JOINT VENTURE AGREEMENT AMONG GIBRALTAR MINES LTD. AND GIBRALTAR RECLAMATION TRUST LIMITED PARTNERSHIP AND TASEKO MINES LIMITED December 30, 2003
AMONG
GIBRALTAR MINES LTD.
AND
GIBRALTAR RECLAMATION TRUST LIMITED PARTNERSHIP
AND
TASEKO MINES LIMITED
December 30, 2003
Table of Contents
| Schedules | |
| Schedule 1 - | Twelve-Year Mining Plan |
| Schedule 2 - | Property |
| Schedule 3 - | Mine Restarting Works/ Mine Restart Program |
| Schedule 4 - | Revenue Share |
THIS AGREEMENT made as of December 30, 2003
AMONG:
GIBRALTAR MINES LTD., a company incorporated under the laws of British Columbia
(“Gibraltar”)
AND:
GIBRALTAR RECLAMATION TRUST LIMITED PARTNERSHIP, a limited partnership formed under the laws of British Columbia
(“Gibraltar LP”)
AND:
TASEKO MINES LIMITED, a company incorporated under the laws of British Columbia
(“Taseko”)
BACKGROUND:
| A. | Gibraltar, a wholly-owned subsidiary
of Taseko, owns the Gibraltar Mine (this term and all other defined terms
in these Recitals are defined below in Article 1), which has been inactive
since 1998, due to low copper prices. |
| B. | Gibraltar and the Gibraltar LP believe
that, as a result of recent and anticipated increases in the price of
copper, the operation of the Gibraltar Mine will soon become economic. |
| C. | Gibraltar and Gibraltar LP wish to establish
this joint venture as a single purpose, limited duration joint venture
for the purposes of funding and carrying out the work necessary to restart
the Gibraltar Mine and, thereafter, sharing production and/or revenues
from the Gibraltar Mine. |
| D. | Gibraltar has agreed to dedicate the
Gibraltar Mine and the Mine Assets to the purposes of the Joint Venture. |
| E. | Gibraltar and the Gibraltar LP have
agreed to contribute cash funding to accomplish the objectives of the
Joint Venture. |
| F. | Taseko is a party to this Agreement
for purposes of guaranteeing the performance by Gibraltar of its obligations
hereunder. |
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the mutual covenants and agreements herein contained the Parties hereto have agreed and do hereby agree as follows:
ARTICLE 1 – INTERPRETATION
| 1.1 | In this Agreement the following
words, phrases and expressions will have the following meanings: |
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(a) |
“Affiliate”
will have the meaning attributed to it in the Company Act (British
Columbia); |
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(b) |
“Agreement”
means this Joint Venture Agreement, as amended from time to time; |
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(c) |
“Chairman”
means the chairman of the Management Committee, as appointed pursuant
to Section 4.7; |
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(d) |
“Change of Control”
means: |
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(i) |
the acquisition by any Person or by
Persons acting jointly or in concert (“acting jointly or in concert”
as defined in Securities Act (British Columbia) as at the date
of this Agreement) of a sufficient number of the voting rights attached
to all outstanding voting securities of Taseko to affect materially the
control of Taseko; |
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(ii) |
the acquisition by any Person or by
Persons acting jointly or in concert of any right, option, warrant, convertible
security or similar securities, that, if exercised, would give such Person
or Persons a sufficient number of the voting rights attached to all outstanding
voting securities of Taseko to materially affect the control of Taseko;
or |
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(iii) |
a change of the composition of 50% or
more of the board of directors of Taseko, unless such change is approved
by the existing board of directors of Taseko, |
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and for purposes of the
foregoing, the holding of more than 20% of the outstanding voting securities
of Taseko (or rights, options, warrants, convertible securities or similar
securities that entitle the holders thereof, if exercised or converted
or otherwise, as the case may be, to hold more than 20% of the voting
securities of Taseko) will be deemed, in the absence of evidence to the
contrary, to be a sufficient number of voting securities of Taseko to
materially affect the control of Taseko; |
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(e) |
“Completion Date”
means the date on which it is demonstrated to the satisfaction of the
Management Committee in accordance with the Mine Restart Program and the
Twelve-Year Mining Plan that the preparing and equipping of the Gibraltar |
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Mine for restarting open
pit mining has been completed and that sustainable full production from
the Gibraltar Mine has resumed; |
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| (f) | “Gibraltar”
means Gibraltar Mines Ltd.; |
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| (g) | “Gibraltar LP”
means Gibraltar Reclamation Trust Limited Partnership; |
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| (h) | “Gibraltar Mine”
means the open pit mine located 17 kilometres northeast of XxXxxxx Lake,
near Xxxxxxxx Lake, British Columbia in the Caribou Mining Division of
British Columbia; |
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| (i) | “Gibraltar Reclamation
Trust” means a “qualifying environmental trust” within
the meaning of the Income Tax Act (Canada) established pursuant
to the terms and conditions of the Gibraltar Reclamation Trust Indenture,
which trust was established subsequent to the establishment of this Joint
Venture to secure and carry out the reclamation obligations of Gibraltar
in respect of Gibraltar Mine; |
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| (j) | “Gibraltar Reclamation
Trust Indenture” means the Gibraltar Reclamation Trust Indenture
among Gibraltar LP, Gibraltar, the Province and the Trustee to be dated
on or about December of 2003; |
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| (k) | “Joint Venture”
means the joint venture formed between Gibraltar and Gibraltar LP pursuant
to Article 2; |
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| (l) | “Joint Venture Bank
Account” means a bank account of the Joint Venture with HSBC
Bank Canada in Vancouver, British Columbia; |
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| (m) | “Management Committee”
means the management committee established pursuant to Article 4; |
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| (n) | “Material Default”
means: |
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(i) |
the bankruptcy, insolvency, liquidation
or dissolution of Gibraltar; |
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(ii) |
the occurrence of any event which would
permit a trustee or receiver to administer the affairs of Gibraltar; |
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(iii) |
the failure by Gibraltar to meet its
funding obligations pursuant to Section 3.3., where such default continues
for 10 Business Days after receipt by Gibraltar from Gibraltar LP of written
notice thereof; |
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(iv) |
the failure by Gibraltar to obtain the
approval of the Management Committee in respect of major decisions pursuant
to Section 4.1, where such default continues for 10 Business Days after
receipt by Gibraltar from Gibraltar LP of written notice thereof; or |
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| (o) | the failure by Gibraltar
to pay the Revenue Share to Gibraltar LP pursuant to Section 12.2, where
such default continues for 10 Business Days after receipt by Gibraltar
from Gibraltar LP of written notice thereof; |
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| (p) | “Mine Assets”
means all tangible and intangible goods, chattels, improvements or other
items of the Gibraltar Mine, including, without limiting the generality
of the foregoing, land (including the Property and other land, leases,
permits and mineral interests), buildings and all mine equipment; |
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| (q) | “Mine Restarting
Works” means every kind of work necessary to restart open pit
mining operations at the Gibraltar Mine done by or on behalf of the Operator
on or in respect of the Property in accordance with the Mine Restart Program
and the Twelve-Year Mining Plan, or as otherwise directed from time to
time by the Management Committee, including: |
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(i) |
operating expenditures in
respect of: |
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A. |
mine works (consisting of drilling,
blasting, loading and hauling), haul roads, pit dewatering, portable crushers,
general services and mine electrical expenditures; |
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B. |
mill works, consisting of general mill
repairs, primary crushing, secondary crushing, grinding, flotation, dewatering,
tailing disposal, reclaiming water, process control and moly circuit expenditures; |
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C. |
plant services, consisting of general
plant works, salvage yard, fresh water system, yards, roads and fences,
heating services, maintenance shops and building maintenance expenditures; |
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D. |
administration, consisting of general
administration, employee benefits, warehouse, engineering and geology,
employee relations, computer services, safety, training, effluent treatment
and environmental monitoring; |
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E. |
expense projects, consisting of truck,
grader, bulldozer, loader and service vehicles fuel and lubricants, engines,
hydraulics, consumable wear items, chassis, cab and suspension, tires
and chains, electrics, wheel motors and services purchased and plant services,
including wall repairs, impact wrenches, tool crib restart and protective
relaying; |
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F. |
mill repairs and maintenance for crushers,
chutes, conveyers and cell feed boxes, grinding mill alarm and repairs,
upgrade conveyer drives, surge tank agitators and conveyer belt repairs,
repair/replace crusher and rod mill/regrind mill liners; and |
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G. |
mill DCS system, preview maintenance
contract and controller card, assay lab repairs, fresh water fire connection
and tailings works; |
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(ii) |
capital expenditures in
respect of the mine, consisting of shovels or undercarriages, five new
or used 205 ton haul trucks, Pollyanna fuel farm and GPS survey equipment;
and |
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(iii) |
capital expenditures in
respect of the mill, consisting of primary dump pocket engineering, cyclone
feed box, pump, moly circuit upgrade, closed loop air compressor reduction,
mill pumpbox piping, mill reclaim gland water system and courier 6l analyzer, |
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including, without limiting
the generality of the foregoing, investigating, developing, property maintenance,
preparing reports, estimates and studies, designing, equipping, improving,
surveying, construction and mining, milling concentrating, rehabilitation,
reclamation and environmental protection, as summarized in Schedule 3; |
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(r) |
“Mine Restart Program”
means the program to implement the Mine Restarting Works, as amended from
time to time, a copy of which is attached as Schedule 3; |
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(s) |
“Net Smelter Returns”
means net smelter returns as defined Section 12.3; |
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(t) |
“Operator”
means the Party or other person appointed as the Operator in accordance
with Article 5; |
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(u) |
“Party”
or “Parties” means the parties to this Agreement; |
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(v) |
“Permit M-40”
means Permit M-40 issued to Gibraltar with respect to the Gibraltar Mine
on July 21, 1999, as amended; |
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(w) |
“Person”
means any individual, partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital, trust, trustee,
executor, administrator, or other legal personal representatives, regulatory
body or agency, government or governmental agency, authority or entity
howsoever designated or constituted; |
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(x) |
“Property”
means the mineral properties described in Schedule 2 (owned properties,
leased properties and properties subject to mining claims) and any additional
mineral properties that become part of the Property for the duration of
this Agreement; |
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(y) |
“Province”
means Her Majesty the Queen in Right of the Province of British Columbia,
as represented by the Minister of Energy and Mines; |
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(z) |
“Revenue Share”
means the revenue share or production share that Gibraltar LP is entitled
to in accordance with Article 12; |
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(aa) |
“Taseko” means Taseko
Mines Limited; |
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(bb) |
“Trustee” means HSBC
Trust Company (Canada); |
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(cc) |
“Twelve-Year Mining Plan”
means the twelve-year mining plan dated March of 2003, which details the
procedure for the restarting of the Gibraltar Mine for open pit mining,
a copy of which is attached as Schedule 1; and |
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(dd) |
“$” means Canadian
dollars. |
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1.2 |
The words “Article”,
“Section”, “Subsection”, “herein”
and “hereunder” refer to this Agreement. The words “this
Agreement” include every Schedule attached hereto. |
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1.3 |
The captions and the emphases
of the defined terms have been inserted for convenience and do not define
the scope of any provision. |
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ARTICLE
2 – FORMATION OF THE JOINT VENTURE |
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2.1 |
The Parties hereby agree
to participate together for the sole purpose of restarting the Gibraltar
Mine for open pit mining in accordance with the terms and conditions of
the Mine Restart Program and the Twelve-Year Mining Plan and sharing production
and/or revenue therefrom (the “Joint Venture”). |
|
2.2 |
Except as expressly provided
in this Agreement, each Party will have the right to independently engage
in and receive full benefits from business activities whether or not competitive
with the Joint Venture without consulting any other Party. The doctrines
of “corporate opportunity” or “business opportunity”
will not be applied to any other activity, venture or operation of any
Party with respect to any opportunity to acquire any assets outside of
the Property at any time, or within the Property after the termination
of this Agreement. |
|
2.3 |
Gibraltar and Gibraltar
LP expressly disclaim any intention to create a partnership or to carry
on business together with a view to profit, nothing in this Agreement
will constitute Gibraltar and Gibraltar LP as partners. |
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2.4 |
Neither Gibraltar nor Gibraltar
LP will have, or represent to have the authority or power to act for or
to undertake or create any obligation or responsibility, express or implied,
on behalf of, or in the name of the other or will be, or represent that
it is the agent or legal representative of the other, except as otherwise
specifically provided in this Agreement or in any other written agreement
executed by Gibraltar and Gibraltar LP. |
|
2.5 |
Gibraltar and Gibraltar
LP agree that each party will retain its separate interests in all property
dedicated to the purposes of the Joint Venture and any residual interests
in such property including the residual beneficial interest of Gibraltar
LP in the Gibraltar Reclamation Trust and the interests of Gibraltar in
the Mine Assets, and the Gibraltar Mine. |
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| ARTICLE 3 – CONTRIBUTIONS AND DEDICATION OF ASSETS | ||
3.1 |
Gibraltar dedicates the
Gibraltar Mine and the Mine Assets as of the date hereof to the purposes
of the Joint Venture. |
|
3.2 |
After the execution hereof,
Gibraltar LP will contribute up to $32,700,000 to the Gibraltar Reclamation
Trust pursuant to the terms and conditions of the Gibraltar Reclamation
Trust Indenture. |
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3.3 |
Gibraltar agrees to fund
up to a maximum of $25,756,560 of the Joint Venture expenses to be incurred
to restart the Gibraltar Mine, estimated as of the date hereof to be $21,463,800,
in accordance with the terms and conditions of the Twelve-Year Mining
Plan, the Mine Restart Program and this Agreement, and will be solely
responsible for funding all on-going maintenance cost of the Gibraltar
Mine. Concurrently with the execution of this Agreement and the formation
of the Joint Venture, Gibraltar will deposit or cause to be deposited
$4,563,800 into the Joint Venture Bank Account and $16,900,000 into the
Joint Venture Bank Account upon release of the equivalent amount of funds
from existing reclamation security arrangements between Gibraltar and
the Province. These funds will be invested at the discretion of the Operator
and, in the event that either Gibraltar LP fails to settle the Gibraltar
Reclamation Trust by December 31, 2003, or this Joint Venture terminates,
such funds, or any remaining portion thereof, together with interest,
will be returned to Gibraltar. |
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| ARTICLE 4 – MANAGEMENT COMMITTEE | ||
4.1 |
Gibraltar and Gibraltar
LP will, forthwith on the execution of this Agreement, establish the Management
Committee which will direct and control the operations of the Joint Venture
and make, on behalf of the parties, all major decisions in respect of
the Mine Restarting Works, including, without limitation: |
|
(a) |
capital expenditure items requiring
expenditures in excess of $50,000 in aggregate; |
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(b) |
Mine Restarting Works expenditures in
excess of $50,000 in aggregate; |
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(c) |
the voluntary suspension of Mine Restarting
Works, for more than 30 days in any 12 month period; |
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(d) |
the terms of engagement of the Operator,
other than the agreed upon charges referred to in Article 5; |
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(e) |
the abandonment, sale or other disposition
of any asset or series of related assets contributed by the Parties to
the Joint Venture having an aggregate fair market value in excess of $50,000
in aggregate; |
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(f) |
the aggregate borrowing of secured or
unsecured debt in excess of $50,000 in aggregate; |
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(g) |
any decision to act or not to act which
would breach any instrument or agreement under which title to the Property
or any of the Assets is held; |
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(h) |
the entry into any material contract
or commitment by the Operator with itself or an Affiliate which is not
accompanied by evidence of the competitive nature of the pricing thereof; |
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(i) |
the settlement of any lawsuit, claim
or demand involving an aggregate amount or value exceeding $10,000; and |
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(j) |
any material modification of the Mine
Restart Program or the Twelve-Year Mining Plan. |
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| 4.2 | Each of Gibraltar and Gibraltar
LP will appoint two representatives to the Management Committee, which
representatives may be replaced from time to time by the Party appointing
them, at such Party’s sole discretion. For Gibraltar, Xxx X. Xxxxxx
and Xxxxx X. Xxxxxxx are appointed representatives and for Gibraltar LP,
Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxxx are appointed representatives.
After the Completion Date, Gibraltar LP will be entitled to one representative
on the Management Committee. |
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| 4.3 | The Operator will call a
Management Committee meeting at least once every month and, in any event,
within 14 days of being requested to do so by any representative. |
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| 4.4 | The Operator will give notice
specifying the time, place of and the agenda for the meeting to all representatives
at least two days before the time appointed for the meeting. |
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| 4.5 | Notice of a meeting will
not be required if all representatives are present and unanimously agree
upon the agenda. |
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| 4.6 | A quorum for any Management
Committee meeting will be present if the representatives of each of Gibraltar
and Gibraltar LP are present. If a quorum is present at the meeting, the
Management Committee will be competent to exercise all of the authority,
power and discretion herein bestowed upon it. The Management Committee
will not transact any business at a meeting unless a quorum is present
at the commencement of the meeting and the quorum must be present throughout
the meeting. A meeting at which a quorum is not present will be adjourned
to the same time and place as the adjourned meeting one week later, at
which adjourned meeting the quorum will be one representative of each
of Gibraltar and Gibraltar LP. |
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| 4.7 | Prior to the Completion
Date, a representative of Gibraltar LP will be the Chairman of Management
Committee meetings, and has the sole discretion to reappoint such Chairman
from time to time. After the Completion Date, a representative of Gibraltar
will be the chairman of Management Committee meetings, and has the sole
discretion to reappoint such Chairman from time to time. |
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| 4.8 | The Management Committee
will decide every question submitted to it by a vote with each Party’s
representative being entitled to cast one vote. The Management Committee |
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will make all decisions
by majority vote. The Chairman will have the casting vote in the event
of a deadlock. |
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| 4.9 | The secretary of the Management
Committee will be appointed by the Chairman and will take minutes of that
meeting and circulate copies thereof to each representative. |
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| 4.10 | The Management Committee
may make decisions by obtaining the consent in writing of the representatives
of all Parties which consent may be in one or more counterparts which
together will be deemed to constitute one consent. Any decision so made
will be as valid as a decision made at a duly called and held meeting
of the Management Committee. |
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| 4.11 | Management Committee decisions
made in accordance with this Agreement will be binding upon all of the
Parties. |
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| 4.12 | The Management Committee
will approve appropriate fee compensation for the services of the Operator. |
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| 4.13 | Each Party will bear the
expenses incurred by its representatives in attending meetings of the
Management Committee. |
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| 4.14 | The Management Committee
may establish such other rules of procedure, not inconsistent with this
Agreement, as the Management Committee deems fit. |
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| ARTICLE 5 – APPOINTMENT AND RENEWAL OF OPERATOR | ||
| 5.1 | Gibraltar and Gibraltar
LP agree to designate Gibraltar as the Operator of the Joint Venture for
GST purposes and to file form GST 21E with Canada Customs and Revenue
Agency as required. |
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| 5.2 | Gibraltar will be the Operator
until it: |
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(a) |
resigns pursuant to Section 5.3; or |
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(b) |
is removed by the Management Committee
pursuant to Section 5.4, |
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and a successor is appointed
by the Parties hereto. |
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| 5.3 | The Operator may resign
as Operator by giving notice (the “Resignation Notice”)
to all of the Parties at least 90 days before its resignation, provided
however that such resignation will not be effective until a successor
Operator is appointed. The Parties will upon receipt of the Resignation
Notice and acting reasonably select another Operator not later than the
90th day after receipt of the previous Operator’s notice of resignation.
Notwithstanding the foregoing, the Operator will remain as Operator until
such time as a new Operator is appointed by the Parties. |
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| 5.4 | The Management Committee
may remove an Operator by six months notice in writing and will appoint
a new Operator. If the Operator has failed to perform in a manner that
is consistent with the industry standards in the mining industry or is
in default of its duties |
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and responsibilities under this Agreement and the
Management Committee or another Party has given to the Operator written
notice setting forth particulars of the Operator’s default and the
Operator has not within 30 days of such notice commenced to remedy the
default and thereafter to proceed continuously and diligently to complete
all required remedial action, the other Party will become the Operator.
|
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| 5.5 | Upon the Operator making a voluntary or involuntary
assignment into bankruptcy or taking advantage of any legislation for
the winding-up or liquidation of the affairs of insolvent or bankrupt
companies, the Operator will automatically cease to be the Operator and
the other Party who is not the Operator or its nominee, will be appointed
as Operator. |
| 5.6 | The new Operator will assume all of the rights, duties,
liabilities and status of Operator as provided in this Agreement. The
new Operator will have no obligation to hire any employees of the former
Operator. |
| 5.7 | Upon ceasing to be Operator, the former Operator
will forthwith deliver to the new Operator, the custody of all Assets,
Property, books, records and other property both real and personal relating
to this Agreement. |
| ARTICLE 6 – RIGHTS, DUTIES AND STATUS OF OPERATOR | |
| 6.1 | The Operator in its operations hereunder will be
deemed to be an independent contractor. The Operator will not act or hold
itself out as agent for any of the Parties nor make any commitments on
their individual behalf, unless specifically permitted by this Agreement
or directed in writing by such Party. |
| 6.2 | Subject to any specific provision of this Agreement
and subject to it having the right to reject any direction on reasonable
grounds by virtue of its status as an independent contractor, the Operator
will perform its duties hereunder in accordance with the Mine Restart
Program, the Twelve-Year Mining Plan and this Agreement. |
| 6.3 | The Operator will manage and carry out such Mine
Restarting Works as set out in the Mine Restart Program, the Twelve-Year
Mining Plan and this Agreement and as the Management Committee may direct
from time to time and in connection therewith will notify the Parties
of any change in Mine Restarting Works which the Operator considers material
and, if it is not reasonably possible, the Operator will notify the Parties
so soon thereafter as is reasonably possible. |
| 6.4 | Subject to Section 4.1, the Operator will have the
exclusive authority to make all decisions relating to the day-to-day operations
at the Gibraltar Mine. |
| 6.5 | Subject to Section 4.1, the Operator will have the
sole and exclusive right and authority to manage and carry out all Mine
Restarting Works and to enter into contracts and subcontracts on behalf
of the Joint Venture with third parties in respect thereof and incur the
costs required for that purpose. In so doing the Operator will, unless
it obtains the approval of the Management Committee: |
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(a) |
comply with the provisions of all agreements
or instruments of title under which the Property or Assets are held; |
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(b) |
pay all costs properly incurred promptly
as and when due; |
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(c) |
prosecute claims or, where a defence
is available, defend litigation arising out of the Mine Restarting Works
provided that any Party may join in the prosecution or defence at its
own expense; |
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(d) |
perform such assessment work or make
payments in lieu thereof and pay such rentals, taxes or other payments
and do all such other things as may be necessary to maintain the Property
in good standing including, without limiting the generality of the foregoing,
staking and restaking mining claims, and applying for licenses, leases,
grants, concessions, permits, patents and other rights to and interests
in the minerals; and |
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(e) |
maintain accounts in accordance with
accounting principles generally accepted and consistently applied in the
mining industry in Canada. |
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| 6.6 | Subject to Section 4.1,
the Operator will be entitled to make all operational decisions with respect
to the methods and extent of mining and processing of ore, concentrate
and metal produced from the Gibraltar Mine (for example, without limitation,
the decision to process by heap leaching rather than conventional milling). |
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| 6.7 | The Operator will, at all
times, perform its duties and obligations hereunder in a sound and workmanlike
manner in accordance with sound mining and engineering practices and in
substantial compliance with all applicable federal, state, provincial,
territorial and municipal laws, by-laws, ordinances, rules and regulations
and this Agreement. |
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| ARTICLE 7 – RESTARTING THE GIBRALTAR MINE | ||
| 7.1 | Upon a decision by the Board
of Directors of Taseko to re-start the Gibraltar Mine, without limitation,
the Operator will carry out on behalf of the Joint Venture, all works
and undertakings necessary to restart the Gibraltar Mine in accordance
with the Mine Restart Program and the Twelve-Year Mine Plan including
the following: |
|
(a) |
hiring and training of qualified operating
personnel, including negotiation of union contracts, if applicable; |
|
(b) |
preparing, inspecting, upgrading and
repairing all equipment, including shovels, trucks, earth-moving equipment
and all other equipment; |
|
(c) |
inspecting, upgrading and repairing
all mine and plant buildings, including roads and the SX-EW plant; |
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(d) |
purchasing any additional equipment
required; |
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(e) |
securing transportation, storage, loading,
unloading and processing services for the copper concentrate; and |
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(f) |
administrative services, including hiring
and training a personnel, upgrades to computer equipment and software,
insurance arrangements and the formulation of employee benefit plans. |
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| ARTICLE 8 – INFORMATION AND DATA | ||
| 8.1 | At all times during this
Agreement, the duly authorized representatives of each Party will, at
its and their sole risk and expense and at reasonable intervals and times,
have access to the Property and to all technical records and other factual
engineering data and information relating to the Property which is in
the possession of the Operator. |
|
| 8.2 | The Operator will furnish
the Parties with monthly progress reports and with a final report within
thirty days of the Completion Date. The final report will show the Mine
Restart Program completed and any other changes or developments affecting
the Gibraltar Mine that the Operator considers are material. |
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| ARTICLE 9 – LIABILITY OF THE OPERATOR | ||
| 9.1 | The Operator will indemnify
and save Gibraltar LP and its officers, employees or agents harmless from
and against any loss, liability, claim, demand, damage, expense, injury
or death, including, without limiting the generality of the foregoing,
legal fees, resulting from any acts or omissions of the Operator or its
officers, employees or agents and any reclamation obligations in respect
of the Gibraltar Mine whatsoever. |
|
| 9.2 | Notwithstanding the foregoing,
Gibraltar LP will not be indemnified or held harmless by any of the Parties
for any loss, liability, claim, damage, expense, injury or death, including,
without limiting the generality of the foregoing, legal fees, resulting
from the gross negligence or wilful misconduct of Gibraltar LP or its
officers, employees or agents. |
|
| 9.3 | Gibraltar LP and its officers,
employees or agents will not be liable to any other Party nor will any
Party be liable to the Gibraltar LP and its officers, employees or agents
in contract, tort or otherwise for special or consequential damages, including,
without limiting the generality of the foregoing, loss of profits or revenues. |
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| ARTICLE 10 – INSURANCE | ||
| 10.1 | The Operator will, at all
times, place and maintain with a reputable insurer or insurers such insurance
as is the industry standard in order to protect the Parties together with
such other insurance as any Party may by notice reasonably request, and
will have Gibraltar LP named as a named insured on such insurance policies,
as its interest may appear. The Operator will, upon the written request
of any Party, provide it with evidence of that insurance. |
|
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| 10.2 | A Party may place, for its
own account, insurance for greater or other coverage than that placed
by the Operator. |
|
| ARTICLE 11 – RELATIONSHIP OF PARTIES | ||
| 11.1 | The rights, duties, obligations
and liabilities of the Parties will be several and not joint nor joint
and several. |
|
| 11.2 | Nothing herein contained
will be construed as creating a partnership of any kind or as imposing
upon any Party any partnership duty, obligation or liability to any other
Party. |
|
| 11.3 | No Party will, except when
required by this Agreement or by any law, by-law, ordinance, rule, order
or regulation, use, suffer or permit to be used, directly or indirectly,
the name of any other Party for any purpose related to the Property. |
|
| ARTICLE 12 – SHARING OF PRODUCTION AND REVENUE | ||
| 12.1 | Subject to this Section
12.2, Gibraltar will be entitled to all production from the Gibraltar
Mine and to all proceeds from the sale of such production. |
|
| 12.2 | Gibraltar LP will be entitled
to a revenue share (“Revenue Share”) of production from
the Gibraltar Mine equal to a maximum 20% Net Smelter Return for a term
commencing on the Completion Date of production from the Gibraltar Mine
in accordance with the Revenue Share percentages set out in Schedule 4
and terminating after twelve years and, thereafter, to a Revenue Share
equal to 3% Net Smelter Return for the succeeding 5 years. Gibraltar LP
will be entitled to take its Revenue Share in kind as an equivalent value
of production. |
|
| 12.3 | For the purposes of determining
the Revenue Share, “Net Smelter Returns” will be calculated
by taking the gross revenues from the sale of all ore mined from the Gibraltar
Mine and from the sale of concentrate and metal derived from ore mined
at the Gibraltar Mine, and deducting therefrom: |
|
(a) |
all smelting and refining costs, sampling,
assaying and treatment charges and penalties, including but not limited
to metal losses, penalties for impurities and charges for refining, selling
and handling by the smelter, refinery or other purchaser (including price
participating charges by smelters and by refiners); |
|
(b) |
costs of handling, transporting, securing
and insuring such material from the Gibraltar Mine or from a concentrator,
whether situated on or off the Gibraltar Mine, to a smelter, refinery
or other place of treatment, and in the case of gold or silver concentrates,
security costs; |
|
(c) |
ad valorem taxes and taxes based upon
sales or production, but not income taxes; and |
|
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(d) |
marketing costs, including sales commissions paid
to arm’s length parties in amounts that are in accordance with rates
customary in the industry, incurred in selling ore, concentrate and metal
produced from the Gibraltar Mine. |
|
For the purposes of determining
Net Smelter Returns, all receipts and disbursements in a currency other
than Canadian will be converted into Canadian currency on the day of receipt
or disbursement, as the case may be. |
||
| 12.4 | Gibraltar will provide to
Gibraltar LP a quarterly report commencing on completion of the full first
quarter, and within 30 days of each quarter thereafter, following the
recommencement of commercial production at the Gibraltar Mine, which will
include the calculation of production from the Gibraltar Mine, Net Smelter
Returns and the Revenue Share for such period, determined in accordance
with this Section, certified to be correct by the Chief Executive Officer
and the Chief Financial Officer of Gibraltar and of Taseko. |
|
| 12.5 | Payments on account of the
Revenue Share will be made by Gibraltar to Gibraltar LP on a quarterly
basis in Canadian dollars at a Canadian chartered bank designated by Gibraltar
LP, from time to time (the “Payment Bank”), commencing
with the month end date that is not more than three months after the date
of the first commercial shipment of production from the Gibraltar Mine. |
|
| 12.6 | If the Payment Bank (or
any successor bank) fails, liquidates or is succeeded by another bank,
or for any reason fails or refuses to accept any payment, Gibraltar will
not be held in default for failure to make such payment until 30 days
after Gibraltar LP has notified Gibraltar of the name of another bank
which will act as Gibraltar LP’s agent to receive the payments. |
|
| 12.7 | Gibraltar may, but will
not be under any duty to, engage in price protection (hedging) or speculative
transactions such as futures contracts and commodity options in its sole
discretion covering all or part of production from the Gibraltar Mine
and, except in the case where products are actually delivered and a sale
is actually consummated under this price protection or speculative transactions,
neither the profits or losses from such transactions will be taken into
account in calculating Net Smelter Returns or any interest therein. |
|
| 12.8 | Gibraltar will ensure that
reasonable practices and procedures are adopted and employed for weighing,
determining moisture content, sampling and assaying and determining recovery
factors. |
|
| 12.9 | Gibraltar LP will be entitled,
from time to time, to review all of the books and records in the possession
of or under the control of Gibraltar or Taseko in respect of the Revenue
Share, and to conduct an audit of all such books and records. If Gibraltar
LP undertakes any such review or audit, each of Gibraltar and Taseko will
provide, to Gibraltar LP or its agent, all books and records in the possession
of or under the control of Gibraltar or Taseko and that are relevant to
such review and audit. If, as a result of such review and audit, and amount
is determined to be payable by Gibraltar to Gibraltar LP in respect of |
|
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the Revenue Share that exceeds
the amounts that have been paid by Gibraltar to Gibraltar LP in respect
of the Revenue Share by three per cent (3%), Gibraltar will pay and reimburse
and indemnify and save Gibraltar LP harmless from all costs and expenses
incurred by Gibraltar LP in the conduct of such review and audit. |
||
| 12.10 | All amounts payable by Gibraltar
to Gibraltar LP under this Article 12 which are not paid when due will
bear interest at the prime rate from time to time of HSBC Bank Canada
(calculated and compounded monthly) from the date such amounts are to
be paid until such amounts, and interest as aforesaid, are paid. |
|
| ARTICLE 13 – TASEKO SUPPORT | ||
| 13.1 | Taseko hereby consents and
agrees to the terms, covenants, provisions, stipulations, conditions and
representations and warranties of Gibraltar contained in this Agreement
and becomes a party to this Agreement severally as well as jointly in
the same manner and to the same extent as if Taseko were a party hereto,
and without restricting the generality hereof, Taseko covenants and agrees
to observe and perform all of the covenants and provisions contained herein
and on the part of Gibraltar herein to be observed and performed. Taseko
agrees with Gibraltar LP that Taseko will, under this Section, be and
be deemed to be a party to the Agreement as if Taseko had executed the
same as “Gibraltar” herein and not merely a surety and, accordingly,
Taseko will not be discharged nor will the liability of Taseko be affected
by any giving of time or substitution of any new covenant or any variation
expressed or implied in any of the terms or provisions of the Agreement
or any omissions on the part of Gibraltar LP to enforce any covenant or
stipulation contained in the Agreement and on the part of Gibraltar to
be performed or observed, or any arrangement or dealing between Gibraltar
and Gibraltar LP or the performance or observance of any of Gibraltar
LP’s covenants herein contained, or any other act or thing or omission
or means whereby the liability of Taseko or a party would not have been
discharged, nor will Taseko be entitled to any previous demands or notice
of any kind. |
|
| 13.2 | Taseko will use all commercially
reasonable efforts to cause Gibraltar to satisfy its duties to carry out
obligations under this Agreement to the extent that the same are under
its control. |
|
| ARTICLE 14 – TERMINATION | ||
| 14.1 | The Joint Venture and this
Agreement will terminate on the earlier of the following to occur: |
|
(a) |
August 1, 2004, if the Gibraltar Mine
has not been restarted by such date; |
|
(b) |
a Change of Control, but only on the
election of Gibraltar LP; |
|
(c) |
a Material Default, but only on the
election of Gibraltar LP; |
|
(d) |
the expiration of Gibraltar LP’s
Revenue Share as provided in Section 12.2; or |
|
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(e) |
the bankruptcy, insolvency, liquidation or dissolution
of Gibraltar LP or the occurrence of any other event which would permit
a trustee or receiver to administer the affairs of Gibraltar LP. |
|
| ARTICLE 15 – NOTICE | ||
| 15.1 | Any notice, direction or
other instrument required or permitted to be given under this Agreement
will be in writing and will be given by the delivery of same or by sending
it by telecopier or other similar form of communication, in each case
addressed to the intended recipient at the address of the respective Party
set out on the first page hereof. |
|
| 15.2 | Any notice, direction or
other instrument aforesaid will, if delivered, be deemed to have been
given and received on the day it was delivered, and, if sent by telecopier
or other similar form of communication, on the day it was actually received. |
|
| 15.3 | Any Party may, at any time,
give notice in writing to the others of any change of address, and from
and after the giving of such notice, the address therein specified will
be deemed to be the address of such Party for the purposes of giving notice
hereunder. |
|
| ARTICLE 16 – GENERAL | ||
| 16.1 | No waiver of any breach
of this Agreement will be binding unless evidenced in writing executed
by the Party against whom waiver is claimed. Any waiver will extend only
to the particular breach so waived and will not limit any rights with
respect to any future breach. |
|
| 16.2 | This Agreement constitutes
the entire agreement between the Parties with respect to the subject matter
hereof. An amendment or variation of this Agreement will only be binding
upon a Party if evidenced in writing executed by that Party. |
|
| 16.3 | Unless earlier terminated
by agreement of Gibraltar and Gibraltar LP, the Joint Venture and this
Agreement will remain in full force and effect until the Completion Date. |
|
| 16.4 | Time is of the essence of
this Agreement. |
|
| 16.5 | This Agreement will enure
to the benefit of and be binding upon the Parties and their respective
successors and permitted assigns. |
|
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| 16.6 | This Agreement will be governed by and interpreted in accordance with the laws of British Columbia and the laws of Canada applicable therein and the Parties hereto irrevocably attorn to the jurisdiction of the courts of British Columbia. |
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and year first above written.
| GIBRALTAR MINES LTD. | ||
| By: | ||
| GIBRALTAR RECLAMATION TRUST LIMITED PARTNERSHIP, By Its General Partner, Gibraltar Reclamation Trust Limited |
||
| By: | ||
| TASEKO MINES LIMITED | ||
| By: | ||
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SCHEDULE 1
TWELVE-YEAR MINING PLAN
- 19 -
SCHEDULE 2
PROPERTY
- 20 -
SCHEDULE 3
MINE RESTARTING WORKS/ MINE RESTART PROGRAM
- 21 -
SCHEDULE 4
REVENUE SHARE PERCENTAGES
| Amount of Gross Subscriptions for Units in Gibraltar LP |
Percentage of Net Smelter Returns |
| Less than $19,000,000 | 11% |
| Less than $20,000,000 | 11% |
| Less than $21,000,000 | 12% |
| Less than $22,000,000 | 13% |
| Less than $23,000,000 | 13% |
| Less than $24,000,000 | 14% |
| Less than $25,000,000 | 14% |
| Less than $26,000,000 | 15% |
| Less than $27,000,000 | 15% |
| Less than $28,000,000 | 16% |
| Less than $29,000,000 | 16% |
| Less than $30,000,000 | 17% |
| Less than $31,000,000 | 18% |
| Less than $32,000,000 | 18% |
| Less than $33,000,000 | 19% |
| Less than $34,000,000 | 19% |
| Equal to or greater than 34,000,000 | 20% |
