EXHIBIT 4.49
SERVICES AGREEMENT
THIS AGREEMENT dated the 1st day of April, 2005.
BETWEEN:
FALLS MOUNTAIN COAL INC. ("Falls Mountain"), a British Columbia
corporation with its principal place of business in Vancouver, British
Columbia, Canada
AND:
SEDGMAN CANADA COMPANY ("Sedgman Canada"), a Nova Scotia company with
registered offices at Xxxxxxx, Xxxx Xxxxxx, Xxxxxx
AND:
SEDGMAN, L.L.C. ("Sedgman USA"), Pennsylvania Limited Liability Company
with its principal place of business in Pittsburgh, Pennsylvania
WHEREAS Falls Mountain entered into an Agreement of Purchase and Sale, dated the
1st day of April, 2005 (the "PURCHASE AND SALE AGREEMENT"), for the supply and
delivery of "EQUIPMENT", as defined in the Purchase and Sale Agreement to Falls
Mountain's Preparation Plant (the "PLANT"), located at Willow Creek Mine in
Chetwynd, British Columbia, Canada;
AND WHEREAS Falls Mountain desires to engage Sedgman Canada to provide services
at the Plant as required to take delivery of, install and fully commission the
Equipment.
THEREFORE, in consideration of the promises and of the mutual agreements
hereinafter contained, the parties hereto do hereby agree as follows:
1. SCHEDULES
1.1 ATTACHED SCHEDULES. The following attached Schedules are a part of this
Agreement:
Schedule I - Scope of Services
Schedule 1 - Scope of Services
Schedule 2 - Fees and Payment
2. SERVICES
2.1 SERVICES. Sedgman Canada will provide Falls Mountain with the services
described in the Scope of Services attached hereto as Schedule 1 (the
"SERVICES") and hereby incorporated into and made a part of this Agreement.
In the event of any inconsistency between this Agreement and Schedule 1,
this Agreement shall govern.
2.2 AMENDMENT OF SERVICES. Falls Mountain may from time to time, by written
notice to Sedgman Canada, make any alteration, addition, or deletion of or
to the Services. Subject to any specific agreement by the parties on the
fees payable with respect to any alteration, addition, or deletion of or to
the Services, the hourly rates as set out in Section 4 of Schedule 2 to
this Agreement will apply to determine the fees owing for any alteration,
addition, or deletion of or to the Services, provided that Sedgman Canada
will not perform any such alteration, addition, or deletion of or to the
Services without the prior express written approval of Falls Mountain.
2.3 STANDARD OF CARE. Sedgman Canada will perform the Services with that degree
of care, skill and diligence normally provided by a qualified and
experienced professionals performing services similar to the Services with
respect to industrial equipment similar to the Plant.
2.4 QUALIFIED PERSONNEL. Sedgman Canada represents that it has professional
personnel who have the qualifications, experience and capabilities as
described in section 2.3 to perform the Services, and that any contractors
or subcontractors retained by Sedgman Canada to perform the Services are
similarly qualified.
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3. FEES
3.1 FEES. Falls Mountain will pay Sedgman Canada the fees on the terms as set
out in Schedule 2.
3.2 TAXES. Falls Mountain shall be responsible for and pay all provincial sales
taxes, goods and services taxes and transfer taxes, if any, exigible with
respect to the provision of services hereunder.
3.3 TAX INDEMNITY. Falls Mountain shall indemnify and save harmless Sedgman
Canada from any and all costs, demands, claims, liabilities, actions and
other obligations of any nature whatsoever arising from Falls Mountain's
breach of section 3.2.
4. SCHEDULE OF SERVICES
4.1 SCHEDULE. Sedgman Canada shall prepare and submit to Falls Mountain, to
Falls Mountain's reasonable satisfaction, prior to the first payment, a
schedule (the "SCHEDULE OF SERVICES") acceptable to both the parties that
indicates the timing (start and completion) of the major constituents,
steps or elements of the Services. The Schedule of Services will include
the date that all the Equipment has been supplied and all the Services have
been performed ("PROJECT COMPLETION").
4.2 PROGRESS. Sedgman Canada shall monitor the progress of the Services
relative to the Schedule of Services; Falls Mountain shall not be required
to make payment of any amount specified in an invoice submitted by Sedgman
Canada in accordance with Schedule 2 unless such invoice is accompanied by
an updated version the Schedule of Services and report as described in
section 4.3.
4.3 RELIANCE ON SCHEDULE OF SERVICES. As part of the monitoring of the progress
of the Services Sedgman Canada acknowledges that Falls Mountain has an
interest in receiving
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an accurate estimate of the achievement of Mechanical Completion as soon as
possible, and that Falls Mountain will be entitled to receive this
information and rely on it to plan its sales of coal. Sedgman Canada will,
not later than 60 days prior to the anticipated date of Mechanical
Completion provide Falls Mountain with an updated Schedule of Services for
the purpose of permitting Falls Mountain to begin to make committed coal
sales.
4.4 PERFORMANCE. Sedgman Canada shall perform the Services in compliance with
the Schedule of Services. If at any time Sedgman Canada discovers that the
Schedule for Services cannot be met it will promptly advise Falls Mountain
in writing and provide a revised Schedule for Services to the reasonable
satisfaction of Falls Mountain indicating the revised dates for the
remaining portions of the Services. Failure to comply with this section 4.4
shall entitle Falls Mountain to terminate this Agreement in accordance with
Article 7 - Termination.
4.5 MECHANICAL COMPLETION, PERFORMANCE STANDARD AND COMMISSIONING. The
equipment, when fully installed and commissioned, has been designed to
achieve a standard of performance (the "PERFORMANCE STANDARD") as follows:
(a) process coal at a continuous feed rate of at least 450 metric
tons per hour in accordance with the conditions outlined in
Schedule 1, the Scope of Services;
(b) separation of ash from the coal so as to achieve less than or
equal to 8% ash dry basis per coal quality specifications
provided by Falls Mountain as detailed in Schedule 1, Scope of
Services;
will be mechanically completed when the Plant is ready to run at the
Performance Standard ("MECHANICAL COMPLETION"). It is a material provision
of this Agreement that Sedgman Canada
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achieve Mechanical Completion. Commissioning is achieved with Sedgman
Canada staff operating the Plant for a continuous period of at least 24
hours at a ninety two percent (92%) availability level where availability
is defined as operating hours divided by scheduled hours. In the event
Sedgman Canada is delayed in its efforts to complete commissioning of the
Plant by reason of:
(a) downtime associated with the existing crushing and handling
system;
(b) lack of raw coal feed from the mine; or
(c) excessive trash in the raw coal feed stock producing delays;
and such delay continues for 30 days or more, then , notwithstanding that
Commissioning has not taken place, Falls Mountain shall immediately remit
to Sedgman Canada the final payment amount set forth in Schedule 2. In the
event that 60 days elapses from the time Sedgman Canada advises in writing
that the Plant is ready to be commissioned and such 60 days' delay is a
result of the causes referred to in (a), (b) or (c) hereof, then Sedgman
Canada will be relieved of its obligation hereunder to commission the
Plant. Falls Mountain further agrees that it will also release any holdback
monies held under the Builders' Lien Act at the end of such 60 day period,
provided that it shall only be obliged to do so if it receives a Statutory
Declaration sworn by a senior officer of Sedgman Canada attesting to the
fact that all of the subtrades and suppliers to Sedgman Canada have been
paid and Sedgman Canada provides an indemnity in respect of any liabilities
which may arise under the Builders' Lien Act (British Columbia) in form and
substance and from a party satisfactory to Falls Mountain acting
reasonably.
5. RELEASE, INDEMNITY AND GUARANTEE
5.1 RELEASE. In consideration of the mutual promises made in this Agreement,
Sedgman Canada does hereby release, remise, acquit and forever discharge
Falls Mountain, its
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directors, officers, employees, agents, servants, and representatives, and
their respective successors and assigns, heirs, and representatives of and
from any and all demands, claims, liabilities, actions and causes of
actions, or other obligations of whatsoever nature (including obligations
of Sedgman Canada to its employees, agents and representatives) arising
directly and solely from Sedgman Canada's breach of this Agreement or
Sedgman Canada's negligence or willful misconduct in the performance of
it's obligations under this Agreement. Notwithstanding the foregoing
provisions of this section, Falls Mountain acknowledges and agrees that no
provision of this section shall be deemed to release, remise, acquit or
discharge Falls Mountain and its successors and assigns from any duty or
obligation which Falls Mountain or its successors and assigns has to
Sedgman Canada under this Agreement or by operation of law or otherwise.
5.2 SEDGMAN CANADA INDEMNITY. Sedgman Canada agrees and binds itself to
indemnify, hold and save harmless Falls Mountain, its officers, agents,
servants and employees from and against all claims, losses, costs, expenses
or damages, including reasonable legal fees, incurred or sustained by them,
or any of them, as a result of injury to persons and damage to property
(including but not limited to, officers, agents, servants or employees of
Sedgman Canada and officers, agents, servants or employees of any
subcontractors of Sedgman Canada) sustained in connection with or arising
out of or occurring in or resulting from Sedgman Canada's breach of this
Agreement or negligence or willful misconduct in the performance of its
obligations under this Agreement; and Sedgman Canada further agrees that in
the event any suits or other proceedings shall be brought against Falls
Mountain or its officers, agents, servants or employees on account of any
such injury or damage or violation of law, Sedgman Canada will provide for
and
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undertake the defence thereof, will pay any judgment or judgments rendered
against Falls Mountain , its officers, agents, servants or employees
therein, and will pay on behalf of Falls Mountain, its officers, agents,
servants or employees any and all reasonable legal fees incurred by them or
any of them as a result of such suit.
5.3 FALLS MOUNTAIN INDEMNITY. Subject to Sedgman Canada's obligation to comply
with all safety rules as set out in section 11.6 to this Agreement, Falls
Mountain agrees and binds itself to indemnify, hold and save harmless
Sedgman Canada, its members, officers, agents, servants and employees from
and against all claims, losses, costs, expenses or damages, including
reasonable legal fees, incurred or sustained by them, or any of them, as a
result of injury to persons (including but not limited to, partners,
officers, agents, servants or employees of Sedgman Canada and officers,
agents, servants or employees of any subcontractors of Sedgman Canada)
sustained in connection with or arising out of or occurring in or resulting
from Falls Mountain's activities at the Plant or the ownership, lease or
operation of (a) the Plant or (b) the premises on which the Plant is
located, and Falls Mountain further agrees that in the event any suits or
other proceedings shall be brought against Sedgman Canada or its members,
officers, agents, servants or employees on account of any such injury or
damage, Falls Mountain will provide for and undertake the defence thereof,
will pay any judgment or judgments rendered against Sedgman Canada, its
officers, agents, servants or employees therein, and will pay on behalf of
Sedgman Canada, its officers, agents, servants or employees any and all
reasonable legal fees incurred by them or any of them as a result of such
suit.
5.4 SEDGMAN USA GUARANTEE. Sedgman USA hereby absolutely, irrevocably and
unconditionally guarantees to Falls Mountain, its successor and assigns,
the full
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performance and observation of all the terms, covenants, conditions and
provisions to be performed or observed by Sedgman Canada under this
Agreement. Such guarantee shall be as primary obligor and not merely as
surety.
6. INSURANCE AND DAMAGES
6.1 ADDITIONAL INSURED. In further consideration of the foregoing and in
recognition that insurance coverage with Falls Mountain named as an
additional insured may be the only practical manner of protecting Falls
Mountain from financial loss arising from or in any way related to or
connected with Sedgman Canada's activities, Sedgman Canada agrees to obtain
at its cost insurance policies from reliable insurers on terms reasonably
satisfactory to Falls Mountain covering normal perils and risks including:
current and valid equipment insurance, course of construction insurance and
general liability insurance; all own expense, commence to rectify, or cause
to be rectified, the breach, matter or thing with Falls Mountain as an
additional named insured in an amount not less than US $2,000,000 (Two
Million Dollars), including excess umbrella insurance coverage, covering
injury to persons and damage to property sustained in connection with or
arising out of or occurring in or resulting from Sedgman Canada's
activities and covering any and all contractual obligations of Sedgman
Canada under this Agreement, including any and all obligations of Sedgman
Canada with respect to the indemnity or save harmless provision set forth
above, it being expressly agreed that this obligation shall constitute a
contract to procure insurance.
6.2 LIMIT OF LIABILITY. Subject to amounts recoverable under policies of
insurance required to be maintained under the Agreement, Sedgman Canada's
aggregate liability under this Agreement for any amounts not covered by
insurance proceeds, shall not exceed 10% of
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the sum of the total fees payable to Sedgman Canada under this Agreement.
Sedgman Canada will not take any action, or permit others to take any
action, or fail to take any action as required, which will have the effect
of reducing or prejudicing or impairing in any way any applicable insurance
coverage of which Falls Mountain is a potential beneficiary.
6.3 CONSEQUENTIAL DAMAGES. Notwithstanding any other provision of this
Agreement, Sedgman Canada shall not be liable to Falls Mountain for any
claim of any kind relating to interruption of operations or loss of
anticipated profits, nor for any other special, incidental, contingent, or
consequential damages.
7. TERMINATION
7.1 NOTICE OF DEFAULT. In the event Sedgman Canada breaches any material
provision of this Agreement, Falls Mountain may give Sedgman Canada a
notice of default.
7.2 RECTIFICATION. In the event a notice of default is given by Falls Mountain
pursuant to section 7.1, Sedgman Canada shall within 10 days after receipt
of such notice, and at its giving rise to Falls Mountain's notice. If such
breach is not capable of being cured within 10 days, Sedgman Canada shall
diligently continue such rectification until completed.
7.3 FAILURE TO RECTIFY. If rectification of the default is not commenced in
accordance with section 7.2, Falls Mountain may immediately terminate the
Agreement.
7.4 PAYMENT ON TERMINATION. In the event of termination under this Article 7 -
Termination, Falls Mountain shall pay Sedgman Canada the fees payable in
accordance with Schedule 2 for all Services completed up to the date of the
termination, but in the event of termination, may set off and deduct any
and all additional costs, expenses and damages incurred by Falls Mountain
on a commercially reasonable basis as a result of the default.
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8. APPLICABLE LAWS, BUILDING CODES AND BY-LAWS
8.1 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia. In the event
of a dispute under this Agreement, a suit may be brought only in a court of
competent jurisdiction of the Province of British Columbia.
8.2 CODES AND BYLAWS. Sedgman Canada shall provide the Services in full
compliance with all laws, statutes, ordinances, rules and regulations,
including all judicial interpretations of the foregoing, relating to or in
any way connected with the labor, health, safety, environment, and work
undertaken herein including, without limitation, any surface mining laws if
Sedgman Canada's activities hereunder are construed by any governmental
agency or authority as being a surface mining operation. Sedgman Canada
agrees and binds itself to indemnify, hold and save harmless Falls Mountain
from and against all claims losses, costs, expenses, damages or fines,
including reasonable attorneys' fees incurred as a result of Sedgman
Canada's non-compliance, for whatever reason, with said law, statute,
ordinance, rule or regulation.
9. BUILDERS LIENS
9.1 HOLDBACK. Falls Mountain will retain a 10% holdback in accordance with the
Builders' Lien Act (British Columbia), and will, subject to Falls
Mountain's set-off rights, release that amount in accordance with that Act.
9.2 REMOVAL OF LIENS. Sedgman Canada will take steps to keep the place of the
Services free of any builder's liens and Sedgman Canada will defend and
indemnify Falls Mountain from any builder's lien filed as a result of the
Services. Sedgman Canada will pay all
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costs and expenses including actual legal costs incurred by Falls Mountain
as a result of any builders lien.
9.3 PAYMENT INTO COURT. If any builder's lien is filed Falls Mountain may hold
back an amount equal to the lien, plus security for costs, and may, at its
election, pay such holdback into court to obtain the discharge of the lien.
10. SUBCONTRACTING
10.1 SUBCONTRACTORS. Sedgman Canada may subcontract part or parts of the
Services, subject to the prior approval of Falls Mountain, which approval
shall not be unreasonably withheld.
11. GENERAL
11.1 ARBITRATION. All matters in dispute under this Agreement may, with the
concurrence of both Falls Mountain and Sedgman Canada, be submitted to
arbitration by a single arbitrator under the Commercial Arbitration Act of
British Columbia, with any arbitration taking place in Vancouver, Canada,
or such other location as the parties may agree.
11.2 ENTIRE AGREEMENT. This Agreement, including the Schedules and any other
documents expressly referred to in this Agreement as being a part of this
Agreement, and the Agreement of Purchase and Sale, contains the entire
agreement of the parties regarding the provision of Services and no
understandings or agreements, oral or otherwise, exist between the parties
except as expressly set out in this Agreement.
11.3 COUNTERPARTS. This Agreement and all documents contemplated by or delivered
under or in connection with this Agreement may be executed and delivered in
any number of counterparts with the same effect as if all Parties had all
signed and delivered the same
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document and all counterparts will be construed together to be an original
and will constitute one and the same agreement.
11.4 AMENDMENT. This Agreement may be amended only by agreement in writing,
signed by both parties.
11.5 SURVIVAL OF OBLIGATIONS. All of Sedgman Canada's obligations to perform the
Services to the required standard of care shall survive the termination or
completion of this Agreement.
11.6 TIME. Sedgman Canada acknowledges that time is of the essence with respect
to the Services and accordingly Sedgman Canada will provide the Services in
accordance with the Schedule for Services. Sedgman Canada shall not be in
default under this Agreement if it fails to meet the Schedule for Services
because of events beyond Sedgman Canada's reasonable control.
11.7 SAFETY. Sedgman Canada will at all times, and in the performance of all
obligations under this Agreement, without additional payment, strictly
comply with all of Falls Mountain's safety rules and regulations applicable
to the Plant and delivered in writing to Sedgman Canada, and also all
statutory rules applicable to the Plant.
11.8 INDEPENDENT CONTRACTOR. Sedgman Canada is an independent contractor in the
provision of the Services and accepts all risks, known or unknown or
unforeseen, in connection with the safety of Falls Mountain's premises
including without limitation activities and occurrences in any way
connected with Falls Mountain's operations.
11.9 NOTICES. Any notice, report or other document that either party may be
required or may wish to give to the other must be in writing, unless
otherwise provided for, and will be deemed to be validly given to and
received by the addressee, if served personally, on the
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date of such personal service or, if delivered by mail, or facsimile, when
received. The addresses for delivery will be as follows:
FALLS MOUNTAIN:
Falls Mountain Coal Inc.
c/o Pine Valley Mining Corporation
501-- 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
X0X 0X0
Fax: (000) 000-0000
ATTENTION: Xxxxxx Xxxxxxxxx
with a copy to:
Bull, Housser & Xxxxxx
Banisters and Solicitors
3000 Royal Centre
0000 Xxxx Xxxxxxx Xxxxxx
XX Xxx 00000
Xxxxxxxxx XX X0X 0X0
ATTENTION: Xxxxx Xxxxxx
SEDGMAN CANADA:
Sedgman Canada Company
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx, Xxxxxx Xxxxxx 00000
Fax: (000) 000-0000
ATTENTION: Xxxxxxx X. Xxxxxx
11.10 UNENFORCEABILITY. If any provision of this Agreement is invalid or
unenforceable, it shall be severed from the Agreement and will not affect
the enforceability or validity of the remaining provisions of the
Agreement.
11.11 HEADINGS. The headings in this Agreement are inserted for convenience of
reference only and shall not form part of nor affect the interpretation of
this Agreement.
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11.12 WAIVER. No waiver by either party of any breach by the other party of any
of its covenants, obligations and agreements shall be a waiver of any
subsequent breach or of any other covenant, obligation or agreement, nor
shall any forbearance to seek a remedy for any breach be a waiver of any
rights and remedies with respect to such or any subsequent breach.
11.13 FORCE MAJEURE. If, because of an event or circumstance beyond the
reasonable control of either party, Sedgman Canada is unable to meet or is
delayed in meeting its obligations under this Agreement, and if Sedgman
Canada promptly gives Falls Mountain written notice of such event or
circumstance, then the time of performance will be extended as reasonably
required as a result of the circumstance or event. The parties will each
bear their own costs as a result of the circumstance or event. Nothing in
this paragraph shall be construed as relieving or suspending Falls Mountain
from its obligations to pay for work performed to the date of such
circumstance or event.
11.14 ASSIGNMENT. No party will assign this Agreement, or any part of this
Agreement, without the consent of the other party, such consent not to be
unreasonably withheld, provided that Sedgman Canada acknowledges and agrees
that Falls Mountain may assign this contract to an institutional lender, by
way of security, without consent and Sedgman Canada agrees it will execute
and deliver such consents and other agreements as such lender may
reasonably request in connection therewith.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
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ATTEST: SEDGMAN CANADA COMPANY
BY: /s/ Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Englesberry ------------------------------------
------------------------------------- ITS: President
ATTEST: SEDGMAN, L.L.C.
BY: /s/ Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Englesberry ------------------------------------
------------------------------------- ITS:
-----------------------------------
ATTEST: FALLS MOUNTAIN COAL INC.
BY: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
------------------------------------- ITS: President and CEO
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SCHEDULE 1 -- SCOPE OF SERVICES
1. FALLS MOUNTAIN
SEDGMAN CONTRACT - 2342
1.0 EXECUTIVE SUMMARY
Falls Mountain has selected Sedgman to construct new Coal Preparation Plant
at their Willow Creek Mine located in northeast British Columbia. The
Project site is approximately 45 km west of Chetwynd, British Columbia. The
new preparation plant will be capable of processing 450 ton per hour (TPH)
of run-of-mine coal produced from the open-pit Willow Creek Mine. Existing
facilities include primary and secondary crushers, a crushed coal stockpile
and rail loadout bin. Using the information provided by Falls Mountain in
their request for proposal and data obtained from the summary technical
report of the Willow Creek property dated September, 2002, prepared by
Norwest, Sedgman has prepared a flowsheet and capital cost for the
following plant processing configuration:
Option Facility Description
------ --------------------
Base proposal 50mm x 13mm full processing, heavy media 13mm x 0.15mm partial
processing, heavy media, spirals 0.15mm x 0 belt filter press
xxxxxxx
1.1 SYSTEM PARAMETERS
Falls Mountain requested Sedgman to provide a turnkey bid proposal for a
preparation facility capable of processing crushed, run-of-mine coal
(primary or secondary crushing) at a rate of 450 tons per hour. Specific
design requirements provided by the Owner include:
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- Raw Coal Feed Source(s)
- PCI and metallurgical coal produced from the Willow Creek
open-pit mine (central and north pit areas).
- Coal Seam Nos. 1, 2, 3, 4, 5, 6, 7 and Seam A.
- Plant Design Capacity
Size TPH Process Facility
---- --- ----------------
50mm x 0 450 Heavy Media Cyclone, Water Only/Spiral
- Operating Mode
- 6,500 hours/year
- Climate
- Minus 48 degrees Celsius to plus 32 degrees Celsius
- Product Specifications
- Washed Coal/Bypass Product
MAXIMUM
----------
Moisture: 8%
Ash: 8.5% (dry)
- Plant Site
- Adjacent to secondary crusher building
- Environmental Permits and Building Permits
- Provided by Falls Mountain
- Ancillary Facilities
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- Site preparation, electrical power supply, water supply and
communications are provided by Owner.
- Additional Wash Plan Requirements
- Ability to bypass a variable portion of the plant feed while
operating
- Option for tailings disposal to either ponds or belt press for
dewatering
- PLC control, automated density control
- Sample points for product and waste streams
- Optional on-line ash analyzer
- Provisions to allow an increase to 600 tons per hour feed rate
1.2 PREPARATION PLANT DESIGN
1.2.1 FACILITY CAPACITY
The new Preparation Plant will process the 50mm x 0 raw coal product from
the secondary crusher. Sedgman will modify the existing crusher discharge
to allow the 50mm x 0 crushed coal to be delivered to the plant feed
conveyor at a rate of 450 tph. Using the size consist data provided,
Sedgman determined that the 13mm x 0 size will range from 55 to 65 percent
of the plant feed.
Based upon a review of the data provided and discussion with Falls
Mountain, Sedgman is proposing the following process circuitry to meet
product quality specifications:
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Base Proposal -- 50mm x 0 Processing; Flowsheet Drawing No. 2342-0102
Size Circuit Processing
---- ------- ----------
50mm x 13mm Heavy Media Cyclone 100% Processing
13mm x 1.5mm Heavy Media Cyclone Variable, up to 80% Processing
13mm x 0 Bypass Variable, up to 100% bypass of
13mm x 0
1.5mm x 0.15mm Water-Only Cyclone/Spiral
0.15mm x 0 Belt Filter Press Xxxxxxx 100% of 0.15mm x 0
The flowsheet configuration developed by Sedgman allows Falls Mountain to
process the run-of-mine coal at a 450 TPH feed rate. Depending upon
run-of-mine quality characteristics, in-seam ash, percent dilution,
washability characteristics and size consist, the weight percentage of raw
coal bypassed to the clean coal product during coal washing will vary from
<20 percent of the plant feed up to 65 percent of the plant feed.
1.2.2 PLANT LOCATION
The new Preparation Plant Facility will be located adjacent to the existing
secondary crushing tower. The plant location will be in general accordance
with the general site building plan drawing 00000-000-000 prepared by
Westmar Consulting Engineers. Sedgman considers this location preliminary,
with the final location to be adjusted based upon final contours, existing
conveyor profiles and Falls Mountain requirements.
1.2.3 SCOPE OF SUPPLY -- PLANT AND MATERIAL HANDLING
The following items have been included in the Sedgman capital cost estimate
for the base and alternate bid proposals.
- Base Proposal
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- Plant Feed Conveyor and bypass chute arrangement connecting
existing secondary crusher discharge with new preparation plant.
- 450 TPH Preparation Plant-- Partial to Full Washing
- Raw fine coal bypass (13mm x 0) return to new plant clean coal
conveyor
- Refuse conveyor and 75 ton refuse bin
- Clean coal conveyor connecting new plant with existing crushed
coal transfer conveyor
- Refuse thickener with two 3.0 meter wide belt presses to xxxxxxx
the 0.15mm x 0 thickener underflow
- Provisions for sampling of feed and product streams and alternate
for ash analyzer
2.0 PROCESS DESCRIPTION
A base bid process configuration, including 0.15mm x 0 refuse fines
dewatering and disposal, is detailed in this Proposal.
2.1 OWNER-SUPPLIED DATA
Falls Mountain has provided Sedgman with current size and washability data.
The size and washability data provided was collected from production
samples of seam 6 and seam 7.
2.2 MINE PLAN
Falls Mountain has indicated that the bulk of their production from
2005-2007 will be from Seam 7 (40%-50%), Seam 6 (20%) and the balance from
Seams 1-4 (30%-40%). Production during this period will be primarily from
the Willow Creek central pit.
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2.3 RAW COAL SIZE DISTRIBUTION
The raw coal size distribution provided by Falls Mountain is summarized
below. Sedgman believes that the current size consist will degrade to finer
size consist when Falls Mountain begins mining seams 1-5 in the central and
north pit areas. The finer size consist shown as future size consist
reflects coals with an HGI index of 80-95.
Size (mm) Seam 6-7 Wt.% Projected Size(1) Wt.%
--------- ------------- ----------------------
50 x25 28.7 11.0
25 x 10 20.2 25.53
10 x 6 7.4 7.97
6 x 2 13.6 20.4
2 x 1 8.7 7.6
1 x 0.5 7.6 8.6
0.5 x 0.15 6.4 9.45
-0.15 7.4 9.45
100.0 100.0
2.4 WASHABILITY
Falls Mountain provided washability data for seams 6, 7 and "A" seam. This
data used for plant design is summarized in the table below:
----------
1 "'Projected size consist reflects coals to be mined with HGI index ranging
from 80-95 HGI.
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TABLE 2.1
+6MM SIZE
Size/Spec. Gravity Seam 6 (1) Seam 7 Seam A
-------------------- ------------- ------------- -------------
Sink Float Wt. % Ash % Wt. % Ash % Wt. % Ash %
---- ----- ----- ----- ----- ----- ----- -----
Float - 1.30 4.22 3.11 60.06 2.49 40.78 6.91
1.30 - 1.50 66.05 5.37 23.14 4.16 14.28 11.12
1.50- 1.70 16.51 22.36 1.32 37.11 9.93 30.65
1.70 - 1.80 3.94 31.07 1.27 47.54 1.96 46.70
1.80 - Sink 9.29 57.66 14.21 87.38 33.05 80.87
(1) WASHABILITY DATA FOR +3.0MM SIZE
TABLE 2.2
FALLS MOUNTAIN WASHABILITY DATA
6MM X 0.5MM SIZE
Size/Spec. Gravity Seam 6 (1) Seam 7 Seam A
-------------------- ------------- ------------- -------------
Sink Float Wt. % Ash % Wt. % Ash % Wt. % Ash %
---- ----- ----- ----- ----- ----- ----- -----
Float - 1.30 17.13 1.78 59.72 1.46 41.06 2.1
1.30 - 1.50 61.4 3.34 28.78 4.33 36.44 9.56
1.50 - 1.70 8.49 22.96 1.95 31.95 6.76 27.01
1.70 - 1.80 1.92 33.8 0.76 48.74 1.32 36.09
1.80 - Sink 11.06 62.71 8.79 73.96 14.32 82.2
(1) WASHABILITY DATA FOR +3.0 X 0.5MM SIZE
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TABLE 2.3
FALLS MOUNTAIN WASHABILITY DATA
0.5 X 0.15MM SIZE
Size/Spec. Gravity Seam 7 Seam A
-------------------- ------------- -------------
Sink Float Wt. % Ash % Wt. % Ash %
---- ----- ----- ----- ----- -----
Float - 1.30 45.88 1.46 57.03 2.24
1.30 - 1.50 44.82 4.33 28.12 9.04
1.50- 1.70 2.8 31.95 4.04 31.08
1.70 - 1.80 0.59 48.74 0.98 45.11
1.80 - Sink 5.91 73.96 9.83 75.37
2.5 CLEAN COAL PRODUCT SPECIFICATIONS
Falls Mountain has provided the following clean coal quality specifications
for the wash plant output:
Wash Plant Product Maximum
------------------ ----------
Moisture: 8.0%
Ash: 8.5% (dry)
The wash plant product is the combined output of bypassed raw coal fines
(13mm x 0) combined with 50 x 0.15mm wash coal to meet the quality
specifications.
4.0 CLARIFICATIONS AND DUTIES
4.1 CLARIFICATIONS AND DUTIES OF SEDGMAN CANADA
- Sedgman Canada shall install all the Equipment, as defined in the
Purchase and Sale Agreement, at the Plant.
- Sedgman Canada shall provide all on-site services required for the
installation of the Equipment, including inspection, surveying, design
and construction services as required.
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- Sedgman Canada will provide engineering services and technical
assistance as may be required to fully install and commission the
Equipment and achieve Mechanical Completion in accordance with the
Schedule of Services.
- Sedgman Canada will at its cost provide one week of on-site training
of Falls installed and operational. Such training may occur during the
time of commissioning leading to Mechanical Completion.
- Sedgman assumes the Owner's existing equipment is in proper working
condition and no mechanical repairs are necessary.
- No sales or use taxes are included in the Proposal. All such taxes
will be the Owner's responsibility.
- Sedgman assumes a two (2) working day Owner drawing approval
turnaround, with only one (1) review stage.
- Our price is based on non-union wages, work rules and productivity.
- No field work would be performed if temperatures fall below 20 degrees
above zero Fahrenheit, unless we would be compensated for the added
cost of providing winter protection.
- No concrete would be poured below 25 degrees above zero when the
temperatures are holding or falling, unless we would be compensated
for added cost for winter protection.
- Climbing to erect steel would be stopped when ice or frost is on the
same.
- Unusual amount of snow or rain would be reason for schedule
extensions.
- Excessive high winds would be reason for requesting extension of time
for doing sheeting work, erection, or concrete forms.
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- Sizes of items and equipment (except for major equipment) stated in
this proposal are for comparison purposes only and actual size
requirements are subject to final engineering design.
- A full-time in-field erection supervisor will be supplied.
- All primary power will be provided by Owner.
4.2 DUTIES OF OWNER
- Supply all primary power and electrical transformers
- All necessary building permits.
- Initial field engineering services providing benchmark elevations and
reference centerlines.
- Adequate all-weather access road to and throughout the construction
site and to the ground storage area for construction materials.
- Road construction for all permanent access roads.
- Adequate construction power consisting of 575 volt, 3 phase, 60 cycle,
alternating current to temporary load centers with devices suitable
for the Contractor's electrical connections at a convenient location.
- 3 phase, 60 cycle, primary permanent service as specified.
- Lubricants for all equipment.
- Furnish a disposal site for debris within 5,000 ft. of the plant site.
- Provide adequate storage area and parking within 1,000 ft. of
construction site.
- Furnish any and all environmental pollution controls and other safety
devices required by law.
- Furnish all required security, including both personnel and fencing.
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- Furnish water supply suitable for construction.
- Provide site for office and equipment trailers for Sedgman and
subcontractors.
- Provide two (2) operating telephone lines to within 50 ft. of the site
for exclusive use of contractor.
- Furnish personnel needed for operating the proposed facility during
testing/commissioning period and any certified personnel, as may be
required by mandatory safety requirements.
- Payment of all sales and use taxes associated with the project.
- Provide any required erosion control and surface drainage excluding
normal construction water from our own excavation.
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SCHEDULE 2 -- FEES AND PAYMENT
1. PRICE FOR SERVICES
Subject to the provisions of this Schedule, Falls Mountain shall pay
Sedgman Canada for the Services on a progress basis in accordance with the
following table (U.S. Dollars):
3/31/05 4/30/05 5/31/05 6/30/05 7/31/05 8/31/05 9/30/05 TOTAL
------- ------- ------- ------- ------- ------- ------- ----------
ENGINEERING
Process Design & Project
Mgt 30% 25% 12.5% 7.5% 7.5% 7.5% 10% 453,648
Civil/Structural Electrical 15% 70% 15% 283,350
CONSTRUCTION
Mobilization/Demobilization 75% 25% 40,000
Foundations 70% 20% 10% 0 0 0 107,741
Structural Steel 0
Equipment Installation 5% 10% 25% 30% 20% 10% 1,360,944
Electrical 0 10% 20% 30% 30% 10% 453,648
Siding & Roofing 0 10% 90% 85,059
Mechanical Completion 0 100% 17,000
COMMISSIONING I00% 13,000
Total $2,814,390
The above table amounts are independent of the bonus and deduction
schedule.
It is expected that the Services will be performed in accordance with the
percentages set out in the above table. If the actual percentage of
Services performed by the date indicated is different from the percentage
shown in the above table, Falls Mountain shall pay Sedgman based on the
actual percentage.
On a monthly basis, Sedgman shall submit invoices to Falls Mountain.
Invoice payment shall be made by Falls Mountain within 30 calendar days
following receipt.
2. BONUS AND DEDUCTION SCHEDULE
In addition to the Price set out in section 1 of this Schedule, the
following bonus and deduction schedule shall apply for early or late
completion, as the case may be. The bonus or deduction is based on the
achievement of Mechanical Completion. If
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Mechanical Completion is achieved by or between the dates set out below
(each day shall start at 1:00 am and end at 12:59:59 midnight of the day
listed), then the applicable bonus payment (or deduction) will apply:
Bonus Payment or (Deduction) ($US)
(200,000) plus an additional
Mechanical Completion deduction of (10,000) per day for
After January 2, 2006 each day after January 2, 2006
--------------------- ----------------------------------
December 26, 2005 to January 2, 2006 (200,000)
December 19, 2005 to December 25, 2005 (140,000)
December 13, 2005 to December 18, 2005 (80,000)
December 6, 2005 to December 12, 2005 (20,000)
November 29, 2005 to December 5, 2005 40,000
November 22, 2005 to November 28, 2005 100,000
November 15, 2005 to November 21, 2005 175,000
November 8, 2005 to November 14, 2005 250,000
November 1, 2005 to November 7, 2005 325,000
October 25, 2005 to October 31, 2005 400,000
October 18, 2005 to October 24, 2005 475,000
October 11, 2005 to October 17, 2005 550,000
October 4, 2005 to October 10, 2005 625,000
September 27, 2005 to October 3, 2005 700,000
September 20, 2005 to September 26, 2005 760,000
September 13, 2005 to September 19, 2005 820,000
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September 7, 2005 to September 12, 2005 880,000
August 30, 2005 to September 6, 2005 940,000
On or before August 29, 2005 1,000,000
The bonus payment (or deduction) is due 10 days after Mechanical
Completion. Falls Mountain may deduct and set off any deduction from
payments owning by Falls Mountain to Sedgman Canada.
3. PAYROLL BURDEN AND OVERHEAD
All costs of any kind, including all labour, equipment, materials and
supplies, and expenses, disbursements and costs of consultants and
contractors, and all direct and indirect costs, as may be required to
perform the Services are included in the Price for Services as set out in
this Schedule. These prices also include:
- Provisions for vacation, public holiday, sick leave, payroll taxes,
and insurance premiums, group or other life insurance, pension,
retirement, etc.
- General accounting.
- Home office overheads.
- Transportation, lodging, and subsistence.
- Insurance as required
- Financing costs and profit
4. SCHEDULE OF RATES
The following schedule of rates applies to any variation Falls Mountain may
approve during the course of the provision of the Services ($US):
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HOURLY RATE
CLASSIFICATION STRAIGHT TIME
-------------- -------------
Project Management $125.00
Process Design Engineer $115.00
Civil Design Engineer $105.00
Estimator $ 90.00
Lead Project Engineer $ 90.00
Purchasing $ 85.00
Project Engineer $ 80.00
Drafter/Cad Operator $ 75.00
Checker $ 75.00
Administrative/Clerical $ 65.00
5. INFLATION INDICATORS
The Base Price was calculated based on the following estimated prices in
U.S. Dollars for delivered steel components:
Structural Steel $1.38/lb.
Galvanized Stair Treads $38.00/each
1-1/4 x 3/16 Galvanized Grating $14.50/sq. ft.
Platework (without liners) $1.30/lb.
1 in. ceramic liners $43.00/sq. ft.
1/2 in. ceramic liners $34.00/sq. ft.
1 in. stonehard liner $16.00/sq. ft.
Conveyor xxxxx $1.15/lb.
Conveyor stringers: $1.20/lb.
30
Conveyor trusses: $1.18/lb.
Conveyor skirtboards $1.54/lb.
Guards: $3.00/lb.
Truss Corbels $1.50/lb.
Conveyor sheeting hoops $2.38/lb.
Counter weights $0.75/lb.
Miscellaneous steel items $1.38/lb.
If the actual price for any individual line item in the above table is more than
10% of the price indicated, then Sedgman Canada shall be entitled to 50% of the
additional cost on providing Falls Mountain with substantiation of the
additional cost and verification that the prices in the above table were
reasonable estimates of market value at the time.
If the actual price for any individual line item in the above table is less than
the price indicated, then Falls Mountain is entitled to a deduction of the Base
Price in that amount.
31