DATED 5 MARCH 2003
JOINT VENTURE AGREEMENT
BETWEEN
MIEN TRUNG INDUSTRIAL COMPANY (MINCO)
AND
NEW VIETNAM MINING CORP (NVMC)
2
JOINT VENTURE AGREEMENT
Based on the Law on Foreign Investment in Vietnam and other relevant legal
documents, the Parties mentioned hereinafter have signed a Joint Venture
Agreement to establish in the Socialist Republic of Vietnam a Joint Venture
Enterprise with the following contents:
1. MIEN TRUNG INDUSTRIAL COMPANY (called "Minco")
Address: Xxxx Xxxx, Xxxxx Xxxx, Xxxxx Xxx, Xxxxxxx
Phone: 00-000-000000/665022 Fax: 00-000-000000
Authorised Representative: Xx. Xxxxxx Xxxx Xxxxx;
Title: Director
Main line of business: Exploration, Exploitation, Processing and
Trading Minerals, Consulting on investment for mining activities and
mining design
Certificate of Operation: No 106994
Registered at: Economic Arbitration Danang Date: 30/07/1993
2. NEW VIETNAM MINING CORP (called "NVMC") a company incorporated in
British Columbia, Canada on 25 January 1994, and continued as an
International Business Company in the British Virgin Islands on 3 June
1997
Address: 1760 - 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, X.X, Xxxxxx, X0X0X0
Phone: 000 000 000 0000
Fax: 000 000 000 0000
Authorised Representative: Xx. Xxxx Xxxxxxxxx Seton
Title: Vice President
Main Line of Business: Mining Industry, Exploration, Development,
Operations and Management of Mines
Certificate of Incorporation: No: 463216 B.C LTD.
Registered at: British Virgin Islands Date: 25 January, 1994
Certificate of Change of Name: No: 463216
Registered at: British Virgin Islands Date: 07 February, 1994
Certificate of Continuation: No: 234416
Registered at: British Virgin Islands Date: 03 June, 1997
BACKGROUND
A. Minco and NVMC wish to cooperate in the exploration, development and
production of gold and other potential Minerals in the Project Area.
B. NVMC has the financial ability, technical competence and professional
skills necessary to carry out Mining Operations hereinafter described, and
has since 1998, pursuant to Exploration Licences 1953 & 1955 QD DCKS issued
by Vietnam's Ministry of Industry, carried out exploration on the Project
Area.
C. NVMC has determined that the Project Area contains a commercial discovery
which would support a Decision to Mine and intends to commence production
in conjunction with continued exploration of the Project Area.
D. The Parties wish to enter into a joint venture accordingly for the purpose
set out above.
E. To establish the Joint Venture Enterprise, Minco and NVMC have agreed to
enter into this Agreement, which will govern all matters concerning each
Party's interest in the Joint Venture and the Enterprise, including the
applications for Investment, Exploration and Mining Licences relating to
the Project Area.
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AGREEMENT:
PRELIMINARY
1.0 DEFINITIONS
1.1 Unless the context otherwise requires, the terms used in this
Agreement shall have the meanings set out below:
"AGREEMENT" means the Joint Venture Agreement set forth herein
and includes any schedules and provisions contained
in such schedules and any amendments thereto in
accordance with clause 28.2;
"BOARD OF MANAGEMENT" means the board of management of the Enterprise as
and/or "BOARD" defined in clause 19.1;
"CHARTER" means the charter of the Enterprise, executed
contemporaneously with this Agreement and as
registered with MPI, as it may be amended from time
to time;
"COMMENCEMENT DATE" means the date of execution of this Agreement;
"DECISION TO MINE" means a decision to establish and develop a mine in
the Project Area, taken by the Board under Section
9.0;
"DECREE 24" means Decree No. 24/2000/ND-CP dated 31 July 2000
as it may be amended, replaced or supplemented at
any time and from time to time by the Vietnamese
Government;
"EFFECTIVE DATE" means the date upon which the Investment Licence is
issued;
"ENTERPRISE" means the limited liability company to be
established by the Parties, by the registration of
the Charter in Vietnam, to carry out the Project as
provided for in this Agreement;
"EXPENDITURE" means all monies properly expended or to be
expended on the Project by the Enterprise or the
Parties pursuant to this Agreement, and includes
(but not in limitation) all capital expenditure and
costs involved in -
(a) establishing the Enterprise,
(b) carrying out Exploration Activities,
(c) the design and construction of the Mining
Facilities,
(d) conducting Mining Operations,
(e) any other expenses incurred by the Parties,
properly chargeable to the Enterprise;
"EXPLORATION means all activities and operations conducted for
ACTIVITIES" the purpose of delineation, assessment and the
geological examination of the Minerals including,
but not limited to, all geochemical and geophysical
surveys, drilling, sampling, aerial surveys,
electromagnetic and radiometric surveys to enable
the preparation of a Feasibility Study whether
conducted prior or pursuant to this Agreement;
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"EXPLORATION AREA" means the area which is more particularly described
in Schedule A, as changed by an extension or
reduction in accordance with this Agreement from
time to time with the approval of the licensing
authority;
"EXPLORATION LICENCE" means a licence issued by the Government on terms
acceptable to the Enterprise which authorises the
Enterprise to carry out Exploration Activities and
gives special rights for a Mining Licence;
"FEASIBILITY STUDY" means a study carried out for the purpose of
gathering information for use in or capable of
being used in the preparation of a formal detailed
study designed to determine the commercial
viability of Mining Operations and includes such
study in a format which is capable of being used
for the purpose of securing from financial
institutions, capital funds for Mining Operations,
and upon which a decision whether or not to conduct
Mining Operations can be properly based;
"FOREIGN INVESTMENT means the Law, Decree 24 and all other Vietnamese
LEGISLATION" Laws solely applicable to foreign investment under
the Law;
"FOREIGN PARTY" includes NVMC and any other foreign enterprise
which is admitted as a party to this Agreement and
accedes to this Agreement at any time during the
Term;
"GOVERNMENT" means the Government of Vietnam (including the
Prime Minister) and its State Committees,
Ministries, General Departments, Agencies and
Instrumentalities and also includes local People's
Committees, Departments and Authorities;
"INVESTMENT LICENCE" means a foreign investment licence issued by MPI
under the Foreign Investment Legislation, which
authorises the Enterprise to carry out the Project
in the manner contemplated by the Charter and this
Agreement and which is otherwise on terms
acceptable to the Parties, as that licence may be
extended, amended, varied, supplemented or replaced
from time to time by MPI or other relevant
licensing authority;
"JOINT VENTURE" means the contractual relationship of the Parties
that shall come into existence pursuant to Section
2.0;
"LAND LAW" means the Law on Land dated 14 July 1993, as
amended by Law No.10/1998/QH10 dated 2 December
1998 and Law No.25/2001/QH10 dated 29 June 2001,
the Ordinance on the rights and obligations of
foreign organisations and individuals leasing land
in Vietnam promulgated on 14 October 1994 and
Decree No. 11/CP dated 24 January 1995 of the
Government implementing that Ordinance together
with the regulations on rentals for leasing land,
water and sea surfaces applicable to foreign
investment in Vietnam under Decision No.
189/2000/QD-BTC dated 24 November 2000 of MOF;
"LAW" means the Law on Foreign Investment in Vietnam
dated 12 November 1996 as amended by the Law dated
9 June 2000 amending, and adding to, the Law on
Foreign Investment in Vietnam dated 12 November
1996 and as those Laws may be subsequently amended,
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replaced or supplemented at any time and from time
to time by the National Assembly;
"LEGAL CAPITAL" means the legal capital of the Enterprise as set
out in its Charter and more particularly described
in Section 4.0;
"LEGAL CAPITAL means the Parties respective contribution to the
CONTRIBUTION" Legal Capital as described in Section 4.0;
"LOAN CAPITAL" means the part of the Total Invested Capital not
contributed as Legal Capital which the Enterprise
may borrow from the Parties or from third parties;
"MINERALS" means all natural deposits and natural
accumulations containing ores, minerals and/or
basic chemical elements of all kinds, either in
elemental form or in association or chemical
combination with other metallic or non-metallic
elements (with the exception of hydrocarbon
compounds, coal and radioactive Minerals) located
in the Project Area including gold, precious
metals, and other associated metals and minerals;
"MINING AREA" means the area known as Bai Go and Bai Dat
which is more particularly described in Schedule A
as changed by an extension or reduction in
accordance with this Agreement from time to time
with the approval of the licensing authority;
"MINING FACILITIES" means the plant, facilities and infrastructure
built or brought onto the Project Area for the
purpose of mining, milling, crushing, separating,
concentrating, smelting, refining, packaging,
storing or transporting the Minerals;
"MINING LICENCE" means a licence issued by the Government on terms
acceptable to the Enterprise to carry out Mining
Operations on the Project Area or any part of it;
"MINING OPERATIONS" means all activities conducted for the purpose of
constructing the mine and work or activity of
mining, removing, extracting, treating, drying,
packaging and handling the Minerals from the
Project Area by open pit or underground mining or
alluvial mining or any other methods now known or
hereafter developed;
"MOF" means Vietnam's Ministry of Finance;
"MPI" means Vietnam's Ministry of Planning and Investment
which is responsible for the approval and issue of
foreign investment licences under the Foreign
Investment Legislation;
"PARTICIPATING means, in relation to each Party its percentage
INTEREST" of -
(a) ownership of the Legal Capital from time to
time, and
(b) obligation to contribute to Expenditure, and
(c) beneficial ownership as a tenant in common of
an undivided share in all assets held by the
Enterprise, and
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(d) the right to receive in kind and dispose of
for its own account Minerals (in whatever
form) derived from the Project Area, and
(e) all other rights, liabilities and obligations
in accordance with this Agreement,
as set out in clause 4.2, or as varied from time to
time;
"PARTIES" means the Vietnamese Party and the Foreign Party
and their respective successors and permitted
assignees, and "Party" means any of them as
appropriate;
"PROJECT" means the conduct of Exploration Activities, the
preparation of Feasibility Studies and, if so
decided as described herein, the design and
construction of Mining Facilities and the conduct
of Mining Operations in the Project Area pursuant
to this Agreement and to ultimate sale of Minerals
recovered as a result of Mining Operations;
"PROJECT AREA" means the area particularly described in Schedule A
in which all exploration and mining will be
conducted (incorporating the Mining Area and the
Exploration Area), as changed by an extension or
reduction in accordance with this Agreement from
time to time with the approval of the licensing
authority;
The Project Area of 70 xx.xx in Xxxxx Son and Xxx
Xxxxx Districts, Xxxxx Xxx Province as presented in
Schedule A with the following coordinates:
UTM COORDINATE
------------------------
POINT Y (UTM) X (UTM)
----- ---------- -----------
A 789525,748 1720981,794
B 793707,815 1716337,319
C 793313,984 1715982,713
D 795200,000 1713888,080
E 795200,000 1705850,000
F 791250,000 1705850,000
G 791250,000 1709255,760
H 787112,749 1713850,643
I 787079,617 1718779,468
"TERM" means the period of time from the Commencement Date
to the Termination Date or such earlier or later
date of termination pursuant to this Agreement;
"TERMINATION DATE" means the date thirty (30) years after the
Effective Date or such later date agreed to by MPI
pursuant to clause 5.2;
"THIRD PARTIES" means any person other than the Parties;
"TOTAL INVESTED means the total amount to be invested by the
CAPITAL" Enterprise in order to complete the Project as
stated in the Investment Licence and as
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particularly described in Section 13.0, as that
amount may be amended from time to time;
"USD" means the lawful currency of the United States of
America;
"VIETNAM" means the Socialist Republic of Vietnam;
"VIETNAMESE LAW" means all legislation issued by the National
Assembly, the Standing Committee of the National
Assembly and the Government, in force from time to
time including, but not limited to, laws,
ordinances, decrees, circulars, official letters,
decisions and other pronouncements.
"VIETNAMESE PARTY" includes Minco and any other Vietnamese enterprise
which is admitted as a party to this Agreement and
accedes to this Agreement at any time during the
Term.
1.2 For the purpose of the interpretation or construction of this
Agreement:
1.2.1 except where the context otherwise requires, words importing
the singular include the plural and vice versa, and one
gender includes the other genders;
1.2.2 headings have been inserted for convenience only and shall
not affect the interpretation of this Agreement;
1.2.3 a "person" includes natural persons, firms, companies and any
other bodies, associations or organisations;
1.2.4 references to dates and times are to Vietnamese dates and
times;
1.2.5 references to monetary amounts are to USD;
1.2.6 references to sections, clauses, subclauses and schedules are
references to sections, clauses, subclauses and schedules in
or to this Agreement;
1.2.7 any expression related to an expression defined in this
Agreement shall have a meaning corresponding to the defined
expression;
1.2.8 any schedules to this Agreement and the provisions and
conditions contained in such schedules shall have the same
effect as if set out in the body of this Agreement;
1.2.9 references to any statute refer also to any regulation, order
and notice made under or pursuant to the statute or
regulations made under the statute;
1.2.10 references to laws, ordinances, decrees, regulations,
decisions, circulars and codes refer also to laws,
ordinances, decrees, regulations, decisions, circulars and
codes amending, consolidating or re-enacting those referred
to;
1.2.11 any covenant not to do anything also constitutes an
obligation not to suffer, permit or cause that thing to be
done;
1.2.12 a right granted or reserved may be exercised from time to
time and at all times;
1.2.13 the illegality, invalidity or unenforceability of any
provision in this Agreement shall not effect the legality,
validity or enforceability of any other provision.
ESTABLISHMENT
2.0 ESTABLISHMENT OF JOINT VENTURE
2.1 The Parties hereby associate themselves in a joint venture to
establish the Enterprise in accordance with the Foreign Investment
Legislation to carry out the following objectives and all related
activities upon and subject to the terms and conditions of this
Agreement and the
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(a) to carry out the Project;
(b) to carry out all other Exploration Activities;
(c) to carry on business in all products extracted or derived from
the Project; and
(d) to carry out all other activities in accordance with Vietnamese
Law which are, or may be, incidental or ancillary to the
foregoing,
in accordance with good and acceptable international practice and, in
undertaking these objectives, the Enterprise has all the powers of a
juridical person including, without limitation, the power to borrow,
provide security, issue guarantees, open bank accounts in accordance
with regulations and to enter into and perform contracts.
2.2 The Parties shall share profits and losses in proportion to their
respective Participating Interests.
2.3 The duration of the Joint Venture will be for the Term, unless
liquidated prior to the expiry of that period in accordance with the
Foreign Investment Legislation or by agreement between the Parties.
2.4 The relationship of the Parties shall be one of joint venturers. The
rights, duties, obligations and responsibilities of the Parties shall
be several and not joint and several. Neither this Agreement nor any
activities of any Party referred to herein shall create any
partnership, association, trust or other relationship under which any
one or more of the Parties may be liable generally for the acts or
omissions of any other Party or Parties, nor should this Agreement be
considered or interpreted as constituting any Party the partner, agent
or representative of the other Party except when otherwise expressly
provided for. In particular, but without limitation, no Party shall
have authority to pledge the credit of the other.
3.0 ESTABLISHMENT OF THE ENTERPRISE
3.1 The Parties hereby agree to establish the Enterprise in accordance
with the Foreign Investment Legislation:
(a) Name of Enterprise:
in English: Xxxxx Son Gold Company
Limited ; in
in Vietnamese: Cong Ty TNHH Xxxx Xxxxx Son
transaction name: PSGC
(b) Addresses of Enterprise
Head office at Xxxx Xxx Town,
Xxxxx Son District, Xxxxx Xxx
Province;
Main production factory at Dak
Sa, Xxxxx Xxx Commune,
Xxxxx Son District, Xxxxx Xxx
Province;
Representative office in Da Nang;
(c) Production capacity: app. 100,000 tpa of ore (initially);
(d) Products of the Enterprise to be marketed
domestically 0%.
internationally 100%;
(e) Enterprise's undertaking mining using modern technology,
processing recovering useful minerals with the maximum rate (over
90%), environmental protection according to Vietnamese Laws and
international environment law.
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3.2 The Parties agree that, contemporaneously with executing this
Agreement, they will execute the Charter which, upon approval and
registration by MPI, will establish the Enterprise under Vietnamese
Law.
3.3 The Enterprise shall be organized and managed in accordance with the
terms of this Agreement and the Charter.
4.0 CAPITAL AND RESPONSIBILITIES
4.1 The Legal Capital of the Enterprise shall be THREE MILLION UNITED
STATES DOLLARS (USD 3,000,000.00) contributed by the Parties in
proportion to their respective Participating Interests and in the
manner set out below.
4.2 At the Effective Date the Participating Interest of the Parties shall
be as follows:
4.2.1 MINCO - FIFTEEN PER CENT (15%)
4.2.2 NVMC - EIGHTY FIVE PER CENT (85%)
The Parties shall continue to hold such Participating Interests
throughout the Term except as provided for in this Agreement and the
Charter.
4.3 MINCO's Legal Capital Contribution of FOUR HUNDRED AND FIFTY THOUSAND
UNITED STATES DOLLARS (USD450,000) will be provided by MINCO deferring
its rights to receive all distributions of profits to which it is
entitled under Section 14.0 until its contribution to Legal Capital
has been recovered in full. If at any time the cash flow requirements
of the Enterprise require the Parties to make contributions to Legal
Capital under Section 13.0 and there are no distributions of profits
available to MINCO tor that purpose, MINCO will borrow the funds
necessary either from other parties then holding Participating
Interests under this Agreement (but those parties are not obligated to
loan the funds to MINCO) or from a third party on terms agreed and
satisfactory to those other parties.
4.4 MINCO will also:
4.4.1 liaise with local and central government to ensure co-operation
and the efficient resolution of local and central government
administrative matters;
4.4.2 use their best endeavours to expedite the grant to the
Enterprise of the Exploration Licence and if appropriate the
Mining Licence; and
4.4.3 provide the Enterprise with all assistance and advice on matters
of procedure and protocol in Vietnam.
4.5 NVMC's Legal Capital Contribution of XXX XXXXXXX XXXX XXXXXXX XXX
XXXXX XXXXXXXX XXXXXX XXXXXX DOLLARS (USD 2,550,000) will be paid by
NVMCas to USD 2,550,000 by credit of prior Exploration Expenditure.
4.6 NVMC will also:
4.6.1 provide the Enterprise with all available geological information
concerning the Project Area that it has prepared;
4.6.2 provide the benefit of its knowledge and expertise in modern
mining and exploration practice; and
4.6.3 arrange third party loans to the Enterprise (subject to Board
approval).
4.7 The parties undertake to contribute their respective Capital
Contributions fully and on time
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4.8 Any Party unable to complete Capital Contributions as scheduled in
this section shall inform the other Party of the reasons therefor and
the measures to be taken by that Party in order to resolve the
situation at least twenty (20) days in advance.
5.0 TERM AND TERMINATION
5.1 This Agreement shall commence on the Commencement Date and terminate
on the Termination Date, but this Agreement shall terminate earlier
if:
5.1.1 the Investment Licence or any extension thereof expires, is
terminated, cancelled or revoked;
5.1.2 notice of termination is given in accordance with clauses 6.3
and 10.3;
5.1.3 the Parties agree in writing to the early termination of this
Agreement;
5.1.4 notice of termination is given pursuant to clause 25.1.4;
5.2 The parties may by agreement extend this Agreement, which extension
shall be subject to approval by MPI.
5.3 Where this Agreement is terminated under clause 5.1, other than as a
result of a default by the Foreign Party, the Vietnamese Party is
required to purchase the Participating Interest of the Foreign Party
for a price agreed between the Parties and, if no agreement is reached
within thirty (30) days from the date of termination, then the price
will be determined by an international accounting firm nominated by
the Foreign Party, who will value the Participating Interest of the
Foreign Party on the basis that the Enterprise is a going concern and
will continue to enjoy full use and benefit of its assets for a
minimum period of twenty (20) years, including any right to use land
or to lease land held by the Enterprise immediately before this
Agreement was terminated.
5.4 It is acknowledged that the transfer contemplated by clause 5.3
requires the approval of the Board. The Parties agree to ensure that
their nominated Board members vote in favour of the transfer. If the
Board does not approve the transfer and the Enterprise is to be
liquidated or dissolved, then the Vietnamese Party will nevertheless
pay the price calculated in accordance with clause 5.3 to the Foreign
Party and following that payment the Vietnamese Party is fully
entitled to all of the balance upon liquidation.
5.5 Subject to clause 5.3 or unless the Parties otherwise agree, on
termination of this Agreement in accordance with clause 5.1, the
Enterprise will be dissolved as provided in the Charter and the
Parties will take the steps required to bring about this liquidation.
5.6 It is recognised by the Parties that dissolution of the Enterprise
requires the unanimous approval of the Board. Where clause 5.5
operates, the Parties agree to direct their nominated members of the
Board to vote in favour of the dissolution.
5.7 If for any reason neither clause 5.3 or clause 5.4 operates, the
liquidation committee referred to in the Foreign Investment
Legislation ("LIQUIDATION COMMITTEE") applies the following
guidelines:
5.7.1 The physical assets of the Enterprise shall be assessed and
valued at market value by an independent third party experienced
in assessing the value of the types of assets owned or held by
the Enterprise ("MARKET VALUE");
5.7.2 In valuing and selling physical assets, the Liquidation
Committee shall use every effort to obtain the highest possible
price for those assets;
5.7.3 If an asset of the Enterprise is sold or transferred to, or
retained by, a Party at a value lower than the market value
assessed for that asset under clause 5.7.1, then that asset is
deemed to have been sold or transferred to, or retained by, that
Party at its market value for the purposes of calculating that
Party's share of the distribution of assets of the Enterprise
under this clause 5.7.
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5.8 The provisions of Sections 22.0, 24.0, 26.0 and 28.0 and the
provisions of clauses 5.3 to 5.7 inclusive survive the termination of
this Agreement.
PROCEDURE
6.0 INVESTMENT LICENCE
6.1 As soon as possible after the execution of this Agreement the Parties
will lodge the Feasibility Study that has been prepared by NVMC
together with this Agreement, the Charter and such other documents as
may be required, with MPI in application for the Investment Licence.
6.2 In making an application for the Investment Licence the Parties shall
apply for all taxation benefits, concessions and other preferential
treatment offered pursuant to the Foreign Investment Legislation and
in particular shall apply for the taxation benefits, concessions and
other preferential treatment as detailed in Schedule B.
6.3 In the event that:
6.3.1 the Investment Licence is issued upon terms and conditions which
are inconsistent with the Parties' application referred to above
and/or with the terms and conditions of this Agreement; or
6.3.2 the Investment Licence is issued upon terms and conditions which
are unacceptable to the Parties; or
6.3.3 the Investment Licence does not issue within four (4) months
from the date of lodgement of the application for an Investment
Licence with MPI (or such later date as the Parties may agree in
writing); then any party may terminate this Agreement and the
Charter by notice in writing to the other Party.
6.4 The parties record that a Feasibility Study has been prepared and
adopted, a Decision to Mine has been taken, and an application for
Mining Licence will be lodged, with respect to the Mining Area. The
provisions of Sections 7.0, 8.0, 9.0 and 10.0 are inserted primarily
in reference to the Exploration Area.
7.0 EXPLORATION
7.1 The Parties acknowledge that an application for an Exploration Licence
over all the Exploration Area has been submitted by NVMC on behalf of
the Enterprise. The Vietnamese Party will do everything necessary to
ensure that it is granted on terms acceptable to the Parties.
7.2 As soon as practicable after the Effective Date the Enterprise will
commence Exploration Activities to determine what parts of the
Exploration Area are most prospective for Mining Operations.
7.3 The Enterprise may relinquish all or any of the Exploration Area at
any time or from time to time during the term of this Agreement and
may apply to have further areas included in the Exploration Area and
the Project Area.
8.0 FEASIBILITY STUDY
8.1 The General Director, with the prior approval of the Board of
Management, may commission the carrying out of a Feasibility Study of
the type suitable for securing finance for mine development of any
suitable deposit in the Project Area.
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8.2 The Feasibility Study will include but not necessarily be limited to
the following:
8.2.1 a thorough geological investigation of all or part of the
Project Area and establishment of proven ore reserves as
defined by the Australian Institute of Mining and Metallurgy as
being sufficient to support a Mining Operation;
8.2.2 a thorough study of the metallurgical properties of the ore;
8.2.3 an analysis of likely mining conditions, the identification of
suitable mining techniques and the costing of the same;
8.2.4 investigation into the design and cost of a suitable processing
plant;
8.2.5 market research to determine the demand and likely price of the
product;
8.2.6 investigation and costing of options for the disposal of mine
waste and tailings;
8.2.7 selecting a suitable site and costing the establishment of any
permanent settlement required to support the proposed mining
operation;
8.2.8 a study of likely significant environmental effects resulting
from the establishment of a mine and any required supporting
infrastructure;
8.2.9 investigation of available options and costs of providing
suitable supplies of water and power to the mine and plant;
8.2.10 undertaking a thorough financial analysis of the project model
based on the results of the preceding items with such analyses
to include prospective cash flow and rates of return on
investment capital from mining;
8.2.11 an investigation into the feasibility of establishing Mining
Operations.
9.0 DECISION TO MINE
9.1 Any Decision to Mine shall be made by the Board of the Enterprise
following review and acceptance of a Feasibility Study.
9.2 If after completion of a Feasibility Study the General Director
recommends the establishment and development of a mine in the Project
Area then such recommendation shall be submitted to the Board for
approval.
9.3 If the General Director determines at any time that such establishment
and development should be discontinued he/she shall submit a detailed
recommendation setting forth the reasons for such recommendation to
the Board for approval not to continue with the mine establishment and
development.
9.4 Upon the Board making a Decision to Mine and subject to them being
satisfied that the project can or will be funded, and upon grant of
the Mining Licence, the General Director shall immediately commission
the design of the Mining Facilities.
9.5 Any decision to commence construction of the Mining Facilities shall
be made by the Board based on the design of the Mining Facilities
commissioned by the General Director as such design may be amended
prior to tabling with the Board of Management.
10.0 MINING LICENCE
10.1 Once a Decision to Mine has been made, the Parties will lodge the
Feasibility Study together with all documents as may be required, with
the Government in application for the Mining Licence.
10.2 In making an application for the Mining Licence the Parties shall
apply for all benefits, concessions and other preferential treatment
offered pursuant to the Foreign Investment Legislation and in
particular shall apply for any benefits, concessions and other
preferential treatment as detailed in Schedule B not already granted
in the Investment Licence.
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10.3 In the event that:
10.3.1 the Mining Licence is issued upon terms and conditions which
are inconsistent with the Parties' application and/or with the
terms and conditions of this Agreement; or
10.3.2 the Mining Licence is issued upon terms and conditions which
are unacceptable to the Parties; or
10.3.3 the Mining Licence does not issue within four (4) months from
the date of lodgement of the application (or such later date as
the Parties may agree in writing); then any party may terminate
this Agreement and the Charter by notice in writing to the
other Party. For the avoidance of doubt, the provisions of
clause 10.3 shall also apply to any Mining Licence granted over
the Mining Area.
10.4 Upon grant of a Mining Licence over the Mining Area, Mining Operations
in the Mining Area shall be implemented as follows:
10.4.1 Construction - from month 2;
10.4.2 Equipment installation from month 4;
10.4.3 Trial Operation from month 9; and
10.4.4 Official production from month 11.
11.0 MATERIAL AND LABOUR
11.1 The Parties shall ensure that, wherever possible or practicable the
Enterprise shall utilise materials produced or manufactured in Vietnam
where such use would not be prejudicial to the Project.
11.2 The Enterprise shall wherever possible, but subject to the provisions
of this Section 11.0, use the services of Vietnamese citizens as
consultants, employees and contractors subject to their experience,
technical competence and costs being competitive on the international
market and acceptable to the Enterprise.
11.3 The Enterprise and its sub-contractors may bring into Vietnam such
expatriate individuals as in the Enterprise's judgment are required to
carry out operations efficiently.
11.4 NVMC shall be entitled to carry out necessary managerial, technical
and administrative services for the Enterprise, and charge normal
commercial rates for doing so.
11.5 Throughout the Term the Enterprise will provide an environment
conducive to the training of unskilled and skilled labour and
technical and professional personnel who are Vietnamese citizens, so
that expatriate employees of the Enterprise will be reduced to the
minimum level of efficient practical operation as soon as possible.
11.6 The Parties agree to comply where practicable with the requirements of
Vietnamese Law in relation to the terms and conditions of employment
of Vietnamese citizens.
12.0 ENVIRONMENT
12.1 The Parties shall ensure that in carrying out the Project, the
Enterprise shall have regard to the surrounding environment and shall
seek to protect the natural environment to the extent to which it is
possible to do so having regard to the nature of the Project, such as
rehabilitation of cultivated land.
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FINANCIAL
13.0 TOTAL INVESTED CAPITAL AND FINANCING
13.1 The Total Invested Capital of the Enterprise (as referred to in
Article 14.1 of Decree 24) will depend on the scope of the operations
undertaken by the Enterprise and cannot be accurately determined at
the date of this Agreement. For the purposes of the Foreign Investment
Legislation, the Total Invested Capital of the Enterprise (as referred
to in Article 14.1 of Decree 24) has been estimated at approximately
TEN MILLION UNITED STATES DOLLARS (USD 10,000,000.00), although this
estimate is subject to variation. Capital costs are detailed in
Schedule C.
13.2 After the Effective Date the Parties may be called upon to contribute
their Legal Capital Contributions and thereafter to provide in
proportion to their Participating Interests, (whether by way of debt
or equity or as otherwise agreed) such funds as may be required to
meet Expenditure, pursuant to clause 13.3.
13.3 The General Director may from time to time under authorisation from
the Board (but not less than thirty (30) days in advance of any period
requiring funds pursuant to an approved programme and budget) as and
when required request in writing from the Parties liable to make the
same, contribution of funds (either by way of an increase in Legal
Capital Contributions, loans or otherwise as agreed by the Parties) to
meet required Expenditure. The funds so requested shall be due and
payable to the Enterprise thirty (30) days after the date of the
request or such longer period as the Board may determine.
13.4 Notwithstanding the above, if the Board of the Enterprise so
determines, the Enterprise may arrange finance from a third party on
terms it thinks fit in lieu of any part of the funds to be provided by
the Parties. The Parties shall remain liable to provide funding to the
Enterprise in proportion to their Participating Interests for any
amount required by the Enterprise to meet Expenditure, but not funded
by way of such third party financing.
14.0 DISTRIBUTION OF PROFITS
14.1 Subject to clauses 14.3 and 14.4, the after tax profit of the
Enterprise (that is, the net profit after deducting expenses, loan
repayments and taxes, recovery of capital where allowed by Vietnamese
Law and setting aside any amounts for any reserve fund) may be divided
each year in proportion to each Party's Participating Interest. The
amount of such after-tax profits distributed to the Parties shall be
determined by the Board, which shall also determine the portion of the
after-tax profit to be entered into any reserve fund.
14.2 If the profit and loss statement in any particular year results in a
loss that cannot be covered by any reserve fund then the said loss
shall be recorded in and entered into the profit and loss statement
and be carried forward in to the succeeding year or years but not
exceeding five (5) years and the Enterprise shall be deemed not to
have made any profits until such time as the loss recorded in and
entered in to the profit and loss statement has been completely
covered.
14.3 With the approval of the Parties, the Board may create whether out of
profits of the Enterprise or otherwise, such reserve funds and for
such purposes, as it may see fit.
14.4 Where cash flow is adequate, the Board may make distributions of
profit (after properly providing for all anticipated expenses and
taxes) on a three monthly basis.
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15.0 TRANSFER OF LEGAL CAPITAL
15.1 Subject to the provisions of this section, and subject to the Foreign
Investment Legislation and the Charter, a Party shall be free to
transfer all or part of its Participating Interest to another person
or enterprise.
15.2 Any Party (the "ASSIGNING PARTY") wishing to transfer all or part of
its Participating Interest (the "OFFERED INTEREST") shall first offer
the same to the other Party (the "NON-ASSIGNING Party") upon such
terms and conditions as it sees fit. Any such offer is revocable. In
the event that the Non-Assigning Party does not agree within one (1)
month after receipt of such offer, to acquire the Offered Interest
upon such terms and conditions, the Assigning Party shall be free to
sell and transfer the Offered Interest to any third party on terms and
conditions which are not more favourable than those offered to the
Non-Assigning Party.
15.3 The transfer by the Assigning Party to a third party (the "PROPOSED
ASSIGNEE") of the Offered Interest shall be conditional upon the
Proposed Assignee executing an Agreement with the Non-Assigning Party
under which the Proposed Assignee agrees to be bound by all of the
provisions of this Agreement and to assume, observe and perform all
the obligations and liabilities of the Assigning Party hereunder and
under the Charter, limited only to the extent of the Participating
Interest received by and held by the Proposed Assignee from the
Assigning Party, and otherwise as though the Proposed Assignee was an
original Party hereunder and under the Charter. No such assignment
shall relieve the Assigning Party of any liability arising before the
transfer is effected.
15.4 Each Party may for the purposes of financing its obligations hereunder
and other costs associated with such financing, with the consent of
the other Party, mortgage or encumber all or any part of its
Participating Interest and its right, title and interest hereunder
provided that such Party who so mortgages or encumbers its interest
shall ensure that such mortgage or encumbrance shall contain a clause
that on any sale held in enforcement of the same, the interest being
sold shall be first offered to the other Party to this Agreement on
the terms and conditions contained herein.
15.5 If either Party transfers all or any part of its Participating
Interest to a third party, the Assigning Party may also assign to such
third party the same proportion of any debts owed to it by the
Enterprise and/or by the Non-Assigning Party. Such assignment of
indebtedness may be effected by the Assigning Party serving a notice
of assignment on the debtor (namely, the Enterprise and/or the
Non-Assigning Party) and, from the time such notice is properly
served, the debtor will thereafter owe the relevant proportion of such
debts to the third party.
15.6
15.6.1 At the expiration of five (5) years from the end of the period
in which the Enterprise makes profits for twelve (12)
consecutive months ("FIRST PROFIT MAKING PERIOD"), the
Vietnamese Party may acquire from the Foreign Party a
proportion of the Foreign Party's Participating Interest in the
Enterprise so that upon completion of that acquisition the
Participating Interests of the Parties for all of the purposes
of this Agreement will be:
Vietnamese Party- 30%
Foreign Party- 70%.
15.6.2 At the expiration of twenty (20) years from the end of the
First Profit Making Period, the Vietnamese Party may acquire
from the Foreign Party a further proportion of the Foreign
Party's Participating Interest in the Enterprise so that upon
completion of that acquisition the Participating Interests of
the Parties for all of the purposes of this Agreement will be:
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Vietnamese Party- 50%
Foreign Party- 50%.
15.6.3 Any acquisition under clause 15.6.1 or 15.6.2 will be made by
the Vietnamese Party paying to the Foreign Party the fair
market value of the interest being acquired. The fair market
value shall be agreed between the Parties and if the Parties do
not agree that value within two (2) months from the date on
which the Vietnamese Party became entitled to acquire that
interest, the fair market value shall be assessed by Ernst &
Young (or its successor) and that assessment will be final and
binding on the Parties. Upon payment of the agreed or assessed
acquisition price by the Vietnamese Party and the Foreign
Party, the Parties will execute an assignment agreement and
register the assignment with MPI under Article 33 of Decree 24.
15.6.4 If the Vietnamese Party fails to proceed with an acquisition
under clause 15.6.1 within three (3) months from the date on
which the Vietnamese Party became entitled to acquire the
relevant interest, the Vietnamese Party will be regarded as
having waived the right to make that acquisition, but that does
not prevent the Vietnamese Party from exercising its right to
make an acquisition under clause 15.6.2. However the
acquisition under clause 15.6.2 must be made within three (3)
months from the date on which the Vietnamese Party became
entitled under clause 15.6.2 to make that acquisition,
otherwise it will be regarded as having waived the right to
make that acquisition.
16.0 ACCOUNTING PRINCIPLES
16.1 Books of account shall be maintained by the Enterprise and shall be
based on international accounting principles and standards approved by
the Board and recognised by the MOF.
16.2 The Board may apply to the MOF for adoption of a financial year which
corresponds to the financial year of one or both of the Parties and if
the MOF approves such application, the financial year of the
Enterprise shall be the financial year so approved.
16.3 At the end of each financial year of the Enterprise, the Board shall
cause to be drawn up a set of financial statements for the Enterprise
(including a balance sheet and profit and loss statement) and shall
also prepare a report of the Board and any other relevant financial
statements. The aforesaid financial statements and report of the Board
shall be prepared in accordance with all relevant provisions of the
Foreign Investment Legislation and shall be approved by a resolution
of the Board and signed by the Chairman.
16.4 After the financial statements and the report of the General Director
have been approved by the Board and signed by the Chairman, they shall
be submitted to the auditor of the Enterprise approved from time to
time by the MOF to audit the accounts.
16.5 The approved statements of the Enterprise and the report of the Board
shall be submitted to MPI, the income tax authorities under MOF and
other relevant authorities as stipulated within three (3) months after
the end of the Enterprise's financial year and a copy of such
statements, authenticated by the Chairman, shall also be provided to
each Party.
17.0 BANKING AND INSURANCE
17.1 The Enterprise shall maintain bank accounts in USD and Vietnamese dong
with a Vietnamese Bank, or such other bank as the Board determines in
accordance with the law. Signatories to all bank accounts shall be
determined by the Board.
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17.2 The required insurance cover for the Vietnamese employees of the
Enterprise shall be arranged through insurance companies in Vietnam or
such other international insurance company as the Enterprise may
nominate from time to time.
17.3 The Enterprise shall obtain appropriate insurance cover through an
insurance company or companies operating in Vietnam or such other
international insurance companies as the Enterprise may nominate from
time to time for personal accident covering employees, consultants,
contractors and third parties, loss or damage to property of the
Enterprise either in transit or on site, and general public liability
insurance.
18.0 SALE OF PRODUCT
18.1 The Enterprise reserves the right to sell gold bullion, bar or other
gold product or any other product of Mining Operations through its
nominated agent in such places as the Enterprise may from time to time
nominate or to distribute the product to the Parties in proportion
with their Participating Interest.
18.2 Revenue from the sale of gold will be deposited in the name of the
Enterprise in the USD account (or such other currency account as the
Parties may from time to time agree) maintained with such Bank either
within or outside Vietnam as the Board determines pursuant to the
regulations of the State Bank of Vietnam.
18.3 Funds sufficient to cover the following expenditures will be remitted
to the Enterprise's accounts in Vietnam:
18.3.1 operating costs of the Enterprise required to be paid in
Vietnam;
18.3.2 Vietnamese business income tax;
18.3.3 value added tax;
18.3.4 Vietnamese remittance tax;
18.3.5 Vietnamese royalties;
18.3.6 other authorised payments to the Government;
18.3.7 profits from the operation due to the Vietnamese Party;
18.3.8 any reserve fund requirements; and
18.3.9 any other amounts required to be paid in Vietnam.
18.4 Profits due to either Party and repayments of any loans made to the
Enterprise shall be remitted to that Party's own account at a bank of
its choosing on the signature of a duly authorised signatory on
behalf of that Party.
REGULATORY
19.0 BOARD OF MANAGEMENT
19.1 The Enterprise shall be managed by a board of management consisting
of six (6) members. The term of office of the Board is five (5)
years. The initial Board shall be appointed by the Parties at the
Effective Date. The Parties shall be entitled to appoint members of
the Board at any time up to the following maximum:
19.1.1 the Vietnamese Party - two (2) members;
19.1.2 the Foreign Party - four (4) members.
19.2 The Party which appoints a particular member to the Board shall be
entitled to remove and replace such member at any time by notice in
writing to the Board.
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19.3 Members of the Board may be paid all traveling, hotel and other
expenses properly incurred by them in attending and returning from
meetings of the Board or in connection with the business of the
Enterprise.
19.4 The Chairman of the Board shall be one of the members of the Board
who is unanimously nominated to that position by the Parties. Such
person shall cease to be Chairman if the Parties unanimously agree to
terminate his/her appointment or if such person ceases for any reason
to be a member of the Board. The first Chairman shall be a
representative of NVMC.
19.5 The Board shall be responsible for the overall management of the
Enterprise.
19.6 Except in relation to the matters required by the Foreign Investment
Legislation, decisions of the Board shall be valid and binding on the
Enterprise if they are approved by a simple majority of votes cast by
members present at a meeting of the Board. Each Party's
representatives shall have the number of votes equal to the
percentage of its Participating Interest. Only one of the
representatives appointed by a Party shall exercise the votes of that
Party.
19.7 Amendments to the stipulations contained in the Charter including
amendments to the name, seat and objectives of the Enterprise,
increases in Legal Capital, and the liquidation of the Enterprise
before the Termination Date (or any extension of it) may only be
effected by agreement of the Parties and will not take effect prior
to the approval of MPI being granted.
19.8 In the event that the Board determines that the funding requirements
of the Enterprise should be met by way of an increase in the Legal
Capital and such increase is approved by the Parties then unless
otherwise agreed, the Parties shall be liable to contribute the
increase in Legal Capital.
20.0 MEETINGS OF THE BOARD OF MANAGEMENT
20.1 The Board shall meet as often as business requires, but at least once
a year, and such meeting shall be convened by the Chairman. The
meetings of the Board shall be held at the place where the Enterprise
has its seat or such other place or places as are mutually agreed by
all the Parties.
20.2 Meetings of the Board will be chaired by the Chairman, or, if the
Chairman is not present, by a member elected from amongst those
present.
20.3 The quorum for a meeting of the Board shall be the presence in person
or by representatives of at least two thirds of the members. A
member of the Board shall be entitled to appoint a representative to
attend at any particular meeting of the Board and to vote on that
member's behalf.
20.4 Notice of each Board Meeting shall be given by the Chairman in
writing to all the Parties who shall be responsible for providing
notice to their representative and shall be accompanied by an agenda.
Such notice must be given at least twenty-one (21) days prior to the
date of the proposed meeting of the Board unless otherwise agreed in
writing by the Parties. Matters not included in the agenda for a
meeting shall not be decided at the meeting to which the agenda
applies unless the Parties agree.
20.5 All proceedings of the Board shall be fully and accurately minuted in
both English and Vietnamese and the minutes kept in a minute book
under the charge of the Chairman. The Board shall determine the
governing language of the minutes of Board meetings and shall
determine the language used for reporting of the business.
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20.6 All decisions of the Board shall be binding on the Parties and any
resolution properly passed by the Board becomes effective immediately
after it has been passed.
20.7 Typed copies of all minutes covering all Board meetings shall be
submitted to all Parties for approval before inclusion in the minute
book. Within seven (7) days of receipt of the draft minutes each
Party shall promptly notify the chairman and the other Party of any
changes it believes should be made. Failure to notify within fourteen
(14) days shall be deemed acceptance of the minutes. Minutes will be
presented to the next meeting of the Board for verification. When the
meeting is satisfied as to the accuracy of the minutes the chairman
and a representative of each Party shall sign them as a true and
correct record, and forward one copy to each of the Parties. The
minutes shall always be signed by a representative of each Party.
20.8 The Board may also take decisions without holding a meeting. A
resolution in writing signed by all the members of the Board for the
time being shall be as valid as if it had been passed unanimously at
a meeting of the Board duly convened and held. Any such resolution
may consist of several documents in like form, each signed by one or
more members of the Board. Any such document purporting to have been
sent by a member of the Board by facsimile, or other electronic means
of communication shall be deemed to be signed by such members.
20.9 The members of the Board may meet by means of a telephone meeting:
20.9.1 "telephone meeting" means the contemporaneous linking together
by telephone of members of the Board comprising a quorum (whether or
not any one or more of those persons is outside Vietnam);
20.9.2 "telephone" means and includes any electronic means of
communication.
20.10 A minute of the proceedings at a telephone meeting shall be
conclusive evidence of the proceedings and the regularity of the
meeting as certified in accordance with clause 20.7.
21.0 GENERAL MANAGEMENT OF THE ENTERPRISE
21.1 The Board shall be responsible for appointing the General Director of
the Enterprise and one (1) First Deputy General Director, and shall
ensure that the conduct of all activities on the Project are
conducted in accordance with good and acceptable international
practice.
21.2 The General Director shall be appointed from persons nominated by the
Foreign Party. The First Deputy General Director shall be appointed
from persons nominated by the Vietnamese Party. All nominees are to
be fully conversant with the English language and have recognized
technical or commercial qualifications relevant to the activities of
the Enterprise. The First Deputy General Director shall be a
Vietnamese citizen.
21.3 The General Director and the First Deputy General Director shall be
responsible for the management and conduct of the day to day business
of the Enterprise. The Board shall determine the respective
responsibilities and authorities of the General Director and the
First Deputy General Director both of whom shall be responsible to
the Board for the operations of the Enterprise.
21.4 The General Director and the First Deputy General Director may, but
need not, be members of the Board. If the General Director is not a
member of the Board, he/she shall nevertheless be entitled to attend
meetings of the Board but shall have no right to vote on any
resolution put at such meeting.
21.5 The Chairman of the Board and the General Director shall have the
authority to represent the Enterprise before Vietnamese law courts
and Vietnamese government authorities.
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21.6 The General Director and the First Deputy General Director shall each
be entitled to have authority to represent the Enterprise in relation
to all matters falling within the scope of the duties so delegated to
each of them by the Board.
21.7 All annual work programmes, business plans and budgets in respect of
the Project shall be prepared by the General Director and shall be
approved by the Board.
21.8 All work programmes shall include but not be limited to the
following:
21.8.1 a description of the aims and objectives of the programme;
21.8.2 a detailed description of the work to be performed under the
programme including mapping, surveys, sampling, drilling, assays,
engineering and metallurgical studies and other detailed geotechnical
activities to be undertaken;
21.8.3 to the extent practicable identification of targets and areas
which are to be subject to drilling or other detailed geotechnical
activity;
21.8.4 a description of the support services which are likely to be
required to carry out the programme;
21.8.5 estimates of the number of expatriates and Vietnamese citizens
which will need to be engaged on the programme and of the costs of
such employees;
21.8.6 estimates of the cost of contractors, on an item by item basis,
required to carry out the programme;
21.8.7 an estimate of the capital expenditure and associated cost,
including the cost of the finance likely to be required in connection
with the programme;
21.8.8 a breakdown of all fees, rental and other similar charges
payable pursuant to any Vietnamese Law during the programme period;
21.8.9 a breakdown of estimated costs of office and other overhead
expenses to be allocated to the programme and budget;
21.8.10 a contingency sum to cover miscellaneous items and overruns.
21.9 All work programmes, business plans and budgets shall be prepared and
calculated on a financial year basis unless otherwise mutually agreed
by the Parties (who shall instruct their members of the Board
concerning the matter) except for the first such work programme,
business plan and budget which will cover the period from the
Effective Date until the end of the current financial year.
21.10 The Parties agree that any work programme, business plan and budget
may be amended from time to time by the General Director, by the
revision, addition or deletion of any work, expenditure or commitment
not previously included or made, or by the addition of any work not
previously included, provided that no such revision, addition or
deletion shall be made if it would otherwise result in the Enterprise
being in default of any obligations under Vietnamese Law. Any
material amendment of work programmes and budgets will require the
approval of the Board.
21.11 In addition to his/her other responsibilities the General Director
shall also be responsible for the following matters:
21.11.1 the preparation and implementation of work programmes,
business plans and budgets;
21.11.2 arranging for the provision of the administration, technical,
accommodation and other requirements of the Enterprise
necessary to implement work programmes and business plans;
21.11.3 engaging and dismissing staff, labour and contractors
required to administer the Enterprise and implement work
programmes and business plans;
21.11.4 undertaking negotiations with the appropriate local, regional
and other authorities wherever necessary;
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21.11.5 ensuring that the Enterprise -
(a) complies with its statutory obligations relating to its
operations;
(b) prepares and lodges all reports required by Vietnamese
Law;
(c) keeps true and correct books, accounts and records of
its operations in accordance with Vietnamese Law;
(d) pays all costs and expenses incurred in carrying out
work programmes and business plans;
(e) furnishes to the Parties a detailed quarterly report of
its operation and the development of the Project; and
(f) provides and maintains in force all insurances required
by Vietnamese Law or regulations and any additional
insurance which it shall reasonably require to be
effected to protect the Enterprise's assets, activities,
employees and contractors; and
21.11.6 determining the funding requirements of the Enterprise (if
any) and the means of financing such requirements.
GENERAL
22.0 CONFIDENTIALITY
22.1 Unless otherwise agreed to by the Parties, all information obtained in
relation to this Agreement, the Project or Mining Operations shall be kept
confidential and shall not be disclosed by the Parties to any third parties
other than:
22.1.1 an employee of the disclosing Party participating in the
Project and then only to the extent necessary for such person
to properly carry out his/her duties;
22.1.2 any Party to whom disclosure is required by any applicable
law or regulation or the rules of any Stock Exchange which
may require disclosure;
22.1.3 a financial institution in connection with any financing
sought to be arranged by the disclosing Party for purposes
directly related to this Agreement;
22.1.4 independent consultants and contractors to the Parties whose
duties and relations to the Joint Venture reasonably require
such disclosure;
22.1.5 independent accountants or legal counsel engaged by a Party
for the purpose only of enabling such accountants or legal
counsel to give appropriate advice to the Party in respect of
matters arising under this Agreement or any agreement
contemplated by this Agreement.
22.1.6 any recognised merchant or investment banking firm engaged in
giving advice to the disclosing Party in connection with this
Agreement; and
22.1.7 any prospective purchaser, transferee or assignee of the
whole or any part of the Participating Interest of the
disclosing Party and any accountants, legal advisers or
financial institutions retained by such third party, subject
to each of those persons entering into a form of
confidentiality agreement in a form reasonably acceptable to
the non-disclosing Party.
22.2 Each Party agrees not to exploit commercial or trade secrets and other
confidential information divulged by the other Party under this Agreement
and not to disclose the same to any corporation, firm or person whatsoever
except to directors, officers and employees of the Enterprise where that
information is required in the normal course of their duties.
22.3 Each Party (at the request of the other Party) and the Enterprise is
to obtain individual undertakings from its directors, officers and other
employees to respect the secrecy of
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trade secrets and other confidential information disclosed to them as
contemplated by clause 22.2.
23.0 FORCE MAJEURE
23.1 The obligations of each Party (other than under Sections 22.0, 24.0
and 27.0) shall be suspended, and the time of expenditure of monies
by a Party shall be extended, to the extent that such Party is
hindered or prevented from performance or expenditure by force
majeure. Force Majeure shall include, but not be limited to, strikes,
lockouts, labour and civil disturbances, unavoidable accidents, acts
of nature, laws, rules, regulations, orders or decrees of any
national, municipal or other law or government agency, acts of war or
rebellion and conditions arising out of or attributable to war
(declared or undeclared), shortage of necessary plant and equipment,
materials, or labour (except where due to negligence, default or
omission on the part of the Party), restrictions or limitation on the
use of necessary equipment, materials or labour, disruptions in
transportation and other matters beyond the reasonable control of
such a Party and whether similar to the matters listed above or
otherwise.
23.2 No Party shall be entitled to the benefit of this section or any part
hereof if the force majeure event is caused by or results from lack
of funds (unless the lack of funds is caused by government
intervention or regulation) or by negligence, default or
omission of the Party claiming suspension.
23.3 If an event of force majeure causes a suspension or extension, the
Party affected shall give notice thereof as soon as reasonably
practicable to the other Party stating the date, extent and nature
thereof. A Party whose obligations or expenditure have been suspended
or extended shall resume performance or expenditure as soon as
reasonably possible after the removal of the event of force majeure
and shall so notify the other Party.
24.0 DISPUTES AND ARBITRATION
24.1 Any dispute arising out of or in connection with this Agreement or
its performance, including the existence and validity of this
Agreement and this section, and the scope, meaning, construction,
interpretation or application of this Agreement ("DISPUTE"), shall to
the fullest extent possible be settled amicably by negotiation and
discussion between the Parties.
24.2 A Dispute which is not able to be settled by amicable agreement and
which is between the Parties or between the Foreign Party and a
Vietnamese economic organisation will be finally settled by
arbitration under the UNCITRAL arbitration rules contained in
resolution 31/98 adopted by the United Nations General Assembly on 15
December 1976 and entitled "Arbitration Rules of the United Nations
Commission on International Trade Law" as presently in force.
The arbitration will be before three arbitrators. The Vietnamese
Party and the Foreign Party will each nominate one arbitrator and the
two (2) nominees will agree on the third arbitrator. If the
Vietnamese Party or the Foreign Party fails to nominate its
arbitrator within fourteen (14) days of being required to do so, or
if the two nominees cannot agree on the third arbitrator within
twenty eight (28) days, then either the Vietnamese Party or the
Foreign Party may request the chairman for the time being of the
Singapore International Arbitration Centre to nominate the required
arbitrator.
The place of arbitration will be Singapore unless otherwise agreed.
The arbitrators are not bound by strict rules of law where they
consider the application of those rules of law to particular matters
to be inconsistent with the spirit of this Agreement
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and the underlying intent of the Parties and, as to those matters,
their conclusions will reflect their judgment of the correct
interpretation of all relevant terms of this Agreement and the
correct and just enforcement of this Agreement in accordance with
those terms. The arbitrators will not amend or modify this Agreement.
The award rendered will apportion the costs of the arbitration.
Any other Dispute, not of the nature referred to above, is to be
referred to the Economic Court of Vietnam if it cannot be settled
amicably by negotiation and discussion.
24.3 An award in arbitral proceedings in accordance with this section 24.0
("ARBITRATOR'S AWARD") will be final and binding on the Parties and
judgment may be entered and executed in any court having jurisdiction
over either of the Parties or the assets of either of the Parties The
Parties undertake to comply with an arbitrator's award.
24.4 During the process of arbitration, this Agreement shall continue to
be performed except and insofar as that part which remains in dispute
and is in the process of being arbitrated.
25.0 DEFAULT
25.1 If any Party (the "Defaulting Party"):
25.1.1 fails to contribute, whether by way of debt or equity, in
proportion to its Participating Interest, its share of any funds
required to meet Expenditure pursuant to clause 13.3; or
25.1.2 defaults in any other substantial obligation to be performed
by it under this Agreement, and such default is not rectified within
sixty (60) days of the other Party (the "Non-Defaulting Party")
giving notice of the default to the Defaulting Party, then the
Non-Defaulting Party can either:
25.1.3 terminate this Agreement by giving notice of termination to
the Defaulting Party following the expiration of such sixty (60) day
period; or
25.1.4 serve a notice on the Defaulting Party invoking clause 25.2.
25.2 Where a notice invoking this clause is served on a Party in
accordance with clause 25.1.4, the Participating Interest of each
Party shall be recalculated as being that percentage which the debt
and equity actually contributed by such Party bears to the total debt
and equity contributed by all the Parties and the Parties respective
Participating Interests shall be adjusted by the transfer from one
Party to the other of such amount of Legal Capital as is necessary to
reflect the new Participating Interests of the Parties.
25.3 A default shall be deemed to have been rectified if clause 25.2 has
been applied in relation to such default and an assignment of Legal
Capital has been effected in accordance with that clause.
25.4 The Defaulting Party IRREVOCABLY APPOINTS the Non-Defaulting Party to
be its attorney and in its name and on its behalf to execute all
transfers, consents, notices and other documents and do all things
necessary for the purpose of giving effect to clause 25.2.
25.5 The Defaulting Party indemnifies and holds harmless the
Non-Defaulting Party against all losses, claims, damages (including
loss of profit), expenses (including legal costs) and all other costs
incurred or suffered by the Non-Defaulting Party, in any way and at
any time arising out of the occurrence of the events specified in
clause 5.1.4 or clause 25.1, or the termination of this Agreement
pursuant to such clauses and the exercise of any of the rights and
remedies of the Non-Defaulting Party under this Agreement.
24
26.0 REPRESENTATIONS AND WARRANTIES
26.1 The Parties enter into this Agreement in the utmost good faith, each
undertaking to act in all respects in connection with the performance
of this Agreement in a positive, fair and reasonable way towards the
others.
26.2 The Parties will use their best endeavours to observe, maintain and
carry out the provisions of this Agreement, and to ensure that their
respective appointees shall exercise their rights in such manner that
the provisions of this Agreement are observed, maintained and carried
out.
26.3 Each of the Parties represents and warrants that:
26.3.1 it has the capacity to enter into and perform under this
Agreement, and all the transactions and agreements
contemplated herein, and that all corporate and other actions
required to authorise it to enter into and perform this
Agreement and all transactions and agreements contemplated
herein have been or will be properly taken;
26.3.2 it will not breach any other agreement or arrangement by
entering into or performing this Agreement, and this Agreement
when signed will have been duly executed by it and shall be
valid and binding upon it in accordance with its terms; and
26.3.3 it is able to provide its Legal Capital Contribution in the
manner and form set out in this Agreement and that it is or
will be in a position to perform all of its obligations under
this Agreement.
27.0 NOTICES
27.1 All notices, consents, requests and other communications
(collectively "NOTICES") authorised or required to be given or made
pursuant to this Agreement by a Party shall be given or made in
writing signed by an authorised representative of such Party
delivered or mailed by registered or certified mail or sent by fax
addressed in accordance with the details set out for each Party in
this Agreement.
27.2 Any such Notice shall be deemed to have been properly served and
received by the intended recipient:
27.2.1 in the case of service by delivery or registered or certified
mail, upon delivery;
27.2.2 in the case of service by fax, upon the sender receiving from
the intended recipient fax machine acknowledgment of legible
receipt.
27.3 Any Party may change its address for the receipt of Notices at any
time by giving written notice of such change to the other Party to
this Agreement in accordance with the provisions of this section.
28.0 MISCELLANEOUS
28.1 The failure of a Party to insist on strict performance of any
provisions of this Agreement or to exercise any right, power or
remedy upon a breach hereof shall not constitute a waiver of any
provision of this Agreement or limit the Parties rights thereafter to
enforce any provision or exercise any right, power or remedy.
25
28.2 This Agreement may be amended and supplemented in accordance with a
resolution of the Board of Management. However no amendments to this
Agreement shall be binding unless in writing, signed by each Party,
and if required to be by Vietnamese Law, approved by MPI.
28.3 This Agreement is executed in the Vietnamese and English languages,
both of which shall be considered equally authentic.
28.4 This agreement contains the entire understanding of the Parties
relating to the Joint Venture and there are no promises, terms,
conditions or obligations, oral or written, express or implied, other
than those contained in this Agreement.
28.5 This Agreement shall be governed and construed in accordance with the
provisions of Vietnamese Law and the Investment Licence.
Each Party agrees to take such actions and execute such additional
instruments as may be reasonably necessary to implement and carry out
the intent and purposes of this Agreement.
28.7 This Agreement shall benefit and be binding upon the Parties and
their respective successors and personal representatives and any
permitted assignees or transferees of their rights, and references to
the Parties shall be construed accordingly.
28.8 Where there is inconsistency between the terms of the Charter and the
terms of this Agreement the terms of this Agreement will prevail.
Signed for and on behalf of
MINCO in the presence of: [SEAL]
/s/ XXXXXX XXXX XXXXX
-------------------------------------
WITNESS
Signed for and on behalf of
NVMC in the presence of: [SEAL]
/s/ XXXX XXXXX
-------------------------------------
WITNESS
26
[MAP OMITTED]
LEGEND
[GRAPHIC OMITTED]
Project Area
Exploraion Area
Mining Area
SCHEDULE A
- PROJECT AREA
- EXPLORATION AREA
- MQIING AREA
27
Schedule "B"
TAXATION BENEFITS AND OTHER PETITIONS
B.1 On the basis that the Project is one that is encouraged because it is in a
region with especially difficult socio-economic conditions referred to in
the relevant list of regions attached to Decree 24 the Joint Venture shall
apply for a business income tax (BIT) rate of 10%, applicable for the whole
of the term of the investment from the time when the Project commences its
business and production activities.
B.2 Notwithstanding clause B.1 above, the Joint Venture shall apply for a BIT
exemption for a period of four (4) years from the tax year in which the
Enterprise first makes profits and a fifty per cent (50%) reduction of BIT
for a further period of four (4) succeeding years.
B.3 The Joint Venture shall apply for a gross royalty on all gold produced not
exceeding two per cent (2%) to three per cent (3%), and shall require an
exemption from obligation to pay any other fees or taxes on resources won
including water.
B.4 Pursuant to Article 29 of Decree 76/2000/ND-CP dated 25 December 2000 the
Joint Venture shall apply for an Exclusive Right Fee not exceeding:
First year: VND 300,000 per square kilometre per annum
Second year: VND 400,000 per square kilometre per annum
Third year: VND 550,000 per square kilometre per annum
Fourth year onwards: VND 700,000 per square kilometre per annum
B.5 The Joint Venture shall apply for rent to be set and exemptions given
pursuant to MOF issued Decision 189/2000/QD-BTC dated 24 November 2000 and
on the following terms:
B.5.1 an 11-year rent free period;
B.5.2 rental level of US$0.01 per square metre per annum
B.5.3 rent to be levied only on the actual land being utilised, and if part
only of a hectare is being utilised then only a corresponding
proportion of the hectare rate will be payable.
B.6 The Joint Venture shall apply for an exemption from import duties on all
raw materials for the first five (5) years of operation of the Enterprise
and all imported Plant & Equipment, machinery, spare parts, construction
and business facilities including transport vehicles and other materials
which relate to the Project whether brought into Vietnam as part of the
Total Invested Capital or otherwise.
B.7 The Joint Venture shall apply for an exemption from the Value Added Tax
(VAT) on imported materials used to produce goods for export and on
equipment, machinery, specialized means of transport, construction
materials and other materials as referred to in Article 60 of Decree 24.
Where VAT is payable during the construction phase and is legally
refundable, the Joint Venture shall apply for VAT refunds on a monthly
basis irrespective of construction duration.
B.8 The Joint Venture shall apply for exemption from any sales tax or export
tax payable in respect of the re-export of items imported by the Parties
for its operations and activities.
B.9 The Joint Venture shall require the right to maintain books of account in
USD for purposes of determining Legal Capital at the time of liquidation.
B.10 The Joint Venture shall require the right to adopt a financial year-end as
at 31 December.
28
B.11 The Joint Venture shall seek guarantees that no further taxes or like
payments will be levied by the Government (including the provinces) on the
Joint Venture and the Enterprise other than the payments mentioned in this
application.
B.12 The Joint Venture will seek guarantees from the Government that it will
have sole and exclusive rights to explore and exploit Minerals within the
Project Area and that invested capital, property and assets shall not be
expropriated, requisitioned and nationalised.
B.13 The Joint Venture will seek always to be able to maintain banking and
marketing procedures adequate to assure international bankers, financiers
and investors that Project loans can be repaid and profits remitted.
B.14 The Joint Venture shall seek a three per cent (3%) tax on the amount of any
profit remittance.
B.15 The Joint Venture shall seek guarantees from the Government that it will
co-operate to ensure that all purposes of the Enterprise are met and that
all necessary Plant and Equipment can be utilised, and Mining Operations
can be carried out according to usual international practices and that all
necessary permits and authorizations will be granted by the provinces to
enable the Project to proceed efficiently.
B.16 The Foreign Party shall seek the right to repatriate to their place of
origin:
B.16.1 share of profits or bullion;
B.16.2 any expenses or approved payments to any person (including the
Parties) incurred outside Vietnam and relating to the Project.
B.17 The Joint Venture shall seek the right:
B.17.1 to carry forward exploration (including feasibility) or
administration expenditure indefinitely for offset against revenue
from any source;
B.17.2 to carry forward capital expenditure for immediate deductibility
against revenue;
B.17.3 not to offset any carried forward deductions during the tax exempt
period but to carry forward the deductions indefinitely through to
the years of profit.
29
"Schedule C"
ESTIMATED CAPITAL COSTS
ITEM
FIXED ASSETS USD(M)
-------------------- ------
Plant Workshop 0.07
Office 0.04
Machinery, Equipment 3.90
Other Fixed Assets 5.20
Working Capital 0.79
Total 10.00
30
TABLE OF CONTENTS
SECTION SUBJECT PAGE
------- ------- ----
Parties 2
Background 2
Preliminary Provisions
1.0 Definitions 3
ESTABLISHMENT PROVISIONS
2.0 Establishment of Joint Venture 8
4.3 Establishment of Enterprise 8
4.0 Capital and Responsibilities 11
5.0 Term & Termination 11
PROCEDURAL PROVISIONS
6.0 Investment License 11
7.0 Exploration 12
8.0 Feasibility Study 12
9.0 Decision to Mine 12
10.0 Mining License 13
11.0 Material & Labour 13
12.0 Environment 14
FINANCIAL PROVISIONS
13.0 Total Invested Capital & Financing 14
14.0 Distribution of Profits 15
15.0 Transfer of Legal Capital 15
16.0 Accounting Principles 16
17.0 Banking & Insurance 17
18.0 Sale of Product 17
REGULATORY PROVISIONS
19.0 Board of Management 18
20.0 Meetings of the Board of Management 19
21.0 General Management 20
GENERAL PROVISIONS
22.0 Confidentiality 22
23.0 Force Majeure 22
24.0 Disputes & Arbitration 23
25.0 Default 24
25.0 Representations & Warranties 24
27.0 Notices 25
28.0 Miscellaneous 25
31
SCHEDULES
A. Project Area 27
B. Taxation Benefits & Other Petitions 28
C. Estimated Capital Costs 30
