate of return on total investment is greater than 22.5 percent,


the threshold rate of return for application of this Section.


(d) Method to Calculate Yield. A project’s accumulated negative net cash flow shall be


determined by applying an annual accumulation factor of 1.225 to negative net cash flow


carried forward from a prior tax period. At the close of each tax period, accumulated


negative net cash flow carried forward from the prior period shall be increased by current


negative net cash flow or offset by current positive net cash flow. A project is not high-


yield and subject to surtax unless its accumulated net cash flow at the close of a period is


positive.


(e) Surtax Rate. Positive net accumulated cash flow at the close of a tax period is taxable at a


rate of 20 percent, and the amount of this liability is deductible from gross income for the


tax period.'


(f) Re-Set Accumulation to Zero. Following a tax period for which tax is due under this


section, a project’s accumulated negative cash flow is re-set to zero and the method of


subsection (d) is re-applied using zero as the starting point for the succeeding tax period.


(g) Steps to Calculate Yield. Beginning with the first tax period in which a project has a class


A mining license and has begun construction, the following steps are used to calculate


yield in accordance with subsection (d).


(1) Cost. State the expenditures, as specified in Section 731, for the tax period. This is the


project’s cost through the close of the period. Go to Step 2.











1 This .section is not applicable to petroleum projects because the PSA to be specified in the Petroleum Law has a


built-in method having similar effect.





: The deductibility of the 20 percent tax on net accumulated cash flow ensures that the income lax is a net income


tax. Although the 20 percent rate appears to be a flat rate, the method of computing its base and the fact that it is


deductible together “tailor-make” the average effective tax rate for the project and ensure that (1) the lax system


does not impose a barrier to investment, yet (2) Liberia is able to claim a larger share of the profits of high-yield


projects.





- 12- \VIMMTC-i/23/2008


 Fiscal Provisions


April 23, 2008


(2) Revenues. State the project’s revenues, as specified in Section 732, for the tax period,


including revenues, if any, from the exploration period as defined in Section 740. This


amount is the project’s revenues through the close of the period. Go to Step 3.


(3) Test Net Cash Flow.


(A) Determine net cash flow. Subtract from revenues the amount of cost to arrive at


net cash flow (R - C = NCF).


(B) Net cash flow zero or negative. If net cash flow is zero or negative, the project is


not yet a high-yield project and the surtax does not apply. Multiply the negative net


cash flow by 1.225 to arrive at the project’s accumulated negative net cash flow to


be carried to the next tax period. Go to Step 4.


(C) Net is positive. If net cash flow is positive, tax is determined under subsection (e),


and this amount is deductible in determining taxable income under Section 703.


Accumulated negative net cash flow is re-set to zero in accordance with subsection


(f). Go to Step 4.


(4) Reprise. Re-apply steps (1) through (3) for each succeeding tax period, beginning with the


period after the one tested under Step 3---


(A) Add costs incurred in the succeeding period to any accumulated negative net cash


flow carried from the prior period (zero if re-set) as under Step 1. Go to (B).


(B) State revenues for the succeeding period as under Step 2. Go to (C).


(C) Test net cash flow as under Step 3.


Section 731. Determination of Expenditures for Section 730 Purposes


(a) Expenditures Counted. For the purposes of determining cost under Section 730(g)(1), a


project’s expenditures for a tax period is the sum of the following amounts incurred during the


period, and does not include the amount of any income tax paid:


(1) Expenses deductible in computing taxable income, but not the allowance for


depreciation or interest and finance charges;


(2) Capital expenditures to acquire or construct a tangible or intangible asset for use in


mining operations; and


(3) Exploration, development, and capital goods expenditures as defined in Section


740(a). For a project’s first tax period, include expenditures for prior exploration,


development, and capital goods attributable to the project under Section 740(a).


(b) Transfer of Interest. Consideration paid for transfer of an interest in the project is


disregarded in determining the project’s total expenditures.


(c) Only Production Expenditures. If an amount referred to in subsection (a) is attributable to


commercial production and some other non-production activity of the project, only the








- 13- \'JMMTC~l/23/20(>8


 Fiscal Provisions


April 23, 2008


amount attributable to commercial production is included in determining the project’s total


expenditures.


Section 732. Determination of Total Revenues


(a) Revenues Counted. For purposes of Section 730, a project's total revenues for a tax period


is the sum of the following amounts:


(1) The project’s gross income for income tax purposes for the tax period, including


amounts from hiring or leasing-out property or the granting of rights to use property


(but not including interest income);


(2) The project’s consideration received for the tax period for the disposal, destruction, or


loss of any property (including materials, equipment, plant, facilities, and intellectual


property or rights) used in mining operations if the expenditure incurred in acquiring


the property was deducted in computing the project’s net cash flow for any tax period;


(3) Any amount received for the tax period for provision of information or data obtained


from any survey, appraisal, or study relating to mining operations, if the expenditure


incurred in undertaking the survey, appraisal, or study was previously deducted in


computing the project’s net cash flow for any tax period;


(4) Any other amount received for the tax period that is a reimbursement, refund, or other


recoupment of an amount previously deducted in computing the net cash flow of the


project for any tax period; and


(5) If property used in mining operations has been destroyed or lost, any compensation,


indemnity, or damages the project received in respect of the property under an


insurance policy, indemnity agreement, settlement, [condemnation action,] or judicial


decision.


(b) Transfer of Interest. Consideration received for transfer of an interest in the project is not


included in a project’s total revenues.


(c) Only Production Revenues. If an amount referred to in subsection (a) is attributable to


commercial production and some other non-production activity of the project, only the


amount attributable to commercial production is included in determining the project’s total


revenues.


[Section 733-739 Reserved.]


Section 740. Definitions





(1) Mining Project. A person (the “producer”) who has entered into a mineral development


agreement with the Government of Liberia carries out mineral exploration, development,


or production activity under an exploration license or class A mining license issued in


accordance with the Mining Law [citation], A “mining project” is the production of


minerals in within the area covered by the Class A mining license. Mining carried out


under another class of mining license is taxable under the general rules of Chapter 2 and


not as a “mining project” under this Chapter, except that the royalty rates of Section 703








- 14- WIMMTC-4/23/200X


 Fiscal Provisions


April 23, 2008


apply to the sale or other disposition of minerals listed therein.


(2) Petroleum Project. A person (the “producer”) who has entered into a petroleum


production sharing agreement with the Government of Liberia carries out petroleum


exploration, development, or production of petroleum in accordance with the Petroleum


Law [citation]. A “petroleum project” is the activity carried out in the geographic area that


is the subject of the petroleum production sharing agreement.


(3) Capital Goods. For purposes of this chapter, the term “capital goods” shall have the same


meaning as in Section 1001 (g)(5).and excludes residential buildings.


(4) Mining Exploration Contract Area. The exploration contract area is the geographic area


covered by a mining exploration license and excludes residential buildings.


(5) Mining License Contract Area. The license contract area is the geographic area covered by


a class A mining license.


(6) Mining Exploration Expenditures. Mining exploration expenditures are costs associated


with exploration of a mining exploration contract area to determine whether it is possible


to develop the area for production of minerals.


(7) Mining Development Expenditures. Mining development expenditures are costs associated


with the development of a mining license contract area, or a part thereof, to prepare it for


commercial production.


(8) Attribution of Expenditures. Exploration, development, and capital goods expenditures


incurred prior to a project’s first tax period are attributable to it for income tax purposes as


follows---


(A) In the case of a mining project, expenditures incurred prior to the existence of any


mining project within a mining exploration contract area are attributable to the first project


established within the first mining license contract area within a mining exploration


contract area. Subsequent expenditures in the exploration contract area after the date of the


first class A mining license, but outside the first project’s license contract area, are


attributed to subsequent projects under subsequent class A mining licenses issued for the


exploration contract area. Exploration, development, and capital goods expenditures not


attributable to a project as described in this paragraph are not deductible in determining


taxable income.


(B) In the case of a petroleum project, exploration expenditures incurred prior to the


identification of a site for development are attributable to the first development site


established under the PSA and leading to commercial production. Subsequent exploration


expenditures within the PSA area are attributed in the same fashion to any subsequent


development site leading to commercial production. Exploration, development, and capital


goods expenditures not attributable to a project as described in this paragraph are not


deductible in determining taxable income.


Section 741. Cross-References


(a) Part I, Section 10(t), General Definitions, “taxpayer.”








- 15- \‘.IM MTC-4/23/2008











/


 Fiscal Provisions


April 23, 2008


(b) Part I, Section 10(\v), General Definitions, “value.”


(c) Part I, Section 17, Fiscal Stability of Mining and Petroleum Taxation


(d) Part I, Section 54(b)(7), Confidentiality.


(e) Part 1, Section 200, Tax Imposed.


(f) Part I, Section 806, Withholding of Tax on Nonresidents.


(g) Part I, Section 904(a)(7), Advance Payments of Regular or Presumptive Income Tax.


(h) Part I, Section 905(g), Withholding on Payments to Residents.


(i) Part III, Goods & Services Tax, Section 1001(g), Taxable Supply.


(j) Part V, Section 1703, Export Duties.


(k) Part V, Section 1708, Exemption from Import Duties.


(l) Part V, Section 1802, Customs Service Fees.


(m) Part XX, Real Property Tax, Section 2009(h), Exemptions.


Sections 742-759. Reserved.


Subchapter B. Renewable Resources





[Reserved]


Section 806. Withholding of Tax on Payments to Nonresidents


(f) Special Rule for Payments by Mining and Petroleum Projects. A mining or petroleum


project subject to Chapter 7 shall withhold tax on payments made to nonresidents at the


following rates---


(1) Dividends, 5 percent.


(2) Interest, 10 percent.


(3) Payments for services, 6 percent.


Section 904. Advance Payments of Regular or Presumptive Income Tax





(7) For persons required to make advance payments of income tax, the total amount of


advance payments of income lax required to be paid for a tax year is equal to I percent of


turnover or, for tax periods beginning on or after July 1, 2009, and with respect to income


of a mining or petroleum project subject to Chapter 7, the amount determined under


subparagraphs (A) through (C).


(A) If a person was subject to the income tax for the preceding tax year, that person’s


advance payments of the current year's tax must be at least---


(i) 100 percent of the person’s income tax due for the preceding tax year, or





(ii) 90 percent of the person's income tax or 100 percent of the person's presumptive


tax for the current tax year, whichever is applicable, if this amount is greater than


the amount described in (i).


(B) If a person was not subject to the income tax for the preceding tax year, but was


subject to the presumptive tax in lieu of the income tax, that person's advance


payments must be at least---


(i) 100 percent of the person's presumptive tax due for the preceding year or








- 16- \U MMTC -4/23/20GK











/ /7


 Fiscal Provisions


April 23, 2008





(ii) 90 percent of the person's income tax due for the current tax year or 100 percent of


the person's presumptive tax due for the current tax year, whichever is applicable,


if this amount is greater than the amount described in (i).


(C) If a person was not subject to either income tax or presumptive tax in the prior tax


year, that person's advance payments must be at least 90 percent of the person's


income tax liability for the current tax year; or 100 percent of the person's presumptive


tax liability for the current year, whichever is applicable.


(D) In the case of a mining or petroleum project taxable under Chapter 7 and not subject to


the income tax in the prior tax year, advance payments of first-year liability shall be


based on estimated taxable income and must equal at least 80 percent of the persons


actual tax liability for the year.


Section 905. Withholding of Tax on Payments to Residents


(g) Special Rule for Payments by a Mining or Petroleum Project. A mining or petroleum


project described in Chapter 7 shall be considered a resident payer, and payments to


residents are subject to withholding at the following rates---


(1) As specified in subsections (a) through (d); and





(2) In the case of a payment for services under subsection (0, at the rate of six percent.


Part III. The Goods and Services Tax


Section 1001. Taxable Supply





(e) Exempt Supply. The following supplies are exempt supplies---


(6) Subject to subsection (f), the supply to a registered manufacturer, to a person in the


business of agriculture or forestry, or to a natural resource extraction project subject to


Chapter 7, of---


(A) raw materials or other inputs for use directly in manufacturing;


(B) raw materials used directly in mining or petroleum projects or preparations for


mining and petroleum projects from the inception of a mining or petroleum project


until the date commercial production begins; and


(C) capital goods.





(g) Definitions. In this Part, unless the context otherwise requires---


(5) Capital goods. The term “capital goods” means---





(A) Plant or equipment and capital spare parts therefore (but not motor vehicles of any


kind) for use exclusively and directly in manufacturing, agriculture, or forestry.


(B) In the case of a mining or petroleum project, plant or equipment and capital spare








- 17- UIMMTC-4,737008





n i K -





/


 Fiscal Provisions


April 23, 2008


parts therefor, including motor vehicles (but not sedans or luxury vehicles as


defined by regulation or motorcycles), and from the project’s inception until the


date commercial production begins, intermediate inputs (including but not limited


to explosives, drilling mud, grinding balls, tires for trucks used in operations, and


similar items).





Part V. Customs Revenue Code


Section 1703. Export Duties


[If export duties arc imposed on mining or petroleum products under Schedule III, remove


them.J


Section 1708. Exemption from Import Duties


(b) As specified by the Minister in regulations, when imported for in a mining or petroleum


project from its inception until the date commercial production begins, plant or equipment and


capital spare parts therefore, including motor vehicles (but not sedans or luxury vehicles as


defined by regulation or motorcycles), and intermediate inputs (including but not limited to


explosives, drilling mud, grinding balls, tires for trucks used in operations, and similar items)


and raw materials.


Chapter 18. Customs License Fees, Harbor Dues, and Customs Sendee Fees


Section 1802. Customs Service Fees


(b) Fees to be Fixed by Minister. The Minister shall by regulation and widely circulated


notice, fix just and reasonable fees to be charged by the Bureau of Customs or on its behalf for


issuing documents and performing other services in connection with the operation of the


customs service which are not set forth herein or in any other statute or regulation. The


customs service fee shall not exceed 1.5 percent of the CIF Liberian Port value of the


imported goods, and shall apply to all imports regardless of whether the goods are exempt


from import duty.


Part VII. Real Property Tax


Chapter 20. Real Property Tax


Section 2000. Real Property Tax; Basis and Rate


Section 2009. Exemptions


The following categories of real property shall be exempt from real property taxes:


(h) Real property used in mining or in petroleum exploration, development, or extraction, but


only with respect to the geographical area specified in a mineral development agreement


excluding residential buildings and improvements thereon or production sharing agreement.











- 18- WJMMTC-I/2J/200K


 Schedule 6.6(a)





Railroad Coordinates








The attached map details the coordinates of the Railroad covered by this Agreement and


described in Section 6.6(a)


 Schedule 6.6(a)





Railroad Coordinates








The attached map details the coordinates of the Railroad covered by this Agreement and


described in Section 6.6(a)


 SfOO^E 05


|_ I 1








BONG MINES RAILROAD PROPERTY














55-

















50- -'SO


Vertlce Easting Northing Vertlce Easting North I


0 349336.8 752768.7 50 71777’,


1 349178.0 752623.2 51 327283.7 717461


348992.8 752411.5 52 327019.1 717141


2


3 348939.9 752173.4 53 326688.4 71698:


-45 4 348820.8 751948.5


5 348767.9 751736.8


55 326040.2 71652C


6 348767.9 750493.3 56 325683.0 71633!


7 348397.5 749884.7 57 325378.7 71632:





8 347907.4 749263.0 58 324029.3 71629!


9 347656.7 748456.0 59 323182.7 71628!


-'40 10 347405.3 747715.1 60 322746.1 71622!


11 345513.5 744341.7 j 61 322388.9 71601*


321767.1 715641


12 345288.6 743905.1 62


13 344666.9 743230.4 63 321330.6 71534-


14 343621.8 742330.9 64 320920.5 71501:





-35 15 343224.9 742013.4 65 320669.1 71485!


16 342841.2 741563.6 66 320192.9 71470!


17 342325.3 740886.9 67 319928.3 714456





18 339600.1 737832.9 68 319610.8 71424*


19 338475.6 736536.5 69 318909.6 71368!


20 337139.5 734512.4 70 318565.7 71346*


-'30 336398.6 733321.6 71 318221.7 713308


21


22 335591.6 732369.3 72 317943.8 71329:


23 334136.4 730636.2 73 317428.0 71325!


24 333938.0 730107.1 74 316713.6 71339!


25 333580.8 729551.5 316501.9 713425


26 333078.1 729035.5


-25 77 315523.0 71326!


27 332456.3 728731.2


28 331689.0 727739.1 78 314874.7 712935


29 331159.9 727223.1 314424.9 712671


30 330538.1 726707.2 80 313829.6 712366


31 330392.6 726548.4 81 313049.1 711903





-'20 32 329784.0 726045.7 312811.0 711745


33 329532.7 725847.3 | 83 312678.7 711506


34 329360.7 725728.2 84 311488.1 710038


35 328831.5 725159.4 85 310972.1 709416


36 328606.6 724894.8 86 309847.6 708609


37 328487.6 724550.8 87 308458.6 707617





15- -15 38 3283420 724061.3 88 305765.2 706625


39 328315.6 723876.1 89 305660.4 705963


40 328051.0 723175.0 90 303934.2 704865


41 327839.3 722129.9 91 303312.4 704442


42 327574.8 721508.1 92 303074.3 704244





10- 43 327402.8 721098.0 93 302505.4 703516


44 327323.4 720714.4 94 302320.2 703265


45 327125.0 720198.4





46 327151.4 719828.0 96 302227.6 702471


47 327429.2 718677.1 97 302214.4 702378


48 327535.1 718293.4


49 327627.7 718068.5














L«[|ind


O Rarfnjaa witiCM


-'00


OO 8UCKfltkvay(74.2*rl


gf? BOlMmUiliO





MaiCcncMunAm |39.Ztt8.48K(M|


^ F»»l.CO(C£6SK«ARE»{SI3.l9ilikranSI5Jie)«»i|














0 2.5 5 Kilometers


I 1 _I


30QOOCtaE 05 310 375OOOnvE








Note: The BMC Railroad property shall be a band 74.2 km


long and 56 meters wide. The width shall be 28.25m





on each side from the vertices which


represent the centerline of the Band of Land.





 SCHEDULE 7.1








1999 Lists of Concession Area Assets





See attached.





 INSPECTION VISIT


of


CONSULTING ENGINEER


DIPL.-ING. KARL HEINZ GOUASE


from


MARCH 7 through 19, 1999


to the


BONG RANGE AREA


and the


PORT OF MONROVIA


























Volume I


Assessment of BMC Assets


"2 ex








Part Page


Introduction 1


A Mine 7


B Concentrator 16


C Pelletplant 24


D Electrical Main Workshop and Powerhouse 37


E Mechanical Main Workshop and Warehouses 42


F Railroad 48


G Port Monrovia 50


H Settlement and Infrastructure 57


 MRODUCTION





" a meeting between the A and B Stockholders of Bong Mining Company (BMC) on


.a^oary 12, 1999 it was decided to send Dipl.-lng. Karl-Heinz Gouase - an


''dependent experienced technical consultant who is familiar with the former in¬


stallations of BMC - to Liberia in order to inspect and evaluate the remaining assets


of BMC in the Bong Range Area and in the Port of Monrovia.


The Minister of Finance and the Minister of Lands & Mines gave their full support to


Mr. Gouase to move freely within Liberia on behalf of GOL to take pictures, to contact


people and to collect all relevant information.


Mr. Gouase traveled to Liberia from March 7 through 19. He paid a total of 6 visits to


the Bong Area inspecting


Mine


- Concentrator


- Pellet plant


Electrical and Main Workshops and Powerhouse


Mechanical Main Workshop and Warehouses


Railroad


and 2 visits to the former lease area of BMC in the port of Monrovia inspecting


- the Railway Car Dumper


- Stacker-Reclaimers


- Shiploader


Pier


- Workshop & Offices


- Tank Farm


Mr. Gouase endeavoured to estimate potential values of the various assets to the


extent they are still available at the Bong and Port areas. He furthermore analysed


the actions that would be required in order to eventually realize these values.


 -2-





v- 3:^ase's detailed findings are contained in the attached Chapters A through H


\ :v ng the order of the former production flow of BMC (Volume I) and in a


:: -crenensive photodocumentation (Volume II).


- :^e figures given in the report are quoted in US$.


estimates are based on the best possible knowledge of the Consultant.


As a general observation it can be stated that all mobile equipment, such as light


duty vehicles, trucks, dozers, graders, and all easy to handle equipment, such as


computers, workshop equipment, machines, tools etc. have been removed from BMC


(probably in the early phase of the civil war) and that the fixed assets as well as all


heavy equipment, such as heavy duty trucks, shovels, drill rigs, locomotives, railcars


etc., have been to a large extent or completely destroyed.


It further can be stated as a general observation that a restoration of part or of all of


the remaining equipment is technically not feasible independent of any economic


considerations.


One has to realize that when BMC was shut down in 1990 as a consequence of the


civil war, the Company had been in operation for more than 25 years, which means


that most of the equipment and machinery was already old at that time. Thereafter,


the equipment and machinery was destroyed, canabalized and exposed during


10 years to a tropical climate contributing to corrosion and deterioration.


In view of this situation, the only way of realizing some of the potential values men¬


tioned in the report would be to dismantle the steel structures, which eventually could


be used locally in Liberia, and to dismantle and hand-pick certain valuable parts of


the remaining machinery and equipment, to transport them to Monrovia Port and to


sell them (after repair) on the international market for used spare parts for the mining


industry.


This, however, would necessitate the engagement of a specialized company that has


the required know-how, expertise, equipment and personnel to dismantle the


respective parts, to transport same to Monrovia and to market them. Such an activity


 -3-





■c- : require mobile cranes, welding machines, lifting devices, tools, trucks and a


: Tractive, as well as the repair of some rail cars and of parts of the railroad track


veen Bong and Monrovia and a marketing organisation.


_~e total potential value of the remaining assets of BMC is estimated to be


acoroximately 15.5 million US$. Taking into consideration the front-end cost of


a smantling the equipment, transportation, repair and marketing, which amout to an


estimated 7 million US$ (see Table 2), a total net value which might be realized could


De in the range of 8.5 million US$, provided that the marketing efforts are successful,


“or details see Table 1. The time needed to complete such an operation is estimate


at 3 years.


The company towns in the Bong and Port Areas, consisting of more than


1.350 dwelling units, have been devastated and destroyed to a great extent with only


a minor part still being used by former BMC employees. Also the entire infrastructure,


such as electricity, water supplies, sewage system, etc., has been largely destroyed.


Consequently, there is no potential value to be realized from the housing and


infrastructure.


 -4-





Table 1











Summary of potential values of remaining assets








Potential Dismantling, Potential


Part Item Sale Value Transport, Sale Ne:


(gross) Value


1,000 US$ 1,000 US$ 1,000 US3


A Mine 1,500 400 1,100


B Concentrator 3,600 1,400 2,200


C Pellet plant 3,300 1,000 2,300


D Electrical Main Workshop and Powerhouse 5,500 1,700 3,800


E Mechanical Main Workshop and Warehouses 800 200 600


F Railroad


G Port Monrovia 800 300 500


H Housing and Infrastructure (including utilities)


I Marketing - 2,000 -2,000


Total 15,500 7,000 8,500


 Table 2


I: :* ec~:pment and labour required for dismantling and transporting certain





“f - e ~ ng equipment of BMC to Monrovia








1,000 US$


4 \ 2 pcs Mobile crane, 150 t nominal capacity each (Bong) 250


2) 1 pc Forklift, 20 t capacity 30


3.) 1 pc Flat truck, 10 t capacity 40


4) 2 pcs Flat truck with integrated crane, 6 -10 t capacity 80


each


5) 1 pc Articulated lorry (40 t) 100


6) 2 pcs 4-wheel-drive light trucks (pick-ups) 30


7) 3 pcs Diesel generator sets, 20 kW each 20


8.) 2 pcs mobile Diesel generators w. light-pole and el- 10


sockets


9.) Standard tools, cable jacks, railroad jacks, cutting 80


torches


electr. welding machines, compressors, pick


hammers


10.) 1 pc Team carrier, 20 seats 20


11.) 2 pcs Living containers 40


12.) 1 pc Sanitary- and first aid container 30


13.) 1 pc Field kitchen 20


14.) 1 pc wheel loader for alternative use with bucket or 40


shield operation (Cat 920 for example)


15.) Manpower (2 staffs and 20 workers) 900


16.) 1 pc second hand locomotive (smaller design) 200


17.) Restoration of the railroad track and culverts 200


18.) Restoration Stockton Creek Bridge (for limited load) 300


19.) Transport costs to Monrovia by rail 300


20.) Equipment for a second crew in the port-area 360


21.) Labour costs for a second crew in the port-area 900


22.) Fuel consumption (Diesel oil) except railroad 930


Round up 120


Sub Total 5,000


Marketing 2,000


_


Total 7,000


Easis of calculation:


Re* 1.) to 14.) Estimated prices for second hand equipment


Ref. 15) Labour costs 25,000 US$ per month; 3 years anticipated


Ref. 16) The condition of the former BMC locomotives is affected to an extent


beyond repair, therefore the purchase price of a second hand locomotive


has been considered.


Ref. 17) tamping by hand


Ref. 19) Transport costs to Monrovia by rail:


Estimate of 15 US$ per ton of piece-cargo and about 20,000 t to be


transported to Monrovia, arrives at cost of about 300,000 US$


Ref. 20) A second crew has to be appointed for unloading and local transport in the


port-area. Equipment has to be similar as up in the mine with minor


exceptions:


1 mobile crane, 60 t (60,000 US$), 1 forklift 20t, 1 flat truck 10 t, 1 flat truck


with integrated crane, 1 pick up, 2 Diesel generators 20 kW, 1 mobile Diesel


generator, standard tools, 1 living container, 1 sanitary- and first aid con¬


tainer, 1 wheel loader CAT 920.


Ref. 22) Fuel costs for generators: (30kW*24 hrs/day*5 G) + (5 kW*24 hrs/day*3 G)


= 3.960 kWh * 365 d/y * 3 years*210 g Diesel/kWh*1 US$/kg Diesel *30%


utilisation: 273,000 US$


for trucks, pickups, cranes etc. (except railroad)


600 kg/d *365 d/y * 3 years * 1 US$/kg 657.000 US$


Total 930.000 US$


 -7-











- MINE (Ml)


-1 Inspection Period


March 10, 11, 13 and 18 - 1999 (17 hrs).





A2 Heavy Duty Equipment





A2.1 Auxiliary-Equipment


Existing fleet at the end of BMC operation: 19 units.








Track Dozer CAT D-09 H 04 Units


CAT D-09 L 02 Units


CAT D-10L 03 Units





Wheel Dozer CAT 824 B 01 Unit


CAT 824 C 01 Unit





Grader |CAT 14G 01 Unit


I CAT 16G 02 Units





Wheel Loader CAT 920 02 Units


CAT 950 01 Units


CAT 966 C 02 Units





With the exception of the 2 wheel dozers CAT 824 B and C, the whole fleet





was confiscated by the NPFL forces and removed from the BMC-Conces-


sion Area end of 1990, early 1991.


Destinations:





Company Item


1 ITI CAT D-10 L


2 LIMINCO CAT D-10 L





3 LIMCO CAT D-10 L


4 ITI D-09 L


5 Gbanga, Airfield D-09 L


Monrovia D-09 H


6


7 ITI 14 G


8 ITI 16 G





9 ITI 920


10 Gbanga, Airfield 966 C


11 ITI V 80 (Forklift)





 -8-








Another CAT D-10 L (BMC-No. 21) was transferred to Messrs. LIMCO by


Mr. S. Abdullai in exchange for a cost-adequate quantity of Diesel oil.


According to information given by former BMC employees 1 Track Dozer D-


09H and 1 Wheel Dozer CAT 920 - both cannibalized - are supposed to be


still around the BMC operation area, however could not be located.


Total remainder at BMC is round about 30 t scrap, representing a value of


approx. 450 US$ (15 US$/t).


A2.2 Drill-Rigs


Existing Equipment at the end of BMC operation:





Typ BMC No. Present Position


01) 60 R -01 Location 07


02) 60 R -02 Location 09


03) GD -03 Location 08


04) GD -04 Location 07


05) GD -05 Location 08








All 5 Drill Rigs are looted extensively and are therefore beyond any possibi¬


lity of repair, the more so since it is not worthwhile to refurbish machines


after more than 22 years.


The concept of speed control and pull down regulation is nowadays


replaced by up-to-date control systems.


Total remainder at BMC is about 300 t steel scrap, representing a value of


approx. 4,500 US$. ~~








Further details:


The damage was caused by dismantling particular items (Leonard-set,


gears, compressors, electrical motors, generators) mainly in order to get


access to nonferrous metal, principally copper and aluminium. These


metals were separated from insulation material by burning the latter one by


m


 -9-





means of wood-fire. This method of collecting metals commenced on a


large scale during the "Operation Octopus" in 1992.


The removal of BMC property was prohibited by the rebel forces, the


removal of scrap however was tolerated.


A2.3 Rope Shovels (Excavators)


Existing equipment at the end of BMC operation:





Type BMC No. Present position


01) P+H 1600 04 Location 04


02) P+H 1600 05 Location 09





03) P+H 1900 • 06 Location 07


04) P+H 1900 07 Location 08


05) P+H 2100 08 Location 08


06) P+H 2100 09 Location 08


07) P+H 2100 10 Location 07


08) P+H 2100 11 Location 09








The technical condition of the rope shovels is similar to that of the drill rigs


(Par. A2.2): The mechanical and the electrical equipment is dismantled or


destroyed for the sake of copper-/aluminium-robbery:


- Cables


- Magnetorque





- Crowd Motor


- Hoist Motor


- Propel Motor


- Swing Motor (1 x left + 2 x right)


- Main Motor


- Generator, swing (1600- and 1900-Shovels)





- Generator, crowd and propel (1600- and 1900-Shovels)





n


 - 10-








Less affected are heavy machinery and components:


- Swing Gear Case (2 x each)


- Propel Gear Case


- Final Drive System


- Hoist Gearbox + Hoist Drum


- Boom and Sheave


- Crowd Main Gear


- Crowd Gearbox


- Track Frames (2 x each)


- Crawler Chain (2 x each)


- Dipper


- Dipper Handle


Refurbishing of the older units (BMC No. 4, 5 and 6) is most probably


technically not possible and not economical.


The components listed above, however, represent certain value in case of


the 4 Shovels P+H 2100, provided they can be sold on the international


second hand market. If so it would be necessary to transport the above


mentioned parts by truck or rail road to the port of Monrovia. The estimated


receipts are as follows:


a) scrap


2 Shovels P+H 1600 = 300 t = 4,500 US$


2 Shovels P+H 1900 = 600 t = 9,000 US$


4 Shovels P+H 2100 = 1.000 t = 15.000 US$ (excluded: reusable components)


total = 28,500 US$





/X


 -11 -





b) reusable components: (assumption 30 % of price for new





components)





US$


60,000


01) Swing Gear Box (2 x each)


02) Propel Gear Box 15,000


03) Final Drive System 30,000


04) Hoist-Gearbox + Drum 40,000


05) •Boom + Sheave + Shippershaft 80,000





06) Crowd Main Gear 15,000


07) Crowd Gearbox 10,000


08) Track Frames (2 x each)


80,000


09) Crawler Chain (2 x each) 120,000


10) Dipper 20,000


11) Dipper Handle 80,000





Total US$ = 550,000








A2.4 Hydraulic Shovels


Existing equipment at the end of BMC operation:








1 DEMAG H 36


2 DEMAG H 72








The two DEMAG-Shovels (H-36 and H-72), presently positioned at the


quarry and the mine service station, are looted as well. Since both are of


newer design, refurbishing would make sense.








Estimation of possible value:


c) DEMAG H-36 Excavator 10,000 US$


d) DEMAG H-72 Excavator 10,000 US$


total 20,000 US$








The above amounts do not include and therefore have to be reduced by the <1


costs for scrapping, dismantling, transport to the port etc.





 - 12-








A2.5 Heavy-Dutv-T rucks


Existing equipment at the end of BMC operation:








Type BMC No. No. of Units


LECTRA HAUL M 100 554 06


555


557


558


560


561





LECTRA HAULM 120 565 06


566


567


568


571


572





WABCO 120 B 573 - 581 09





WABCO 120 C 582 08


583


584


585


586


587


598


599





EUCLID R 170 588 - 593 06


Total: 35





In addition, 3 Water Trucks (No. 551 - 553) and 1 Shifter (No. 559) were in


regular use at the Mine.





At the termination of BMC's operation the trucks have been parked at the


following areas:


a) Precrusher Area





b) Hauling Road to pit ZAWEAH II


c) Mine service station.





The same damage as described above for the Drill Rigs and Shovels has





been done to the HD-trucks. The wheelmotors, cables, generators and


 - 13-








alternators of the Heavy Duty Trucks were destroyed mainly to recover the


copper wiring.


The GM V-12 and V-16 two-stroke Diesel engines likewise were damaged


and aluminum / aluminum-alloy removed totally:


cylinder head cover,





blower housing,


turbo charger.


Rainwater penetrating into the unprotected motors has led to corrosion.








Nevertheless, it seems possible to re-work and re-use the basic structure of


the motors, as well as the expensive components like crankshafts and


camshafts.





Components of motors GM V-12 and V-16 for potential re-use:





1) Motor casings completely 29 x V-12 29 x 4,000 US$ = 116,000 US$


assembled: 06 x V-16 6 x 5,000 US$ = 30,000 US$


2) Crankshafts: 29 xV-12 29 x 2,500 US$ = 72,500 US$


06 x V-16 6 x 3,000 US$ = 18,000 US$


3) Camshafts: 29 xV-12 29 x 800 US$ = 23,200 US$


06 xV-16 6 x 1,000 US$ = 6,000 US$


4) Pistons with connecting 29 x V-12 1,000 us$


rods: 06 xV-16


Total 444 units


5) Cylinder heads of 35 motors, 35,000 US$


■including valves


Further reusable parts of Heavy Duty Trucks:


6) Suspensions and Steerings 35 x 3,000 US$ = 105,000 US$


7) Wheelmotor-Frames 35 x 5,000 US$ = 175,000 US$


8) Front-Axles 35 x 4,000 US$ = 140,000 US$


9) Truck-Frames of 6 EUCLIDS 6 x 10,000 US$= 60,000 US$


Subtotal 781,700 US$


rounded: 780,000 US$


Receivables from scrap remainder of 10,000 US$


35 production- and 4 service-trucks


if





 -14-





About 120 Heavy Duty Trucktires appear to be in good shape, some of


them barely used, others new. Since rubber quality suffers from aging


effects within 5 years, however, the tires still on hand are to be considered


useless.


A3 Buildings


Parts of the former mine service station (steel structure skeletons) are still


existing. They could be dismantled provided suitable equipment is available


at the site like a mobile crane, welding machines, etc. Reinstallation of the


following buildings elsewhere should be possible.


a) Heavy Duty Trucksection and fuel-station


b) Light-Duty-Trucksection


c) Caterpillar-Section


Ref, a) Main parts of the travelling crane, including craneway-rails are still


usable. Lifting and travelling-mechanisms, however, are destroyed.


The steel construction of the building is reusable after sand-blasting and


protective coating. - ■'


Estimated value 80,000 US$


Ref, b) Building of LD Truck section is lower than the building of HD Truck


section.


Clearance height 4,5 m; no crane


Estimated value of steel construction 20,000 US$


Ref. c) Steel structure is still usable.


Crane defective.


Estimated value of steel construction 50,000 US$ v


Total estimated second hand value of steel structure of buildings


150.000 US$


(Dismantling and protective coating not included).


. tL 4.


%


 -15-











A4 Summary / Mine Area


Compilation of possible receipts excluding scrap

















mechanical parts


A2.1 Auxiliary Equipment





A2.2 Drill Rigs





A2.3 Rope-Shovels 570,000 US$


A2.4 Hydraulic Shovels 20,000 US$





A2.5 Heavy Duty Trucks 780,000 US$


A3 Buildings, Halls 150,000 US$





Total 1,500,000 US$





Estimated costs of - 400.000 US$


dismantling and transport


Net value 1,100,000 us$



















































































'4








 -16-








B CONCENTRATOR (CD) inch Primary Crushers and Ore Blending Yard


B1 Inspection Period


March 10, 13 and 18, 1999 (11 hrs).





B2 Primary Crusher and Ore Blending Yard


Existing equipment at the end of BMC operation:





2 Primary Crushers


1 Ore-Stacker


1 Bridge Reclaimer


Conveyor Belt System








Technical Condition:


Primary Crushers and Ore Reclaimer could be sold as second hand equip¬





ment for refurbishing. Equipment could be reworked except for electrical


drives and cables, which have been destroyed and cannibalized and would


have to be replaced completely.


The Stacker-Boom is seriously damaged (scrap).





Possible receivables:








Equipment assessment of value


remarks


a) 02 Primary-Crushers Two Times 230,000 US$ 460,000 US$





b) 01 Crusher Building with Overhead-Crane without lifting 80,000 US$


Overhead-Crane device


c) 01 Stacker destroyed


d) 01 Reclaimer 560,000 US$


(RECO-3000)


total Value (re-usable components): 1,100,000 US$


Costs for tools, dismantling and transport - 650,000 US$





Net value 450,000 US$





Dismantling would require heavy hoisting equipment, special tools and


transport facilities, which are not available on the site. To bring such equip-


 -17-





ment to the BMC-site would require substantial expenditures. These would


payoff only if all the equipment that still could be used will be dismantled


(and sold).





It is, for instance, not profitable to invest into the dismantling of one Crusher





only.


The alternative, namely the scrapping of all the equipment, remaining at


BMC would be even more uneconomic:





a) 2 Primary Crushers 8501 x 20 USS/t = 17,000 US$


b) 1 Stacker 1701 x 15 US$/t = 2,550 US$


c) 1 Reclaimer 420 t x 15 US$/t = 6,300 US$


(RECO 3000)


plus 1 Transfer car 501 x 15 US$/t = 750 US$





Total Scrap 26.600 US$





Approximately only 40,000 US$ could be expected if the equipment would


be sold as scrap (machinery and conveyor belt system), which would not


justify the cost for dismantling and transport to Monrovia, which would be


substantially higher.





B3) Beneficiation Plant


Technical Condition of equipment:


The grinding- and upgrading-area is totally looted and devastated. Here


again copper, bronze and aluminum was robbed. Every single motor is de¬





stroyed.


Condition of machinery in general was seriously affected by a disastrous


fire in the early 90th (3rd floor upwards). Burnt or burnt out are all -rubber


hoses and rubber wear protection all over the plant:


cascade mill screens,


thickener cyclones,


rubber lining of chutes and spirals,


rubber hoses.


 -18-





Temperatures of up to 1000 °C weakened the steel girder system of the


floors, resulting in a break down of floors and damage of machinery below.


Another general problem results from oil- and grease-removal, leaving be¬





hind open, uncovered control windows, inspections doors and maintenance


openings on bearings, gears and couplings. Rainwater penetrated into the


building and the equipment, since roofs were not existing any longer neither


on industrial buildings nor on houses within Bong Town.





Nevertheless, heavy mill bearings (trunnions, white metal bushings) should


be reworkable, if these items can be sold.


It is, on the other hand, barely predictable, how long this condition of rela¬


tive usability is going to last. Beyond this point, scrapping is the only possi¬


bility, which - in turn - may not be expected to be profitable.





Cascade Mills. Ball Mills


With the exception of electrical motors and couplings, the drives of the mills


may still be in a condition justifying refurbishing.


Gears and sprockets are in a relative fair condition. Mill shells are more or


less untouched, but only the 4 larger-sized cascade mills (24' x 8') are sale¬


able, if at all. A big problem will be the transport to the coast of such large


equipment considering the poor condition of the roads and the railroad.








Magnetic Separators


The separators and tanks were decomposed without exception in order to


get hold of refined steel (stainless) sheets and parts, which were saleable in


Monrovia according to information at the site.





Humphrey's Spirals


The bodies of the spirals (alloyed cast iron) resisted the heat of a. m. fire. In


general, relining with wear resistant rubber would be technically possible,


however, nowadays such spirals are fabricated at much lower cost from


synthetic material. Therefore it would be impossible to realize a reasonable


price for BMC-spirals. f] /L


V


9


Filters


All units were decomposed / damaged beyond repair, down to the steel


base.


Scrap value is zero, since the labour cost would surpass possible


receivables.


Only the tablefilters seem to be reworkable. This filter-type, however, is out


of date and of minor interest. Therefore no commercial value to be


expected.


Hydroseparators


Sheet body and mechanism are only slightly damaged, however, there will


be no demand for this special type of machines second hand. There is no


commercial value to be expected.


3 Large Tailings Thickeners


Same situation as "Hydroseparators".


The tank is made of concrete and therefore cannot be relocated.


Pumps (centrifugal pumps)


During normal operation at BMC's concentrator approximately 80 heavy


duty pumps were in operation (fresh water, process water, slurry). Pump-


stators are still on their base plates. The impeller housings were opened,


bearings and shafts decomposed. Bearings and gaskets were missing.


Other components are spread all over the pump station area.


It might be possible, to reassemble about 50 pumps by adding missing


parts like wear parts, gaskets, bearings and couplings.


The motors, of course, are totally destroyed (copper) and would have to be


replaced.


Vacuum Pumps


Due to their compact design and construction, the vacuum pumps are less


dismantled than the centrifugal pumps. Unfortunately inspection covers


 -20-








were opened (removed), as well as on all the other machines. Here too,


bearings have been affected by rainwater.


On the basis of a comprehensive overhaul program the pumps are reus¬


able.


In this special case, the overhaul work should be done by a potential buyer,


since this type of machine would ask for special lifting devices and tools,


which are not available at the site.








Concentrate Bins and Conveyor Belt Systems


The Concentrate Bins are apparently intact, whereas the conveyors are de¬





stroyed. Rubber belts were burnt and gear-boxes rendered useless by


opening and following corrosion. Drive- and return pulleys are scattered


widely. 30 spare units are still available.


Nevertheless, the trade price of all this installation is considered to be zero.





Concentrator-Workshop


The Workshop installation is completely removed, looted or destroyed:


2 upright drilling machines removed


1 planing ledge destroyed


1 turning lathe destroyed





1 grinding machine removed


work benches removed








No commercial value at all.





Buildings


The main steel structure of the following buildings is still of some value:


- Primary crusher (overgrown) incl. bridge crane • 80,000 US$


- Rubber shop 40,000 US$


- Main buildings/Concentrator incl. bridge crane 880,000 US$


(Cascade mill hall, ball mill hall, return water-pumphouse)_


total 1,000,000 US$


 -21 -








To dismantle heavy steel construction beams will require substantial work.


Especially in the concentrator main buildings preparatory pull-down-work


(clearance) is necessary, before the beams in question are accessible for


actual recovering.





Estimation: 2 Supervisors, 30 workers (6 months) = 240,000 US$.


Mobile cranes, welding equipment.


Possible values which may be realized are as follows:








assessment of value


Equipment remarks


a) 12 Crude Ore Bins No commercial value


inclusive dis¬


charge systems





b) 12 Cascade-Mills, 4 times 210,000 US$ 840,000 US$


only 4 larger


sizes are of


commercial


interest and


value





c) 11 Screens for No commercial value


Cascade-Mill (burnt out and rotten)


discharge slurry





d) 68 Pumps for 50 pumps are repairable 120,000 US$


various opera¬


tion areas


- Cascade-Mills


discharge,





- Spirals


feed


Ball-Mills





discharge,


Dewatering


Table-, and


Discf liters,





Returnwater-


pumps





^3





 -22-











e) Magnetic Sepa¬ No commercial value


rators (totally looted)





o Spirals No commercial value


(totally burnt)


g) Cyclone Classi¬ No commercial value


fiers (Rubber-Lining burnt)





h) Filters No commercial value


(totally looted, remaining parts


are below technical standard)





i) Vacuum Pumps Partly repairable 90,000 US$





j) Ballmills Restoration is possible 450,000 US$


Millshells, Gears and Main-


Bearings are re-usable after


general-overhaul





k) Concentrate- No commercial value


Bins





1) Buildings Main Steel structure still 1,000,000 US$


existing


Costs for dismantling and


transport not considered





Value (re-usable components): 2,500,000 US$


Costs for pull down work in the concentrator - 240,000 US$


main buildings


Costs for dismantling and transport - 510,000 US$


Net value 1,750.000 US$











B4 Summary / Concentrator Area


Compilation of possible receipts in US$ if equipment is sold on the interna¬


tional market. The following compilation depicts the estimated value of the





BMC concentrator remainders on the site as to machinery and steel con¬


struction.


 -23-











A rough estimation of costs arising from expenditures for labour force and


equipment as well as transportation to Monrovia port has been taken into





account.














receivings costs net value


US$ US$ US$


(B2) Primary Crusher and 1,100,000 650,000 450,000


Ore Blending Yard


(B3) Beneficiation Plant 2,500,000 , 750,000 1,750,000


_i


Total 3,600,000 J 1,400,000 2,200,000


 -24-








C PELLETPLANT (PE)








C1 Inspection Time


March 15, 1999 (4 hrs)








C2 List of equipment inspected:


1. ) Concentrate Conveyor Belts and Emergency Stockpile


2. ) Concentrate Bins


3. ) Doser-Beltscales underneath Concentrate Bins


4. ) Surface Grinding (Ballmills, Slurry Pumps)


5. ) Slurry Tanks, Filter Feed Pumps, Filtrate Thickeners


6. ) Disc Filters, Vacuumpumps, Compressors


7. ) Flotation Plant


8. ) Pelletfeed- and Bentonite Bins (Agglomeration Area)


9). Bentonite Grinding





10. ) Pelletfeed Mixers (Agglomeration Plants I and II)


11. ) Conveyor Belts (Agglomeration and Greenpellets)


12. ) Balling Drums


13. ) Greenpellet Screens


14. ) Reciprocating Conveyor (Grate Feed System)


15. ) Wide Belt


16. ) Roller Feeder


17. ) Travelling Grate


18. ) Rotary Kiln


19. ) Annular Cooler


20. ) Pellet Load-out Area





21. ) Buildings


22. ) Office Building with electrical Distribution Station and Control Room


23. ) Fuel Oil Storage Tanks, Pumpstation


 -25-








C3 Findings


1.) Concentrate Conveyor Belts and Emergency Stockpile


Rubber belts between distribution station of the Concentrator Plant and


concentrate bins of the Pellet Plant are completely destroyed, the steel


structure is still there to a certain extent, however, without roofing and grat¬


ings of the gangways, which have been removed.


Upper and lower idlers are decomposed, bearings and shafts are not


. present any more.


In general the condition of the belt system is more or less the same as


found in the Concentrator, which means it has no commercial value.


The draw-off-conveyors underneath the concentrate emergency stockpile


could not be inspected, but presumably are in a similar condition.


No commercial value.


2. ) Concentrate Bins


Concentrate bins are still existing, however, partly corroded, which also


applies for the bin building (steel construction) since these installations,


have been individually designed for that purpose, they are probably not


usable otherwise and therefore not saleable.


No commercial value.


3. ) Doser-Beltscales underneath Concentrate Bins


The rubber belts are burnt or removed, electric motors looted, gear boxes


opened and roller bearings pulled off. The remains are scrap.


No commercial value.


 -26-











4.) Surface Grinding (Ballmills, Slurry Pumps)


Present condition of 4 KRUPP-Ballmills








No. Number per Mill Item Condition





1 1 mill shell good


2 2 end walls, feed and dis¬ good


charge side





3 2 neck bearings presumably in good con¬


dition since still within their


housings


4 1 wear protection liner (shell still available


and end walls)





5 2 el. motors (twin-drive) looted (destroyed)


6 2 pin type couplings undamaged at the site


7 2 sprocket shafts incl. undamaged at the site


sprockets and bearings





8 1 gear rim undamaged at the site


9 1 lubrication system for looted (destroyed)


neck bearings and gear


rim








The main mechanical components of the 4 mills are still in a reasonably


good condition.


The estimated commercial value could be up to 1,200,000 US$. Said


amount will be reduced by costs for dismantling and transport to Monrovia.








The heavy slurry pumps are decomposed, the electrical motors looted. The


mechanical parts are still at the site and a decomposition is possible. This


statement holds true for all the 8-10 heavy duty slurry pumps of the wet





section of the pelletplant.


The commercial value is considered to be 20,000 US$, without the costs for


dismantling and transport.


 -27-








5. ) Slurry Tanks, Filter Feed Pumps, Filtrate Thickeners


Tanks and Thickeners are made of steel sheet and are equipped with agi¬


tators (tanks) and rake mechanisms (thickeners). This equipment is still in


fair shape with the exception of its drive units.


Here again, the decomposition and later remounting at another place is


problematic and costly. It will be practically impossible to find a technical


demand for this special type of equipment.


No commercial value.





6. ) Disc Filters, Vacuumpumps, Compressors


Large diameter piping system of the filtersection is still existing.





Disc Filters


The motors are completely destroyed and looted.


Wormgears were decomposed and bronze worm wheels stolen.


The filter tanks are obviously undamaged.


. All filter disc segments are missing.


Central shafts and bridge block steering systems are existing but damaged.


The agitator bearings were stolen.


No commercial value.


Vacuumpumps


Housings, rotors and bearings are still at the site to a large extent.


The upper parts of the gearboxes were removed, gear wheel sets are


corroded and therefore not usable any more. The roller bearings of all gears


are missing. The pin type couplings between gearboxes and drive shafts of


the pumps are still existing, however, only some parts of the couplings


between el. motors and gearboxes could be found.





Joint foundation frames for pumps and motors, fabricated as costly weld¬


ment, are on the spot without exception.





7


■ .


oik


i


 -28-





Compressors for compressed air snapblow at discfilters


Units completely destroyed, including motors and couplings. Only some


crank cases are there. No commercial value.





Rubber Belt Conveyors behind Filter Discharge


Belts burnt or removed


Carrying roller frames some remaining


Carrying rollers only shells existing


Conveyor support structure partially at the site


Drives destroyed


Drive- and return pulleys still at the site, but without bearings





The present value of the entire filtering area is exclusively represented by


10 vacuumpumps of the larger size (SIEMENS-ELMO). The amount of


120,000 US$ is exclusive steel frames. Computation of receipts do not


consider cost for dismantling and transport to Monrovia.





7. ) Flotation Plant


The flotation plant as such is considered to be destroyed. The 2 concentrate


thickeners are still in a reasonably good condition, but their kind of as¬


sembly makes dismantling and reassemble elsewhere impossible.


8. ) Pelletfeed- and Bentonite-Bins (Agglomeration Area)


Pelletfeed Bins


The bins are still, undamaged, the liner, however, is removed. Discharge


doser beltscales, including motors and gears, are destroyed.


No commercial value.


Bentonite Bins


The situation corresponds to the findings at the pelletfeed bins.


No commercial value.


9. ) Bentonite Grinding








 -29-





Only the body of the 2 LOESCHE-mills and pan grinder tools are rework-


able. Disassembly and removal are easy due to the favourable location of


the mills on the ground floor of the open side of the plant building.


The present value of the mills is considered to be 200,000 US$ each, costs


for disassembly and transport not considered.


10. ) Pelletfeed Mixers (Agglomeration Plants I and II)





Plant I (PEKAY-Mixers)


The equipment is to be considered worthless, since either damaged,


corroded, burnt or stolen.


No commercial value.


Plant II (LOEDIGE-Mixers)





The equipment is worthless with the exception of Mixer shells and shafts


incl. bearings. The trade price of the latter components is considered to be


very low, the more so, because of the tendency in modern plants towards


large centralized units instead of smaller mixers in each individual agglo¬


meration system.


No commercial value.





11. ) Conveyor Belts (Agglomeration and Greenpellets)


For agglomeration plants I and II the situation concerning the conveyor belt


systems is as mentioned before for similar installations:


Belts: missing


Carrying rollers: missing


Drive- and return pulleys: some available


el. Motors: destroyed, burnt


Gears: opened, damaged








No commercial value.














/ n


 -30-





12.) Balling Drums


Drum Shells, Riding Rings and Cutter Bars


Except for the cutter bar bearings, the equipment is in fair shape.


Carrying Rollers


Carrying rollers were removed in order to take off the bearings. Therefore


drums now rest on the steelconstruction, but are otherwise undamaged.


Drum Drives


Gear Rims good condition


Sprockets and Shafts good condition


Bearings of Sprocket Shafts missing


Gear Boxes opened, damaged


el. Motors destroyed


Steel framings are complete, not damaged and in correct position.


The present value is estimated to be 700,000 US$ for the 14 units, addi¬


tional costs of dismantling and transport not considered.


13.) Greenpellet Screens


Drive Shaft and Eccentric Sheaves still existing


Screen Frame still existing


V-Belt Pulleys some present


el. Motors missing


Support Framing complete


The screens are still of commercial value, even though pelletplants prefer


roller screens nowadays. Screens, however, have wide fields of application.


Commercial value is estimated to be 140,000 US$, which amount, again,


does not consider costs for disassembly and transport.


 -31 -





14.) Reciprocating Conveyor (Grate Feed System), Plant I


Except for the support framing, the components of the belt and the hydraulic


system are missing, looted, damaged or cannibalized.


No commercial value.


Wide Belt (Grate Feed System), Plant I


15.)


The item is to be regarded as unrepairable.


No commercial value.


Roller Feeder (Grate Feed System), Plant I


16.)


Only the steel frame is left.


No commercial value.





Travelling Gate (Plant I)


17.)





Grate Machine





Carrying Rollers (transport- and return-level) as well as the drive- and re¬


turn-shafts are still present. The grate chain was completely dismantled and


removed.


The drive gear is still in position but opened and therefore most likely corro¬


ded.


Bearings of carrying rollers, drive- and return-shafts were removed entirely


or at least the bushings taken off. Some empty casings are left.


Wet Deduster





El. Motors for rake-mechanism and fans are missing, gears defective. The


deduster housing is rotten.





Main Process Fans #1(2 units) and 2 (offgas)


The Impellers are still in their casings, the bearings, however, are missing


or destroyed. The couplings are still there, el. motors destroyed, likewise all


dust valves.


Steel Structure


The steel structure (framing) of the grate machine is in its original position.


Altogether, the grate machine and the equipment belonging to it, are more


or less worthless.


Only exception: the impellers of the main process fans, in fair condition or


practically unused (spare units), are reusable for identical fans elsewhere


and in this case represent a commercial value of 500,000 US$. Costs for


dismantling and transport not considered; spare units: transport only.


Rotary Kilns


Kiln steelshells , riding rings and sealings are still in reasonable shape.


Gear rims, sprockets and sprocket shafts are in operational condition, the


protection covers still set up.


The bushings of the sprocket shaft bearings, however, are missing.


Gears of the main drives (4 units) are obviously not damaged.


The 4 el. motors of the main drives are destroyed.


The gears of the 2 el. auxiliary drives are still in position, the motors are


missing. The same situation is prevailing at the 2 Diesel auxiliary drives


(gears in place, motors missing).


The cooling air fans for the main drives are destroyed completely.


Kiln Carrying Rollers


Rollers are complete, even the bronze bushings are at hand, since removal


would ask for lifting up the heavy kiln.


Guide- and Thrust-Rollers


4 units complete, inclusive bearings.


It is not likely that a kiln shell of several hundreds of tons is arc-cut and later


on rewelded elsewhere.


 -33-








Some kiln components, however, might be of interest for the second hand


market:


2 gear rims 60.000 US$


4 sprockets with shafts 10.000 US$


4 planetary gears plus auxiliary drives 10.000 US$


8 carrying rollers 80.000 US$


4 thrust rollers 20.000 US$


total 180,000 US$





Costs for dismantling and transport not considered.


19.) Annular Cooler





Cooler Pallets





2 sets of cooler pallets in fair condition are installed.


Cooler Fans





The 4 units (2 x GREEN FUEL in Plant I; 2 x KKK in Plant II) are seriously


damaged:


4 impellers show damages on bearing necks of the shafts


bearings of impeller shafts are damaged


4 el. motors are totally damaged





Perhaps one or the other of the impellers could be reworked, but a decision


can be made only after careful inspection.


t


Cooler Drives





seriously damaged.


Apron Conveyors





seriously damaged.


 -34-





Conveyor Trough (Low Head Feeder)


The feeder in Plant II is in fair condition, likewise the unbalance-exciters.


The electrical motors are damaged.


The equipment in Plant I, as far as still present, is in poor condition, i. e. not


reworkable. Only the trough body may be usable after overhauling.


Result (reusable Equipment)


2 sets of cooler pallets (2 x 30 pc) 120,000 US$


To dismount the cooler pallets is a difficult and time consuming matter. The


economic result is questionable, therefore no commercial value.


4 low head feeders without motors 30,000 US$


20.) Pellet Load-Out Area


Conveyor Belt System


Completely demolished (scrap)


Chunk Crusher


The jaw crusher is still in working condition, except for the missing motor.


Stacker / Pellet Stockpile


seriously damaged (scrap)


Stockpile Discharge


discharge gates / valves underneath the stockpile are damaged


Pellet Bins


Steelsheet bins are in fair condition. The discharge facilities are damaged,


the hydraulic gate drives are missing.


 -35-





Result


1 jaw crusher 10,000 US$








Costs for dismounting and transport not considered.





21.) Buildings


Present value of the steel-structure is about


Wet sections 600.000 US$


Hot sections 400.000 USS


1,000,000 US$





Since expenditures for dismantling and transport will substantially reduce


a. m. amount and because of the fact, that the buildings are designed for


special purposes, the real value would be lower.


No commercial value.


22. ) Office Building with el. Distribution Station and Control Room


The floors are entirely cleared, the transformers on the ground floor com¬


pletely destroyed.


Staircases are still usable, the electric elevator, however, is destroyed.


Only some frames of former switch cabinets and control panels are left in


the control room.


Doors and windows are removed without exception.


The structure of the building is still in reasonably good condition, since the


concrete roof prevented atmospheric corrosion.


There is, however, no trade price for an immobile building like this.


23. ) Fuel Oil Storage Tanks, Pumpstation


The tanks are still in sound condition. Except the el. motors, the pump- and


piping system is also intact, as far as can be judged from outside.


At the daily tank oil station, the tank itself is still usable. Here, however, the


pumps are damaged, the el. motors removed.


C


 -36-





In spite of the good condition of some equipment, the trade value of the


mentioned facilities is negligible.


C4 Compilation of possible Values








Pos. us$


4 4 Ball Mills 4,4 0 * 8,8 m 1,200,000





10 Slurry Pumps 20,000


6 10 Vacuum Pumps 120,000





9 2 Bentonite Mills 400,000





12 14 Balling Drums 700,000


13 14 Screens (Seed-Screens) 140,000





17 5 Impellers for Process Fans 500,000


18 Components of Rotary Kilns 180,000





19 Components of Annular Cooler 30,000


20 Chunk Crusher 10,000





Total 3,300,000


Estimated costs of dismantling and transport - 1,000,000





Net value 2,300,000


























3>f





 -37-





D Inspection of Electrical Workshop and former Powerhouse Area .


D1 Inspection Time





March 10, 1999 (3 hrs)


D2 List of Equipment inspected





1. ) Electrical Main Workshop





2. ) Pipeline Haindii-Powerhouse Bong


3. ) Drinking Water Preparation Plant


4. ) Auxiliary Diesel Generators (2 sets)


5. ) Sulzer Diesel-electric Power Generators (11 sets)


6. ) Fuel Oil Tanks


7. ) Buildings Electrical Workshop, Drinking Water Plant, Powerhouse





D3 Plant Areas in Detail


1.) Electrical Main Workshop


The workshop, close to the mechanical main workshop, was completely


looted (see photo documentation).


Machine tools, tools for rewinding, electrical motors and generators and one


drying stove are missing or destroyed.


Cannibalized electrical motor components, damaged welding generators, a


looted forklift, bent shelves etc. are scattered all over the shop floor.


Separated rooms are turned down to the foundation walls.


Still now, some persons are busy with removing corrugated sheet-iron of


the building.


The main frame is still in fair condition, crane-bridges and runways of 2


cranes are still available, travelling gears, however, are missing.








2.) Pipeline St.-Paul River - Powerhouse Bong


Approximately 2,500 t of steelpipes are installed in 2 lines, which are not


damaged yet, according to information given by former BMC employees.


Could be dismounted and reused.


 -38-





Scrap value of about 50,000 US$ would not justify costs for scrapping and


transport to Monrovia.


A value in situ of 120,000 US$ should be possible for the material as pipes,


reduced by 90,000 US$ for dismantling, resulting in a net value of 30,000


US$.


3. ) Drinking Water Preparation Plant


Installations were removed, only some vessels remained.


Scrap.


No commercial value.


4. ) Auxiliary Diesel Generators


2 Power Generators were installed (2000 kp each), to generate emergency


power for the industrial consumers and for start-up of Sulzer-Diesel-Gene-


rators in case of break down.


Both units are destroyed almost completely.


Motor housings and crank shafts are still existing and could be used after


careful repair.


Sale of (spare) parts, however, is probably not possible since motors are of


older design.


5. ) Sulzer-Diesel-electric Power Generators


After the last extension in 1978, 11 Generator sets were in operation


4 x 8,000 kW


7 x 9,000 kW


Motors and Generators were looted 1992/94.


Motor components are probably not restorable since corrosion started after


removal of roofing and side protection of the building (1996).


Taking off of non-iron material was done very reckless.


It was not possible to evaluate condition of each single set, it seems,


however, possible to rebuild some of them. 4





I


 -39-











A rough estimate of components values, independent of possibility to''sell,


reads as follows:








value-in-situ


Diesel-Motors US$





a) Cylinder heads (some) 80,000


b) Piston rods (all) 50,000





c) Connecting rods (all) 50,000


d) Cylinder bushings (liner) (all) 200,000





e) Crankshafts (some) 1,000,000


o Crankcases (all) 1,500,000





g) Stairs, Floors (Steel); partially 40,000





Generators





a) Rotor-Bodies (all) 800,000


b) Stator-Bodies (all) 600,000





Total value of components: 4,320,000 J


Estimated costs of dismantling and transport - 1,480,000





Net value 2,840,000











Scrapping, on the other hand, would create costs of about 500,000 US$


and would therefore exceed the scrap value.





6.) Fuel Oil Tanks





. The tank farm is still existing with 2 major exceptions





- pumpstation (removed)


- HFO treatment plant (destroyed)








Probably no prospect on hand.





No market value.


Buildings: Electrical Workshop, Drinking Water Plant, Powerhouse


Electrical Workshop


Steel construction incl. roof supporting beams and bridge crane are in fair


condition.


Value-in-situ 30,000 US$


Costs for disassembly and transport_20,000 US$


Net value 10,000 US$








Drinking Water Plant


Main steel construction is in fair condition. Since the building is of minor


dimensions, sale within Liberia is imaginable.


Value-in-situ 30,000 US$


Costs for disassembly and transport10,000 US$


Net value 20,000 US$








Powerhouse


Main steel construction incl. crane-bridge and -runway are in fair condition.


Crane motors, however, are destroyed. The roof construction, except


covering, is reusable.


Value-in-situ 1,000,000 US$


Disassembly and transport100,000 US$


Net value 900,000 US$








It is to be emphasized here again, that costs of disassembly and transport


would only be economically viable if the entire BMC-equipment, classified


as "saleable", can actually be sold.


Detailed information about necessary prerequisites (equipment, personnel)


and the required front-end investment are outlined in chapter "Introduction".


Mechanical Main Workshop and Warehouses (BONG)


Inspection Time


March 13, 1999 (1,5 hrs)


List of Equipment inspected:


1. ) Welding shop for heavy duty mine equipment


2. ) Machine shop and machine tools


3. ) Office and tool room


4. ) Heavy duty truck Diesel engine repair shop


5. ) Testbench for heavy duty truck Diesel engines


6. ) Railway locomotive repair and service shop


7. ) Gearbox and wheelmotor repair shop


8. ) Warehouse I


9. ) Warehouse II


10.) External Warehouse, profile steel storage area


Findings


Welding Shop for Heavy Duty Mine Equipment


(Main Workshop)


Building is a heavy steel construction equipped with a bridge crane. Mainly


welding repair work on heavy components of Mine equipment was


performed in the welding shop:


dipper for rope shovels,


dipper sticks,


dump bodies for heavy duty trucks,


buckets for wheelloaders,


track frames for rope shovels and drill rigs.


The shop was equipped with autogenous flame-cut tools, rabbet plane (arc


air cutting torches) and electrical welding generators.


 -43-





The entire welding equipment was removed.


Heavy Mine equipment, due to repair in 1990, is still on the spot and not


damaged.


Even though roofing and clothing of the building are removed, the main





structure is in fair condition.


Electrical drives of lifting and travelling crane accessories are destroyed.


Only the main steel framing of the building represents a certain value:





Value-in-situ 60,000 US$


Costs of disassembly and transport20.000 US$


Net value 40,000 US$





2.) Machine shop and machine tools


As depicted in the photo documentation, refurbishing of the entire variety of


machine tools and plate working machines is impossible at reasonable


costs:





lathe machine


horizontal drilling machine


all purpose milling machine


polish-grinding machine


vertical drilling machine


guillotine shears


folding press


sheet bending machine





No commercial value.





3.) Office and tool room


Offices were located at an elevated level with the tool room underneath.


The floor of the toolroom collapsed, probably as the result of a


conflagration.


The whole area is looted and destroyed.


No value at all.


 -44-








4. ) Heavy Duty Truck Diesel Engine Repairshop


Here formerly 12- and 16 cylinder two stroke Diesel engines were repaired.


The entire equipment is either removed or destroyed, some scrap, scattered


all over the hall, is not worth mentioning.


No commercial value.


5. ) Testbench for Heavy Duty Truck Diesel Engines


The testbench is completely destroyed.


No commercial value.


6. ) Railway Locomotive Repair and Service Shop


Locomotives and shunting engines were parked in the repair shop (part of


the main workshops) right before termination of BMC's operation in May


1990:


4 pc. Diesel-electric locomotives (1,200 hp each)


1 pc. Diesel-hydraulic locomotive (1,600 hp)


2 pc. Diesel-hydraulic shunting engines ( 225 hp each)


3 pc. Diesel-hydraulic shunting engines ( 500 hp each)


1 pc. Rail bus, MAN-Diesel (110 hp)


1 pc. Home made shunting engine (110 hp)


working in the BMC-port





The 5 large main locomotives as well as the 5 shunting engines and the two


smaller machines are completely destroyed.


The Diesel motors of the 5 shunting engines were dismantled.








 -45-








Missing are: crank shafts


camshafts


pistons


connecting rods


cylinder heads (aluminum)





substructure of casings


oil pans





Wheelmotors of the 4 Diesel-electric locomotives were dismantled just for


removal of copper-windings. For just some kilograms of copper the entire





fleet of BMC-locomotives was destroyed and now has to be considered


scrap.


No commercial value.








7.) Gearbox and Wheelmotor Repair Shop


The two repair installations are completely looted


- large gears, hydraulic cylinders, HD truck suspensions





- wheelmotors.








The same applies to the spare parts stock.





No commercial value.





8.) Warehouse I (BONG)


The warehouse stocks are completely removed (looted). Only shells of belt





conveyor idlers are scattered on the floor after removal of shafts and


bearings.


The range of former offices are pulled down to their walls, no windows and


doors available any more.


Alone the steel construction of the building is still intact.


Warehouse II


Storage of new or repaired heavy machinery components such as wheel


motors took place here.


The area is now dotted with remainders of HD truck wheelmotors,


. wheelmotor frames and other heavy machinery.


Some wheelmotor frames might be saleable (about 10 units).


The main beams of the steel construction and the bridge of the bridge crane


are in fair condition.


External Warehouse; Profile Steel Storage Area


In this area, profile steel, steel sheets, wear liner material and paint were


stocked up here.


The area is equipped with a portal crane, covering approximately 50 % of


the iron fence. The crane is in fair condition, except for the motor. The store


is completely cleared (looted) with the only exception of 3 spare impellers


for the process fans / pellet plant.


 -47-








Item Value-in-situ Dismantling Net value


and transport


1,000 us$ 1,000 us$ 1,000 us$


Items except Buildings


Wheelmotor Frames (approx. 10 units) 100


Portal Crane (no motor!) / Iron Fence 20


3 Spare Rotors / Process Fans 120


Subtotal: 240 42 200


Buildings: Main Steel Structure


Welding Shop with bridge crane 60 20 40


(no motor)


Main Workshop with bridge crane 200 50 150


(no motor)


Warehouse I with bridge crane 170 40 130


(no motor)


Warehouse II with bridge crane 130 50 80


(no motor)


Subtotal: 560 160 400


Grand total: 800 200 600


 -48-





F RAILROAD (RR)


F1 Track System, Bedding of Track


Track System and Bedding need restauration, thereof 25 % extensive


repair-work and rebedding. The BMC-tamping machine was not found.


In case, the RR will be refurbished for the only purpose of transporting used


components of BMC equipment / installations to Monrovia, the intensity of


repair work will be less, compared to regular iron ore transport purposes,


mainly because of a lower haulage velocity and lower transportation weight.


Nevertheless, all culverts under RR-dams are to be examined with regard to


their stability.


The repair of the Stockton Creek RR-Bridge in Monrovia for the limited task


mentioned above would require costs of about 150,000 US$. Without the


bridge, all equipment parts would have to be transloaded at the road


crossing before the bridge onto trucks or heavy duty trailers for


transportation to the port area. Critical to our opinion are the very heavy


parts of equipment like ball mill shells (approx.jfO t without end walls,-gear


rim, liner) or primary crusher shaft (approx. 60 t without liner cone).


Transloading from RR wagons to trucks would have to take place at the


only crossing RR / Road near Mount Coffee. Grader work for preparation of


the laterite road (Caldwell-road) has necessary, the condition of the Road


' Bridge over the Stockton River has to be examined.


F2 Rolling Stock


Stock at the end of BMC-operation


186 Railroad iron ore cars


20 flat cars ■' ' #‘


10 side dumpers


7 bentonite cars (closed)


3 crushed rock cars (open)


6 HFO tank cars