NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
and
RAMU NICKEL LIMITED
OROGEN MINERALS (RAMU) LIMITED
MINING DEVELOPMENT CONTRACT
RAMU NICKEL PROJECT
BLAKE DAWSON WALDRON KUTT C PAONGA
Lawyers State Solicitor
Level 4, Mogoru Moto Building Office of the State Solicitor
Champion Parade Department of Attorney General
PO Box 850 P O Box 591 '
Port Moresby, NCD Waigani, NCD
Tel: (675)309 2000 Tel: (675)325 2209
Ref: DCF.00-0485 Ref: RDTC 98/01
TABLE OF CONTENTS
Clause Page No
1. DEFINITIONS 2
2. INTERPRETATION 7
2.1 General 7
2.2 joint and Several Obligations 8
3. LEASES AND OTHER RIGHTS FOR MINING DEVELOPMENT 9
3.1 State's Obligations to Grant 9
3.2 Provincial and Local-level Governmental Approvals 9
3.3 Modifications or Variations 10
3.4 Landowner Compensation 10
3.5 Content, Form and Term of Leases etc. 10
3.6 Leases etc as required for the Project 11
4. PROJECT IMPLEMENTATION 11
4.1 Joint Venturer's Obligations 11
4.2 Progress Reports 12
4.3 Liaison Office 12
4.4 Contractors and Subcontractors 12
4.5 Expatriate Workers , 12
5. INFRASTRUCTURE FACILITIES 12
5.1 Works and Facilities 12
5.2 State's Election to provide Works and Facilities 13
5.3 Transfer of Works and Facilities 13
5.4 Payment for Works and Facilities 13
5.5 Management and Maintenance 14
5.6 Proper Standard 14
5.7 Sale of Electricity 14
5.8 Telecommunications 15
5.9 Third Party Access 15
5.10 Title to Interest in Property 15
6. RATES AND DUTIES 16
6.1 Right to Import and Export 16
6.2 Export Taxes and Duties 16
6.3 Import and Excise Duties 17
6.4 Discriminatory Taxes and Duties 17
111339327
1
11.
6.5 Payment of Reimbursement 17
VALUE ADDED TAX
18
7.1 Application of VAT 18
7.2 Recovery of VAT 18
FISCAL PROVISIONS 18
8.1 Ring Fencing of Mining Operations 18
Transfer Price
8.2 20
8.3 Income Tax 21
8.4 Additional Profits Tax 21
8.5 21
Royalty
86 Tax Remittance 21
FINANCING OF THE PROJECT 21
9.1 Submission of Financial Plan 21
9.2 Consideration and Approval of Financial Plan 22
9.3 Maintenance of Debt: Equity Ratio 22
CURRENCY AND EXCHANGE CONTROL 23
PART A 23
Application and Definitions 23
10.1
10.2 Foreign Currency Accounts 24
10.3 Approved Finance 24
10.4 Distributable Profits 25
10.5 Approved Dividends 25
10.6 Retention of Foreign Currency 26
10.7 Purchase of Foreign Currency 27
10.8 Reporting to Central Bank 27
10.9 28
Return of Surplus Foreign Currency
10.10 Remittance of Equity 28
10.11 Non-discrimination 28
10.12 State's Action to Ensure Compliance 29
10.13 Speculative Currency Transactions 29
PART B 29
10.14 Application and Definitions 29
10.15 Foreign Currency Accounts 30
Approved Finance 30
10.16
10.17 Branch Profits and Distributable Profits 31
10.18 Approved Dividends 32
10.19 Retention of Foreign Currency 32
10.20 Purchase of Foreign Currency 33
10.21 Reporting to Central Bank 33
10.22 Return of Surplus of Foreign Currency 34
10.23 Remittance of Equity 34
10.24 Non-discrimination 35
111339327
III.
10.25 Site's Action to Ensure Compliance 35
10.26 Speculative Currency Transactions 35
11. MARKETING AND OTHER CONTRACTS 36
11.1 Right to Market Mine Products 36
11.2 Agreements on Competitive Commercial Terms 36
11.3 Arms Length Basis 37
11.4 Sale of State's Share of Mine Products 37
12. ACQUISITION OF STATE INTEREST 38
12.1 State's Option 38
12.2 Mining Equity Agreement 38
12.3 Orogen Option 38
13. INVESTMENT PROMOTION AUTHORITY CERTIFICATION 38
14. ENVIRONMENTAL MANAGEMENT AND PROTECTION 38
14.1 Compliance with Environmental Plan 38
14.2 Variation of Environmental Plan 38
14.3 Amendment required by State 39
14.4 Disputed Amendments 39
14.5 Amendments while Approved Finance outstanding 39
14.6 Application of Environmental Laws Generally 39
15. TRAINING AND LOCALISATION 40
15.1 Compliance with Programme 40
15.2 Alteration of Programme 40
15.3 Disputed Alterations 40
15.4 State Assistance 40
16. SUPPLY AND PROCUREMENT 41
16.1 Registration of Local Suppliers 41
16.2 PNG Contractors and Suppliers 41
16.3 PNG and International Procurement 41
16.4 Costs to be considered 42
17. LOCAL BUSINESS DEVELOPMENT 42
18. INSURANCE 42
18.1 Insurance required 42
18.2 Insurance of PNG Risks 42
18.3 Application of Insurance Proceeds 43
19. PATENT AND TECHNOLOGY RIGHTS 43
111339327
iv.
20. SUSPENSION OF OPERATIONS 43
20.1 Election to suspend 43
20.2 Maintenance 43
20.3 Report on Costs to Resume Operations 44
20.4 Resumption of Operations 44
20.5 Direction to Resume Operations 44
20.6 Disputed Resumptions 44
20.7 Sole Expert Determinations 44
20.8 Deemed Abandonment 44
20.9 Other Suspensions 45
21. TERMINATION 45
21.1 Joint Venturers'Right to Terminate 45
21.2 State's Right to Terminate 45
21.3 Default Notice 45
21.4 Termination or Assignment Notice 46
21.5 Disputed Termination 47
21.6 Where Receiver or Manager appointed 47
21.7 Continuing Compliance 48
21.8 Assignment of Defaulting Venturer 49
22. CONSEQUENCES OF TERMINATION 49
22.1 Obligations of Parties 49
22.2 Reversion of Property to State 50
22.3 Continuance in Force 50
23. ASSIGNMENT 50
•
23.1 Right to Assign 50
23.2 Effect of Assignment 50
23.3 Assumption by Assignee 51
23.4 Mortgages, Charges etc 51
23.5 Rights of Mortgagee or Chargee 52
23.6 Consents and Approvals 52
24. EXTENSIONS TO TIME 53
24.1 Extensions by Agreement 53
24.2 Automatic Extensions 53
24.3 Effect on Periods and Dates 53
25. ARBITRATION 53
25.1 Meaning of Dispute 53
25.2 Submission to ICSID 53
25.3 ICSID Arbitration 54
25.4 Submission to UNCITRAL Arbitration 55
25.5 Application of UNCITRAL Arbitration Rules 55
111339327
V.
25.6 Award Binding 56
25.7 Waiver of Immunity 56
25.8 Cost of Arbitration 56
25.9 Stay of Other Rights 56
25.10 Sole Expert 56
26. LAW APPLICABLE 57
27. STABILITY OF TERMS 57
27.1 Agreed Terms and Material Adverse Change 57
27.2 Stabilisation 57
27.3 Claim by Joint Venturer 57
27.4 Payment of a Cairn 58
27.5 Payments grossed up 58
27.6 Termination 58
27.7 Most Favoured Investor 58
28. FORCE MAJEURE 59
28.1 Effect of Force Majeure 59
28.2 Meaning of Force Majeure 59
29. INDEMNITY 59
29.1 State indemnified 59
29.2 Liability limited 60
29.3 Defence of Claims 60
30. NON-DISCRIMINATION , 60
31. VARIATION 60
31.1 Variations by Agreement 60
31.2 Modifications to Approved Proposals for Development 61
31.3 Definitions 61
32. CONSULTATION 62
32.1 Training and Localisation Committee 62
32.2 Supply and Procurement Committee 62
32.3 Environmental Committee 63
32.4 Committee Meetings 63
33. NOTICES 63
33.1 Notice Procedure 63
33.2 Notices deemed given 64
33.3 Plans, Proposals etc. 65
34. REPRESENTATIONS AND WARRANTIES 65
111339327
VI.
34.1 Representations and Warranties by Each party 65
34.2 Representations and Warranties by the Joint Venturers 65
34.3 No Other Representations and Warranties 66
35. WAIVER 66
36. SEVERABILITY 66
37. FURTHER ACTS 66
38. COUNTERPARTS 66
SCHEDULE I - FORM OF SPECIAL MINING LEASE 69
SCHEDULE II - DUTIES ON IMPORTED GOODS 71
111339327
THIS CONTRACT is dated the 36lk day of 2000 and is made between -
(1) THE INDEPENDENT STATE OF PAPUA NEW GUINEA (hereinafter called the
State"); and
(2) RAMU NICKEL LIMITED, a company incorporated in Papua New Guinea with its
registered office at Level 9 Pacific Place, Musgrave Street, Port Moresby and
OROGEN MINERALS (RAMU) LIMITED a company incorporated in Papua New
Guinea with its registered office at Level 2, Ela Beach Tower, Musgrave Street, Port
Moresby (the "Joint Venturers' ).
WHEREAS
A. Promising indications of commercial deposits of minerals (nickel and cobalt) have
been discovered in the area of the Exploration Licences and the Joint Venturers have
applied for a Special Mining Lease.
B. In order to maximise the benefits of the Project to the people of Papua New Guinea,
development of the minerals within the Exploration Licences will be accompanied by
the construction of associated processing facilities, including:
(i) a slurry pipeline from the mine site to the refinery at Basamuk on the Rai
coast; and
(ii) the Basamuk refinery which will produce nickel and cobalt, together with
associated power, port and other facilities to export this product.
G The State may exercise its right u/ider the Exploration Licences to purchase up to a
30% interest in the mineral discovery and associated processing facilities in which
case it may nominate Mineral Resources Development Company Limited ("MRDC")
as the purchaser and the existing Joint Venturers, in proportion to their existing
interests, will be obliged to sell that interest to MRDG
D. Under the Option Agreement dated 13 September 1996 between the State, MRDC
and Orogen Minerals (Ramu) Limited ("Orogen"), Orogen has an option to acquire a
25% interest in the Project (including the associated processing facilities) from
MRDC.
E. Orogen has been given notice pursuant to Section 33 (3) of the Mining Act that the
Head of State acting on advice may grant a Special Mining Lease for the
development of a commercial mining project in the area of the Exploration Licences
and Orogen may exercise its option to acquire a 25% interest in the Project from
MRDC.
F. The balance of the 30% interest in the Project may be purchased by MRDC, namely
5%, to be held by a subsidiary of MRDC for the future benefit of the Landowners.
111339327
2.
G. Development of the Project will be of major economic significance to the people of
Papua New Guinea.
H. The State wishes, subject to the provisions of Recital I, to ensure that the
development of any commercial mineral deposits and associated processing facilities
will secure the maximum benefit for, and adequately contribute to the advancement
and the social and economic welfare of the people of Papua New Guinea, including
the people in the vicinity of the Joint Venturers' operations, in a manner consistent
with their needs and the protection of the environment.
I. The State wishes to encourage the development of the mining and processing
operations and the optimisation of its natural resources upon terms and conditions
which, it is anticipated at the time of the execution of this Contract, will secure
maximum benefits for the people of Papua New Guinea and secure to the Joint
Venturers and their shareholders an appropriate return on investment
commensurate with the risks involved.
J. The State and the Joint Venturers have agreed on a number of matters which are set
out in this Contract and which are to be an enduring arrangement of national interest
and which are to be continuing legal and binding obligations of the State and the
Joint Venturers (and their respective successors and permitted assigns) subject to
alteration or termination only in the circumstances set forth in this Contract.
NOW IT IS HEREBY AGREED AND DECLARED AS FOLLOWS:
1. DEFINITIONS
In this Contract, unless the content otherwise requires -
"Approved Financial Plan" means the plan submitted by a Joint Venturer and
approved by the Secretary responsible for financial matters in accordance with
Clause 9, which upon approval will form part of the Approved Proposals for
Development;
"Approved Finance" means debt financing which is-
(a) within the scope of a Joint Venturer's Approved Financial Plan; and
(b) on terms and conditions which have been approved by the Central Bank in
accordance with Clause 10,
but does not include any part of the Equity of the Joint Venturer;
'Approved Proposals for Development" means the proposals for development
submitted by the Joint Venturers which have been approved by the Minister
pursuant to Section 43 of the Mining Act, as such proposals may be modified, varied,
amended or altered as permitted under this Contract;
111339327
3.
"Approved Reduction of Capital" means:
(a) where a Joint Venturer is a single purpose company, a reduction in its
Equity (in accordance with the Companies Act 1997 in the case of a
company incorporated in Papua New Guinea); or
(b) where a Joint Venturer is a multi-purpose company, a reduction in the
Equity of its Branch,
where the reduction is made in accordance with Clause 10.10 or 10.23;
"Branch" means the facilities and other resources of a multi-purpose company
(whether incorporated in Papua New Guinea or elsewhere) that are used, fully or
partially, for the Project and the costs of which are identified in the Branch Accounts;
"Branch Accounts" means accounts prepared on a quarterly basis, and in accordance
with generally accepted accounting principles, which relate solely to a Joint
Venturer's expenditure on, revenue from and financing of, the Project and which
clearly identify head office advances, and the respective balances thereof, as Equity
or Approved Finance;
"Central Bank" means the Bank of Papua New Guinea created pursuant to the
Central Banking Act 2000 and its successors;
"Contract" means this Contract as varied from time to time in accordance with the
terms hereof;
"Commencement of Commercial Production" means the day on which the
aggregate production of Mine Products from the beneficiation plant reaches 80%
of designed production capacity (as set out in the Approved Proposals for
Development) for a continuous period of 30 days;
"Costs to Resume Operations" means one and two-tenths(1.2) times the costs (which
includes the cost of new capital expenditures) required to resume Normal
Operations plus one and two-tenths(1.2) times the sum of the Joint Venturers'
estimate of:
(a) royalties and mining levy,
(b) Operating Costs, and
(c) all other incidental costs,
necessary to continue Normal Operations for a further period of twelve months;
"Department" means the Department of Mining or such other department of the
State as is for the time being responsible for mining matters;
111339327
4.
Effective Date" means the date on which this Contract was executed by the Parties,
and in the event that it was executed by different Parties on different dates means the
date on which it was executed by the Party who was the last Party to execute the
same;
"Environmental Plan" means the environmental plan for the Project submitted
under Section 4 (6) of the Environmental Planning Act (Chapter 370) and
approved under that Act by the Minister responsible for environmental matters,
which also forms part of the Approved Proposals for Development as such plan
may be varied or amended as permitted under Clause 14;
"Equity" means;
(a) where a Joint Venturer is a single purpose company, its issued ordinary
shares (to the extent that they are paid up), its issued preference shares (to
the extent that they are paid up and have been designated at the time of
their issue as "equity" in a notice to the Central Bank) and its undistributed
accounting profits; and
(b) where a Joint Venturer is a multi-purpose company, non-interest bearing
advances made by the head office to the Branch which are designated as
"equity" or "branch capital" in a notice to the Central Bank and entered in
the Branch Accounts so designated;
"Exploration Licences" means Exploration Licence No.193, Exploration Licence No.
1178 and Exploration Licence No 1247 granted pursuant to the Mining Act;
'Feasibility Study" means a study into the feasibility of the Project which forms part
of the Approved Proposals for development;
"Force Majeure" has the meaning given to that term in Clause 28.2;
"Foreign Currency Account" means an account denominated in a currency other
than Kina and opened by a Joint Venturer with a bank which may be (at the
discretion of the Joint Venturer) either in Papua New Guinea or outside Papua
New Guinea;
"Foreign Exchange Regulations" means the regulations made pursuant to the
Central Banking Act (Chapter 138);
"Income Tax Act" means the Income Tax Act 1959;
"Joint Venturers" means the second parties to this Contract and includes any
permitted assigns or successors of the rights and obligations of any of them;
"Joint Venture Agreement" means the agreement dated 21 January 2000 as
subsequently amended, which as a result of various assignments and accessions is
now between the Joint Venturers and may later include such other parties as may
111339327
5.
acquire an interest in the Project, relating to the way in which exploration, mining
and processing operations shall be conducted under this Contract;
"Land Act" means the Land Act 1996;
"Landowners" means members of any landowning group, which has its origin in the
Madang Province and owns land within the Special Mining Lease, mining leases,
lease for mining purposes and mining easements and other tenements related to the
Project that have been granted, and whose customary ownership of that land has
been verified by the District Officer Lands for the Madang Province;
"Local Level Government" means the Usino, Bundi, Astrolabe Bay and Rai Coast
Local Government Councils;
“Manager" means the person from time to time appointed, with the consent of the
State, by the Joint Venturers to conduct operations pursuant to the Joint Venture
Agreement;
"Mine Products" means the ores or concentrates or other minerals produced from the
area of the Special Mining Lease and all refinery products from the Refinery;
"Minister" means the person for the time being entitled to exercise the powers of the
Minister under the Mining Act ;
"Mining Act" means the Mining Act 1992;
"Mining Area" means the area within the Special Mining Lease;
"Mining Equity Agreements" njieans the agreements under which Orogen and a
MRDC subsidiary may acquire their interests in the Project;
' Mining Operations” means the exploration, development and mining operations
carried on by the Joint Venturers within the Exploration Licences and the Mining
Area;
"Normal Operations” means the operation of the Project carried on in accordance
with the Approved Proposals for Development;
"Operating Costs" for any period means the costs incurred by the Joint Venturers
during Normal Operations excluding depreciation and other non-cash costs and
financing charges;
"Parties" means the persons who are for the time being original parties to this
Contract or parties added or substituted pursuant to Clause 21 and "Party" means
any one of them;
1113.39327
6.
"Processing Operations' means those parts of the Project which are not Mining
Operations, and includes the transporting of the beneficiated ore from the Mining
Area to the Refinery through the slurry pipeline and the refining of the ore to
produce nickel and cobalt at the Refinery;
Project" means the mining and any processing development contemplated by this
Contract and described in the Approved Proposals for Development;
"Project Area" prior to the time when the leases referred to in Clauses 3.1 and 3.2 are
granted means the area of the Exploration Licences and thereafter means all areas
included in the leases, easements, licences, rights and grants referred to in Clauses 3.1
and 3.2.
"Project Assets" means:
(a) the Special Mining Lease and any other leases issued pursuant to the
Mining Act for Project purposes;
(b) all other leases, rights, permits, licenses, grants, authorisations and
approvals referred to in Clauses 3.1 and 3.2 which are required for the
Project;
(c) all plant, buildings, installations, infrastructure and other facilities located
on the Special Mining Lease or on any other lease from the State under the
Mining Act or under the Land Act which are required for the Project
(subject to the terms of such a lease); and
(d) all other property (tangible or intangible) and assets in Papua New Guinea
held by the Joint Venturers for the purposes of the Project (including ore in
process and Mine Products produced by the Project);
"Provincial Government" means the Madang Provincial Government;
"Quarter"; means -
(a) January, February, and March; or
(b) April, May and June; or
(c) July, August and September; or
(d) October, November and December;
"Refinery" means the refinery to be constructed at Basamuk in the Madang
Province which will produce nickel and cobalt;
"Related Corporation" means a related corporation as defined in Section 2 of the
Companies Act 1997;
111339327
7.
"Sole Expert" means a person appointed by agreement between any two or more
Parties to resolve any difference of view or disagreement between them and in the
event the Parties in dispute fail to agree on the person to be so appointed, such
appointment shall be made by the Chairman of the Administrative Council of the
International Centre for the Settlement of Investment Disputes, provided that the
person so appointed, whether by agreement or otherwise, does not by virtue of
nationality, personal connection or commercial interests have a conflict between his
own interest and his duty as a sole expert to act impartially;
"Special Mining Lease" means the special mining lease (or leases) and any renewals
thereof, granted under the Mining Act to the Joint Venturers pursuant to Clause 3;
"Speculative Currency Transaction" means a transaction involving the purchase or
sale of Papua New Guinea currency, the primary object of which is the making of a
profit on the exchange of currency but does not include the taking out of forward
cover in respect of anticipated purchases or sales of goods and services or loan
obligations denominated or payable in foreign currency in accordance with the
guidelines issued from time to time by the Central Bank;
"State" means the first part)- to this Contract and includes any authorised agent of
the State;
'Test Date" means 30 June and 31 December each year; and
‘Training and Localisation Programme" means the training and localisation
programme prepared by the Manager pursuant to and in accordance with the
Employment of Non-citizens Act (Chapter 374) and the guidelines for training plans,
which also forms part of the Approved Proposals for Development, as such
programme may be amended or altered as permitted under Clause 15.
2. INTERPRETATION
2.1 General
In this Contract, unless the context otherwise requires -
(a) monetary references are references to Papua New Guinea currency unless
otherwise specifically expressed;
(b) the headings and subheadings do not affect the interpretation or construction;
(c) reference to an Act includes the amendments to that Act for the time being in
force and also to any Act passed in substitution therefor and any regulations
for the time being in force thereunder;
(d) words and expressions which have a certain meaning in the Foreign Exchange
Regulations or the Income Tax Act, as the case may be, are used with the same
meanings in this Contract;
111339327
8.
(e) words importing the singular include the plural and vice versa;
(0 words importing any gender include the other gender;
(g) references to a person include a partnership, firm or corporation and any
instrumentality of the State; and
(h) the recitals form part of this Contract.
2.2 Joint and Several Obligations
Any covenant or agreement on the part of the Joint Venturers made pursuant to
this Contract (including any covenant or agreement made by all the Parties) shall,
unless otherwise provided, or the context otherwise requires, be read and
construed as a covenant or agreement by all of the Joint Venturers jointly and each
of them severally. For the avoidance of doubt, the following obligations, to the
extent that they arise from covenants or agreements of the Joint Venturers in this
Contract, are several ( and not joint and several) obligations of the Joint Venturers:
(a) obligations to pay income tax or any other tax, duty, charge or impost
payment (other than royalty) which is not included in any joint venture
budget or funded by cash calls on the Joint Venturers under the Joint
Venture Agreement;
(b) obligations under Clause 9 with respect to the submission of a financial
plan and the maintenance of a debt to Equity ratio;
(c) obligations under Clause 10 with regard to accounts, dividends, currency,
reporting, and other matters;
(d) obligations under Clause 11 with regard to sale or other disposition of Mine
Products;
(e) obligations under Clause 13 with regard to the Investment Promotion
Authority certification;
(f) obligations arising as a consequence of termination under Clause 22, but not
including:
(i) any obligation to pay moneys under Clause 22.1(b) which arises in
respect of an obligation which is a joint and several obligation of the
Joint Venturers; and
(ii) any obligations arising under Clause 22.1(e);
(g) obligations under Clause 23 with regard to assignment; and
(h) obligations with regard to arbitration under Clause 25, but not including an
obligation arising out of arbitration proceedings which relate to an
111339327
9.
obligation or liability which is a joint and several obligation or liability of
the joint Venturers.
3. LEASES AND OTHER RIGHTS FOR MINING DEVELOPMENT
3.1 State's Obligations to Grant
Subject to the requirements of law and compliance with procedures under the
Mining Act, the Land Act and other applicable law's, the State will -
(a) on or within one month after the Effective Date, grant to the Joint Venturers
as tenants in common the Special Mining Lease, in accordance wnth the
form of lease annexed as Schedule I;
(b) within two months after the application by the Joint Venturers or within
two months after the Effective Date, whichever is later, grant to the Joint
Venturers as tenants in common such of the following as may be reasonably
required for the purpose of carrying out the Project:
(i) a mining lease for the mining of limestone near the Special Mining
Lease, other mining leases, leases for mining purposes, mining
easements, rights, permits, licences and grants pursuant to the
Mining Act;
(ii) leases, rights, permits, licences and grants pursuant to the Land Act;
and
(iii) leases, rights, permits, licence and grants pursuant to legislation
other than the Mining Act and the Land Act, including in particular
the grant of water use permits allowing the extraction of water in
sufficient quantities to meet the needs of the Mining Operations and
the Processing Operations, and the discharge of tailings from the
Processing Operations into the sea.
3.2 Provincial and Local-level Governmental Approvals
If the Joint Venturers require any lease, right, permit, licence, grant, authorisation
or approval of the Provincial Government or Local-level Government, for the
construction or operation of the Project in accordance with the Approved
Proposals for Development, the Joint Venturers, shall make application therefor to
the responsible authorities within the Provincial Government or Local-level
Government. Recognising that discretion and/or authority with respect to such
matters rest with the Provincial Government or Local-level Government, the State
shall nonetheless, at the request of the Joint Venturers to the extent the applicable
law' permits, use its good offices to assist in obtaining such lease, right, permit,
licence, grant, authorisation or approval.
111339327
10.
3.3 Modifications or Variations
If, in accordance with Clause 31, the Joint Venturers modify or vary the Approved
Proposals for Development and such modification or variation is approved or
deemed approved by the State, the Joint Venturers may apply for and (subject to
the requirements of law and compliance with procedures under the Mining Act,
the Land Act and other applicable laws) the State shall, within two months of the
date of application, grant or cause to be granted to the Joint Venturers any
addibonal special mining lease, lease, right, permit, licence, grant or approval or
allow variations to any existing special mining lease, lease, right, permit, licence,
grant or approval required to give effect to any such modification or variation to
the extent that they are reasonably required for the purpose of carrying out the
Project.
3.4 Landowner Compensation
The Joint Venturers, after consultation with the State, shall negotiate a relocation
agreement and a compensation agreement covering the relocation of and
compensation or costs payable to the Landowners as a result of the use of the area
of land covered by the Special Mining Lease and other necessary leases, rights,
permits, licences, and grants, which compensation and costs shall be borne by the
Joint Venturers. If requested by the Joint Venturers, the State shall use its good
offices to assist the parties to conclude the negotiation of the compensation
agreement on fair and reasonable terms. During the life of such a compensation
agreement:
(a) the Joint Venturers will, in a timely manner, report to the State any
circumstances, happenings or events which might lead to disputes relating
to compensation and relocation or the orderly implementation of the
agreement; and
(b) the State will use its best endeavours to ensure that the institutions established
for the management and resolution of land disputes will be able to carry out
their duties so that any such disputes between the Joint Venturers and the
landowners, or between the Landowners themselves, are settled in an orderly
and expeditious fashion in accordance with such agreements and the
applicable law, and will upon request of the Joint Venturers use its good
offices to help ensure that the compensation and relocation agreements are
respected by the Landowners.
3.5 Content, Form and Term of Leases etc.
The leases, rights, permits, licences and grants referred to in Clauses 3-1 and 3.2,
shall contain -
(a) in the case of the Special Mining Lease, such terms and conditions in the
form appearing in Schedule I; and
111339327
11.
(b) in any other case, such terms and conditions as are fair and reasonable to
the Joint Venturers, which may include, where applicable, provisions that -
(i) Joint Venturers shall not, without the consent of the State, which
consent shall not be unreasonably withheld, use the land for any
purpose other than that for which it was granted;
(ii) the Joint Venturers shall construct or provide improvements
substantially as specified in the Approved Proposals for
Development or as otherwise agreed between the Joint Venturers
and the State;
(iii) the leases, rights, permits, licences and grants will terminate on the
earlier of the termination of this Contract and the Special Mining
Lease, subject to any need for any of them to continue to permit
rehabilitation and the processing on a contract basis of ore from other
projects in Papua New Guinea or from overseas after mining on the
Special Mining Lease has ceased; and
(iv) the Joint Venturers shall use their best efforts to accommodate
traditional land uses to the degree that such uses are consistent with
economic, efficient, safe mining practices and do not interfere with
the construction and operation of the Project in accordance with the
Approved Proposals for Development.
3.6 Leases etc as required for the Project
The leases (other than the Special Mining Lease), rights, permits, licences, and
grants to which the Joint Venturers are entitled under this Clause will be drawn
up in a form and on terms which will ensure that the land to which these leases,
rights, permits, licences and grants relate may be used by the Joint Venturers in a
manner which will enable them to carry out the Project in accordance with the
Approved Proposals for Development.
4. PROJECT IMPLEMENTATION
4.1 Joint Venturer's Obligations
Subject to and following upon:
(a) the grant of the Special Mining Lease; and
(b) the approval of each Joint Venturer's Financial Plan,
the Joint Venturers, using their best efforts, shall:
(c) construct, install and provide all such plant, equipment, prepared sites and
facilities of the design and capacity specified in the Approved Proposals for
Development; and
111339327
12.
(d) commence Normal Operations.
4.2 Progress Reports
Until the Commencement of Commercial Production, the Joint Venturers through
the Manager, shall supply on a quarterly basis a progress report to, and meet with,
the Department.
4.3 Liaison Office
The Joint Venturers through the Manager shall maintain a liaison office in Port
Moresby until the Commencement of Commercial Production and will, during the
life of the Project, designate a representative located in Papua New Guinea who
will be responsible for ensuring the implementation of the provisions of this
Contract relating to supply and procurement.
4.4 Contractors and Subcontractors
The Joint Venturers shall ensure that their contractors and subcontractors are
legally bound to comply with the provisions of this Contract insofar as such
provisions are applicable to them. Without limiting the generality of the foregoing
the Joint Venturers shall ensure that their contractors and subcontractors shall
comply with approved Training and Localisation Programme and Business
Development Plan of the Joint Venturers.
4.5 Expatriate Workers
Subject to:
(a) the requirements of law and national security; and
(b) compliance with procedures under the Migration Act (Chapter 16) and
other laws of general application relating to the entry of non-citizens into
Papua New Guinea and their employment within the country;
the State covenants that it will expeditiously approve the job descriptions for
expatriate workers in accordance with the approved Training and Localisation
Programme and grant permits and multiple-entry visas, as required, for the entry
and re-entry of expatriate workers (and their dependants) whose job descriptions
have been approved.
5. INFRASTRUCTURE FACILITIES
5.1 Works and Facilities
In this Clause, "Works and Facilities" means any of the installations and
infrastructure specified in the Approved Proposals for Development for use of the
Joint Venturers and which are capable of being used by the State but shall not
include:
111339327
13.
(a) administrative buildings and buildings and other improvements allocated
for the accommodation of the Joint Venturers' employees and their families;
(b) installations and infrastructure directly used in the mining and processing
of ore including, without limitation, the slurry pipeline from the Mining
Area to the Refinery, the wharf and the power station ; or
(c) roads (other than existing public access routes^ constructed for and on
behalf of the Joint Venturers and situated within the Mining Area or the
lease upon which the Refinery is situated.
5.2 State's Election to provide Works and Facilities
Within sixty days of the Effective Date, the State may, by notice to the Joint
Venturers, elect to provide the costs, or part thereof, of any Works and Facilities.
The State may further elect to recoup such costs by the payment to the State of a
charge which shall be agreed between the State and the Joint Venturers. Such
charge will allow for the recoupment over a reasonable period of the amount of
such costs provided by the State, together with a reasonable return thereon. Such
return will be determined having regard to the State's expected risk in outlaying
the funds for the Works and Facilities and the cost of borrowing such funds as are
required. If the amount of such charge cannot be agreed, it shall be determined by
a Sole Expert.
5.3 Transfer of Works and Facilities
At any time after the Commencement of Commercial Production, but subject to
Clause 5.4, the State may, by notice, require the Joint Venturers to transfer to the
State their ownership of any Works and Facilities. As soon as practicable after
such notice, the Joint Venturers shall do all things necessary to transfer to the State
their title to the Works and Facilities. Upon vesting tit e in the State, the Joint
Venturers shall cease to have any liability or risk in respect of these Works and
Facilities except so far as they continue to manage them and except for any liability
which may have accrued prior to the date of transfer to the State. The Joint
Venturers shall at all times have first priority of use of such Works and Facilities
and that the State's ownership shall not unreasonably interfere with the use of
such Worlds and Facilities by the Joint Venturers.
5.4 Payment for Works and Facilities
Where the State requires the Joint Venturers to transfer to it any Works and
Facilities as provided in Clause 5.3:
(a) upon transfer of title, the State shall pay to the Joint Venturers a purchase
price equal to the then residual value after tax depreciation of their interest
in the Works and Facilities. The purchase price shall be paid in annual
instalments commencing at the end of the financial year in which title was
transferred, and shall be equal to the sum of the annual amounts of
111139327
14.
depreciation that each Joint Venturer could have claimed as a deduction
allowable under the Income Tax Act. The State shall ensure that the annual
instalment payment is a capital receipt and will not constitute assessable
income under the Income Tax Act; and
(b) for so long as the State makes the payments under Clause 5.4 (a), the Joint
Venturers shall pay to the State on the day of the receipt of an annual
instalment under Clause 5.4 (a) a facilities use r charge equal to such
instalment. The State shall ensure that the facilities user charge will
constitute a deemed outgoing pursuant to Section 68 of the Income Tax Act.
5.5 Management and Maintenance
If, at any time, the State acquires or provides any Works and Facilities or part
thereof under this Contract, the State may either
(a) require the Joint Venturers at their own cost to manage and maintain those
Works and Facilities to a reasonable standard provided that the State shall
pay its equitable proportion of such costs; or
(b) assume responsibility for maintaining such Works and Facilities to a
reasonable standard and charge the Joint Venturers a maintenance charge to
cover an equitable proportion of the costs of maintenance and the direct
costs of operating such Works and Facilities.
In either case the equitable proportion shall be determined on the basis of the
proportionate use of the Works f nd Facilities by the joint Venturers and other
users. If the equitable proportion cannot be agreed it shall be determined by a Sole
Expert.
5.6 Proper Standard
Where the State has provided or acquired Works and Facilities pursuant to this
Contract and fails to properly maintain same, the Joint Venturers may, without
prejudice to any other rights they may have, after giving no less than ten days'
notice to the State, carry out such work as is necessary to bring such Works and
Facilities up to the proper standard required for the purposes of the Project and set
off the expense incurred against the maintenance charge payable under Clause 5.5
(b). The Joint Venturers may carry out such work immediately in the case of
emergency, giving notice to the State thereafter.
5.7 Sale of Electricity
If:
(a) the Approved Proposals for Development pro\ ides for the Project electric
power supply facilities to generate electric power in excess of the Project's
needs in order to meet local rural requirement; or
111339327
15.
(b) subsequent to the Approved Proposals for Development, the Joint
Venturers decide that the Project electric power supply capacity exceeds the
needs of the Project at any time;
and the Electricity Commission makes an Order under Section 31 of the Electricity
Commission Act (Chapter 78) permitting the sale of electricity to other users, the
Joint Venturers shall sell to the appropriate governmental agency such excess
electricity produced by the facilities for resale and distribution to rural electrical
loads. The Joint Venturers shall under no circumstances be required to increase the
capacity of its electric power supply facilities or transmission facilities beyond that
required by the Approved Proposals for Development to meet the needs of any
other users or to construct or maintain any off-site grid or distribution system. The
price of electricity to be purchased by the appropriate governmental agency shall
be negotiated between the Joint Venturers and such governmental agency and
shall be subject to the approval of the Electricity Commission. The approved price
and formula for future adjustments will be included in the Order issued by the
Electricity Commission.
5.8 Telecommunications
The State shall ensure that Telikom PNG provides data-quality international
telecommunication facilities for the Project in accordance with the Approved
Proposals for Development. The State shall, through Telikom PNG or other
responsible agency, charge the Joint Venturers for the supply of
telecommunication services either at the tariff rate specified in the Approved
Proposals for Development or such reasonable commercial rate as is agreed to
between Telikom PNG and the Joint Venturers.
5.9 Third Party Access ,
Third parties will be permitted by the Joint Venturers to use the Works and
Facilities which they own, operate and maintain, but only if such use will not
adversely affect the Joint Venturers' use or intended use thereof. Such Works and
Facilities will continue to be managed by the Joint Venturers and the Joint
Venturers will have the priority use thereof over all other users. The Joint
Venturers may charge a reasonable fee to allow third parties to use the Works and
Facilities. Third parties will also be permitted to use any of the Works and
Facilities vested in the State but managed and maintained by the Joint Venturers
under Clause 5.5(a) (but only if such use will not adversely affect the Joint
Venturers' use or intended use thereof) and in those circumstances the costs will
be shared in accordance with Clause 5.5 and the Joint Venturers shall not charge
the third parties any fee for use.
5.10 Title to Interest in Property
Except as otherwise provided in this Clause, nothing in this Clause shall take effect
to divest the Joint Venturers of their title to or interest in any property or to require
the Joint Venturers to transfer same to the State.
111339327
16.
6. RATES AND DUTIES
6.1 Right to Import and Export
Subject to:
(a) any requirement of defence and the safety of t ie public and quarantine;
(b) the obligations of the State pursuant to multilateral international
agreements to which the State is a party;
(c) any general, non-discriminatory determination by the National Executive
Council of the State notice of which has been given to the Joint Venturers
that the import of goods from a particular place or the export of Mine
Products to a particular place is not permitted; and
(d) Clause 16;
the State shall ensure that the Joint Venturers, and the agents and contractors of
the Joint Venturers shall have the right to acquire, import into and move within
Papua New Guinea and use any plant, machinery, equipment, temporary
buildings and structures, vehicles, explosives, fuels, reagents, supplies, materials
and any other assets:
(e) required for the construction, installation, provision, expansion,
maintenance or operation of any of the facilities required for the Project; or
(0 otherwise required for the purposes of the Project;
and to export from Papua New Guinea -
(g) subject to Clause 22.1(c), any plant, machinery, equipment, temporary
buildings and structures, vehicles, explosives, fuels, reagents, supplies, and
any other asset imported into Papua New Guinea for the construction,
installation, provision, expansion, maintenance or operation of any of the
facilities required for the Project; and
(h) subject to Clause 11.1, the Mine Products resulting from the operation of the
Project.
6.2 Export Taxes and Duties
The State covenants to reimburse the Joint Venturers fer any rate, tax, charge, due,
duty, excise, tariff or other levy (except the royalty on Mine Products and the
mining levy oil assessable income from mining operations) imposed by the State,
any province or local-level government and applied to, or payable by, the Joint
Venturers in respect of the export from Papua New Gu nea by the Joint Venturers
of Mine Products.
111339327
17.
6.3 Import and Excise Duties
The State shall ensure that, until the Commencement of Commercial Production,
all goods within the tariff classification items specified in Schedule II which are
imported by or on behalf of the Joint Venturers or any contractor or subcontractor
and are to be used or consumed in the construction of the facilities for the Project
will be free of import duty.
If necessary, the State shall promulgate exemptions under the Customs Tariff Act
1990 for this purpose. If at any time the relevant duty exemptions are not in force,
the State covenants to reimburse the Joint Venturers for any import duty paid on
the goods covered by this clause.
6.4 Discriminatory Taxes and Duties
In addition and without prejudice to the provisions ol Clause 27, the State
covenants to reimburse the Joint Venturers:
(a) for any payment made by them in connection with the Project (including
payments made by any of them pursuant to an obligation to reimburse
employees) on account of any rate, tax, rent, charge, due, duty, excise, tariff
or other levy by the State, any province or local-level government;
(b) for any withholding tax on, or compulsory' deduction of equivalent effect
from, dividends or interest payable by the Joint Venturers to any registered
or beneficial holders of shares in the Joint Venturers or to any lenders of
Approved Finance; and
(c) for any costs incurred by them to the extent that such costs arise as a result
of any law, statute, regulation or enactment of the State, any province or
local-level government,
to the extent that any of the above discriminates (either specifically or as a result of
the way it applies) against the Joint Venturers in respec t of either its Mining
Operations or its Processing Operations under this Contract or against their
employees.
6.5 Payment of Reimbursement
Any amount owed to the Joint Venturers in respect of reimbursement pursuant to
Clause 6.2, 6.3 or 6.4 shall be paid by the State not later than one (1) month
following the making of the payment in respect of which reimbursement is due,
together with interest on the amount of any such payment from the date paid until
so reimbursed by the State at the same rate per annum as is payable from time to
time by the State on its 30-day treasury bills, failing which any amount owed
pursuant to this clause shall be recoverable by credit against other taxes or duties due
and payable to the Commissioner General of Internal Revenue.
111339327
18.
7 VALUE ADDED TAX
7.1 Application of VAT
For purposes of the Value Added Tax Act 1998, the State shall ensure that:
(a) the export of Mine Products from the Project is zero-rated;
(b) until the Commencement of Commercial Production, value added tax
levied on the importation of any plant, machinery, equipment, temporary
buildings and structures, vehicles, explosives, fuels, reagents, supplies,
materials and other assets which are imported into Papua New Guinea by
or on behalf of the Joint Venturers or any contractor or subcontractor solely
for the purpose of the Project will not be payable until the 21“ day of the
month following the month in which the importation occurs; and
(c) notwithstanding that the payment of value added tax is deferred in
accordance with paragraph (b), those imported goods are entered for home
consumption under the Customs Act (Chapter 101 of the PNG Revised
Laws) and released to the Joint Venturers, contractor or subcontractor (as
the case may be) without delay.
7.2 Recovery of VAT
Where as a result of the Value Added Tax Act 1998 or Clause 7.1 an amount is due
to the Joint Venturers or any contractor or subcontractor as a refund of value
added tax paid or borne, that amount may be recovered by the Joint Venturers,
contractor or subcontractor (as the case may be) by way of:
(a) monthly refund from the Commissioner General of Internal Revenue; or
(b) credit against other taxes or duties due and payable to the Commissioner
General of Internal Revenue,
and in either case may be set off against further value added tax due and payable
pursuant to Clause 7.1(b).
8. FISCAL PROVISIONS
8.1 Ring Fencing of Mining Operations
The State shall ensure that, for taxation purposes only, the Mining Operations will
be considered and treated as a mining project for the purposes of Part III Division
10, especially Subdivision CA of the Income Tax Act end the Processing
Operations will be considered and treated separately, and that as a result:
(a) the value (as determined in accordance with Clause 8.2)of the beneficiated
but unrefined ore from the Special Mining Lease, at the input flange of the
111339327
19.
slurry pipeline will be deemed to be assessable income from mining
operations for each of the Joint Venturers;
(b) allowable exploration expenditure incurred by each of the Joint Venturers
in relation to the Mining Operations will be deductible against that
assessable income from mining operations;
(c) allowable capital expenditure incurred by each of the Joint Venturers in
relation to the Mining Operations will be deductible against that assessable
income from mining operations;
(d) the calculation of net cash receipts for additional profits tax purposes will
be done for each Joint Venturer on the basis of its receipts from and
outgoings in respect of the Mining Operations.
(e) income from the sale of the Mine Products from the Project's refinery will be
assessable income for each of the Joint Venturers under the general
provisions of the Income Tax Act;
(0 the value (as determined in accordance with Clause 8.2) of the benefidated
but unrefined ore from the Special Mining Lease, at the input flange of the
slurry pipeline, will be deemed to be a deductible outgoing incurred by
each of the Joint Venturers in carrying on business for the purpose of
gaining or producing the assessable income referred to in paragraph (e);
(g) without limiting the application or generality of provisions in the Income
Tax Act, expenditure on:
(i) facilities for carrying on the Mining Operations;
(ii) the benefidation plant to be constructed adjacent to the Mining
Operations;
(iii) the housing and related infrastrudure :o be provided in Madang for
persons employed in the Mining Operations; and
(iv) the access roads, bridges and transport infrastructure necessary for
or associated with the Mining Operations,
will be accepted and treated as allowable capital expenditure and be
deductible as such, or will be deductible as depreciation (including where
applicable, accelerated depreciation), against assessable income from the
Mining Operations;
(h) without limiting the application or generality of provisions in the Income
Tax Act, expenditure on:
(i) facilities for carrying on the Processing Operations;
111339327
20.
(ii) facilities for the provision of power, water and other utilities
required by the Refinery;
(iii) the housing and related infrastructure to be provided for persons
employed in the Processing Operation.;; and
(iv) the marine facilities (including the wharf and storage) associated
with the Refinery,
will be deductible against assessable income from the Processing
Operations either as an allowable deduction in the year in w hich the
expenditure is incurred or as depreciation (including, where applicable
accelerated depreciation); and
(i) expenditure on the limestone mining operations will be deductible against
assessable income from the Processing Operations as allowable capital
expenditure under Part III Division 10.B of the Income Tax Act.
8.2 Transfer Price
The transfer price, being the value at which the beneliciated but unrefined ore
from the Special Mining Lease is deemed to be transferred from the Mining
Operations to the Processing Operations for the purposes of Clause 8.1, will be
determined quarterly in accordance with the following formula:
MOC + MD
TP = PR x__
TOC + TD
Where:
TP = Transfer Price
PR = Project Revenues, being the net revenues for the Project as a whole
from the sale of Mine Products derived from the Mining Area,
based on the sale price of the recoverable metal less all marketing,
selling and freight costs.
MOC = Mining Operating Costs, being the operating costs of the Mining
Operations
TOC - Total Operating Costs, being the aggregate operating costs of both
the Mining Operations and the Processing Operations
MD = Mining Depreciation, being the accounting or book depreciation of
all the depreciable assets (including assets the value of which is
111339327
21.
deductible as allowable exploration expenditure or allowable
capital expenditure) used in Mining Operations.
TD = Total Depreciation, being the aggregate accounting or book
depreciation of all the depreciable assets used in the Project as a
whole.
8.3 Income Tax
Subject to and in accordance with Clauses 8.1 and 8.2 each of the Joint Venturers
will be subject to dual assessment of its income from :he Project, and shall submit
separate tax returns, in respect of:
(a) its taxable income from mining operations on the Special Mining Lease; and
(b) its other taxable income derived from the Project.
8.4 Additional Profits Tax
Subject to and in accordance with Clauses 8.1 and 8.2, the taxable additional
profits derived by each of the Joint Venturers from the Mining Operations will be
determined in accordance with the Mining Division of the Income Tax Act
(presently Division 10 of Part III in particular Subdivision D).
8.5 Royalty
Each of the Joint Venturers will be liable to pay royalty on its "net smelter returns",
which will be determined in accordance with Section 107 of the Mining Act
(Chapter 195) as continued in force by the transitional provisions of the Mining
Act. *
8.6 Tax Remittance
The Manager on behalf of the Joint Venturers will maintain US dollar
denominated accounting books and records for the Project, and on the basis of
these each Joint Venturer will prepare its tax returns in relation to the Project in US
dollars. The State shall ensure that the Commissioner General of Internal Revenue
assesses the income tax and additional profits tax (if any) for each Joint Venturer in
relation to the Project in US dollars and arrangements are made to allow each Joint
Venturer to pay such tax in US dollars.
9. FINANCING OF THE PROJECT
9.1 Submission of Financial Plan
Each Joint Venturer shall submit to the State and the Central Bank its financial
plan for financing its participation in the Project. The financial plans will
111339327
(a) set out in full detail the manner in which the Joint Venturer intends to
finance the cost of its participation in the Project through to
Commencement of Commercial Production, including a reasonable
provision for working capital to maintain Normal Operations;
(b) identify capital to be used by the Joint Venturer for this purpose as Equity
and/ or debt, as the case may be, and the ratio of debt to Equity which will
not exceed 3:1;
(c) identify sources of the proposed debt finance and the terms and conditions of
such debt finance, including in particular the cost of funds (identifying all
fees, charges and commissions as well as interest rates and or interest
margins);
(d) describe the security to be provided for the financing; and
(e) identify the Joint Venturer’s need for Foreign Currency Accounts.
9.2 Consideration and Approval of Financial Plan
The State shall ensure that its department responsible for financial matters and the
Central Bank give expeditious consideration to the financial plan and requests for
any further information required from the Joint Venturer. The State may by notice
to the Joint Venturer request a revised financial plan if the one submitted by the
Joint Venturer does not comply with the provisions of the Contract or otherwise
does not commercially or economically satisfy the State or the Central Bank.
Within one (1) month after the date of receipt from the Joint Venturer of:
(a) the financial plan or revised financial plan; and
(b) such further information as may have been reasonably requested,
the State shall notify the Joint Venturer whether or not it has been approved by the
Secretary of the department responsible for financial matters. If it has not been
approved, but the Joint Venturer is of the view that it provides for the financing of
its participation in the Project in a manner which is commercially and
economically reasonable, the Joint Venturer may require the decision to be
reviewed jointly by the Secretary for the department responsible for financial
matters and the Governor of the Central Bank and a recommendation to be made
to the Minister responsible for financial matters for a binding decision, within a
further period of one (1) month.
9.3 Maintenance of Debt: Equity Ratio
Each Joint Venturer shall ensure that, on each successive Test Date, the
outstanding balance of its Approved Finance (converted into Kina from the
currency of drawdown at the rate which is the average of the buying and selling
rates quoted for the currency by Australia and New Zealand Banking Group
111339327
23.
(PNG) Limited at 11:00 am on the date of each drawdown) does not exceed
seventy five percent (75%) of the Joint Venturer's share of the sum of-
(a) allowable exploration expenditure, allowable capita] expenditure and
expenditure on any plant or article in respect of which an election has been
made under Section 163AVV of the Income Tax Act incurred by the Joint
Venturers on the Project;
(b) expenditure on the slurry pipeline, the Refinery and other transportation
and processing facilities;
(c) any net trade debt owing to the Joint Venturers in the ordinary course of
business in respect of operations of the Project; and
(d) the value of the uninvoiced inventory of the Joint Venturers held in the
ordinary course of business in respect of operat ons under the Project.
Expenditure by the Joint Venturer on the Project, that falls outside the scope of
Approved Finance as permitted by this subclause, will be financed by Equity.
10. CURRENCY AND EXCHANGE CONTROL
PART A
10.1 Application and Definitions
This Part A of Clause 10 applies to any Joint Venturer which is a single purpose
company incorporated in Papua New Guinea. In this Part:
"Accounting Profits" means the Joint Venturer's book profits, calculated in
accordance with generally accepted accounting pnnciples and arrived at after
deduction of:
(a) in relation to each Year of Income, the Income Tax and Additional Profits
Tax which have been paid or will be payable by the Joint Venturer on its
income from the Project for that year; or
(b) in relation to an interim period prior to the finalisation of the annual
accounts, the Income Tax and Additional Profits Tax which would be
payable by the Joint Venturer in respect of the in:ome from the Project
derived by the Joint Venturer during that period on the basis that the Joint
Venturer continued to derive income during the whole of the year of
income of which the period forms a part, at the same daily average rate as
in that period;
' Approved Dividends" means dividends of the Joint Vt nturer which have been
approved by the Central Bank pursuant to Clause 10.4(a); and
111339327
24.
"Distributable Profits' means in relation to any date of determination, the sum of
a Joint Venturer's current year's undistributed Accounting Profits plus its retained
earnings as of that date.
10.2 Foreign Currency Accounts
In accordance with the provisions of this Clause 10, he Joint Venturer shall apply
to the Central Bank for authority to maintain Foreign Currency Accounts. The
Central Bank shall approve those Foreign Currency Accounts which are required
by the Joint Venturer's Approved Financial Plan. Funds in such accounts may be
invested in such liquid or marketable financial instruments (other than in
instruments of the Joint Venturer or its Related Corporations) as the Joint Venturer
may elect and the earnings in such financial instruments shall be treated for the
purpose of this clause as if they were earnings from he sale of Mine Products for
export from Papua New Guinea.
10.3 Approved Finance
(a) Within the scope of the Approved Financial Plan and the required 3:1 debt
to Equity ratio, the State shall procure all the necessary authorities and
approvals for the following arrangements to be treated as Approved
Finance:
(i) loans to be used exclusively for the purpose of financing the Project
or Normal Operations, which are on tetms no less favourable to the
Joint Venturer than those generally available from banks and
financial institutions lending to similar mining projects in terms of
risk and location, and any refinancing of such loans on similar or
more favourable Jerms, provided that loans to a Joint Venturer from
a Related Corporation will be on terms [including interest rate and
fees) which are no more favourable to the Related Corporation than
terms given to third party lenders of equally ranking loan); and
(ii) issues of redeemable preference shares at par to finance major capital
expenditure on the Project, which is within the Approved Proposals
for Development, where the dividend rate on such shares is no more
than the market rate of interest at that time for secured loans to the
Project and other projects comparable tc the Project in terms of risk
and location.
(b) The Joint Venturer shall not at any time give notice to the Central Bank
designating the redeemable preference shares referred to in paragraph (a)
above as Equity.
(c) Preference shares constituting Equity of the Joint Venturer once designated
as such shall not at any time thereafter be converted into, or deemed to be.
Approved Finance.
111339327
25.
(d) Within thirty (30) days of each Test Date the loint Venturer shall submit to
the Central Bank:
(i) a statement showing the balance of Approved Finance as of the
preceding Test Date (if any) expressed in US Dollars;
(ii) a schedule of drawdowns and repayments of Approved Finance
made prior to the Test Date and after the preceding Test Date (if
any), detailing the foreign currency (and if necessary the US Dollar
equivalent amount) and date of each drawdown and repayment; and
(iii) cumulative figures expressed in US Dollars for each of the categories
of expenditure described in Clause 9.3 certified by a duly authorised
officer of the Joint Venturer as having Oeen derived in accordance
with the last audited profit and loss statement.
10.4 Distributable Profits
(a) Before paying any dividend to a shareholder outside Papua New Guinea,
the Joint Venturer shall present to the Central Bank a full set of audited
profit and loss statements and balance sheet with accompanying notes
which:
(i) have been certified by a duly authorised officer of the Joint Venturer
as having been prepared in accordance with generally accepted
accounting principles; and
(ii) show that there are Distributable Profits in respect of which, or in
respect of part of,which, the dividends are to be declared.
(b) Within a period of two (2) weeks the Central Bank may, if on reasonable
grounds it is not satisfied that there are Distributable Profits out of which
the dividend is to be paid, require the Joint Venturer to submit an audited
profit and loss statement showing that there are sufficient Distributable
Profits.
10.5 Approved Dividends
(a) A dividend of the Joint Venturer payable to a shareholder resident outside
Papua New Guinea which is :
(i) one of a series of dividends declared not more frequently than once
each Quarter; and
(ii) payable directly or indirectly out of Distributable Profits in respect of
which, or in respect of part of which, that dividend has been declared
and cleared for taxation purposes and relevant Dividend
Withholding Tax has been remitted to the Internal Revenue
Commission,
111139327
26.
shall be approved by the Central Bank.
(b) Approval pursuant to Clause 10.5(a) shall be given by the Central Bank
within thirty (30) days from the date on which the statements referred to in
Clause 10.4(a) were submitted or, in a case where the Central Bank has
required an audited profit and loss statement within thirty (30) days from
the date on which the Central Bank has recei\ed an audited profit and loss
statement showing that there are sufficient Distributable Profits.
10.6 Retention of Foreign Currency
The Joint Venturer may retain in foreign currency outside Papua New Guinea in
its approved Foreign Currency Accounts:
(a) the amount of any funds received or transferred in foreign currency
pursuant to Approved Finance and Equity in respect of:
(i) commitments due or to become due during the ensuing Quarter in
foreign currency to persons resident outside Papua New Guinea for
the supply of goods, and services for the Project (including capital
goods, insurance premiums and obliga ions due to non-resident
employees and consultants); and
(ii) any other payment approved by the Central Bank; and
(b) proceeds of the sale by the Joint Venturer of Mine Products exported
overseas, and its share of the settlement of insurance claims received in
foreign currency, in an aggregate amount (sub ect to Clause 10.8) not to
exceed the sum of the aqiounts due or to become due during the ensuing
Quarter, or such longer period as may be approved by the Central Bank, in
respect of -
(i) the discharge of obligations, arising out of Approved Finance,
designated in a currency other than Kina, but only to the extent that
Approved Finance did not, at the last Test Date, exceed the
proportion of expenditure referred to in Clause 9.3;
(ii) commitments in foreign currency to persons resident outside Papua
New Guinea for the supply of goods and services for the Project
(including capital goods, insurance premiums and obligations due to
non-resident employees and consultants);
(iii) the forecast amount of Approved Dividends declared or to be
declared by the Joint Venturer in accordance with Clause 10.5 and
payable to shareholders resident outside Papua New Guinea where
such dividends relate to profits derived from the Project;
111339327
27.
(iv) payments to be made by the Joint Venturer for the purpose of
effecting an Approved Reduction of Capital in accordance with
Clause 10.10;
(v) payments of Papua New Guinea income tax, additional profits tax
and dividend withholding tax which are payable or forecast to be
payable in foreign currency; and
(vi) any other payment approved by the Central Bank.
10.7 Purchase of Foreign Currency
When at any time after the first sale of Mine Products:
(a) the amount of foreign currency' held by the Joint Venturer in its approved
Foreign Currency Accounts under Clause 10.6 i; as a result of any
circumstances of Force Majeure insufficient (belore taking into account
payment of Approved Dividends) to meet its obligations of the type
referred to in Clause 10.6(b)(i) and (ii); and
(b) the Joint Venturer has surplus funds held in Papua New Guinea in Kina,
the Joint Venturer may purchase foreign currency with those surplus Kina funds
and remit it overseas to meet its obligations of the type referred to in Clause
10.6(b)(i) and (ii) as they fall due, until foreign currency is again available for this
purpose under Clause 10.6.
10.8 Reporting to Central Bank
The Joint Venturer shall submit to the Central Bank:
(a) within ten (10) working days after the end of each calendar month, a report
on all inflows and outflows from its approved Foreign Currency Accounts
during that calendar month, in the form required by the Central Bank;
(b) within fifteen (15) working days after the end of each Quarter -
(i) a report on the foreign currency which it has retained in its approved
Foreign Currency Accounts under this Clause 10 during the Quarter,
if any, accounting for funds retained pursuant to Clause 10.6 by
identifying the purposes in the categories (a)(i) and (ii) and (b)(i) to
(vi) for which the foreign currency is being retained and disbursed;
and
(ii) a report certified by a duly authorised officer of the drawdown,
transfer or subscription of Approved Finance and any collateral
obligation pertaining thereto during that Quarter and the
outstanding balances at the end of the Quarter; and
111339327
28.
(iii) a forecast of the foreign currency which it expects to retain in its
approved Foreign Currency Accounts under this Clause 10 during
the ensuing Quarter, if any; and
(c) within five (5) months after the end of each ye^r of income audited accounts
showing the amount of Distributable Profits for the year of income and the
balance of Approved Finance at the end of the year of income.
10.9 Return of Surplus Foreign Currency
Except as provided in Clause 10.6 the Joint Venturer shall convert all its foreign
currency earnings from the Project into Kina and remit the proceeds to Papua New
Guinea to a bank account in the name of the Joint Venturer for its use or pledged
to lenders of Approved Finance.
10.10 Remittance of Equity
(a) After the date upon which all Approved Finance has been repaid the Joint
Venturer may request from the Central Bank agreement on a schedule
providing, for a reduction in Equity of the Joint Venturer, which separates
Equity provided in Kina and Equity provided in a currency other than Kina.
Such a schedule will be agreed within twelve (12) months, or such shorter
period as the Central Bank may specify, of this -equest and will, for the
purposes of effecting the reduction in Equity, authorise payments in the
currency in which the Equity was provided to be made over a period being
not less than three (3) years and covering, so far as practicable, the
estimated period during which the Project will continue, provided that no
such payment will be authorised in respect of any period during which the
Joint Venturer is holding unremitted Distributable Profits other than
earnings of the current Quarter.
(b) Where a schedule has been agreed under paragraph (a) the Joint Venturer
may, to the extent that the Equity to be reduced was supplied in a currency
other than Kina, purchase foreign currency with funds held in Kina for the
purpose of making payments required in foreigi currency in order to give
effect to the Approved Reduction of Capital.
10.11 Non-discrimination
In addition to, and without derogating from, its rights under this Contract, the
Joint Venturer, in relation to the Project, shall not be subject to any legislative or
regulatory action of the State in regard to foreign exchange, and control thereof,
which:
(a) is less favourable than the general application of legislative and regulatory
action which applies to persons dealing with foreign exchange in Papua
New Guinea; and
1113,19327
29.
(b) in particular, prevents the Joint Venturer from ouying and selling Kina, in
accordance with the Foreign Exchange Regulations and this Clause 10, and
at rates of exchange as favourable as those available to other commercial
buyers and sellers of that currency in similar sized transactions.
10.12 State's Action to Ensure Compliance
Where any right or assurance given to the Joint Venturer under this Clause 10
requires the Central Bank: -
(a) to approve or authorise any act, matter or thing; or
(b) to grant authority under the Foreign Exchange Regulations for its exercise
or performance,
and the Joint Venturer has supplied any information to the Central Bank required
by, and otherwise met the conditions of, this Clause 10 and the Central Banking
Act, the State shall, upon request from the Joint Ventu-er ensure by policy
directions to the Central Bank or otherwise that such approval is given or such
authority is granted.
10.13 Speculative Currency Transactions
Without limiting the provisions of the Central Banking Act the Joint Venturer shall
not use any provisions of this Clause 10 or any authority or approval given by the
Central Bank or by an authorized dealer under the Foreign Exchange Regulations
to engage in Speculative Currency Transactions. If the Joint Venturer is in breach
of this subclause, it shall pay to the State as liquidated damages an amount equal
to the amount of any profit or gain which the Joint Ver turer makes on the
Speculative Currency Transaction and any cost incurred in establishing that the
transaction was a Speculative Currency Transaction.
PART B
10.14 Application and Definitions
This Part B of Clause 10 applies to any Joint Venturer which is a multi-purpose
company incorporated in Papua New Guinea. In this Part:
"Accounting Profits" means the Branch's book profits, calculated in accordance
with generally accepted accounting principles and arrived at after deduction of:
(a) in relation to each Year of Income, the Income Tax and Additional Profits
Tax which have been paid or will be payable by the Joint Venturer on its
income from the Project for that year; or
(b) in relation to an interim period prior to the finalisation of the annual
accounts, the Income Tax and Additional Profits Tax which would be
payable by the Joint Venturer in respect of the income from the Project
111339327
30.
derived by the Joint Venturer during that per od on the basis that the Joint
Venturer continued to derive income during the whole of the year of
income of which the period forms a part, at the same daily average rate as
in that period;
"Approved Dividends" means dividends of the Joint Venturer declared in respect
of Branch Profits and approved by the Central Bank pursuant to Clause 10.17(a);
"Branch Capital" means a non-interest bearing advance made by the head office
of the Joint Venturer to its Branch, which has been designated as branch capital in
a notice to the Central Bank given pursuant to this Contract;
"Branch Profits" means in relation to any date of determination, the sum of the
Branch's current year's undistributed Accounting Profits plus its retained earnings
as of that date; and
"Distributable Profits" means in relation to any date of determination, the sum of
a Joint Venturer's current year's undistributed Accounting Profits plus its retained
earnings as of that date.
10.15 Foreign Currency Accounts
In accordance with the.provisions of this Clause 10, the Joint Venturer shall apply
to the Central Bank for authority to maintain Foreign Currency Accounts to be
used exclusively for the activities of the Branch in relation to the Project. The
Central Bank shall approve those Foreign Currency Accounts which are required
by the Joint Venturer's Approved Financial Plan. Funds in such accounts may be
invested in such liquid or marketable financial instruments (other than in
instruments of the Joint Venturer or its Related Corporations) as the Company
may elect and the earnings on such financial instrume nts shall be treated for the
purpose of this Clause as if the)' were earnings from the sale of Mine Products for
export from Papua New Guinea.
10.16 Approved Finance
(a) Within the scope of the Approved Financial Plan and the required 3:1 debt
to Equity ratio, the State shall procure all the necessary authorities and
approvals for advances from the head office to the Branch (other than
Branch Capital), which are to be used exclusively for the purpose of
financing the Project or Normal Operations and are on terms no less
favourable to the Branch than those generally available from banks and
financial institutions lending to similar mining projects in terms of risk and
location, to be treated as Approved Finance.
(b) Within thirty (30) days of each Test Date the Joint Venturer shall submit to
the Central Bank:
(i) a statement showing the balance of Approved Finance as of the
preceding Test Date (if any) expressed in US Dollars;
111 339327
31.
(ii) a schedule of advances entered in the Branch Accounts in respect of
Approved Finance, and debits made in the Branch Accounts in
respect of repayments thereof, made prior to the Test Date and after
the preceding Test Date (if any), detailing the foreign currency' (and
if necessary the US Dollar equivalent amount) and date of each
advance and debit; and
(iii) cumulative figures expressed in US Dollars for each of the categories
of expenditure described in Clause 9.3, certified by a duly authorised
officer of the Joint Venturer as having been derived in accordance
with the last audited profit and loss statement for the Branch.
10.17 Branch Profits and Distributable Profits
(a) If the Joint Venturer wishes to make a debit in the Branch Accounts against
Branch Profits it shall present to the Central Bank profit and loss statements
for the Branch which:
(i) have been certified by a duly authorised officer of the Joint Venturer
as having been prepared in accordance with generally accepted
accounting principles; and
(ii) show that there are Branch Profits in respect of which, or in respect
of part of which, the debit is to be made.
(b) The Joint Venturer may make a debit in the Branch Accounts, against the
Branch Profits, of an amount no greater than the Branch Profits as shown in
the profit and loss statements under paragraph (a).
(c) Before paying any dividend in respect of Branch Profits to a shareholder
outside Papua New Guinea, the Joint Venturer shall present to the Central
Bank profit and loss statements which :
(i) have been certified by a duly authorised officer of the Joint Venturer
as having been prepared in accordance with generally accepted
accounting principles; and
(ii) show that there are Distributable Profits in respect of which, or in
respect of part of which, the dividends are to be declared.
(d) Within a period of two (2) weeks the Central Bank may, if on reasonable
grounds it is not satisfied that there are Branch Profits or Distributable
Profits out of which the dividend is to be paid, require the Joint Venturer to
submit an audited profit and loss statements for the Branch and the Joint
Venturer showing that there are sufficient Branch and Distributable Profits.
111339327
32.
10.18 Approved Dividends
(a) A dividend of the Joint Venturer, in respect ot Branch Profits, payable lo a
shareholder resident outside Papua New Guinea which is :
(i) one of a series of dividends declared not more frequently than once
each Quarter; and
(ii) payable directly or indirectly out of that part of Distributable Profits
that are Branch Profits in respect of which, or in respect of part of
which, that dividend has been declared and cleared for taxation
purposes and relevant Dividend Withholding Tax has been remitted
to the Internal Revenue Commission,
shall be approved by the Central Bank.
(b) Approval pursuant to Clause 10.18(a) shall be given by the Central Bank
within thirty (30) days from the date on which the statements referred to in
Clause 10.17(a) and (c) were submitted or, in a case where the Central Bank
has required an audited profit and loss statement, within thirty (30) days
from the date on which the Central Bank has received audited profit and
loss statement showing that there are sufficient Efranch and Distributable
Profits.
10.19 Retention of Foreign Currency
The Joint Venturer may retain in foreign currency outside Papua New Cuinea in
its approved Foreign Currency Accounts:
(a) the amount of any funds,received or transferred in foreign currency
pursuant to Approved Finance and Branch Capital in respect of -
(i) commitments due or to become due during the ensuing Quarter in
foreign currency to persons resident outside Papua New Cuinea for
the supply of goods, and services for the Project (including capital
goods, insurance premiums and obligations due to non-resident
employees and consultants); and
(ii) any other payment approved by the Central Bank; and
(b) proceeds of the sale by the Joint Venturer of Mint Products exported
overseas, and its share of the settlement of insurance claims received in
foreign currency, in an aggregate amount (subject to Clause 10.21) not to
exceed the sum of the amounts due or to become due during the ensuing
Quarter, or such longer period as may be approved by the Central Bank, in
respect of -
(i) the discharge of obligations arising out of Approved Finance as
being designated in a currency other than Kina, but only to the extent
111339327
33
that Approved Finance did not, at the la:.t Test Date, exceed the
proportion of expenditure referred to in Clause 9.3;
(ii) commitments in foreign currency to persons resident outside Papua
New Guinea for the supply of goods and services for the Project
(including capital goods, insurance premiums and obligations due to
non-resident employees and consultants);
(iii) the forecast amount of Approved Dividends declared or to be
declared by the Joint Venturer in accordance with Clause 10.18 and
payable to shareholders resident outside Papua New Guinea where
such dividends relate to profits derived from the Project;
(iv) payments to be made by the Joint Venturer for the purpose of
effecting an Approved Reduction of Capital in accordance with
Clause 10.23;
(v) payments of Papua New Guinea income tax, additional profits tax
and dividend withholding tax which are payable or forecast to be
payable in foreign currency; and
(vi) any other payment approved by the Central Bank.
10.20 Purchase of Foreign Currency
When at any time after the first sale of Mine Products:
(a) the amount of foreign currency held by the Joint Venturer in its approved
Foreign Currency Accounts under Clause 10.19 is as a result of any
circumstances of Force Majeure insufficient (before taking into account
payment of Approved Dividends) to meet its obligations of the type
referred to in Clause 10.19(b)(i) and (ii); and
(b) the Joint Venturer has surplus funds held in Papua New Guinea in Kina,
the Joint Venturer may purchase foreign currency with those surplus Kina funds
and remit it overseas to meet its obligations of the type -eferred to in Clause
10.19(b)(i) and (ii) as they fall due, until foreign currency is again available for this
purpose under Clause 10.19.
10.21 Reporting to Central Bank
The Joint Venturer shall submit to the Central Bank:
(a) within ten (10) working days after the end of each calendar month, a report
on all inflows and outflows from its approved Foreign Currency Accounts
during that calendar month, in the form required by the Central Bank,
(b) within fifteen (15) working days after the end of each Quarter -
111339327
34.
(i) a report on the foreign currency which it has retained in its approved
Foreign Currency Accounts under this Clause 10 during the Quarter,
if any, accounting for funds retained pursuant to Clause 10.19 by
identifying the purposes in the categories (a)(i) and (ii) and (b)(i) to
(vi) for which the foreign currency is being retained and disbursed;
and
(ii) a report certified by a duly authorised officer of the advances and
debits pertaining to Approved Finance? and any collateral obligation
pertaining thereto during that Quartei and the outstanding balances
at the end of the Quarter; and
(iii) a forecast of the foreign currency which it expects to retain in its
approved Foreign Currency Accounts under this Clause 10 during
the ensuing Quarter, if any; and
(c) within five (5) months after the end of each year of income audited accounts
showing the amount of Distributable Profits lor the year of income and the
balance of Approved Finance at the end of the year of income.
10.22 Return of Surplus of Foreign Currency
Except as provided in Clause 10.19 the Joint Venturer shall convert all its foreign
currency earnings from the Project into Kina and remit the proceeds to Papua New
Guinea to a bank account in the name of the Joint Venturer for the use of the
Branch or pledged to lenders of Approved Finance.
10.23 Remittance of Equity '
(a) After the date upon which all Approved Finance has been repaid the Joint
Venturer may request from the Central Bank agreement on a schedule
providing for a reduction of Branch Capital w hich separates Branch Capital
supplied in Kina and Branch Capital in a currency other than Kina. Such a
schedule will be agreed within twelve (12) months, or such shorter period
as the Central Bank may specify, of this request and will, for the purposes of
effecting the reduction of Branch Capital, authorise payments in the
currency in which the Branch Capital was provided to be made over a
period being not less than three (3) years and covering, so far as practicable,
the estimated period during which the Project will continue, provided that
no such payment will be authorised in respect of any period during which
the Joint Venturer is holding unremitted Branch Profits other than earnings
of the current Quarter.
(b) Pursuant to the schedule agreed under paragraph (a), the Joint Venturer
will make a debit in the Branch Accounts against Branch Capital, effecting a
Kina transfer of the Branch Capital scheduled in Kina and otherwise
required in Kina, and may, to the extent that Branch Capital was supplied
in currency other than Kina, purchase foreign zurrency, with funds held in
111339327
33.
Kina, for the purpose of making payments required in foreign currency, in
order to give effect to the Approved Reduction of Capital.
10.24 Non-discrimination
In addition to, and without derogating from, its rights under this Contract, the
Joint Venturer, in relation to the Project, shall not be subject to any legislative or
regulatory action of the State in regard to foreign exchange, and control thereof,
which:
(a) is less favourable than the general applicatior of legislative and regulatory
action which applies to persons dealing with foreign exchange in Papua
New Guinea; and
(b) in particular, prevents the Joint Venturer from buying and selling Kina, in
accordance with the Foreign Exchange Regulations and this Clause 10, and
at rates of exchange as favourable as those available to other commercial
buyers and sellers of that currency in similar sized transactions.
10.25 State's Action to Ensure Compliance
Where any right or assurance given to the Joint Venturer under this Clause 10
requires the Central Bank -
(a) to approve or authorise any act, matter or thirg; or
(b) to grant authority under the Foreign Exchange Regulations for its exercise
or performance,
and the Joint Venturer has supplied any information to the Central Bank required
by, and otherwise met the conditions of, this Clause 10 and the Central Banking
Act, the State shall, upon request from the Joint Venturer ensure by policy
directions to the Central Bank or otherwise that such approval is given or such
authority is granted.
10.26 Speculative Currency Transactions
The Joint Venturer shall not use any provisions of this Clause 10 or any authority
or approval given by the Central Bank or by an authorized dealer under the
Foreign Exchange Regulations to engage in Speculative Currency Transactions. If
the Joint Venturer is in breach of this Clause 10.26, it shall pay to the State as
liquidated damages an amount equal to the amount of any net after tax profit or
gain which the Joint Venturer makes on the Speculative Currency Transaction and
any cost incurred by the State in establishing that the transaction was a Speculative
Currency Transaction.
111339327
36.
11. MARKETING AND OTHER CONTRACTS
11.1 Right to Market Mine Products
A Joint Venturer may market without further reference to the State its share of
Mine Products and shall have sole control and management of sale and delivery of
such Mine Products, including the forward selling cf all Mine Products, and shall
assume all risks therefor, provided that -
(a) such marketing is consistent with the Approved Proposals for
Development;
(b) the Joint Venturer:
(t) sells its share of Mine Products on an arms' length basis (or, in the
case of sales to Related Corporations, on terms and conditions no
more favourable to the buyer than those which may apply in sales
made on an arm's length basis) subject only to normal deductions for
shipping (where applicable) and other realisation costs; or
(ii) delivers its share of Mine Products in repayment of loans which form
part of Approved Finance; and
(c) the State has not notified the Joint Venturer that the export of its share of
Mine Products to buyers in a specified jurisdiction could -
(i) breach an obligation of the State arising under international law;
(ii) prejudice nationa^security; or
(iii) prejudice the international relations of the State by the export of
Mine Products to another country with which it has been declared by
the State to be contrary to the interests of the State to be engaged in
international trading.
11.2 Agreements on Competitive Commercial Terms
Each Joint Venturer shall inform the State of each agreement concerning sales or
processing of Mine Products, patent licensing, engineering, construction or
management services which is with a Related Corporation or is otherwise not an
agreement entered into on an arm's length basis. If, in the opinion of the State,
such agreement is not on competitive commercial terms, the State may, within
thirty' (30) days of receipt of information about such ai agreement, give notice to
such Joint Venturer of the terms which the Slate determines to be competitive
commercial terms.
Upon receipt of the State's notice the Joint Venturer may -
(a) terminate the agreement;
111339327
37.
(b) renegotiate the agreement using the terms determined by the State; or
(e) refer the dispute, within thirty (30) days, to a Sole Expert for a
determination as to what are competitive commercial terms in the
circumstances.
Upon receipt of the expert's decision, which shall bt binding on the Parties, the
Manager and each Joint Venturer shall renegotiate the agreement, if necessary, to
embody those terms decided by the Sole Expert to be competitive commercial
terms or terminate the agreement.
11.3 Arms Length Basis
For purposes of this Clause 11, a sale is at urm’s length or a transaction is on an
arm's length basis where -
(a) the buyer and the seller in negotiating the sale have sought to promote their
own best interests in accordance with fair and honest business practices;
(b) the consideration expressed in the agreement for sale is the only
consideration for the sale;
(c) the price and other terms of the sale have not been affected by, nor
determined as a consequence of, any other agreement or any direct or
indirect relationship (other than the relationship created by the agreement
for sale between the sellers or shareholders of the seller, or a company in
which the seller is a shareholder, and the buyer or shareholders of the
buyer, or a company in which the buyer is a shareholder); and
•
(d) neither the seller, nor any person or company connected with it through
shareholding or otherwise, has any direct or indirect interest in the
subsequent re-sale or disposal by the buyer of any of the products
purchased pursuant to the agreement or sale.
11.4 Sale of State's Share of Mine Products
At any time after the State has elected to participate in the Project (whether
directly or through its nominee) under provisions of a Mining Equity Agreement
or other like agreement, the State or its nominee, as the case may be, may require,
by notice in writing, all of the Joint Venturers (in proportion to their participating
interests under the Joint Venture Agreement) to sell, an its behalf, its share of the
Mine Products. The State agrees to, or to procure its nominee, to reimburse out-of-
pocket expenses incurred by the Joint Venturer in selling its share of the Mine
Products and pay a mutually acceptable marketing fee.
111339327
38.
12 ACQUISITION OF STATE INTEREST
12.1 Stale's Option
Further to Recitals C, D, E and F the State has an option but not the obligation to
acquire at cost from the Joint Venturers a 30% interest in the Project.
12.2 Mining Equity Agreement
If the State exercises its option in whole or in part, such acquisition shall be
effected under a Mining Equity Agreement or such other agreement pursuant to
and consistent with the Option Agreement as defined under the Mineral Resources
Development Company Pty Limited (Privatisation) Act 1996.
12.3 Orogen Option
If Orogen exercises its option under the Option Agreement to acquire a 25%
interest from the State or MRDC, this interest will be in addition to the existing
interest it holds under the Joint Venture Agreement but that existing interest will
be subject to proportional reduction as a result of the State exercising its option. In
addition, a 5% interest shall be taken up and funded by an MRDC subsidiary to be
held in trust for the benefit of the Landowners.
13. INVESTMENT PROMOTION AUTHORITY CERT IFICATION
Each Joint Venturer shall apply to be certified under the Investment Promotion Act
1992 in respect of its activities contemplated by or required to be carried out under
the Approved Proposals for Development. The State shall ensure that each Joint
Venturer is issued with a certificate, in which any corditions are consistent with
this Contract and the Approved Proposals for Development, in accordance with its
application for the duration of the Project or for any period until the Joint Venturer
ceases to have an interest in the Project (whichever period is shorter).
14. ENVIRONMENTAL MANAGEMENT AND PROTECTION
14.1 Compliance with Environmental Plan
The Joint Venturers shall comply in all material respects with the approved
Environmental Plan.
14.2 Variation of Environmental Plan
The Environmental Plan may be varied by the Joint Venturers pursuant to the
Environmental Planning Act (Chapter 370) and as provided for in Clause 31.
Where pursuant to Clause 31.2 any variation of the Environmental Plan requires
the approval of the State, the Joint Venturers shall submit such vanation to the
Minister responsible for environmental matters.
111339327
39.
14.3 Amendment required by State
Subject to Clause 14.5, the Minister responsible for environmental matters may, on
behalf of the State, initiate amendment to the Environmental Plan if:
(a) at any time the conduct of Normal Operations in accordance with the
Environmental Plan for whatever reason poses a material danger to public
health and safety; or
(b) the conduct of Normal Operations results in significant damage to the
ecology of the area which was not contemplated in the Environmental Plan;
or
(c) the environmental impact of Normal Operations shall prove substantially
more adverse than anticipated in the Environmental Plan; or
(d) technological procedures or improvements taereof shall have become
available and economic subsequent to the Effective Date and, if applied to
the operations of the Project, could materially mitigate the environmental
impact of Normal Operations.
14.4 Disputed Amendments
In the event that there is a dispute in respect of any amendment initiated by the
Minister responsible for environmental matters on behalf of the State in any of the
circumstances set out in Clause 14.3, the dispute shall be referred to arbitration
under Clause 25 and the amendment shall not become effective unless and until it
is upheld by the resulting arbitration award.
•
14.5 Amendments while Approved Finance outstanding
During the period for which any Approved Finance is outstanding, the State shall
ensure that the Minister responsible for environmental matters does not initiate
any amendments to the Environmental Plan in the circumstances set out in Clause
14.3(d) which make the cost to the Joint Venturers of carrying out the Project
materially greater.
14.6 Application of Environmental Laws Generally
The Joint Venturers shall not be subject to any laws and regulations relating to the
environment that are in their general application less favourable to the Joint
Venturers than the laws and regulations relating to the environment which apply
to all other persons engaged in natural resource projects in Papua New Guinea nor
will the laws and regulations relating to environment in Papua New Guinea be
applied to the Joint Venturers in a manner less favourable to the manner in which
they are generally applied to others to whom they are applicable.
11IV19327
40.
15. TRAINING AND I OCALISATION
15 1 Compliance with Programme
The Joint Venturers will comply with the approved Training and Localisation
Programme and priority in employment will be given in the following order,
firstly to the residents of the Usino - Bundi and Rai Coast Districts, then to other
Madang Province residents, and then to residents of Papua New Guinea.
15.2 Alteration of Programme
(a) The Joint Venturers may, with the consent of the State (which consent shall
not be unreasonably withheld), amend or alter the Training and
Localisation Programme with a view to secuiing the maximum training of
and benefits to Papua New Guineans from the Project. If the Programme is
disrupted by circumstances or events (whether or not they constitute Force
Majeure under Clause 28.2) which make it difficult or impossible for the
Joint Venturers -
(i) to comply with their obligations under (he Programme; or
(ii) to operate the mine site in accordance with the standard as outlined
in the Mining (Safety) Act (Chapter 195A);
the Joint Venturers may give notice of alternative or revised plans to the
part of the programme affected.
(b) Should the Joint Venturers give notice pursuant to paragraph (a) the State
shall within thirty (30) days either -
(i) approve those alternative or revised plans, or
(ii) meet with the Joint Venturers to discuss and agree upon the
alternative or revised plans.
15.3 Disputed Alterations
If the discussions under Clause 15.2 (b) do not lead to the State's approval of
alternative or revised plans and the Joint Venturers consider the State's decision to
be unreasonable, the Joint Venturers may within sixty (60) days, elect to refer the
matter to arbitration. In reaching a decision the arbitrator shall judge the
reasonableness of the State's decision.
15.4 State Assistance
The State shall give such advice to the Joint Venturers as is reasonably required in
the development and implementation of the Training and Localisation Programme
and in the recruitment of Papua New Guinean staff.
111339327
41.
16. SUPPLY AND PROCUREMENT
16.1 Registration of Local Suppliers
The Joint Venturers shall, on an annual basis, identify and invite registration of
businesses in Papua New Guinea, particularly in the Madang Province and the
area of the Project, which are capable of supplying materials, equipment and
sen-ices to the Project, but pre-qualification and registration does not provide
assurance to a business that it will be invited to tender or be awarded any contract.
16.2 PNG Contractors and Suppliers
(a) When calling for tenders from contractors and suppliers, the Joint Venturers
shall include Papua New Guinean contractors and suppliers where -
(i) the contractors have proven ability in performing work of a similar
nature and size to that required for the Project, within the specified
time period; and
(ii) the suppliers are established and recognised suppliers of materials
and equipment who have marketed or distributed such materials
and equipment and who have applied in writing to be registered
with the Joint Venturers.
(b) The Joint Venturers shall ensure that its contractors are bound by
obligations comparable to those set out in paragraph (a) when the
contractors call for tenders from sub-contractors
16.3 PNG and International Procurement
•
The supply of materials, equipment and services may te tendered for and
procured internationally provided that where such materials, equipment and
services are procurable within Papua New Guinea from businesses pre-qualified
and registered pursuant to Clause 16.1 and meet the requirements of Clause 16.2,
such businesses shall be given a reasonable opportunity to tender and if a tender
submission from such business -
(a) meets the specifications of the invitation to tender,
(b) is competitive in cost with international sources, and
(c) meets the delivery requirements of the Project,
then such materials, equipment and services shall be procured from sources within
Papua New Guinea with preference being given to businesses including joint
ventures with substantial interests, firstly from the Usina - Bundi and Rai Coast
Districts, then from other parts of the Madang Province and then from other parts
of Papua New Guinea. With respect to all tendered contractors and suppliers,
111339327
42.
whether Papua New Guinean or otherwise, the final determination to award a
particular contract shall be made by the Joint Venturers.
16.4 Costs to be considered
In assessing the tenders from local contractors and suppliers, the Joint Venturers
will consider the extra costs they would incur if they were to grant the contract to a
foreign supplier or contractor. These extra costs shall include, but are not
necessarily restricted to, wharfage costs, shipping costs, stevedoring costs, customs
clearance costs, customs duties, and demurrage charges.
17. LOCAL BUSINESS DEVELOPMENT
The Joint Venturers, in consultation and cooperation with the State and the
Provincial Government, will-
fa) comply with and carry out the Business Development Plan which forms
part of the Approved Proposals for Development; and
(b) conduct an annual review of progress being made on the implementation of
the Business Development Plan and make such variations to it as required
by changing circumstances and are agreed by :he Minister responsible for
trade and industry' matters.
18. INSURANCE
18.1 Insurance required
From the commencement of construction, the Joint Venturers shall ensure that
those aspects of the Project thaf are normally insured in accordance with the
practice of the mining industry and are commercially insurable at a reasonable
cost are insured and the State shall be advised of the policy or policies in place.
18.2 Insurance of PNG Risks
For all matters which involve Papua New Guinea risks, the Joint Venturers shall
obtain and maintain their insurance from Papua New Guinea insurers or through
Papua New Guinea insurance brokers, as required by the Insurance Act 1995,
except to the extent that:
(a) adequate insurance from companies having financial capacity to meet any
claims is not obtainable from or through such insurance brokers at a price
which is commercially competitive with the price for such insurance
obtainable elsewhere; or
(b) the agreements relating to Approved Finance require otherwise.
If paragraph (a) or (b) applies, the State shall grant or procure the grant by the
relevant government agency of an exemption from the requirement of the
111339327
43.
Insurance Act 1995 to obtain and maintain certain irsurance in Papua New Guinea
subject to any tax, duty or levy as required by legislation or regulation.
18.3 Application of Insurance Proceeds
The Joint Venturers shall, unless the insurance polic es or loan agreements state
otherwise or the State otherwise agrees, use any amount paid to it pursuant to any
damage or destruction provisions in any contract of insurance to reinstate the
Project Assets (except for Mine Products) in respect of which such amount was
paid, provided that the Joint Venturer shall not be required to repair or restore any
portion of the Project Assets:
(a) that, prior to the damage or destruction, had been obsolete or were of no
material value to the operation of the Project; or
(b) where the Joint Venturers, following a review of the facts with the State, has
notified the State that in their judgement the cost of doing so is not justified
by the incremental economic benefit which the Project will derive
therefrom. In the event that the State notifies the Joint Venturers within
thirty (30) days of receipt of such notice that it disagrees with such
judgement, the matter shall be referred for determination to a Sole Expert.
19. PATENT AND TECHNOLOGY RIGHTS
All know-how within the meaning of section 163N ol the Income Tax Act
developed within the Project shall remain the property of the Joint Venturers. If
the Joint Venturers apply for, take out and retain patent or other technology rights
or registrations to protect all or any portion of the know-how, the State shall have
a royalty free right to use such protected know-how on and in respect of the
Project.
20. SUSPENSION OF OPERATIONS
20.1 Election to suspend
After consultation with the State and on giving the State not less than thirty (30)
days notice, the Joint Venturers may elect to suspend production if, in the three (3)
months immediately preceding the date of the notice, the Joint Venturers’ revenues
from the Project are less than the sum of royalties, mining levy and Operating
Costs. As soon as possible after giving notice under this Clause, the Joint
Venturers shall submit a report giving details of revenue, royalties, mining levy
and Operating Costs of the Project for the period of three (3) months aforesaid
giving the reasons why, in their opinion, it is necessar/ to cease production.
20.2 Maintenance
Where pursuant to the Clause 20.1 the Joint Venturers have elected to suspend
production they shall maintain, subject to fair wear and tear, the Project Assets so
as to prevent significant deterioration until Normal Oj*erations are resumed.
111339327
44.
20.3 Report on Costs to Resume Operations
No later than twelve (12) months from the date on which the Joint Venturers
suspended production pursuant to Clause 20.1 and thereafter at no longer than
twelve (12) month intervals until Normal Operations are resumed, the Joint
Venturers shall submit a further report showing their projection of the Costs to
Resume Operations and of revenue for the same period.
20.4 Resumption of Operations
If a report submitted pursuant to Clause 20.3 shows the Joint Venturers' projection
of revenue from the Project for the succeeding twelve [12) month period is greater
than their projection of Costs to Resume Operations for that twelve (12) month
period if Normal Operations were to be resumed, ther the Joint Venturers shall
promptly take such measures necessary to ensure that Normal Operations are
resumed within a reasonable time period.
20.5 Direction to Resume Operations
Where production has been suspended for a continuous period of not less than
three (3) years, the Minister may direct the Joint Venturers to resume Normal
Operations if he is of the reasonable opinion that the Costs to Resume Operations
are less than the revenue from the Project for the same period. The Minister will
provide the Joint Venturers with a copy of the State's projections of costs and
revenues.
20.6 Disputed Resumptions
If the Joint Venturers disagree with the Minister’s direction pursuant to Clause
20.5, they may elect to submit th£ State's and the Joint Venturers' projections of
revenue and Costs to Resume Operations to a Sole Expert for his opinion.
20.7 Sole Expert Determinations
Where projections made by' the State and the Joint Venturers have been referred
pursuant to Clause 20.6, the Sole Expert shall determine what projections would be
reasonable to make in respect of the twelve (12) month period under review and
the opinion of the Sole Expert shall be binding on the Parties so that in the event
that the Sole Expert accepts the projections of the Joint Venturers or is otherwise of
the opinion that if Normal Operations were resumed the Joint Venturers' revenue
from the Project would be less than Costs to Resume Operations in respect of the
twelve (12) month period, the direction given by the Minister pursuant to Clause
20.5 shall be deemed to have been withdrawn.
20.8 Deemed Abandonment
Where pursuant to Clause 20.5 the Minister has directed the Joint Venturers to
resume Normal Operations and that direction has not been or is not deemed to
have been withdrawn, the Joint Venturers, if they do net promptly take such
111339327
45.
measures to ensure that Normal Operations are resumed within a reasonable time
period, shall be deemed to have abandoned the Project for the purpose of Clause
21.2(c) provided however, that where projections of revenue and Costs to Resume
Operations have, pursuant to Clause 20.6, been referred to a Sole Expert, the time
period shall run from the date the Sole Expert gave his opinion on the projections.
20.9 Other Suspensions
Nothing in this Clause 20 shall be deemed to limit the right of the Joint Venturers
to suspend or limit production:
(a) as part of Normal Operations (for example, for engineering, maintenance or
other technical reasons); or
(b) when it is permitted to do so for reasons of Force Majeure pursuant to
Clause 28.
21. TERMINATION
21.1 Joint Venturers' Right to Terminate
The Joint Venturers may terminate this Contract at any time after the
Commencement of Commercial Production by giving twelve (12) months' notice to
the State.
21.2 State's Right to Terminate
The State may terminate this Contract by notice to each of the Joint Venturers if:
(a) the Special Mining Lease expires by effluxion of time and is not renewed;
(b) the Special Mining Lease is surrendered under the Mining Act other than
for the purpose of the Joint Venturers being issued a renewal or extension
thereof or being issued a new Special Mining Lease in respect of the Project;
or
(c) the Joint Venturers shall have abandoned the Project (within the meaning of
Clause 20.8) and not resumed it within a period of sixty (60) days after
notice is given by the State to each of the Joint Venturers.
21.3 Default Notice
In the event that:
(a) the Joint Venturers are in material default of any of the joint and several
obligations set forth in Clauses 4.1, 14.1,15.1, 17 or 20, or fail to treat as
binding and comply with any award made in an arbitration pursuant to
* Clause 25 in respect of any of those aforesaid obligations; or
111339327
46.
(b) any Joint Venturer is in material default of any of the several obligations set
forth in 10.9,10.22, or 11.1(c), or fail to treat as binding and comply with any
award made in an arbitration pursuant to Clause 25 in respect of any of
those aforesaid obligations;
the State may give notice of such a default or failure (hereinafter in this Clause
called the "Default Notice"):
(c) in the case of the situation to which paragraph (a) applies, to each of the
Joint Venturers, which shall specif)' the default or failure alleged. The State
shall at the same time give a copy of the Default Notice to each lender to
any of the Joint Venturers under any Approved Finance, and each
mortgagee under any mortgage or charge of any of the Project Assets,
where the name and address of that lender, mortgagee or chargee has
previously been notified to the State; or
(d) in the case of the situation to which paragraph (b) applies, to the Joint
Venturer, which shall specify the default or failure alleged. The State shall
at the same time give a copy of the Default Notice to each lender to the Joint
Venturer under any Approved Finance, and each mortgagee under any
mortgage or charge of any of the Project Assets, where the name and
address of that lender, mortgagee or chargee has previously been notified to
the State.
21.4 Termination or Assignment Notice
If within a period of one hundred and eighty (180) days following a Default Notice
(or such longer period as may be fixed by an arbitration award where the subject
matter of the Default Notice is submitted to arbitration under Clause 21.5) either
(a) the default or failure specified in the Default Notice has not been remedied
(or active steps have not been commenced and continued to remedy the
default or failure if it is not capable of speedy remedy); or
(b) compensation is not paid in respect thereof (in the case of a default or
failure not capable of remedy but where payment of compensation would
be adequate recompense to the State),
then, subject to Clauses 21.5 and 21.6, the State may :
(c) in the case of the situation to w'hich Clause 21.3(a) applies, by notice
(hereinafter in this Clause called a ‘Termination Nodce") to each of the
Joint Venturers (which shall be copied to each lender, mortgagee or chargee
who was given a copy of the Default Notice) bring about the termination of
the Contract on a date which is not less than one (1) month thereafter
(hereinafter in this Clause called the Termination Date"). The State shall
ensure that the Minister does not make a decision to forfeit the Special
Mining Lease, and that no other action is taken by or on behalf of the State
111339327
47.
lo terminate the Special Mining Lease or any other leases granted under the
Mining Act for the purposes of the Project, before the Termination Date; or
(d) in the case of the situation to which Clause 21.3(b) applies, by notice
(hereinafter in this Clause called an "Assignment Notice”) to the defaulting
Joint Venturer ("Defaulting Venturer") (which shall be copied to each
lender, mortgagee or chargee who was given a copy of the Default Notice)
will require the Defaulting Venturer, unconditionally and without
consideration and free from encumbrances, to assign its entire undivided
interest in the Project Assets to the other Joint Venturers in undivided
proportionate shares in proportion to their undivided interest in the Project
Assets, on a date which is not less than one (1) month thereafter (hereinafter
in this Clause called the "Assignment Date").
21.5 Disputed Termination
If the Joint Venturers) or the State contest:
(a) the grounds for the issue of the Default Notice; or
(b) whether the default or failure has been remedied; or
(c) the adequacy of any compensation paid pursuant to Clause 21.4(b),
the matter shall be submitted for arbitration pursuant to Clause 25. If the
arbitrator finds (in the case of paragraph (a)) that adequate grounds exist for issue
of the Default Notice, he shall fix a period during which the Joint Venturer(s) must
comply with Clause 21.4(a) or (b) and the amount of compensation payable (if
applicable). If the arbitrator finals (in the case of paragraph (b)) in favour of the
State, he shall fix a period during which the Joint Venturers) must remedy the
default or failure. If the arbitrator finds (in the case of pangraph(c)) in favour of
the State, he shall fix the amount of compensation payable and the period for its
payment.
The State shall not serve a Termination Notice or Assignment Notice, as the case
may be, while arbitration between the State and the Joint Venturers) under this
subclause is in progress and any Termination Notice or Assignment Notice
already served will be suspended immediately upon the commencement of such
arbitration for the duration of any such arbitration. If the arbitrator finds in favour
of the Joint Venturers) or within the period fixed by the arbitrator the default or
failure is substantially remedied or the compensation is paid, the State shall not
serve a Termination Notice or Assignment Notice and shall withdraw any
Termination Notice or Assignment Notice already served.
21.6 Where Receiver or Manager appointed
If at any time following a Default Notice but prior to the Termination Date or
Assignment Date, as the case may be, a receiver or manager or other administrator
acting on behalf of lenders who jointly or severally have provided Approved
111339327
43.
Finance to ail or any of the Joint Venturers secured by a mortgage or charge, is
appointed in respect of the relevant portion of the Project Assets and his
administration covers or is extended to cover an undivided interest (in aggregate)
in the Special Mining Lease of more than fifty (50) per cent, or he otherwise
demonstrates to the satisfaction of the Minister that he has the power to procure
the remedy of the default or failure or the payment of compensation in respect
thereof, the State shall not give a Termination Notice or Assignment Notice, and
any Termination Notice or Assignment Notice already served will be suspended,
until the expiry of two (2) years after the date on which the Default Notice is given
or one (1) year after the determination (by award or otherwise) of any arbitration
under Clause 21.5, whichever is later. Within this period, the receiver or manager
or other administrator may either
(a) remedy the default or failure which gave rise to the Default Notice or pay
compensation in respect thereol in accordance with Clause 21.4; or
(b) (subject to the requirements of the Joint Venture Agreement and the Mining
Act) sell or otherwise dispose of the relevant interest in the Project Assets to
any other person approved by the Minister (such approval not to be
unreasonably withheld) on condition that such person shall within this
period remedy the default or failure which gave rise to the Default Notice
or pay compensation in respect thereof in accordance with Clause 21.4.
If in either case the relevant default or failure is substantially remedied or
compensation is paid in respect thereof, the State shall not serve a Termination
Notice or Assignment Notice following upon that Default Notice and any such
Termination Notice or Assignment Notice which has been suspended will be
deemed to be withdrawn.
21.7 Continuing Compliance
The extra period permitted under Clause 21.6 to a receiver or manager or other
administrator prior to the Termination Date or Assignme at Date shall be subject to
compliance with the condition that during that extra period the receiver or
manager or other administrator shall:
(a) comply with this Contract and the Mining Act; anc
(b) use such pow ers as are available to it to ensure tha: the Project Assets are
maintained, subject to fair wear and tear, so as to prevent significant
deterioration of such assets.
If during such period a receiver or manager or other administrator sells the
relevant portion of Project Assets, the obligations under paragraphs (a) and (b)
shall cease to apply to the receiver, manager or other administrator.
111339327
49.
21.8 Assignment of Defaulting Venturer
Following an Assignment Notice, the Defaulting Venturer shall do all things
necessary to effect the assignment of the Defaulting Venturer's entire interest in
the Project Assets to the other Joint Venturers by or on the Assignment Date. The
Defaulting Venturer will be discharged from any further liability in respect of any
obligation under this Contract which accrues from the date that assignment has
been effected but without prejudice to pre-existing rights accrued to the State
against the Defaulting Venturer.
In the case where the Defaulting Venturer expresses in w riting an inability to meet,
or fails to meet, the Assignment Date deadline then the Minister may by notice
declare a later Assignment Date. If in the Minister's reasonable opinion there are
no extenuating circumstances whereby the Assignment Date should be changed,
then at any time after the Assignment Date the Minister shall exercise a power of
attorney hereby given in respect of doing all things and executing all documents
necessary, directly or indirectly, to effect the assignment of the Defaulting
Venturer's undivided interest in the Project to the remaining Joint Venturers.
22. CONSEQUENCES OF TERMINATION
22.1 Obligations of Parties
If this Contract is terminated -
(a) the Joint Venturers will surrender to the State the Special Mining Lease and
every other tenement which forms part of the Project Assets but without
prejudice to the liability of any of the Parties in resoect of any antecedent
breach or default under this Contract or in respect of any indemnity given;
(b) each Party shall forthwith pay to the other Party all moneys that may be
owing to the other Party hereunder;
(c) the State shall have the option to purchase (subject to any encumbrances
thereon) exercisable by notice to the Joint Venturers within thirty (30) days
following termination of this Contract all or any portion of the Project
Assets not surrendered pursuant to paragraph (a) at a price equivalent to
the lesser of the then residual value of such assets after tax depreciation or
the fair market value of such assets, which fair market value is to be
determined by agreement between the Parties but failing such agreement
by a Sole Expert;
(d) the Joint Venturers shall have the right, within the one (1) year period
following the thirty (30) day notice period referred to in (paragraph (c):
(i) to assign or otherwise dispose of all or any portion of the remaining
Project Assets to any person; or
111339327
50.
(ii) to remove and recover from the Mining Area and export from Papua
New Guinea, unless otherwise specified in the Approved Proposal
for Development, any of the remaining Project Assets on the
condition that such removal does not cause irreparable damage to
major assets which are not removed from the Mining Area; and
(e) the Joint Venturers shall leave the Mining Area in a safe and stable
condition to the reasonable satisfaction of an inspector under the Mining
(Safety) Act (Chapter 195A), having regard to natural conditions in the area
and applying general!)' accepted standards of good mining practice,
provided that the Joint Venturers shall not be required to alter the physical
condition of the mine, the tailings disposal site, or ether Project facilities
beyond the requirements of the Environmental Plan.
22.2 Reversion of Property to State
Upon expiry of the one (1) year period referred to in Clause 22.1 (d), all Project
Assets which remain on the Mining Area shall become the property of the State
without any cost to the State or any liability for the State to pay compensation
therefor.
22.3 Continuance in Force
Clauses 22.1, 22.2 and 25 shall continue in force notwithstanding the termination
of the rest of this Contract.
23. ASSIGNMENT
23.1 Right to Assign ,
A Joint Venturer may, with the consent of the Minister, ass gn its entire interest or
an undivided proportionate share of its interest in:-
(a) the Project Assets ; and
(b) its rights and obligations under this Contract.
The State covenants that the consent of the Minister to an assignment will not be
unreasonably withheld. The consent of the Minister will not be required where
Clauses 23.4 or 23.5 apply.
23.2 Effect of Assignment
If a Joint Venturer assigns -
(a) its entire interest in the Project Assets and its rights and obligations under
this Contract, then upon the assignee giving the State the undertaking
referred to in Clause 23.3, the Joint Venturer shall be discharged from any
further liability in respect of any obligation which arises after the date of
II1339327
51.
that assignment without prejudice to pre-existing rights accrued to the State
against the Joint Venturer; or
(b) an undivided proportionate share of its interest in the Project Assets and its
rights and obligations under this Contract, then upon the assignee giving
the State the undertaking referred to in Clause 23.3 -
(i) the obligations under this Contract assumed by the assignee and the
continuing obligations under this Contract of the Joint Venturer shall
be the joint and several obligations, or the several obligations of the
Joint Venturer and the assignee;
(ii) the Joint Venturer, if it is then the Manager shall, during the period
that it retains ownership of an undivided proportionate interest in
the Project Assets and in all of its rights and obligations under this
Contract, be the Manager and no change in the Manager shall take
place without the consent in writing of the State (which consent shall
not be unreasonably withheld); and
(iii) every agreement made between the Joint Venturer and any assignee
shall be consistent with this Contract and a copy thereof will be
furnished to the State as soon as it has been executed.
23.3 Assumption by Assignee
Where an assignment takes effect pursuant to Clause 23.1 -
(a) the Joint Venturer shall enter into a Contract with the assignee wherein the
assignee -
(i) agrees to become a part)' to this Contract; and
(ii) undertake to assume, observe and comply with all obligations of the
Joint Venturer; and
(b) the assignee shall be a permitted assignee and have the same rights of
assignment as the Joint Venturer under this Contract.
23.4 Mortgages, Charges etc
Notwithstanding the foregoing provisions of this Clause 23, but subject to
generally applicable legal requirements for the creation, perfection and
enforcement of security interests -
(a) each Joint Venturer may mortgage, charge by way ol fixed or floating
charge or otherwise assign or encumber by way of security its entire interest
or an undivided proportionate share of its interest in the Project Assets, this
Contract, its share of Mine Products, its rights under any sales agreements
for Mine Products, its proceeds from the sale of Mine Products (including
111339327
52.
such proceeds in any of the accounts referred in Clause 10) and any of its
other assets and its uncalled capital (and premiums) to secure its Approved
Finance; and
(b) subject to Clause 23.5, any mortgagee, chargee or other secured party under
any mortgage, charge or other security given by a Joint Venturer pursuant
to this subclause may exercise all rights of sale and other rights included in
any instrument of mortgage or charge given by it under any Approved
Finance, provided that it first gives to the State thirty (30) days notice of its
intention to exercise any rights of sale and five (5) days notice in all other
cases.
The State shall ensure that all statutory approvals required in Papua New Guinea
are given for each mortgage, charge or other security to be given or granted by a
Joint Venturer pursuant to this subclause.
23.5 Rights of Mortgagee or Chargee
No mortgagee or chargee or other secured party that acquires by assignment or
otherwise any rights of a Joint Venturer under this Contract shall have any greater
rights than a Joint Venturer hereunder, and its exercise of those rights shall be
subject to all of the terms, conditions and requirements of this Contract. The rights
of any such mortgagee, chargee, or secured party to sell a Joint Venturer's interest
in the Project or any of the Project Assets shall not be exercisable:
(a) unless the whole or part of the Joint Venturer's undivided interest in the
Project and the Project Assets which are mortgaged, charged or otherwise
subject to a security interest is sold as a going concern (or with such
exceptions as the State may agree) to a purchaser tc which the State does
not reasonably object on grounds of:-
(i) national security or national foreign policy; or
(ii) insufficient financial standing to perform the obligations that the
purchaser will be assuming as a Joint Venturer under this Contract,
within thirty (30) days of being notified of the identity of such purchaser
and being given information sufficient for the State to assess the financial
standing of the purchaser; or
(b) except in accordance with any provisions in the Joint Venture Agreement
relating to pre-emptive rights.
23.6 Consents and Approvals
The State shall ensure that, subject to compliance with applicable procedures, all
required statutory approvals are given to the assignment of this Contract and all or
any of the Project Assets or of an undivided interest therein, to the person that
purchases from a mortgagee, chargee, or other secured party in accordance with
111339327
53.
the requirements of Clause 23.5. Any such purchaser shell be required to comply
with the requirements of Clause 23.3.
24. EXTENSIONS TO TIME
24.1 Extensions by Agreement
Notwithstanding any provision of this Contract, the Parties by agreement between
the persons responsible for giving Notices under Clause 33, may from time to time
extend any period referred to in this Contract for such period, or substitute for any
date referred to in this Contract such later date, as they think fit.
24.2 Automatic Extensions
If a Joint Venturer is prevented or hindered by any circumstances or event of a
kind set out in Clause 28 or by an arbitration under Clause 25 from undertaking all
or any of its obligations hereunder or exercising any right granted, the period of
time allowed for the performance of that obligation or exercise of that right and all
periods of time thereafter allowed for the performance of obligations or exercise of
rights which are dependent upon the first mentioned obligation or right, shall be
extended by a period equal to the period during which such prevention or
hindrance continues or during the period from the time when the question,
dispute or difference arose until the time of its settlement by agreement, its
determination by the Sole Expert or by arbitration, as the case may be.
24.3 Effect on Periods and Dates
Where any period is, or is deemed to be, extended or any later date substituted for
an earlier date under this Claus?, that extended or substituted period or date shall
be deemed to constitute the period or date referred to in this Contract
(notwithstanding that at the time of such extension or substitution such period
may have expired or such date may have passed).
25. ARBITRATION
25.1 Meaning of Dispute
For purposes of this Clause, "Dispute" means any dispute, disagreement,
controversy or claim arising out of or relating to this Contract, or the interpretation
or performance of provisions of this Contract or the breach, termination or validity
thereof, which the Parties are unable to resolve by mutual agreement within a
reasonable time. It does not include any difference of viev/ or disagreement
which, pursuant to provisions of this Contract, has been submitted for
determination of a Sole Expert.
25.2 Submission to ICSID
The Parties irrevocably consent to submit any Dispute between the State and the
Joint Venturers to the International Centre for Settlement of Investment Disputes
111339327
54.
("ICSID") for settlement by arbitration pursuant to the Convention on the
Settlement of Investment Disputes between States and Nationals of Other States
(the "Convention").
25.3 ICSID Arbitration
(a) For the purposes of Article 25(2)(b) of the Conventicn the Parties agree that:
(i) although Ramu Nickel Limited is a national of Papua New Guinea, it
will because of foreign control be treated as a national of Australia;
(ii) although Orogen Minerals (Ramu) Limited is a national of Papua
New Guinea because it is a 100% subsidiary of Orogen Minerals
Limited, if the State’s indirect shareholding ir Orogen Minerals
Limited falls below 50%, Orogen Minerals (Ramu) Limited will
because of foreign control be treated as a national of Australia; and
(iii) if an incoming Joint Venturer, although incorporated in Papua New
Guinea and therefore a national of Papua New Guinea, is foreign
controlled, it will be treated as a national of the contracting state
under the Convention of which it gives notice to the State at the time
of acceding to this Contract.
(b) An ICSID Arbitral Tribunal constituted pursuant to >his Contract (the
"Tribunal”) shall consist of a single arbitrator appointed by agreement
between the parties to the Dispute, but if the parties are unable to agree on
the identity of the single arbitrator to be so appointed within forty-five (45)
days of the date on which the Secretary-General of ICSID has dispatched
notification of the registration of a request for arbitration, the Tribunal shall
consist of three arbitrators*. In that event, one arbitrator shall be appointed
by each party to the Dispute and the third arbitrator, who shall be the
President of the Tribunal, shall be appointed by agreement between the
parties or in the absence of such agreement by the Chairman of the
Administrative Council of ICSID in accordance with Article 38 of the
Convention.
(c) Nothing in any notice by the State pursuant to Article 25(4) of the
Convention shall be read or construed as limiting the jurisdiction which a
Tribunal established under the Convention pursuant to this Contract would
otherwise have to settle a Dispute by arbitration.
(d) For the purposes of submission of any Dispute to arbitration by ICSID, the
Parties agree (without limitation) that a Dispute about any of the following
is fundamental to the investment by the Joint Venturers in the Project:
(i) the continuation of the Special Mining Lease or any other mining
lease, lease for mining purposes or mining easement granted
pursuant to Clause 5;
111X19327
55.
(ii) the operation of Clause 6 in respect of rates and duties;
(iii) the ability of any Joint Venturer to obtain financing for its
participation in the Project in accordance wth Clause 9 and on
commercial terms;
(iv) the right to retain foreign currency in foreign currency accounts and
to convert Kina into foreign currency which can be remitted out of
PNC, as provided for in Clause 10;
(v) the right to export the Mine Products and to market them in
accordance with Clause 11;
(vi) the Agreed Terms under Clause 27;
(vii) non-discrimination and related matters under Clause 30; and
(viii) the termination of this Contract.
25.4 Submission to UNCITRAL Arbitration
Any Dispute between the State and any one or more of the Joint Venturers which
cannot be referred to ICSID arbitration under Clauses 25.2 and 25.3 shall be settled
by arbitration under the Arbitration Rules, as at present in force, of the United
Nations Commission on International Trade Law (hereinafter in this Clause called
the "UNCITRAL Arbitration Rules"), subject to such modifications as the parties
to the Dispute may agree in writing at the time.
25.5 Application of UNCITRAL Arbitration Rules
For the purposes of the arbitration of any Dispute under the UNCITRAL
Arbitration Rules:
(a) the appointing authority shall be the Chairman of the Administrative
Council of ICSID;
(b) an agreed appointee shall be appointed as a single arbitrator, but if within
thirty (30) days of the receipt by the respondent of the notice of arbitration
the parties have not agreed on a single arbitrator, the number of arbitrators
shall be three;
(c) the place of arbitration shall be Port Moresby, Papua New Cuinea or such
other place as the parties to the Dispute may agree; and
(d) the language to be used in the arbitral proceedings shall be English.
111339327
56.
25.6 Award Binding
An award in arbitration proceedings under this Clause shall be binding on the
parties to the Dispute and judgement thereon may be entered in any court having
jurisdiction for the purpose.
25.7 Waiver of Immunity
The State hereby irrevocably waives any claim to immunity -
(a) in respect of proceedings on the merits of the claim which is the subject of
such arbitration;
(b) in respect of proceedings to enforce any such award including, without
limitation, immunity from service of process and from the jurisdiction of the
Court; and
(c) in respect of execution of any such award against the property of the State,
being property of the State held for commercial purposes.
25.8 Cost of Arbitration
Unless otherwise agreed or provided, the cost of any arbitration procedure will be
borne -
(a) equally by the two parties to the Dispute where it has been referred jointly
by them; or
(b) otherwise, by the unsuccessful party in accordance with the ICSID
Arbitration Rules or the 15NCITRAL Arbitration Rules, as the case may be.
25.9 Stay of Other Rights
Where a Dispute has been referred to arbitration pursuant to this Clause, neither
Party shall be entitled to exercise any rights or election arising in consequence of
any alleged default by the other arising out of the subject matter of the Dispute
until the Dispute has been resolved by the decision of the arbitrators.
25.10 Sole Expert
Where any difference of view or disagreement between any two or more of the
Parties is, pursuant to any other provision of this Contract, submitted for
determination of a Sole Expert, the Sole Expert shall act as an expert and not as an
arbitrator, and accordingly the foregoing provisions of this Clause do not apply. A
determination by a Sole Expert shall be binding on the Parties. Unless otherwise
agreed, the cost of submitting any such matter to a Sole Expert will be borne:
(a) if one Party calls for the matter to be determined by the Sole Expert and
loses, by that Party;
111339327
57.
(b) if one Parly calls for the matter to be determined by the Sole Expert and
wins, equally by ail Parties to the determination; and
(c) if a number of Parties jointly submit the matter to be determined by the Sole
Expert, equally by all of them.
26. LAW APPLICABLE
This Contract shall be governed by and construed in accordance with the law of
the Independent State of Papua New Guinea and such rules of international law
as may be applicable.
27. STABILITY OF TERMS
27.1 Agreed Terms and Material Adverse Change
The State is committed to maintaining the long term stability of the fiscal terms
under which the Project is developed. The fiscal terms outside this Contract which
are important for the Joint Venturers are the fiscal provisions set out in Clauses 7
and 8, whether they apply by force of existing legislation or otherwise, and the
royalty, taxes, levies and charges applicable to the Project or the Joint Venturers, or
dividends or interest payable by any of the Joint Venturers, as at the date of this
Contract at the rates in force as at such date (the "Agreed Terms").
For the purposes of this Clause 27:
"Material Adverse Change" means a change w'hich materially or substantially
impairs, erodes or diminishes the financial results derived cr expected from the
Project by a Joint Venturer or the dividends or other payments payable by a Joint
Venturer.
27.2 Stabilisation
If at any time during the period of ten (10) years after the Commencement of
Commercial Production the Agreed Terms are altered or affected by any
legislative or administrative action of the National Government, any provincial or
local-level government or any government agency in such a way as to cause a
Material Adverse Change for any Joint Venturer, the State shall indemnify the
Joint Venturer, but only to the extent of the financial loss to the Joint Venturer or
the reduction in dividends or other payments payable by it caused by the Material
Adverse Change when assessed on its own and not in concert with factors which
do not form part of the Agreed Terms.
27.3 Claim by Joint Venturer
The Joint Venturer may, by notice to the State, claim payment of any amount to
which the indemnity in Clause 27.2 relates (including any amounts payable to
providers of Approved Finance under an increased costs clause in a finance
agreement or otherwise). The notice must specify the amount and the Material
111339327
58.
Adverse Change that is the basis of the claim. If the State disputes the claim, it
must give notice to this effect to the Joint Venturer making the claim within two(2)
months after the State's receipt of the Joint Venturer's notice. If the dispute is not
resolved within a further period of four (4) months, then it will be referred to an
arbitration under Clause 25.
27.4 Payment of a Claim
The State shall pay to the Joint Venturer making a claim:
(a) if the claim is undisputed, the amount of the claim within three (3) months
after the State's receipt of the notice from the Joint Venturer; or
(b) if the claim is disputed, the amount, if any, determined by the arbitrator as
being the proper amount of the claim within three (3) months after the
arbitrator makes his determination.
If the amount under paragraph (a) or (b) is not paid within the period of three (3)
months, the State shall become liable to pay interest on that amount from the end
of that period until actual payment at the same rate per annum as is payable from
time to time by the State on its 30-day treasury bills, and the Joint Venturer shall be
entitled to recover such amount (plus interest) by credit against taxes or duties due
and payable to the Commissioner Ceneral of Internal Revenue.
27.5 Payments grossed up
If any payment made by the State under Clause 27.4 is subject to any taxes in
Papua New Guinea in the hands of the Joint Venturer, or if any deductions or
withholdings are made from any such payment on account of taxes, the sum due
from the State under Clause 27.4 Will be increased to the extent necessary to ensure
that, after the application of such taxes or the making of such deductions or
withholdings, the Joint Venturer receives a net sum equal to the sum which it
would have been left with or have received if no such taxes were applicable or no
such deductions or withholdings were required to be made.
27.6 Termination
Subject to Clause 27.7 and to any claim outstanding and unpaid at the time, the
foregoing provisions of this Clause 27 shall terminate and tease to have effect on
and from the tenth anniversary of the Commencement of Commercial Production.
27.7 Most Favoured Investor
If at any time an investor in a development project in Papua New Guinea is
accorded by a contract or agreement with the State or otherwise more favourable
treatment in respect of the stability of fiscal and other term; than has been given to
the Joint Venturers under this Clause 27, that more favourable treatment
(including, if appropriate, those fiscal and other terms) will apply to the Joint
Venturers by force of this provision.
111339327
59.
28. FORCE MAJEURE
28.1 Effect of Force Majeure
Any failure on the part of a Party hereto to comply with any of the terms,
conditions and provisions of this Contract (except any obligation of a Party to
make payment of money to the other Party) shall not be grounds for termination
or give the other Party hereto any claim for damages insofar as such arises from
Force Majeure, if the first-mentioned Party-
fa) has taken all appropriate precautions, due care an d reasonable alternative
measures with the objective of avoiding such failure and of carrying out its
obligations under this Contract; and
(b) has given notice to the other Party of the occurrence of Force Majeure on
becoming aware of such an event.
The first-mentioned Party shall take all reasonable measures to overcome the Force
Majeure and to fulfil terms and conditions of this Contract with the minimum of
delay (provided that no Party has an obligation to settle a labour dispute or to test
the constitutionality of any legislation or law) and shall give notice to the other
Party on the restoration of normal conditions.
28.2 Meaning of Force Majeure
For the purposes of this Contract, Force Majeure shall include w’ar, insurrection,
civil disturbances, terrorism, sabotage, blockades, riot, embargoes, strikes and
other labour conflicts, land disputes, epidemics, volcanic eruptions, earthquakes,
cyclones, floods, tidal waves, explosions, fires, lightning, governmental restrictions
or unavailability of materials or equipment and any other event which the party
claiming force majeure could not reasonably be expected to prevent or control, and
in the case of the Joint Venturers shall include any delay or failure by the State to
give any consent or approval required under this Contract or under any applicable
law.
29. INDEMNITY
29.1 State indemnified
Except as otherwise provided in this Contract, the Joint Venturers shall indemnify
and hold harmless the State against all claims made by or on behalf of any third
party in respect of injury, loss or damage resulting from work carried out or goods
or services supplied by the Joint Venturers pursuant to th s Contract provided,
however, that such indemnity shall not apply to the extent, if any, that such injury,
loss or damage resulted from wrongful acts or omissions of the State.
111339327
60.
29.2 Liability limited
In the absence of negligence of the Joint Venturers, their servants or agents, the
Joint Venturers shall not be liable to indemnify and save harmless the State
pursuant to Clause 29.1 except where injury, loss or damage was caused to a third
party by work carried out or goods or services supplied by the Joint Venturers of a
kind or in circumstances in respect of which the law of Papua New Guinea
imposes liability for injury, loss or damage without proof of negligence.
29.3 Defence of Claims
If any claim, demand, or writ, in respect of the liability referred to in this Clause
29, is brought or alleged against the State, in respect of w hich indemnity is to be
sought from the Joint Venturers, the State shall forthwith notify the Joint Venturers
and the Joint Venturers shall have the option to assume the defence thereof.
Unless the Joint Venturers fail to assume such defence, they will not be liable to
the State for any legal or other expenses subsequently incurred by the State in
connection with such defence. The State agrees to provide reasonable co-operation
to the Joint Venturers and their legal advisers in the defence of such alleged
liability. The Joint Venturers shall not be liable to indemnify the State for any
settlement of any such action effected without the written consent of the Joint
Venturers. The compliance by the State with this Clause 29 shall be a condition
precedent to any liability of the Joint Venturers under such clause.
30. NON-DISCRIMINATION
The State shall treat the investments and activities of the joint Venturers in Papua
New Guinea pursuant to this Contract on a basis no less favourable than that
accorded to investments and activities associated with investments of foreign
owned or controlled companies in Papua New Guinea under any bilateral
investment protection treaty between the State and any e ther country, and
accordingly, if under any such treaty companies receive the benefit of any
undertakings by the State relating to expropriation and nationalisation and
compensation therefor, the Joint Venturers will be treated as though those
undertakings were extended to them.
31. VARIATION
31.1 Variations by Agreement
The Parties may from time to time by agreement in writing add to, substitute for,
cancel or vary all or any of the provisions of this Contract, the Approved Proposals
for Development, the Special Mining Lease, Leases for Mining Purposes, Mining
Easements and all other leases, licences, rights or grants granted or any
programme, proposal or plan approved for the purpose of this Contract to more
efficiently or satisfactorily implement or facilitate the objectives of this Contract.
111339327
61.
31.2 Modifications to Approved Proposals for Development
(a) Subject to Clauses 14.2 and 14.3 in respect of the Environmental Plan and
Clause 15.2 in respect of the Training and Localisation Programme,
Modifications to the Approved Proposals for Development may at any time
during the life of the Project be made by the Joint Venturers without
reference to the State unless by making any such Modification the Joint
Venturers would cease to be in substantial compliance with the Approved
Proposals for Development.
(b) If the Joint Venturers wish to make a Modification to the Approved
Proposals for Development which falls outside the scope of Clause 31.2(a)
the Joint Venturers shall notify the State in writing of the Modification
which they wish to make, and unless the State within thirty (30) days
informs the Joint Venturers by notice in writing that the Modification is one
on which further consultation between the State ard the Joint Venturers is
required the Modification will be deemed to have been approved by the
State and the Approved Proposals for Developmer t shall stand amended
accordingly.
(c) In the event that the State pursuant to Clause 31.2(b) informs the Joint
Venturers that a Modification to the Approved Proposals for Development
requires further consultation between the State and the Joint Venturers the
Modification shall not take effect unless it has been approved by the State,
provided, however, that;
(i) the State undertakes that its approval of any such Modification will
not be unreasonably withheld; and
(ii) the State will be deemed to have approved any such Modification if
either
(A) the State, within thirty (30) days from the date on which notice
was given to the Joint Venturers pursuant to Clause 31.2(b),
has not informed the Joint Venturers that it declines to
approve the proposed Modification; cr
(B) a refusal by the State to approve a Modification has been
referred to arbitration under Clause 25 and the arbitrator has
(or arbitrators have) made an award finding that the refusal of
the State to approve the Modification s unreasonable.
(d) Where pursuant to Clause 31.2(c) a Modification has been approved or is
deemed to have been approved by the State the Approved Proposals for
Development shall stand amended accordingly.
31.3 Definitions
For the purpose of this Clause
111339327
62.
(a) " Approved Proposals for Development" includes in relation to each joint
Venturer its Approved Financial Plan and for a Modification of an
Approved Financial Plan references in Clause 31.2 to the "Joint Venturers"
shall be read as the Joint Venturer whose Approved Financial Plan is being
modified.
(b) "Modification" includes variation or amendment cr any alteration by
deletion or addition.
(c) The approval by the State of any Modification of the Approved Proposals
for Development in respect of Clauses 9,14,15 and 17, shall be signified in
writing by, respectively, the secretary of the department responsible for
finance matters, the minister responsible for environmental matters, the
minister responsible for labour matters and the minister responsible for
industry matters. In any other, case approval by the State of a Modification
of the Approved Proposals for Development shall be signified by any
instrument under the hand of the Minister.
32. CONSULTATION
32.1 Training and Localisation Committee
(a) A Committee shall be formed, comprising one member each from the
Department, local landowners, the Joint Venturers and the Provincial
Government and chaired by a representative of the department responsible
for labour matters, which shall monitor the implementation of the approved
Training and Localisation Programme.
(b) This Committee shall operate during the term of this Contract and the Joint
Venturers shall furnish if with quarterly reports outlining the progress of
the approved Training and Localisation Programme, problems
encountered, positions filled and the number of Papua New Guineans
employed (including from the particular province and local area).
32.2 Supply and Procurement Committee
(a) A Committee shall be formed, comprising one member each from the
Department, the Provincial Government, local landowners and the Joint
Venturers and chaired by a representative of the department responsible for
commerce and industry matters, which shall monitor the supply and
procurement of goods and services to the Project.
(b) The Committee shall operate during the term of this Contract and the Joint
Venturers shall furnish it with quarterly reports conforming in form and
content to that agreed for major project operators in the minerals sector. The
reporting format and content and any revisions thereto shall be mutually
agreed to achieve the following objectives:
111339327
63.
(i) to provide the information necessary to eva uate the economic
impact of procurement of goods and services for the Project;
(ii) to enable the monitoring of the Papua New Guinean content of
goods and services procured for the Project;
(iii) to assist in the identification of industries w iich could be established
in Papua New Guinea to supply the Project; and
(iv) to provide suitable and reliable statistics to be used by the State.
32.3 Environmental Committee
A Committee shall be formed, comprising one member each from the Department,
the Provincial Government, local landowners and the Joint Venturers and chaired
by the representative of the department responsible for environmental matters,
which shall review environmental matters concerning the Project.
32.4 Committee Meetings
All of the above Committees will meet quarterly on the same dates and in the
same location (Madang or Port Moresby) and prior to their meetings will receive
from the Joint Venturers an update of the Project.
33. NOTICES
33.1 Notice Procedure
(a) Any notice, consent, demand, approval or other communication (a
"Notice") required or permitted to be given shall be deemed to have been
given if-
(i) in the case of a Notice given by the State other than a Notice given
pursuant to Clause 14, such Notice is signed on behalf of the State by
either the Minister or the Secretary of the Department, as their
respective responsibilities require; or
(ii) in the case of a Notice to be given by the Joint Venturers, such Notice
is signed by a duly authorised representative of the Joint Venturers
or Joint Venturer as the case may be.
(b) Each such Notice shall, as elected by the Party giving such notice, be
personally delivered or transmitted by telex or facsimile to the other Party
at the address in Papua New Guinea as given below
111139327
64.
Notice to the State -
The Secretary
Department of Mining,
Konedobu, PNG
Telex No. NE22211
Answerback: VVABRO
Fax No: (675) 321-3701
Notice to the Joint Venturers -
The Manager
Ramu Nickel Limited
9* Floor, Pacific Place
Musgrave Street
Port Moresby, PNG
Fax No: (675) 321-7633
with copies to -
Highlands Pacific Limited
Level 4, 167 Eagle Street
Brisbane Qld 4000
Australia
Fax No: (61-7)3221-6727
Orogen Minerals (Ramu) Limited
Level 2, Ela Beach Tower
Musgrave Street
Port Moresby, PNG
Fax No: (675) 320 2209
33.2 Notices deemed given
Except as otherwise specified herein, all Notices shall be deemed to have been
duly given on the earlier of -
(a) the date of receipt if delivered personally;
(b) the next business day after the date of transmission with confirmed
answerback if transmitted by telex; and
(c) two (2) business days after the time recorded on the transmitting machine if
transmitted by facsimile, unless -
(i) within those two (2) business days the intended recipient has
informed the sender that the transmission was received in an
111339327
65.
incomplete or garbled form and is able subsequently to produce the
transmission evidencing the fact; or
(ii) the transmission result report of the sender indicates a faulty or
incomplete transmission.
Any Party may change its address by Notice to the other Parties in accordance
with the provisions of this Clause. All Notices and all documents or instruments
delivered in connection with this transaction shall be in the English language.
33.3 Plans, Proposals etc.
Where the Joint Venturers are required to submit any plans, proposals or other
material for the approval of the State, the date of submission shall be deemed to be
the date on which the State received those plans, proposals or other materials.
34. REPRESENTATIONS AND WARRANTIES
34.1 Representations and Warranties by Each party
Each of the Parties represents and warrants that:
(a) it has the capacity to enter into and perform its obligations under this
contract and that all corporate and other internal actions required to
authorise it to enter into and perform its obligations under this Contract
have been or will be properly taken;
(b) its execution, delivery and performance of this Contract have been duly
authorised by all required actions of its governing authority or owners and
do not and will not: ,
(i) violate any law, rule, regulation, order or decree applicable to it; or
(ii) violate its constitution or organisational docc ments;
(c) this Contract is a legal and binding obligation of the Party, enforceable
against that Party in accordance with its terms, except to the extent
enforceability is modified by bankruptcy, reorganisation and other similar
laws affecting the rights of creditors generally and by general principles of
equity; and
(d) it will not breach any other agreement or arrangement by entering into or
performing its obligations under this Contract and this Contract when
signed will have been duly executed by it and will be valid and binding
upon it in accordance with its terms.
34.2 Representations and Warranties by the Joint Venturers
Each Joint Venturer represents and warrants that:
111339327
66.
(a) it is duly organised, validly existing and in good standing under the laws of
its place of incorporation; and
(b) it has the corporate power to carry out the Project and achieve
Commencement of Commercial Production.
34.3 No Other Representations and Warranties
Except as set out in Clause 34.1 and 34.2 or expressly stated elsewhere in this
Contract, no representation, inducement or warranty was, prior to the execution of
this Contract, given or made by any one of the Parties with the intent of inducing
any other party to enter into this Contract, and any representations, inducements
or warranties that may have been so given are hereby den ed and negated.
35. WAIVER
The failure of any Party to enforce at any time any of the provisions of this
Contract shall in no way be construed to be a waiver of the provision or any part
thereof or the right of any Party thereafter to enforce each and every part of the
provision in respect of any subsequent default or breach.
36. SEVERABILITY
The provisions of this Contract shall be separate and severable each from the other
to the extent that if any provision or any portion of any provision is deemed to be
inoperative then the remainder of this Contract shall remain binding upon and
enforceable by the Parties. Nothing herein shall preclude one Party from
requesting any other Party to renegotiate any provision of this Contract.
37. FURTHER ACTS
The Parties shall execute such documents and do and perform such acts that lie
within their power and are necessary to give full effect to this Contract.
38. COUNTERPARTS
This Contract may be executed in any number of counterparts, each of which
executed shall be deemed to be an original, and such counterparts shall together
constitute one contract.
IN WITNESS WHEREOF this Contract has been duly executed by the Parties
2000.
111339327
67.
SIGNED for and on behalf of (he
INDEPENDENT STATE OF PAPUA NEW
GUINEA by the Governor General SIR Signature of Governor General
SILAS ATOPARE, G.C.M.G., K. St.J acting
with and in accordance with the advice of
the National Executive Council in the
SmhE 7lf-k!ica]
Name of witness
THE COMMON SEAL of RAMU NICKEL
LIMITED was affixed by authority of tlje
Board of Directors in the presence of, and the
sealine is attested by:
Signaturepf director
Stenatu
Name of faoutaiy • /?/Y C-c^fa fMOSoCjg-f M0/U-lM0tf.o
Name of director
111339327
68.
THE COMMON SEAL of OROGEN
MINERALS (RAMU) LIMITED was affix
by authority of the Board of Directors in th
presence of, and the sealing is attested by:
MI/Az.
Signature of Secretary
Mxmu 1. UtML ■T F
Name of Secretary Name of director
111339327
INDEPENDENT STATE OF PAPUA NEW GU NEA
Mining Act 1992
Mining Regulation 1992
Act, Sec. 33, 36
Reg Sec. 2 FORM 3
SPECIAL MINING LEASE No. 8
I, SILAS ATOPARE, G.C.M.G, K.SLJ, Governor General of the Independent
State of Papua New Guinea (the State) by virtue of the powers conferred by the
Mining Act 1992 (the "Act") and all powers me enabling, and in accordance with
the Mining Development Contract dated Jl, *Su&j, 2000 (the "Mining
Development Contract”) acting with and in accordance with the advice of the
National Executive Council, HEREBY GRANT to Ramu Nickel Limited, a
company incorporated in Papua New Guinea with its registered office at Level 9.
Pacific Place, Musgrave Street, Port Moresby, and Orogen Mnerals (Ramu)
Limited, a company incorporated in Papua New Guinea with its registered office
at Level 2, Ela Beach Tower, Musgrave Street, Port Moresby, (collectively
referred to as the "Lessee’) Special Mining Lease No. (the Lease') over land
situated at Kurumbukari in the District of Usino-Bundi in the Madang Province
and more particularly described in Appendix 1 (the “Land-), a;; may be varied
from time to time, for a term of Forty (40) years from the date hereof, and
such extensions of the term as may be endorsed hereon for the purpose of
mining minerals in accordance with the Act and subject to the following
conditions -
(1) The Lessee shall comply with the Approved Proposals for Development
attached hereto as Appendix 2, as may be varied from time to time;
(2) The Lessee shall adhere to the conditions of the Mining Development
Contract
(3) The Lessee shall commence construction of the Mine within 36months of
grant of the Special Mining Lease or from the date of financing being secured
whichever occurs first.
(4) Without limiting the obligations imposed on the Lessee, the Lessee shall
compensate the owners of land which is located within the boundaries of this
Special Mining Lease in accordance with the Act and the Approved Proposals
for Development;
(5) The Lessee shall provide the Department of Mining six monthly reports on
any exploration activity carried out on the Land;
(6) The Lessee shall construct or provide improvements on the Land,
substantially as specified in the Approved Proposals for Development, or as
otherwise agreed from time to time between the Lessee and the State;
(7) The Lessee shall not, without the consent of the State, wNch consent shall
not be unreasonably withheld, use the Land for any purpose other than for
which it was granted pursuant to the Act. the Mining Development Contract
and the Approved Proposals for Development;
(8) The Lessee shall use its best efforts to accommodate traoitional land uses to
the degree that such uses are consistent with efficient anc safe mining
practices and are compatible with the performance of the .essee's obligations
under the Mining Development Contract
(9) This Special Mining Lease, or any renewal thereof, may not be cancelled
under the Mining Act unless the Mining Development Con.ract has been
terminated and therefore this Special Mining Lease shall cnly terminate
(a) if the Mining Development Contract is properly terminated in
accordance with its terms or by the agreement of all the parties to
the Mining Development Contract for the time being; or
(b) on the expiry of its term including any extension thereof,
whichever occurs first.
•P^^dayof
Dated at Port Moresby this 2000.
Signed for and on behalf of the
INDEPENDENT STATE OF PAPUA
NEW GUINEA by Wqpvernor -general )
Sir SilSs'Atopare, G.CTfa G. K.St.J acting ) Governor General
with and in accordance with the advice of the )
National Executive Council in the presence of )
Witness Stymie /--f-N/o'd
Name (printed)
71.
SCHEDULE II
DUTIES ON IMPORTED GOODS
Under Customs Tariff Act 1990
Tariff Classification * General Description
Chapter 25 - all items Salt; sulphur; earths and stone; plastering materials, lime and
including: cement
2523.21.00
2523.29.00
Chapter 32: Paints, varnishes etc
3208.10.00
3208.20.00
3208.90.10
3208.90.90
3209.10.00
3209.90.10
3209.90.90
Chapter 34: Soap, detefgent, cleaning agents etc
3402.11.00
3402.12.00
3402.13.00
3402.19.00
3402.90.00
111339327
72.
Chapter 39 - all items Plastics and articles thereof
except:
3923.21.10
3923.21.30
3923.29.00
3923.3
3923.6
3923.90.90
39.24
3924.90.50
3926.40.00
Chapter 44 - all items Wood and articles of wood, wood charcoal
except:
44.13
4413.00.10
44.14
4415.20.00
44.18
44.19
44.20
44.21
4421.90.40 •
Chapter 68: Articles of stone, plaster, cement, asbestos, mica or similar
materials
68.08
6810.20.00
6810.91.00
68.12
111339327
73.
Chapter 69 - all items Ceramic products
except:
69.11
69.13
69.14
Chapter 72 - all items Iron and steel
including 7210.41.00
Chapter 73 - all items Articles of iron and steel
except:
7310.21.00
7310.29.10
7321.13.00
73.23
7323.99.10
Chapter 76 - all items Aluminium and articles thereof
except: $
7615.11.00
7615.19.10
Chapter 78 - all items Lead and articles thereof
including:
7806.00.20
7806.00.90
111339327
74.
Chapter 85 - all items Electrical machinery and equipment and parts thereof
including:
85.06
8507.1
Chapter 94: Prefabricated buildings
94.06
* As set out in Customs Tariff (Tariff Reform 1999) Act 1998
111339327